The first requirement for resolving an IRS or state tax debt is tax compliance. Contrary to what many people think, if you owe back taxes, your first priority should actually be paying the current year. Those that don't withhold or pay their current taxes often find themselves in a viscous cycle of constantly struggling to re-pay back taxes and continually owing when it comes time to file again.

A wage garnishment or wage levy is a legal seizure of property. It is an effective method of tax collection used by both the IRS and many States. The IRS or States will issue a wage garnishment to seize all or part of a taxpayer’s wages if a taxpayer does not respond to collection letters or fails to live up to an agreement to re-pay back taxes. A wage garnishment does not take the taxpayer’s financial situation into account and is often thought of by collection agents more as an “attention getter” than a true resolution to a tax problem.

We have a client who had to close down his business due to financial difficulties. Unfortunately he ended up owing taxes to all of California's tax agencies - FTB, EDD and BOE. The amounts to FTB and BOE are relatively small (under $4000 each) compared to the EDD debt which is now over $12,000.

Have you ever fallen behind on your taxes? For most wage earners, taxes are something that they deal with sometime between January 1st and April 15th every year, they usually pay a little or get a little money back and then forget about them until the next year. For the self-employed and for business owners, taxes are a whole different beast. Saving money for estimated payments, dealing with payroll taxes, sales tax, and all of the other taxes we have a duty to pay is an everyday concern. Have you ever fallen a little short one month and not made those payments?

JAY FREEBORNE, ENROLLED AGENT
WASHINGTON TAX SERVICES.

I have been working in the tax resolution industry since 1997. In 2005, I received my Enrolled Agent License to practice before the IRS. Here is a list of emails from clients that were sent to me over the last few years. You can also find my commentary on tax resolution issues at http://taxresolutiontalk.blogspot.com

Comments are verbatim as sent via email to Washington Tax Services (last names removed for privacy).

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Sept 10, 2009

Wage garnishment is a legal process in which some percentage of your earning’s are withheld by an employer for the re-payment of debt undertaken by you. Nowadays most of the wage garnishments are being made by court’s order. Many other wage assignment exist which are completely legal and are being used by state tax collection agency and IRS for the purpose of collection of unpaid taxes and there are federal agency administrative garnishments for collection of non-tax debts owed to the federal government.