By Jeff Parrack, CPA National Internet Tax Services
As a CPA who specializes in IRS wage garnishment issues, I know firsthand how devastating IRS tax levies can be to anyone in the country. They rarely, if ever, come at a good time. Most Americans live paycheck to paycheck and have more month left over at the end of the money than they have money left over at the end of the month. Even those people who are able and disciplined enough to save money can be negatively affected by just a single IRS tax levy.
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Anytime a paycheck or bank account is garnished by the IRS someone will need an IRS tax levy release….. and that person will usually need it very quickly so his/her bills can continue to be paid and food can be put on the table and the lights can be kept on.
But don’t despair if you have been hit with an IRS wage garnishment for your unpaid federal income taxes. Even if you have not filed tax returns for several years it is still possible to get the IRS to release your wage garnishment and file all your tax returns and get back on the good side of the income tax police.
Why an experienced CPA’s services can be invaluable
Having specialized in the IRS Wage Levy Release business for twenty-five years has taught us a lot. Just like you in your job, we have found that our years of experience have resulted in a tremendous knowledge of our unique field. Sure, we prepare income tax returns for many clients but our niche skill as CPAs is in negotiating with the IRS for people whose wages, paychecks, and bank accounts have been levied by the IRS.
The IRS has a special program and specially trained representatives who do nothing all day except talk to troubled taxpayers nationwide who have been notified by their banks or their payroll departments that they are about to have some serious money problems. However, these IRS representatives have a priority that is not shared by the people who have the tax levy problems and who need IRS tax levy help. The main goal of all IRS representatives is collect as much money as they can, and to do so as quickly as possible. This goal is obviously not the same goal that you have if you have been hit with an IRS wage levy because you probably want to get a full paycheck as quickly as possible, or get as much money put back into your bank account as possible – if you have been hit with an IRS bank levy.
The IRS has certain rules and regulations that they must follow to determine how much of your money they can get every month. However, you are probably totally unaware of what those rules and regulations are, and you therefore find yourself at a tremendous disadvantage if you talk to one of these IRS representatives without doing a lot of research and educating yourself on your rights and obligations, all of the special calculations that are required, and all of the personal and financial information that must be disclosed to the IRS before they will even consider the possibility of issuing a tax levy release.
Furniture sales people know how to sell furniture. History teachers know a lot about history. Doctors know how to treat many infections. Pilots know how to fly planes. Auto mechanics know how to repair car engines. Mothers know how to run a house. But not many of these types of people know anything about negotiating with the IRS to get that valuable IRS Form 668D – Release of Levy.
Properly, efficiently, and quickly negotiating the release of IRS levies is a highly valuable skill when it is needed. And most taxpayers can benefit from knowledgeable, professional help, since immediate action is required to save their next paychecks. That’s why our specialized CPA office has developed a streamlined system to get our clients’ IRS tax levies released within two to five days.
Our professional experience allows us to negotiate with our IRS contacts from a position of expert knowledge and authority since we know the game and the rules about IRS wage garnishments and IRS installment agreements. When a taxpayer discovers that his or her paycheck has been garnished, then panic quickly sets in. A quick internet search can find the IRS Collection telephone number and a call can be placed at 2:00 pm. But then, a 90-minute hold may occur, and not many employees or business people or moms or dads at home can wait that long for an IRS employee to get on the phone. Again, that’s where the professionals come in.
What we do
In our office we make a general call to our IRS contacts every morning – first thing. We have our schedule of clients and all of their properly documented information and special calculations just waiting for us each morning. We typically do not take incoming calls before 10:00 a.m. because we are usually on the phone for the first two to two-and-a-half hours of our day. We also make calls to the IRS several times during the day so we get to know these people quite well. And our years of experience have taught us how to quickly give the IRS the information they require and we have also learned how to properly and accurately work out the best deals for our IRS tax levy release clients.
We can get our IRS reps to give us all of your W-2 and 1099 income information as well as all other reported sources and amounts of income for each and every one of the last six to eight years. We use this income information to properly and correctly report all of your income even when you cannot provide us with any of your own income info.
Your unfiled tax returns can be prepared and emailed to you within two days for your review/signatures, and then you can email them back to us for lightning-quick filing with the IRS through a special procedure that we use. Jumping this high hurdle so quickly allows us to negotiate the release of your tax levy in one or possibly two phone conversations with our IRS contacts.
Once all of your income tax returns have been prepared and filed you will be classified as “compliant” in the IRS computer system. Only compliant taxpayers can receive IRS tax levy releases; so becoming compliant is obviously the first goal for almost 90% of our clients.
Carefully discussing with our IRS reps the specific information about you and your family is very important. However, knowing the rules and regulations and calculations and payment requirements is extremely critical. Taxpayers are almost always at a disadvantage when they talk to the IRS by themselves since they are stressed and nervous and don’t know up from down or left from right when they are being bombarded with intrusive and probing questions from an IRS authority figure who may be as nice as they come, or as difficult and demanding as possible.
If you contact the IRS on your own to attempt to get your wage levy released, you may find that your IRS rep is just as friendly and kind and informative and helpful as they come. But you might also discover that your IRS rep is one of those rare ones who may be having a bad day. We find that almost all IRS reps are easy to deal with but as negotiation specialists we also deal with a different group of IRS employees who work in the IRS Practitioner Priority Service (PPS) and who talk to CPAs like us and other professionals and not to general taxpayers. These PPS reps know that we know the lingo and the requirements, calculations, limitations, special rules, and possible payment options.
Keep in mind that most of our clients will be negotiated into a monthly payment arrangement of some kind that is referred to as an IRS Installment Agreement. Qualifying for such a monthly payment plan requires a very detailed financial calculation that considers all of your income and all of your “allowable monthly living expenses.” Determining which expenses are allowable is very tricky, and requires a lot of knowledge and understanding of how this part of the IRS Collection system works.
The IRS will add up all of your sources of monthly income to determine your Total Gross Monthly Income. Then they will deduct all of your federal and state income tax withholdings and payroll taxes to arrive at your Net Available Income. These parts of their calculations are the easiest part, because your paystubs, bank deposits, and received payments will typically be used to verify the required income and tax deductions.
After your Net Available Income is calculated, the IRS will then discuss with you each and every one of your monthly living expenses. These expenses will include housing and utilities, medical expenses, child care, life insurance, court-ordered payments, automobile expenses, credit card payments, child support, car note payments, and many others.
Many of your monthly living expenses will be completely and totally allowable; but you will also have some monthly expenses that can and will be totally disallowed in the determination of your ability to pay the IRS any monthly amount. You will also have upper allowable limitations on some of your monthly expenses so that if you spend say, more than $517 per month on your car payment, then you will be limited to only $517 in determining the allowable portion of that car payment.
Once your Total Allowable Living Expenses are determined, the IRS will then deduct those total expenses from your Net Available Income. The resulting number is called your Monthly Net Cash Flow, and is basically your income minus your monthly expenses that the IRS allows.
You may disagree with your IRS rep about their determination of whether or not some of your monthly expenses should be allowed but you should always remember that your IRS rep must follow the proper procedures and calculations that have been designed by the IRS. There just isn’t going to be much room for negotiation here in order to get your IRS tax levy release.
So the calculation is like this:
All of your Sources of Income
– minus your Payroll Taxes and Withholding and other payroll deductions
Equals your Net Available Income
– minus your Allowable Living Expenses as defined by IRS
$$$ Equals Your Monthly Net Cash Flow $$$
Your Monthly Net Cash Flow will then typically become your required monthly payment to the IRS to pay off all your old taxes.
You obviously will want your monthly payment to the IRS to be as small as possible, but the IRS will always want your monthly payment to be as high as possible. Therefore, you should be able to see that this IRS system is designed to get the highest Monthly Net Cash Flow that is possible.
However, your goal here is to get your Allowable Monthly Living Expenses to be as low as possible. And this is where you will be at a distinct disadvantage since you do not know the best and most advantageous way to determine your own allowable expenses. And the IRS isn’t going to tell you the best way to do it.
So this is where using some professional help become a valuable source of information and negotiating power.
But your alternative is to watch the IRS take up to 40% of your take-home pay on all of your paychecks for the next three to five years.
Now is this long drawn out garnishment worth it to you? That is the question you would need to consider most carefully.
Author Bio: Jeff Parrack is a CPA and has specialized in IRS Wage Garnishment and other IRS Collection issues since 1990. He rarely sees his clients face-to-face since they are located all over the country in all fifty states. His websites bring him and his professional staff all of their IRS wage levy release clients and he talks to troubled taxpayers and to his IRS contacts every day. His calm manner and thorough professional knowledge and understanding of IRS collection procedures and techniques uniquely qualifies him in this highly specialized field. His guarantee is that he will release your IRS wage garnishment — or you won’t pay him a single dime.