If you receive Form 668-W(c)(DO) Notice of Levy on Wages, Salary, and Other Income, you have three options you should explore.
- Set up an installment payment plan over 72 months
- Submit an Offer in Compromise
- Bankruptcy
INSTALLMENT PLAN
Under this method, you are spreading the amount you owe over six (6) years, which will leave you more money per paycheck than a garnishment will leave you. Also, if the debt is large enough, let’s say you lost a high paying job and now you are earning substantially less money, you can set up an installment plan and only pay a percentage of the tax debt because you are not earning as much money as you used to make when you incurred the tax debt. If you were making the same amount of money, the tax debt would not be a problem, but it is a huge problem now that you are not making as much money……….therefore, the IRS allows you a payment plan commiserate with your current wages.
OFFER IN COMPROMISE
This method is discussed under the Tax Solutions topic within this website. Basically, if you don’t qualify for a payment plan then you will list all assets your own and subtract from that amount all of the liabilities you owe and that will give you a net amount. This net amount or net worth is what you are offering to the IRS in order to compromise or solve your debt.
BANKRUPTCY
Bankruptcy stops a wage garnishment. Under bankruptcy, a trustee looks at your income, debts, and tax and works out a payment to pay your tax and your debts. This is an equitable decision because none of your living expenses are neglected or not paid. Depending on the chapter of bankruptcy you select, you may pay a percentage of your tax and other debts over a period of years, but after your bankruptcy is discharged, you walk away not owing any money to anyone.