Wednesday, October 05, 2005

Dealing with a tax levy.

I hope you never have to.

Fortunately I’ve never had the personal pleasure of much contact with the IRS.

Oh, there was that one time about 16 years ago when they questioned one of my deductions. What made it nerve-wracking was they didn’t choose to tell me in the letter they sent that it was a single charitable contribution they were interested in.

NO, they just sent a “Dear Taxpayer” letter telling me to appear in person with all my records for an “examination” of my 1988 return. They don’t use the word “audit;” it’s an “examination.”

I dutifully loaded up a medium size cardboard carton with all my receipts, records, check stubs, bank statements, and on and on. I showed up in the lobby of the Federal Building feeling like a criminal, and cooled my heels for about 30 minutes past my “appointment” time. Shoot, THEY were in no hurry. They knew I wasn’t going anywhere.

When I walked into the examiner’s office and she informed me that all she wanted was documentation on one contribution, I almost wept in relief. Shoot, I had that! And sure enough, within about ten minutes I was skipping out the door and down the street to where I’d parked the car, feeling like a kid just let out of school for summer vacation!

But I’ve never had to face a tax levy. That only happens if you’re delinquent in your taxes, you’ve set up a good-faith payment schedule, and you then fail to make your scheduled payments.

Trust me; you don’t want to do that. It just happened to one of my employees.

No, they won’t throw you in jail. Why not? You can’t PAY them if you’re in jail. They want you to keep your job, and maybe work a second one as well.

But they will obtain a court order to attach ALL or your wages (except, of course, your taxes, Social Security, and voluntary deductions for such things as health insurance and other benefits) and then they’ll let you take home a minimal, fixed amount based on your filing status (single, married) and your number of exemptions. All the rest, however much it may be, they make your employer send to them.

In the case of my employee who files single with just one exemption, he’s allowed to take home a maximum of (get this)... $158 a week! That’s it.

You say you can’t live on that? They don’t care. You say your home will be repossessed, along with your car? They don’t care. The IRS has no compassion.

And guess what? If you take a second job, they’ll levy those wages too. For how long? Until the entire amount you owe, including interest and penalties, is paid.

As this guy’s employer we’d like to be compassionate and fudge for him. But we can’t. It’s a court order, after all. If we knowingly ignore or violate it, I could go to jail. So, sorry Mr. F. Have fun on $158 a week.

I hope you never have to experience a run-in with the IRS.


kenju said...

OUCH! I sure hope I don't ever have a problem like that. Hearing about it sure makes me want to do everything in my power to avoid a run-in with the IRS.

Jodi said...

This comment has nothing to do with tax levys. You peaked my curiousity and made (yes, MADE) me look up Sudoku. And now I can't stop playing. Good thing my free trial ends in 28 days.

Anonymous said...

Ours is just as ruthless excepting they are not allowed to claim your salary. They will either seize all your assets or if they are feeling in a good mood and realise that you were not out to defraud them, they will be lenient enough to allow a repayment plan.

Anonymous said...

Poor guy. What a horrible position to be in, for anybody. I can't even imagine what I might do in the same circumstances.