Many Americans suffer from some form of tax debt. Some will find it easy to make payments, while there are those who will struggle through them. Couple this hardship with unexpected and unfortunate circumstances such as losing a job or suffering an injury, and that debt could suddenly balloon beyond reach. When tax debts go unpaid, the IRS could decide to garnish the debtor’s wages which could make the latter’s situation even worse.
Generally speaking, wage garnishment by the IRS can be stopped by one of two ways: settle the debt through an offer in compromise, or delay its effects through an installment agreement. Here’s what you need to know about each:
Offer in Compromise
An offer in compromise allows a taxpayer to pay off his tax liability for less than the amount owed. There are specific requirements that need to be met before a debtor’s offer in compromise can be accepted, which can take a while. Fortunately, the IRS halts wage garnishments while negotiations are in process.
An installment agreement, as the name suggests, means that you agree to make monthly payments plus interest to pay off your debt. Wage garnishment will be halted once you enter into an installment agreement with the IRS. To keep an installment agreement in place, you need to make sure you make your payments on time.