CPA Practice Advisor - 36

A YEAR IN THE LIFE: PAYROLL

ACCOUNTANT

A Primer on IRS Continuous Wage
Garnishments
By Arnold van Dyk

WHEN A TAXPAYER'S private financial woes become public,
especially to that taxpayer's employer with the issuance of an
IRS wage garnishment order, the taxpayer is left with a sense
of vulnerability that can only be relieved by resolving the situation as quickly as possible. Even though there are employee
protections in place to keep an employer from retaliating against
an employee for having a wage garnishment issued, it seems
inevitable that your client will worry that this turn of events will
have harmful impacts on the client's career.
Through the People First Initiative,
the IRS placed a moratorium on the
issuance of new wage garnishment
orders from April 1, 2020, until July
15, 2020. Those taxpayers who already
had wage garnishments in place could
contact the IRS and request that their
current wage garnishment be postponed due to the COVID-19 pandemic.
When requesting the postponement,

the taxpayer may have needed to
furnish documentation, confirming
economic hardship due to COVID-19.
Collection enforcement is on the
mind of the IRS. Before the current
pandemic brought the world to a
standstill, the commissioner of IRS's
Small Business/Self-Employed Division, Eric Hylton, announced in a
press call in February 2020, that over
800 new employees will be added to
their tax collection phone line. There
is no guarantee the IRS will extend the
wage garnishment provision in the
People First Initiative. Meanwhile, U.S.
households continue facing economic
hardships that have not been seen
since the Great Depression. A wage
garnishment can be the tipping point
that sends a taxpayer's finances and
household into a tailspin.

WAGE GARNISHMENT
BASICS
Part of providing a vigorous defense
for a client whose wages are being
garnished is having an understanding
of the IRS wage garnishment process.
Wage garnishments are a type of continuous levy or seizure that serves two
purposes: recovering the outstanding

AUGUST 2020 ■

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tax liability due and getting the taxpayer's attention to the seriousness of
the situation. In addition to wages and
commissions (including wages that
have been earned but not received
as of the date the order was served),
garnishment orders can be issued to
customers of independent contractors
who have an overdue tax liability that
has not been resolved.
Generally, wage garnishments are
not the first line of action the IRS will
take when collecting past-due income
taxes. Before a wage garnishment is
ordered, the IRS is required to send
several notices, including a notice
of assessment of tax and demand
for payment, a notice of a right to a
hearing, and the final "warning shot," a
notice of intent to levy. All notices will
be mailed to the taxpayer's last known
address on file, which is an excellent
reason to encourage taxpayers to
keep their address current with
the IRS. After all, the last thing a
taxpayer wants to deal with is a wage
garnishment or any other sort of levy
or seizure.
Once the IRS decides to issue a
wage order, the agency will send the
taxpayer's employer or customers (if
the taxpayer is an independent contractor) Form 668-W(ICS) or 668-W(C)
D.O. The IRS does not send a copy of
this notice to the taxpayer. It is up to
the taxpayer to request a copy of the
order from his or her employer, and if
your client has not done this already,
it is essential a copy of the order be
requested as soon as possible. This
notice notifies the employer that the
company is required (ordered) to begin
garnishing the wages/payments of the
affected taxpayer.
Employers generally have at least
one full pay period to begin garnishment, and they do not want to ignore

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