Wage Garnishment for Income Tax Payment

If you owe back taxes to the IRS, wage garnishment is one of the methods that the IRS can use to force you to pay the money you owe.  But there are certain protections afforded to an individual that limit how much money the IRS can garnish from wages and that otherwise protect the individual.

The purpose of this article is to provide an overview of these protections.

What is wage garnishment?

Wage garnishment is when the IRS requires that an employer withhold a portion of the earnings of the individual for the purpose of repaying back taxes.  The IRS can garnish an individual’s wages without obtaining a court order.

What protects the individual related to wage garnishment?

Title III of the Consumer Credit Protection Act (CCPA) governs an individual’s rights regarding wage garnishment.  The Wage and Hour Division (WHD) of the United States Department of Labor administers the CCPA.

What protection does Title III provide to an individual concerning wage garnishment?

Title III provides protection to individuals in two significant ways:

  1. Title III prevents an employer from terminating an individual on the basis that the individual’s wages have been garnished related to a single debt.  This protection applies regardless of the count of legal actions enacted related to the single debt.
  2. Title III places an upper limit on the portion of an employee’s wages that can be garnished in a single week or pay period.

Does Title III apply to all of an individual’s wages?

Title III protects earnings paid in the form of wages, salaries, commissions, bonuses, and pension and retirement program payments.  Title III does not limit garnishment of tip income.

How much of an individual’s wages does Title III allow to be garnished?

Normally Title III permits wage garnishment in an amount up to the lesser of the following:

  • 25 percent of disposable earnings
  • Amount by which disposable earnings exceed the minimum hourly wage multiplied by 30

Disposable earnings are defined as the earnings left after legally required deductions are subtracted, including federal, state, and local taxes;  Social Security; unemployment insurance; and state retirement systems.  Deductions from pay not required by law, including union dues, health and life insurance, and charitable contributions, are not considered when calculating the amount of income subject to wage garnishment.

This limit on wage garnishment applies regardless of how many garnishment orders are submitted to an employer.

However, for wage garnishment related to state or federal income tax debt, the strict garnishment limit noted above does not apply.

What are the limitations of Title III?

If an individual’s wages are garnished related to two or more debts, Title III does not prevent an employer from terminating the individual.

In addition, as noted above, the limit on the amount of income subject to wage garnishment does not apply when the garnishment relates to federal or state tax debt.

Who can help me if my wages are garnished for tax purposes?

You should speak to a tax attorney right away if you receive a notice that your wages are being garnished to repay tax debt or if you believe your wages are about to be garnished.  A tax attorney knows what options are available to fight the IRS or other tax entities.  A tax attorney can help walk you through what options are available based on your situation.

You can get help from a tax attorney by calling the phone number located at the top of this web site.  Note that the first.  Note that all conversations with your attorney are completely confidential.  The first conversation is free of charge and does not obligate you to anything.

by Mark Johnston

Mark has been a contributor to legal web sites related to bankruptcy, tax, and criminal law since 2011. He has an Accounting degree from Texas A&M University.