For anyone dealing with tax debt, the IRS is an intimidating collector. Unlike other debt collectors, the IRS is often swift and fierce with implementing consequences for failure to pay on a tax debt. From wage garnishment to tax liens on property, these consequences can be difficult to get reversed. However, you may just be able to get the order lifted with the help of a Tampa bankruptcy lawyer.
The difficult thing about a wage garnishment is that it is a court ordered process, which means it can only be stopped by another court order or hearing. The IRS laws and the bankruptcy code can be a complex interaction when tax debts are involved. However, there are instances in which filing for bankruptcy can stop a wage garnishment order.
For an individual filing for bankruptcy, the automatic stay order will stop IRS wage garnishments for 1040 income taxes, interest and penalties. It will temporarily remove liability for repayment and any further consequences like a lien or bank levy, for as long as you are in an active bankruptcy case. Tax debts are considered “priority debts”, meaning they will be required to be repaid in a Chapter 13 filing or satisfied by some form of liquidation. If the debts are deemed dischargeable and the case is successfully completed, all future liability of the debts will be removed as well. This means that the IRS will not be able to collect on the tax debt after they have been discharged in bankruptcy.
It is important to note that not all tax debts are dischargeable. Debts that do not qualify for bankruptcy will not be protected from wage garnishment or other collection efforts. In such cases, your lawyer may be able to help you negotiate a payment plan directly with the IRS.