Have you had a levy or lien placed on your salary or wages? Have you been threatened with one or the other? If so, you know how frustrating it can be. Wage garnishments are a frequent tool both the IRS and the State of Maryland use to collect back taxes or tax liabilities. But these levies and liens can cause real pain for those who are subject to them. Many times the IRS and state taxing authorities place levies or liens as a last resort, so although it can get much worse, it can get much better. With an experienced IRS and state tax attorney in Maryland, you can receive some relief.
At Gabaie & Associates, LLC, we dedicate our practice to helping those otherwise law-abiding citizens get a better tax deal than the one they've already been dealt.
IRS Wage Levies
When an IRS levy is issued, it means the IRS has the authorization to legally seize your property in an effort to satisfy your tax liabilities. An IRS levy permits the IRS to take money from a bank account or another financial account, seize and sell your vehicle, real estate, or other personal property, or garnish your wages. When it comes to wage garnishment, your employer must comply with the levy or face certain consequences.
If your wages or salary have been garnished, you likely have questions. Read through the information here and if you still have questions, contact Gabaie & Associates, LLC today for a consultation.
How is a Garnishment Started?
There are procedures the IRS must follow before it can garnish your wages via a levy. First, the IRS will assess your tax liability and then send you a notice and a Demand for Payment. If you ignore this notice and do not satisfy the payment demand within the required time limit established by the notice, the IRS will send a Final Notice of Intent to Levy and a Notice of Your Right to a Hearing. Thirty days after the Final Notice has been sent, the IRS can begin garnishing your wages.
How Much of Your Wages Can Be Garnished?
The IRS has a lot of power when it comes to your wages and salary. Unlike other creditors who are bound by federal and state laws that place caps on the amount to be garnished each week, the IRS is subject to no such limitations. The IRS can leave you without very little money so long as it does not create a hardship whereby you cannot reasonably afford the basic necessities to live.
Can You Get Your Property Back?
If the IRS has seized your property, whether in the form of wages or other, you can file a claim to have the property returned to you. If the request is denied, you can appeal the decision.
How Do You End a Garnishment?
If you want the levy released, there are two possible means to that end: (1) you can contact the IRS to resolve your tax liability immediately; or (2) you can demonstrate the levy has caused an immediate economic hardship. The IRS is required to release the levy under the following conditions:
- The liabilities has been satisfied.
- You declare bankruptcy.
- The collection period expired before the levy was issued.
- If it helps you pay your taxes, then it should be released.
- You enter an Installment Agreement and as part of the terms of that agreement, a levy is not permitted.
- The levy created an economic hardship, which means you cannot meet your basic living expenses.
- The property's value is more than what was owed and releasing the levy will not prevent the IRS from collecting on the liabilities.
An experienced tax attorney can help you develop a strong case, but if in the end your request for a levy release is denied, you can appeal the decision.
Maryland Salary Lien
The State of Maryland is serious about collecting unpaid taxes and often acts aggressively to enforce actions. Collection by the Comptroller's Office can create problems for individuals and businesses alike. If you owe taxes to the States of Maryland, one method to seek payment is via a salary lien.
A tax salary lien imposed on your salary or wages is a powerful legal instrument that has the same force and effect in Maryland as a court issued judgment lien. When a taxpayer in Maryland fails to pay taxes, the Maryland Comptroller's office places you in collections. At that point, letters are sent requesting payment. When those letters go unanswered for a certain amount of time, the Maryland Comptroller's office files the tax lien.
The tax lien can detrimentally impact your credit rating, your ability to obtain a bank loan, or even affect your job if your job requires your credit to be in good standing. Unlike an IRS levy, however, there are exemptions that prevent Maryland from taking a certain amount of your wages.
Maryland Salary Lien Exemptions
The Commercial Law Article Section 15-601-1 provides the means to determine the amount of wages to be exempted from a salary lien. In all Maryland counties but four, the exemption equations are the same.
Generally speaking, the amount to be exempted from a salary lien is the greater of:
- $145 times the number of weeks wages due were earned, or
- 75% of disposable wages due, and
- Less medical insurance payments deducted by the employer from the employee's wages.
Calculation Example for Married Couple with 2 Exemptions |
$145 x 2 weeks | 75% disposable wages |
Gross Wages | $1,150.68 | $1,150.68 |
Federal Tax | -$58.75 | -$58.75 |
FICA | -$81.89 | -$81.89 |
Disposable Wages | $954.30 | $954.30 |
Exemption | -$290.00 | -$715.72 (the greater amount) |
Sub-Total | $654.30 | $238.58 |
Less Medical Insurance | -$80.21 | -$80.21 |
Amount Due State | $574.09 | $158.37 |
In this example the greater amount to be exempt is $715.72, so the amount that would be owed is $158.37.
The four counties that differ slightly from the above equations are Caroline, Kent, Queen Anne's and Worcester counties. The amount to be exempted from a salary lien in these counties is the greater of:
- 75% of disposable wages due, or
- 30 times the federal minimum hourly wage at the time the wages are due, and
- Less medical insurance payments deducted by the employer from the employee's wages.
Voluntary deductions such as credit union payments, charitable contributions, IRA, etc. are not included in the definition of disposable wages and should not be deducted before the computation is made.
Dedicated Wage Garnishment Attorney in Columbia & Baltimore, MD
As you can see, the State of Maryland is more limited with respect to wage garnishment via its lien than what the IRS is through its levy. Both amounts, however, are substantial. The State of Maryland can take action such as a bank levy which can wipe out a taxpayer's bank account. An experienced tax attorney can help you. Contact us today at 443.345.8291 for a consultation.
