Garnishment of 1099s and Wages

Wages are garnished for a score of reasons. For people in debt, this is a serious situation because creditors collect payment direct from paychecks.

First, salary garnishment occurs when a verdict has been made against the defendant. The defendant's paycheck is garnished as a result. This means that money is automatically collected from the paycheck (or other source of income) to be paid to the creditor or plaintiff. Here are some common reasons that wages are garnished:

* Unpaid child support.
* Taxes are in arrears.
* Court fines owed.
* Owed student loans.
* Credit card debt.
* Other monetary responsibilities.

Garnishment is capped by federal law at twenty-five percent and differs from state to state. Some states provide garnishments of lower amounts, while states like Texas, South and North Carolina, and Pennsylvania don't allow garnishment. The specific order for garnishments to be taken when income is not enough is federal first, state second, and credit cards last.

The IRS process that needs to be complied with when garnishing wage are:

* The first thing served is a Notice and Demand for Payment.
* Thirty days before garnishment is effective, a Final Notice is served. (Note: The Final Notice is not needed to be served personally, so plenty of people do not receive it. They may not be aware that their salary are going to be garnished.)
* Salary is then garnished until either the dues are settled or other deals are made for settlement. Garnishment of salary can't be declined by defendants.

Companies that hire independent contractors or freelancers have to file a 1099 form to the IRS to declare income. Taxes are computed by the 1099 contractors themselves.

An employer has no choice but to take settlement out of an employee's paycheck when wages are garnished. With freelancers or independent contractors, employers are not responsible to do so. Instead of the wage being garnished, the contractor's bank account or accounts receivable are levied by the credit.

The IRS and other creditors can freeze and seize money when a bank account is levied. This can be practiced until the dues are resolved.

Having your wage garnished or your bank account levied is tough. To assist you with IRS issues, consult seasoned lawyers like Darrin T. Mish.

Be Sociable, Share!

•