IRS Wage Garnishment – Can My Employer Fire Me?
Let me answer this in two parts 1) The legalities 2) Practicalities. When you receive the IRS Notice of Intent to Levy it is time to take action to solve the problem. Do not wait until you receive a notice from your employer of a wage garnishment. If you receive a notice of a wage garnishment, can you lose your job?
The Legalities:
The Consumer Credit Protection Act under 15 U.S.C. 1674, and the IRS citation in Internal Revenue Manual 5.11.5.2., protects you from termination due to a wage garnishment, including one from the IRS, if this is your only debt. Your employer can be fined up to $1,000 and or be imprisoned for up to one year for terminating you as result a wage garnishment or any other singular debt. However, in most states, this protection does not extend to cases where your wages are being garnished two or more times (either consecutively or at the same time.). This is enforced by the U.S. Department of Labor.
The Practicalities
While not a lot of employees do get fired as a result of a wage garnishment, the employers typically cite other reasons, such as fiscal irresponsibility, as in the case of financial advisors, etc. These types of individuals typically sign an employee agreement that protects the employer under such circumstances, that the employee must voluntarily sign in order to be hired.
Other employers just disregard the rules and fire the employee in violation of the law. They view it as their right to terminate an employee for cause.
Moral of the Story: It is best to solve the problem before it reaches the level of a wage garnishment.
The IRS wants three things from you to solve the problem; communication, information, and compliance.
- Communication. The IRS wants you to reach out to them and indicate that you wish to solve the problem. They want to be able to convey to you what they will need from you to reach a solution short of active collection. In most every case, the IRS issues a wage garnishment.
- Information. The IRS needs information from you in order to be able to determine your financial circumstances and your ability to pay. This will require you to complete the IRS Collection Information Statement Form 433-A.
- Compliance. The IRS wants you to timely file returns and withhold sufficient amounts from your paychecks, so to break even on your return.
An IRS wage garnishment is an avoidable event, through communication, information, and compliance. It does not have to result in threats of being fired from your job