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Handling an IRS Notice of Levy
If you have received a Notice
of Levy from the IRS of an employee's wages
or for monies owed to a creditor, you have obligations
as well as rights.
First, remember that the Notice of Levy is not for taxes that you owe,
but rather is for taxes that may be owed by the
person
levied upon. Under Federal and State Law, a wage execution cannot
be cause for terminating an employee.
What Has to be Paid to The
IRS?
WAGE EXECUTION
The employee completes part
four of the form indicating their marital status and
exemptions. As the employer, you
calculate the amount to be withheld from the employee's wages and
turned over to the Internal Revenue Service.
Frequently, new and lower
paid employees quit employment upon the wage execution because there is
little incentive for
them to work with a significant portion of money being paid to the
Internal Revenue Service. Therefore, you should
encourage them to seek advice of a tax attorney to resolve their tax
problems.
OTHER LEVIES
If you owe money to a
creditor and you receive a levy, you are required to
discontinue making payments to that
creditor. Nevertheless, you are not
required to pay anything to the Internal
Revenue Service unless you are going to pay
that to the creditor. For example, if you choose not to pay the
creditor for any reason, you do not have to pay
the Internal
Revenue Service either. The IRS can
only collect monies that are actually due and owing to the creditor,
and they
cannot force you to pay additional monies, disputed monies, or monies
that you have chosen not to pay the creditor for
any reason. Your liability to the
Internal Revenue Service is only based upon a payment to the creditor
instead of the
Internal Revenue Service after a Notice of Levy is
issued.
Conclusion - Action
WAGE EXECUTION
1. Talk to the
employee directly, have the employee immediately
complete part 4 of the wage execution to determine what
the salary would be.
2. Encourage the employee to
get assistance from a tax attorney to resolve the
matter. Usually, tax problems are the
result of other financial problems.
3. Withhold
the appropriate amounts from the employee and pay that to the Internal
Revenue Service as calculated on the
payment schedule.
OTHER
LEVIES
1. You do not
have to pay the Internal Revenue Service
any disputed amounts or amounts in which
you believe are not
owed to the creditor.
2. Do not pay the creditor,
rather pay the amounts due to the Internal Revenue Service.
3. Verify the
correct name on the levy. Only pay the IRS for the
creditor named on the levy. Do not pay the IRS if monies are owed to a
creditor with a different name
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