Can My Wages Be Garnished for Nonpayment of Taxes in Indiana?
If you end up owing back Indiana state income taxes and do not pay the amount required, the state can garnish your wages for nonpayment. However, Indiana only uses garnishment methods as a last resort, and the amount it can take is limited. The best way to prevent garnishment is to respond to any back-tax payment demand, but if the garnishment is already in place, some residents can stop further garnishment by the Indiana department of revenue with an Offer in Compromise.
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Defined
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When you owe Indiana state income tax, they will first issue a Demand for Payment notice, and if not paid or protested within 60 days, they may proceed with a wage garnishment for back taxes owed. When presented with a state tax garnishment, your employer must deduct a certain portion of your weekly wages until the full payment is made.
Amount
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The state of Indiana can order an employer to garnish all of your disposable earnings up to 25 percent of your wage or the amount by which your disposable income exceeds 30 times the federal minimum wage rate, whichever is the smallest amount. In most cases, the Indiana Department of Revenue, will not only require you to pay off the back income tax, but will also require you to pay interest on the debt.
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Solution
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If you are unable to pay the full Indiana state tax liability, you can file an Offer in Compromise. This is a settlement you make with the Indiana Department of Revenue, where they settle for less than the amount you owe, established as either a one time payment or a payment plan. However the Indiana department of revenue will not accept a zero dollar amount. To qualify for an Offer in compromise, you must prove eligible financial difficulties. These can include a critical illness within the immediate family or personal financial difficulties, which result from an uncontrollable event.
Protection
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Indiana provides certain employee protection under the garnishment law. An employer is forced to comply; federal law prevents him from firing you because of the garnishment. However, the employer can charge a $12 service fee for the inconvenience of making the deductions. The fee is paid by both the state and the debtor.
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