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Does a Tax Lien from the IRS or state protect me from other creditors?
Anonymous1 views2 answers
I owe a large amount of money to the IRS, around $20k. I am on an installment agreement with both the IRS and State of Colorado. I was told that I would have a tax lien filed against me because of the amount I owe. I also have several credit cards in collections. I read somewhere that if a tax lien is filed, the government takes priority over all of my other debts. My question is what if one of my credit cards decided to sue me and win a judgement. Can they garnish my wages if I have a tax lien? Doesn't the IRS/State take priority? I don't own a home and I have no assets, I was just concerned about my wages being garnished. Thank you!
I do not know about any special Colorado law, but in general, the existence of a federal tax lien will NOT have any effect on whether another creditor can garnish your wages. I do not believe you have any additional protection on this issue.
Tax liens don't work that way. You won't have the protection as you describe it. If you are on a voluntary installment agreement with the IRS and CO DOR, your wages are fair game to another creditor who sues you and obtains a judgment. If the IRS was garnishing (levying) your wages, that is different; but an installment agreement is not a wage levy (even if the installment agreement is directly debited from your paycheck).
If those are the debt issues you are facing, probably time to consider bankruptcy. If the taxes are old enough, you may be able to off-load a portion of your tax debt in the process.
So, the direct answer to your question, YES, another creditor can garnish your wages notwithstanding the existence of the tax lien.
