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Tax Levy on Social Security Benefits

Tax Levy on Social Security Benefits

The IRS has powers that many ordinary creditors don’t have. One of those powers is the ability to levy your Social Security benefits if you have delinquent tax debt. This is done as part of the Federal Payment Levy Program (FPLP).

How Much Can the IRS Take?

The IRS can take 15% of your Social Security benefits payments, month after month, until your balance is paid in full. This can be the difference between getting by and falling behind for those who depend on Social Security as a major source of retirement income.

Under prior law, there was an exempt amount of Social Security payments each month, but that exemption no longer exists. So no matter how big or small your monthly Social Security check is, the IRS can seize 15% of it.

Social Security Benefits Subject to Levy

Federal Old-Age, Survivors, and Disability Insurance Benefits can be subject to the levy, but the IRS stopped systematically levying Disability Insurance benefits in 2015. Supplemental Security Income (SSI) can’t be levied by the IRS.

Lump sum death benefits and benefits paid to children also won’t be levied. Neither will payments that already have partial withholding to pay back debt owed to Social Security.

Your benefits also shouldn’t be levied if your income falls below certain levels.

Getting the Levy Released

Your best approach would be to avoid the Social Security benefits levy before it begins. You should receive several IRS notices before the levy can take place, including a Notice of Intent to Levy. You have 30 days from the date of this notice to negotiate some other kind of payment arrangement.

If you are experiencing a financial hardship, you may be able to avoid the levy or have it released. For example, if Social Security is your only source of income, you may be able to request that your account be classified as currently not collectible. You could also be eligible for an Offer in Compromise, which would settle your tax debt once-and-for-all.

Installment agreements are another viable option. You can make monthly payments that fit your budget. If you comply with the terms of your payment plan, you can avoid a Social Security benefits levy and any other type of enforced collection action taken by the IRS.

Meet with a tax attorney to discuss how to resolve your tax issues and protect your Social Security benefits from an IRS levy.

Contact The Gartzman Law Firm to speak with an Atlanta tax attorney about your case. Request your consultation by calling (770) 939-7710.