Key Takeaways:
- The IRS can legally garnish up to 15% of your monthly Social Security retirement or disability benefits through the Federal Payment Levy Program (FPLP).
- Supplemental Security Income (SSI) is completely exempt from IRS levy, regardless of how much you owe in back taxes.
- Before garnishing your benefits, the IRS must send you a notice and give you the opportunity to request a Collection Due Process (CDP) hearing to dispute or resolve the debt.
- You can stop or avoid a levy by setting up a payment plan, applying for Currently Not Collectible (CNC) status, or submitting an Offer in Compromise if you qualify.
- The IRS generally has 10 years to collect a tax debt, after which they lose the legal authority to levy your Social Security.
- Senior citizens and low-income earners may qualify for hardship relief, and working with a tax professional can help protect your benefits and resolve tax issues more effectively.
Social Security benefits provide a crucial lifeline to millions of Americans, particularly retirees, disabled individuals, and others who rely on these payments for their basic needs. But when you have unpaid taxes, many beneficiaries fear that the IRS could step in and take a portion of their much-needed Social Security payments. It’s an unsettling thought, but it raises an important question: can the IRS take your Social Security? The answer, unfortunately, is yes, but it’s not as simple as it might seem. Here’s an overview of the IRS’s authority to garnish Social Security benefits, limits, protections, and ways to resolve tax liabilities without losing a significant chunk of your income.
How the IRS Can Access Your Social Security Payments
When taxpayers owe back taxes and don’t resolve them, the IRS can pursue collection through various means, including levies. Levies are legal seizures of your property or income to satisfy taxes owed. One powerful tool the IRS uses is the Federal Payment Levy Program (FPLP), which allows the IRS to directly levy certain federal payments, including Social Security benefits.
Which Social Security Benefits Can Be Levied?
The IRS can levy Social Security retirement benefits and Social Security Disability Insurance (SSDI) benefits under this program. These payments are based on your work history and the Social Security taxes you and your employers have paid.
On the other hand, Supplemental Security Income (SSI) is completely exempt from IRS levy. SSI is a need-based program funded by general tax revenues instead of Social Security taxes. That said, they are designed for low-income disabled or elderly individuals. The IRS cannot touch SSI payments regardless of your tax liability.
How Much Can the IRS Levy?
The IRS can only levy a portion of your Social Security retirement or disability benefits. Under the FPLP, the IRS can take up to 15% of your monthly Social Security benefits.
For example, if you receive $1,500 per month in Social Security, the IRS could levy up to $225 each month to satisfy your tax liability. The remaining 85% stays with you. This 15% cap is important because it protects you from losing your entire benefit, which many retirees and disabled individuals rely on for daily living expenses. Still, losing any portion of your income can be a serious financial strain.
Protections in Place for Beneficiaries
While the IRS has the power to levy Social Security benefits, there are several protections in place for beneficiaries.
- SSI Payments Are Exempt: If you receive only Supplemental Security Income (SSI), the IRS cannot levy any of those benefits for tax bills.
- Notice and Hearing Rights: Before the IRS levies your benefits, they must send you a Notice of Intent to Levy and provide an opportunity to request a Collection Due Process (CDP) hearing. This hearing lets you dispute the amount, challenge the levy, or propose alternatives like installment agreements.
- Collection Statute Expiration Date (CSED): The IRS generally has 10 years to collect any taxes owed. After this period, they lose the legal authority to collect, including levying Social Security benefits.
- Other Sources Can Be Levied: Even if only 15% of Social Security benefits can be levied, the IRS can also levy other assets such as wages, bank accounts, or retirement accounts, which can compound financial difficulties.
- Hardship Considerations: If paying your tax balance creates undue hardship, you may qualify for relief options (covered below) that can stop or reduce levies.
What Happens if You’re Facing an IRS Levy on Social Security?
Getting notified of an IRS levy on your Social Security benefits can be stressful, but you do have rights and options. Once the IRS issues a levy, they send your Social Security Administration (SSA) a levy notice. The SSA then withholds the levied amount from your monthly benefit and sends it directly to the IRS. Because Social Security is often the primary income source for many, this levy can feel devastating, but you don’t have to accept it without a fight.
Steps to Take If You Face an IRS Levy on Social Security
Respond to IRS Notices
Ignoring IRS notices can lead to serious consequences. If you’ve received a notice of intent to levy, this is a warning that the IRS is preparing to take action. You have 30 days from the date of the final notice to request a CDP hearing, which can stop the levy process temporarily while you dispute the debt or seek a resolution.
Consider an Offer in Compromise (OIC)
If you cannot pay your tax debt in full, you may qualify for an Offer in Compromise, where the IRS agrees to settle your tax debt for less than the full amount owed. However, this process requires demonstrating financial hardship or an inability to pay the full debt within a reasonable time.
Set Up an Installment Agreement
If you can afford to pay your debt in installments, entering into a payment plan with the IRS can help you avoid a levy. By agreeing to a payment arrangement, the IRS will generally stop collection efforts, including garnishment of your Social Security benefits.
Request “Currently Not Collectible” (CNC) Status
If your income is very low and paying the tax debt would create a severe financial hardship, you can request CNC status. While this doesn’t erase the debt, it temporarily stops the IRS from collecting it, including preventing a levy on your Social Security payments.
Seek Professional Help
Tax laws and IRS procedures can be complicated. Consulting a qualified tax professional or tax attorney can help you understand your options and negotiate with the IRS on your behalf.
Preventing a Levy on Social Security
To avoid the stress and financial hardship of IRS levies, proactive steps are essential:
- File Taxes Timely: Always file your tax returns on time to avoid penalties and interest.
- Pay Taxes or Arrange Payment Plans: If you owe taxes but cannot pay in full, set up a payment plan early. The IRS prefers repayment arrangements over levies.
- Communicate with the IRS: Respond promptly to IRS notices and explore options such as OIC or CNC.
- Maintain Records of Income and Expenses: This can help demonstrate hardship if needed.
- Consider Professional Advice: Tax professionals can negotiate with the IRS and help you avoid levy actions.
What About State Tax Agencies?
It’s worth noting that state tax authorities generally cannot levy federal Social Security benefits under the FPLP, but some states have their own rules for garnishing state tax debts. If you owe state taxes, check your state’s tax agency policies.
Frequently Asked Questions
Q: How much can the IRS take from your Social Security?
The IRS can take up to 15% of your monthly Social Security retirement or disability benefits through the Federal Payment Levy Program. However, Supplemental Security Income (SSI) is completely exempt from IRS garnishment.
Q: Can the IRS go after your Social Security benefits?
Yes, the IRS can legally garnish Social Security retirement and disability benefits to collect unpaid taxes. This is done through a program called the Federal Payment Levy Program (FPLP).
Q: How do I stop the IRS from garnishing my Social Security?
You can stop the IRS from garnishing your Social Security by setting up a payment plan, requesting Currently Not Collectible (CNC) status, or applying for an Offer in Compromise. Responding to IRS notices and requesting a Collection Due Process (CDP) hearing can also pause or prevent a levy.
Q: Does the IRS go after senior citizens?
Yes, the IRS can pursue tax collection from senior citizens, including by levying Social Security benefits. However, they must follow legal procedures and offer hardship relief options if the taxpayer is unable to pay.
Q: Can the IRS freeze my Social Security?
The IRS cannot freeze your entire Social Security check, but it can automatically deduct up to 15% each month if you owe back taxes. SSI payments are protected and cannot be frozen or garnished by the IRS.
Tax Help for Those with Social Security Benefits
The IRS does have the authority under federal law to levy up to 15% of your Social Security retirement or disability benefits to collect unpaid taxes, but Supplemental Security Income (SSI) benefits are fully protected and exempt from levy. The IRS must provide notice and offer an opportunity to dispute before levying. Importantly, there are protections and options to prevent or stop levies, such as payment plans, Offers in Compromise, or Currently Not Collectible status. Acting early and communicating with the IRS can help you protect the bulk of your Social Security income. If you’re worried about IRS levies, consult a tax professional who can help you navigate these rules and negotiate solutions that minimize financial harm. Optima Tax Relief is the nation’s leading tax resolution firm with over $3 billion in resolved tax liabilities.
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