IRS Tax Levy – How To Protect Social Security Benefits

The Federal Payment Levy Program (FPLP) allows for certain Social Security (SS) benefits to be subject to an IRS tax levy. In fact, all benefits described in the Social Security Act, Title II, may be levied, which includes, Survivors, Disability Insurance, and Federal Old-Age Benefits. To pay a tax liability, a 15% IRS tax levy may be assessed on any or all of these payments.

The FPLP is not restricted by the amount of SS Benefits an individual is left with, after taxation. This is due to the fact that the FPLP secures payment on tax liability, which is different from the stipulations of the 1996 Debt Collection Improvement Act, which holds $750 of any individual’s benefits as off-limits to satisfy debts, excluding tax debts. Because a Federal tax levy of this nature satisfies a tax debt, some individuals may be left with less than $750 per month.

The good news is, the FPLP excludes a number of Social Security Benefits, as well, such as those paid to children and lump sum death benefits, as well as those for taxpayers who were age 101 at the turn of the millennium. In addition, Supplemental Security Income payments and those with certain withholdings for SS debts are out of the FPLP’s danger, as well.

Prior to placing a levy on SS benefits, the IRS will send a number of notices, informing the taxpayer of the forthcoming levy and rights to appeal. One among these is the Final Notice of Intent to Levy. Afterward, if the taxpayer takes no action, then an additional notice, Final Notice Before Levy on SS Benefits, will be sent. 30 days after the date on the latter notice, a 15% levy will be placed on the taxpayer’s Social Security Benefits.