If you are a delinquent taxpayer owing money to the IRS, the agency can seize some of your assets, including taking money directly from your social security benefits. The IRS leverages the Federal Payment Levy Program (FPLP) to take 15 percent of your social security benefits payments to satisfy the tax debt, regardless of the amount of money you are left with.
What Is the Federal Payment Levy Program?
The Federal Payment Levy Program (FPLP) is a U.S. Department of the Treasury program that mandates the IRS to collect delinquent federal tax debt. The program places an ongoing levy on eligible federal payments to taxpayers who have failed or refused to pay their taxes.
Are There Scenarios Where Social Security Benefits Are Excluded?
There are scenarios where the IRS may not collect a delinquent taxpayer’s social security benefits. Some of the exceptions where the Federal Payment Levy Program may not apply include:
- The SSA Disability Insurance Benefits from their FPLP program
- Certain taxpayers with low incomes deemed to be below the poverty guideline
- Lump-sum death benefits and benefits paid to the children
- Payments with partial withholding to repay a social security debt
- The supplemental security income payments
How Much of My Monthly Social Security Benefits Can the IRS Take?
As mentioned earlier, the IRS typically takes 15 percent of your social security benefits payments. Losing a portion of your social security check can result in larger financial problems, especially if you depend solely on your social security benefits check for income.
Will the IRS Contact Me Before Taking Money from My Social Security Income?
Before the IRS moves to garnish your social security benefits, they will first send you a notice that indicates your tax balance due and the need to pay off your tax debt to avoid social security garnishment. This notice also indicates your right to appeal if you had not been issued a notice before. If you fail to respond, the IRS sends an additional notice, CP 91 or CP 298, Final Notice Before Levy on Social Security Benefits, that explains your social security benefits might be levied.
How Much Time Do I Have to Settle My Tax Debt Before the IRS Begins to Levy My Social Security Benefits?
You have 30 days from the date of receiving CP91 or CP 298 notice to make arrangements to pay your tax debt. As soon as the deadline lapses, the IRS will begin to deduct 15 percent from your monthly benefit regardless of whether or not the remaining benefit sent to you is less than $750.
How Can I Settle My Tax Debt Before an IRS Social Security Levy?
Before or once you receive the final notice from IRS that they will levy your social security benefits, act fast to stop the levies from being imposed on your social security income. Some of the available tax relief options include:
- Pay Your Full Tax Debt: You can use your savings or liquidate assets and pay off your full tax debt in a single payment.
- Get on an IRS Payment Plan (Installment Agreement): Arrange a payment plan with the IRS that allows you to pay off your tax debt in smaller monthly payments over time (usually 72 or 84 months).
- Submit an Offer in Compromise (OIC): Submit an offer to the IRS to settle your tax debt for less than the full amount and stop the levy of your social security benefits. The IRS can approve your Offer in Compromise if the settlement amount offered is the most the agency can expect to collect.
- Request Hardship Status: You can also request “Currently Not Collectible (CNC)” if you’re unable to make any tax payments due to your current financial struggles.
How Can Wiztax Help?
If you owe taxes this year and/or for previous year(s) and you’re unable to pay off your full tax debt, Wiztax will help you solve your tax issue. We provide an all-inclusive Wiztax Solution Plan that includes all-inclusive pricing with no hidden fees, 100% Satisfaction Guarantee, Offer in Compromise, Hardship Status, IRS Payment Plans, IRS Notices Support, Audit Protection, and more. Call us today at (866) 568-4593 to learn more, or start here.
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