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Can the IRS Garnish Social Security Payments?

Can the IRS garnish Social Security payments? The IRS can garnish up to 15% of certain Social Security payments under the Federal Payment Levy Program (FPLP) to satisfy tax debt.

However, there are certain limits to how the Internal Revenue Service will garnish Social Security payments. And because garnishing your monthly Social Security benefits is only part of the IRS levy program, there may be:

  • Certain notifications that must be made before the Social Security garnishment begins
  • Alternatives to garnishing your Social Security benefits to pay back taxes
  • Certain parts of your Social Security that IRS levies do not apply to

This article will attempt to answer some of the most commonly asked questions about the IRS’ ability to garnish Social Security benefits.

How much of my Social Security payments can the IRS garnish?

As a general rule, the IRS can garnish up to 15% of your Social Security benefits to pay down an outstanding tax bill. However, there are certain Social Security benefits that are not subject to FPLP:

  • Lump sum death benefits
  • Children’s benefits
  • Supplemental Security Income (SSI) payments
  • Social Security Disability Insurance benefits (SSDI)

According to the IRS, FPLP also “excludes certain delinquent taxpayers who receive social security payments if their income falls at or below certain established levels, based on the Department of Health and Human Services poverty guidelines.”

Is all of my Social Security subject to garnishment?

If you do enough internet research, you might come across some references discussing a limit where your Social Security monthly payments cannot go below $750. That does not apply to unpaid taxes. Here’s why.

Two separate collection processes exist.

The federal government has several programs to help enforce collection actions.

One program is known as the Treasury Offset Program, which enables the collection of different federal benefits to pay down against certain federal debts. This would include things like:

Under the Treasury Offset Program, the federal government may garnish up to 15% of Social Security benefits (not including SSI benefits).

However, this only applies to federal nondebt tax. Your tax debt falls under the Federal Payment Levy Program, or FPLP.

FPLP is not subject to $750 limit.

Unlike the Treasury Offset Program, FPLP is not subject to the $750 monthly limitation, so your monthly benefit can dip below $750 to satisfy the tax levy. However, this program exists only to satisfy outstanding debt for federal taxes, not for any other program.

How does the IRS garnish my Social Security?

It’s important to note that garnishing Social Security income is not the only step in the collections process. When it comes to collecting back taxes, the Internal Revenue Code mandates certain notifications and other collection attempts before your Social Security is addressed.

Your Social Security check is not the first choice.

If the IRS can satisfy your tax debt without having to garnish your Social Security check, then it will do so. Some other collection actions the IRS may attempt to use include:

  • Offering a variety of options to pay in full
  • Repeated notification attempts in writing
  • Notice of federal income tax lien

The IRS may seize other assets or sources of income to pay your overdue taxes, such as:

  • Banking accounts
  • Investment accounts
  • Retirement accounts
  • Real estate and personal property
  • Federal payments, such as pensions

However, there is a collections process that must be followed.

The IRS can’t just take your check. There’s a collections process.

According to IRS Publication 594: The IRS Collection Process, the IRS will only start to levy, or seize, property, after the following have already happened:

  • The IRS assessed the tax and sent the taxpayer a bill
  • The taxpayer neglected or refused to pay the tax
  • The IRS sent a Final Notice of Intent to Levy AND Notice of Your Right to a Hearing at least 30 days before the seizure. The 30 day period may be disregarded in the following cases:
    • The collection of tax is in jeopardy
    • A levy is served to collect tax from a state tax refund
    • Levy is served to collect the tax debt of a federal contractor, or
    • A disqualified employment tax levy (DETL) is served

It’s important to note that the collections process can be suspended for several reasons, including:

  • The IRS is considering an installment agreement as part of a repayment plan, or offer in compromise
  • You’re living outside the United States for at least 6 months
  • The tax periods being collected on are included in a bankruptcy with a continued stay
  • You request a Collection Due Process hearing. Collection is suspended until the notice of determination is given or the tax court’s decision is final
  • You request innocent spouse relief

The good news is that there are ways that you can use to try and stop the IRS from taking your Social Security retirement income altogether.

How can I stop the IRS from garnishing my Social Security?

There are several options you may look into pursuing in order to preserve you Social Security benefits.

Payment in full

Perhaps this was a simple misunderstanding, or you don’t recall receiving the IRS notices about collections, your tax bill, or levies. If that’s the case, and you have the financial resources to pay your taxes (plus interest and penalties), then making a full payment is the IRS’ preferred option.

IRS Installment Agreement

Perhaps you agree with the tax bill, but you can’t pay it all at once.

Entering an installation agreement allows you to pay your taxes (plus interest and penalties) over a period of time. You can apply through the IRS website or by filing Form 9465-Installment Agreement Request.

It is important to note that there may be additional fees to set up the installment agreement, and there is no guarantee that the IRS will approve your request. However, while the installment agreement is still being processed, the IRS will stop collection activity.

Additionally, if the installment agreement is approved, then the IRS will not go after your Social Security payments as long as you remain in a current status.

Offer in Compromise

An offer in compromise allows a taxpayer to settle their tax bill for less than the full amount owed. An offer in compromise is something the IRS considers for taxpayers who cannot pay the full tax liability or when doing so creates a financial hardship.

In order to be considered for an offer in compromise, a taxpayer must:

  • Have filed all required tax returns
  • Made all estimated tax payments
  • Not be in a bankruptcy proceeding
  • Have submitted all federal tax deposits on behalf of employees (if self-employed with employees)

Currently Not Collectible

Currently Not Collectible status, also known as CNC status, is when the IRS decides to suspend collection activity for one of any number of reasons, including:

  • Inability to find taxpayer
  • Statute of limitations
  • Financial hardship

If a taxpayer requests that the IRS suspend collection activity due to financial hardship, the Internal Revenue Manual contains procedures that the IRS must follow in order to stop the collections process. This may include having the taxpayer complete Form 433-A: Collection Information Statement For Wage Earners and Self-Employed Individuals.

Innocent Spouse Relief

Innocent spouse relief is when the IRS does not hold a taxpayer accountable for taxes, penalties, or interest based upon a spouse, or former spouse, who may have improperly reported or omitted items on a tax return, causing an underpayment.

To request innocent spouse relief, you must complete IRS Form 8857, Request for Innocent Spouse Relief.

Appeals process

If you do not agree with the assessed tax, you always have the right to appeal through the IRS Office Of Appeals. The Office of Appeals is a separate and independent from the Office of Enforcement and Collections.

If you are considering an appeal, you may find more information about your appeal rights and the appeals process on the IRS website.

Taxpayer Advocate Service

The Taxpayer Advocate Service is an independent organization within the IRS that works solely for the taxpayer. According to their website, the taxpayer advocates can help taxpayers who have tax problems they cannot resolve on their own.

Conclusion

To summarize, the IRS can garnish Social Security payments in order to satisfy tax debt. However, their ability to do so is limited, and there are certain entitlements, such as Social Security disability benefits, that the IRS will not garnish.

If you liked this article, and would like to learn more about other tax planning topics, check out our tax planning archives! If you’d like to learn more about Social Security topics, you can read more articles in our Social Security section.