If you owe money to the IRS and are receiving Social Security benefits due to federal old age and survivors trust fund or disability insurance benefits the IRS can take up to 15% of your Social Security payments in order to satisfy your debt. Prior to 1996, it was required that $750/month had to be left for the social security recipient. On the bright side, benefit payments such as lump sum death benefits and benefits paid to children are not eligible.
Furthermore, supplemental security income (SSI) payments under Title XVI as well as payments with partial withholding to repay a debt owed to social security will not be levied through the Federal Payment Levy Program.
How do you know if your Social Security is about to be tapped by the IRS?
The IRS is required to send you a form that states, “Final Notice – Notice of Intent to Levy and Notice of your right to a hearing”. At this point you will have 30 days to respond.
After receiving your final notice letter, you can:
- Pay the tax
- Negotiate an alternate payment method
- Be declared non-collectible (hardship) status
- File for an appeal
- Ignore the warning and do nothing
If you decide to ignore the warning and do nothing, after 30 days the IRS will submit your levy to the Financial Management Service (FMS) and 15% of your social security will begin to be taken to satisfy your tax debt, and the levy will remain until the tax is either paid off or you have made other arrangements.
If you are counting on social security benefits to stay afloat, you can’t afford for the IRS to take 15% of your money. Depending on your circumstances, you may qualify for an “Offer-in-Compromise”, allowing you to pay significantly less than what you owe to the IRS.
You do not need to deal with your problems alone. If you need help, call our office and set up your free consultation today.