Key Terms

Federal Payment Levy Program

A levy is a legal seizure of your property to satisfy a tax debt. Taxpayers with outstanding tax debts are subject to a levy on income and assets.

If you are subject to the levy, you will receive a notice from the IRS. If you do not pay the tax or contact the IRS within 30 days of the date of the notice, the IRS is allowed to levy on your income, assets and Social Security.

Once a levy is in place, the IRS may withhold monies from the federal payments you receive. This levy may continue until the entire amount of your federal tax debt is repaid or other payment arrangements are made, or the debt becomes unenforceable by law.


What is a levy on Social Security benefits?

All taxpayers with outstanding tax debts are subject to a levy on assets and income sources, including Social Security benefits. There are two ways the IRS may levy upon your Social Security benefits:

  • Automated Federal Payment Levy Program (FPLP) – The IRS is able to levy up to 15 percent of your Social Security benefits each month.
  • Manual (non-FPLP) levy – There is no restriction to how much the IRS can take from manual levies, however they take into account money for reasonable living expenses.

IRS levies on Social Security payments may include: retirement payments, survivor payments or disability insurance program payments.

IRS levies on Social Security payments will not include: children’s benefits, supplemental security income payments or lump sum death benefits.

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Is there financial relief if you are subject to a levy?

First, determine if you owe the tax. If you do owe the tax, there may be options that can provide financial relief, including:

  • Audit Reconsideration – You may not have responded to an earlier IRS notice and the IRS may have assessed the liability based on certain assumptions. You may be able to ask the IRS to reconsider the assessment.
  • Innocent Spouse Relief – Generally, both you and your spouse are each responsible for paying the full amount of any tax, interest and penalties due on your joint return. However, you may be relieved of those amounts if your spouse (or former spouse) incorrectly included you on the joint return.

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What if I cannot pay the amount I owe?

Call the IRS immediately if you cannot pay all or part of the tax you owe. If the IRS determines that you cannot pay due to an economic hardship, the IRS may temporarily delay collection.

You may also want to consider entering into an agreement with the IRS to find collection alternatives to repay your debt. You can also request to be classified as currently not collectible, the IRS has determined you cannot afford to pay the debt at this time, however the debt does not go away and penalties and interest will continue to be added to the debt.

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What if I am the guardian or conservator for a taxpayer?

If you are a guardian or conservator, you will need a Power of Attorney before the IRS can work with you or make any payment arrangements. A Power of Attorney can be obtained by completing Form 2848, Power of Attorney and Declaration of Representative. If the taxpayer is incapacitated, you should still complete a Form 2848 as well as attach legal documentation that allows you to act on the taxpayer’s behalf.

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When the IRS placed a levy on a taxpayer’s Social Security income and U.S. Government Pension, the taxpayer was forced to borrow money from family and friends to meet basic living expenses. The IRS insisted the taxpayer owed employment taxes. Find out how TAS helped this taxpayer in need.
 

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