IRS levies on Social Security benefits - enforced collection on those who can least afford it

Posted on September 15, 2008
Filed Under IRS Collection Problems, IRS Levies |

I have seen an increase in calls to my office from retirees who have received an IRS levy on their Social Security benefits.  In most every case, the levy (1) relates to conduct from self-employment when they were younger, and that conduct has long ago ended and (2) creates a substantial hardship for the retiree, who needs the levied money for to pay for prescriptions, food, utilities and rent.  

The IRS is authorized to levy on Social Security benefits under section 6331(h) of the Internal Revenue Code.  These levies are continuous and take 15% of Social Security benefit, a real hardship to those on a fixed budget.  

The IRS makes the levy by matching its records against those of the government’s Financial Management Service.  Once a match is made, the IRS will send a Final Notice Before Levy on Social Security Benefits (CP 91).  If no action is taken within 30 days as to the notice (i.e, collection appeal), the IRS electronically transmits the levy to FMS for a reduction in the benefit.    

The IRS had previously used a income filter to systemically exclude those with income below a specified threshold.  The Government Accountability Office (GAO) found the filter flawed, and in 2006 the IRS eliminated it.   

The IRS Taxpayer Advocate reports what I have seen:  Their case intake from the Federal Levy Program, which includes Social Security benefits, increased from 525 cases in fiscal year 2004 to nearly 3,500 cases in fiscal year 2007.  

Comments

4 Responses to “IRS levies on Social Security benefits - enforced collection on those who can least afford it”

  1. Matt J. Hietala EA LLC on September 18th, 2008 11:04 pm

    I dont believe the IRS differentiates whether the SS benefit is a widow/wodower, disability, or retirement payment. Supplemental (SSI) I believe is exempt.

    If you receive Social Security, or federal retirement/survivor benefits, you cant hide no matter where you go.

    Howard- thanks for the info

    Matt

  2. howardlevy on September 19th, 2008 8:48 am

    There is no differentiation on who is levied, although there should be in these situations of such vulnerability.

    Supplemental is exempt, you are correct.

    Howard

  3. Matt J. Hietala EA LLC on September 21st, 2008 5:43 pm

    Howard- I have a client who is a dual citizen of US/Canada who has inquired as to whether the IRS can enforce a levy if he has moved to Canada owing a bunch to the IRS. Would your answer be different if a US citizen TP moved to countries other than Canada. I do know that the statute for collection is extended for absences in excess of 6 months out of the country.

    Matt

  4. Peggy on December 19th, 2008 11:10 pm

    The IRS takes 209 a month from me. I cannot even live like a human. I’ve tried the tax advocates , the low income tax law students they took my stimulus check and to date several thousand dollars.
    Will it ever end? I have PTSD and this is really pushing me over the edge.
    Please Help

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