Social Security garnishment is generally prohibited when it comes to creditors. But the U.S. Government is no ordinary creditor and has the full force of the IRS to perform levies against tax-delinquent debtors. So can the IRS garnish Social Security? Simply put, yes. The IRS is among the only agencies that can levy your Social Security money if you owe back taxes.
How Much Can the IRS Garnish?
Title II of the Social Security Act and Section 6331 of the IRS Code allows the IRS to perform manual levies on Social Security income or use the Federal Automated Payment Levy Program.
The IRS Code enables the IRS to levy Social Security disability (SSD) payments, retirement payments, and survivor payments. It does not, however, allow the IRS to garnish lump-sum death payments, children’s benefits, or Supplemental Security Income (SSI) payments.
Under the Federal Payment Levy Program, the IRS can garnish up to 15% of your Social Security payment. If you are being garnished manually, the Social Security Administration will set a minimum monthly allotment for you to take home and then take everything else. The minimum monthly payment changes each year. You may, however, qualify for other exemptions.
What Is the Social Security Garnishment Process?
Before the IRS begins garnishing your social security payments, they issue several letters informing you of the debt you owe to the U.S. government. If you owe money, the IRS will send a CP-14 form which states how much you owe and when it’s due. The IRS generally issues three more notices that escalate the situation. Finally, you will receive a CP-91 or CP-298 which informs you of the IRS’s intent to levy your Social Security benefits. They will give you 30 days from the issuance of the final notice to rectify the outstanding debt.
The SSA has no authority over this situation. It’s the IRS that you’ll need to deal with.
How Can You Release a Levy on Your Social Security Benefits?
How can you remedy the situation if your Social Security benefits are subject to levy by the IRS? You have a few options:
- Full repayment. Obviously, if you can pay the outstanding balance in full, you can have the levy lifted on your Social Security payments
- Pay in installments. Prior to or after the IRS has begun levying your Social Security payments, you can agree to repay the deficient balance in installments. Currently, you must owe less than $50,000 and be able to repay over the course of six years.
- Partial payment installment agreement (PPIA). PPIA allows those without the financial means to repay all of the debt to pay some of the debt monthly over a specific time period. The agreement allows some of the debt to expire. If you’re at the point where the IRS is threatening to garnish your Social Security payments and cannot afford to repay the entire debt in installments, a PPIA can save you a considerable amount of money. You will be required to disclose your financials to the IRS.
- Offer in compromise. An offer in compromise is similar to a PPIA, but instead of making monthly installments over the course of a few years, you make one lump-sum payment. Financial disclosure is required.
- Currently not collectible. If you are in dire financial straits and cannot afford to make payments to the IRS, the IRS will label your case as CNC (currently not collectible).
- Bankruptcy. Some tax debt is dischargeable in bankruptcy, but it must meet specific criteria. You should talk to a bankruptcy attorney before attempting to discharge tax debt this way.
- Innocent spouse relief. Sometimes spouses find themselves on the hook for tax debts incurred by their husband or wife. If that’s the case, you can apply for innocent spouse relief, but the requirements are strict.
How a Fairfax VA IRS Attorney Can Help
Can the IRS garnish Social Security? Yes, but there are ways to appeal a tax levy or otherwise reach an agreement with the IRS. Contact Sodowsky Law Firm, PC to learn more.