Can the IRS Levy Social Security Benefits?
While the IRS can collect unpaid taxes from Social Security, specific regulations and taxpayer rights apply. Learn how the process works and your available options.
The Internal Revenue Service (IRS) can collect delinquent federal taxes by levying Social Security benefits. While many federal payments are shielded from private creditors, specific laws grant the IRS the ability to seize a portion of these benefits to satisfy a tax debt. This process is not immediate and is preceded by a series of required notifications before any collection action begins.
The Scope of an IRS Levy on Social Security
The IRS uses the Federal Payment Levy Program (FPLP) to collect unpaid taxes from federal payments. This automated system allows the IRS to continuously take a portion of a taxpayer’s benefits until the tax debt is paid. Federal law authorizes the IRS to levy these federal payments, including certain types of Social Security.
Through the FPLP, the IRS can take a flat 15% of the gross monthly Social Security payment. This continuous levy applies to Social Security retirement and survivor benefits. The 15% is taken from the total benefit amount before any deductions, such as for Medicare premiums.
A distinction exists for other Social Security payments. Social Security Disability Insurance (SSDI) benefits are not subject to the automated 15% FPLP levy, but the IRS can still seize these payments through a manual levy not limited to the 15% rate. In contrast, Supplemental Security Income (SSI) payments are entirely exempt from IRS levy because it is a needs-based program. Benefits paid to children and lump-sum death benefits are also protected from levy.
The IRS Levy Notification Process
An IRS levy on Social Security benefits does not occur without warning. The process involves a sequence of official notices sent to the taxpayer’s last known address. This notification period provides an opportunity for the taxpayer to address the debt before their benefits are affected.
The process begins after a tax debt has been assessed, when a return is filed with a balance due or if the IRS files a Substitute for Return. The first communication is a notice and demand for payment, such as a CP14 notice, which states the amount of tax owed. If this bill is not resolved, the IRS will send a series of reminder notices.
The final communication in this sequence is the Final Notice of Intent to Levy and Notice of Your Right to a Hearing, often sent as Letter 1058 or LT11. This document warns that the IRS intends to seize property, including federal payments. It also informs the taxpayer of their right to request a Collection Due Process (CDP) hearing within 30 days from the date on the notice.
Options for Resolving the Tax Debt
A taxpayer can prevent or stop a levy on their Social Security benefits by proactively resolving the underlying tax liability with the IRS. Entering into a formal agreement with the IRS will halt the collection process. Several resolution options are available for different financial circumstances.
One common path is an Installment Agreement, which allows the taxpayer to make monthly payments over time until the debt is paid in full. This formal payment plan, once approved, removes the taxpayer from active levy programs like the FPLP. The terms of the agreement are based on the taxpayer’s ability to pay and the total amount owed.
An Offer in Compromise (OIC) is an agreement that allows a qualifying taxpayer to settle their tax debt for less than the full amount owed. An OIC is considered when the taxpayer’s income and assets are insufficient to pay the full liability. The IRS evaluates an OIC based on a formula that considers ability to pay, income, expenses, and asset equity.
For individuals experiencing severe economic hardship, a Currently Not Collectible (CNC) status may be an option. This does not forgive the debt but temporarily suspends collection actions, including levies. The IRS may grant CNC status if the taxpayer can demonstrate that paying the debt would prevent them from affording basic living expenses. The IRS will periodically review the taxpayer’s financial situation to determine if their ability to pay has changed.
How to Request a Levy Release
Once a taxpayer has entered into a resolution with the IRS, such as an Installment Agreement or an approved Offer in Compromise, the levy on their Social Security benefits will not be released automatically. The taxpayer must take specific steps to ensure the collection action is stopped. The request for a levy release must be directed to the IRS, not the Social Security Administration.
The most direct way to request a release is to call the IRS phone number provided on the levy notice. When making the call, the taxpayer should have their Social Security number and any correspondence related to their approved resolution readily available. This documentation serves as proof that an agreement is in place to resolve the tax debt.
Upon verifying the approved resolution, the IRS agent can initiate the process to release the levy. The IRS will then send a formal release notice to the Bureau of the Fiscal Service, the agency responsible for disbursing federal payments. This action instructs the Bureau to cease the deduction from future Social Security benefit payments.