Can the IRS Take Your Social Security Check?
Understand if the IRS can levy your Social Security benefits, what limits apply, and how to protect your payments from tax debt.
The Internal Revenue Service (IRS) is the federal agency responsible for collecting taxes and enforcing tax laws. When taxpayers fail to meet their obligations, the IRS employs various collection methods to recover outstanding tax debts. This includes the potential to levy federal payments, a concern for many individuals who rely on Social Security benefits. Understanding the circumstances under which the IRS can take a portion of these benefits to satisfy a tax liability is important.
IRS Authority to Levy Social Security Benefits
The IRS possesses legal authority to seize property and rights to property to satisfy unpaid tax liabilities, as outlined in 26 U.S. Code Section 6331. This authority extends to certain federal payments, including Social Security benefits, to ensure the collection of delinquent taxes. This collection action is known as a levy, which differs from a lien as it represents the actual taking of property rather than just a claim against it.
The primary mechanism for the IRS to levy Social Security benefits is the Federal Payment Levy Program (FPLP). This program allows the IRS to intercept federal payments, including Social Security, to satisfy overdue tax debts. The FPLP operates by matching delinquent taxpayer records with federal payment records, facilitating automated levies.
Before the IRS can initiate a levy on Social Security benefits, it must adhere to specific procedural requirements. The taxpayer must have an outstanding and overdue tax liability, meaning the tax has been assessed and a notice and demand for payment remains unsatisfied. The IRS must then issue a Notice of Intent to Levy, informing the taxpayer of the impending action and their right to a hearing. This final notice provides a 30-day window for the taxpayer to respond or make arrangements before the levy commences.
Understanding Levy Limitations and Exemptions
While the IRS can levy Social Security benefits, there are specific limitations on the amount that can be taken. For most automatic levies through the Federal Payment Levy Program (FPLP), the IRS can only levy up to 15% of the monthly benefit. This 15% cap applies to Social Security retirement benefits and adult survivor benefits. The levy continues until the tax debt, including interest and penalties, is fully paid.
Certain types of Social Security benefits are exempt from FPLP levies. Supplemental Security Income (SSI) payments, which are needs-based, are fully protected from levy. Lump-sum death benefits and survivor benefits paid to children are also exempt from FPLP collection actions. While Social Security Disability Insurance (SSDI) benefits were previously subject to FPLP, the IRS ceased systemically levying them through this program; however, old age and survivors benefits remain subject to the 15% levy.
The IRS may consider financial hardship when determining levy actions. If a levy would cause significant economic hardship by preventing an individual from meeting basic, reasonable living expenses, the IRS may reduce or suspend the levy. This requires the taxpayer to provide detailed financial information to demonstrate their inability to pay without undue hardship. This is not an automatic exemption, and the IRS will review each case individually.
Resolving Tax Debt and Preventing Levy
Proactive engagement with the IRS is important for taxpayers facing outstanding tax debts to prevent or stop a levy on their Social Security benefits. Ignoring IRS notices can lead to enforced collection actions, including levies. Upon receiving a notice of an outstanding tax liability, taxpayers should promptly contact the IRS to explore resolution options.
One common resolution option is an Installment Agreement, which allows taxpayers to make monthly payments over an extended period. Entering into an installment agreement can prevent or stop a levy, though interest and penalties continue to accrue until the debt is paid. Taxpayers owing $50,000 or less in combined tax, penalties, and interest may qualify for a streamlined installment agreement.
Another option for taxpayers facing significant financial difficulty is an Offer in Compromise (OIC). An OIC allows certain taxpayers to settle their tax debt for a lower amount than what they owe if they can demonstrate they cannot pay their full liability. The IRS considers the taxpayer’s ability to pay, income, expenses, and asset equity when evaluating an OIC.
For taxpayers experiencing severe financial hardship, the IRS may grant Currently Not Collectible (CNC) status. This status temporarily halts collection efforts, including levies, if the IRS determines that the taxpayer cannot pay their tax debt while meeting basic living expenses. While in CNC status, interest and penalties still accumulate, and the IRS may periodically review the taxpayer’s financial situation. Seeking assistance from a qualified tax professional can help navigate these processes and ensure the best possible outcome.