Being a tax defaulter is not a choice. However, many tax defaulters worry if their creditors can garnish their social security. Luckily, the U.S law prohibits creditors from garnishing the social security of people who owe them money. Having said that, there is one creditor that is exempt from this law and can garnish your social security. It’s the U.S government.
The U.S government has a team of IRS who are tasked with handling tax-delinquent debtors. They are also entitled to social security garnishment if you owe taxes and interest to the state. If you are facing an IRS inquiry, you must consider hiring a professional tax law firm Virginia Beach.
In this blog, we will discuss all the essential aspects concerning Social Security Garnishment.
How Much Can the IRS Garnish?
According to title II of the Social Security Act and IRS Code 6331, the IRS is permitted to undertake manual levies on social security income. The Federal Automated Payment Levy Program further authorizes the IRS to levy on certain payments spent by the Bureau of Fiscal Service.
The IRS 6331 code allows the levy of SSD payments, survivor payments, and retirement payments. Additionally, the code prohibits the IRS from taking out the lump-sum amount from Supplemental Security Income payments, children’s benefits, and death payments.
The FPVP only allows the IRS to take out up to 15% of the defaulter’s social security payment. In case of manual Social Security Garnishment, the Social Security Administration will set a minimum monthly payout for the defaulter and transfer the rest to the IRS. Since there are various methods to pay the IRS, one must consult a certified IRS lawyer Virginia Beach to explore more options.
What Is the Social Security Garnishment Process?
The IRS issues letters to the tax-defaulter informing them of the taxes they owe to the government before taking any actions. The IRS will send a CP-14 form containing detailed information on how much money you owe to the government and when the last day is to make the payment. Before taking further action, the IRS allows a three-month notice period to the person. After the end of the three-month notice-period, the IRS sends a CP-91 or CP-298 form. The CP-91 and CP-298 are formal notices informing you of their intention to levy your Social Security payments. Once you have received the legal notice, you will have 30 days to pay off your outstanding taxes and levies.
Once the matter has escalated, speaking to the Social Security Administration will not help you with the situation. You must contact the IRS.
How Can You Release a Levy on Your Social Security Benefits?
If your Social Security benefits are subjected to IRS levies, there are a few options to remedy the situation.
If you are in a position to pay the debt in full and settle the case, the IRS will lift the levy on your SS benefits. However, if you cannot settle the debts in one go, you can opt for an installment program. To be eligible for the program, your state debt should be less than $50,000 and capable of repaying the debt within six years.