Monday, April 11, 2011

IRS Levy -- Social Security -- Disability (SSDI) -- Title II Disability Benefits -- Federal Payment Levy Program


SOCIAL SECURITY - DISABILITY (SSDI)
The IRS
and 
YOU



QUESTION: Is it possible for the IRS to take some of my Social Security or Social Security Disablity (SSDI) benefit check if I owe a delinquent tax debt?

Yes, this is possible – but only with title II disability benefits.  The SSI program does not permit a levy or garnishment, attachment against payments for any reason since the assumption is that persons on SSI have very little income or resources.  Effective 7/1/89, the Taxpayer's Bill of Rights (P.L. 100-647) specifically prohibits IRS levies against SSI payments.

In the title II program, the IRS may take a portion of your monthly Social Security benefit payment to recover delinquent taxes.  IRC Section 6331 states that individuals and businesses with delinquent tax liabilities may be subject to a continuous 15% levy against funds owed them by the federal government (including SSA benefits) beginning in July 2000. To do this, the IRS has to file something called a “Notice of Levy” with the Social Security Administration (SSA).

A Notice of Levy is continuous until the IRS tells SSA to stop levying. In processing a levy, SSA is merely acting to assist IRS in its duty to collect delinquent taxes. Except for seeing that the process in requirements are met, SSA has neither the authority nor obligation to question the correctness of an IRS levy.

If an IRS levy is received for an individual who is receiving benefits on behalf of someone else as a representative payee, it will be returned to the IRS.  SSA can only levy an individual’s own benefits.

A taxpayer whose title II disability (SSDI) payments are subject to levy may contact the IRS to resolve the issue by paying the tax bill, entering into an installment agreement or proposing an offer in compromise to settle your back tax debt. For more information about SSA’s role in processing IRS levies, refer to POMS GN 02410.100 - Internal Revenue Service (IRS) Levy.


Through the Federal Payment Levy Program (FPLP), Social Security benefit payments outlined in Title II of the Social Security Act, Federal Old-Age, Survivors, and Disability Insurance Benefits, are subject to the 15-percent levy (15%), to pay your delinquent tax debt.

However, benefit payments, such as lump sum death benefits and benefits paid to children, are not included in the FPLP. Additionally, Supplemental Security Income (SSI) payments, under Title XVI, and payments with partial withholding to repay a debt owed to Social Security are not levied through the FPLP.  Beginning February 2011, the FPLP may exclude certain delinquent taxpayers who receive social security payments if their income falls at or below certain established levels, based on the Department of Health and Human Services poverty guidelines.

Before your Social Security benefits are included in the FPLP, the IRS will send you a final notice of their intent to levy, with appeal rights, if one has not already been issued. If you have already received this notice, the IRS will send you an additional notice CP 91 or CP 298 (Final Notice Before Levy on Social Security Benefits), explaining that your Social Security benefits may be levied.

You have 30 days from the date of this notice to make arrangements to pay your tax debt before the IRS begins deducting 15 percent from your monthly benefit.

Because the FPLP is used to satisfy tax debts, the IRS may levy your Social Security benefits regardless of the amount. This is different from the 1996 Debt Collection Improvement Act which states that the first $750 of monthly Social Security benefits is off limits to satisfy non-tax debts. Fifteen percent of the Social Security benefit will be levied through the FPLP regardless of whether or not the remaining benefit sent to you is less than $750.



You Do Not Have to Suffer With an IRS Levy


Flat Fee Tax Relief will have your IRS Levy removed in 1 day/24 hours. Because you are receiving Social Security benefits, you may lose some money to one more benefit check due to the processing of the levy release. The Levy release must go from the IRS to the Social Security Administration and the Levy may capture money from 1 more check depending on the day in the month that the Levy release was obtained.






You Have a Limited Income

You Should be Looking to Settle with the IRS 

Offer in Compromise

Get a Fresh Start

An Offer in Compromise (OIC) is an agreement between a taxpayer and the Internal Revenue Service that settles the taxpayer’s tax liabilities for less than the full amount owed. Absent special circumstances, an offer will not be accepted if the IRS believes that the liability can be paid in full as a lump sum.

If you have little or no equity in a home or property, and your income is limited, you really need to look at an IRS settlement through the Offer in Compromise program.


Get Rid of Your IRS Back Tax Debt


The IRS may accept an Offer in Compromise based on three grounds:

1. Doubt as to Collectibility - Doubt exists that the taxpayer could ever pay the full amount of tax liability owed within the remainder of the statutory period for collection.
Example: A taxpayer owes $20,000 for unpaid tax liabilities and agrees that the tax she owes is correct. The taxpayer’s  monthly income does not meet his or her necessary living expenses. He or she does not own any real property (or has little or no equity) and does not have the ability to fully pay the liability now or through monthly installment payments.

2. Doubt as to Liability - A legitimate doubt exists that the assessed tax liability is correct. Possible reasons to submit a doubt as to liability offer include: (1) the examiner made a mistake interpreting the law, (2) the examiner failed to consider the taxpayer’s evidence or (3) the taxpayer has new evidence.

3. Effective Tax Administration - There is no doubt that the tax is correct and there is potential to collect the full amount of the tax owed, but an exceptional circumstance exists that would allow the IRS to consider an OIC. To be eligible for compromise on this basis, a taxpayer must demonstrate that the collection of the tax would create an economic hardship or would be unfair and inequitable.


An Offer in Compromise Can be Paid in Installments

In general, you, the taxpayer, must submit a $150.00 application fee and initial payment along with the IRS Form 656, Offer in Compromise.  Taxpayers may choose to pay their Offer in Compromise (OIC) in one of three payment options:

1. Lump Sum Cash Offer - Payable in non-refundable installments, your Offer in Compromise amount must be paid in five or fewer installments upon written notice of acceptance.  A non-refundable payment of 20 percent of the offer amount along with the $150 application fee is due upon filing the Form 656. 

If your Offer in Compromise will be paid in 5 or fewer installments in 5 months or less, the offer amount must include the realizable value of assets plus the amount that could be collected over 48 months of payments or the time remaining on the statute, whichever is less.

If your Offer in Compromise will be paid in 5 or fewer installments in more than 5 months and within 24 months, the offer amount must include the realizable value of assets plus the amount that could be collected over 60 months of payments, or the time remaining on the statute, whichever is less.

If your Offer in Compromise will be paid in 5 or fewer installments in more than 24 months, the offer amount must include the realizable value of assets plus the amount that could be collected over the time remaining on the statute.

2. Short Term Periodic Payment Offer - Payable in non-refundable installments; your Offer  in Compromise amount must be paid within 24 months of the date the IRS received the offer. The first payment and the $150 application fee are due upon filing the Form 656. Regular payments must be made during your Offer in Compromise investigation.

Your Offer in Compromise amount must include the realizable value of assets plus the total amount the IRS could collect over 60 months of payments or the remainder of the statutory period for collection, whichever is less.

3. Deferred Periodic Payment Offer - Payable in non-refundable installments; your Offer in Compromise amount must be paid over the remaining statutory period for collecting the tax. The first payment and the $150 application fee are due upon filing the Form 656. Regular payments must be made during the Offer in Compromise investigation.

Are You Qualified and Eligible for an 

Offer in Compromise

IRS Eases Eligibility

The IRS Fresh Start Initiative


“I’ve made a whole set of changes to the Offer in Compromise (OIC) program since I’ve been here to try to increase the participation rate, increase the acceptance rate, because it’s good for the tax system,” Doug Shulman, the IRS Commissioner said.

“These changes to the Offer in Compromise program will help give taxpayers a fresh start,” said Doug Shulman, the IRS commissioner, in a conference call with reporters. These changes “are especially appropriate as the American people and small businesses are climbing out of the worst recession in a generation.”

“There are a variety of things, all aimed at increasing acceptance rates for an Offer in Compromise, making it a user-friendly thing to apply for,” Shulman said. 



I am Dave Rosa, the V.P. of Client Relations at Flat Fee Tax Service, Inc. It is my duty and responsibility to you, as well as Flat Fee Tax Service, Inc., to provide you with an honest and straightforward evaluation of your IRS problem. After our consultation we will be able to tell you if you are eligible and qualified for an IRS settlement through the Offer in Compromise program. 

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1 comment:

  1. If you owe a back tax debt to the IRS and you are on Social Security or Social Security a Disability (SSDI), you do not need to suffer. read this article.

    ReplyDelete