Yes, the IRS can take money from your Social Security retirement or survivor benefits if you owe back taxes and ignore its notices. It does this through the Federal Payment Levy Program, which reduces your payment by 15%. You get a final notice and 30 days to respond first. SSI is never taken this way, and disability benefits are not levied automatically.
Key takeaways
- The IRS can levy 15% of each Social Security retirement or survivor payment until a past-due tax debt is paid in full.
- SSI payments, lump-sum death benefits and benefits paid to children are not levied through this program.
- Disability insurance benefits have not been levied automatically since October 5, 2015.
- Before a levy, the IRS sends a final notice. If you do not respond within 30 days of the notice date, the levy can begin.
- A payment plan, a hardship pause or a Collection Appeals request can stop or prevent a levy, so contact the IRS as soon as a notice arrives.
If you owe back taxes and live on Social Security, a letter from the IRS can be scary. The good news is that the IRS has to warn you first, and you have real options. The bad news is that ignoring the letters is the one thing that does not work.
This post explains how the IRS can reach your benefits, who is protected, and what to do if you get a notice. It is general information, not personal tax advice.
How can the IRS take Social Security benefits?
A levy is the legal seizure of property to pay a tax debt. The IRS says it can levy wages, bank accounts and, if a balance remains, other property and rights to property, including Social Security benefits.
For Social Security, the IRS uses the Federal Payment Levy Program. It lists certain Social Security benefits among the federal payments that can be levied. The Bureau of the Fiscal Service, which sends federal payments, can reduce a payment by 15%.
The IRS says this 15% applies even if what is left of your benefit is under $750. That differs from the $750 protection that applies to some non-tax federal debts.
Which benefits can and cannot be levied?
| Payment | Levied through the program? |
|---|---|
| Social Security retirement benefits | Yes, 15% |
| Social Security survivor benefits | Yes, 15% |
| Social Security disability insurance | Not automatically since Oct. 5, 2015 |
| SSI (Supplemental Security Income) | No |
| Lump-sum death benefit | No |
| Benefits paid to children | No |
There is one more protection. Since February 2011, certain taxpayers are excluded if their income is at or below levels based on the federal poverty guidelines. You can compare your income with the federal poverty level, but ask the IRS how it applies to you, because the exact test is the IRS’s to decide.
What does a levy look like in real numbers?
Here is an illustration, not a prediction. Say you receive a $2,000 monthly retirement benefit and owe the IRS $18,000.
- Levy per month: $2,000 × 0.15 = $300
- Benefit you still receive: $2,000 − $300 = $1,700
- Taken per year: $300 × 12 = $3,600
- Months to cover the $18,000 if nothing were added: $18,000 ÷ $300 = 60 months
In real life it would take longer, because the IRS says interest and some penalties keep being added until you pay in full. Use a budget calculator to see whether a $300 monthly cut would fit your spending.
Will the IRS warn you first?
Usually, yes. Before a levy, the IRS sends a final notice, such as a CP 90 or CP 297, that explains your right to a hearing. The IRS says that if it does not hear from you within 30 days of the date on that notice, it can proceed. Some levies skip this pre-levy notice, so do not wait for a final letter if you already know you owe.
An earlier notice, the CP504, is called a Notice of Intent to Levy. It is not the end of the road. It tells you to pay, call, or ask for an appeal.
How can you stop or avoid a levy?
Start by calling the number on your notice. These are the main routes the IRS describes:
- Pay in full. You can pay online or by mailing a check with the notice.
- Set up a payment plan. A short-term plan gives you up to 180 days to pay in full. A long-term installment agreement spreads payments over time. Online, the setup fee is $0 for a short-term plan, and for a long-term plan $29 with direct debit or $69 otherwise. Phone, mail or in-person setup costs more. The IRS says it is generally prohibited from levying while a request is pending, with some exceptions.
- Ask for hardship status. Currently Not Collectible status pauses most collection if you cannot pay because of financial hardship. The debt is not forgiven, and interest keeps building.
- Request an appeal. If you disagree, the notice explains how to ask for a Collection Appeals review.
- Ask for a release. The IRS may release a levy that is causing immediate economic hardship or that it issued in error.
What to do now
- Open every IRS letter. Note the date on the notice, because the 30 days start there.
- Check what you owe. Look at your IRS online account or the notice for the balance, tax year and notice number.
- Call the number on the notice before the deadline. Have your income and monthly expenses ready.
- Pick a path: pay, set up a payment plan, or ask about hardship. Compare the monthly cost with your income tax calculator estimate for next year so you do not fall behind again.
- File every missing return. The IRS says the online long-term plan requires all required returns to be filed.
- Keep records of calls, letters and payments.
Is this new?
No. The IRS says the levy program began in February 2002, and the disability exclusion dates to 2015. It is in the news now because tax debts and retirement budgets are on many people’s minds. If you owe taxes and your benefits are your main income, the best step is simply to contact the IRS early.
Frequently asked questions
Can the IRS garnish my Social Security check?
Yes, in one specific situation. If you owe past-due federal taxes and have not worked out a plan with the IRS, it can levy 15% of your Social Security retirement or survivor payments through the Federal Payment Levy Program. The levy continues until the debt is paid or the IRS releases it. Private creditors, such as credit card companies, generally cannot do this.
Can the IRS take my SSI?
No. The IRS says Supplemental Security Income (SSI) payments are not levied through the Federal Payment Levy Program. Lump-sum death benefits and Social Security benefits paid to children are also left out. SSI is a different program from Social Security retirement benefits, so check your benefit statement if you are not sure which one you receive.
Can the IRS take my Social Security disability benefits?
The IRS says it has not systematically levied Social Security disability insurance benefits since October 5, 2015. That is a statement about its automatic program, not a promise about every possible collection step. If you receive disability benefits and get a levy notice, call the number on the notice and ask what applies to you.
How much notice does the IRS give before levying my benefits?
Before most levies, the IRS sends a final notice that explains your right to a hearing. The IRS says that if it does not hear from you within 30 days of the date on that notice, it can move ahead with the levy. Respond within that window by paying, setting up a payment plan, or asking for a hearing using the instructions on the notice.
How do I stop an IRS levy on my Social Security?
Contact the IRS using the number on your notice. Options include paying in full, setting up a payment plan, asking for Currently Not Collectible hardship status, or requesting a Collection Appeals review. The IRS may also release a levy that is causing immediate economic hardship or was issued in error. Interest and penalties usually keep growing until the balance is paid.