IRS Levy | Social Security | Flat Fee Tax Service
The tax professionals at Flat Fee Tax Service have helped countless taxpayers who have had their Social Security and Social Security Disability (SSDI) benefits seized by the IRS. The IRS, through the Federal Payment Levy Program (FPLP), can seize as little as 15% of your benefit check.
A taxpayer may have retired and now draws on their Social Security or may be unable to work due to disability and now receives Social Security Disability (SSDI). The IRS may have previously placed a financially struggling taxpayer in currently not collectible status (CNC) because they did not have enough income to pay an overdue income tax debt. Now that a taxpayer is drawing money from Social Security, do not be surprised to receive a notice from the IRS that the Internal Revenue Service is going to be taking part of the taxpayer’s check each month.
A taxpayer may have thought they were in Currently not Collectible status only to find out that their check is 15% short of the full benefit. Can the IRS really seize social security? Yes, the IRS can and will take at the minimum 15% unless steps are taken to stop, remove and release the IRS levy.
What is Currently not Collectible?
Currently not Collectible status (CNC) simply means that the IRS won’t try to collect taxes at the current time. Should a taxpayer be placed in Currently not Collectible status (CNC), a Federal Tax Lien will be filed. If your credit is important to you, this will be an issue. The income tax debt owed will continue to accrue penalties and interest. The IRS can rescind the taxpayer’s Currently not Collectible anytime that they choose without warning. To be placed in Currently not Collectible status, a taxpayer will have to show the IRS there is not enough income to pay the IRS and meet the taxpayer’s basic necessities. Most often, Currently not Collectible (CNC) will necessitate filling out a Form 433-F (Financial Asset Form). This IRS form requires a taxpayer to list all of their income, assets, and expenses. Use the IRS National Standards for personal/ food expenses and medical expenses without having to prove your actual expenses. A taxpayer will be limited to claiming the national standards on all expenses unless it is proven that a taxpayer has a special circumstance that makes their expenses higher. A taxpayer can find the National Standards on the IRS.gov website.
How does Currently not Collectible status effect how much income tax is owed?
The interest and penalties on your account continue to increase.
Can the IRS change a taxpayer’s status?
Yes, the IRS can change the taxpayer’s status at any time. The IRS will take a look at your status every twelve (12) to twenty-four (24) months or so. The IRS will also look at any change in income.
Can the IRS really take my social security or Social Security Disability (SSDI)?
The IRS can and will take a taxpayer’s social security retirement benefit or social security disability benefits once the IRS computer discovers that a taxpayer is receiving a government check. As a general rule, the IRS will limit what they take to 15% per the Federal Payment Levy Program (FPLP). The IRS should not take Supplemental Security Income (SSI) benefits. These benefits are considered public benefits and are usually assumed to be only enough to provide for basic necessities. Please note, the IRS can take more than 15% should a Revenue Officer issue a Manuel Levy.
Although the IRS is supposed to prevent certain very low-income social security retirement and social security disability recipients from being placed in the federal payment levy program, we all know that is a rule that is often broken. This screening program is not full proof so taxpayers still may have to submit a 433-F to be put into currently not collectible status.
What if a taxpayer does not believe they owe the IRS the past due income taxes?
If a taxpayer has never received a notice of levy before, a request for a Collection Due Process hearing (CDP) is an option. A Collection Due Process (CDP) hearing will allow a financially struggling taxpayer to present evidence that the IRS should not levy on Social Security benefits. A taxpayer could also challenge the income tax debt if the taxpayer has not had a chance to challenge it before. A taxpayer might not have been able to challenge the income tax debt if the IRS did not issue the right notice or mailed the notice to the wrong place.
If a taxpayer received the notice but decided not to respond, the taxpayer cannot challenge the income tax debt in a CDP hearing. A taxpayer might be able to ask for an audit reconsideration. In an audit reconsideration, the taxpayer will tell the IRS why their decision was wrong and provide them with any evidence that will help the IRS change their mind.
If the taxpayer is Currently not Collectible should they do an Offer in Compromise?
Now we are talking about an actual permanent solution to the financially struggling taxpayer’s income tax problem. If the IRS has already declared the taxpayer to be unable to pay the overdue income tax debt, why not take the extra step and retire the income tax debt altogether through an IRS settlement? If a taxpayer has no assets and is relying on Social Security benefits to live on, it would behoove the taxpayer to get rid of the tax debt. Many of the same IRS rules that govern being Currently not Collectible work for the Offer in Compromise program.
During the Offer in Compromise process, the IRS must leave the taxpayer alone. That means no levies. No enforcement actions. If you have no assets and only have your Social Security, your IRS settlement should be very, very small. At the end of the Offer in Compromise process, the taxpayer will have no IRS income tax liens.
YOU WILL RECEIVE THE FRESH START THAT YOU NEED
When we receive a call from a taxpayer who is or was declared to be Currently not Collectible, we explain the settlement program this way: If you were running a marathon, would you stop running when you were 200 yards from the finish line? Of course not. Finish the race. Settle with the IRS for less.
Where can a taxpayer get IRS help if they need it?
You can receive expert IRS tax representation at Flat Fee Tax Service We are “America’s Best & Most Affordable IRS Tax Relief Team.”
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