If the IRS is after you for back taxes and they haven’t been able to convince you to write them a check, the next thing they’ll do is to try to find easy-to-seize assets: bank accounts and things of that sort.
Social Security benefits are one easy-to-seize asset. After all, the government is writing the check in the first place.
There are two ways the government goes about seizing Social Security benefits: via the Federal Payment Levy Program (FPLP) and by Field Collection.
FPLP is more automated, but also more limited. Through this program, the IRS can seize no more than 15% of your Social Security benefits continuously until your back taxes are paid off. However, by policy, the agency will not levy your Social Security benefits by means of the FPLP if your estimated income is below 250% of the poverty line.
Field Collection is less-limited. If your case is turned over to Field Collection, the agent assigned to your case may seize however much they think is appropriate — as much as 100%. However, Field Collection is also less-automated: It requires a revenue officer to examine your case and your circumstances and make a judgement call.
The IRS’s budget has been reduced in recent years, which has affected the number of cases it can work. In an press article, an IRS manager stated that, due to resource constraints, revenue officers are only assigned very high-dollar balance due accounts. While the IRS later clarified that its collection actions are not limited to high dollar accounts because it has a variety of collection tools available, it did not clarify that revenue officers continue to work a full range of balance due cases.
That quote comes from a new TIGTA report on Social Security levies. The Washington Post article it refers to quoted an IRS Field Collection supervisor as saying that only if a person’s back taxes exceeded $1 million would a revenue officer be assigned to the case. It also quoted the IRS’s non-denial denial of this. (In TIGTA’s own investigation of a random sample of 136 cases where Social Security benefits were levied by Field Collection, however, it found the median balance due to be $83,226, with a back taxes range from hundreds to millions of dollars.)
Anecdotal reports from within the American war tax resistance community suggest that Social Security levies are done inconsistently and haphazardly, and the TIGTA report bears that out, noting that different Field Collection group managers had very different policies, and different ideas of what the goals of Social Security benefits seizures were. Some indicated that they had set policies that, on further inspection, were not actually being carried out by the revenue officers in their groups.
Field Collection agents were sometimes assigned cases that were already being collected via FPLP, and in most of these cases, they cancelled the FPLP and issued a manual levy for a higher amount. Sometimes they did this even though they had reason to believe that this would cause economic hardship. They also felt no reason to respect the 250%-of-poverty-line cut-off that the FPLP program uses.
Although Field Collection agents can decide they want to take as much as 100% of your Social Security benefits to pay back taxes, you have the right to a partial exemption, based on your age, filing status, number of dependents, and other sources of income, so that they leave you enough to live on. In practice, the audit found, the IRS was frequently failing to give people these exemptions they were entitled to, or to let them know they were entitled to them.
My take-away from this is that if you find that your Social Security benefits are being seized for back taxes, it may well be worth your while to research the laws and policies the IRS is supposed to be following in such cases and then to raise a fuss if they are screwing up. If you have a low income, mostly from Social Security, you can likely get most of it exempted from the levy, but the agent on your case may not know this or may be hoping you don’t figure it out.