A reader asks the following regarding IRS levies on social security benefits: What is the difference between an automated federal levy on social security and a manual tax levy, and why does the IRS choose one over the other? Here is my response: 1. Automated Levy (15%). Pursuant to section 6331(h) of the [...]
Economic hardship and the IRS
The IRS Taxpayer Advocate, Nina Olsen, reported in her recent testimony to the House Ways and Means Committee that the IRS classified nearly $20 billion in tax debt as “currently not collectible” in 2008. This is more than the amount the IRS collected on taxpayer delinquent accounts, including installment agreements and offers in compromise [...]
If you cannot pay your delinquent taxes because of an economic hardship, the IRS can suspend collection efforts against you. This does not mean your debt is forgiven; just that the IRS will defer collection and not take your wages or bank account. Internal Revenue Service Policy Statement 5-71 permits hardship status on IRS accounts, [...]
I have seen an increase in calls to my office from retirees who have received an IRS levy on their Social Security benefits. In most every case, the levy (1) relates to conduct from self-employment when they were younger, and that conduct has long ago ended and (2) creates a substantial hardship for the retiree, [...]
