By Pedro Bianco
En esta noticia
An unresolved tax debt can end up affecting something many retirees consider untouchable: the Social Security check. Through an automated program, the IRS can withhold up to 15% of those payments to collect back taxes, month after month. It does not happen overnight, some beneficiaries are exempt, and there are several ways to stop it.
How the IRS automatic levy works
The mechanism is called the Federal Payment Levy Program (Federal Payment Levy Program or FPLP). It is an automated system: the IRS sends the Treasury Department a list of taxpayers with overdue tax debts, and the Treasury deducts a percentage of their federal payments before depositing them. In the case of Social Security, that deduction can reach up to 15% of each monthly check, and it is applied without a court order.
Who is affected and who is exempt
The levy applies to Social Security retirement and survivor benefits. The FPLP does not set a debt threshold: it establishes a cap on how much can be withheld (15%), not a minimum amount owed. In other words, it can kick in even with relatively small debts.
There are important exemptions worth knowing:
- Supplemental Security Income (SSI) payments are exempt: because it is a needs-based program, they are protected and cannot be levied under the FPLP.
- Social Security disability benefits (SSDI) stopped being automatically levied under this program in 2015, although the IRS can still do so through other channels in specific cases.
Beyond Social Security, the FPLP can also reach other federal payments, such as federal government pensions, military retirement pay and certain benefits, with the same 15% cap.
The advance notice everyone needs to address on time
Even though the program is automatic, the IRS does not act without warning. Before starting the levy, it sends a notice, CP91 or CP298, called the “Final Notice Before Levy on Social Security Benefits”, usually about 30 days before the deductions begin. That window is crucial: it is the chance to respond and, if possible, stop the levy.
The Social Security Administration (SSA) cannot stop the levy. The process to resolve it is handled directly with the IRS, at the number listed on the notice.
How to stop the automatic levy
Within that period, and also afterward, there are several options to stop or avoid the levy:
- Request a Collection Due Process (CDP) hearing. If filed within 30 days of the notice, it suspends the start of the levy while the case is reviewed.
- Pay the debt in full, if possible.
- Set up an installment agreement, which once in effect lifts the levy.
- Submit an offer in compromise for those who qualify to settle for less than the full amount.
- Ask for Currently Not Collectible status if the levy creates a real financial hardship: that suspends collection while the situation lasts, although the debt remains in place.