Por Agustina Troiano
En esta noticia
The U.S. Internal Revenue Service (IRS) has a tool that can directly affect the monthly income of some retirees who collect Social Security. Through Notice CP91, the agency says it can withhold up to 15% of these benefits to recover unpaid federal tax debts.
The measure does not apply to all beneficiaries but to those with certain outstanding tax obligations who meet a series of conditions set by the agency. Before applying the withholding, the IRS must send notices and provide a deadline for the taxpayer to resolve the situation.
However, there are exceptions for certain retirees with low incomes and beneficiaries of other assistance programs.
Under what tax status can the IRS withhold up to 15% of Social Security?
The IRS can withhold up to 15% of certain Social Security benefits when a person has past-due federal tax debts that have not been paid. This measure is part of the Federal Payment Levy Program (FPLP), a mechanism that allows the agency to collect unpaid taxes by withholding certain federal payments. According to the IRS, the program applies to Social Security retirement and survivors benefits, although it does not apply to all SSA payments.
The withholding does not mean that any retiree with a debt automatically loses part of their income. The agency must follow a notice-and-collection process, and the amount withheld can reach 15% of the monthly benefit or be limited to the exact amount of the debt if it is lower than that percentage.
What requirements must retirees meet to receive Notice CP91?
For the IRS to move forward with this measure, the taxpayer must have an outstanding federal tax debt and must have received previous notices without resolving the amount owed. When the agency identifies that it can apply a withholding on Social Security benefits, it sends Notice CP91, which serves as a final notice before garnishing those payments. In the document, it says it intends to withhold up to 15% of the benefits to recover unpaid taxes.
The notice also sets a 30-day deadline from the date it is issued for the beneficiary to contact the IRS and reach an agreement to pay the debt before the monthly deductions begin. If there is no response and the situation is not resolved within that period, the agency can move ahead with the withholding.
Which retirees are exempt from the deduction and how they can avoid withholding
The IRS has exceptions for certain Social Security beneficiaries who are facing financial hardship. One is the Low Income Filter (LIF), a filter that excludes certain delinquent taxpayers from the automatic withholding program if their estimated total income falls below 250% of the federal poverty guidelines set by the Department of Health and Human Services.
Also excluded are payments from Supplemental Security Income (SSI), which should not be confused with traditional Social Security retirement benefits. In this regard, the agency has stopped systematically applying this mechanism to Social Security disability benefits since October 2015.
Available options include paying the outstanding balance, requesting an installment payment plan, or asking for a temporary delay in collection if they are facing financial hardship. The IRS also allows taxpayers who meet the program requirements to submit an offer in compromise. The request must be handled directly with the agency; the SSA cannot cancel the garnishment or resolve the tax debt.