To prevent having their benefits reduced, seniors or other Social Security recipients with overdue tax debts should our office for a FREE Consultation to find out what their options are.

Payments to Social Security recipients can be reduced by 15 percent through the Federal Payment Levy Program if their tax debts remain unresolved. In past years, hundreds of thousands of people who received Social Security payments owed federal taxes from earlier years.

Congress approved the Taxpayer Relief Act of 1997, which authorized continuous levies on certain federal payments going to individuals and businesses, including Social Security payments.

The IRS applies the Federal Payment Levy Program after attempts to resolve delinquent tax accounts have failed.

The levy, or garnishment, of Federal pension and Social Security benefits can cause great hardship, and anyone owes back taxes should contact an experienced tax professional who handles tax collection cases.

The IRS can transmit a levy electronically to the Financial Management Service, a bureau of the Treasury Department. From that point until the debt is paid or other satisfactory arrangements are made, FMS reduces the taxpayer’s Social Security payments subject to the levy by 15 percent and sends it to the IRS. The balance of the payment is sent to the taxpayer.

Social Security recipients affected by this program will find that is hopeless to contact the Social Security Administration.

This collection program also can extend to suck up any payments to vendors doing business with the federal government. Benefits paid for Federal employees’ travel advances and reimbursements are also subject to this type of levy. The salaries of federal employees paid through the National Finance Center will also be affected.

The General Accounting Office once estimated that these IRS levies could recover about $311.8 million annually in unpaid tax bills from those who receive Social Security payments.