SSA (U.S. Social Security Administration) and IRS (Internal Revenue Service) issue a new notice. These agencies act quickly when a taxpayer fails to meet their tax obligations, something to keep in mind to avoid losing money.
If IRS detects a nonpayment after issuing a Notice of Lien, they can impose automatic penalties and alert SSA. This means up to 15% of Social Security benefits can be withheld monthly to settle tax debts.
Ssa and Irs warn of the consequences of not paying
IRS starts the process by sending a Notice of Federal Tax Lien after a nonpayment following the first notice. This official document states that the government claims a right over all the taxpayer's assets, both current and future. These can be bank accounts, housing, salary, vehicles, among others.
If the debtor doesn't respond or pay, the levy begins. IRS sends a Final Notice of Intent to Levy, which requires notifying the taxpayer and SSA if benefits are involved. The withheld percentage, which can be 15%, doesn't affect essential benefits intended for subsistence.
This measure shows the coordination between agencies to ensure the collection of overdue taxes and protect government revenue. Therefore, it's crucial to respond to IRS notices and stay up to date with payments to avoid losing part of future benefits.
How to avoid this situation
The best way to avoid harm is to keep track of IRS. If you receive payment notices, respond immediately, pay the full debt, or set up a payment plan. IRS allows you to review outstanding amounts, including penalties and interest, on their portal or by calling the number listed in the notice.
Additionally, if the withholding of benefits causes severe hardship, you can request protection by arguing that the measure would cause significant economic harm. IRS can review your request and release the levy if they consider it appropriate.
Normalizing this possibility doesn't mean giving up. If you regularize your situation with IRS and obtain a Certificate of Release of Lien, SSA automatically stops the withholdings. This way, your payments return to their normal level.