SSDI and IRS Tax Levies- Can I stop them?Although some wage garnishments can be avoided if you either file bankruptcy or start receiving disability benefits, IRS tax levies are not stopped. In fact, the protection the Social Security Act provides for Social Security benefits against creditors does not extend to the government or the Internal Revenue Service (IRS). If you are receiving Social Security Disability Insurance (SSDI) but you owe taxes, the IRS can potentially seize your Social Security Disability Insurance (SSDI) funds to satisfy the taxes you owe.
Taxpayer Advocate Services
On our disability forum we had a disability recipient ask if they could reduce or eliminate the tax levy on their Social Security Disability Insurance (SSDI) payments. The good news is the IRS has created the Office of the Taxpayer Advocate to help individuals who need assistance dealing with the IRS. The Office of the Taxpayer Advocate helps individuals with the following:
- Assisting taxpayers in resolving problems with the Internal Revenue Service;
- Identifying areas in which taxpayers have problems in dealings with the Internal Revenue Service;
- If possible, proposing changes in the administrative practices of the IRS to mitigate those identified problems; and
- Identifying potential legislative changes which may be appropriate to mitigate such problems.
(Information provided on the IRS website)
Taxpayers who have issues can contact the Taxpayer Advocate Service (TAS) by calling (877) 777-4778. If you have a hardship you can work with the TAS to discuss alternative arrangements. The IRS, however, will expect your situation to meet the definition of significant hardship as defined by the SSA, and they will expect you to provide proof of your hardship.
What does the SSA consider a significant hardship?
The IRS has identified specific definitions of what they consider significant hardship which is outlined in IRC § 7811. The statutes were expanded in 1998 and now include the following four specific circumstances:
(1) An immediate threat of adverse action;
(2) A delay of more than 30 days in resolving taxpayer account problems;
(3) The taxpayers incurring of significant costs (including fees for professional representation) if relief is not granted; and
(4) The taxpayer will suffer irreparable injury or a long-term adverse impact.
There is also more good news for the taxpayer. The Taxpayer Advocate now has broader authority to affirmatively take any action as permitted by law with respect to taxpayers who would otherwise suffer a significant hardship as a result of the manner in which the IRS is administering the tax laws. Included is this broader action is the right to tell the IRS the timeframe for taking action on a Taxpayer Assistance Order (TAO),
Hiring a Disability Lawyer
Filing for Social Security Disability can be a long, complicated, exhausting process. You are not guaranteed benefits; in fact, up to 70% of SSDI and SSI applicants are denied benefits the first time they apply. Talk to a Disability lawyer if you have questions.
If you are currently receiving SSDI or SSI benefits and your benefits are being levied to pay for past IRS tax debts, contact the Office of the Taxpayer Advocate for more information about whether the levies can be modified to eliminated due to your significant hardship.
- SSDI- will getting disability benefits reduce my retirement? (disabilitybenefitshome.com)