If you’re receiving Social Security and owe back taxes, you’re probably wondering: can the IRS take my benefits? The short answer is yes, but there are limits. The IRS can levy up to 15% of your Social Security payments through their automated system. Understanding your rights can help you protect your income.
How the IRS Takes Social Security Benefits
The IRS uses the Federal Payment Levy Program to collect unpaid taxes from Social Security benefits. This automated system was authorized by the Taxpayer Relief Act of 1997 and allows the IRS to withhold up to 15% of your monthly payment until your tax debt is paid.
According to the Social Security Administration, the IRS can automatically levy Old-Age and Survivors Insurance benefits. If you receive $1,500 per month, the IRS could take $225 each month.
Social Security Disability Insurance (SSDI) benefits, on the other hand, are no longer automatically levied through the Federal Payment Levy Program, as of October 2015. However, the IRS can still use manual levies for disability benefits in certain high-debt cases.
Which Social Security Benefits Are Protected?
Not all Social Security payments can be seized by the IRS. According to federal law, these benefits are completely exempt from IRS levy:
- Supplemental Security Income (SSI): These need-based payments are fully protected.
- Survivor benefits paid to children: Benefits for minor children cannot be touched.
- Lump-sum death benefits: One-time payments to survivors are exempt.
These protections exist because Congress recognized that some benefits serve essential needs that shouldn’t be disrupted.
The IRS Notice Process Before a Levy
The IRS can’t just start taking your Social Security without warning. Federal law requires specific steps:
- Initial Demand (CP-14 Notice): First notice requesting payment
- Additional Notices: Follow-up letters if you don’t respond
- Final Notice (CP-90): States the IRS’s intent to levy and your appeal rights (30 days to respond)
- Social Security Levy Notice (CP-91 or CP-298): Informs you the IRS will start taking 15% of your benefits.
You have 30 days after receiving the Final Notice to request a Collection Due Process hearing. This hearing gives you the right to explain your situation and propose alternatives. Missing this deadline means you lose your appeal rights.
Manual Levies: When the IRS Can Take More
While the automated system caps levies at 15%, the IRS can use manual levies to take a larger portion. Manual levies are typically reserved for high-dollar cases or situations involving prolonged noncompliance.
With manual levies, the IRS doesn’t follow a set percentage. Instead, they calculate your allowable living expenses and take everything above that amount. For 2025, single taxpayers with no dependents can keep $1,250.00 per month. Married couples filing jointly with no dependents can keep $2,500.00 monthly. These exemption amounts increase with every dependent the taxpayer has.
A 2016 Treasury Inspector General report found that in some cases, revenue officers imposed manual levies that caused financial hardship for low-income taxpayers. This happens when automatic levy filters route low-income cases away from the 15% cap, only to face potentially larger manual levies later.
If you believe the levy imposed on you is unjust or causes hardship, it’s crucial to advocate for your rights with the help of an IRS tax attorney.
Currently Not Collectible Status: Your Safety Net
If paying the IRS would create financial hardship, you may qualify for Currently Not Collectible (CNC) status. The IRS can temporarily suspend collection efforts when you prove you can’t afford to pay.
How CNC Status Works
When granted CNC status, the IRS will:
- Stop levy actions on your Social Security
- Suspend wage garnishments
- Halt other collection activities.
However, penalties and interest continue to accrue. The IRS also files a tax lien if you owe more than $10,000.
Qualifying for CNC Status
You need to demonstrate that paying the IRS would prevent you from meeting basic living expenses. The IRS requires Form 433-A (Collection Information Statement) showing:
- Monthly income from all sources
- Necessary living expenses
- Assets and their equity
- Bank statements (usually three months).
The IRS compares your income against allowable expenses using national and local standards. If your expenses equal or exceed your income, you qualify.
What Happens During CNC Status
The IRS reviews your financial situation annually. If your income increases, they may restart collection activities. You’ll need to file all required tax returns going forward. The IRS will also keep any tax refunds and apply them to your debt.
The good news: if your financial situation doesn’t improve within 10 years, the collection statute of limitations expires, and the IRS writes off the debt.
New York Considerations for Tax Relief
New York residents facing IRS collection on Social Security benefits should understand both federal protections and state considerations. While federal law governs IRS levies, New York has one of the highest costs of living in the nation, which affects your ability to negotiate with the IRS.
When applying for CNC status or setting up payment arrangements, the IRS uses local standards for housing and transportation costs. In New York, particularly in the New York City metro area and surrounding counties, these allowable expenses are higher than in most states. This can work in your favor when proving financial hardship.
Other Options to Stop Social Security Levies
Beyond CNC status, you have several options to protect your Social Security:
Installment Agreements
If you owe less than $50,000, you can set up a payment plan online. Monthly payments are spread over up to 10 years from the date of assessment to make the debt manageable. Setting up an installment agreement typically exempts you from the Federal Payment Levy Program.
Partial Payment Installment Agreement
This is similar to regular installment agreements, but you pay less than the full amount owed. This works when you can make some payment but can’t pay the full debt before the statute of limitations expires.
Offer in Compromise
This option lets you settle your tax debt for less than you owe. You must prove you can’t pay the full amount within the collection period. The IRS requires detailed financial disclosure and considers your income, expenses, assets, and future earning potential.
Hardship Request
If the levy would prevent you from meeting basic needs, request an immediate release. Submit Form 433-A or 433-F showing your financial situation in detail.
Why You Need Experienced Legal Help
Dealing with the IRS while protecting your Social Security requires knowledge of complex tax laws and procedures. One mistake can lead to months of lost income.
Attorney John D’Amato has over 29 years of experience helping New Yorkers resolve IRS problems and protect their benefits. As a trusted tax attorney in Western New York, John D’Amato has helped clients stop Social Security levies and achieve favorable outcomes.
Recent clients say:
“John and his team were amazing. They are very thorough and efficient when they handled my case. When I had a question, they responded quickly.” – Brian S.
“John always took the time to answer my questions right away, either by phone or email. Super efficient and friendly team. I am grateful for the firm and what they did to protect my credit and assets.” – Victoria A.
With a proven track record of success, John D’Amato provides:
- Immediate response to levy notices
- Negotiation of payment plans and CNC status
- Protection of your Social Security income
- Representation at Collection Due Process hearings
- Solutions tailored to your unique situation.
Frequently Asked Questions
Can the IRS take all of my Social Security?
No. The automated Federal Payment Levy Program caps seizures at 15% of your monthly benefit. Manual levies can take more, but must leave you with a minimum amount for living expenses based on IRS standards.
What if I receive only Social Security and have no other income?
If Social Security is your only income and it’s barely enough to cover basic needs, you’re a strong candidate for Currently Not Collectible status. The IRS may suspend collection efforts entirely.
Does owing taxes affect my ability to get Social Security?
No. Tax debt doesn’t prevent you from applying for or receiving Social Security benefits. However, once payments begin, the IRS can levy them.
How long does a Social Security levy last?
The levy continues until you pay your tax debt in full, set up an alternative payment arrangement, or the 10-year collection statute expires. Unlike wage levies that apply to each paycheck, Social Security levies continue indefinitely.
Can I negotiate a lower levy amount?
While you can’t reduce the 15% rate under the Federal Payment Levy Program, you can stop the levy entirely by setting up an installment agreement, requesting CNC status, or pursuing other resolution options.
What happens if I ignore IRS notices?
Ignoring notices guarantees the levy will start. You’ll lose your right to appeal and miss opportunities to negotiate better terms. The sooner you respond, the more options you have.
Will the IRS take my state tax refund, too?
Yes. While this article focuses on Social Security, the IRS can also intercept federal and state tax refunds to apply to your debt. This happens even if you’re in CNC status.
Protect Your Benefits Today. Call John D’Amato.
If you’ve received an IRS notice about levying your Social Security, don’t wait. You have limited time to respond and protect your benefits.
Contact John D’Amato, PLLC today at (716) 703-9099 for a free consultation.
With offices conveniently located in Western New York, John D’Amato serves clients throughout the state of New York (NY).
Don’t let the IRS take your Social Security without exploring every option to protect your income. Let top-rated New York tax attorney John D’Amato fight for you.
John D’Amato Law Offices is located in Western New York and serves clients throughout the state with IRS tax problems, bankruptcy, and foreclosure defense. With over 29 years of experience, Attorney John D’Amato has helped thousands of clients resolve their financial challenges and get a fresh start.