Levy

• If you do not pay your tax owed or make arrangements to pay, the IRS can levy your Social Security benefits. The amount to be levied cannot exceed 15 percent of your monthly benefit and can be levied until your tax is paid in full or the statute of limitations (10 years) expires. You can still collect your Social Security benefits if you owe, but your benefit will be reduced to cover the debt you owe if the IRS issues a levy. The IRS can levy both Social Security disability benefits and ordinary Social Security benefits.
  
  

Considerations

• A levy can adversely impact your credit rating. If you prefer to make voluntary monthly payments to the IRS in lieu of having your monthly benefits levied, you can set up an installment agreement with the IRS. Download Form 9465 to set up the monthly payment arrangements or use the IRS' Online Payment Agreement Application. The fee to set up an installment agreement is $105 but is reduced to $52 for taxpayers who agree to have the monthly payment direct debited from their bank account.
  
  

Notification

• Once the IRS decides to levy your Social Security benefits, you will receive a CP 91 letter in the mail. Once you receive the notice, you have 30 days to respond and either pay the balance in full or make arrangements to pay.
  
  

Exceptions

• Supplemental Security Income (SSI) is paid to those who are over 65 and blind or disabled. Unlike Social Security retirement benefits, SSI is a welfare program based on the recipient's income. Although it is administered by the Social Security Administration, the money from the SSI comes directly from the general fund of the Treasury Department. SSI benefits cannot be levied by the IRS regardless of the amount of tax owed. In addition, lump-sum death benefits and benefits paid to children are also not subject to the IRS levy.