Can Social Security Benefits Be Garnished for Delinquent Federal Taxes?

The IRS is empowered by federal law to garnish wages for delinquent federal taxes. Unlike most creditors, the IRS can garnish wages without first getting a court order. It only must provide notice of its intent to garnish and notify the delinquent taxpayer of her right to a hearing. In fact, the IRS can even garnish Social Security benefits under certain circumstances.

Arrears

• The 1996 Debt Collection Improvement Act authorized the Treasury Department to collect tax arrears through wage garnishment even from Social Security retirement benefits. The IRS garnishes Social Security recipients who are at least six months delinquent on taxes.

Eligibility

• The IRS's ability to garnish Social Security is not unlimited. The recipients must receive at least $750 per month or more. Individuals making less than that cannot have their benefits garnished.

Procedure

• The first thing the IRS will do to garnish wages is mail the delinquent taxpayer a notice and demand for payment. If the taxpayer does not respond, a second notice is sent. This final notice of intent to levy and notice of your right to a hearing will come by certified or registered mail with a return receipt request at least 30 days before the IRS plans to garnish.

Defenses

• Once the taxpayer receives the final notice, she can request a hearing and assert a defense before the garnishment goes into effect. Some defenses include that the taxpayer has paid the debt; the tax was assessed during bankruptcy; the IRS made an error; the statute of limitations had run prior to the notice being sent or the taxpayer wishes to make a payment plan. You should contact a qualified lawyer or tax accountant to discuss the specifics of your situation.

Limitations

• The IRS can only garnish up to 15 percent of a delinquent taxpayer's Social Security Benefits. That means if a taxpayer receives $1,000 per month in Social Security income, then the most the IRS can garnish is $150 per month.