The future of social security is an uncertain one, but can social security be garnished? Scroll down to find out more about social security and Notice CP91.
Of the many notices and letters the IRS issues each year, Notice CP91 is one of the more serious notices. Receiving this notice from the IRS means that you’re severely behind on tax payments, and the IRS will resort to garnishing your social security benefits. What does this mean exactly? Let’s find out.
Understanding Notice CP91
The contents of Notice CP91 describe that the addressee has 30 days from the date of the notice before the IRS will garnish (claim) 15 percent of the social security benefits of the person to whom the notice is addressed.
Why would the IRS send you this notice? Generally, it’s because:
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- You owe the IRS back taxes that you haven’t paid, and you have received other notices warning you of this.
- You haven’t contacted the IRS or worked out any concrete steps to tackle your back taxes.
- You have missed previous deadlines for addressing your overdue tax balance.
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Notice CP91 is one of several different “last resort” options the IRS can turn to if a taxpayer continues to leave their debt unpaid. It is signaling a levy, meaning the IRS is one step away from physically claiming a percentage of your benefits in order to pay your back taxes. The IRS has the power to levy or garnish other incomes, compensations, and assets.
For example, Notice CP504 is the Notice of Intent to Levy, which means the IRS will claim an account, property, or tax refund to cover your tax debt. When receiving a Notice CP91, the IRS will garnish or claim a portion of your social security benefits.
While this is one of the final notices the IRS will send you before claiming a portion of your benefits, you do have ways to combat it.
Can Social Security Be Garnished if I Ignore Notice CP91?
If you ignore Notice CP91, your social security can be garnished. The IRS will claim 15 percent of your social security benefits each month until your tax debt is paid.
Keep in mind that if you refuse to take measures to contact the IRS or reduce your debt otherwise, you will continue to accrue interest at the quarterly rate set by the IRS.
You can reduce the interest your tax debt will accrue and halt your levies by taking the appropriate measures now before the deadline strikes.
What Do I Do Now? 5 Simple Steps to Avoid Social Security Garnishment
The last thing you want to do is nothing at all. There are a few options available to you if you have received a Notice CP91 from the IRS. You can avoid social security being garnished. Let’s go over them.
Step 1: Get Professional Help
Working with a tax professional can help you cut through the usual channels and help you navigate the bureaucracy of the IRS as quickly as possible. A tax professional will also be able to help you work through your taxes and financial details to identify the best possible way to tackle your tax debt, avoid liens and levies, and dodge further penalties and interest.
If you believe that your tax debt is a mistake or that the IRS has sent you the wrong notice and have the necessary evidence to back it up, a tax professional can also help represent you when working through the appeals process.
Step 2: Appeals
There are multiple ways to appeal a decision to levy a tax account, including through the IRS Independent Office of Appeals and the US Tax Court. You will want professional legal representation in either case and solid evidence.
The IRS is made up of humans, after all, and humans make mistakes. If the IRS sent you the wrong notice or erroneously applied a tax debt to your account, you can quickly resolve the issue through a tax professional. A tax professional can also help you relieve liens and levies while your case is being processed.
Step 3: Repayment
If your tax debt to the IRS is no mistake, then you will want to take the appropriate steps to resolve the debt as soon as possible – preferably before the deadline on your Notice CP91.
There are three common ways to do so. The first is through a payment plan. The IRS offers three payment plans:
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- Pay now
- Pay in several lump sums (over the course of 120 days)
- Pay in monthly installments (over the course of more than 120 days)
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Each payment plan has its advantages and disadvantages, as well as different setup fees depending on the chosen payment plan and the way you set it up (setting it up online is often the cheapest approach).
Entering into a payment plan with the IRS can delay the collection process, meaning the IRS will not issue a levy on your account (as long as you aren’t late on your payments). Payment plans typically also reduce the interest accrued on your tax debt after the first few payments.
Step 4: Offer in Compromise
If you cannot afford to make monthly payments to dissolve your tax debt completely, don’t worry. You can argue for an offer in compromise. This is an option the IRS provides to low-income taxpayers who don’t have any financial means to pay their debt in time (within the statute of limitations) without meeting financial hardship.
The IRS will review your offer in compromise (OIC) alongside your financial information to determine whether your tax account is a good fit for an OIC and whether your proposed offer meets their expectations. If your offer is lowballing what you are capable of paying each month, for example, they are more likely to reject it.
Your best bet is to work with a tax professional to formulate your offer. They will help you create an offer that the IRS is more likely to accept. You can also use the IRS’s pre-qualifier tool to get a better idea of whether they might take your offer.
Note that neither a tax professional nor the IRS’s pre-qualifier tool can guarantee that your offer will be accepted.
Step 5: Halt the Collections Process
The last resort if you cannot shoulder payments to the IRS at the moment is to temporarily halt all collection actions. This option can keep the IRS from issuing a levy or even stop a levy while it’s active.
To qualify, you must prove that the IRS’s collection actions are causing financial hardship. The IRS will periodically check-in to see if your financial situation has improved before continuing collection actions.
Final Thoughts
So, can social security be garnished? The answer is yes – the IRS can garnish social security. But there are ways to avoid it and prevent further actions against you.
Even if you are currently being levied, it’s important to remember that not all hope is lost. Work with a tax professional today to get in touch with the IRS, formulate a payment plan you can shoulder, and get back on the government’s good side.