There's the version of tax resolution the late-night commercials sell you. Then there's how it actually works. I'm Darrin Mish, a Tampa tax attorney. I've spent 32 years on the inside of these cases. Here's the real version.<\/p>\n
I hear this one constantly. A retired person opens an IRS notice, sees the words “intent to levy,” and assumes there has to be some mistake. They have heard their whole life that Social Security cannot be touched. They have heard that pensions are protected. They have heard that senior citizens have special legal shields against debt collectors.<\/p>\n
Some of that is true. Most of it is true against regular creditors, like credit card companies or hospital bills. None of it is fully true against the IRS.<\/p>\n
The IRS sits in a different category from ordinary debt collectors. Federal tax law gives them powers nobody else has. When the IRS comes after retirement income, the question is not usually whether they can touch it. The question is how much and how fast.<\/p>\n
After 32 years of working tax debt cases, I have watched too many retired people give up before they understood their options. Here is what is actually protected, what is not, and what you can do about it.<\/p>\n
In 1997, Congress passed the Taxpayer Relief Act. Tucked inside it was a provision that became Internal Revenue Code Section 6331(h). That provision gave the IRS the power to take up to 15% of certain federal payments through an automated system.<\/p>\n
The system is called the Federal Payment Levy Program, or FPLP. It went live in July 2000. Since 2002, Social Security retirement and survivor benefits have been part of the program. The IRS sends the Treasury Department a list of taxpayers with overdue tax debt, and Treasury automatically deducts 15% from each monthly benefit check before it leaves the system.<\/p>\n
No court order. No human judgment in the moment. Just an algorithm matching tax debt to federal payments.<\/p>\n
The IRS does have to send notice first. Form CP91 or CP298 goes out 30 days before the FPLP begins deducting from your benefits. That 30-day window is your chance to do something about it before the levy starts.<\/p>\n
Yes. Up to 15% of each monthly check under Title II of the Social Security Act, which covers retirement, survivors, and most regular Social Security benefits.<\/p>\n
This applies regardless of the amount. If your monthly check is $900, the IRS can take $135 every month. If it is $3,200, the IRS can take $480.<\/p>\n
Technically yes, but practically rare in recent years. The IRS stopped systemically levying SSDI payments through the automated FPLP system as of October 2015. They can still levy SSDI through manual processes in specific cases, but the automated grab is no longer happening.<\/p>\n
No. SSI payments under Title XVI of the Social Security Act are protected from FPLP. SSI is a needs-based program rather than an earned benefit, and Congress carved it out of the levy program.<\/p>\n
This is the one piece of retirement-adjacent income that has solid legal protection from IRS levy.<\/p>\n
Yes. Federal retirement annuities are federal payments. They go through FPLP at the same 15% rate.<\/p>\n
Yes. Tier I and Tier II railroad retirement benefits are subject to FPLP.<\/p>\n
Yes. Military retirement pay flows through Treasury and is subject to FPLP. The Taxpayer Advocate Service has publicly criticized this practice for the harm it causes to disabled veterans, but the program continues.<\/p>\n
This one surprises people. Veterans Administration benefits are generally protected from creditors under 38 U.S.C. Section 5301, which says VA benefits are exempt from attachment, levy, or seizure under any legal or equitable process.<\/p>\n
But that same statute contains an explicit carve-out. The protection does not apply to IRS levies under the Internal Revenue Code. The IRS can reach VA disability and pension payments.<\/p>\n
This is where it gets more nuanced. The FPLP automated system reaches federal payments. Private retirement accounts go through a different process.<\/p>\n
Yes, the IRS can levy private pension distributions. A pension payment going to you is income, and the IRS can attach to the pension administrator with a Notice of Levy. There is no automatic 15% cap. The levy generally captures the entire payment.<\/p>\n
The IRS can levy these too, but their internal procedures slow the process down. Under Internal Revenue Manual 5.11.6, the IRS is supposed to consider other sources first and look at whether the taxpayer needs the retirement funds for necessary living expenses.<\/p>\n
The IRM also requires the IRS to evaluate whether the taxpayer’s behavior has been “flagrant” before going after retirement accounts. Translation: if you have been ignoring the IRS, hiding assets, or actively obstructing collection, your retirement accounts are vulnerable. If you have been making good-faith efforts to resolve the debt, the IRS generally leaves them alone.<\/p>\n
This is not a hard rule. I have seen the IRS reach into 401(k)s when they decided they needed to. But it is rarer than levies on bank accounts, wages, or Social Security.<\/p>\n
Yes. State and municipal pensions are reachable by IRS levy through the same Notice of Levy process used for private pensions.<\/p>\n
This is the second question I get a lot. People believe Social Security recipients have some special legal shield. Some of that belief is correct. Most of it does not apply to the IRS.<\/p>\n
Under federal law (42 U.S.C. Section 407), Social Security benefits are protected from regular creditors. A credit card company cannot garnish your Social Security. A hospital cannot levy it. A car loan lender cannot touch it. These protections are real and they are significant.<\/p>\n
But Section 407 has a built-in exception for the United States. The IRS, child support enforcement, and certain federal debts are not bound by Section 407. So a credit card company is locked out, while the IRS walks through the door.<\/p>\n
State law adds protections that sometimes help against state-level tax debt or other creditors, but those state-law protections do not bind federal tax collection either.<\/p>\n
The truth is that seniors get strong protection against ordinary creditors and almost no protection against the IRS unless something else triggers an exemption (like SSI eligibility or the low-income filter discussed below).<\/p>\n
There is one safety net inside the FPLP system. The IRS applies a low-income filter that exempts taxpayers whose income is below 250% of the federal poverty level.<\/p>\n
If you qualify under this threshold, your Social Security should not be subject to the automated 15% levy even with an outstanding tax debt. The filter is supposed to screen these cases out before the levy starts.<\/p>\n
It does not work perfectly. The Taxpayer Advocate Service has documented cases where the filter failed and low-income seniors got hit anyway. If you are below the poverty threshold and the IRS is levying your Social Security, the filter should be applied retroactively. Get on the phone with the IRS or the Taxpayer Advocate Service immediately.<\/p>\n
Once you know the IRS can reach your retirement income, the question becomes how to stop them.<\/p>\n
When you receive the CP91 or CP298 notice of intent to levy, you have 30 days to request a Collection Due Process hearing. Filing the request stops the FPLP from starting and gives you a forum to negotiate.<\/p>\n
Miss the 30-day window and the levy begins. You still have options, but the leverage is gone.<\/p>\n
If the levy is creating financial hardship – if it leaves you unable to pay basic living expenses – the IRS will put your account in Currently Not Collectible<\/a> status. CNC stops the levy and stops other collection action. The debt does not go away, but the IRS leaves you alone while you remain unable to pay.<\/p>\n For most retirees on fixed income, CNC is the right answer. Your tax debt will likely time out under the 10-year Collection Statute Expiration Date before your financial situation improves.<\/p>\nInstallment Agreement<\/h3>\n