By Alexis Lyn Hailpern, Attorney at Law
According to the Social Security Administration (“SSA”) Office of Retirement and Disability Policy, 67 million people received benefits from the Social Security Administration in 2017. 87.7% of the $996.6 billion dollars used to fund social security were sourced from 2017 payroll taxes.[1]
The money withheld from current paychecks pays for current social security recipients. Although employees and employers overwhelmingly fund social security for the elderly and disabled, the Federal government still controls the laws and disbursements of such funds including the use of social security levies in the case of back taxes.
A social security levy is part of the Federal Payment Levy Program (“FPLP”). FPLP levies occur when a taxpayer has a back tax liability and receives some sort of federal disbursement. A social security levy is also part of the Automated Levy Program (“ALP”). ALPs are called “automated” as someone at the Internal Revenue Service (“IRS”) does not have to press a button to send a levy to the SSA. Rather, IRS computer software matches its data with the data of another federal or state administration – such as the SSA – and if the proper elements are in line, the computers automatically start the levy and send notice to the taxpayer. Thereafter, the SSA withholds 15% of each social security disbursement, remits the 15% withheld to the IRS against the back tax liability and sends the net balance to the social security recipient. Social security levies are a continuous levy – after triggered, they will continue until the back tax is paid, the back tax is in a payment arrangement or until the levy is released.
Obtaining a release on a social security levy is not quick or simple. As with any facet of the law, each case is diverse, and many factors play a role into how and when the levy can be released. If the levy is released, the release is not instantaneous. In most cases, the levy will linger for a month or two after the release is granted. This delay is caused by a need for the IRS system to pair up with the SSA system, and as with any antiquated computer system, syncing abilities are slow. Lastly, if the levy is released, there will not a refund of any monies levied before the release.
If you are a senior with unresolved back taxes, you will eventually see a social security levy and you will miss out on 15% of your benefits if your situation is not remedied before the IRS computer goes through a matching cycle with the SSA. As always, taxpayers should not challenge the IRS without a top-notch professional. Engaging an attorney as quickly as possible situates the taxpayer in the best position to be defended.
- Alexis Lyn Hailpern is an attorney at Jackson Kelly’s Denver, Colorado, office. She advises clients in business matters, IRS and tax controversy matters and nonprofit formation/compliance matters. Jackson Kelly PLLC is a national law firm representing leading global corporations, national companies, entrepreneurs and individuals in areas of law such as environmental, business, labor and employment, federal and state workers’ compensation, civil litigation and occupational safety and health. The firm has offices in Colorado, Indiana, Kentucky, Ohio, Pennsylvania, West Virginia and the District of Columbia. Alexis can be reached at 303-390-0188.
[1] Social Security Office of Retirement and Disability; Did You Know That . . .; Policy Fast Facts & Figures About Social Security, 2018, (Jan. 31, 2019, 12:49 PM), https://www.ssa.gov/policy/docs/chartbooks/fast_facts/2018/fast_facts18.html#pagei.