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Can the IRS Levy More Than 15 % of Social Security?

How much can the IRS take from you?

A common misconception is the IRS is limited to levying 15 % of the social security received.  Under IRC Sec (6331(h), the IRS is permitted to levy 15 % to pay delinquent tax debts under the Federal Payment Levy Program.  The IRS, however has a manual levy program under IRC Sec 6331(a), and the 15 % levy is a supplement to the manual levy power.

There is, regrettably no limit to the manual levy program.  Revenue Officers, over the years have taken as much as 50 per cent, and recently have started taking 100 per cent. IRS levies are typically a one-time occurrence, only seizing property in existence at the time the levy is served.

We typically see one-time levies on bank accounts;  however a one time levy seizes future payments if they are fixed and determinable.  Social Security benefits are clearly fixed and determinable.

In Hines v. United States the Federal District Court held that a one-time IRS levy initiated by service of a paper levy form upon the Social Security Administration captured the taxpayer’s social security benefits due before and after levy. The court rejected the taxpayer’s claim that the levy was continuous and unlawful because it seized more than 15% of a specified payment.

What relief is available?

The United States Supreme Court has stated that the IRS levy power should be expansively construed,  Drye v. United States.  Specifically the Court observed that the language of IRC 6331(a) is “broad and reveals on it’s face that Congress meant to reach every interest in property that a taxpayer might have.”

Remedies to abate such an horrific levy include administratively arguing hardship or filing bankruptcy for a domestic taxpayer;  if a taxpayer has expatriated or given up US citizenship, we may be able to use tax treaties or local laws of the foreign country to obtain relief.

Dana M. Ronald

Tax Crisis Institute