TN 30 (11-10)
GN 02410.100 Internal Revenue Service (IRS) Levy
CITATIONS: Social Security Act, Section 207(b), Social Security Regulation (SSR) 79-4, United States Code 6331, 6334 (c)
A. Introduction to Internal Revenue Service (IRS) levy
Section 6331 of the Internal Revenue Service (IRS) Code gives the authority to levy wages for delinquent tax liability. Section 6334(c) of the IRS Code contains a specific exception to constraints on the assignment of Social Security Administration (SSA) benefits as provided in Sec. 207 (b) of the Act. Properly served IRS Notices of Levy for the collection of delinquent Federal taxes are enforceable against Title II benefits. Effective July 1989, the Taxpayer's Bill of Rights (P.L. 100-647) prohibits levies against SSI payments.
B. Policy on IRS tax levy
In the processing of levies, SSA acts only to assist IRS in actions to collect delinquent taxes. Except for seeing that the processing requirements provided here are met, SSA serves under the express direction of the order to levy. SSA has neither the authority nor the obligation to question the correctness of an IRS levy.
1. Levy and release from levy
A Notice of Levy is continuous until IRS tells SSA to stop levying. Although the Notice of Levy shows the amount the taxpayer/beneficiary owes IRS at the time the levy is served, this amount can change because of interest and penalties incurred and/or additional payments made by the taxpayer during the course of the levy. Therefore, SSA will levy monthly benefits until IRS sends a Release of Levy. The Release should show the amount still owed to IRS. See C.2. below.
2. Service of the levy order
A Notice of Levy or a Release of Levy is served on the Assistant Regional Commissioner (ARC), Processing Center Operations (PCO) of the Program Service Center (PSC) having jurisdiction over the taxpayer/beneficiary's case, or the Director.
3. Processing the levy order
Effective 2006, Title II Levy orders are processed through the automated Tax Levy System (TAXY), see SM 00833.000 ff. TAXY is a national online system that automates the IRS Tax Levy process. The system adjusts Title II benefits, issues payment to IRS as designated in the levy, and issues appropriate notices to the levied beneficiary and IRS. The Processing Center(s) (PC) can create, update, and query the TAXY system to process the payment of tax levies. Field Offices (FOs) and Teleservice Centers (TSCs) can only query the TAXY system (See SM 00833.010 and SM 00833.060 for TAXY queries).
An order of levy will be served using IRS form 668W, Notice of Levy on Wages, Salary and Other Income.
An order of release of levy will be served using IRS form 668D, Notice of Release of Levy.
If you receive a Notice of Levy or a Release of Levy for a beneficiary who does not live within your service area, do not forward it. Process the misdirected order through TAXY.
4. Time of service
A Notice of Levy and/or a Notice of Release of Levy will be acted on when we receive the appropriate form 668W or form 668D.
C. Procedure for handling tax levy
1. Effect of levy on benefits
If a Notice of Levy is properly served, via form 668W, apply it to the Title II benefits payable to the taxpayer/beneficiary named on the Levy for the month of service and continuing and any retroactive benefits (e.g., AERO increase, underpayment, etc.) due while the levy is in effect.
If a Notice of Levy is properly served but not effectuated timely, apply it beginning with the next benefit payable.
2. Effect of release from levy
A Release from Levy is issued by IRS, via form 668D, when only a small amount is still outstanding. Generally, it will show the amount still owed to IRS. When a properly served Release from Levy is received, stop the levy action when the amount shown on the Release is reached. If no amount is specified, stop the levy immediately.
3. Benefits not payable
If benefits are not payable when a levy is served or if benefits cease to be payable (for any length of time) while a levy is in effect, notify IRS using the notice in NL 00703.745. It is not necessary to tell IRS why benefits are not payable.
4. Benefits less than exempt amount
If IRS allows exemptions and the Social Security benefit payable is less than the total of the exemption(s), notify IRS that there is nothing to levy using the notice in NL 00703.745.
5. Beneficiary protests levy or release from levy
If a beneficiary protests the levy or release from levy, we have no authority to repay any withheld monies. Input to TAXY will generate a protest notice to the beneficiary with instructions to contact IRS. See SM 00833.080B.5.