The Taxpayer Relief Act of 1997 authorizes the Department of the Treasury’s Internal Revenue Service (IRS) to collect overdue Federal tax debts of individuals who receive Federal payments, including Social Security payments. The law authorizes IRS to levy up to 15% of each payment until the tax debt is paid.

NOTE: The tax levy amount is not affected by SSA's proposed monthly benefit withholding amount outlined in GN 02210.010.

The Department of the Treasury's (Treasury) Bureau of the Fiscal Service (Fiscal Service) and IRS run the Federal Payment Levy Program (FPLP).

Unlike the IRS tax levy program described in GN 02410.100, the FPLP is an automated system that does not require the Social Security Administration (SSA) to take any action to reduce a payment. Fiscal Service is responsible for reduction, or levy of the payment, after SSA certifies the payment and sends it to Fiscal Service for disbursement. We refer to these reductions as “automated tax levies.” With a few exceptions described in GN 02410.305C, SSA's Title II payments are subject to such automated tax levies when IRS determines that a delinquent tax debt should be collected in that manner.

The Treasury Offset Program (TOP) processes the automated tax levies that reduce SSA Title II benefits. IRS and Fiscal Service work together to accomplish the match that identifies the SSA beneficiary as a delinquent tax debtor. In addition, IRS and Fiscal Service send all notices to SSA's beneficiaries informing them about the levy. For detailed information about the automated levy process, see GN 02410.305D.

NOTE: IRS will continue to collect delinquent tax debts through the paper process of the IRS levy program described in GN 02410.100. IRS determines whether to collect a tax debt through the paper process or the automated tax levy process of the FPLP. However, IRS will not use both processes at the same time to collect an individual's delinquent tax debt.

As part of the FPLP, SSA receives Federal tax return information from IRS in the form of the IRS Final Notice Before Levy on Social Security Benefits. This IRS notice identifies the Social Security beneficiary as a delinquent tax debtor. For more information about the IRS notice stored on the Online Retrieval System (ORS), see GN 02410.305G.

It is SSA's responsibility to ensure that we use and disclose the tax information only as authorized by the Internal Revenue Code (26 U.S.C. 6103).

Disclosing the tax return information discussed in GN 02410.305G for purposes other than those intended for the FPLP is punishable upon conviction by a fine of as much as $5,000 or imprisonment for as long as five years or both, see GN 02410.305H. Any unauthorized disclosure of tax return information may also result in an award of civil damages against the Federal employee in an amount not less than $1,000 and the possibility of punitive damages being awarded against that person.

Any inspection of tax information that is not authorized by law constitutes a criminal misdemeanor punishable upon conviction by a fine of as much as $1,000 or imprisonment for as long as one year or both. Such unauthorized inspection of tax information by a Federal employee may also result in the award of civil damages against the United States.

Therefore, all SSA employees who have access to the tax information related to FPLP stored on the ORS must not inspect, use, or disclose such information except as provided in GN 02410.305H. For additional information about disclosure of tax return information, see GN 03320.000.

During the matching process, it is possible for one beneficiary to owe a delinquent tax debt and a delinquent non-tax debt. If this occurs, IRS and Fiscal Service will collect the delinquent tax debt first. If the non-tax debt meets the criteria for collection after the tax levy is imposed and the tax debt is collected in full, the Title II payment will be offset to satisfy the non-tax debt via Benefit Payment Offset (BPO), see GN 02410.300. This may be confusing to some beneficiaries, so you need to know how TOP processes offsets from Title II benefits when a beneficiary owes multiple debts. For more information on processing multiple debts, see GN 02410.305F.

Under FPLP, Fiscal Service reduces a Title II benefit payment by 15%. There is no minimum benefit amount that is protected from levy under FPLP. Unlike BPO, which cannot reduce a Title II benefit payment below $750 per month to collect a non-tax debt, FPLP can reduce a Title II benefit payment below $750 per month to collect a tax debt. For more information on BPO, see GN 02410.300B.2.

The reduction of a Title II benefit payment under tax levy is not appealable to SSA since the levy occurred due to a debt owed to IRS. The beneficiary should discuss any appeal rights with IRS. We can redirect a beneficiary to IRS if he or she wants to appeal the tax debt. For more information about handling inquiries from beneficiaries who want to protest the levy of a Title II benefit due to a delinquent tax debt, see GN 02410.305H.3.

If we determine that a Title II benefit payment was not due to the beneficiary, causing an overpayment, and it was reduced by FPLP, the beneficiary is liable for the entire payment amount including the amount withheld under FPLP.

SSA employees should redirect all requests for relief from tax levy due to hardship to IRS. By law, SSA does not have the authority to stop or delay IRS automated tax levy.

IMPORTANT: DO NOT issue any special payments such as a critical payment or immediate payment to pay back levied benefit payments. For more information about how to handle requests for relief from tax levy due to hardship, see GN 02410.305H.7.

In some cases, tax levy can result in an excess collection. For example, when a beneficiary fully repays a tax debt but due to systems timing, Fiscal Service cannot stop the next scheduled levy. It is not SSA's responsibility to refund the excess collection. It is IRS’ responsibility to refund the beneficiary any excess collections.

IMPORTANT: DO NOT issue any special payments such as a critical payment or immediate payment to pay back the levied amount.

For more information about how to handle allegations of excess collections, see GN 02410.305H.5. and GN 02410.305H.6.

SSA computes and certifies its Title II payments to Treasury as usual. We do not check for delinquent tax debts owed to IRS, and we do not calculate the amount of the levy.

After SSA computes and certifies its Title II payments, Fiscal Service runs its matching process to identify the existence of a delinquent tax debt owed by a beneficiary and notifies IRS if a match occurs.

SSA sends payment files to Fiscal Service routinely each month. These files contain data about the beneficiary and the payment that Fiscal Service uses in its automated processes to conduct tax levy through FPLP. This data includes, but is not limited to the:

• •

  monthly benefit payment;

• •

  beneficiary's own account number (BOAN);

• •

  claim account number (CAN); and

• •

  bypass code for payments excluded from levy, if applicable.

SSA's systems automatically identify payments that qualify for the tax levy and exclude the payments listed in GN 02410.305C. The system places a bypass code on the beneficiary’s payment record when:

• •

  the beneficiary is receiving Title XVI payments;

• •

  the beneficiary is receiving Title II disability payments with a PIC A-H;

• •

  the beneficiary is undergoing partial withholding to recover a debt owed to SSA, or the beneficiary’s payment is being levied through the paper levy process; or

• •

  the beneficiary is receiving Title II payments with a PIC C, G, J, or K.

The beneficiary’s payment record is an SSA systems-generated record sent automatically to Fiscal Service; it is not the Master Beneficiary Record (MBR). The bypass code tells Fiscal Service not to levy a Social Security payment.

NOTE: No manual action is required to input a bypass code on the beneficiary’s payment record in order to exclude an SSA payment from levy under FPLP. SSA’s systems recognize the exclusions in GN 02410.305C and automatically add the code to (and remove the code from) the beneficiary’s payment record.

Fiscal Service uses TOP to levy SSA's Title II benefits via the FPLP program. For information on TOP see GN 02201.029. TOP is based on computer matching and uses the taxpayer identification number (TIN) and a name control (usually the first four characters of the debtor's last name) to match the payee and debtor records. For individuals, the TIN is the same the BOAN.

IRS submits a weekly file of delinquent tax debts to Fiscal Service and updates tax debts already in the Treasury's National Interactive Delinquent Debtors Database that Fiscal Service maintains. The debts in the IRS file are marked with an indicator to instruct Fiscal Service to notify IRS that one of its tax debts has matched with a Title II benefit payment, but not to levy that SSA payment until IRS directs Fiscal Service to do so. TOP matches a Title II beneficiary's identifying information (BOAN and name control) with the same information from the debtor database. IRS then uses this matching information to determine whether to proceed with the automated tax levy.

About 60 days before a Title II benefit payment is levied, IRS sends a Final Notice Before Levy on Social Security benefits. This IRS notice explains the following to Social Security beneficiary:

1. a. 

   IRS intends to take collection action;

2. b. 

   IRS has identified Social Security benefits to which the beneficiary is entitled;

3. c. 

   IRS intends to levy (or reduce) the Social Security benefits by 15% to pay toward the delinquent tax debt;

4. d. 

   Full and immediate repayment of the tax debt will stop the levy against the Social Security benefits (payment instructions are given); and

5. e. 

   A payment arrangement can be made with IRS if the they cannot make full and immediate repayment.

In addition, the IRS notice shows the Social Security Number, or BOAN and the claim account number of the beneficiary who owes the delinquent tax debt. The IRS notice does not contain any information about the amount of the Social Security benefit (either before or after the levy) or the date of the Social Security benefit that will be levied.

NOTE: The IRS Final Notice Before Levy on Social Security benefits serves as the warning letter to the Social Security beneficiary. For tax levy, Fiscal Service does not send a 60-day and 30-day warning letter as it does with BPO. For information about warning letters in the BPO program, see GN 02410.300E.2.

Within 24 hours of printing and mailing the tax levy notice, IRS transmits an image of the Final Notice Before Levy on Social Security benefits so it can be stored in ORS on or before the date that the Social Security beneficiary receives the notice. Copies of the Final Notice Before Levy stored in ORS do not contain the toll-free number for IRS. For the more information and the number, see GN 02410.305H.1.

If the tax debt still qualifies for collection after IRS sends the Final Notice Before Levy on Social Security benefits, IRS initiates the levy and Fiscal Service reduces the Title II benefits. Fiscal Service sends a notice of offset to the beneficiary in time to be in their hands by payment day. In addition, the beneficiary receives a notice each time the beneficiary’s benefit is levied.

Fiscal Service’s notice of levy includes the following information:

1. a. 

   Name, address and telephone number of IRS;

2. b. 

   Name, address, SSN, and creditor agency account number of the beneficiary whose benefit was offset;

3. c. 

   Amount of the Title II payment before the levy and the amount of the levy;

4. d. 

   Payment date; and

5. e. 

   IRS’ toll-free telephone number in case the beneficiary wants to contact IRS about the offset. For IRS’ toll-free number, see GN 02410.305H.1.

Each week, Fiscal Service electronically sends offset data files to SSA's central office for processing. Fiscal Service sends the files no later than 48 hours before the payment date. The offset information is posted to the Payment History Update System (PHUS) for SSA employees to view.

Fiscal Service sends the levy amount collected to IRS, which accounts for the collection and keeps the tax debt balance updated.

Post-offset claims (e.g., nonreceipt and nonentitlement) involving Title II payments that were levied are handled the same as non-offset payments. No special handling or inputs are necessary by SSA.

A reversal is the act of taking back levy amounts from IRS. Fiscal Service performs reversals automatically. Fiscal Service will reverse a levy when, for example, SSA determines that a Title II benefit that was levied should not have been paid at all. SSA's systems automatically tell Fiscal Service about the need for reversals. Reversals do not require any manual action by SSA.

To control cases with multiple debts, Fiscal Service established debt priorities based on the type and age of the debt, with tax debts and the oldest debt having the highest priority for collection via FPLP. Therefore, when a person has multiple debts, Fiscal Service’s policy is to collect the tax debt and the oldest debt first.

When a beneficiary owes SSA a debt, tax levy ceases until the debt is fully collected by SSA. Any tax levy that is in progress will automatically stop when SSA begins benefit adjustment. For more information about Title II payments excluded from tax levy, see GN 02410.305C. In addition, Fiscal Service will not send the offset notice.

SSA's systems automatically include the bypass code on the payment record of any Title II beneficiary who is undergoing benefit withholding by SSA. This bypass code is a signal to Fiscal Service to stop the tax levy. For more information about the bypass code, see GN 02410.305D.3.

When SSA removes the bypass code, Fiscal Service resumes tax levy if all conditions for FPLP continue to be met. Fiscal Service takes the following actions:

1. a. 

   Notifies IRS, through TOP, that the Social Security benefit is again available for automated tax levy;

2. b. 

   Resumes levies without further warning if IRS' warning letter cycle was completed before SSA stopped the tax levy;

3. c. 

   Sends offset notices each month that the benefit is levied.

If you receive an inquiry from a beneficiary who is confused about this situation, refer to GN 02410.305H.13.

ORS contains an electronic image of the IRS Final Notice Before Levy on Social Security benefits. The notice shows the information listed in GN 02410.305E.3.

In addition, the MBR and PHUS show limited information about TOP-related activity either FPLP or BPO on a Title II benefit. The MBR shows two codes in the Transaction Data Line indicating TOP-related activity on a Title II benefit.

PHUS shows two TOP-related event codes and legends, which indicate FPLP or BPO activity on a Title II benefit, see SM 00630.100C.

You should retrieve copies of the FPLP notices only when you need information about tax levy to assist a Title II beneficiary who inquires about FPLP. For more information on what is on the notice, see GN 02410.305E.3.

In most cases, the Title II beneficiary asks questions about tax levy that IRS should answer. For more information about handling inquiries about tax levy, see GN 02410.305H. If IRS should answer the beneficiary’s question, redirect him or her to IRS.

IMPORTANT: DO NOT print or give copies of the notice to a beneficiary. If you have already printed a copy of the Final Notice Before Levy on Social Security benefits, you must ensure that the copy is destroyed and not given to the beneficiary. For more information about the confidentiality of tax information on the ORS, see GN 02410.305B.1.

You can get access to ORS by using the Online Retrieval System (ORS) Login Screen.

Beneficiaries may contact SSA with questions about the tax levy program. If the question is general, provide a description of the program. Include the following items in your description:

1. a. 

   IRS and Fiscal Service run the tax levy debt collection program;

2. b. 

   Tax levy is authorized by law The Taxpayer Relief Act of 1997;

3. c. 

   Tax levy reduces a beneficiary’s Title II benefit payment to collect a delinquent tax debt owed by the beneficiary to IRS; and

4. d. 

   SSA has no control over whether or not IRS initiates the levy.

If the beneficiary wants more information about the tax levy program, the beneficiary should contact IRS at 1-800-829-7650.

In reaction to the IRS Notice Before Levy on Social Security benefits or the Fiscal Service offset notice, Social Security beneficiaries who receive the notices sometimes contact SSA with questions. The IRS and Fiscal Service notices refer, in general, to the debt owed by the Title II beneficiary to IRS; neither notice stored on ORS provides specific information about the debt such as amount, dates, or cause. When the beneficiary asks SSA for information about the debt, tell them:

1. a. 

   SSA does not have any specific information about the debt, such as the amount, date, or cause of the debt; and

2. b. 

   They should contact IRS at 1-800-829-7650 for additional information about the debt.

When Fiscal Service reduces a beneficiary’s Title II benefit due to tax levy, it is not an SSA initial determination subject to appeal rights. When a beneficiary wants to protest the levy of the Social Security benefit, tell them:

1. a. 

   The levy is not an SSA initial determination subject to appeal rights with SSA;

2. b. 

   SSA cannot accept a formal request for an appeal of the tax levy; and

3. c. 

   Contact IRS at 1-800-829-7650 to discuss any further appeal rights.

IMPORTANT: DO NOT accept any formal appeal such as a Form SSA-561-U2 (Request for Reconsideration) regarding the beneficiary’s protest of the tax levy. If a beneficiary sends a formal request to SSA or otherwise insists on making a formal appeal, dismiss it in accordance with existing instructions in GN 03102.325B.3.

If a beneficiary asks about requesting a waiver of the tax debt owed to IRS, tell them:

1. a. 

   The tax debt is not owed to SSA;

2. b. 

   SSA cannot accept a waiver request regarding the tax debt owed to IRS; and

3. c. 

   Contact IRS at 1-800-829-7650 to discuss any issues regarding fault in causing the tax debt and ability to repay the tax debt.

IMPORTANT: DO NOT accept a waiver request (SSA-632-BK or equivalent form) on a tax debt owed to IRS. If a beneficiary sends a waiver request to SSA or otherwise insists on making a waiver request on a tax debt, do not process the waiver request and instruct the beneficiary to contact IRS.

When a beneficiary alleges that he or she already paid the debt or is not the individual who owes the debt, tell him or her:

1. a. 

   IRS determines who owes delinquent tax debts and who is liable for the repayment;

2. b. 

   SSA is not authorized to decide on behalf of IRS that he or she does or does not owe a debt subject to tax levy; and

3. c. 

   Contact IRS at 1-800-829-7650 to discuss the liability for the debt.

IMPORTANT: DO NOT issue any special payments such as a critical payment or immediate payment to re-issue benefits that were offset due to tax levy. IRS is responsible for re-issuing money withheld from a Title II benefit due to tax levy.

If a beneficiary believes that Treasury incorrectly calculated the amount withheld from their payment, tell them:

1. a. 

   IRS issues the levy for the 15% reduction amount withheld from the Title II payment; and

2. b. 

   SSA only knows that 15% can be deducted, see GN 02410.305B.3; and

3. c. 

   Contact IRS at 1-800-829-7650 to discuss the amount of the tax levy in more detail.

IMPORTANT: DO NOT issue any special payments such as a critical payment or immediate payment to pay back benefits that were offset due to tax levy. IRS is responsible for paying back money withheld from a Title II benefit due to tax levy.

Due to alleged hardship, beneficiaries may request that SSA prevent tax levy from occurring or to refund the money that has already been withheld from their Social Security benefits. When a beneficiary requests relief from tax levy due to hardship, tell him or her:

1. a. 

   Tax levy is done at the request of IRS;

2. b. 

   SSA cannot take any action to stop the levy or to refund any money that has already been withheld;

3. c. 

   Any money that has been withheld is in the possession of IRS; and

4. d. 

   Contact IRS at 1-800-829-7650 regarding the request for relief from tax levy due to hardship.

IMPORTANT: DO NOT issue any special payments such as a critical payment or immediate payment to pay back benefits that were offset due to tax levy. IRS is responsible for paying back money withheld from a Title II benefit due to tax levy.

If the beneficiary alleges bankruptcy, tell them:

1. a. 

   Tax levy is done at the request of IRS;

2. b. 

   SSA cannot take any action to stop the levy or to refund any money that has already been withheld;

3. c. 

   Any money that has been withheld is in the possession of IRS; and

4. d. 

   Contact IRS at 1-800-829-7650 to discuss further options.

If the beneficiary alleges not receiving the IRS Final Notice Before Levy on Social Security Benefits and Fiscal Service notice, tell them:

1. a. 

   IRS is responsible for mailing the Final Notice Before Levy on Social Security Benefits to the beneficiary subject to tax levy;

2. b. 

   Contact IRS at 1-800-829-7650 to discuss nonreceipt of the IRS Final Notice Before Levy on Social Security Benefits;

3. c. 

   Fiscal Service is responsible for mailing the offset notice each time the Title II benefit is levied; and

4. d. 

   Contact Fiscal Service at 1-800-304-3107 to discuss nonreceipt of the offset notice.

When a beneficiary contacts SSA in the mistaken belief that they can repay an IRS debt by paying SSA, tell them:

1. a. 

   The debt is owed to IRS and payment is a matter between the beneficiary and IRS;

2. b. 

   SSA cannot accept payment on behalf of IRS; and

3. c. 

   Contact IRS at 1-800-829-7650.

IMPORTANT: Under no circumstances should you accept a payment for a debt owed to IRS.

If a beneficiary alleges nonreceipt of a Title II payment that was also reduced because of tax levy, take the same action you would normally take in the event of an allegation of nonreceipt of payment.

NOTE: For information on processing nonreceipt claims, see GN 02406.000.

Beneficiaries may experience difficulty understanding the unusual tax levy cases described in GN 02410.305F. Since Fiscal Service carries out the rules for conducting offsets for multiple debts with different priorities, Fiscal Service is in the best position to handle these inquiries. When a beneficiary asks SSA for information about multiple debts and debt priorities, tell them:

1. a. 

   Tax levy is a debt collection program run by IRS and Fiscal Service; and

2. b. 

   SSA has no control over how Fiscal Service performs the offsets or how it determines debt priorities.

If the beneficiary wants more information about how offsets are done for multiple debts or how debt priorities are determined, they should contact the TOP Call Center at 1-800-304-3107. The TOP Call Center employs people who are trained to respond to questions about the program.

A beneficiary whose benefit has been levied may become confused if the tax levy process is stopped while an SSA debt is being recovered. When the beneficiary asks what happened to the tax levy process, tell them:

1. a. 

   The tax levy process is suspended while SSA recovers its own debt;

2. b. 

   Title II benefits reduced to collect SSA debts are excluded from tax levy;

3. c. 

   Once SSA fully recovers the SSA debt, Fiscal Service will resume collection of the tax debt if all tax levy criteria are met.