Effective Dates: 09/04/2019 - Present Previous | Next

TN 45 (09-19)

GN 02410.105 Exemptions from Levy

A. Background for IRS levy exemptions

The Internal Revenue Service (IRS) exempts a limited amount of a delinquent taxpayer's total income from levy so as to not deprive that taxpayer and their family of subsistence income.

The number of dependents used in determining the amount exempted in the levy of Social Security benefits are the same as those claimed for tax purposes and may not be equal to the number of auxiliaries entitled to benefits on a claim.

If a taxpayer or beneficiary has income other than Social Security benefits, the IRS may apply the exemptions to the other income and levy the full amount of the Social Security benefits.

B. Policy for IRS levy exemptions

The Internal Revenue Code (26 U.S.C. § 6334(d)) entitles the beneficiary named on the notice of levy to exemptions from the levy.

The IRS tables show the amount of an individual's exemption from levy, as determined by number of dependents and tax filing status. For the amounts exempt from levy, see IRS Publication 1494 (http://www.irs.gov/pub/irs-pdf/p1494.pdf ).

Exemption from levy based on number of dependents and tax filing status went into effect January 1, 2018 and will apply through the end of 2025.

Use the exemption status provided by IRS on form 668W when processing the levy via the IRS Tax Levy Database System (TAXY) and the system automatically applies the appropriate exemption amount.

SSA implemented the exemption from levy based on number of dependents and tax status in August 2019 (COM 09/19).

A person entitled to an exemption on one account cannot be entitled to an exemption on another account.

EXAMPLE:

  1. 1. 

    A spouse cannot have a dependent exemption on their own account and a dependent's exemption on their spouse's account; or

  2. 2. 

    A child cannot have a dependent's exemption on both parents' accounts.

C. Procedure on exemption for IRS levy

1. IRS does not specify exemptions

If exemptions are not specified on the notice of levy, take the following actions:

  • •

    Establish the levy via TAXY - for the "Select Computation Method," use Option 1 (Partial), see SM 00833.035 and SM 00833.045. TAXY automatically sends the beneficiary a “Statement of Exemptions” to return to us so that SSA can determine the correct amount of exemptions.

  • •

    Annotate the Special Message Field on the MBR to show that benefits are being levied with exemptions set to DEFAULT status, see GN 02410.110. Be sure to update the special message field with any changes to the exemption amount. TAXY should generate a notice to the beneficiary and the IRS.

  • •

    If the exemption statement is returned, use the exemption status provided by the beneficiary and process the levy via TAXY to establish the amended exemption status to the next benefit payable. Do not question the number of dependent's exemptions claimed; IRS will take any action it deems necessary against the taxpayer/ beneficiary to correct improper claims for exemptions.

2. IRS does not allow exemptions

If IRS wishes to attach the beneficiary's entire benefit amount, they will annotate the notice of levy with a statement (or include a separate cover letter or attachment) advising SSA that the taxpayer is not entitled to the exemptions. Do not solicit exemptions in these cases. If IRS does not allow exemptions, take the following actions:

  • •

    Establish the levy via TAXY. For the “Select Computation Method”, use Option 2 (Full). After all medical insurance deductions have been withheld from the beneficiary, this option will issue the remaining amount of the MBP to the IRS. As a result, we will not have to manually bill the beneficiary for medical insurance premiums.

  • •

    Annotate the Special Message Field on the MBR to show that benefits are being levied with exemptions set to Full Withholding, see GN 02410.110. Be sure to update the special message field with any changes to the exemption amount.

TAXY should generate a notice to the beneficiary and the IRS.

3. Total exemptions exceed benefit

If the exempt amounts, as shown in IRS Publication 1494, exceed the amount of benefits due at the time of service, take the following actions:

  • •

    Establish the levy via TAXY. Your input will post a TAX LEVY field on the MBR with a Start Date = Current COM and a Term Date = Current COM. As a result, SSA will not withhold any benefits for the tax levy.

  • •

    Annotate the Special Message Field on the MBR to show that benefits are being levied per GN 02410.105.C.3. Be sure to update the special message field if this situation changes.

TAXY should generate a notice to the IRS, see NL 00703.745. The beneficiary will NOT receive a notice in these scenarios.

4. Applying exemptions

Exemptions are applied when the levy is effectuated. When the appropriate value for exemption is entered in TAXY, the proper exemption will be credited to the levied benefit.

Do not refigure a levy each time IRS changes the exempt amounts unless the beneficiary requests that it be refigured.

To Link to this section - Use this URL:
http://policy.ssa.gov/poms.nsf/lnx/0202410105
GN 02410.105 - Exemptions from Levy - 09/04/2019
Batch run: 09/04/2019
Rev:09/04/2019