The IRS can garnish your Social Security

If you or your spouse collects social security benefits and have been assessed past due taxes or have other debts, those SS benefits may be subject to collection action by the Internal Revenue Service (IRS) and the Arizona Department of Revenue (ADOR). This can be particularly distressing if you are retired and in debt and your only source of income is social security.

The IRS has statutory authority, via the Federal Payment Levy Program, to garnish up to 15 percent of Social Security benefits to pay delinquent taxes. Other creditors, such as banks and credit card companies, cannot touch your Social Security benefits. But when the government is collecting on a debt, those funds are fair game.

The federal government can garnish your benefits for repayment of several types of debts, including:

• Federal income taxes
• Federal student loans (even if many years old!)
• Child support and alimony
• Non-tax debt owed to other federal agencies
• Defaulted federal home loans
• Certain civil penalties

If you plan to travel in retirement, know that the federal government can revoke your passport or deny issuance of a passport if you owe the government an assessed debt in excess of $50,000.

What can you do? Visit with your tax attorney. You may be able to negotiate an installment agreement that might avoid having your SS benefits garnished and allow you to obtain a passport. If you are in arrears with student loan payments, a tax attorney can help you “work out” of that defaulted situation.

Be proactive about addressing your debt problem -- before your one source of retirement income is diverted elsewhere and you are really left struggling! Visit with your Phoenix or Scottsdale tax attorney Stephen McFarlane to learn more.

We represent clients at all administrative agency and appeal levels, the Arizona Tax Court, and the federal US Tax Court, and throughout Arizona: Phoenix, Glendale, Peoria, Scottsdale, Mesa, Tempe, Chandler, Queen Creek, Yuma, Casa Grande, Tucson, Sierra Vista, Bisbee, Flagstaff, Prescott, Payson, Coconino County, Yavapai County, Maricopa County, Pima County, Cochise County, Pinal County.