A new report by the Treasury Inspector General for Tax Administration (“TIGTA”) determined that Internal Revenue Service employees improperly levied elderly taxpayer’s Social Security benefits, leading to economic hardship for elderly and low-income people with tax liabilitys.
For many elderly and low-income taxpayers, Social Security benefits are their only income. The Tax Code requires that the IRS agents release levies that cause individuals economic hardship. Taxpayers can claim an exemption against the levy, which allows them to receive a minimum Social Security payment. Under these exemptions, the levy should be released.
For 15 percent of the sample cases examined by TIGTA, the levy action caused or exacerbated economic hardship for those Social Security recipients. In these cases, revenue officers should have realized the taxpayers were experiencing economic hardship, according to the report.
I personally was involved in a case such as this where an elderly gentleman was having 40% of his social security benefits levied, leaving him with very little to live on and creating an economic hardship for him.
In this case, the IRS Revenue Officer was convinced that the taxpayer was working for his son and receiving pay for his work. This simply was not true. While he had worked for his son in an unofficial capacity in the past, the pay was really just a nice gesture from his son to help his father out.
The fact of the matter was that the taxpayer’s son was not giving him money in any capacity anymore, yet the IRS Revenue Officer was levying 40% of his social security, making it so he could not pay his personal bills including his rent and car payments.
The Revenue Officer refused to budge on this. Instead of battling it out with the Revenue Officer who clearly was not going to reduce the levy, I filed a Collection Appeal Program (“CAP”) appeal. The issue was removed from the Revenue Officer’s hands and reviewed by an independent appeals officer within two days.
Upon review, the appeals officer agreed with us and ordered that the levy had to be reduced to 15% so that the taxpayer could pay his bills. The appeals officer determined that the 40% levy created an economic hardship for the taxpayer and was issues improperly.
While many IRS Revenue Officer’s do the right thing when it comes to levying social security, there are too many times when they take advantage of the taxpayer. If you find yourself in a situation where you feel you’re being taken advantage of but you don’t know your rights, find an experienced tax attorney to help.