Social Security Benefits, Student Loans and the IRS

Many of our debtor clients ask the question: if I owe the IRS taxes and I'm collecting Social Security benefits or going to collect Social Security benefits in the future, can the IRS levy my Social Security payments? Unfortunately for delinquent taxpayers, through the Federal Payment Levy Program (FPLP), 15% of a taxpayer's Social Security benefits may be levied to pay delinquent tax debt. However, certain other federal benefits, such as lump sum death benefits, Supplemental Security Income (SSI) and benefits paid to children are excluded from the FPLP levy.

What about student loans? If a debtor defaults in the payment of federally guaranteed student loans, then the IRS may levy on the debtor's tax refunds and apply those monies to the balance of the student loans. Additionally, if a debtor defaults on federally insured outstanding student loans, the government can take some federal benefit payments (including Social Security retirement and disability benefits, but not SSI) as reimbursement for student loans, but not the full amount (see below).

With respect to student loan defaults, the government cannot take any amount that would leave you with benefits less than $9,000 per year or $750 per month. And it cannot take more than 15% of your total benefits for either student loan defaults or delinquent taxes.

If you have questions about the federal government's powers to seize your benefits for the payment of delinquent taxes or publicly guaranteed student loans, please contact Jim Shenwick.