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Can The IRS Garnish Social Security Disability Payments?

Published on May 17th, 2024

Losing your Social Security Disability benefits can be distressing, especially when you rely on them as a primary source of income. The sudden loss or reduction of these benefits can create confusion, frustration, and fear, as you worry about how to regain your benefits and how to make ends meet in the meantime.

One of the most distressing scenarios is when the Internal Revenue Service  (IRS) garnishes your supplemental security income (SSI) or Social Security disability insurance (SSDI) benefits. In the following guide, we will walk you through exactly why the IRS can take away these monthly benefits and how you can get them back.

Social security card in a pile of money.

How Can The IRS Garnish Your Social Security Disability Check?

Garnishment occurs when a creditor legally seizes a portion of your income to satisfy a debt. Since the Social Security Administration is a government entity controlling the disability benefits distributed to millions of Americans, many individuals might wonder if the IRS can take your Social Security disability benefits away.

When it comes to receiving Social Security disability benefits, the IRS can garnish them if you have outstanding federal debts. This process can be particularly stressful because it directly affects your income. Here’s how garnishment works and how the IRS can proceed with it:

  • Federal Tax Debts – The IRS has the authority to garnish your SSDI benefits if you owe federal taxes. Unlike private creditors, the IRS has broader powers to collect on debts owed to the government. If you have unpaid taxes, the IRS can come for your monthly payments through SSDI or SSI.
  • Notice and Warning – The IRS generally sends multiple notices before garnishing your disability insurance or other disability benefits. The Final Notice of Intent to Levy is the critical notice that informs you of the IRS’s plan to garnish your income.
  • Limits on Garnishment – The IRS is limited in how much it can garnish from your benefits. By law, the IRS can levy up to 15% of your monthly SSDI payments.
  • Offsetting Refunds – The IRS can also offset your tax refund to cover outstanding federal tax debts. This means if you are owed a tax refund, the IRS can use it to offset your debt before garnishing your disability payments.

How To Fight Back Against The IRS Attempts To Garnish Your Disability Payments

If the IRS is attempting to garnish your SSDI payments, it’s important to understand your options for defending yourself. One potential avenue is negotiating a payment plan with the IRS to address your tax debts without garnishing your benefits. You can also file for a financial hardship exemption if garnishment would cause significant financial distress. Here’s how you can challenge the IRS’s actions:

  • Negotiate a Payment Plan – Contact the IRS and negotiate a payment plan that you can afford. The IRS offers several options, including installment agreements, which allow you to pay your debt over time.
  • File for Hardship Relief – If garnishing your benefits would cause financial hardship, you can file for hardship relief. This status suspends the IRS’s collection activities until your financial situation improves.
  • Request a Collection Due Process Hearing – You have the right to a hearing if you receive a Final Notice of Intent to Levy. During this hearing, you can present your case and negotiate with the IRS.
  • Offer in Compromise – An offer in compromise allows you to settle your tax debt for less than the full amount owed. The IRS considers your ability to pay, income, and assets when evaluating an offer in compromise.

What Can You Do If Your Disability Payments Are Garnished?

If the IRS has already garnished your SSDI benefits, there are still steps you can take to address the situation and potentially recover your benefits:

  • Consult a Tax Professional – A tax professional can help you understand your options and negotiate with the IRS on your behalf. They can also help you set up a payment plan or apply for other forms of relief.
  • Request a Review – You can request a review of the garnishment by providing evidence of financial hardship or disputing the debt. The IRS may reduce or suspend the garnishment based on your circumstances.
  • Seek Legal Assistance – An attorney in tax or disability law can help you navigate this process and protect your rights. They can represent you in hearings and negotiations with the IRS.
  • Consider Bankruptcy – In extreme cases, bankruptcy may provide relief from IRS garnishments. However, this option should be considered carefully, as it has long-term financial consequences.

Can Long-Term Disability Garnish Social Security Payments?

Long-term disability (LTD) payments and Social Security Disability Insurance (SSDI) payments serve similar purposes but are distinct benefits. LTD insurance is typically provided through private insurers, either as an employee benefit or through individual policies. SSDI, on the other hand, is a federal program.

Garnishment rules differ for these types of payments:

  • Long-Term Disability – Long-term disability benefits are usually subject to garnishment for private debts, such as credit card bills or medical debts. However, the terms vary depending on the insurance policy and state laws.
  • Social Security Disability – SSDI payments are generally protected from garnishment by private creditors, but the IRS can garnish them for federal tax debts, as discussed earlier.

In short, long-term disability payments can be garnished by private creditors, while SSDI payments are more protected but still vulnerable to garnishment by the IRS for tax-related debts.

Schedule A Free Case Consultation With Jeffrey A. Rabin & Associates

Disability payments are life-changing for those who are unable to work due to a physical or mental health condition. If you’re a first-time applicant or have been denied, let our team of attorneys with Jeffrey A. Rabin & Associates, Ltd. take a look at your case.

We will examine every possible detail of your condition and application to ensure it is as solid as possible when you submit it to the Social Security Administration. Let our attorneys fight for your initial claim or appeal. Contact us at (312) 431-1000 now to schedule your case consultation.

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