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IRS Levies Caused Taxpayer Hardship, Says TIGTA

by Mike Godfrey, Tax-News.com, Washington

05 August 2016


Some Internal Revenue Service (IRS) revenue officers, when issuing levies on US taxpayers, took action against Social Security recipients that likely caused or exacerbated economic hardship, according to a report released by the Treasury Inspector General for Tax Administration (TIGTA).

It was pointed out that to satisfy tax debts, the IRS may levy Social Security benefits. Nevertheless, a provision of the Internal Revenue Code requires the IRS to release levies that cause economic hardship, particularly for those older and low-income taxpayers whose benefits are their primary source of income.

In addition, taxpayers have the right to claim an exemption against the levy, which allows them to receive a minimum amount of the Social Security payment and prevent all or part of the levy.

Revenue officers make levy determinations of Social Security benefits on a case-by-case basis and exercise judgment in making the determination to levy. However, while there are special procedures and thresholds for levying individual retirement accounts and 401(k) retirement accounts, there are no special considerations or procedures for revenue officers when levying Social Security benefits.

In these cases, revenue officers follow manual procedures for levying assets in general. In most cases, revenue officers are compliant with these general IRS procedures when levying Social Security benefits, but, for 15 percent of its sample, TIGTA found that revenue officers took levy action on Social Security recipients that likely caused or exacerbated economic hardship.

These levies may be due in part to collection policies that appear to give equal weight to non-legal considerations (such as whether taxpayers are "cooperative" within the subjective determination of revenue officers), TIGTA said. Additionally, in 28 percent of the sampled cases, revenue officers used the wrong form to levy Social Security benefits, and, as a result, the IRS did not consider exemption amounts before establishing the levy.

Russell George, the TIGTA, said: "We believe the IRS needs to adjust its policies and procedures to allow revenue officers, with appropriate discretion, not to levy if facts and circumstances clearly show that taxpayers are in or on the threshold of an economic hardship."

TAGS: compliance | tax | tax compliance | law | Internal Revenue Service (IRS) | enforcement | tax authority | social security | United States | individual income tax | Tax

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