GN 02410.305: Federal Payment Levy Program (FPLP)
Effective Dates: 10/08/2015 - Present TN 12 (09-01)
- GN 02410.305 Federal Payment Levy Program (FPLP)
A. Policy – general 1. Authority The Taxpayer Relief Act of 1997 authorizes the Internal Revenue Service (IRS) to collect overdue Federal tax debts of individuals who receive Federal payments, including Social Security payments. The law authorizes IRS to levy up to 15% of each payment until the tax debt is paid.
- 2. Description of FPLP
The FPLP is run by the Department of the Treasury's Bureau of the Fiscal Service (BFS), formerly known as the Financial Management Service (FMS) and IRS. Unlike the IRS tax levy program described in GN 02410.100, the FPLP is an automated system that does not require SSA to take any action to reduce a payment. The reduction, or levy, is done by the Treasury's BFS after SSA certifies a payment and sends it to the Treasury for disbursement. We refer to these reductions as “automated tax levies.” With a few exceptions described in GN 02410.305B, SSA's title II payments are subject to such automated tax levies when IRS determines that a delinquent tax debt should be collected in that manner. Automated tax levies that reduce SSA title II benefits are done through the Treasury Offset Program (TOP). IRS and BFS work together to accomplish the match that identifies the SSA beneficiary as a delinquent tax debtor. In addition, IRS and BFS send all notices to SSA's beneficiaries telling them about the levy. See GN 02410.305C for detailed information about the automated levy process. NOTE: Delinquent tax debts will also continue to be collected by IRS through the paper process of the IRS levy program described in GN 02410.100. IRS determines whether to collect a tax debt through the paper process or the automated tax levy process of the FPLP. IRS will not use both processes at the same time to collect an individual's delinquent tax debt. 3. Unauthorized use and disclosure of tax information As part of the FPLP, SSA receives Federal tax return information from the IRS in the form of the IRS Final Notice Before Levy on Social Security benefits. This IRS notice identifies the Social Security beneficiary as a delinquent tax debtor. (See GN 02410.305F for more information about the IRS notice stored on the Online Retrieval System (ORS).) It is SSA's responsibility to insure that the tax information is used and disclosed only as authorized by the Internal Revenue Code (26 U.S.C. 6103 in particular). The act of disclosing the tax return information discussed in GN 02410.305F for purposes other than those intended for the FPLP (as described in GN 02410.305G) is punishable upon conviction by a fine of as much as $5,000 or imprisonment for as long as 5 years or both. Any unauthorized disclosure of tax return information may also result in an award of civil damages against the employee in an amount not less than $1,000 and the possibility of punitive damages being awarded against that person. Any inspection of tax information that is not authorized by law constitutes a criminal misdemeanor punishable upon conviction by a fine of as much as $1,000 or imprisonment for as long as one year or both. Such unauthorized inspection of tax information by a Federal employee may also result in the award of civil damages against the United States. Thus, any SSA employee who has access to the tax information related to FPLP stored on the ORS must not inspect, use or disclose such information except as provided in GN 02410.305G. Also, see GN 03320 for additional information about disclosure of tax return information. 4. Debt priorities During the matching process, it is possible for one person to owe a delinquent tax debt and a delinquent non-tax debt. If this occurs, the delinquent tax debt will be collected first. If the criteria for collection of a non-tax debt are met after the tax levy is imposed, the title II payment will be offset for the non-tax debt to the extent that the offset does not reduce the payment below $750. This could be confusing to some beneficiaries, so you will need to know how the offset of the Social Security benefits is processed through TOP when a beneficiary owes multiple debts. See GN 02410.305E for more information on processing multiple debts. 5. Minimum benefit amount By law, automated FPLP can reduce a benefit payment by 15%. Unlike the Benefit Payment Offset (BPO) program in which the benefit payment cannot be reduced below $750 (see GN 02410.300A.4.), there is no minimum amount that cannot be subjected to FPLP. Thus, a title II benefit payment can be reduced below $750 per month to collect a tax debt. In addition, title II benefit payments below $750 a month are subject to FPLP. 6. Reduction of title II benefit not appealable to SSA The reduction of a title II benefit payment under tax levy is not appealable to SSA since the levy occurred due to a debt that is owed to IRS; that agency is the one with which a beneficiary should discuss any appeal rights. We can redirect a beneficiary to IRS if he or she wants to appeal the tax debt. See GN 02410.305G.3. for more information about handling inquiries from beneficiaries who want to protest the levy of a title II benefit due to a delinquent tax debt. 7. Title II overpayments If a title II payment was reduced due to tax levy and we later determine that the payment was not due, the beneficiary is liable for the entire payment amount including the amount withheld under FPLP. 8. Hardship requests Any request for relief from tax levy due to hardship should be redirected to IRS. SSA is not authorized to stop or delay IRS automated tax levy. In addition, do not issue any special payments such as critical payments to pay back benefits that were levied. See GN 02410.305G.7. for more information about how to handle requests for relief from tax levy due to hardship. 9. Excess collections due to tax levy In some cases, tax levy can result in an excess collection. For example, this can occur when a beneficiary fully repays a tax debt but due to systems timing, BFS cannot stop the next scheduled levy. It is not SSA's responsibility to refund the excess collection. It is the responsibility of the Department of the Treasury to refund to the person any excess collections. Do not make any special payments such as critical payments to pay back the amount that was levied. See GN 02410.305G.5. and GN 02410.305G.6. for more information about how to handle allegations of excess collections. B. Policy – SSA payments excluded from tax levy Some payments under the Social Security Act are excluded by IRS from the tax levy process. The following payments are excluded: 1. Title XVI payments Title XVI payments are excluded by IRS from tax levy. 2. Title II Disability payments Effective October 2015, the IRS and BFS excludes all payments that have a payment identification code of A-H from the FPLP. 3. Title II payments undergoing partial withholding * Title II payments undergoing partial withholding to recover a debt owed to SSA are excluded from tax levy. (See GN 02410.305E.3. for more information about this exclusion.) * Title II payments that are already being levied by IRS through the Form 668W or paper levy process (see GN 02410.100). 4. Certain payment identification codes All payments that have a payment identification code of C, G, J or K are excluded by IRS from tax levy and when a payment is being levied by the paper levy process. C. Process – SSA's role in the FPLP process
- 1. SSA computes and certifies payments without regard to tax levy
SSA computes and certifies its title II payments to the Department of the Treasury as usual. We do not check for delinquent tax debts that are owed to IRS and we do not calculate the amount of the levy. After SSA computes and certifies its title II payments, BFS runs its matching process to identify the existence of a delinquent tax debt owed by any beneficiary and notifies IRS that a match occurred. 2. SSA sends payment files to BFS SSA sends payment files to BFS as a matter of routine each month. These files contain data about the beneficiary and the payment that BFS uses in its automated processes to conduct tax levy through FPLP. This data includes, but is not limited to, monthly benefit payment, the beneficiary's own account number (BOAN), the claim account number (CAN) and the bypass code for payments excluded from levy, if applicable.
- 3. SSA automatically includes bypass code on payment files
SSA's systems automatically identify payments that qualify for the tax levy exclusion listed in section GN 02410.305B.2. The system places a bypass code on the person's payment record when that person is undergoing partial withholding to recover a debt owed to SSA and when a payment is being levied by the paper levy process. (The person's payment record is an SSA systems-generated record sent automatically to BFS; it is not the Master Beneficiary Record (MBR).) The bypass code tells BFS not to levy a Social Security payment. NOTE: No manual action is required to input a bypass code on the person's payment record in order to exclude an SSA payment from levy under FPLP. SSA's systems have been changed to recognize the exclusion situation in GN 02410.305B.2. and automatically add the code to (and remove the code from) the person's payment record. D. Process – treasury's FPLP process
- 1. Background
BFS uses TOP to conduct the levy of SSA's title II benefits via the FPLP program. (See GN 02201.029 for information on TOP.) TOP is based on computer matching and uses the taxpayer identification number (TIN) and a name control (generally the first four characters of the debtor's last name), to match the payee and debtor records. For individuals, the TIN is the same as the BOAN. 2. IRS sends debt to TOP On a weekly basis, IRS submits a file of delinquent tax debts to BFS and updates tax debts already in the Treasury's National Interactive Delinquent Debtors Database maintained by BFS. The debts in the IRS file are marked with an indicator to instruct BFS to notify IRS that one of its tax debts has matched with a title II benefit payment, but not to levy that SSA payment until directed by IRS. TOP matches a title II beneficiary's identifying information (BOAN and name control) with the same information from the debtor database. IRS then uses this matching information to determine whether to proceed with the automated tax levy.
- 3. IRS notifies debtor
About 60 days before a title II benefit payment is levied, IRS sends a Final Notice Before Levy on Social Security benefits. This IRS notice tells the Social Security beneficiary that: * IRS intends to enforce collection action; * IRS has identified Social Security benefits to which the person is entitled;
- * IRS intends to levy (or reduce) the Social Security benefits by 15% to pay toward the delinquent tax debt;
* Full and immediate repayment of the tax debt will stop the levy against the Social Security benefits (payment instructions are given); * A payment arrangement can be made with IRS if the person cannot make full and immediate repayment. In addition, the IRS notice shows the Social Security Number, or BOAN and the claim account number of the person who owes the delinquent tax debt. The IRS notice does not contain any information about the amount of the Social Security benefit (either before or after the levy) nor the date of the Social Security benefit that will be levied. NOTE: The IRS Final Notice Before Levy on Social Security benefits serves as the warning letter to the Social Security beneficiary. For tax levy, BFS does not send a 60-day and 30-day warning letter as it does with BPO (see GN 02410.300D.2. for information about warning letters in the BPO program).
- 4. IRS notifies SSA about the planned levy
Within 24 hours of printing/mailing the tax levy notice, IRS transmits an image of the Final Notice Before Levy on Social Security benefits so it can be stored on SSA's ORS on or before the date that the recipient receives the notice. Due to systems processing, the toll-free number for IRS cannot be seen when retrieving copies of the Final Notice Before Levy on Social Security benefits from ORS (see GN 02410.305G.1. for the number). 5. BFS sends notice of levy If the tax debt still qualifies to be collected after the IRS Final Notice Before Levy on Social Security benefits has been sent, IRS initiates the levy and BFS reduces the title II benefits. BFS sends a notice of offset to the debtor. The notice is sent in time to be in the hands of the Social Security beneficiary by payment day. In addition, the notice is sent each time the person's benefit is levied. The BFS notice of levy includes the following information: * the name, address and telephone number of IRS; and * the name, address, SSN, and creditor agency account number of the person whose benefit was offset; and * the amount of the title II payment before the levy and the amount of the levy; and * the payment date; and * the toll-free telephone number of IRS in case the person wants to contact IRS about the offset. See GN 02410.305G.1. for the toll-free number.
- 6. Weekly offset data file
On a weekly basis, BFS sends offset data files to SSA's central office for processing. The files are sent electronically no later than 48 hours prior to the payment date. Although the offset data file cannot be read or accessed by SSA's employees, the information about the offsets is posted to the Payment History Update System (PHUS). 7. BFS sends debt collections to IRS BFS sends the levy amount (i.e., the tax debt collection) to IRS, which accounts for the collection and keeps the tax debt balance updated. 8. BFS processes post-offset claims Post-offset claims (i.e., nonreceipt and nonentitlement) involving title II payments that were levied are handled the same as non-offset payments. No special handling or inputs are necessary by SSA. 9. BFS processes reversals A reversal is the act of taking back levy amounts from IRS. BFS performs reversals automatically. Reversals are done when, for example, SSA determines that a title II benefit that was levied should not have been paid at all. SSA's systems automatically tell BFS about the need for reversals. No manual action is required by SSA to process reversals. E. Process – FPLP process and unusual cases You should be aware that some unusual cases could occur in the FPLP process. While the circumstances are rare, they might be confusing to the beneficiary. You need to know how they are processed, so you can identify them when a beneficiary inquires about the case. Such cases fall into three categories. The first category involves Social Security beneficiaries who owe a tax debt and a non-tax debt. When this situation occurs, TOP will apply collections to satisfy a tax debt first. TOP will then offset that same title II benefit payment to collect a non-tax debt, to the extent that the levy does not reduce the payment below $750. The second category involves a beneficiary whose payment matches more than one debt of the same type (i.e., non-tax or tax). In those situations, collections will be applied to the oldest debt first. After the oldest debt has been fully recovered, BFS continues collecting the next debt, and so on. The third and last category involves a title II beneficiary who is already subject to tax levy under FPLP when SSA begins to collect an overpayment by benefit adjustment. When this happens, tax levy ceases until the debt owed to SSA is collected. This is because title II benefit payments that are reduced to collect an SSA debt are excluded from tax levy. See GN 02410.305B for more information about title II payments excluded from tax levy. The following paragraphs describe the tax levy process for unusual cases that will arise. 1. Lower priority debt being collected; higher priority debt becomes available for levy When a non-tax debt (lower priority) is being collected and a tax debt (higher priority) becomes available for collection by FPLP, BFS takes the following actions: * Continues to collect the lower priority debt until the higher priority debt is ready for levy; * Begins collecting the higher priority debt after the IRS due process period expires; * Ceases collection of the lower priority debt while the higher priority debt is being collected; * Sends offset notices each month the higher priority debt is being collected via FPLP; * Resumes collection of the lower priority debt after the higher priority debt has been collected; and * Sends offset notices each month the lower priority debt is being collected. If you receive an inquiry from a person who is confused about this situation, refer to GN 02410.305G.12. for guidance. NOTE: The last payment made on the higher priority debt may be so low that enough money is available to resume collection on the lower priority debt within the same month. When this occurs, the debtor will not receive two separate offset notices from BFS, but will instead receive one offset notice containing detailed information for both debts. See GN 02410.305F for more information about accessing copies of the BFS and IRS notices on SSA's ORS. 2. Multiple debts in low amounts A debtor may owe multiple debts and all the debts are of relatively low amounts. For instance, the debtor may owe $60 to IRS, $40 to the Small Business Administration and $30 to the Department of Agriculture. If enough money is available from the Social Security monthly payment to collect these debts in one month, BFS would reduce that monthly payment to satisfy all three debts. In this case, IRS will send their Final Notice Before Levy on Social Security benefits for the tax debt and BFS will send a separate warning letter for each of the other non-tax debts. But only one offset notice will be generated by BFS; it will contain detailed information on each debt. See GN 02410.305F for more information about accessing copies of the BFS letters and notices and IRS notices on SSA's ORS. If you receive an inquiry from a person who is confused about this situation, refer to GN 02410.305G.12. for guidance. 3. Beneficiary already subject to FPLP; Social Security debt becomes subject to withholding from Title II benefit Since title II benefits that are being reduced to collect SSA debts are excluded from tax levy, any tax levy that is in progress will automatically stop when SSA begins benefit adjustment. In addition, the offset notices will not be sent by BFS. SSA's systems automatically include the bypass code on the payment record of any title II beneficiary who is undergoing benefit withholding by SSA. This bypass code is a signal to the Treasury to stop the tax levy. See GN 02410.305C.3. for more information about the bypass code. When SSA removes the bypass code, BFS resumes tax levy if all conditions for FPLP continue to be met. BFS takes the following actions:
- * Notifies IRS, through TOP, that the Social Security benefit is again available for automated tax levy;
* Resumes levies without further warning if IRS' warning letter cycle was completed before the tax levy was stopped by SSA;
- * Sends offset notices each month that the benefit is levied.
If you receive an inquiry from a person who is confused about this situation, refer to GN 02410.305G.13. for guidance. F. Process--getting specific information about Title II benefits subject to tax levy 1. General ORS contains an electronic image of the IRS Final Notice Before Levy on Social Security benefits. The notice shows the information listed in GN 02410.305D.3. In addition, the MBR and PHUS show limited information about TOP-related activity (either FPLP or BPO on a title II benefit). The MBR shows two codes in the Transaction Data Line indicating TOP-related activity on a title II benefit. PHUS shows two TOP-related event codes and legends which indicate FPLP or BPO activity on a title II benefit.
- 2. When to retrieve copies of the final notice before levy on Social Security benefits from ORS
You should retrieve copies of the FPLP notices only when you need information about tax levy to assist a title II beneficiary who inquires about FPLP (see GN 02410.305D.3. for more information on what is on the notice). If you have printed a copy of the Final Notice Before Levy on Social Security benefits, you must insure that the copy is destroyed (see GN 02410.305A.3. for more information about the confidentiality of tax information on the ORS). Also, copies of the notice should not be printed and given to a beneficiary. In most cases, the title II beneficiary asks questions about tax levy that should be answered by IRS. See GN 02410.305G for more information about handling inquiries about tax levy. If the person's question should be answered by IRS, redirect that person to IRS. 3. How to retrieve copies of the IRS and BFS notices from ORS
- You can get access to ORS by using this link http://orsstd.sspf.ssa.gov/orsstd.
G. Procedure--handling inquiries about tax levy 1. Person requests general explanation of tax levy Some people will contact SSA with questions about the tax levy program. If the question is general, provide a description of the program. Include the following items in your description: * Tax levy is a debt collection program run by IRS through BFS; and * It is authorized by law (the Taxpayer Relief Act of 1997); and * It is the reduction of a title II benefit payment to collect a delinquent tax debt owed by the beneficiary to IRS; and
- * SSA has no control over whether or not IRS initiates the levy.
If the person wants more information about the tax levy program, the person should contact IRS at 1-800-829-7650. 2. Person requests information about the debt owed to IRS In reaction to the IRS Notice Before Levy on Social Security benefits and/or the BFS offset notice, Social Security beneficiaries who receive the notices sometimes approach SSA with questions. The IRS and BFS notices refer, in general, to the debt owed by the title II beneficiary to IRS; neither notice stored on ORS provides specific information about the debt such as amount, dates or cause. When a person asks SSA for information about the debt, tell the person: * SSA does not have any specific information about the debt, such as the amount, date or cause of the debt; and * The person should contact IRS at 1-800-829-7650 for additional information about the debt. 3. Person protests the levy of the Title II benefit When BFS reduces a person's title II benefit due to tax levy it is not an SSA initial determination subject to appeal rights. When a person wants to protest the levy of the Social Security benefit, tell that person: * The levy is not an SSA initial determination subject to appeal rights with SSA; and
- * SSA cannot accept a formal request for an appeal of the tax levy; and
* To contact IRS at 1-800-829-7650 to discuss any further appeal rights. IMPORTANT: Do not accept any formal appeal such as a Form SSA-561-U2 regarding the person's protest of the tax levy. If a person sends a formal request to SSA or otherwise insists on making a formal appeal, dismiss it in accordance with existing instructions in GN 03102.325B.3. 4. Person requests waiver of the debt owed to IRS If a beneficiary asks about requesting waiver of the tax debt owed to IRS, tell the person: * The tax debt is not owed to the Social Security Administration; * SSA cannot accept a waiver request regarding the tax debt owed to IRS; * To contact IRS at 1-800-829-7650 to discuss any issues regarding fault in causing the tax debt and ability to repay the tax debt. IMPORTANT: Do not accept a waiver request (SSA-632-BK or equivalent form) on a tax debt owed to IRS. If a person sends a waiver request to SSA or otherwise insists on making a waiver request on a tax debt, do not process the waiver request (see GN 02250.305 for instructions). 5. Person alleges not owing the debt When a person alleges that he or she already paid the debt or is not the individual who owes the debt, tell him or her: * IRS determines who owes delinquent tax debts and who is liable for the repayment; and * SSA is not authorized to decide on behalf of IRS that a person does or does not owe a debt subject to tax levy; and * To contact IRS at 1-800-829-7650 to discuss the liability for the debt. IMPORTANT: Do not make any special payments such as critical payments to pay back benefits that were offset due to tax levy. IRS is responsible for paying back money withheld from a title II benefit due to tax levy. 6. Person challenges the amount of the tax levy If a beneficiary believes the amount withheld from his payment by the Treasury is calculated incorrectly, tell him or her: * IRS issues the levy for the 15% reduction amount withheld from the title II payment; and * SSA only knows that 15% can be deducted (see GN 02410.305A.5.); and * To contact IRS at 1-800-829-7650 to discuss the amount of the tax levy in more detail. IMPORTANT: Do not make any special payments such as critical payments to pay back benefits that were offset due to tax levy. IRS is responsible for paying back money withheld from a title II benefit due to tax levy. 7. Person requests relief from tax levy due to hardship Due to alleged hardship, people request SSA to prevent tax levy from occurring and/or to refund the money that has already been withheld from their Social Security benefits. When a person requests relief from tax levy due to hardship, tell him or her: * Tax levy is done at the request of IRS; and * SSA cannot take any action to stop the levy or to refund any money that has already been withheld; and
- * Any money that has been withheld is in the possession of IRS; and
* To contact IRS at 1-800-829-7650 regarding the request for relief from tax levy due to hardship. IMPORTANT: Do not make any special payments such as critical payments to pay back benefits that were offset due to tax levy. IRS is responsible for paying back money withheld from a title II benefit due to tax levy. 8. Person alleges bankruptcy If the person alleges bankruptcy, tell the person: * Tax levy is done at the request of IRS; and * SSA cannot take any action to stop the levy or to refund any money that has already been withheld; and
- * Any money that has been withheld is in the possession of IRS; and
* To contact IRS at 1-800-829-7650 to discuss further options. 9. Person alleges not receiving the IRS and/or the BFS notices If the person alleges not receiving the IRS Final Notice Before Levy on Social Security benefits and the BFS notice, tell that person: * IRS is responsible for mailing the Final Notice Before Levy on Social Security benefits to the person subject to tax levy; and * To contact IRS at 1-800-829-7650 to discuss nonreceipt of the IRS Final Notice Before Levy on Social Security benefits. * BFS is responsible for mailing the offset notice each time the title II benefit is levied; and * To contact BFS at 1-800-304-3107 to discuss nonreceipt of the offset notice. 10. Person requests to repay the debt owed to IRS When a beneficiary approaches SSA in the mistaken belief that he or she can repay an IRS debt by paying SSA, tell him or her that: * The debt is owed to IRS and payment is a matter between the person and IRS; and
- * SSA cannot accept payment on behalf of IRS; and
* To contact IRS at 1-800-829-7650.
- IMPORTANT: Under no circumstances should you accept a payment for a debt owed to IRS.
11. Person alleges nonreceipt of payment that was reduced by tax levy If a beneficiary alleges nonreceipt of a title II payment that was also reduced because of tax levy, take the same action you would normally take in the event of an allegation of nonreceipt of payment.
- NOTE: For information on processing non-receipt claims, see GN 02406.000.
12. Person requests explanation of offsets for multiple debts The unusual tax levy cases described in GN 02410.305E may prove to be difficult for beneficiaries to understand. Since BFS carries out the rules for conducting offsets for multiple debts with different priorities, BFS is in the best position to handle these inquiries. When a person asks SSA for information about multiple debts and debt priorities, tell the person: * Tax levy is a debt collection program run by IRS through BFS; and * SSA has no control over how BFS performs the offsets or how it determines debt priorities; and * To contact BFS at 1-800-304-3107. If the person wants more information about how offsets are done for multiple debts or how debt priorities are determined, the person should contact the TOP Call Center at 1-800-304-3107. The TOP Call Center employs people who are trained to answer questions. 13. Person requests status of tax levy while SSA debt is being collected A beneficiary whose benefit has been levied may become confused if the tax levy process is stopped while an SSA debt is being recovered. When the beneficiary asks what happened to the tax levy process, tell the person:
- * The tax levy process is suspended while SSA recovers its own debt;
* This happens because title II benefits being reduced to collect SSA debts are excluded from tax levy; * Once the SSA debt is fully recovered, BFS will resume collection of the tax debt if all tax levy criteria are met.
x← This means that the line was removed and was added – in other words, the "Effective Dates" line at the top of the document has been updated to reflect that the new version is effective as of the date the change was made.