- Income tax liability
- Student loans
- Child support
- Home loans
- Civil penalty obligations
In some instances, the government may demand that a recipient return some SSI funds. This usually happens when the government finds that the individual is not entitled to benefits or has been receiving too much.
Most people who lose some of their SSI benefits lose them to the IRS. With the Federal Payment Levy Program, this agency is allowed to take as much as 15 percent of income to satisfy delinquent tax debts. This rule applies whether a person receives a comfortable or tight income. For non-tax debts to other federal agencies, they are not allowed to take the first $750 of monthly income.
If the IRS has issued an intent to levy, the beneficiary has 30 days to set up a payment arrangement without the agency enforcing a full 15 percent garnishment. For federal student loans, the debts are still valid regardless of how long the individual has been out of school since there is no statute of limitations on SSI garnishments for such loans. In this instance, the government can take as much as 15 percent of monthly benefits as long as the deduction does not reduce monthly income to less than $750.
Alimony and child support payments are processed through a national system. The amount of garnishment depends on a person's state of residence. If the state's legal maximum is less than the maximum mandated by the Consumer Credit Protection Act, the state's rules apply. However, the CCPA's maximum is imposed if the state's provisions mean a higher garnishment amount. According to the CCPA, a person may lose as much as 65 percent of income depending on the number of children and ex-spouses receiving support. Also, the length of delinquency is a determining factor.
Making A Settlement
The best course of action if there is a levy is to set up a payment arrangement or make a settlement. The agency may be willing to settle on a lower amount if the debt is paid upfront. Some agencies also set up monthly payment arrangements if the individual who owes money agrees to an automatic withdrawal. These payment amounts are usually lower than what may be taken in the event of a levy and an ensuing garnishment. An offer in compromise may be the only solution. Since there is a nonrefundable charge for filing, be sure to meet all eligibility criteria.
Although a common assumption is that the IRS and other federal agencies are strict and unrelenting, this is not true. The IRS is especially willing to work with people who make a good-faith effort to pay their debts. In many cases, the agency has extended payment periods and set low affordable monthly payments for those who are willing to pay. Also, many other agencies are willing to do the same today. If federal debts become unmanageable, be sure to contact the agency quickly to explore payment options and avoid a credit-damaging garnishment.
To learn more, speak to an insurance agent at 314-351-HALO(4256).