The Law Offices of Daniel S. Williams
Federal Payment Levy Program
If you have not paid all of your federal income taxes, beware. The Internal Revenue Service has partnered up with the Department of the Treasury, Financial Management Service (FMS), to create a program that is authorized to collect overdue taxes through a continuous levy on certain federal payments owed to you.

Through the Federal Payment Levy Program, the IRS can levy against the following payments owed to you:

  • Federal employee retirement annuities
  • Federal payments made to you as a vendor doing business with the government
  • Federal employee travel advances or reimbursements
  • Certain Social Security benefits. However, benefit payments such as lump sum death benefits, benefits paid to children, and special benefits for taxpayers over a certain age are not subject to the levy. In addition, Supplemental Security Income payments and payments with partial withholding to repay a debt owned to Social Security will not be levied through the program.
  • Some federal salaries.

Not all federal payments made to a delinquent taxpayer will be levied under the program. If you are in bankruptcy, have applied for innocent or injured spouse relief, made alternative arrangements to pay, or the IRS has concluded that you are in a hardship situation, you will generally receive your payments in full.

In order to implement the levies, the IRS sends a list of delinquent accounts to the FMS for matching against pending federal payments. If a match is found, the taxpayer receives notice of the intent to levy and of the taxpayer's right to a hearing, and a failure to respond to the notice authorizes the IRS to levy on the federal payments.

Once levied, payment due to a delinquent taxpayer may be reduced by 15 percent or by the exact amount of tax owed if it is less than 15 percent of the payment. The levy is continuous until the overdue tax liability is paid in full or other arrangements have been made with the IRS.

Copyright 2007 LexisNexis, a division of Reed Elsevier Inc.

This web site is designed for general information only. The information presented at this site should not be construed to be formal legal advice nor the formation of a lawyer/client relationship.
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