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Are You Receiving Social Security, Pension or Disability Income?


HELPS is a nonprofit law firm and 501(c)(3) charitable organization. We serve senior citizens and disabled persons struggling with debt.

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Past Due Taxes Owed To the IRS

Can Retirement or Social Security Income Be Garnished for Past Due IRS Income Taxes?

The IRS can garnish (offset) 15 percent of social security income for past due income taxes. It is very uncommon for the IRS to garnish pensions and other retirement income.

Garnishment of social security for federal tax debt will not happen wihtout notice. If you owe the federal taxes, the IRS will send you a notice before the offset occurs.

Can the IRS Garnish or Levy a Bank Account for Past Due Income Taxes?

The IRS can levy bank accounts for unpaid tax debt. This practice, however,is relatively uncommon. If your bank account is levied by the IRS for unpaid tax debt, do not give up hope. You can contact the IRS (see below) and ask to be put on Currently Not Collectible Status. If the IRS agrees that you qualify this status, it is very likely they will release your levied funds.

How to Obtain Currently Not Collectible Status

Lower income persons can often be placed on currently not collectible status (CNC) with the IRS. Once an account is placed in CNC status, the IRS will cease collection action, which includes any levy or garnishment actions that are currently taking place. When a taxpayer is placed in CNC status, this status typically lasts for a year. If the taxpayer's financial situation does not change or improve, CNC status will continue.

Persons with especially lower income can often obtain CNC status by simply phoning the IRS. You will not need to file detailed financial paper work.

For more information on Currently Not Collectible status and how you can be placed in this status, visit the IRS Taxpayer Advocate Service website at:

IRS Taxpayer Advocate Service

There are websites that offer additional general information by searching the internet for “IRS uncollectible status.” If you have difficulty you can also contact the IRS Taxpayer Advocate Service for help. The Taxpayer Advocate Service is an independent organization within the IRS. The Taxpayer Advocate Service (TAS) is available to individuals for free to ensure that every taxpayer is treated fairly and understands their rights. The IRS Arizona Taxpayer Advocate’s phone number is 602-636-9500. This is their website:

What Can be Done About Taxes Owed to a State Revenue Department?

State tax collectors cannot garnish social security, pensions, and other retirement income. It is protected from garnishment by federal law. State tax collectors might not tell seniors their income is protected. Instead they may attempt collection from seniors who don’t know their rights. If a state tax collector calls, a senior, who can’t afford to pay their past state taxes can simply advise the state tax collector his income is federally protected social security, pensions, VA benefits, or disability and they can’t afford to pay the tax. The state can, however intercept a federal tax refund if any.

Federal banking regulations protects twice the amount of monthly social security in a bank account into which social security is deposited is automatically protected from garnishment by any collector, including a state tax collector. It does not matter the sources of the funds in the account at the time of the garnishment. So, for example, if your social security is $1000 per month, as long as there is not over $2000 in the bank account into which social security is deposited the bank disregards any garnishment.
The Arizona Taxpayers Bill of Rights published by the Arizona Department of Revenue, unfortunately does not provide information regarding the federal protections of seniors income like social security and pensions. If protected money is levied from your bank account contact the Arizona Taxpayer Assistance at (602) 255-3381 or an Arizona revenue agent to obtain a release of these federally protected funds.

What is a Tax Lien?

Sometimes seniors are unnecessarily worried when they receive a notice of a “tax lien.” A tax lien from the IRS or state taxing agency is a “lien” on a taxpayer’s property. Language in the written lien notice sometimes causes people to worry that they might lose their home, car and other possessions. Tax collectors are not in the business of selling peoples homes. It just doesn’t happen in real life. Many people have little or no equity in a home for a lien to attach anyway. The taxing agency files the lien and hopes the tax gets paid if and when the home is sold. Tax collectors also do not go after personal possessions, especially from seniors with lower incomes.

I Received a 1099c What do I do?

A 1099c is a form a creditor submits to the IRS, copied to the taxpayer, that states a debt has not been paid. The IRS then takes the position in certain instances that since the debt was not paid it is now income upon which taxes need to be paid.

The law provides that to the extent a person is “insolvent”, meaning their debts exceed their assets there is no tax liability. IRS form 982 with box 1b checked off indicating insolvency is submitted with a 1099c when the tax returns are filed. “Box” tax return preparation services on the internet will automatically (and incorrectly) count a 1099c as income which will result in taxes owing. It is difficult to make the software do it correctly.

Many tax preparers do not understand the rules regarding 1099c and incorrectly advise seniors that a tax needs to be paid. A senior should make sure that tax returns are filed (even if they otherwise do not file tax returns) and that they verify their tax preparer correctly filled out IRS form 982. Avoid any tax preparer that is unfamiliar with form 982. Even if there is a tax liability lower income seniors can apply for uncollectable status with the IRS.

Can Tax Relief Companies I See Advertised Help Me?

The United State Federal Trade Commission, FTC, is an independent government agency whose primary function is consumer protection. This is a quote from the first paragraph on their website describing tax relief companies:

“Tax relief companies use the radio, television and the internet to advertise help for taxpayers in distress. If you pay them an upfront fee, which can be thousands of dollars, these companies claim they can reduce or even eliminate your tax debts and stop back-tax collection by applying for legitimate IRS hardship programs. The truth is that most taxpayers don’t qualify for the programs these fraudsters hawk, their companies don’t settle the tax debt, and in many cases don’t even send the necessary paperwork to the IRS requesting participation in the programs that were mentioned. Adding insult to injury, some of these companies don’t provide refunds, and leave people even further in debt.”

What About an Offer in Compromise?

An offer in compromise is where the taxpayer pays the IRS a discounted amount in settlement of past due taxes where a person cannot pay past taxes in an installment agreement with the IRS. There are better solutions for lower income seniors who normally do not have access to funds to offer to settle back taxes. Some CPA’s and local tax attorneys are able to answer questions and help you determine if this would be a practical solution. Here is the IRS website that describes offers in compromise:

Can I Eliminate Taxes Through Bankruptcy?

Taxes often can be eliminated through bankruptcy. The general rule is that the tax must have been filed at least two years ago, be for a tax over three years old in order to be eliminated through bankruptcy. Seniors can contact an experienced bankruptcy attorney for more information.


Certainly seniors want to pay their taxes if they are able. However, our society wants seniors to have the food and medicines they need. If there is a choice between basics and paying taxes, laws and procedures are in place protecting lower income and poor seniors from tax collection. Their income is protected and available for their needs.

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Peace of Mind
These HELPS clients were dealing with harassing debt collectors and anxiety over old Debt. HELPS provided a solution to their financial worries.