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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 11372
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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I have a tax lien and my taxes were filed by the IRS on my

Customer Question

I have a tax lien and my taxes were filed by the IRS on my behalf on 7/30/2007. They have been garnishing my SSDI via offset since that time. I assumed it would continue until the CSED, which I assume to be July of 2017. They stopped taking anything out starting with my November 3 check and haven't taken any out since. My levy was for $400K and is not nearly paid in full. I am wondering what is going on and if my CSED may have already expired.
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Submitted: 1 year ago.
Category: Tax
Expert:  Lane replied 1 year ago.

Hi,

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I hold a JD (Juris Doctorate, a doctoral degree in the law), with concentration in Tax Law, Estate law & Corporate law, an MBA, with specialization in finance & tax, as well as CFP® and CRPS designations. - I’ve been providing financial, Social Security & Medicare, estate, corporate & tax advice since 1986.

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You MAY have answered your own question here, not, however, because the statute has expired, but because they may have placed you into non-collectible status

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The "CSED clock" starts ticking when taxes are assessed

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The date of assessment is the date the tax liability is assessed on a particular form at an IRS Service Center. When the applicable form is signed by an IRS official, the 10-year period for that tax liability starts to run. When interest and late payment penalties (as well as other penalties) related to that tax year tacked onto the underlying tax debt, they too must be collected within the same 10-year period.

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But, in YOUR situation never having filed a tax return, where IRS filed one for you (i.e. using a Substitute for Return or SFR), then the statute of limitations began to run whenever that assessment was processed by the IRS on your behalf.

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Expert:  Lane replied 1 year ago.

Currently not collectible status occurs when the IRS assesses that you cannot afford to repay the debt, and doing so would create an economic hardship on you. It is forbearance by the IRS, a break from enforcement that can last years.... AND that does not toll the statutory period (stop the CSED clock from ticking)

Customer: replied 1 year ago.
I am aware of that information. What I am concerned about is what measures the IRS has available to them after the CSED, which in my case is 7/30/2017. Is there something that they are doing by not continuing the automatic collections and switching to a "paper" collection? Does the "paper" collection allow them to continue to collect after the CSED? If so, does it allow them to collect more than the 15% of my disability benefit under SSDI?
Expert:  Lane replied 1 year ago.

It changes nothing regarding CSED.

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But yes, it DOES affect amounts ...It's possible that they are moving to MANUAL (from automated):

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Automated:

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Pursuant to section 6331(h) of the Internal Revenue Code, the IRS can continuously take, month after month, an automatic 15% of a taxpayer’s social security benefits. All the IRS has to do is match its records of delinquent taxes to those of the government’s Financial Management Service, which indicate social security entitlement. After a match is made, a notice is sent to the taxpayer from the IRS that the 15% levy will commence on his or her social security. Once the levy commences, the Financial Management Service sends a notice of confirmation to the taxpayer.

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Manual

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The manual levy requires the assignment of an IRS Revenue Officer, while the automatic levy is a paperless transmission. The manual levy is usually made in extreme circumstances where there is a lack of cooperation.

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There CAN be exemptions, however, regarding the Manual Levy... This exemption – contained in IRC 6334(a)(9) – permits the taxpayer to receive a minimum amount of the social security payment and defeat all or part of the manual levy.... The IRS publishes a table of the amounts that can be claimed as exempt. A single taxpayer getting a monthly social security benefit can currently claim $779.17 as exempt from a manual.

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https://www.irs.gov/pub/irs-pdf/p1494.pdf

Expert:  Lane replied 1 year ago.

I should also ad that IRS has recently announced that they will attempt to be more reasonable in levy releases in hardship cases. If an automated or manual IRS social security levy doesn'tleave sufficient funds to pay living expenses,you should contact them ... it will only reinforce your financial situation

Customer: replied 1 year ago.
It has been my understanding that the IRS could only take up to 15% of my Social Security Disability Payments. Are you saying that the paper levy can take more than that?
Expert:  Lane replied 1 year ago.

"Manual Levy," (there are paper aspects to the automatic levy too) ... again the manual levy means that there's now a revenue officer involved.

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The IRS is not limited by IRC 6331(h) to taking 15% of a taxpayer’s social security benefits. The IRS can issue a manual levy that can continuously take all of the social security benefits under Internal Revenue Code section 6331(a), which permits levy on all wages, salary or other income (which would include social security).

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So, in that case, unless you use the table for an exemption, the law allows 100%.

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But again, they will work with you if you show it creates hardship and the statutory clock will not be tolled, even if this IS a manual levy

Customer: replied 1 year ago.
I just found this. https://www.irs.gov/Individuals/Social-Security-Benefits-Eligible-for-the-Federal-Payment-Levy-Program The timing indicates that they stopped offsetting my SSDI payments due to this change in their internal policy. Do you know what they do next? In other words, are they now ceasing collection of people with SSDI or are they pursuing all of them manually and therefore more aggressively?
Expert:  Lane replied 1 year ago.

There's no "what they are doing now" ... Everything is dependent on what IRS calls the "facts and circumstances" test.

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If they believe that you are hiding assets, It's likely that they've moving to a manual process.

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If they believe that this is truly a hardship issue, then they'll make the determination that putting the additional resources on this (revenue officer salary, costs of notice to levy specific accounts, etc) woul be more costly that amounts collected, if it turns out that there are no assets there to collect.

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