If you`re paying back taxes, you may be wondering if the Internal Revenue Service (IRS) can legally seize your retirement benefits, including funds from your 401(k), retirement, or other retirement account. While these accounts are protected from creditors, the IRS is an exception and can legally seize funds from your retirement savings. The seizure of Social Security for federal tax debts does not take place without notice. If you owe federal taxes, the IRS will send you a notification before the settlement is made. “Tax relief companies are using radio, television and the Internet to promote assistance to taxpayers in need. If you pay them an upfront fee, which can be in the thousands of dollars, these companies claim they can reduce or even eliminate your tax debt and stop the tax refund by applying for legitimate IRS hardship programs. The truth is that most taxpayers are not eligible for the programs sold by these scammers, their businesses do not pay the tax payable, and in many cases do not even send the necessary documents to the IRS to apply to participate in these programs. Some of these companies do not offer repayment and leave people even more indebted. www.consumer.ftc.gov/articles/0137-tax-relief-companies It`s not an exhaustive list, but it does give an overview of the kinds of things the IRS will consider. The most common pitfalls are those that involve several periods of responsibility. The Internal Revenue Manual does not provide guidance on the number of default periods required to trigger the “blatant” label. Intuitively, most taxpayers who were faced with a levy on their retirement assets only got to this point through several periods of tax liability. It is therefore important to have a defense prepared for this argument if you claim that your tax behavior was not blatant.

Also keep in mind that it is common for IRS staff to interpret broad or vague language so that an investigation is possible. For example, terms such as “egregious” or “uncooperative behaviour” could potentially be interpreted as meaning relatively minor offences. Therefore, the risk of losing pension funds can be much greater than it seems, and preventive measures (for example. B, the resolution of liability) are highly recommended, even if you feel that you do not meet the criteria for collecting pension funds. The IRS can only seize a portion of your income or salary to offset your taxes. You will not be left without income because you will have to pay the necessary and basic cost of living for yourself and all the relatives who depend on you. The IRS also has the power to seize a portion of disability, Social Security benefits, and survivor payments to offset taxes owing. The Bundesbank`s regulations protect the monthly social security twice in a bank account to which social security is paid and is automatically protected against seizure by any tax collector, including a state tax collector.

It does not matter from what sources the funds are in the account at the time of seizure. For example, if their Social Security is $1,000 per month, the bank will ignore any garnishment as long as there is no more than $2,000 in the bank account into which Social Security is deposited. The Arizona Taxpayer Bill of Rights, released by the Arizona Department of Revenue, www.azdor.gov/Portals/0/Brochure/001.pdf unfortunately contains no information about federal income protection for seniors such as Social Security and pensions. If protected money is withdrawn from your bank account, contact Arizona Taxpayer Assistance at (602) 255-3381 or an Arizona revenue officer to obtain permission for such state-protected funds. If you default on a federal student loan, the government can take on up to 15% of the outstanding debt. However, it is not eligible for the first $750 of your monthly Social Security and retirement benefits. For more information about the currently uncollectible status and how to be placed in that status, visit the IRS Taxpayer Advocate Service website at: www.taxpayeradvocate.irs.gov/get-help/paying-taxes/currently-not-collectible/ The IRS is not allowed to collect pension benefits based on need. So if you get additional security income through the Social Security Administration because you`re older, the IRS can`t charge for those SSI payments. The IRS also can`t access funds you`re not currently entitled to. So if you`re still employed and your employer-sponsored plan doesn`t allow for payments, or if you`re not already involved in the plan, the IRS can`t get you to ask for a distribution of the funds until you have the legal right to do so.

In the meantime, the Agency may debit the account. If you have funds in a retirement account or receive retirement income and the IRS has issued a definitive letter of intent to hand over, the situation is very serious. How you react can determine if you have the means to take care of yourself after your years of work. There are legal and administrative safeguards that a lawyer with jurisdiction in tax regulation can take to ensure that you can safely retire. .