What is a CP91 Notice?
Imagine getting a letter that says the government is going to take part of your Social Security benefits. That’s what a CP91 notice is. It’s an official “heads-up” from the IRS. It tells you that they’re planning to “levy” your Social Security payments.
What does “levy” mean? It basically means that the IRS is going to take a portion of your money to pay what you owe in taxes. The CP91 notice specifically targets your Social Security benefits, which can be especially concerning for many people who rely on this income.
This isn’t the IRS’s first choice. They send this notice only after other attempts to collect taxes have failed. Think of it as the IRS saying, “Okay, we’ve tried other ways. Now we’re moving to taking money from your Social Security.”
Why Did I Receive a CP91 Notice?
You’re probably asking, “Why me?” The IRS doesn’t send out these notices randomly. You receive a CP91 notice because you have:
- Unpaid Federal Taxes: You owe money to the IRS from a previous year, whether it is from your income tax or self-employment tax.
- Missed Payment Deadlines: You haven’t paid your taxes by the due date or any subsequent deadline.
- Failed Payment Arrangements: You haven’t followed the terms of a payment plan that you had with the IRS.
- Ignored Previous Notices: The IRS has likely sent you other letters before this one, perhaps reminders or warnings about your unpaid taxes. Failing to respond to those letters is often why they resort to a levy on Social Security benefits.
How Does a Social Security Levy Work?
The levy on your Social Security benefits means that the Social Security Administration (SSA) will send part of your monthly payment directly to the IRS instead of to you. Here’s how it typically works:
- The IRS Notifies the SSA: The IRS sends a notice to the SSA, instructing them to levy your benefits.
- SSA Begins Garnishing Payments: The SSA then takes a portion of your Social Security payment each month and sends it to the IRS until your tax debt is paid off.
- Amount of the Levy: The IRS can take up to 15% of your monthly Social Security benefits under a typical levy.
- You Receive a Reduced Payment: You’ll receive the remaining part of your monthly payment. This is your Social Security payment minus the amount being levied by the IRS.
- Levy Continues Until Debt is Paid: The levy will stay in place until your tax debt, along with any penalties and interest, is completely paid off.
What Should I Do When I Get a CP91 Notice?
The most important thing is not to ignore this notice. Here’s what you should do:
- Read it Carefully: Go over the notice carefully. Understand the amount you owe, the tax years involved, and the deadlines mentioned.
- Verify the Debt: Double-check that the amount the IRS says you owe is actually correct. Get your tax records and compare. If there’s an error, contact the IRS immediately to fix it.
- Contact the IRS: Call the number on the notice or visit an IRS office. Be polite and explain your situation. You may be able to work out a payment plan or explore other options.
- Explore Payment Options: Discuss these possibilities with the IRS:
- Installment Agreement: If you can’t pay the full amount, you may be able to set up a monthly payment plan.
- Offer in Compromise (OIC): If your financial situation makes it impossible to pay the full amount, you might be able to settle for a lower amount. However, this is a difficult process and is not granted in many cases.
- Hardship Exemption: The IRS might temporarily or permanently suspend the levy if it causes you severe financial hardship.
- Consider Professional Help: If you’re overwhelmed, get help from a qualified tax professional. A tax advisor can navigate the complexities of IRS procedures and help you create the best plan of action. They can also negotiate with the IRS on your behalf.
- Act Quickly: The IRS will levy your benefits if you don’t act fast. The sooner you address the issue, the more options you may have.
What Happens If I Ignore the CP91 Notice?
Ignoring the CP91 notice will not make the problem go away. The levy will continue each month until the debt is paid. Plus, your tax debt will continue to increase as interest and penalties are added. Avoiding action will lead to the situation worsening.
How Can I Prevent a Future Levy?
- File Your Taxes on Time: Even if you can’t pay right away, file your return by the deadline.
- Pay Your Taxes on Time: Pay your taxes as soon as possible. If you can’t pay the whole amount, pay at least something to lower your debt.
- Communicate with the IRS: If you’re struggling to pay, contact the IRS as soon as possible to discuss your options.
- Keep Accurate Records: Maintain thorough records of your income, deductions, and taxes paid. This can help you avoid future issues.
Important Considerations About a CP91 Levy
- Not all Social Security Benefits are Levyable: While most Social Security retirement and disability benefits are subject to levy, Supplemental Security Income (SSI) payments are not. SSI is a needs-based benefit for people with very low incomes.
- Appeals: You generally do not have the right to appeal a levy before it starts, but you can appeal after the levy has already begun.
- State Levies: While this discussion is focused on federal tax levies, many states also can levy your Social Security benefits for state tax debts.
- Impact on Daily Life: A levy on your Social Security can create financial difficulties. Do not wait until this occurs to take action to resolve your tax debt.
- Other Income Sources: Social Security is not the only source the IRS can levy. They can take wages, bank accounts, and even your property if necessary.
The Key Takeaway
A CP91 notice is serious, but it’s not a death sentence. It’s a sign that you need to take action regarding your tax debt. Understand the situation, verify the information, and take action with the IRS to resolve the problem. If you need help, seek advice from a tax professional who can offer the best path forward. Remember, ignoring the issue will not make it disappear. The sooner you confront it, the easier it will be to resolve.