Taxation & Estate Planning

By 2009 the IRS Expects to Levy 3 Million

By Darrin Mish

According to the 2007 Taxpayer Advocate Service Annual Report to Congress the IRS is expanding its FPLP collection initiatives. The Federal Payment Levy Program (FPLP) is an automated system that matches IRS records against those of the government's Financial Management Service (FMS) and allows continuous levies to be issued for up to 15 percent of federal payments due to taxpayers who have unpaid federal tax liabilities. FPLP levies can attach to a variety of sources of federal income, ranging from salaries of federal employees to retirement income to federal contractor (or vendor) payments. However until recently the bulk of all FPLP levy payments received have from Social Security recipients.

Wage levies in general can create economic harm to taxpayers that find themselves unable to resist IRS efforts to garnish their wages. However, an FPLP levy has the potential for a more intense economic impact. The regular levy process allows the taxpayer the opportunity to request a hearing and have someone to personally review the facts of the case. While this hearing is pending the levy action is stopped. With the Federal Payment Levy Program on the other hand, there is no human component. It is completely automated. In simplest terms, if you get a check from the federal government as an employee, for retirement benefits, or otherwise and you owe back taxes and the required notices have been sent, the FPLP will issue a levy, garnishing your federal payments.

As a recipient of federal payments you are in effect assumed guilty and have to prove your innocence. You are denied due process of law afforded to privately compensated taxpayers. The first groups of federally compensated taxpayers to be added to the FPLP system are civilian employees of the Department of Energy, the EPA, the Department of Health and Human Services and the VA. The IRS projects the inclusion of these federal employees to boost their collections by 960,000 taxpayers pushing the total number of FPLP levies close to 3 million by 2009. That doesn't include anticipated collections from Department of Defense civilian employees and Military Retirement Annuity recipients who are also on the list of additions.

This means an increased amount of frustration in dealing with IRS problems for an increased number of taxpayers. Under the FPLP program it is commonplace for the IRS to receive multiple payments from taxpayers who otherwise would be entitled to reprieve before a levy is released. Coping with an IRS wage levy can cause an immense amount of stress for the average taxpayer. As a taxpayer you do have rights. Learning those rights and the correct steps to take in managing your case with the IRS can be challenging and time consuming, adding to your stress and frustration. Hiring a professional with quality experience in handling IRS matters can help you sleep at night and put your hard-earned money back in your pocket more quickly.

Full post as published by IRS Problem Solver Blog on July 22, 2008 (boomark / email).