What is the Federal Payment Levy Program (FPLP)?
The Federal Payment Levy Program (FPLP) gives the IRS the right to seize a portion of certain payments you receive from the government. If you are a federal employee, a government contractor, or receiving Social Security benefits, your payments could be offset under the FPLP.
Payments Covered by the FPLP
Any of the following payments can be offset under the FPLP:
- Federal employee salaries
- Federal employee retirement annuities
- Certain Social Security benefits
- Railroad retirement benefits
- Military retirement payments
- Medicare provider and supplier payments
- Federal payments made to you as a contractor or vendor doing business with the government
Only Social Security retirement and survivors’ benefits are subject to the FPLP, not disability benefits or Supplement Security Income.
How the Levy Works
FPLP levies are similar to wage garnishments in that they are continuous. The levy applies to every federal payment you receive until your balance is paid off.
Typically, the levy amount is 15% of each payment, regardless of the size of the payment. For government contractors, the offset can be 100% of the payment or the full amount of tax owed.
Before your federal payments are levied, you should typically receive a Collection Due Process (CDP) notice warning you about the coming levy and notifying you of your right to a hearing.
Avoiding the Levy
If you receive a CDP notice, you have 30 days to request a CDP hearing. This is your chance to avoid the levy before it happens, so call a tax attorney right away to figure out your tax resolution options.
You can avoid the FPLP levy in several ways:
- Request an IRS installment agreement
- Submit an Offer in Compromise
- Request innocent spouse relief
- Claim currently not collectible status due to economic hardship
- File for bankruptcy
However, you can’t get back money that has already been levied, even if you are experiencing an economic hardship. Take action before the 30-day waiting period expires to stop the levy before it starts.
If you receive a CDP notice or a letter notifying you that your federal payments have been seized, get help from a tax attorney to avoid levies of your future federal payments.
Contact an Attorney
Get free tax advice from a Michigan tax lawyer by contacting Ayar Law at 248-262-3400 today.