IRS CP91 / CP298: Social Security Levy Notice Explained with Transcripts

Receiving an IRS CP91 or CP298 notice signals immediate risk to your financial stability and Social Security benefits. These notices indicate the IRS will seize a portion of your monthly retirement income. Both letters represent the government’s strongest enforcement action against taxpayers with unresolved federal tax debts. Ignoring them leads directly to automatic garnishment of your benefits.

The Federal Payment Levy Program empowers the IRS to collect taxes by taking 15% of Social Security payments. Unlike other debt collectors, the IRS does not exempt a minimum income before deducting funds. Retirees can lose part of their limited monthly income regardless of living expenses. Such levies create severe financial strain for older taxpayers.

The notice provides exactly 30 days to respond before garnishment begins under federal law. Taxpayers may request a Collection Due Process hearing within that deadline. Missing this window eliminates the right to challenge the levy in Tax Court. Immediate action preserves financial security and ensures access to available taxpayer protections.

What Are CP91 and CP298 Notices

The IRS issues CP91 and CP298 notices when taxpayers have unresolved tax debt tied to income reported on a tax return. These notices matter because they serve as a final notice before the IRS intends to levy on monthly Social Security benefits. Under the Federal Payment Levy Program, the IRS can continuously collect a portion of benefits until the full amount is paid. Understanding these notices helps taxpayers request relief, discuss payment options, and protect essential benefits from enforced collection.

IRS CP91 Notice: For Individual Taxpayers

• Final Notice: The IRS CP91 is a final notice warning that the IRS intends to levy on monthly Social Security benefits.
  
  
• Target Audience: The IRS issues CP91 notices to individual taxpayers with unpaid tax debt linked to income on personal tax returns.
  
  
• Payment Options: Taxpayers can resolve the matter by requesting payment arrangements, paying the full amount, or pursuing an appeal.
  
  
• Urgency: This notice signals that the department will proceed with collection unless the taxpayer takes steps to resolve the debt.

CP298 Notice: For Business-Related Taxpayers

• Business Debts: The CP298 is a final notice to taxpayers with payroll or employment-related tax debt.
  
  
• Federal Payment Levy Program: The IRS uses this program to apply continuous levy actions until the business pays or resolves its balance.
  
  
• Additional Notice: This letter confirms intent to enforce collection if no payment arrangements or appeal rights are exercised.
  
  
• Options Available: Businesses can discuss payment options with the IRS and request installment agreements to protect cash flow.

Federal Payment Levy Program: Continuous Collection Process

• Program Overview: The Federal Payment Levy Program allows the IRS to automatically levy Social Security benefits without repeated contact.
  
  
• Locked Padlock Icon: Many taxpayers see the locked padlock icon on digital notices, symbolizing secure but unavoidable collection authority.
  
  
• Continuous Levy: The levy reduces monthly Social Security benefits until taxpayers resolve the debt or establish payment arrangements.
  
  
• Appeal Rights: Taxpayers maintain the right to request relief and explore free taxpayer advocate assistance before benefits are reduced.

These notices represent the IRS’s intent to collect overdue tax debt through continuous levies on Social Security. Taxpayers who respond quickly, discuss payment options, and contact the IRS directly have the best chance to resolve their situation.

Key Differences Between CP91 and CP298

The IRS issues both CP91 and CP298 notices as a final notice, but they apply to different taxpayers and carry different implications. The table below outlines how these notices affect individuals with Social Security benefits and businesses with payroll or employment-related tax debt. Understanding these differences helps taxpayers identify their obligations, protections, and best response strategies.

1. Taxpayer Type

• CP91 Notice:
  Sent to individual taxpayers with unpaid personal tax debt.
• CP298 Notice:
  Issued to businesses or employers with payroll or employment-related tax liabilities.

2. Social Security Impact

• CP91 Notice:
  The IRS intends to levy up to 15% of an individual’s monthly Social Security benefits under the Federal Payment Levy Program.
• CP298 Notice:
  The IRS does not directly levy a business owner’s Social Security benefits, but it may levy business-related income streams.

3. Final Notice Role

• CP91 Notice:
  Serves as the final warning before the IRS places a levy on Social Security benefits.
• CP298 Notice:
  Acts as the final notice before the IRS enforces collection on business accounts or assets.

4. Hardship Considerations

• CP91 Notice:
  Individuals may request relief by showing that a Social Security levy would cause economic hardship.
• CP298 Notice:
  Businesses have limited hardship protections and typically must pay or request a structured payment arrangement.

5. Appeal Rights

• CP91 Notice:
  Individuals can request a Collection Due Process (CDP) hearing within 30 days to delay or stop the levy.
• CP298 Notice:
  Businesses also have appeal rights, but they must act quickly to prevent enforced collection.

6. Resolution Options

• CP91 Notice:
  Individuals can explore:
  • Installment agreements
  • Offers in Compromise
  • Currently Not Collectible (CNC) status
• CP298 Notice:
  Businesses can:
  • Contact the IRS to request a payment plan
  • Negotiate structured repayment for payroll-related liabilities

These distinctions show that the CP91 directly impacts individuals by reducing monthly Social Security benefits, while the CP298 affects businesses through collection on unpaid payroll or employment taxes. Taxpayers who act quickly can protect benefits, exercise appeal rights, and resolve tax debt more effectively.

Eligibility and Exemptions

The IRS issues levy notices under the Federal Payment Levy Program only when specific conditions are met, and certain exemptions protect vulnerable taxpayers. Understanding who qualifies for levy actions and who is excluded helps taxpayers know their rights and obligations. Below are the main eligibility rules, exemptions, and types of federal payments affected.

• Eligibility Criteria: The IRS issues levy notices when taxpayers have outstanding unpaid tax debt after multiple collection attempts.
  
  
• Federal Payment Levy Program Trigger: The IRS includes taxpayers in the Federal Payment Levy Program if no payment arrangements or appeal requests are active.
  
  
• Poverty-Level Exemption: Taxpayers with income at or below the federal poverty guidelines may be excluded from automatic levy actions.
  
  
• Supplemental Security Income Exemption: The IRS does not levy Supplemental Security Income payments because they are protected by federal law.
  
  
• Social Security Benefits Subject to Levy: Under the program, the IRS intends to levy up to 15 percent of monthly Social Security benefits.
  
  
• Other Federal Payments: The IRS can levy retirement benefits, military pensions, and certain federal contractor payments to satisfy tax debt.

These rules show that while the IRS can enforce collection through levies on Social Security and other federal payments, important exemptions protect low-income taxpayers and Supplemental Security Income recipients from losing essential benefits.

Rights and Legal Protections

When the IRS issues a CP91 or CP298 notice, taxpayers still have important rights and protections to safeguard their Social Security benefits and financial stability. These rights allow taxpayers to request hearings, challenge debts, and seek relief when levies create hardship. Below are the main protections available after receiving these final notices.

Collection Due Process Hearing: Protecting Appeal Rights

• Request Deadline: Taxpayers may request a Collection Due Process hearing within 30 days of the notice date.
  
  
• Right to Challenge: During the hearing, taxpayers can dispute the validity of the tax debt or propose alternative payment arrangements.
  
  
• Suspension of Levy: The IRS must suspend levy actions while the hearing request is pending and under review.
  
  
• Tax Court Appeal: Taxpayers may petition the U.S. Tax Court if they disagree with the outcome of the hearing.

Innocent Spouse Relief: Addressing Joint Tax Return Liabilities

• Relief Request: Taxpayers can request innocent spouse relief when a joint tax return leads to unfair liability.
  
  
• Spousal Responsibility: The IRS may release one spouse from liability if the tax debt resulted solely from the other spouse’s actions.
  
  
• Social Security Protection: Relief can prevent Social Security benefits from being levied to satisfy joint debts.
  
  
• Required Forms: Taxpayers must file Form 8857 to request innocent spouse relief and provide supporting documentation.

Hardship Protections: Preserving Basic Living Needs

• Currently Not Collectible: Taxpayers may request Currently Not Collectible status if paying would prevent covering basic living expenses.
  
  
• Proof of Income: The IRS requires financial documentation, including income and expense statements, to evaluate hardship claims.
  
  
• Social Security Benefits Impact: Hardship claims can suspend levies on monthly Social Security benefits when taxpayers prove their inability to pay.
  
  
• Taxpayer Advocate Service: Free assistance is available from the Taxpayer Advocate Service for taxpayers facing serious financial hardship.

Statutory Limits: Boundaries on IRS Levy Authority

• Levy Percentage: Under the Federal Payment Levy Program, the IRS may levy only up to 15 percent of monthly Social Security benefits.
  
  
• Protected Payments: The IRS cannot levy Supplemental Security Income payments or certain federal survivor benefits.
  
  
• Time Restrictions: The IRS must act within the ten-year collection statute of limitations for enforcing tax debt.
  
  
• Legal Safeguards: Federal law ensures taxpayers retain due process rights even when a final notice has been issued.

These protections demonstrate that while the IRS intends to collect unpaid tax debt aggressively, taxpayers maintain significant rights to appeal, seek relief, and shield essential Social Security benefits.

Step-by-Step Response Timeline

When the IRS issues a CP91 or CP298 final notice, taxpayers must act quickly to protect their Social Security benefits. The following timeline outlines specific steps for each critical stage, from immediate actions to final submission. This schedule helps taxpayers preserve rights, explore payment options, and prevent enforced collection.

• Immediate Actions: Taxpayers should confirm the accuracy of the tax debt, verify Social Security benefit calculations, and gather all supporting documents.
  
  
• Weeks 1–2: To protect Social Security benefits, taxpayers should explore installment agreements, hardship status, or other payment options.
  
  
• Weeks 2–3: Taxpayers should prepare Form 12153 to request a Collection Due Process hearing under the Federal Payment Levy Program.
  
  
• Weeks 3–4: Taxpayers should finalize submission of forms and documentation to prevent levy actions against monthly Social Security benefits.

By following this timeline, taxpayers intend to resolve their tax debt and improve their chances of protecting essential benefits.

Common Mistakes to Avoid

Many taxpayers unintentionally make errors after receiving an IRS CP91 or CP298 final notice, which can worsen their financial situation. By understanding these common mistakes, taxpayers can protect their Social Security benefits and preserve their rights under the Federal Payment Levy Program. Below are the most frequent missteps and how to avoid them.

Ignoring a Final Notice: Immediate Risk of Levy

• Missed Opportunity: Ignoring an IRS CP91 or CP298 notice allows the IRS to proceed with levying monthly Social Security benefits.
  
  
• Automatic Action: After the response window closes, the IRS intends to enforce collection automatically through the Federal Payment Levy Program.
  
  
• Increased Debt: Ignoring notices results in additional penalties and interest that raise the full amount owed.
  
  
• Lost Rights: Failure to respond forfeits important appeal rights and reduces the chance of negotiating payment arrangements.

Contacting the Wrong Agency: Misplaced Effort

• SSA Limitation: Contacting the Social Security Administration does not stop an IRS levy.
  
  
• IRS Authority: Only the IRS can remove, delay, or modify levy actions under federal law.
  
  
• Wasted Time: Contacting SSA delays proper action and shortens the 30-day response period.
  
  
• Correct Action: Taxpayers must contact the IRS directly to request relief or discuss payment options.

Making Partial Payments: Ineffective Resolution

• Misapplied Payments: Partial payments without agreements are often applied to older balances, leaving recent tax debt unresolved.
  
  
• No Levy Protection: Sending money without formal arrangements does not stop levy actions on Social Security benefits.
  
  
• Misleading Signal: Sporadic payments may convince the IRS that taxpayers can pay more than they claim.
  
  
• Required Action: Taxpayers should request installment agreements or other structured payment options to secure protection.

Providing Inaccurate Financial Information: Damaging Credibility

• False Data: Submitting incorrect income or expense information harms credibility during hardship claims.
  
  
• Verification Risk: The IRS verifies financial details and may reject inaccurate submissions.
  
  
• Fraud Consequence: Providing false statements with legal consequences can be treated as fraud.
  
  
• Honest Disclosure: Accurate financial information strengthens hardship requests and increases the likelihood of levy relief.

Missing Deadlines: Lost Rights and Protections

• Strict Timeline: Taxpayers have only 30 days from the final notice date to request a Collection Due Process hearing.
  
  
• Weakened Appeal: Filing late allows only an equivalent hearing, which does not stop levy actions.
  
  
• Ongoing Levy: Missing deadlines means the IRS continues to levy Social Security benefits without interruption.
  
  
• Timely Response: Filing on time preserves appeal rights and helps prevent enforced collection under the Federal Payment Levy Program.

Avoiding these mistakes allows taxpayers to act strategically, protect their Social Security benefits, and resolve tax debt more effectively.

Professional Help

Receiving an IRS CP91 or CP298 final notice can be overwhelming, especially when Social Security benefits are at risk. Professional guidance ensures taxpayers make informed decisions, preserve rights, and choose the best resolution path. Below are the main situations where help is essential and the resources available to protect taxpayers.

When to Seek Professional Help: Critical Situations

• Large Balances: Taxpayers should seek professional help when tax debt exceeds $25,000 and immediate action is required.
  
  
• Complex Finances: Professional support is crucial if taxpayers have multiple income sources, assets, or ongoing business obligations.
  
  
• Missed Deadlines: Tax professionals can assist when taxpayers miss filing deadlines and still need representation to negotiate relief.
  
  
• Appeal Preparation: Guidance is highly recommended when preparing Form 12153 or other requests under the Federal Payment Levy Program.

Roles of Tax Professionals: Safeguarding Benefits

• CPAs: Certified Public Accountants analyze financial records, ensure compliance, and help structure payment arrangements that protect benefits.
  
  
• Enrolled Agents: EAs are federally licensed to represent taxpayers before the IRS and negotiate installment agreements or Offers in Compromise.
  
  
• Tax Attorneys: Attorneys provide legal defense, address appeals, and protect Social Security benefits in cases involving levy disputes or fraud concerns.
  
  
• Combined Expertise: Each professional offers unique skills that help taxpayers resolve tax debt while safeguarding essential monthly Social Security benefits.

Professional assistance helps taxpayers act strategically, effectively use their appeal rights, and protect Social Security benefits from levy actions.

FAQs

What is an IRS CP91 notice?

An IRS CP91 notice is a final warning sent to individuals with unpaid federal tax debt. It informs taxpayers that the IRS intends to levy up to 15 percent of their monthly Social Security benefits through the Federal Payment Levy Program. The notice means prior attempts to collect the balance were unsuccessful. Taxpayers have 30 days from the notice date to respond, request a hearing, or establish payment arrangements to prevent enforced collection.

What is a CP298 notice?

A CP298 notice is the business counterpart to the CP91. The IRS issues it to employers or business entities with unresolved payroll or employment-related tax debt. Like the CP91, the CP298 is a final notice before levy action begins. It allows the IRS to use the Federal Payment Levy Program or other collection methods to recover amounts owed. Businesses have 30 days to act, request a hearing, or negotiate structured payment arrangements.

How much of my Social Security benefits can be taken?

The IRS may levy up to 15 percent of your monthly Social Security benefits under the Federal Payment Levy Program. This levy applies regardless of your living expenses or financial needs. Unlike other federal debts, there is no minimum exemption amount when tax debt is involved. For example, if your monthly Social Security benefit is $1,500, the IRS can withhold $225 monthly until the tax debt is paid or resolved.

Can I stop a levy on Social Security under the Federal Payment Levy Program?

You can stop or delay a levy by responding promptly to the notice and requesting relief. Options include negotiating an installment agreement, submitting an Offer in Compromise, or proving economic hardship. Filing Form 12153 to request a Collection Due Process hearing also suspends levy actions until your case is reviewed. Acting quickly preserves your rights, gives you time to present documentation, and can prevent the IRS from taking Social Security benefits.

What form do I file to request a hearing after a final notice?

Taxpayers must file Form 12153, “Request for a Collection Due Process or Equivalent Hearing,” within 30 days of the notice date. Filing this form ensures the IRS pauses levy actions while reviewing your appeal. You must include a copy of your CP91 or CP298 notice and a clear explanation of your reasons. Timely filing preserves your right to petition the U.S. Tax Court if you disagree with the outcome of the hearing.

Does economic hardship qualify me for relief?

Yes, economic hardship may qualify you for relief from a Social Security levy. If the levy prevents you from covering necessary living expenses, you can request Currently Not Collectible status. The IRS requires full disclosure of your income, monthly expenses, and supporting documentation to evaluate the claim. If approved, levy actions are suspended, although interest and penalties may continue. This protection allows you to responsibly maintain basic living needs while addressing your tax debt.