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Can NC Dept of Revenue garnish Social Security benefits or my bank account for unpaid taxes from 2007?

Kill Devil Hills, NC |

I failed to file a NC tax return for 2007. The statue says I earned $19,000+ and received unemployment benefits of $4,000+, and paid no taxes, resulting in my owing $1,200 in taxes and $1,000+ in penalties. Although I didn't file, I paid more than $400 in income taxes. I can file, and probably lower my tax liability to two or three hundred dollars, that still leaves the penalty issue. If the state cannot touch my social security, I don't care.

Attorney Answers 4

  1. Best answer

    Most states can - and do - garnish SS benefits before you get them:

    •To enforce child support or alimony obligations under 42 USC 659.
    •To enforce a valid garnishment for court-ordered victim restitution under 18 USC 3613.
    •To collect unpaid federal taxes under 26 USC 6334(c).
    •To have a portion of your check withheld to satisfy a current year federal income tax liability under 26 USC 3402 (P).
    •Other federal agencies will offset benefits to collect money from benefits to pay a non-tax debt owed to that agency according to the Debt Collection Act of 1996 (Public Law 104-134).

    This information is found at

    They do not withhold for State taxes, but once the money is in your account they will take the money.

    However, if you did not file a 2007 tax return, you may now have Federal tax liability, and that money COULD be withheld directly from your benefits before the money comes to you. Instead of taking an I don't care position, you would be better served by getyting in front of this, meeting with a tax attorney and getting both the State and Federal tax issue resolved. You may have more willingness by the IRS to work out an acceptable payment schedule if you go to them. If they have to find you, they may not be so willing to make a deal.

    The exact answers to questions like this require more information than presented. The answer(s) provided should be considered general information. The information provided by this is general advice, and is not legal advice. Viewing this information is not intended to create, and does not constitute, an attorney-client relationship. It is intended to educate the reader and a more definite answer should be based on a consultation with a lawyer. You should not take any action that might affect your claim without first seeking the professional opinion of an attorney. You should consult an attorney who can can ask all the appropriate questions and give legal advice based on the exact facts of your situation. The general information provided here does not create an attorney-client relationship.

  2. They are not garnishable from the US government before you receive them, but once they hit your bank account, the state could garnish the bank and take the monies out of your account. If Social Security is your sole source of income then I don't think that the bank can be garnished either. I practice in Texas where virtually everything is exempt from execution so if I were you I would call a NC lawyer.

    Hope this helps. If you think this post was helpful, please check the asnwer was a good answer tab below. Thanks. Mr. Geffen is licensed to practice law throughout the state of Texas with an office in Dallas. He is authorized to handle IRS matters throughout the United States and is licensed to practice in US Tax Court as well as The Court of Claims. This answer is provided as a public service and as a general response to a general question, it is not meant, and should not be relied upon as specific legal advice, nor does it create an attorney-client relationship.

  3. First and foremost, as my colleague eluded to, you should definitely contact a NC disability attorney since NC may have specific protections against creditors and/or the federal government from garnishing your social security benefits. In general, your social security benefits can be garnished by the IRS to satisfy a federal tax debt or by the state to satisfy child support obligations. Since you question revolves around the state of NC garnishing your benefits, you will need to speak with a qualified accountant familiar with the laws in NC or a NC disability lawyer.

    Any information obtained from this answer should not be treated as legal advice and in no way creates the existance, or appearance, of an attorney-client relationship.

  4. Actually some amount of Social Security benefits are not garnishable even after they hit the bank account; and the bank may have an affirmative obligation to protect the funds.

    Effective May 1, 2011, a new Federal regulation requires that banks which receive a garnishment order for an account into which Social Security, VA, Railroad Retirement, or Federal pensions have been deposited, must look more closely before honoring the garnishment order. The bank has to figure out the sum of such Federal benefit payments that have been deposited to the account during a two month period, and must ensure that the account holder has access to an amount equal to that sum or to the current balance of the account, whichever is lower.

    Under this new regulation, you do not forfeit your protection from garnishment by mingling your Federal checks with other money -- but there are limits on the amount of money in your account that's protected from garnishment. Only 2 months worth of benefits are protected. Additionally, don't transfer benefits to another account or else the protection is void.

    Disclaimer Information on this site is provided by Brian Scott Wayson as general information, not legal advice, and use of this information does not establish an attorney-client relationship. If you have questions about your specific situation, please call an attorney.

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