Background: Since 2018, TAS has been urging the IRS to stop assigning to private collection agencies (PCAs) the accounts of taxpayers who receive Supplemental Security Income (SSI) or Social Security Disability Income (SSDI). In 2019, Congress passed the Taxpayer First Act (TFA), which required the IRS to exclude these accounts. Specifically, TFA § 1205(a) amended Internal Revenue Code § 6306(d)(3) to exclude from assignment to PCAs the debts of taxpayers “substantially all of whose income consists of disability insurance benefits under section 223 of the Social Security Act or supplemental security income benefits under title XVI of the Social Security Act.”
The IRS had no trouble systemically excluding the accounts of taxpayers who receive SSDI. SSDI payments are reported to the IRS by the Social Security Administration (SSA) on Form 1099, and the IRS therefore knows the identities of SSDI recipients. But the IRS was not able to systemically exclude the accounts of taxpayers who receive SSI benefits. The SSA does not issue 1099s with respect to SSI recipients, and the SSA took the position that privacy law barred it from sharing the names of SSI recipients with the IRS.