What CP298 means
CP298 says the IRS intends to levy up to 15% of your Social Security benefits to pay unpaid taxes. The levy is automated. It runs through the Federal Payment Levy Program, which matches IRS balances against federal payments. Social Security is one of them.
The detail most people miss is the account type. The Internal Revenue Manual pairs two notices for this levy: CP91 for individual accounts and CP298 for business accounts. If you got a CP298, the debt the IRS is chasing sits on a business account tied to you, usually a sole proprietorship's employment or other business taxes. If your notice is a CP91 instead, read our CP91 guide.
Why you got it
The IRS sends CP298 when three things are true. A business balance is in collection. Your Social Security number was matched to Social Security benefit payments. And the account passed the program's screens for levy.
The manual says the notice displays the balance due and identifies the specific benefit payment that may be levied by its claim and beneficiary account numbers. It also says CP298 provides an additional 30 days after the Collection Due Process notice time frame to resolve the liability. So this notice usually comes after you already had a chance to request a hearing on a different notice. That history matters for your options.
How the 15% levy works
IRC 6331(h) allows a continuous levy on certain payments. Once approved, it attaches to up to 15 percent of each specified payment and keeps attaching until the levy is released. Social Security benefits are on the list of specified payments.
Fifteen percent does not sound like much until you live on a fixed income. It comes off every month. It does not stop because you are retired. It stops when the balance is paid, the levy is released, or the account is otherwise resolved.
Retirement does not retire a business tax debt. The IRS knows exactly where your benefits are deposited.
The deadline
Your CP298 gives a date. Treat it as the last day to resolve the balance or exercise appeal rights before the levy starts. The IRS does not publish a single universal number of days for every CP298 recipient, so use the date on your copy.
On appeal rights, the IRS manual says the notice informs taxpayers of their right to appeal through the Collection Appeals Program, or through an equivalent hearing if there was no prior Collection Due Process or equivalent hearing on those periods. An equivalent hearing does not carry the same Tax Court review that a timely CDP hearing does. If you are still inside a CDP window from an earlier notice, that is the stronger path.
What to do now
- Identify the business account. Which business, which form, which periods. CP298 relates to a business (BMF) account. Find out which one before you call.
- Confirm the balance. Compare the periods and amounts with your filed returns and payment history. Business balances sometimes include estimated assessments from returns that were never filed.
- Call the number on the notice. The IRS page says to use that number, not the Social Security Administration. SSA cannot stop the levy.
- Pick a resolution. Full payment, an installment agreement, an offer in compromise, or a hardship review. The IRS page for CP298 points to payment plans and offers, and lists Form 9465 and Form 12153 among its resources.
- Put it in writing. If you request an appeal, keep proof of what you sent and when.
What to have ready when you call
A phone call goes better when you know the answers before the agent asks. Have these in front of you:
- The CP298 itself, with the notice date and the tax periods listed.
- The business name and employer identification number the balance belongs to.
- Copies of the returns for those periods, or a note of which ones were never filed.
- Proof of any payments you believe were not credited.
- A realistic monthly number you can pay, based on your actual budget.
Ask the agent four things. Which periods are included. Whether any balance is based on an IRS-prepared return rather than one you filed. Whether a levy has already been approved or is still pending. And what has to happen, by what date, to keep the first levy from going out.
Check the collection clock
The IRS does not get forever. Under IRC 6502, tax generally may be collected by levy only if the levy is made within 10 years after the assessment, unless that period is extended or suspended. Hearings, offers in compromise, bankruptcy, and some other events can pause the clock. Look at the assessment dates for each period on your transcript. An old business balance may be closer to its collection deadline than the IRS letter suggests, and that changes which option makes sense. Our guide on how long the IRS has to collect explains the basics.
If the levy would cause a hardship
Many people receiving Social Security have little room in the budget. If paying basic living expenses is already a struggle, ask the IRS to review your finances. A hardship review uses your actual income and allowable expenses, documented on a collection information statement. Do not wait until benefits have been reduced for six months to bring it up.
What not to do
Do not assume the business debt died with the business. If you were a sole proprietor, the business tax is your tax. Closing the business did not close the account.
Do not change bank accounts to dodge the levy. The levy attaches to the benefit payment itself, not to the account it lands in.
Do not ignore a related Trust Fund Recovery Penalty. If the business was a corporation or LLC and you were personally assessed the penalty, see our guide to the Trust Fund Recovery Penalty. That assessment is collected from you as an individual.
The law behind CP298
IRC 6331(h) authorizes the continuous levy on up to 15 percent of specified payments, including Social Security benefits. IRC 6330 governs the pre-levy hearing rights. IRM 5.19.9.4 describes the Federal Payment Levy Program notices, including the CP91 and CP298 pair, the extra 30 days, and the appeal rights the notice describes.
If you received a CP298, call us at (813) 229-7100 before the date on the notice. The fastest fixes happen before the first check is reduced.