I have no assests. My only source of income was my social security. Last month I started receiving 100% VA disability. Both checks go into a checking account. This past week I was notified by the IRS that I owe them taxes from 2004 when I cashed in a retirement account. Can the IRS garnish funds from either the social seccurity check or the VA disability check?

Maybe. If you were getting one or the other, I would say you couls stop anny garnishment/levy on the argument that you needed the money to survive, but since you are getting both, the IRS could legitimately argue that you have the resources to pay the tax you owe.

The IRS has full power to take what they are owed, and it's up to you to fight it, not the other way around. So it's in your interest to contact them to set up a payment plan first. You won't be forgiven the tax but you might be forgiven some of the interest and penalties, if you do it right.

Joypulv raises good points.