U.S. Treasury Seizing Refund Checks of Americans to Collect Old Debts Owed by Their Parents

This still-developing news regarding a relatively new collection tactic by the U.S. Treasury is causing outcries on Capitol Hill and via lawsuits across the country.
It seems the U.S. Treasury has seized $75 million this year from U.S. taxpayers whose debts are more than 10 years old.
Many of the debts date back to taxpayers who are deceased. However, the children of these Americans are now seeing their IRS tax refund checks seized and sent back to the federal government.
Hundreds of thousands of U.S. taxpayers are getting somewhat threatening letters instead of tax refund checks. These letters inform them that the federal government has seized their money to repay their parents’ decades-old debts that they never settled.
2008 Farm Bill to Blame
It seems that the 2008 Farm Bill included a single line that made this possible, allowing the government for the first time to seek out individual taxpayers who have owed Uncle Sam money for more than ten years. Before the farm bill language turned up, the U.S. could not recover money owed for more than a decade.
Moreover, it seems that only about 10 percent of appeals are granted in these cases involving the children of debtors.
If the debtor is deceased, according to the Federal Trade Commission, the money is considered a write-off. But the Social Security Administration has a different view of the law, chasing down adults whose parents cared for them with unintentionally overpaid benefits.
Some have Sued the Feds
Some of these cases have led to lawsuits filed on behalf of the affected children of the debtors. Mary Grice and her attorney Robert Vogel sued the federal government for seizing money it says the Social Security Administration incorrectly paid her mother 37 years ago.
Grice, a 56 year-old Food and Drug Administration employee, told the Washington Post that she received a threatening letter in March telling her that all $4,462 of her 2013 tax refund was seized by he government for overpaying her mother Sadie’s Social Security benefits in 1977. The bill came to $2,996, but the government took Mary’s entire refund check. Sadie Grice died in 2010.
Social Security spokeswoman Dorothy Clark told The Washington Post on Thursday that “[w]e have an obligation to current and future Social Security beneficiaries to attempt to recoup money that people received when it was not due.”
Meanwhile, Democratic Senators Barbara Boxer of California and Barbara Mikulski of Maryland wrote Acting Social Security Commissioner Carolyn Colvin on Friday, requesting a halt to this collection practice.
‘While this policy of seizing tax refunds to repay decades-old Social Security overpayments might be allowed under the law, it is entirely unjust,’ they wrote.

J. Lipsky

Hello, I am John, born in Cedar Rapids, but lived a lot of years in Latin America. I am an economist and have specialized in credit and debt. Originally sovereign debt, but later on, in credit score management and debt consolidation. I write for many publications. Here in eCreditDaily, I write about credit, second chance banking, and debt. I also write for other websites and bulletins about inflation and country risk.

Featured Articles