- U.S. Treasury has grabbed $75 million this year from Americans whose debts are more than 10 years old, thanks to a single line in the farm bill
- Many of the debts trace back to the deceased parents of the people who now see their IRS tax refund checks sent back to Washington, D.C.
- Only about 10 per cent of appeals are granted
- A Maryland woman said she lost nearly $3,000 because the Social Security Administration overpaid her mother in 1977 after her husband died, leaving her with five children to raise
- Before the farm bill language turned up, Uncle Sam couldn't recover money that was owed for more than a decade
Hundreds of thousands of U.S. citizens are getting shocking letters in their mailboxes instead of tax refund checks – nastygrams informing them that the federal government has seized their money to repay debts their parents decades-old debts that they never settled.
In some cases, they're debts the parents never knew they had. And no one warned their children.
The 2008 Farm Bill included a single line that made it possible, allowing the government for the first time to hunt down individual taxpayers who have owed Uncle Sam money for more than ten years.
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.
Frustrated: 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
Shock: Social Security overpayments made decades ago are boomeranging on the beneficiaries' children
The Treasury Department has been exercising its new authority since 2011, bringing in $424 million in old debts that were previously considered out of reach.
Social Security says it's identified 400,000 taxpayers whose families have owed a combined $714 million for ten years or more. Every oen of those, the agency claims, will learn their fate by this summer.
Since January the government has recovered more than $95 million in ancient obligations. That's a fraction of the $1.9 billion the Treasury has seized overall in 2014, most of it owed for a much shorter time.
But it's the targeting of Americans for their deceased parents' decades-old delinquent Social Security accounts – often without solid evidence of exactly who received errant payments in the first place – that has people up in arms.
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.'
Mary Grice, a 56 year-old Food and Drug Administration employee, told the Post that she received a threatening letter in March advising her that all $4,462 of her 2013 tax refund was seized to compensate the government for overpaying her mother Sadie's Social Security benefits in 1977.
The bill came to $2,996, but the government captured Mary's entire refund check.
Sadie Grice died in 2010.
'What incenses me is the way they went about this,' Mary said. 'They gave me no notice, they can’t prove that I received any overpayment, and they use intimidation tactics, threatening to report this to the credit bureaus.'
She sued the Social Security authorities this week in federal court, arguing that her due process rights were violated when the government put her on the hook for a debt that allegedly traces back to her long-dead father's benefit account.
Democratic Senators Barbara Boxer (2nd R) and
Barbara Mikulski (L) are demanding the Social Security Administration
cancel debts that are more than ten years old and incurred through no
fault of the person who's currently on the hook
Looking for one of these this April? Check your
parents' credit reports first. Sadly, it doesn't matter if they passed
away years ago
The agency told the Post that it always tries to contact taxpayers before seizing their money. In Grice's case, they send postcards to a PO box where she hasn't received mail since 1979.
Somehow, though, they knew the correct address to reach her when it was time to take her tax refund.
Robert Vogel, a lawyer who took Grice's case pro bono, told the Post that '[t]he craziest part of this whole thing is the way the government seizes a child’s money to satisfy a debt that child never even knew about.'
'They’ll say that somebody got paid for that child’s benefit, but the child had no control over the money and there’s no way to know if the parent ever used the money for the benefit of that kid.'
Democratic Senators Barbara Boxer of California and Barbara Mikulski of Maryland wrote to Acting Social Security Commissioner Carolyn Colvin on Friday, asking for a time-out.
'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.
'Garnishing taxpayers’ refunds to pay for debts that are more than a decade old – and incurred through no fault of their own – is a policy that cannot be continued in good conscience.'
Wants her day in court: The feds are going after
deceased debtors' children, even if the children had nothing to do with
the debt in the first place
In an online essay, CNBC producer Jake Novak noted that tax refund checks are now 'the new promised land for government regulators and bureaucrats desperate for more revenues.'
The Obamacare law, for instance, was designed to use the IRS as a mechanism to collect penalties levied for disobeying the individual medical insurance mandate.
The Social Security administration is the latest example. Already 1,200 Americans have filed appeals on seizures of old debts that they say don't belong to them. But they win only 10 per cent of the time.
'We have a case of the government saying: "When you screw up, you pay. When we screw up, you also pay",' wrote Novak.
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