Social Security stops trying to collect on old debts by seizing tax refunds
By Marc Fisher
April 14, 2014 - The Washington Post
The Social Security Administration announced
Monday that it will immediately cease efforts to collect on taxpayersf debts to
the government that are more than 10 years old.
The action comes after The Washington Post reported that the government was
seizing state and federal tax refunds that were on their way to about 400,000
Americans who had relatives who owed money to Social Security. In many cases,
the people whose refunds were intercepted had never heard of any debt, and the
debts dated as far back as the middle of the past century.
gI have directed an immediate halt to further referrals under the Treasury
Offset Program to recover debts owed to the agency that are 10 years old and
older pending a thorough review of our responsibility and discretion under the
current law,h Social Securityfs acting commissioner, Carolyn Colvin, said in a
statement.
Colvin said anyone who has received Social Security or Supplemental Security
Income benefits and gbelieves they have been incorrectly assessed with an
overpaymenth should contact the agency and gseek options to resolve the
overpayment.h
The effort to collect on old debts began with a single line in the 2008 farm
bill that lifted the statute of limitations on debts to the government that are
more than 10 years old. The Treasury Department then set up rules that allowed
the government to settle such debts by intercepting taxpayersf refunds. Treasury
has collected about $2 billion in intercepted tax refunds this year, $75 million
of that on debts delinquent for more than 10 years.
Mary Grice, a federal worker who lives in Takoma Park, Md., never got the
refunds she was expecting to see in her mailbox this year. The government seized
her checks because of a $2,996 debt that was supposedly incurred under her
fatherfs Social Security number. Her father died in 1960, when she was 4, and
her mother received survivorsf benefits thereafter.
But 37 years passed between when Social Security says it overpaid someone in
the Grice family and when Mary Gricefs refund was taken. She was unable to find
out from the agency exactly who received the overpayment — her mother or perhaps
her fatherfs first wife, both of whom are no longer living.
The suspension of the collection effort is gthe right thing to do,h said
Gricefs attorney, Robert Vogel. gItfs a first step. The next thing they have to
do is stop collecting debts from children under any circumstances.h
Vogel filed suit in federal court in Greenbelt last week, alleging that the
government denied Grice due process by failing to give her notice of the debt
and by taking the money from her, even though she was not receiving government
benefits at the time the debt was incurred.
Vogel and several members of Congress argued that the government should not
be holding children accountable for the financial acts of their parents. The
Federal Trade Commission, on its Web site, advises Americans that gfamily members
typically are not obligated to pay the debts of a deceased relative from their
own assets.h
After The Postfs article was published late last week, many hundreds of
taxpayers who had had their refunds intercepted came forward and complained to
members of Congress that they had been given no notice of the debts and that the
government had not explained why they were being held responsible for debts that
their deceased parents may have incurred.
In a note Social Security officials sent to several members of Congress on
Monday, the agency said, gWe will be reexamining our responsibilities under
current law for such referrals and will be notifying you of our conclusions upon
completion of the thorough review.h
In a letter to Treasury Secretary Jack Lew on Monday, Sen. Charles E.
Grassley (R-Iowa) said that government agencies were apparently gnot properly
notifying individuals or allowing them to inspect records of the debt they
supposedly owe, which are violations of the law.h
Grassley said that although Congress did authorize the government to seek
payment on old debts, the law gsays nothing about allowing the government to
offset payments from an individual to pay debts not in his or her name. It is
unclear where the government has that authority.h
The senator said that Congress created a rigorous system to ensure that debt
collection is handled transparently, but git appears that agencies are abusing
this system.h