Large numbers of Americans have had all or part of their tax refund seized by the IRS in an attempt to collect on debts – even from a person’s parents and grandparents — that were up to 50 years old.
This nightmare has already happened to one citizen by the name of Mary Grice; her tax refund was seized because Social Security overpaid a disability payment to her family in 1977.
“It was a shock,” Grice told The Washington Post. “What incenses me is the way they went about this. 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.”
The Treasury Department seized Grice’s tax refund to collect on a $2,996 overpayment to her family in 1977, although no one, not even the government, knows which family member received it. Her mother received Social Security survivor benefits for nearly 20 years because her father died in 1960, when Grice was 4. Grice has sued the Social Security Administration claiming it violated her right to due process.
Acting Social Security Commissioner Carolyn Colvin suspended the controversial program Monday “pending a thorough review of our responsibility and discretion under the current law,” but there’s no guarantee the program won’t return — and for the many citizens who already had their checks seized, it’s too late.
Disability Payments and Survivor Benefits Being Seized
“The 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,” Grice’s attorney, Robert Vogel, told The Post. “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.”
Most of the seizures were related to the survivors’ benefits that Social Security pays to widows or widowers who are raising children alone, The Post noted. Social Security was apparently trying to collect survivors’ benefits that were overpaid decades ago.
Grice is not alone. The Post reported that the Treasury seized tax refunds to cover any debt owed to the federal government. Most of the money was collected by the Social Security Administration, which could collect such debts from 400,000 Americans.
Poor Record Keeping Alleged
Many people cannot defend themselves because the government has done a poor job of keeping records, Vogel alleged. That includes sending paperwork to the wrong address.
Grice said the Social Security Administration sent a notice of the seizure to her old post office box in North Carolina; she’s lived in Takoma Park, Maryland, for the past 30 years and hasn’t used the box since 1979.
Brenda Samonds of Illinois also had money seized.
“The government took the money first and then they sent us the letter,” Brenda Samonds of Glenarm, Illinois, told The Post. “We could never get one sentence from them explaining why the money was taken.”
As it turned out, the government seized Samonds’ tax refund because her husband Mike’s mother was overpaid on a disability payment in the 1970s. Samonds said that the notice of the seizure was sent to the home of Mike’s mother who has been dead for 33 years.
The situation is made worse because many taxpayers only keep records for three years at the IRS’s recommendation. Most people simply lack the documentation to verify or contest such seizures.
State Tax Refunds Can Be Seized, Too
Even state tax refunds can be seized. Mike Verbich had his Maryland state tax refund seized to pay off money he owed to Social Security. Verbich claimed he repaid the money in 1978.
Verbich tried calling Social Security to get an explanation and waited on hold for two hours. He eventually gave up because he didn’t feel like spending time or money to contest a seizure of $172.
Grice had both her state and federal tax refunds seized, the Post reported. Social Security seized her entire $4,462 refund even though she only owed $2,996. The agency returned the difference after The Post printed a story about her case.
Sneaky Change In The Law Allowed New IRS Abuse
Until 2011 it was illegal for the Treasury Department to seize debts over 10 years old. Congress changed the law to allow such debt collections in 2011 by adding a provision to a farm bill.
“We don’t even know why this law was repealed,” attorney J. Christian Adams told Fox News’ Meagan Kelley. Adams said no member of Congress claimed responsibility for the action and that the Obama administration said it was not responsible.
Those who have their refunds seized can appeal the seizure to the IRS or sue like Mary Grice did. Complaining to the media can get results as well, as Grice and others found out.
Since 2011, the Treasury Department has collected $424 million in debts over 10 years old, The Post reported.