After three years of complaints and pressure from taxpayers, the federal government will stop seizing the tax refunds of Americans whose long-dead parents had incurred debts to Social Security many years earlier.
In an emergency message to its staff late Friday, the Treasury Department announced that it will immediately stop confiscating money from hundreds of thousands of people whose forebears had been overpaid by Social Security decades earlier.
The change, which applied only to debts from 2002 or earlier, follows Washington Post articles that chronicled the impact of the seizures on taxpayers who never knew that their parents had had debts to the government.
“I’m glad the government is stepping up to the plate to give back the money to tens of thousands of people, even though they were taking the position in litigation that they didn’t have to give it back,” said Robert Vogel, the Washington lawyer who represented a number of the affected taxpayers in a years-long lawsuit aimed at reversing the collection policy. About 65,000 people will be eligible for a total of about $56 million in refunds.
The confiscations began after a one-line change in the farm bill in 2008 allowed the government to take tax refunds from citizens whose parents had incurred debts to Uncle Sam at least 10 years earlier.
Mary Grice has lived in the same apartment in Takoma Park, Md., since 1984 but had never received any notice about a debt. Then, in 2014, the U.S. government intercepted Grice’s federal and state tax refunds and sent her a letter saying it was keeping the money to pay off her late father’s $2,996 debt.
Grice was 4 years old when her father died. Grice has four siblings, but the government went after her money because its policy is to start with the oldest sibling and work down through the family until the debt is paid.
Grice was one of six people whose refunds were seized who filed suit against the government in 2014. The government fought hard to get the case dismissed, granting most of the plaintiffs waivers from the collection program and refunding their money. Government lawyers then argued that the case should be thrown out because the plaintiffs had no further grounds for complaint.
“They were picking off the clients to moot the entire case,” Vogel said.
Despite repeated demands for a halt to the collection efforts from Democrats and Republicans alike in Congress, the government insisted that it had “an obligation to current and future Social Security beneficiaries to attempt to recoup money that people received when it was not due,” as a Social Security spokesman said at the time.
The agency did not respond to a request for comment Friday.
The effort to collect old debt reached across many government agencies and hauled in more than $400 million in its first three years. But it was Social Security’s collection efforts that got taxpayers howling, mainly because very few of those who had their money seized ever knew that their parents had had any debt.
In Grice’s case, Social Security had sent notice of the debt to a post office box in Roxboro, N.C., where she had lived from 1977 to 1979 and never since. Of course, Social Security had Grice’s current address; every year, it sent her a statement about her benefits.
After The Post wrote about Grice’s case, the government returned her money. But four months later, she got a new bill from Social Security, demanding the same $2,996 that it had just given her back. “DID YOU FORGET?” the letter said, demanding “full payment right away.”
Many of the taxpayers whose money was confiscated were able to win back refunds over the past couple of years because they could show that Social Security had sent notice to badly outdated addresses.
Most of those whose money was seized first learned of the old debts when their tax refund checks never showed up.
The federal government went after the children of those who owed the money even though the Federal Trade Commission said that “family members typically are not obligated to pay the debts of a deceased relative.”
Brenda and Mike Samonds of Glenarm, Ill., spent many months trying to get back the $189.10 tax refund the government seized because it said that Mike’s mother, who had died 33 years earlier, had been overpaid on survivor’s benefits after Mike’s father died in 1969.
“It was never Mike’s money, it was his mother’s,” Brenda Samonds said soon after the seizure. “The government took the money first and then they sent us the letter.”
The government mailed its notice about the debt to the house Mike’s mother lived in 40 years earlier.