IRS holding income tax refunds to recover parents’ Social Security ‘overpayments’

IRS holding income tax refunds to recover parents’ Social Security ‘overpayments’

Along with death and taxes, add a third certainty in life: taxes after death.

This April 15, the IRS is seizing millions of dollars of alleged Social Security overpayments from children of dead beneficiaries.

The Treasury Department has been exercising its new authority since 2011, bringing in $424 million in old debts previously considered out of reach, according to published reports.

If the debtor is deceased, the Federal Trade Commission long has considered the money a write-off. But the Social Security Administration has a different view, chasing down adults whose parents cared for them with unintentionally overpaid benefits.

Larry Benson, who writes the “Fraud of the Day” column for, calls the IRS action alternately odd and humorous:

I find it odd that the SSA can take the refund of a child of a past debtor, and hold that offspring responsible. Obviously, in a number of cases, at the time the debt was created, this person was a minor and could not be legally bound by a contract. I really don’t see how this is enforceable.

Second, I find humorous that the IRS says it always tries to contact taxpayers before seizing their money.

Benson noted a case in which postcards were sent to a post office box where one descendant hasn’t received mail since 1979.

Mary Grice, a 56-year-old Food and Drug Administration employee, said 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.

Grice’s “bill” came to $2,996, but the IRS withheld her entire refund check. She is suing the government. Said Grice:

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.

Congress, which extended the long arm of the IRS in a farm bill, is shocked, shocked.

U.S. Rep. Sam Johnson, chairman of House Social Security Subcommittee, sai:

While Social Security has a responsibility to the American taxpayer to collect overpayments, what is reported here, if true, raises serious questions as to how the agency is administering the law.

The Texas Republican added that he is “committed to getting the facts and will take the needed actions Americans want, need and deserve.”

Top Republican on the Senate Judiciary Committee, Sen. Charles Grassley, R-Iowa, added:

People are right to be puzzled when the statute of limitations has been lifted, the government goes after debts in what seems like a willy-nilly way, and when some of the debts are so small that the government might spend more resources on attempted collection than the amount of the debt itself.

Government has to be reasonable and use common sense.

Tax refunds are clearly becoming the new promised land for government regulators and bureaucrats desperate for more revenues,” said Jake Novak, a commentator for CNBC.

We already know that confiscating tax refunds are the only real way the IRS will be able to impose Obamacare non-compliance penalties, and now it seems like the Social Security Administration is jumping on that bandwagon.

Once again, we have a case of the government saying, ‘When you screw up, you pay. When we screw up, you also pay.

Carolyn Colvin, acting commissioner of Social Security, announced Monday her agency would limit IRS seizures to cases within the past 10 years.

But that’s small solace, says Pamela Mullin, an activist with Student Loan Justice.

“There’s no legal precedent for minor children inheriting the debts of their parents, especially by a government agency with no documentation provided,” she said.

“These are people, minors at the time, who were not involved in the contractual obligation with Social Security. This opens the possibility for the federal government to attempt to collect trillions of dollars in federal student loan debts from the children of deceased parents,” she said.

Read more by Kenric Ward at

Kenric Ward

Kenric Ward

Kenric Ward is a national correspondent and writes for the Texas Bureau of Formerly a reporter and editor at two Pulitzer Prize-winning newspapers, Kenric has won dozens of state and national news awards for investigative articles. His most recent book is “Saints in Babylon: Mormons and Las Vegas.”


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