The Bainbridge Firm, LLC
Schedule a Free Initial Consultation

Toll Free: 800-762-1612

Columbus : 614-545-9990

Portsmouth : 740-353-7548

Ironton :740-532-9772

Marion : 740-387-6727

Social Security will not seize tax refunds for past debts

People who owe old debts to the Social Security Administration are getting a reprieve this tax season: The federal government won't be seizing their tax refunds.

Acting Social Security Commissioner Carolyn Colvin suspended a debt collection program last spring in which thousands of people had tax refunds seized to recoup overpayments that happened more than a decade ago. Members of Congress complained that some people were being forced to repay benefits they received decades ago as children.

Following a review, the agency said it will continue suspending the program this tax season while officials explore possible changes.

"The commissioner is concerned about the public perception about the way we're running this program," said Pete Spencer, Social Security's deputy commissioner for budget, finance, quality and management.

There is a catch: The debts won't go away. Eventually, when the debtors start receiving retirement benefits, Social Security can deduct the debts from their payments.

"We are bound by federal law to collect these debts and they don't go away," Spencer said.

Sen. Barbara Mikulski, D-Md., called Social Security's review of the collection program "a start."

But, she added, "We can't have families trapped in a mess of paperwork and red tape. I will continue fighting to make sure that no one feels blindsided or victimized by Social Security's efforts to collect decades-old debts."

The collection program was authorized by a 2008 change in the law that allows Social Security and other federal agencies, through the Treasury Department, to seize federal payments to recoup debts that are more than 10 years old. Previously, there was a 10-year limit on using the program.

In most cases, the seizures are tax refunds.

Last spring, the agency said it had identified 400,000 people with old debts totaling $714 million. About 300,000 people still have old debts, Spencer said. The rest were resolved, either through payment plans or, in some cases, the person died.

About 55 percent of the debts were for less than $1,000, Spencer said.

There are several scenarios in which people may have received overpayments as children. For example, when a parent of a minor child dies, the child may be eligible for survivor's benefits.

If there was an overpayment made on behalf of the child, that child could be held liable years later, as an adult.

Also, if a child is disabled, he or she may receive overpayments. Those overpayments would typically be taken out of current payments, once they are discovered.

But if disability payments were discontinued because the child's condition improved, Social Security could try to recoup the overpayments years later.

Rep. Vern Buchanan, R-Fla., introduced a bill last year that would restore the 10-year limit on collecting old debts. He said Monday he will again introduce the measure this year to stop Social Security from collecting old debts.

"It's a simple matter of fairness," Buchanan said.

"Children should not be punished for the government's failure to correctly determine their benefits."

The Social Security Administration began reviewing the debt collection program last year after several members of Congress complained that people were being forced to repay overpayments that had gone to their parents or guardians.

That didn't happen, Spencer said.

"No one, absolutely no one, contrary to what was alleged in the press, no one was asked to pay back a debt that was a debt of their parent or another adult," Spencer said. "These were their debts."

The most common form of overpayment went to college students, Spencer said.

From 1965 to 1985, children who lost parents could continue to receive survivor's benefits until they reached the age of 22, as long as they were full-time students. Since 1985, those benefits have ended at age 18, unless the beneficiary is still in high school.

Sometimes, a student would stop going to school without telling Social Security, so payments would continue until the agency found out, Spencer said.

"The main reason that these overpayments existed in the first place, this is what our study showed, is because the individual did not follow their reporting responsibilities," Spencer said. "They did not report to us, as they agreed to do, the fact that their status changed, that they started working, that they married, that they were put in jail, that they no longer were students."

Courtesy of the Associated Press, January 19, 2015. 

No Comments

Leave a comment
Comment Information
email us for a response

Free Initial consultationCall us today for a free initial consultation. We promise to provide a response within a few hours.

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

office locations - we have four offices to serve you.

The Bainbridge Firm, LLC

Columbus Office
900 Michigan Avenue
Columbus, OH 43215

Toll Free: 800-762-1612
Phone: 614-545-9990
Fax: 614-224-9300
Map & Directions

Portsmouth Office
611 Court Street
Portsmouth, OH 45662

Toll Free: 800-762-1612
Phone: 740-353-7548
Fax: 740-353-1984
Map & Directions

Ironton Office
119 North Fifth Street
Ironton, OH 45638

Toll Free: 800-762-1612
Phone: 740-532-9772
Fax: 740-532-3127
Map & Directions

Marion Office
198 East Center Street
Marion, OH 43302

Toll Free: 800-762-1612
Phone: 740-387-6727
Fax: 740-382-5816
Map & Directions

Cambridge Office
120 Southgate Parkway
Cambridge, Ohio 43725

Toll Free: 800-762-1612
Phone: 614-545-9990
Fax: 614-224-9300
Map & Directions

  • Super Lawyers
  • Av lexis Nexis martindale-hubbell peer rated review rated for ethical standards and legal ability
  • Listed in Best lawyers | The world's premier guide
  • ohio state bar association EST 1880
  • ohio association for justice
  • CBA | columbus bar association
  • U.S. News & best lawyers present best law firms 2015