Feds Swiping Tax Refunds to Pay Parents' Debts

Many are told there aren't even records proving the debt exists

By Kevin Spak,  Newser Staff

Posted Apr 11, 2014 7:58 AM CDT | Updated Apr 13, 2014 1:11 PM CDT

(Newser) – The Treasury Department has been seizing tax refunds or demanding payment from hundreds of thousands of Americans on some very old debts—some of which aren't exactly theirs in the first place. Many taxpayers are being forced to repay debts their parents allegedly racked up, the Washington Post reports. A single sentence lurking in a recent farm bill removed the 10-year statute of limitations on debt owed to the government, and since 2011 the Treasury has collected $424 million on these old accounts.

Social Security has been especially aggressive, targeting 400,000 taxpayers that it says collectively owe back $714 million in ancient overpayments. In many cases, the people who actually received the money are dead, so the agency goes after any children who may have indirectly benefited from the money, starting with the eldest, until the debt is paid. The Post talked to some of the targets and got some horror stories:

  • Mike Samonds says the government seized his refund over an overpayment to his mother, who died 33 years ago. "We could never get one sentence from them explaining why the money was taken," his wife says; the notice was mailed to the house his mother lived in 40 years ago.
  • Ted Verbich says the government snatched his Maryland tax refund, without warning, over a 36-year-old alleged debt, and provided no documents to back the claim. (Treasury officials told the Post there must be evidence of overpayment before an agency can take a refund.) He demanded a receipt saying he'd resolved his debt. "I'll put in the request," a clerk told him, "but in reality, you'll never get anything."
  • Mary Grice says her refunds were seized over money allegedly overpaid to someone in her family—the government isn't sure who—out of survivor's benefits paid to her mother after her father's death. They haven't explained why they're targeting Grice, the middle of five children; have provided no proof she received any money; and have threatened to report her to a credit bureau. And though they have her current address, they sent a notice about the debt to a PO box she last rented in 1979. She's fighting the matter in court.
For more, read the Post's full report.

  (Shutterstock)
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