Social Security Administration Pledges to Stop Seizing Tax Refunds

Can a government agency take away my tax refund

Imagine expecting a tax refund only to find out that you won’t be receiving it due to payments that went to your parents when you were a child. That was the reality for approximately 400,000 taxpayers when the Social Security Administration (SSA) tried to collect alleged overpayments. Many of those taxpayers were not even aware of any debt and had no advance notice that their tax refund would be seized.

The SSA recently informed Congress that it will suspend this collection program, although the agency insists it is within their rights. Specifically, the SSA said if an overpayment was more than 10 years old, it would stop confiscating refunds while the program is being reviewed.

Senator Barbara A. Mikulski (D-Md.) called the SSA’s announcement “a start,” but she expressed concern about families continuing to be surprised by the SSA’s collection process. Individuals could be targeted for benefits they received during childhood; for example, minor children of a parent who died might have received survivor’s benefits. Maybe those children, as they grew older, were not even aware of these benefits and continued to receive them even after they were no longer eligible. That would be considered an overpayment, and the SSA is intent on seeking repayment of those debts.

Some taxpayers had their seized tax refunds returned only to receive letters a short time after demanding repayment of the alleged debts. According to the SSA, overpaid benefits might have been sent to a parent on behalf of a child, but the beneficiary is the child and the child remains responsible.
Collections by the SSA totaled about $75 million, and an attorney representing taxpayers pointed out that the agency will likely seek repayment in other ways besides tax refunds (such as wage garnishment or withholding future benefits).

If you are facing a tax controversy, the attorneys at Longman & Van Grack have the experience and knowledge to help. Contact our Bethesda and Rockville, Maryland offices today at (301)291-5027 to discuss your concerns.