Feds Snatch Kids’ Tax Refunds to Pay Off Parents’ Old Debts

What's Hot

The Most Sinful City in the U.S. Is … (Hint: It’s Not Vegas)Family

How a Mexican Tariff Will Boost the Cost of 6 Common PurchasesFamily

This Free Software Brings Old Laptops Back to LifeMore

How to Protect Yourself From the ‘Can You Hear Me?’ Phone ScamFamily

Report: Walmart to Begin Selling CarsCars

Is Your TV Tracking You? Here’s How to Tell — and Prevent ItAround The House

Trump Scraps FHA Rate Cut — What Does It Mean for You?Borrow

Where to Sell Your Stuff for Top DollarAround The House

11 Staging Tips to Help You Get Top Dollar When Selling Your HomeAround The House

8 Tuition-Free U.S. CollegesCollege

10 Overlooked Expenses That Ruin Your BudgetFamily

4 Car Insurers That Might Raise Rates Even When the Accident Wasn’t Your FaultCars

How to Invest If Trump Kills the ‘Fiduciary Rule’Grow

20 Simple Hacks to Make Your Stuff Last LongerAround The House

12 Surprising Ways to Wreck Your Credit ScoreBorrow

Uncle Sam is intercepting some taxpayers’ tax refund checks to collect on Social Security overpayments made to their parents -- even decades ago.

If the government finds that your parent was overpaid for Social Security survivor benefits, you could be on the hook to pay it back. That’s right. Even if the debt is decades old, Uncle Sam could be coming after you.

A Maryland woman named Mary Grice found out the hard way that someone in her family was allegedly overpaid by Social Security in 1977. According to The Washington Post, the government confiscated both her federal and state tax refund checks to settle the old debt of $2,996.

“It was a shock,” said Grice, 58. “What incenses me is the way they went about this. 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.”

Grice’s father died in 1960, and his five children and his first wife received Social Security survivor benefits as a result. One of those recipients — it’s unknown which one — was overpaid in 1977. According to the rules, Social Security goes to the oldest of the living beneficiaries for the money, then works its way to the youngest until the debt is paid. The Post said:

The Federal Trade Commission, on its website, advises Americans that “family members typically are not obligated to pay the debts of a deceased relative from their own assets.” But Social Security officials say that if children indirectly received assistance from public dollars paid to a parent, the children’s money can be taken, no matter how long ago any overpayment occurred.

The Post says the feds have seized $75 million in tax refunds this year to settle debts owed to the government that are more than 10 years old. It added, “The aggressive effort to collect old debts started three years ago — the result of a single sentence tucked into the farm bill lifting the 10-year statute of limitations on old debts to Uncle Sam.”

Just so we’re clear on how this works: The government screws up and overpays Social Security survivor benefits. Then later (sometimes decades later) the government wants to right its past mistakes, and it comes after the children to do so.

CNBC said there’s a clear message here, and it’s disturbing.

Remember that the people who benefited from these alleged Social Security payments have not committed any crime — that’s why the government doesn’t need to provide any proof or real documentation. It’s more likely that the SSA simply screwed up and expects the descendants of its accidental beneficiaries to pay up. And again, the money comes out first before you can protest and find out why.

Not surprisingly, there’s reluctance on the government agencies’ part to step up and take credit for reopening the old cases, the Post said. Social Security says it wasn’t its idea – go ask Treasury. Not us, says the Treasury Department – check with Congress. Congress claims it was likely a move pushed by the bureaucracy.

Regardless of which agency is behind the seizure of tax refunds to pay off old debts, it’s happening. Did your family receive survivor benefits when you were a child? If there’s even a chance there was a mistake made, you might want to review and make potential revisions to your W-4 to make sure you don’t get a tax refund the government could seize.

What do you think of Uncle Sam targeting kids for their parents’ old debts? Share your comments below or on our Facebook page.

Stacy Johnson

It's not the usual blah, blah, blah

I know... every site you visit wants you to subscribe to their newsletter. But our news and advice is actually worth reading! For 25 years, I've been making people richer without making their eyes glaze over. You'll be glad you did. I guarantee it!


Read Next: 21 Restaurants Offering Free Food Right Now

Check Out Our Hottest Deals!

We're always adding new deals and coupons that'll save you big bucks. See the deals to the right and hundreds more in our Deals section.

Click here to explore 1,824 more deals!