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

Photo (cc) by efile989

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.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
9 Everyday Problems You Can Solve With Vaseline
9 Everyday Problems You Can Solve With Vaseline

Forget expensive specialty products. Good ol’ petroleum jelly can address many common annoyances.

8 Types of Companies That Check Your Credit Report
8 Types of Companies That Check Your Credit Report

Federal law lets these entities peek at your credit — regardless of whether you’re borrowing money.

7 Hobbies That Help You Live Longer
7 Hobbies That Help You Live Longer

Research shows some hobbies can add years — or even decades — to your life.

10 Ways to Nail Savings on Your Remodeling Project
10 Ways to Nail Savings on Your Remodeling Project

Here’s how to save on your next remodeling project with discounted materials and more tips and tricks.

10 Expenses You Should Not Put on a Credit Card
10 Expenses You Should Not Put on a Credit Card

Sometimes it’s simply safer to keep the plastic tucked away.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
10 Things Frugal People Never Buy
10 Things Frugal People Never Buy

If you’re a true tightwad, the mere thought of spending money on these items gives you the willies.

10 Useless Purchases You Need to Stop Making
10 Useless Purchases You Need to Stop Making

You might as well flush your money down the loo if you spend it on these things.

7 Social Security Rules Everyone Should Know by Now
7 Social Security Rules Everyone Should Know by Now

Confusion over Social Security is a shame, considering how many of us will need this money badly.

If You Find This Thrift Shopping, Buy It
If You Find This Thrift Shopping, Buy It

They don’t make coffee makers like this anymore.

What a $15 Minimum Wage Means for Social Security
What a $15 Minimum Wage Means for Social Security

A federal minimum-wage hike could affect the Social Security system dramatically.

7 Social Security Benefits You May Be Overlooking
7 Social Security Benefits You May Be Overlooking

There’s more to Social Security than retirement benefits.

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

14 Things You Should Stop Buying in 2021
14 Things You Should Stop Buying in 2021

These convenient household products come with hidden costs that you might not have considered.

Is Writing a Check Still Safe?
Is Writing a Check Still Safe?

Every time you pay by check, you hand your bank account numbers to a stranger.

The 6 Best Investing Apps for Beginners
The 6 Best Investing Apps for Beginners

If you’re looking to ease into investing in the coronavirus economy with just a little money, check out these easy-to-use tools.

10 Deep Discounts Available on Amazon This Friday
10 Deep Discounts Available on Amazon This Friday

These items are all steeply discounted — but the deals won’t last long.

8 Things You Should Replace to Improve Your Life Today
8 Things You Should Replace to Improve Your Life Today

Being frugal isn’t smart if you put off replacing these items.

6 Ways to Protect Your Retirement Accounts From Hackers
6 Ways to Protect Your Retirement Accounts From Hackers

Imagine having $245,000 stolen from your retirement account — and not being reimbursed.

9 Shopping Mistakes to Avoid at Costco
9 Shopping Mistakes to Avoid at Costco

Are you missing out on serious savings at your favorite warehouse club?

13 Amazon Purchases We Are Loving Right Now
13 Amazon Purchases We Are Loving Right Now

These practical products make everyday life a little easier.

7 Income Tax Breaks That Retirees Often Overlook
7 Income Tax Breaks That Retirees Often Overlook

Did you realize all these tax credits and deductions exist — or that they apply to retirees?

This Is the Most Dependable Car Brand in the U.S.
This Is the Most Dependable Car Brand in the U.S.

This brand’s vehicles are least likely to give drivers repair headaches, according to J.D. Power.

7 Kirkland Signature Items to Avoid at Costco
7 Kirkland Signature Items to Avoid at Costco

Even if it seems you save a bundle buying Costco’s Kirkland Signature brand products, they may not be the bargain they appear to be.

7 Hidden Sections of Amazon Every Shopper Should Know
7 Hidden Sections of Amazon Every Shopper Should Know

These little-known departments of Amazon are gold mines for deal-seekers and impulse shoppers alike.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.