The Social Security Administration is backing off the controversial practice of seizing tax refunds to collect on decades-old debt.

Acting Social Security commissioner Carolyn Colvin issued the following statement Monday:

I have directed an immediate halt to further referrals under the Treasury Offset Program to recover debts owed to the agency that are 10 years old and older pending a thorough review of our responsibility and discretion under the current law.

Colvin added, “If any Social Security or Supplemental Security Income beneficiary believes they have been incorrectly assessed with an overpayment under this program, I encourage them to request an explanation or seek options to resolve the overpayment.”

It’s a big deal, reports The Washington Post, which broke the story about the program’s irregularities. The Post said:

The action comes after The Washington Post reported that the government was seizing state and federal tax refunds that were on their way to about 400,000 Americans who had relatives who owed money to the Social Security agency. In many cases, the people whose refunds were intercepted had never heard of any debt, and the debts dated as far back as the middle of the past century.

Last week we shared the Post’s story about Maryland resident Mary Grice, who had her tax refunds snatched this year to settle an overpayment of Social Security survivor benefits that someone (Social Security couldn’t say who) in Grice’s family received in 1977. Her father died in 1960, when Grice was 4 years old, and she, along with her siblings and her father’s first wife, received survivor benefits after that.

Even though the overpayment was decades old and Grice was no longer getting survivor benefits when the overpayment was made, she was held liable to pay. She sued, the Post said.

According to the Post, the practice of collecting decades-old debts came about after a single line in the 2008 Farm Bill did away with a 10-year statute of limitations.

Now it appears that your tax refunds are safe from seizure, at least for the moment. We’ll see what happens after the Social Security Administration completes its review.

But apparently this program hasn’t been working the way it’s supposed to. Says The Associated Press:

“We want to assure the public that we do not seek restitution through tax refund offset in cases when the debt in question was established prior to the debtor turning 18 years of age,” Social Security spokesman Mark Hinkle said in an email. “Also, we do not use tax refund offset to collect the debt of a person’s relative — we only use it to collect the overpaid benefits the person received for himself or herself.”

What do you think about Social Security’s backpedaling on collecting old debts? Share your comments below or on our Facebook page.