Old Social Security Claims Tap Taxpayer Refunds

By the time this column was written its subject had faded into the background somewhat except that it demonstrates what has happened and can happen in the future.  What I am talking about is government garnishment of tax refund checks for alleged Social Security overpayments in the past.  What is even worse is that many of the alleged debts, if they were owed, were owed by parents or relatives of the unhappy taxpayers.

A few weeks ago, the Washington Post broke the story of Mary Grice, a Maryland resident, who received a letter stating her tax refunds both from the IRS and the state of Maryland were being seized because of an old Social Security debt.   It was a very old debt.

When Grice was 4 years old, in 1960, her father died which entitled her mother to Social Security survivor benefits based on her father’s earnings record for the five children.  The children turned 18 and benefits ended but the Social Security Administration in 2014, 37 years later, now claimed that they overpaid Sadie Grice, Mary’s mother, in 1977.  The money was deducted from Mary’s income tax refund in 2014.

The Grice account was not uncommon.   As the story gained traction in the media and social media, others came forward.  Some of the claims were small.  Many were ancient.  In Glenarm, IL, Brenda and Mike Samonds were reported to have challenged the Social Security Administration for the $189.10 the SSA claimed had been overpaid to Mike’s mother in survivor’s benefits.  His mother died 33 years ago.  Ted Verbich, a federal worker in Maryland, had his Maryland tax refund withheld for $172 that was allegedly overpaid in 1978.

According to the Post article, “hundreds of thousands of taxpayers who are expecting refunds this month are instead getting letters like <the one> Grice got informing them that because of a debt they never knew about – often a debt incurred by their parents – the government has confiscated their check.”  Allegedly the Treasury Department has “intercepted $1.9 billion in tax refunds already this year – $75 million of that on debts delinquent for more than ten years.”  See “Social Security, Treasury Target Taxpayers for Their Parents’ Decades-Old Debt,” Marc Fisher,  Washington Post, April 10, 2014.

The predictable outcry, including by some members of Congress had almost immediate results.  Carolyn Colvin, Acting Social Security Commissioner, announced shortly after that she had directed an immediate halt to the Program to recover debts owed to the agency that are 10 years old and older pending a thorough review.  Mary Grice received a check for the $2,996 that the agency had said that she owed.

The swift resolution of Mary’s claim after she filed suit in federal district court leaves much unresolved for the system at large.

One of the first questions would be why these old claims are arising now and the answer there may lie with Congress.  Tucked away in the Farm Bill in addition to reducing the funding for SNAP (food stamps) was a provision relaxing the statute of limitations on government claims from ten years to indefinite, meaning that the government could go back as far as it was able to make claims for alleged overpayments.  This helps to explain the situation where thirty or more years later claims have been made where the agency had no records to back up its demand.

An additional disturbing factor can resonate with Pennsylvanians who have been living with a filial responsibility law.  Filial responsibility is the notion that children, merely by reason of their relationship, can be found responsible for the debts of parents.  Under Pennsylvania law, the claim against the child can be made if the parent is considered “indigent” which has meant in Court interpretation, unable to pay a nursing home or assisted living bill.

The case of the Social Security Administration claiming against an adult child of the person who received benefits evokes an eery familiarity.  The agency’s claim that the child benefited from payment to the parent years ago is not too far off from making children responsible for their parent’s bills.  This has to be watched.

Fortunately, when brought to light, at least for the Social Security Administration problem, reason returned and the policy came under review.

About the Author Janet Colliton

Esquire, Colliton Law Associates, P.C. Janet Colliton has practiced law for over 38 years, 37 of them in Chester County, Pennsylvania, a suburb of Philadelphia. Her practice, Colliton Law Associates, PC, is limited to elder law, Medicaid, including advice, applications and appeals, and other benefits planning including Veterans benefits, life care and special needs planning, guardianships, retirement, and estate planning and administration.

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