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IRS seizes children's tax refunds over parent's Social Security 'overpayments'

Rep. Sam Johnson chairs the House Social Security Subcommittee.
Rep. Sam Johnson chairs the House Social Security Subcommittee.
U.S. House of Representatives

Along with death and taxes, add a third certainty in life: taxes after death.

On this April 15, and every other day, the IRS is seizing millions of dollars of alleged Social Security overpayments from children of dead beneficiaries.

The Treasury Department has been exercising its new authority since 2011, bringing in $424 million in old debts previously considered out of reach, according to published reports.

If the debtor is deceased, the Federal Trade Commission long has considered the money a write-off. But the Social Security Administration has a different view, chasing down adults whose parents cared for them with unintentionally overpaid benefits.

Larry Benson, who writes the “Fraud of the Day” column for, calls the IRS action alternately odd and humorous.

“I find it odd that the SSA can take the refund of a child of a past debtor, and hold that offspring responsible. Obviously, in a number of cases, at the time the debt was created, this person was a minor and could not be legally bound by a contract. I really don’t see how this is enforceable,” Benson said.

“Second, I find humorous that the IRS says it always tries to contact taxpayers before seizing their money.”

Benson noted a case in which postcards were sent to a post office box where one descendant hasn’t received mail since 1979.

Mary Grice, a 56-year-old Food and Drug Administration employee, said all $4,462 of her 2013 tax refund was seized to compensate the government for overpaying her mother Sadie’s Social Security benefits in 1977.

Grice’s “bill” came to $2,996, but the IRS withheld her entire refund check. She is suing the government.

“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 complained.

Congress, which extended the long arm of the IRS in a farm bill, is shocked, shocked.

“While Social Security has a responsibility to the American taxpayer to collect overpayments, what is reported here, if true, raises serious questions as to how the agency is administering the law,” said U.S. Rep. Sam Johnson, chairman of House Social Security Subcommittee.

The Texas Republican said he’s “committed to getting the facts and will take the needed actions Americans want, need and deserve.”

Tax refunds are clearly becoming the new promised land for government regulators and bureaucrats desperate for more revenues,” said Jake Novak, a commentator for CNBC.

“We already know that confiscating tax refunds are the only real way the IRS will be able to impose Obamacare non-compliance penalties, and now it seems like the Social Security Administration is jumping on that bandwagon,” he said.

“Once again, we have a case of the government saying, ‘When you screw up, you pay. When we screw up, you also pay,’” Novak said.

Carolyn Colvin, acting commissioner of Social Security, announced Monday her agency would limit IRS seizures to cases within the past 10 years.

Additional information can be found here.

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