Social Security, Treasury target taxpayers for their parents’ decades-old debts

On April 10, the Washington Post led with a story that created an uproar and outrage by taxpayers across the country.  The story focused on the seizure of tax refunds by the government to repay debt that was, in some instances, decades old.

“Social Security claims it overpaid someone in the Grice family — it’s not sure who — in 1977. After 37 years of silence, four years after Sadie Grice died, the government is coming after her daughter.

Update from Forbes.  The SSA has suspended its scope of more than 10 years.  Meaning, they will not pursue alleged over-payments on any taxpayer more than 10 years.  But, did you know that the government gave itself the right to chase taxpayers for old debts indefinitely. And the easiest way to do it is through an offset. Where you ask?  When?

“To be clear, the government has long had the authority to seize tax refunds to pay back certain obligations (more on that in a moment), but in 2008, the rules that limited the time to seize funds were rewritten. The change was made in the Food, Conservation, and Energy Act of 2008 – sometimes called “the farm bill” – since, as you know, Congress is terribly fond of tossing bits of new law into totally unrelated bills (like those credit card reporting requirements inserted into the Housing and Economic Recovery Act of 2008 or how a bill called the Service Members Home Ownership Tax Act of 2009 turned into the Patient Protection and Affordable Care Act). The provision, tucked near the back of the Act, which clocks in at more than a quarter million words, says simply:

(e)(1) Notwithstanding any other provision of law, regulation, or administrative limitation, no limitation on the period within which an offset may be initiated or taken pursuant to this section shall be effective. (2) This section does not apply when a statute explicitly prohibits using administrative offset or setoff to collect the claim or type of claim involved.”

SSA’s announcement might have been a relief to some taxpayers but the law is still on the books. And so long as the law authorizes government agencies to collect on those old debts, taxpayers could be in danger of having their tax refunds seized for years to come.

And remember,  that the IRS can go as far as they want to if they suspect fraud, so make sure your taxes and records are in order, and have your taxes prepared by a tax professional, such as a CPA or EA.

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http://www.washingtonpost.com/politics/social-security-treasury-target-hundreds-of-thousands-of-taxpayers-for-parents-old-debts/2014/04/10/74ac8eae-bf4d-11e3-bcec-b71ee10e9bc3_story.html

http://www.forbes.com/sites/kellyphillipserb/2014/04/24/payback-is-forever-tax-refund-offset-law-remains-on-the-books/#./?&_suid=139851903245309521199226209964