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Social Security Administration using the IRS to seize tax refunds

By
Real Estate Agent with Keller Williams Realty Lafayette/West Lafayette, Indiana

 

 

Social Security Administration using the IRS to seize tax refunds on alleged overpayment long ago.

 

I am just fine with my tax dollars going to support our federal government as I can't afford to hire an infantry division to keep Vladimir Putin out of my backyard, or pave the roads so I can show houses to clients.

I do wish we had a more simplified tax code that does not require hundreds(yes hundreds!) of hours to document legal deductions and keep accurate records for our real estate business. 

If you did not read the story in the Washington Post recently, it told how the Social Security Administration was using the IRS to seize the tax refunds of family members of deceased individuals for money the SSA believed they overpaid to individuals, that in some cases goes back to the 1970's and 1960's! 

The living relative's first clue was a threatening letter from the SSA that their tax refund had been seized by the IRS for an UNDOCUMENTED over-payment by the SSA to their deceased relative long, long ago.  No documents of proof, mind you, but the living relative is now without their refund. 

This goes back to an overlooked line in the Farm Bill passed back in 2008 that allows the US government to collect debts over ten years old, and started to be enforced by cash strapped agencies in 2011. 

There is already some push back after The Post story broke as some lawmakers are sounding off that this is clearly wrong and the SSA is backing off already.  

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Update:  The SSA is now saying that they will not seek repayment of debts over ten years old and that they will work with individuals with other options IF the people contact them.  

Our elected officials need to now go back and amend the law to eliminate that provision of allowing government agencies the right to collect payments over ten years old and insist that goverment agencies provide written documentation and go through proper due process before resorting to a tax refund seizure.

My opinion.  What is yours?

 

 

 

 

 

 

 

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Comments(106)

Inna Ivchenko
Barcode Properties - Encino, CA
Realtor® • GRI • HAFA • PSC Calabasas CA

Sounds like IRS does what is convenient.

At the same time, who would argue with them? Have you heard of many success stories of such?

Jun 28, 2014 04:52 PM
Bruce Walter
Keller Williams Realty Lafayette/West Lafayette, Indiana - West Lafayette, IN

Inna, the heavy hand was with the Social Security Administration as they would send a threatening letter without any support or documentation of the money owed by the deceased parent with them stating the debt then fell upon the son/daughter.  How can you send someone a back bill from 30 or 40 years ago without any documentation of debt owed.  The IRS simply seized the debt alleged by the Social Security Administration in the form of a tax refund.  This is how it will work if someone chooses not to comply with the Affordable Care Act.  Next year we will have health insurance that complies with the ACA but on top of our premium we will pay another premium of about $17 a month for pediatric dental care even though we have no children under age 18.  If we don't pay the extra $200 per year for something we will never use because we have no children under age 18 then we will not be in compliance and will be fined  The IRS is empowered by the ACA to  seize the fine from a tax refund if we have one.

Jun 29, 2014 09:08 AM
Barbara-Jo Roberts Berberi, MA, PSA, TRC - Greater Clearwater Florida Residential Real Estate Professional
Charles Rutenberg Realty - Clearwater, FL
Palm Harbor, Dunedin, Clearwater, Safety Harbor

All I can say is that something stinks! There should be NO WAY the government should be able to do this!

Jul 02, 2014 08:04 AM
Sandy Shores FL Realtor®, Melbourne Real Estate
M & M Realty of Brevard Inc. - Melbourne, FL
Brevard County Real Estate, Florida's Space Coast

Bruce, it just never ceases to amaze me the kind of things the government comes up with.  What will they think of next?

Jul 03, 2014 06:21 AM
Bruce Walter
Keller Williams Realty Lafayette/West Lafayette, Indiana - West Lafayette, IN

Barbara-Jo, it was a classic example of a rider that was totally unrelated to the original 2008 Farm Bill being added at the last moment, and few members of Congress probably even caught it.  There ought to be a law that only provisions related to a bill should be included in it and cut out all these unrelated rider or pork earmarks!

Jul 04, 2014 12:23 AM
Bruce Walter
Keller Williams Realty Lafayette/West Lafayette, Indiana - West Lafayette, IN

Sandy, they are probably proposing a new tax on business for those individuals whose name matches what they sell.  In your case you sell ocean front properties in Florida with sand laden beaches--Sandy Shores- so you could be hit with a new tax!!!    ^_~

Jul 04, 2014 12:27 AM
Ann Hayden 636-399-7544
Berkshire Hathaway HomeServices Select Properties-St. Louis Missouri - Des Peres, MO
SelectAnn.com

Bruce,

They can collect debts on dead people?  I guess the dead people are allowed to vote now too?

Ann Hayden in Wildwood, MO

Jul 05, 2014 06:57 AM
Bruce Walter
Keller Williams Realty Lafayette/West Lafayette, Indiana - West Lafayette, IN

Ann, I hadn't thought about it that way!  Hope you enjoyed your Fourth of July celebrations yesterday!

Jul 05, 2014 07:04 AM
Ann Hayden 636-399-7544
Berkshire Hathaway HomeServices Select Properties-St. Louis Missouri - Des Peres, MO
SelectAnn.com

Thank you Bruce!  It was good.

Ann Hayden in Wildwood, MO

Jul 05, 2014 11:31 AM
Bruce Walter
Keller Williams Realty Lafayette/West Lafayette, Indiana - West Lafayette, IN

You are welcome, Ann!

Jul 07, 2014 12:01 PM
Roy Kelley
Retired - Gaithersburg, MD

I am glad that they reversed the policy. The federal government still needs to impove collection skills.

Jul 11, 2014 03:24 AM
Bruce Walter
Keller Williams Realty Lafayette/West Lafayette, Indiana - West Lafayette, IN

Roy, I was glad to see that The Washington Post  was on top of this story.  It was some top notch reporting and it made a difference!

Jul 12, 2014 09:53 AM
Harrison K. Long
HomeSmart, Evergreen Realty - Irvine, CA
REALTOR , GRI, Broker associate, Attorney

Bruce ... I am also disappointed that the two departments of the U.S. government are working together on debt collection activities when the alleged debt has aged.

Jul 16, 2014 07:10 AM
Bruce Walter
Keller Williams Realty Lafayette/West Lafayette, Indiana - West Lafayette, IN

Harrison, it was entirely legal for them to do so when that debt collection extension window was opened beyond 10 years when it was slipped into the 2008 Farm Bill.  My concern is for the children who are having their tax refunds seized when they were not adults when the deceased parent received the Social Security  benenfit, and there is no documentation of wrongdoing or proof!  That is not acceptable, and good for The Washington Post  for calling the SSA out on this!  We need a more vigorous press watching out for the people!

Jul 16, 2014 07:17 AM
Yolanda Cordova-Gilbert
Richmond, TX

Bruce,

 Just stopped by to say hello and be the 101 comment on this blog I do remember reading it in April! I hope you are having a good start to your week!

Oct 27, 2014 09:54 AM
Bruce Walter
Keller Williams Realty Lafayette/West Lafayette, Indiana - West Lafayette, IN

Yolanda, thank you for reading and coming back with a comment.  The week is off to a flying start!!!

Oct 27, 2014 09:57 AM
Robert Bob Gilbert
Berkshire Hathaway HomeServices Anderson Properties - Katy, TX
Your Katy TX ( West of Houston) Real Estate Expert

Bruce, 

I fear the tax code in this country will never be simplified as there way too many tax lawyers who are in Congress or who are buddies with congress or support their reelection campaign. The code is just ridiculous and most IRS agents do not understand most of this crap! SSA seizing tax refunds is not right in ant way or shape since who knows if their data is correct? 

Dec 11, 2014 03:26 AM
Bruce Walter
Keller Williams Realty Lafayette/West Lafayette, Indiana - West Lafayette, IN

Bob, every year some of the leading accounting firms have people play a taxpayer and call in some different common scenarios to the IRS tax helpline and it usually comes out that over 50% of the answers given by IRS "experts" are WRONG.   If the tax payer acts on this incorrect anwer by the IRS the taxpayer is still liable for any penalties and back interest if they are audited.  The tax code is way too complicated and all the loopholes actually help the more well to do taxpayers.  The fair tax or flat tax would cut down on the cheating and actually raise more revenue!

Dec 11, 2014 03:48 AM
Kelly Hagglund
The Kelly Group Real Estate - Newberg, OR
SW Portland Real Estate Expert

Thanks for sharing with the update!! It is really important news for everyone, not just the real estate market! It is surprising how many of these news stories get overlooked by the media outlets and public these days.

Jan 07, 2015 09:14 AM
Bruce Walter
Keller Williams Realty Lafayette/West Lafayette, Indiana - West Lafayette, IN

Kelly, people just need to be informed and news organizations need to get out and do some old fashioned investigative research, fact checking, and reporting instead of just relying on statements by public figures and organizations!

Jan 07, 2015 09:49 AM