Federal Government Takes Taxpayers’ Refunds To Cover Decades-Old Overpayments

In a massive program like Social Security, sometimes people get overpayments ranging from a few bucks to a few thousand bucks. It used to be that if whatever government entity overpaid a family didn’t catch up with them and recoup the money, the statute of limitations on the debt would run out after ten years. A teeny section of the 2008 farm bill changed that, and now the government is snatching up taxpayers’ refunds to cover their dead parents’ decades-old debts.

The relevant sentence looks like impenetrable legalese:

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.

What it means to ordinary citizens is “if you’ve ever received money from the government that you weren’t supposed to, we’ll catch up with you, and we can take your tax refund.” The Washington Post looked into this phenomenon and profiled people who have had their refunds taken: of course, since it’s Washington, D.C., many of the people profiled are government employees. That adds an extra level of irony.

The Treasury department reports that it has recovered $424 million in “offsets” owed to various parts of the federal government. While keeping the Social Security trust fund running is important and all, pursuing taxpayers for their long-dead parents’ Social Security payments looks very bad.

Take one person profiled by the Post: his father died 45 years ago, and his mother received Social Security survivors’ benefits. She died 12 years later. Now, 33 years after her death, the government finally caught up with her son to take his tax refund. Some taxpayers appeal, but only about 10% of them are successful.

The amount of my federal payment (e.g., income tax refund) has been reduced (“offset”). Why? [Treasury Department]
Social Security, Treasury target taxpayers for their parents’ decades-old debts [Washington Post] (Thanks, Max!)

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  1. mjbressman says:

    I don’t get it – how can the government come after their son 33 years later to take his tax refund? I know that you can go after someone’s estate after they pass away, but does that provision in the 2008 bill allow the government to come after someone’s estate years after it’s been settled? That seems absurd!

    • furiousd says:

      You bring up a good point that I agree with: if the estate of the person is not dissolved, then it seems crummy but reasonable. But going after a relative’s assets for money incorrectly paid to another person’s estate is absurd.