IRS Will Not Seize Refunds to Pay Back Old Debts to Social Security

For the 2014 tax filing season, the Social Security Administration (SSA) has agreed not to seize an individual’s tax refunds to pay back old debts. Since 2008, the SSA has been able to have the Treasury Department seize federal payments to someone who owes a debt to the SSA, usually in the form of tax refunds. Unlike the IRS, which administratively can only collect on a debt for ten years, the SSA has no such limitation and can attempt to recoup benefit overpayments from children who are well into their adult years.

Certainly there is resistance to this program. Several members of the Legislature have raised the alarm that taxpayers should not be blindsided by unknown debts or hounded to pay decades old debts. Last year, the SSA stayed its collection efforts when an uproar was raised that individuals were being forced to repay debts for benefits paid to parents or guardians on the child’s behalf. Vern Buchanan, R-FL, has introduced a bill to limit collection efforts to 10 years like the IRS but as of yet nothing has come of it.

The SSA for its part, argues that most of these debts are for benefits paid to individuals aged 18 to 22 who received survivor benefits; from 1965 to 1985, beneficiaries were able to receive benefits until 22 if in college. The SSA said that far from being innocent victims, the beneficiaries agreed to report to the SSA if they no longer attended school, were jailed, got a job, or were married which would have ended the benefit payments. The individuals did not and continued to receive benefits to which they were not entitled.

Whatever the merit of the SSA’s collection efforts, it is estimated that 400,000 individuals owe $714 million dollars to the SSA, with 55% of the individuals owning less than $1,000. As of the date of the AP story, that number has dwindled to 300,000 due to individuals agreeing to payment arrangements or the death of the individual.

Here is a link to the Yahoo Finance article that was the source of this post:;_ylt=A0LEVzipDbVUuFQAHzNXNyoA

James D. Wade, Esq.
Beacon Tax Advocates, LLC
57 Portland Road, Ste. 3
Kennebunk, ME 04043