Across the nation, hundreds of thousands of taxpayers who are expecting refunds this month are instead getting letters like the one [Mary] Grice [of Takoma Park, Md.] got, informing them that because of a debt they never knew about — often a debt incurred by their parents — the government has confiscated their check.
The Treasury Department has intercepted $1.9 billion in tax refunds already this year — $75 million of that on debts delinquent for more than 10 years, said Jeffrey Schramek, assistant commissioner of the department’s debt management service. The aggressive effort to collect old debts started three years ago — the result of a single sentence tucked into the farm bill lifting the 10-year statute of limitations on old debts to Uncle Sam.
No one seems eager to take credit for [the provision]…
While a variety of stale disputes are involved, some of the most controversial involve alleged Social Security overpayments to long-deceased parents that the government says it has a right to reclaim because they contributed or might have contributed to the support of now-grown children. Targets say they are helpless to contest the seizures in many cases because financial records have long since been thrown out, in line with the IRS’s own guidelines which do not encourage the keeping of financial records for decades. State as well as federal refunds can be intercepted, and the taxpayer who wants to argue must sue to get the money back.
A spokeswoman says the feds attempt to contact targets about the claims before attaching refunds, but the Washington Post’s report cites examples in which notice was sent to decades-old post office boxes or addresses, even though both tax and Social Security authorities held current correct addresses for the taxpayer.
Need it be added that many of the methods the government is using would be deemed unlawful if asserted by creditors trying to collect private debts? To name only the most egregious of the problems, children cannot ordinarily be made to pay parents’ debts, even when there is a writing by the parent acknowledging the debt as valid (which will ordinarily be lacking in after-the-fact assertions of overpayment).
It is at most a minor ironic consolation that taxpayers are likely to react to these outrageous tactic by scaling back hard on the widespread practice of voluntary over-withholding, reasoning that it is unsafe to build up a big refund if authorities can snatch it away for unpredictable reasons with little hope of recourse.
P.S. More from J.D. Tuccille, Reason.