Social Security tax refund seizures suspended, program reviewed
WASHINGTON (AP) - People with old Social Security debts are getting a reprieve - for now.
The Social Security Administration had been participating in a program in which thousands of people were having their tax refunds seized to recoup overpayments that happened more than a decade ago.
On Monday, Acting Social Security Commissioner Carolyn W. Colvin said she was suspending the program while the agency conducts a review.
Social Security recipients and members of Congress complained that people were being forced to repay overpayments that were sometimes paid to their parents or guardians when they were children.
The Social Security Administration says it has identified about 400,000 people with old debts. They owe a total of $714 million.
So far, the agency says it has collected $55 million, mainly by having the Treasury Department seize tax refunds.
Colvin said she was suspending the program "pending a thorough review of our responsibility and discretion under the current law to refer debt to the Treasury Department."
"If any Social Security or Supplemental Security Income beneficiary believes they have been incorrectly assessed with an overpayment under this program, I encourage them to request an explanation or seek options to resolve the overpayment," Colvin said.
The program was authorized by a 2008 change in the law that allows Social Security and other federal agencies, through the Treasury, to seize federal payments to recoup debts that are more than 10 years old. Previously, there was a 10-year limit on using the program.
In most cases, the seizures are tax refunds.
The Washington Post first reported on the program.
Democratic Sens. Senators Barbara Boxer of California and Barbara Mikulski of Maryland complained about the program in a letter to Colvin.
"While this policy of seizing tax refunds to repay decades-old Social Security overpayments might be allowed under the law, it is entirely unjust," the senators wrote.
After Colvin's announcement, Boxer said in a statement, "I am grateful that the Social Security Administration has chosen not to penalize innocent Americans while the agency determines a fair path forward on how to handle past errors."
There are several scenarios in which people may have received overpayments as children. For example, when a parent of a minor child dies, the child may be eligible for survivor's benefits, which are often sent to the surviving parent or guardian.
If there was an overpayment made on behalf of the child, that child could be held liable years later, as an adult.
Also, if a child is disabled, he or she may receive overpayments. Those overpayments would typically be taken out of current payments, once they are discovered.
But if disability payments were discontinued because the child's condition improved, Social Security could try to recoup the overpayments years later.
"We want to assure the public that we do not seek restitution through tax refund offset in cases when the debt in question was established prior to the debtor turning 18 years of age," Social Security spokesman Mark Hinkle said in an email. "Also, we do not use tax refund offset to collect the debt of a person's relative. We only use it to collect the overpaid benefits the person received for himself or herself."
Hinkle said the debt collection could be waived if the person was without fault and repayment would "deprive the person of income needed for ordinary living expenses or would be unfair for another reason."