Anyone who has gone through the traumatic experience of losing a parent knows that the mourning process can take awhile and that the sadness will linger for some time. Indeed, the emotions are so strong that it can still prove jarring and even frustrating to receive some type of mail addressed to a parent years after their passing.
As maddening as this scenario can be, consider how much more exasperating it can become when you receive a notice from a creditor indicating that your deceased parent owes money for a debt incurred long ago that you never even knew existed.
Taking things one step further, imagine how this situation becomes absolutely infuriating when the notice is from the federal government and indicates your tax refund is being confiscated to cover the amount owed by your deceased parent.
While such a situation may seem highly improbable, it’s actually been the reality for hundreds of thousands of U.S. taxpayers thanks to a single line amendment in a farm bill passed back in 2008. Specifically, this amendment allowed the federal government to seize the tax refunds of those citizens whose parents incurred some manner of debt at least a decade earlier.
The effort to collect on these old debts proved fruitful, as over $400 million was collected during the first three years by various federal agencies. However, the one agency that generated the most controversy with its collection efforts was the Social Security Administration.
That’s because many of the taxpayers affected by its collection efforts 1) never knew about any overpayment of benefits to their parents years ago and 2) never received any advance notice that their tax refund was going to be seized.
In recent developments, this practice by the SSA — which has long been denounced by lawmakers from both sides of the aisle, and was the subject of a years-long lawsuit resulting in $56 million in refunds to roughly 65,000 taxpayers — has mercifully come to an end.
Last Friday, the Treasury Department issued an emergency message instructing staff to no longer confiscate the tax refunds of individuals whose deceased parents were overpaid by the SSA anytime from 2002 or earlier.
If you have questions or concerns concerning a civil or criminal tax-related matter, consider speaking with a skilled legal professional who can explain the law, set forth your options and pursue solutions.