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from the Sins-of-the-Father-Visited-upon-the-Son dept.
The Washington Post reports that hundreds of thousands of taxpayers who are expecting refunds are instead getting letters informing them that because of a debt they never knew about often a debt incurred by their parents the government has confiscated their check sometimes on debts 20 or 30 years old. For example, when Mary Grice was 4, back in 1960, her father died, leaving her mother with five children to raise. Until the kids turned 18, Sadie Grice got survivor benefits from Social Security to help feed and clothe them. Now, Social Security claims it overpaid someone in the Grice family it's not sure who in 1977. After 37 years of silence, four years after Sadie Grice died, the government is coming after her daughter. "It was a shock," says Grice, 58. "What incenses me is the way they went about this. They gave me no notice, they can't prove that I received any overpayment, and they use intimidation tactics, threatening to report this to the credit bureaus."
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, says 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. The Federal Trade Commission, on its Web site, advises Americans that "family members typically are not obligated to pay the debts of a deceased relative from their own assets." But Social Security officials say that if children indirectly received assistance from public dollars paid to a parent, the children's money can be taken, no matter how long ago any overpayment occurred. Many of the taxpayers whose refunds have been taken say they've been unable to contest the confiscations because of the cost, because Social Security cannot provide records detailing the original overpayment, and because the citizens, following advice from the IRS to keep financial documents for just three years, had long since trashed their own records. More than 1,200 appeals have been filed on the old cases but only about 10 percent of taxpayers have won those appeals. "The government took the money first and then they sent us the letter," says Brenda Samonds.." We could never get one sentence from them explaining why the money was taken."
(Score: 3, Interesting) by VLM on Tuesday April 15 2014, @05:20PM
I've solved this "problem" by not getting refunds for many years now. Takes a bit of investment income but not as much as you'd think. Carried to an extreme you need to file quarterlies or pay a modest fee/penalty for underpayment, which has happened to me a couple of times. As an anecdote, underpaying by mid $10K for the year resulted in an underpayment penalty of a hundred-something bucks, which I could have avoided by filing quarterlies. I would imagine in those scenarios, they just start garnishing wages and seizing accounts?
As a side note you'd be surprised how many people simply can't understand a return isn't some kind of credit or reward or welfare handout, it just means you overpaid thru the entire year.
(Score: 0) by Anonymous Coward on Tuesday April 15 2014, @06:03PM
I just got back about 14 dollars between state and fed. My roommate was telling me about how he got back some $500 like it's a good thing, but then I pointed your very argument out to him. That kind of killed the conversation.
(Score: 2) by starcraftsicko on Tuesday April 15 2014, @06:35PM
I don't advocate actually doing this, but in the current environment for effectively 0% interest at banks (especially for small sums of money), a 0% loan to the government isn't the lunacy it would seem to be. For folks that have trouble finding the financial discipline to "save", it could even make financial sense.
This post was created with recycled electrons.
(Score: 2) by VLM on Tuesday April 15 2014, @07:27PM
"For folks that have trouble finding the financial discipline to "save", it could even make financial sense."
Invariably the same crowd where the return money is gone by the end of the week they get it.
(Score: 3, Insightful) by starcraftsicko on Tuesday April 15 2014, @08:58PM
Agreed. But it's also the same crowd that mostly never has $2000 in one place to spend via any other means. As a practical matter, it may function more like a 'Christmas club' [wikipedia.org] account than like a retirement/investment account, but there is a value to such things.
This post was created with recycled electrons.
(Score: 1) by GlennC on Tuesday April 15 2014, @06:40PM
I keep trying to explain to my wife that I'd rather not give the Federal government a loan at 0% interest.
Sorry folks...the world is bigger and more varied than you want it to be. Deal with it.
(Score: 0) by Anonymous Coward on Tuesday April 15 2014, @07:18PM
It is amazing the # of people who think it is 'free money' from the gov.
I ask them ok will you loan me 5000 dollars a 0% interest and when done I want you to fill out this form to get your money back? No is the response every time. Then why do you do it with the state and fed gov? I then show them how to properly fill out their W4. The language on them is deliberately misleading and the cheat sheet is broken to make you think it is the deductions you take on the 1040. They are named the same but are totally different things. For every 1000 you get back add one is a good rule of thumb. Then on your 1040 fill it out to the # of dependents you have, not what is on the W4.
If you do not use W4 withholding you can also pay your taxes quarterly. W4 withholding just makes it easier to over pay your taxes.