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The Almighty Buck Government United States Politics

IRS Can Now Seize Your Tax Refund To Pay a Relative's Debt 632

Hugh Pickens DOT Com (2995471) writes "Just in time for the April 15 IRS filing deadline comes news from the Washington Post that hundreds of thousands of taxpayers expecting refunds are instead getting letters informing them of tax debts they never knew about: often a debt incurred by their parents. The government is confiscating their checks, sometimes over debts 20—30 years old. For example, when Mary Grice was 4 (in 1960), her father died ... 'Until the kids turned 18, her mother received survivor benefits from Social Security ... Now, Social Security claims it overpaid someone in the Grice family in 1977. ... 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 ... $75 million from debts delinquent for more than 10 years according to 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.'"
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IRS Can Now Seize Your Tax Refund To Pay a Relative's Debt

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  • Over 18 (Score:5, Insightful)

    by Anonymous Coward on Monday April 14, 2014 @10:03PM (#46752755)

    Since the kids were not over 18 - could the benefit received by the mother not be considered a contract between the govt and the mother and therefore since the kids were too young to be signatories how could they be held accountable?

    • Re:Over 18 (Score:5, Interesting)

      by Fjandr ( 66656 ) on Monday April 14, 2014 @10:16PM (#46752843) Homepage Journal

      The IRS doesn't recognize incapacity to make agreements.

      • Re:Over 18 (Score:5, Insightful)

        by Z00L00K ( 682162 ) on Tuesday April 15, 2014 @12:21AM (#46753491) Homepage Journal

        But they seem to recognize inheritance of debt.

        I thought that inherited debt was something that was used in medieval times and in some third world countries to effectively create slavery.

        • Re:Over 18 (Score:5, Insightful)

          by Anonymous Coward on Tuesday April 15, 2014 @12:53AM (#46753613)

          You are right, and that is effectively what they are attempting now. A way to increase revenue and have a class of people that are eternally in poverty with no recourse.

        • Re:Over 18 (Score:5, Interesting)

          by MrKaos ( 858439 ) on Tuesday April 15, 2014 @01:10AM (#46753657) Journal

          But they seem to recognize inheritance of debt.

          I thought that inherited debt was something that was used in medieval times and in some third world countries to effectively create slavery.

          That's the point. While you are busy attending to the debt left to you by the previous generation, you aren't concerned with matters of democracy to lobby against things like this.

        • Re:Over 18 (Score:5, Insightful)

          by Duhavid ( 677874 ) on Tuesday April 15, 2014 @02:19AM (#46753997)

          Quite. Now, who added the single line spoken of to the farm bill that opened the door for this?

        • Re:Over 18 (Score:5, Insightful)

          by Applehu Akbar ( 2968043 ) on Tuesday April 15, 2014 @02:23AM (#46754023)

          Yes, multi-generation debt is totally illegal in the private sector. For evil of this mind-numbing intensity, you need a government.

        • Re: (Score:3, Interesting)

          What is the federal debt, but inherited debt?

        • Re: (Score:3, Interesting)

          by DarkOx ( 621550 )

          The entire reason for the IRS and the income tax was to restore slavery. Sure the slaves are different, but interestingly and unsurprisingly the slave holders are largely the same group.

        • Re:Over 18 (Score:5, Interesting)

          by usuallylost ( 2468686 ) on Tuesday April 15, 2014 @08:33AM (#46755529)

          This is far worse than inheretence of debt. They are seizing these people's refunds based on debts that they claim their parents have incurred. Yet when the woman in the article demanded proof of the debt they were unable to produce any. She was supposed to get a due process review before they seized her money but all of the notices of that right just happened to go to a PO box she hadn't had in decades. Yet when it came time to collect they suddenly had her right address. From the article this pattern is not uncommon. So basically we have the IRS collecting a debt that they can't even prove is a debt and doing so, either through intent or incompetence, in a way that deprives the victims of their due process rights to challenge it. Even if you accept the premise of a child inhereting the parents debt, which I really fail to see any legimate basis for, this method of collecting those debts stinks on ice. I mean with they way they have this setup they could just declare anybody owed any amount that they desired to collect. After all they are not providing any proof and are simply siezing your money with no due process. I hope the lady in the article prevails in her court case. Because if she doesn't the rest of us will never know when some "old debt" will appear.

          I noticed a couple of other disturbing things in this article. Ms Grice's father only owed, by their unsubstanitated claim, $2,996. Yet they seized her entire refund of $4,462 and only released the difference to her after the Washington Post started questioning it. So in addition to making her pay a debt that isn't hers, that they have no proof of and that they deprived her of her due process rights for, they also helped themselves to an additional $1,466 of her money that they only released under pressure from the press. Some of the other cases seem to be for fairly token amounts. Makes you wonder if what we are seeing here is the IRS adopting the tactic of demanding money from people that is just a bit less than what they can afford to fight for. Hopefully the courts will strike this whole thing down.

          • Re:Over 18 (Score:5, Interesting)

            by slinches ( 1540051 ) on Tuesday April 15, 2014 @10:53AM (#46756581)

            Hopefully the courts will strike this whole thing down.

            All of the IRS? I agree.

            I think funding for the federal government should come out of the states' treasuries instead. That way federal spending decisions will be weighed against the lost opportunity to fund state programs.

          • Re:Over 18 (Score:5, Interesting)

            by PortHaven ( 242123 ) on Tuesday April 15, 2014 @11:18AM (#46756909) Homepage

            Don't you know, the $4,462 was seized. Because of interest. That's right, when they find a debt like that they charge compounding interest. And they charge it at a rate no one can get on their savings accounts.

            So I wager that they consider Ms. Grice to actually owe about $20,000 still.

            ***

            Please note that I had a friend who was taxed on a million dollars in stock options that he never sold, and never made money from (dot com bust). Mortgaged house to pay taxes. Took it to court, won as it was deemed unconstitutional. IRS was ordered to pay it back. And they are....in increments over 20 years.

            That's right, they demanded it now. And are paying it back slowly.

    • Re:Over 18 (Score:4, Insightful)

      by AK Marc ( 707885 ) on Monday April 14, 2014 @11:22PM (#46753227)
      Of all the problems, that's the one you attach to? This is an ex post facto law (the debt was "clear" in 2010, and owed in 2014 due to change of law). It's seizing without due process, and it's an illegal bill of attainder. Though I'm sure it's a new class of "seizure" that doesn't need to follow any of the legal protections in the Constitution. Like being pulled over for speeding is both an arrest and not an arrest at the same time so they can pick and choose rights and powers that apply.
      • Re:Over 18 (Score:5, Interesting)

        by the eric conspiracy ( 20178 ) on Monday April 14, 2014 @11:44PM (#46753341)

        1. Ex post facto limitations apply to criminal cases, not civil cases.

        2. Bills of attainder applies to a specific person or group of persons. I.e. a law saying Joe at 123 Maple Street has to pay 50% of his money to Small Town DPW. In England they were used to execute people, i.e. the govt would pass a law saying Bill will be executed such and such a day.

        3. The problem here is due process IF they can't show you the records to justify the seizure. That's really really bad news.

        • by Teancum ( 67324 )

          1. Ex post facto limitations apply to criminal cases, not civil cases.

          While I appreciate the sentiment, I have known legislators who specifically write in "grandfather clauses" even for purely civil legislation because of the principle of ex post facto concepts applying to civil law. It may have more applicability to state laws, and especially legislatures controlled by the opposite party from the party which appointed the judge or currently runs the Department of Justice. This separate clause (independent from the congressional ex post facto clause) might also apply:

          No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility. -- Article I Section 10

          This c

        • Re:Over 18 (Score:5, Interesting)

          by KingOfBLASH ( 620432 ) on Tuesday April 15, 2014 @07:19AM (#46755153) Journal

          Actually for debts to tax authorities due process can be suspended if the government can show they believe providing you with notice of their collections efforts will cause you to hide the money, spend the money, or otherwise dispose of the funds.

          I found this out the hard way. The state of MA, due to an error, believed I never filed a tax return and owed them money. When I found out, I told them I was going to dispute it, and a few days after I filed an abatement my accounts were frozen, and I had a tax lien in my name.

          Technically, this is illegal (they're supposed to let me dispute the charges and there is supposed to actually be a judgement as to whether or not my case had merit). However, when I tried to get legal help, I found out the reason they could do this because they simply told a judge they had to have the lien so I didn't run away with my money. (Which is funny because I'm unemployed and just on this side of broke -- the judge should have laughed them out of town).

          When I fought it, the lien and the frozen accounts were reversed promptly, but not without a big pain in the ass.

          I'm afraid from what I understand, this is typical. Even if the IRS is wrong, the cards are stacked in their favor if they believe you're right (or incorrectly believe you to be an international man of mystery tax dodger). And until you convince them otherwise, they can make your life VERY miserable.

          You need to get real legal advice and stop asking slashdot for help on your problems.

    • They can be held accountable because fuck you, that's why.

      Since when does the government need to justify a shakedown? You got money. They got guns. Guess who wins.

  • by srwood ( 99488 ) on Monday April 14, 2014 @10:05PM (#46752773)

    We had a $186.00 deducted from our tax refund this year for social security. Having never collected social security we called the SSA and was informed that the social securities benefits my wife received as a teen following the death of her father were overpaid as she had a part-time job at a pharmacy and they had deducted the amount. Mind you my wife is 53 years old now.

    • by artor3 ( 1344997 ) on Monday April 14, 2014 @10:14PM (#46752821)

      FYI, they've cancelled the policy and are encouraging people targeted by it to contact them for a refund.

  • Ex Post Facto Law (Score:5, Insightful)

    by Anonymous Coward on Monday April 14, 2014 @10:11PM (#46752795)

    Just what good is a Statute of Limitations when it can be raised after the fact?
    Can they lift the Statute on 40 year old Federal crimes and go out and arrest people?
    And this is beside the fact that you are not your parents. Once you are an adult you are an individual.

  • by Xoc-S ( 645831 ) on Monday April 14, 2014 @10:11PM (#46752799)
    Survivor benefits are paid to the children, not the surviving parent. The parent only get the money as the custodian of the children, and is supposed to use it for the benefit of the child. The parent doesn't report the benefits on his or her tax return. If the child makes enough money during the year to file a tax return, the child does. So the IRS is going after the party to which the money was given. But of course, it really makes no sense...the child did not actually receive the money. The child has no records of receiving the money, or of any overpayment and can't contest it. It's unlikely even the parent has the records. And it is implied that the IRS can try to collect money from whomever they can get it from, not just the child of record.
  • by epyx ( 162239 ) on Monday April 14, 2014 @10:12PM (#46752801)
    The IRS has already stopped collecting these old debts, but let's not let that get in the way of a good political rant..

    http://www.forbes.com/sites/ro... [forbes.com]
    • by Cryacin ( 657549 ) on Monday April 14, 2014 @10:18PM (#46752861)
      So what? How about I go over your house and beat your face in. Hey, I've stopped now! Let's not let that get in the way of a good criminal rant!
    • That doesn't change the fact that they tried to and still are legally able to pursue these "debts" with no real recourse for those who are targeted. This stinks of a temporary hold to let the controversy die down so it can be reintroduced at a slower pace next time, if you're boiling frogs alive you bring the temperature up slowly so they don't jump out of the pot.

  • by artor3 ( 1344997 ) on Monday April 14, 2014 @10:12PM (#46752803)

    They cancelled this policy [nytimes.com] almost immediately after it was brought to light.

    • by mysidia ( 191772 ) on Monday April 14, 2014 @10:29PM (#46752935)

      No... they SAID they cancelled this policy, immediately after it was brought to light. if they quietly reinstate in whole or in part... who would be the wiser? :)

    • by the eric conspiracy ( 20178 ) on Monday April 14, 2014 @10:42PM (#46753031)

      This has been going on for a while. And while it's stopped right now, it's only under review.

      This sort of collection should be limited to the actual recipients, and have some sort of statute of limitations.

      Commercial debt dies with the probate process. It's not passed on.

    • Re: (Score:3, Interesting)

      by pitchpipe ( 708843 )

      They cancelled this policy almost immediately after it was brought to light.

      I dunno. Are the 0.01%ers trying to figure out a new way to fuck over the middle class?

      Since middle class wages have stagnated since the late '70s our share of the tax burden hasn't really been able to grow, and the rich have had their burden reduced quite a bit. So now we have massive debts. Gotta pay 'em somehow. I know, sounds kooky, right?! Look at the filial responsibility laws. [trustbuilders.com] Parent racking up huge debts to the state because of the care they need in old age? Think you won't have to pay for that? Thi [forbes.com]

    • Incorrect. They suspended enforcement while they review the matter. However, if the IRS finds, as a matter of law, that they're obligated to collect these debts, per the meaning of the statute, then they must attempt to collect them unless the law is changed or the courts rule otherwise. I've often heard from those on the left, "Oh, don't worry they're not going to enforce that" or "they're only going to use that against the right people", but here is the perfect example of why the law isn't always the best
      • by sjames ( 1099 )

        I've heard plenty of "don't worry, they won't enforce that" from both parties and in almost always proves to be incorrect (as was intended from the start).

  • Pocket change (Score:4, Insightful)

    by Anonymous Coward on Monday April 14, 2014 @10:13PM (#46752811)

    "The Treasury Department has intercepted ... $75 million from debts delinquent for more than 10 years"

    Let's put this into perspective:

          $ 75,000,000 collected
    $1,386,100,000,000 last year's revenue from individual income tax

  • Who has a deep and abiding desire to beat the shit out of every Congressman who votes for a bill without fully understanding it?

    • by readin ( 838620 )
      I have long thought that we should amend the Constitution to say that every bill must be read out loud in its entirety before it can be voted on, and that only members who sit quietly with no electronic equipment though the entire reading should be allowed to vote on it.

      A bonus would be that every sponsor of a bill would have to approve every amendment to a bill. That way you would always have at least one person who could be held personally accountable fore the whole bill (i.e. they wouldn't be able to
  • I don't agree with this tactic, but when congress keeps cutting taxes without reducing spending by a matching amount they leave the IRS with few choices but to work harder to pursue outstanding debts.
  • by damicatz ( 711271 ) on Monday April 14, 2014 @10:17PM (#46752855)

    I always make sure I never have a refund and that I "owe" taxes because the thieves that run the federal government simply cannot be trusted. All it takes is some pencil-pushing bureaucrat to decide that you were "overpaid" and they can steal your refund without so much as a trial, a hearing, or a chance to defend yourself.

  • by eric31415927 ( 861917 ) on Monday April 14, 2014 @10:27PM (#46752923)

    A large refund is a sign of poor tax planning. You are getting your own money back without interest. In light of this story, you may not even get your own money back if the feds take it.

    Arrange your source deductions and installment payments so that you don't get a refund.

    It would be better to owe $2K each year than to expect refunds.

  • by jrumney ( 197329 ) on Monday April 14, 2014 @10:31PM (#46752959)

    the result of a single sentence tucked into the farm bill lifting the 10-year statute of limitations on old debts

    Why do you let your politicians get away with such bullshit?

    • Why do you let your politicians get away with such bullshit?

      You are mistaken if you think the people still (if ever) control the government.

    • by readin ( 838620 )
      Because too many Americans want their government doing everything for them, and it nearly does. But we only get a few votes each year. This gives the politicians the opportunity to do a lot of things wrong so long as they do more things right than their opposition likely would.

      Let me put it this way. I can about the national debt, generally following the Constitution, specifically allowing freedom of religion, illegal immigration, lowering spending, global warming, racism, NASA, good treatment of Amer
  • by Todd Knarr ( 15451 ) on Monday April 14, 2014 @10:32PM (#46752963) Homepage

    Just because the time limit has been raised, that doesn't incur a liability for the debt on the part of anyone who isn't already liable for it. And generally children aren't liable for their parent's debts unless their signature's on the contract. The parent's estate might be liable, but good luck collecting from that once the estate's finalized and closed out. I suspect this'll be what any competent attorney will raise as an issue if the victims get one: "Regardless of anything else, this is not my client's debt and the debt being collectible doesn't on it's own make my client liable for it.".

  • by radarskiy ( 2874255 ) on Monday April 14, 2014 @11:48PM (#46753353)

    The SSA used a private contractor to make sure all parties were correctly notified about the debt before seizure proceedings were started, which would have allowed incorrect claims to be dropped. Of course, the private contractor screwed that up.

    • by asylumx ( 881307 )

      Of course, the private contractor screwed that up.

      That can't be right, the private sector does everything better!

      </sarcasm>

  • by Alain Williams ( 2972 ) <addw@phcomp.co.uk> on Tuesday April 15, 2014 @04:24AM (#46754505) Homepage

    Now that the government of the USA has decided to remove the statue of limitations as regards taxation, might I remind Barack Obama of the little matter of unpaid taxes to King George III of England. These date back to your protest against the 1773 Tea Act [wikipedia.org]. Can I tell her Magesty's government that payment will soon be made ?

  • by jamesl ( 106902 ) on Tuesday April 15, 2014 @06:48AM (#46755027)

    Victory! Social Security Suspends Stale-Debt Collection Program
    http://overlawyered.com/2014/0... [overlawyered.com]

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