IRS Chasing Children For Dead Parents' Debts

The IRS is going after taxpayers to pay their deceased parents' decades-old debts. NPR's Scott Simon talks with Marc Fisher of The Washington Post about the collection efforts.

SCOTT SIMON, HOST:

This is WEEKEND EDITION from NPR News. I'm Scott Simon. Many people expect some kind of tax refund this year. But not so fast. The government's going after old debts incurred by taxpayers' parents that taxpayers usually know nothing about and have little recourse to challenge. The debts are owed to may federal agencies, but the Social Security Administration has found 400,000 taxpayers who collectively owe more than $700 million on Social Security overpayments to family members. Marc Fisher of The Washington Post has been reporting this story, and he joins us now. Marc, thanks so much for being with us.

MARC FISHER: Good to be with you.

SIMON: I thought dying was the one way you might be able to get out of debts.

FISHER: Well, and if you believe the federal government or other arms of the federal government, children are not supposed to be held accountable for their parents' debts. But the Social Security Administration and the Treasury have found a way around that thanks to a one-line change they made in the 2008 Farm Bill.

SIMON: And that line is? I suspect it has nothing to do with wheat or barley, yeah?

FISHER: Nothing at all. Basically, what it said is the government, which previously had not been allowed to go out and collect debts that were more than 10 years old, now can go back as far as they'd like - decades back. And in the last couple of years, they've been aggressively doing that to the tune of many hundreds of millions of dollars.

SIMON: And you've talked to several people who've been hit by this, right?

FISHER: I have. And what happens is they don't even know what's going on. All they know is they don't get their tax refund that they were expecting. So some folks who were very energetic this year and had already filed their taxes and were expecting to get their returns, instead they get a letter saying, you're not getting your tax refund because your parent or someone in your family once got an overpayment from the Social Security Administration. In a couple of cases - particularly a woman in Takoma Park, MD - she was 4 years old when her father died.

Her mother got survivors benefits from the Social Security Administration. And then when this woman, Mary Grice, became of age, her family stopped getting survivors benefits, and she thought that was the end of it. Thirty-seven years later, it turns out Social Security claims that they paid a little bit too much to the family, and now since her mother has died, they've come after Mary.

SIMON: How does the government even know that they might have overpaid?

FISHER: Well, they have records going back that say, you know, you were eligible for X amount per month. And then maybe somebody in the family went back to work and got more in the way of earnings than they would have had to be eligible for those benefits. And so there was this debt sitting there on the account over all these years. But in many of these cases, the government can't even say who exactly incurred the debt. It might have been a surviving spouse. It might have been surviving children. All they know is that the debt is on the books. And apparently their regulations allow them to go after almost anyone in the surviving family without regard to whether they were the ones who got the benefits in the first place.

SIMON: And they have no recourse?

FISHER: Well, there's an appeals process, and you can seek a waiver. The folks I've spoken to, for the most part, when they call or visit Social Security, they're told, yeah, you can go through the waiver process, but you're not likely to win. The Social Security Administration tells me that about 10 percent do win their case, but that's 90 percent who don't. And of that 90 percent, some of them, it's just, you know, a few hundred dollars maybe, and they figure it's not worth the battle. In other cases, it's some thousands of dollars, and they really need the money. But very few lawyers will touch these cases because they are relatively small amounts of money involved.

SIMON: So this is all being done because the government's in debt?

FISHER: Well, that was sort of the impetus for all of this. They have brought in a lot of revenue. And the government, anticipating that some people would say, hey, it can't be worth your time and effort to go after these small, old debts. The process of going after them's going to cost you more than you bring in. So they've done an analysis that actually shows that they are bringing in more money than it costs to go make the collections. So to that end, they say that they're saving the taxpayers money.

When I asked the Social Security folks who came up with this idea to go after these old debts, they said, well, go talk to Treasury. I went to Treasury. They said, well, go talk to Congress. I went to Congress. They said, oh, it had to be somebody back in Treasury or somewhere in the bureaucracy. So no one is willing to step up and take credit for this. And now that this story has appeared, there's kind of a circling the wagons and it's not - no one wants to be associated with this at this point.

SIMON: Marc Fisher, who's senior editor at The Washington Post. Thanks so much for being with us.

FISHER: Thanks, Scott.

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