WASHINGTON — The Social Security Administration said Monday that it would stop trying to collect taxpayers’ debts that were more than 10 years old.
The statement came after a Washington Post article revealed that the Treasury had started intercepting the federal and state tax refunds of debtors’ children — even if the debts were decades old. The debts stem from overpayments by Social Security that the agency had been trying to recoup even if the original recipients had died.
“I have directed an immediate halt to further referrals under the Treasury Offset Program to recover debts owed to the agency that are 10 years old and older,” Carolyn W. Colvin, the acting commissioner of Social Security, said in a statement.
Colvin said the effort would stop until the agency completed a thorough review of its “responsibility and discretion” to collect any debts to the government.
A revision to the Farm Bill passed in 2008 lifted the statute of limitations “applicable to collection of debt by administrative offset.” That allowed the authorities to withhold the tax refunds of 400,000 people who had relatives with debts to Social Security, The Post reported.
Some of the debts were incurred as long ago as the mid-20th century, The Post said, and the taxpayers whose refunds were being intercepted did not know that their relatives had been overpaid or owed any money.
The actions by the Social Security Administration and the Treasury — which were made public as the Internal Revenue Service’s tax-filing deadline loomed — led to a public outcry, at least one lawsuit and a sharp response from Capitol Hill.
“Payment beneficiaries have to be accountable for overpayments from the government, but the government has to be reasonable and use common sense,” Sen. Charles E. Grassley, R-Iowa, said in a statement.
Grassley sent scathing letters to Colvin and Treasury Secretary Jacob J. Lew, demanding a reassessment of the effort to recoup the Social Security overpayments. Grassley questioned whether the federal government had the authority to seek repayment from debtors’ relatives in the first place. “The agency is right to revisit” its policy of trying to recoup money from people who received overpayments, he said. “However, it shouldn’t take embarrassing media coverage and lawsuits for this step to take place.”
The Social Security Administration also reached out to individuals whose refunds might have been intercepted. “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.