Don't start dreaming about what you'll spend your IRS refund on just yet; several taxpayers are saying that their refunds are being seized by the government to cover the old debts of relatives.
The Washington Post shares the story of Mary Grice, a Maryland resident who had both her state and federal refunds intercepted due to an alleged debt from dozens of years ago. Her father died in 1960, and Mary's mother and four siblings received survivor benefits from Social Security to help pay for everyday living expenses. Social Security now says that in 1977, it overpaid a member of the Grice family (they don't know who), and Mary was tapped to pay the price. "It was a shock," she said. "What incenses me is the way they went about this. They gave me no notice, they can't prove I received any overpayment, and they use intimidation tactics, threatening to report this to the credit bureaus."
How did this happen? In 2011, a sentence was added to the farm bill that lifted a 10-year statute of limitations on the government collecting old debts, and the hunt for money owed began in earnest. This summer, the Social Security Administration will go into overdrive, tracking down more than 400,000 taxpayers who, as a group, owe $714 million in debts more than a decade old.
Grice was finally able to get close to $1,500 of her refund back, after The Post inquired about her case. Although the Treasury said she owned $2,996, they initially held onto her combined refunds of $4,462. Read more about Grice and other people affected by this policy at The Washington Post.