Three Washington, D.C., residents have filed suit against the Social Security Administration and the IRS, claiming the agencies illegally confiscated 2013 tax refunds based on alleged overpayment of Social Security survivor benefits.
Those alleged overpayments extend back decades, to when the plaintiffs were children, according to a news release from the Legal Aid Society and McKenna, Long and Aldridge, attorneys for the plaintiffs.
Furthermore, at no time were the plaintiffs informed of the overpayments, meaning the claims could not be challenged, the lawyers said.
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In 2014, the IRS confiscated about $75 million in refunds to 400,000 taxpayers based on claims they or their families received overpayments, which were often made to the parents or relatives of those having refunds confiscated.
"Due process principles and the Social Security Administration's own regulations prevent the government from appropriating tax refunds and only notifying taxpayers after the money is gone," said Daniel Jarcho, a partner at McKenna Long and a member of Legal Aid Society's board.
The three named plaintiffs received survivor benefits, but if certified, their class would also represent disability beneficiaries who had refunds confiscated, according to Nina Wu, an attorney with Legal Aid Society.
Tina Heard, 54 and one of the named plaintiffs, received payments as a child after her mother passed away in 1970, but those payments stopped 30 years ago. Her 2013 federal refund of $2,226 was confiscated, as was a $918 refund from the District of Columbia, according to court documents. A remaining disputed debt of $2,150 to the SSA remains, the suit said.
Absent the refund, the complaint claims Heard was forced to borrow money to pay for rent, her car, and her son's college tuition.
Heard, who claims to have never been notified of the overpayments, was able to eventually learn she received $5,583 of alleged overpayments between 1978 and 1981, but only after her refunds had been confiscated, and only after making her own inquiries to the SSA.
Another of the defendants, Pearline Snow, a 61-year-old lifelong resident of Washington, D.C., began receiving $399 a month in survivors' benefits in 1984 after her husband died. In April of 2014, she had $2,541 of federal and state tax refunds confiscated.
The third plaintiff, Carol Graham, 51, became eligible for survivor benefits in 1971, when her father died. She received her last benefit payment in December of 1982.
Graham also began receiving benefits on behalf of her son, after his father died in 1996. Those payments lasted through October 2003. Her refund of $244 from the District of Columbia was also intercepted in April of 2014.
"We're talking about very old alleged debts. Our plaintiffs had no notice or opportunity to be heard prior to the seizure of their tax refunds, and notice is critical to all individuals to challenge the government's actions," said Wu.
"SSA cannot adequately explain the alleged overpayments, despite our plaintiffs' best attempts to get answers," she added.
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Nick Thornton
Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.
