The new year comes with a certain amount of trepidation for those living on fixed incomes; particularly senior citizens who depend on Social Security benefits as well as income tax refunds to make ends meet during the year. However, there are many people who have been overpaid benefits, and the Social Security Administration wants the money back.
However, recovering overpayments through income tax refunds is not going to be a worry this year. According to a recent ABC News.com report, the SSA announced that it would suspend a debt collection program that resulted in the seizure of thousands of income tax refunds.
In essence, some of the overpayments had occurred decades ago (when those receiving benefits were only children). The Administration indicated that it identified 400,000 people who have old debts totaling more than $700 million. More than half of the outstanding debts were less than $1000.
While the collection program is on hiatus, the Administration pledges to find alternatives to collect applicable debts. In the meantime, the debts that are in the process of being collected to not go away. In fact, a preliminary plan is in the works that will collect debts though the payment (or withholding) of future Social Security benefits.
As we alluded to earlier, many people depend on income tax refunds to guard against higher costs of living and to have a small emergency fund to defray the cost of some increases in cost of living. If you have questions about what to do in the event your tax refund is seized, an experienced attorney can help