If it wasn’t bad enough that my Generation X and Millennials have to worry about whether we will receive a 30 to 50 percent cut to our Social Security benefits, now we have new worries. According to a recent report by The Washington Post, the IRS has been withholding tax refunds to satisfy their parents’ old debts to the government. If Social Security makes mistakes and overpays my parents, will I be responsible to pay back the government? According to the report, The Treasury Department has intercepted $1.9 billion in tax refunds. Although not all are related to Social Security overpayments, it’s scary to think the bureaucracy can penalize the children of deceased parents who allegedly owe money to the government.
Reinstituting the statue of limitation
I had heard on the “Suze Orman Show” about the fact that a 10-year statute of limitation on old debts to the government has been lifted as an obscure part of a farm bill. Orman’s advice was to make every attempt to avoid getting a tax refund. I personally never heard the government going after children for debts incurred by their parents. It’s even worse that the so-called debts came about because of miscalculations by the Social Security Administration, which says 400,000 taxpayers owe $714 million on old “debts.” It’s completely ridiculous that the statue of limitation was removed for old debts. I think people should demand lawmakers reinstitute the statue of limitation, especially considering the ancient record-keeping would be spotty at best.
Letting debts go after death
According to the Washington Post report, children don’t typically owe debt when a parent dies. However, the Social Security Administration claims the children indirectly received assistance from the public money. For example, if a child’s mother received an overpayment of “survivor benefits” after the death of a husband, the Social Security Administration appears to be coming after the grown children more than three decades later. I know the Social Security system is in trouble, but the answer isn’t to harass taxpayers, but to reform the system with ideas such as the Purple Social Security Plan proposed by Boston University professor of economics Laurence J. Kotlikoff.
Instead of dolling out so-called public money, the Social Security Administration needs to recognize itself as obsolete. In its place should be a personal security account (PSA) that belongs to each American citizen as a real retirement account. No one would have to worry about the Treasury Department intercepting their tax refunds due to miscalculations and errors by the Social Security Administration. Instead of leaving my children with potential mysterious debts, I can leave them with the inheritance of my PSA. Besides, does the government really want to be messing with taxpayers who have crossed over to the other side?
More from this contributor:
COLA for Social Security Isn’t Fair for Young
My Husband Refuses to Take Social Security
Planning for Retirement with No Social Security