Making Justice Real

The Official Blog of the Legal Aid Society of the District of Columbia

Social Security Administration Pledges to Curtail Seizure of Tax Refunds

Legal Aid is pleased to announce that effective immediately, the Social Security Administration will no longer confiscate income tax returns to repay certain alleged debts incurred before 2002. This change in policy comes as Legal Aid and the law firm of Alston & Bird LLP continue to litigate a federal putative class-action lawsuit challenging this practice and seeking compensation for victims who have been subject to it. That case—filed on behalf of District of Columbia residents Tina Heard, Pearline Snow, and Carolyn Graham, and others similarly situated—remains pending in the U.S. Court of Appeals for the District of Columbia Circuit.

The Social Security Administration’s new policy was announced in an “Emergency Message” that it issued this past Friday. In addition to announcing that it will change its policy on referrals to the “Tax Offset Program” (TOP) for older alleged debts, the statement also signals that taxpayers whose refunds were taken should be eligible for reimbursement with more specific instruction regarding such possible compensation to follow. The reimbursement could affect roughly 65,000 Americans who have had a total of approximately $56 million in tax refunds seized under the challenged practice.

The plaintiffs in Legal Aid’s lawsuit claim that their tax refunds were unlawfully seized, that this confiscation occurred with no notice, explanation, or evidence of indebtedness, and that they were provided with no adequate means to challenge that seizure, all in violation of various federal laws as well as due process requirements under the U.S. Constitution. Another case alleging similar claims was filed in the U.S. District Court for the District of Maryland and is currently pending before the U.S. Court of Appeals for the Fourth Circuit.

The Social Security Administration’s announcement states that it will no longer use the Tax Offset Program to attempt to collect alleged overpayments that became delinquent before May 19, 2002. Additionally, the announcement indicates that there will, in the future, be a procedure to request refunds of TOP collections already made.

While Legal Aid welcomes the efforts that the Social Security Administration is undertaking in response to the ongoing litigation, this policy change alone does not fully address the issues raised by Legal Aid’s lawsuit. The to-be-announced refund process remains contingent and uncertain. And even after this announcement, the Social Security Administration continues to seek the collection of overpayments, including overpayments that became delinquent decades ago, through all possible means other than through the Tax Offset Program. The Social Security Administration will continue to be able to pursue such collections even if it lacks sufficient evidence to demonstrate that the alleged overpayment actually happened.

“This is a great first step, but we have a long way to go,” said Chinh Q. Le, Legal Director at the Legal Aid Society of the District of Columbia. “This stops one unfair practice by the Social Security Administration, but it only promises compensation at some undefined point in the future and does not address many other practices we alleged are unlawful.”

Legal Aid urges individuals who believe that their tax refunds were seized based on an alleged Social Security overpayment that became delinquent before May 19, 2002, or who have been asked to repay an alleged overpayment that the Social Security Administration cannot document, to pay close attention to these developments and seek out legal assistance if necessary. Residents of the District of Columbia are encouraged to contact Legal Aid.

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