Making Justice Real

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

Social Security Administration Agrees To Return Up To $30 Million In Wrongly Confiscated Tax Refunds

Legal Aid announced a settlement with the Social Security Administration (SSA) this week that could help tens of thousands of Americans obtain forgiveness of approximately $30 million in debts allegedly owed to Social Security.

“Tens of thousands of people have waited more than five years for a resolution, so we are delighted to reach a comprehensive settlement in this matter that will hopefully provide some measure of relief for them, especially amid the COVID-19 pandemic,” said Eric Angel, Executive Director of Legal Aid.

In 2014, SSA began seizing tax refunds over alleged decades-old benefits overpayments, some of which went back to the 1970s. SSA typically had no documentation to support their claims of overpayments. In some cases, the benefits in question were paid to a relative of the plaintiffs when the plaintiffs were just children, and not to the plaintiffs themselves. Legal Aid filed a class action lawsuit alleging that the SSA had confiscated the plaintiffs’ tax refunds without notice, in violation of federal law, and without the due process required under the Constitution.

SSA sought to avoid a decision on the merits of the case by refunding the seized funds to Ms. Heard and the other two named plaintiffs and waiving their overpayments and then moving to dismiss the action. The trial court agreed to dismiss the case, but Legal Aid appealed, seeking to resolve the underlying issue that SSA should not be able to confiscate tax refunds in order to pursue decades-old alleged debts for which the agency had no documentation.

“It never seemed fair that the government withheld my tax refund just because it thought I was overpaid Social Security benefits more than 30 years ago,” said Tina Heard, one of the three named plaintiffs. “It seemed especially wrong that the government never told me that I owed it anything before taking my money.”

During the course of the litigation, SSA issued an internal notice ending its practice of confiscating tax returns to repay itself for decades-old debts. SSA then offered repayments for the tax return money previously taken, resulting in repayments of more than $10 million to more than 13,000 taxpayers. But even this remedy was incomplete because SSA took the position that all of the plaintiffs, whether they received repayments or not, still owed the decades-old debts.

“Many of the class members rely on their tax refunds to pay for basic needs – rent, medicine, food, tuition,” said Dan Jarcho, a Washington lawyer who co-counseled with Legal Aid on the case and is also a member of Legal Aid’s Board of Trustees. “We knew we had a responsibility to see this through.”

As part of the settlement announced this week, SSA has agreed to notify roughly 30,000 class members of the right to apply for a “waiver” of their alleged debt, meaning that, if the application is granted, the supposed debt will cease to exist. Most such requests should be granted because of the relatively small amounts of the debts (many under $1,000) and because of their extreme age.

Legal Aid encourages all taxpayers who receive notice from SSA informing them of their right to request a waiver to do so promptly, beginning the process of obtaining both a refund of any money previously taken unlawfully and an end to any further collection efforts by SSA.

Residents of the District of Columbia who believe they may have been impacted by SSA’s tax refund confiscation are encouraged to contact Legal Aid at (202) 628-1161.

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