Why is Social Security seizing your tax refund over your relatives' debt?

CBS News first met Mary Grice in April after her tax refund of almost $3,000 dollars had been confiscated, she said, without notice. It turned out the Social Security Administration had seized her refund, claiming her family received too much in death benefits after Grice's father died - in 1960. Grice, who was five years old at the time, says she never got a penny and calls the loss of her refund an injustice.

"They feel that, 'We're the government, we can do whatever we want, however we want, whenever we want.' and it's so unfair," she said.

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CBS News first met Mary Grice in April after her tax refund of almost $3,000 dollars had been confiscated, she said, without notice.

Grice was the target of what Social Security calls its Treasury Offset Program, which allows it to seize old debt. Officials believe that debt older than ten years totals $714 million and needs to be collected.

But when Grice's story went public, Social Security announced an "immediate halt to further referrals" on decades-old debt, and said in a statement it would never "(try) to collect the debt of a person's relative."

CBS News found several taxpayers who say Social Security is doing just that: taking their refunds without evidence the debt is theirs.

Here's what happened to Diana Vonderacht of New Jersey: "I asked them to give me checks with signatures because I can show them I didn't sign these checks. They don't have any checks. They have no proof."

Social Security said in a statement: "We do provide documentation of the alleged overpayments."

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Officials believe that debt older than ten years totals $714 million and needs to be collected.

But John Jones of Maryland, who lost a $3,100 refund, saved a voicemail from a Social Security worker warning him not to expect any documents.

"...there is no paper folder still existing for that case. As I said, it's usually after 7 years they're destroyed," the worker can be heard saying on the tape.

When Mary Grice complained last spring, Social Security at first paid her back. But last month it sent a letter, saying she still owes the debt.

"You haven't explained to me why I owe you, and I have no intentions of paying it until you do," Grice said.

Social Security told CBS News the entire old debt collection process remains under review. But five taxpayers have sued to stop the program all together.

  • Wyatt Andrews

    Wyatt Andrews is a CBS News National Correspondent based in Washington D.C. He is responsible for tracking trends in politics, health care, energy, the environment and foreign affairs.