Tax grab in US is another hit on little people

Most of us borrow money some time in our lives, whether it’s for a house, a car, a holiday, or just to make ends meet.

While we do not like the thought of being in debt, we at least incur it knowingly.

Most of us also have enough difficulty paying back our own debt without having to pay back a debt incurred by someone else.

However, that is exactly what some US taxpayers are being forced to do. I read a news report in the Washington Post the other day and was fascinated at what the US government appears to be doing to increase its tax take. We can only hope that our lads and lassies in Revenue do not try it on us.

Sadie Grice, who works for the US Food and Drug Administration, was surprised some weeks ago to find the federal government had intercepted tax refunds she was due from both the IRS and the state of Maryland. There was no notice other than a letter which arrived some days later saying the government had seized her refund to satisfy an old debt. Well, you might say ‘and so she should’.

However, this was not Sadie’s debt. Her father died in 1960 when Sadie was four, leaving her mother with five children to look after. Until they were 18, her mother received benefits from Social Security.

This is where it gets really bizarre. Social Security claims it overpaid someone in the family in 1977. Unfortunately, it just does not know who it overpaid.

Now 37 years later and four years after her mother’s death, it has decided to go after Sadie. Clearly a smash and grab approach to tax collection. It all sounds a little like wild-west law enforcement — shoot first and ask questions later.

Sadie’s case is not unique. It would appear that across the US, hundreds of thousands of taxpayers are getting similar letters. It’s been reported that the Treasury Department has snatched $1.9bn (€1.35bn) in tax refunds this year, with $75m coming from ‘debts’ that are over 10 years old.

Up to three years ago, there was a statute of limitations of 10 years on debts owed to government. Sneaky politicians or administrators tucked a sentence into a farm bill lifting the statute and nobody noticed.

Nobody is taking responsibility for this. Congress, Treasury and Social Security are all blaming each other. Yet it is not stopping them from snatching this money. Since they started this reach back beyond 10 years, they have collected $424m.

Since Sadie would have been 21 in 1977, the money would not appear to have been paid to her as no payment was made over the age of 18. Interestingly, the government doesn’t seem to care who actually owes the money. The policy would appear to go after the oldest and work down through the family until they get it.

So in her case it would appear that they looked through the family members to see who had an income, and unfortunately she was it.

The stories are many but what they have in common is that the debt is not owed by the person from whom the money is being taken. One taxpayer had actually paid the money owed at the time around 36 years ago but they still claimed that he owed $172 and they seized it. When he asked for a receipt and confirmation that his ‘debt’ was paid off’ he was told he could ask for it but that, in reality, he would never get anything.

In Sadie’s case, the government seized her full refund even though they claimed her family debt was just shy of $3,000. Only after the Washington Post chased up the issue was she paid the difference.

Sadie’s final comments in the article went, “My Mom used to say, this country is carried on the backs of the little people,’ and now I see what she meant’.

Now is it any different here? Bankers, et al, create an economic disaster and the ordinary people pay and pay. The bankers and their friends just get richer.

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