Uncle Sam Revives Feudal Practice to Collect From Children of Debtors

Holding children responsible
for the debt incurred by their parents is a feature of historical
feudalism and a few modern third-world shitholes.

Developed countries, by and large, assume that a debt dies with
the person who willingly incurred it, or at least stops with his or
her estate. “By and large,” I write, because the U.S. government
has broken with centuries of tradition holding individuals
responsible for their choices, opting to withhold tax refunds from
children whose parents incurred vague and often ill-documented
obligations to the feds.

Writes
March Fisher of The Washington Post:

A few weeks ago, with no notice, the U.S. government intercepted
Mary Grice’s tax refunds from both the IRS and the state of
Maryland. Grice had no idea that Uncle Sam had seized her money
until some days later, when she got a letter saying that her refund
had gone to satisfy an old debt to the government—a very old
debt.

When Grice was 4, back in 1960, her father died, leaving her
mother with five children to raise. Until the kids turned 18, Sadie
Grice got survivor benefits from Social Security to help feed and
clothe them.

Now, Social Security claims it overpaid someone in the Grice
family—it’s not sure who—in 1977. After 37 years of silence, four
years after Sadie Grice died, the government is coming after her
daughter. Why the feds chose to take Mary’s money, rather than her
surviving siblings’, is a mystery.

Across the nation, hundreds of thousands of taxpayers who are
expecting refunds this month are instead getting letters like the
one Grice got, informing them that because of a debt they never
knew about — often a debt incurred by their parents—the government
has confiscated their check.

The new multi-generational debt collection practice required a
two-step policy change. One was the
elimination of the 10-year statute of limitations on debts to
the federal government. The other involves the Social Security
Administration insisting that if tiny tots indirectly benefited
from public assistance collected by adults decades ago those
now-grown ex-tots are responsible for any overpayments the feds may
claim.

The elimination of the statute of limitations may, on its face,
allow the government to go after individuals responsible for
incurring debt, but the longer time horizon means accurate records
can be hard to come by. According to Fisher, “Social Security
officials told Grice they had no records explaining the debt.”

How do you collect a debt that you can’t prove exists? Through
the sheer grinding weight of the state, of course.

Going after the next generation—which never made the decision to
incur a debt to begin with—really is a massive break from previous
policy.

Most
financial websites advise heirs that they are responsible for
parents’ debt only if they cosigned loans, held joint accounts, or
shared community property with the deceased. Beyond that, the debt
adheres to the debtor’s estate and may devour any inheritance. The
estate belonged to the debtor and passes to heirs only after bills
are paid. But the debt stops there.

The Federal Trade Commission (FTC) likewise
asserts, “family members typically are not obligated to pay the
debts of a deceased relative from their own assets.”

The estate of the deceased person owes the debt. If there isn’t
enough money in the estate to cover the debt, it typically goes
unpaid. But there are exceptions to this rule. You may be
responsible for the debt if you:

• co-signed the obligation;
• live in a community property state, such as California;
• are the deceased person’s spouse and state law requires you to
  pay a particular type of debt, like some health care expenses;
  or
• were legally responsible for resolving the estate and didn’t
  comply with certain state probate laws.

The FTC should send a memo over to Treasury and the Social
Security Administration to clue them in on modern debt practice.
Sure, the government is broke and scrambling for any cash it can
find. But reviving feudalistic practices to visit the debts of the
parents on sons and daughters should involve perhaps a tad more
discussion. Especially if the feds hanker to take the next logical
step into debt
bondage.