An Iowa man faces an IRS debt claim stemming from a 30-year-old overpayment in Social Security benefits. Iowa man Christopher Storm was shocked after the IRS took his tax refund to recover old Social Security debt. The American Sun reported, citing IRS records, that the IRS said Storm received more Social Security benefits than he was entitled to nearly 30 years ago.
Storm began receiving Social Security survivor benefits when his father died when he was 17, a local news outlet reported. Storm said he received about $500 a month until he was 18. According to Storm, he also received a final one-time payment of $3,000 after he turned 18.
IRS says man owes $10,000
The IRS now claims that Storm was overpaid as early as 1996. The agency said he owed about $8,000 in overpaid benefits. On top of that, the IRS added about $2,000 in interest, bringing the total to about $10,000, The Sun reported.
Instead of receiving the tax refund he expected, Storm saw money being used to pay off alleged debts. Storm commented that survivor benefits helped him support himself after losing his father. He said he and his family are struggling to understand why the government is suddenly demanding repayment after so many years.
Tax refund on old debt
Storm called the situation unfair because the claims came nearly three decades after the payments were made. He said the money may not be much to everyone, but it means a lot to his family. Storm revealed that he and his wife plan to use their tax refund toward home repairs. His attorney, Keith Buzzard of McGinn Law, said Storm may have received too much money at age 17 to be ineligible for full benefits, according to Buzzard.
The case highlights a problem some Americans face when government agencies later determine that benefits payments were made in error. As of the time of this article’s publication, the Social Security Administration (SSA) has not commented publicly on Storm’s case. The Sun quoted another survey from Talker Research showing that many Americans rely heavily on tax refunds to pay for important expenses.
Why tax refunds matter to Americans
A survey of 2,000 U.S. taxpayers found that 79% expect to receive a tax refund this year. Some 52% of respondents said tax refunds were an important part of their budget plans. About 77% plan to use their refunds to purchase essential items. The most common uses include paying rent (52%), buying groceries and necessities (44%) and paying off credit card debt (37%). More than half of people who used their refunds to pay off credit card debt said they were trying to clear the bill from holiday spending.
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How Americans plan to use their refunds
Only 8% said they planned to use their refunds to purchase luxury goods. Among luxury purchases, people cited new clothes (37%), entertainment (28%) and a new mobile phone (26%). The survey found that the average taxpayer expects to receive a tax refund of about $1,700 this year. About 22% expect refunds to increase compared to last year, while 26% expect refunds to decrease. About 51% believe their refund amount will be about the same as last year.
The survey shows why unexpected loss of refunds can cause financial problems for many families – as many people already had plans for the money. As the Sun’s report noted, Storm’s case is a reminder that disputes over old government benefit payments can sometimes affect tax refunds years later.
