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IRS Confiscating Tax Refunds to Pay Parents' Debt


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#1 Gerowen

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Posted 12 April 2014 - 02:29

 

Some 400,000 Americans may see their tax refund checks grabbed by the government after Congress quietly lifted the 10-year statute of limitations in 2011 on money owed to Uncle Sam.
 

Now, debts going back decades are considered fair game for the IRS, and the government is coming after the children and grandchildren of the original debtors for the repayment. 
 
In some cases, debts of parents from the early 1960s and 70s are being collected from children. 
 
In many cases, the IRS doesn't even possess the original records of the debts. 
 
The article also discusses a woman who is being targeted by Social Security because they think they may have overpaid somebody in her family in years gone by, but they're not sure who.
 

 




#2 FloatingFatMan

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Posted 12 April 2014 - 08:54

How is that even legal?  You don't inherit your ancestors debts...



#3 HawkMan

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Posted 12 April 2014 - 09:06

How is that even legal?  You don't inherit your ancestors debts...

 

Actually you do. ot well it's a bit technical. but in essence you do. 

 

if you want to inherit their goods, you have to inherit everything, even their debts, UNLESS they had bank insurance against it. 



#4 Decebalvs Rex

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Posted 12 April 2014 - 09:18

When you inherit your parent's money you also inherit their debts. Fair and square, its all about what they signed for.



#5 theyarecomingforyou

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Posted 12 April 2014 - 09:50

Debts should be collected at the time of inheritance. This move reminds me of the life debt concept in Continuum.



#6 HawkMan

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Posted 12 April 2014 - 10:00

Debts should be collected at the time of inheritance. This move reminds me of the life debt concept in Continuum.

 

They are, if and when possible, but sometimes the debs are more than the money, or it's just debts and "worthless" good. 



#7 +MikeChipshop

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Posted 12 April 2014 - 10:10

How is that even legal?  You don't inherit your ancestors debts...

 

As stated, you do. I have friends in Spain and they say once you remove previous debts you get a bill for the remaining debt, of which you can avoid by not inheriting anything. Harsh doesn't quite cover it.



#8 theyarecomingforyou

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Posted 12 April 2014 - 12:59

They are, if and when possible, but sometimes the debs are more than the money, or it's just debts and "worthless" good. 

Debts are incurred by the individual and shouldn't be transferred on to relatives / inheritors. Any debts should be subtracted from the inheritance before it is paid out and no-one should be expected or forced to accept an inheritance where the debt exceeds the assets. Debt is personal.

 

At first glance this seems to be an outrageous abuse of power.



#9 Arkos Reed

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Posted 12 April 2014 - 13:07

This is a classic... unfortunately

 

In France, I have seen many families forced to sell inherited houses to pay debts they were not aware of when they accepted. Even worse, inheritance is taxed, up to 40% of the value of the inherited goods/money. Say you inherit the old familiy house but can't pay the taxes? you have to sell it...



#10 +nowimnothing

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Posted 12 April 2014 - 13:27

you do inherit both assets and liabilities, but I believe you only inherit liabilities up to the amount of assets. In other words, you can't have a negative inheritance. But if these people inherited money, that money should have rightly gone to their ancestors' debtors. That makes sense to me.



#11 theyarecomingforyou

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Posted 12 April 2014 - 14:11

Any debts should be paid at the point of inheritance to avoid situations like this. The real issue is why this isn't occurring. For instance, if lawyers have been neglecting to pay the IRS for taxes owed on an estate then the government is obviously right to pursue that money and any families affected should launch legal proceedings against the lawyers involved. If the debt was only recently discovered then that speaks of incompetence on the part of the IRS and people are right to be irritated.

 

The problem here is that we don't have enough information. This is just Fox News running an anti-government agenda. If debts should have been paid out of the inheritance and weren't then they are still legally owed. The impression given is that the government is going around collecting debts from relatives of the debtors and that people are being put out of pocket when it seems to be that the inheritance they received hadn't had the debts deducted. You can't inherit more debts than assets.

 

It's shocking that one of the main US "news" networks is so blatant in its anti-government rhetoric. It lacks any pretence of impartiality or objectivity.



#12 Rippleman

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Posted 12 April 2014 - 14:30

How is that even legal?  You don't inherit your ancestors debts...

if not, whats to stop a parent diagnosed with a terminal illness going out and borrowing/buying as much as he possibly can and then giving it to his kids/wife then dying leaving all he borrowed? That's the idea anyways. But like one said above, it is limited (here in Canada anyways) to the estate. Sell/auction the estate, pay off debts, what ever is left over (if any) is then passed on to kids. BUT if the child wants to keep a house his parents bought but yet not paid for, the child is now responsible for the debt.



#13 HawkMan

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Posted 12 April 2014 - 14:58

and no-one should be expected or forced to accept an inheritance where the debt exceeds the assets.


We already said this. They're no. If the debt exceeds the value of the inheritance you can chose not to inherit anything, including the debt. But this means you get nothing, not the house or the car or the family heirloom. If you want those, then you also have to accept the debt incurred.

But if the parent has life insurance, these up usually includes a debt clause that will take care of all or a lot of the remaining at death. Question is, after so long when the irs go after them, are they working with the insurance companies, can the insurance companies even do anything after so long, and the debt wasn't in the picture when these people accepted the inheritance. You can't come after they accepted it and say this is also part of it.

#14 HawkMan

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Posted 12 April 2014 - 15:02

if not, whats to stop a parent diagnosed with a terminal illness going out and borrowing/buying as much as he possibly can and then giving it to his kids/wife then dying leaving all he borrowed? That's the idea anyways. But like one said above, it is limited (here in Canada anyways) to the estate. Sell/auction the estate, pay off debts, what ever is left over (if any) is then passed on to kids. BUT if the child wants to keep a house his parents bought but yet not paid for, the child is now responsible for the debt.


There was a case 2 ish or so years ago perhaps with a well of American family who inherited a lot of valuable art, I think it was some vase like thing, but there was issues accepting it because of inheritance tax and some other. Basically they had to pay it to inherit, but they needed to inherit the goods first to sell some of it off to pay the taxes or debts.

#15 theyarecomingforyou

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Posted 12 April 2014 - 17:26

We already said this. They're no. If the debt exceeds the value of the inheritance you can chose not to inherit anything, including the debt. But this means you get nothing, not the house or the car or the family heirloom. If you want those, then you also have to accept the debt incurred.

It was a general principle, I wasn't saying it had occurred in this instance.

 

Question is, after so long when the irs go after them, are they working with the insurance companies, can the insurance companies even do anything after so long, and the debt wasn't in the picture when these people accepted the inheritance. You can't come after they accepted it and say this is also part of it.

Exactly. You can't have debt revealed after the inheritance, as it's not possible to make an informed decision. Unfortunately the Fox News article / video is extremely sparse when it comes to the details - we really don't know what's going on. It might be perfectly reasonable but then again it might be a massive government overreach. Certainly the case highlighted, where the IRS allegedly didn't know who the debt belonged to and was going after a relative, sounds highly questionable.