Social Security Resumes Debt Collection Program Suspended During COVID-19 Outbreak

The resumption of debt collection activities is estimated to affect 280,000 individuals who owe about $2.7 billion to the agency.

A Social Security Administration building in Burbank, Calif., on Nov. 5, 2020. Valerie Macon/AFP via Getty Images

Americans who owe money to the Social Security Administration could soon see their federal or state payments withheld to offset their debt after the agency announced on March 20 that it is immediately resuming collection efforts through the Treasury Offset Program, which had been paused since 2020.

The program, administered by the Department of the Treasury’s Bureau of Fiscal Service, is designed to collect delinquent debts that people owe to various federal and state agencies. The program matches debts owed by taxpayers with money that federal and state agencies are paying them, such as social security benefits and tax refunds. It withholds the payments to offset delinquent debt.

“This decision comes after a suspension of collections due to the economic challenges posed by the COVID-19 pandemic,” the agency said in a March 20 statement.

The Social Security Administration (SSA) said that the Treasury has already started collecting SSA debts accrued before March 2020, which is estimated to impact 280,000 individuals who collectively owe $2.7 billion. As a result of this collection, beneficiaries may see their social security income withheld.

The program collected more than $3.8 billion in state and federal delinquent debts in fiscal year 2024.

The SSA has referred its delinquent debts to the offset program since 1992. Before March 2020, the agency had successfully recouped around $2 billion in delinquent debt through the program.

“Resuming collections through the Treasury Offset Program is a critical step in our commitment to being good stewards of taxpayer funds and ensuring the integrity of our programs,” Acting Commissioner of Social Security Lee Dudek said. “We are dedicated to recovering overpayments while providing individuals with the necessary information and options to address their debts.”

The law mandates that agencies refer debts owed by people and businesses to the offset program when the debts are overdue by 120 days, according to the Bureau of Fiscal Service.

Agencies must ensure that the debt is legally enforceable, and are required to notify taxpayers, through a letter, that they are sending the dues for collection to the Treasury Offset Program. This must be done at least 60 days before sending the debts for collection to the program.

“The letter must tell the debtor about the debt (type and amount), that the agency intends to refer the debt for offset, and what rights the debtor has to resolve the debt situation,” the bureau states on its website. “The letter must give the debtor opportunities to pay the debt, enter into a payment agreement, or dispute that they owe the money to the agency.”

The type of federal and state payments that the program can collect to offset debts include tax refunds, wages such as military pay, certain state payments, federal benefit payments such as social security, contractor payments, and retirement income.

The law also allows states to collect child support dues from certain types of federal payments.

“A debtor stays in the TOP database until the agency that sent the debt to the TOP database tells TOP to stop collecting the debt,” the bureau states. “The agency might tell TOP to stop collecting if the debt has been paid in full, if the debt is subject to a bankruptcy stay, or if other reasons justify pausing or stopping collection.”

SSA’s decision to start recovering debts through the program comes after the agency recently announced changes to its overpayment recovery policy.

Earlier this month, SSA said it would start withholding 100 percent of a beneficiary’s monthly benefits to recover overpayments made by the agency to the individual.

Since March 2024, the SSA has been recovering overpayments at a rate of 10 percent of monthly benefits or $10, whichever is greater. The new policy comes into effect on March 27.

Rep. John B. Larson (D-Conn.) criticized the SSA for the new overpayment recovery policy.

“Many Social Security beneficiaries already struggle to make ends meet. Their benefits are what allows them to put food on the table, keep a roof over their heads, and put gas in their cars,” he said.

Dudek justified the policy reversal, saying the agency shoulders a “significant responsibility to be good stewards of the trust funds for the American people.”

“It is our duty to revise the overpayment repayment policy back to full withholding, as it was during the Obama administration and first Trump administration, to properly safeguard taxpayer funds,” he said.