TN 6 (07-90)

GN 05010.132 Tax Refunds by SSA

A. Policy

1. General

SSA refunds taxes erroneously withheld if the refund can be processed during the same year in which the tax was withheld and before the cut-off date (i.e., about December 10) for preparation of the annual statement for that year.

The refund is paid to the beneficiary from whom the tax was incorrectly withheld. If the beneficiary has died, SSA cannot pay the refund (see B.).

Refund is either by actual payment or use of that amount to pay an obligation of the beneficiary to SSA on that account. (See GN 05010.250 if there is an overpayment.)

2. Tolerances

SSA applies a $1.00 tolerance both for tax refunds and excess tax refunds (see GN 05010.134). Thus, a refund of less than $1.00 is not paid and an excess refund of $1.00 is not subject to adjustment or recovery.

In cases involving children paid in a combined check, the amount due each child, or paid on behalf of each child, must be at least $1.00 for SSA to take action.

B. Procedure

If a beneficiary due a tax refund has died and the file shows there is a surviving spouse, advise the spouse of the amount due and that the estate must file with IRS at the end of year to get the refund.

If there is no surviving spouse, send the notice to the deceased's estate at the deceased's last residence address.

C. Example

This is an example of a tax refund paid by SSA.

B, a nonresident alien beneficiary, enters the U.S. on June 26, 1989. On July 22, 1989 she visits the FO to report her entry. She submits evidence of her lawful admission for permanent residence on June 26, 1989.

SSA takes action to change her alien withholding tax status; but, it is too late to stop withholding tax from the checks for June and July. Since B was a U.S. resident on the dates the payments for those months were made (i.e., July 3 and August 3), she is due a refund of the tax withheld from those benefits.

SSA refunds these taxes since action can be taken before the cut-off date for preparation of the 1989 annual statement.

To Link to this section - Use this URL:
GN 05010.132 - Tax Refunds by SSA - 11/09/1990
Batch run: 11/09/1990