Shouldn't I Be Allowed To File An Appeal?

Aug 10 2019 - 7:49am

Took early retirement/SSI while still self employed. An unexpected IRS Whistleblower Award arrived in my 65th year. That same year,I happened to earn income. Taxes were taken from Whistleblower award. Social Security would not allow me to appeal their demand for overpayment even though I attempted to tell them that award was not income which my taxes alone showed net income over the SSI income. That even with my deductions on Schedule C allowed me expenses against my income, I did not exceed the allowable income limit. I was coerced then and there to sign a payback at $300/month even tho I said I needed a CPA and a lawyer. After research Went back into SS office. Now they insist I fill out a waiver of pay back with documentation of my income/debt/assets. SS has already collected nearly $1000 towards the $11k they say I owe. The coerced mo amount I signed for is $300/mo. I don’t understand why they refused to let me appeal, why I am getting double jeopardy for a good deed that caused taxes owed the IRS but is not income for Social Security purposes. From Social Securities website they are very vague about awards as SS income. 67 today. They got me this year. Is this right.

Hi,

If what you're saying is accurate, then I'm not sure why there would even be an overpayment for Social Security to collect. Social Security only counts gross wages and net earnings from self-employment (NESE) toward the earnings test limit. Other types of income are not limited and would not create an overpayment.

I assume that your whistleblower award was not considered as wages for which you'd be given a W-2 form. I wouldn't think that it could be classified as self-employment income either, although I'm not a tax expert. However, if you included that income on your schedule C for the year and paid self-employment (i.e. Social Security) taxes on that income, even if you did so erroneously, then it would show up as earnings on your Social Security record. And, if that caused your countable earnings to exceed Social Security's earnings test limit then Social Security would want to withhold at least part of your benefits for that year, which could result in an overpayment.

You generally have only 60 days from the date that you're notified of an overpayment in which to file an appeal (https://www.ssa.gov/pubs/EN-05-10041.pdf), although exceptions can be made if good cause for late filing is established. I don't know enough about your case to know if you meet a good cause exception, but even if it's too late to file an appeal Social Security shouldn't collect an overpayment that doesn't in fact exist. If your actual gross wages and NESE didn't exceed the Social Security earnings test exempt amount in the year in question, then I don't see why you're overpaid at all. If you initially reported excess earnings and then filed an amended tax return to change your earnings for the year in question to an amount below the Social Security earnings test exempt amount then Social Security should eventually remove the overpayment and refund any amount they previously collected toward the overpayment. But, they probably won't be willing to do that until your amended tax return (assuming that you filed one) is approved by the IRS.

Best, Jerry