February 23, 2021

Congressman Joe Neguse Introduces Constituent-Inspired Legislation to Fix IRS Oversight, Ensure Fairness in Social Security

Legislation would ensure that lump-sum Social Security disability payments don’t leave Americans owing large unexpected payments to the IRS 

Washington D.C. —Congressman Joe Neguse has reintroduced legislation to amend an IRS rule that has resulted in surprise tax burdens for widows, new retirees, people with disabilities, and people receiving other benefits through the Social Security Administration (SSA). Congressman Neguse was inspired to introduce this legislation after a constituent in Silverthorne shared an issue he had, which left him owing over $27,000 back to the IRS because of a lump-sum social security disability payment. 

The Fairness in Social Security Act addresses a faulty IRS rule which requires that one-time lump-sum payments of social security benefits – payments made for the time it took the Social Security Administration to certify one’s disability – be included when calculating a person’s annual taxable income. Under current IRS rules, recipients of these lump-sum payments may be disqualified from tax credits they already received to purchase healthcare through the Affordable Care Act exchanges, resulting in some recipients owing large amounts back to the IRS. The Fairness in Social Security Act removes the inclusion of social security disability payments prior to the current year in calculating an individual’s income to ensure individuals aren’t left owing large sums back to the IRS. 

“At a time when so many Americans are suffering financial hardship, there is absolutely no excuse for an oversight like the one addressed by the Fairness in Social Security Act to continue to threaten the financial wellbeing of hard-working Americans,” said Congressman Joe Neguse. “When we became aware of this issue, we knew we had to get to work right away to address the issue, and ensure no American is ever left in this position again.” 

Background 

Congressman Neguse initially introduced the Fairness in Social Security Act in August 2019. The bill passed the U.S. House of Representatives in June 2020.  

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