Topic: Social Security Payments
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We have a representative payee account for which the beneficiary has called to ask for account information specifically related to balances and their economic impact payment. Can we provide this information to the beneficiary of a representative payee account, or can we only provide that information to the representative payee?
We are not aware of any authority that would prohibit you from sharing account information with the beneficiary of a representative payee account. Absent such authority, we believe you should provide account information to the beneficiary of a representative payee account — the funds in the account belong to the beneficiary, and the beneficiary may…
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We have a customer who was appointed by the Social Security Administration (SSA) as the representative payee for an account opened for a minor child receiving social security benefits. Recently, we received a court order appointing someone other than the representative payee as the guardian of the estate for the minor child. The court order provides that both the representative payee and the guardian should be listed on the minor account. Are there any changes that need to be made through the SSA? Must the representative payee be changed to the person who is the guardian of the estate?
No, we do not believe any changes need to be made through the SSA to remove the current representative payee and to replace them with the person who is the guardian of the estate. The SSA recognizes that a beneficiary entitled to receive social security benefits may have both a court-appointed guardian and a representative…
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Our bank received a notice of reclamation from the Treasury Department in October of 2017 regarding the death of a customer who died in June of 2017. The customer’s daughter, who is a joint owner on the account, did not notify us of the death. The account received supplemental security income (SSI) payments for July, August, and September of 2017. We returned the full SSI payments for July and August to the Treasury Department, and a partial payment for September due to insufficient funds remaining in the account. Last month, the Treasury Department debited the balance of the September payment from our bank. Are we liable for more than 45 days’ worth of benefit payments? If so, can we offset the funds from another joint account the daughter has with our bank?
Yes, in these circumstances your bank is liable to the Treasury Department for more than 45 days’ worth of benefit payments. The Treasury is authorized to recover the post-death benefit payments from two sources: (1) from all post-death benefit payments in the recipient’s account, and (2) from the outstanding balance of any remaining post-death benefit…
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When a customer receiving automatic electronic social security payments dies, we know we need to return any payment received after the customer’s death. Does the same rule apply for representative payee accounts? Do we need to return any automatic social security payments made to the representative payee account after the account beneficiary dies?
Yes, social security benefits paid to a representative payee account on behalf of a beneficiary must be returned after the beneficiary’s death. The regulations governing reclamation of federal benefit payments require banks to return all federal benefit payments received after learning of a beneficiary’s death, whether the payments are made directly to a beneficiary or…
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One of our customers is a representative payee on two deposit accounts. Both accounts have the exact same ownership, showing the customer as representative payee for a social security beneficiary. However, only one of the accounts receives social security payments, and that account now is overdrawn. We have confirmed that the other account has not received any social security payments, although we know that the customer does move funds between the accounts. Do we have a right of setoff in the other account to cover the overdraft?
Yes, we believe that your bank would have a valid right of setoff in the second account. From what you have told us, your deposit account agreement provides for a contractual right of setoff, and both accounts have identical ownership. We note that the second account may contain some social security benefit payments that have…
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Are we required to follow the rules for protecting public benefit payments when responding to a tax levy issued by the Illinois Department of Revenue? The levy form provided to the bank does not provide a mechanism for indicating that there are protected funds in the account. The federal rules appear to exempt U.S. tax levies, but not state tax levies.
Yes, we believe that the last two months of federal benefit payments are protected from a state tax levy, provided that the payments were made by direct deposit and tagged as federal benefit payments. While these protections do not apply when responding to a levy issued by the IRS, they do apply to levies issued…
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A customer held a joint account with her mother, who was receiving Social Security benefits. The mother died one year ago, but the daughter did not notify us and continued to withdraw her mother’s benefit payments from the account, and there are no funds remaining in the account. We eventually received a reclamation letter from the Treasury demanding $10,000. What legal recourse do we have against the daughter? Should we file a police report and a SAR?
Your bank would be within its rights to file a police report and SAR, as the collection of benefit payments after a relative’s death is a federal crime. Also, the Social Security Administration provides a hotline for reporting Social Security fraud, and we are providing a link with the reporting information below. We do recommend…
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Can we accept deposits of SSI checks payable to a representative payee into the personal account of the representative payee?
Generally, we do not believe that a representative payee should be allowed to commingle funds by depositing a beneficiary’s SSI checks into the representative payee’s personal account, unless an exception applies (for example, if the representative payee is the beneficiary’s spouse who lives in the same household as the beneficiary). The Social Security Administration rules…
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We have a customer who has made physical threats against a bank employee and her family. We have obtained a no contact order from the local police and would like to close the customer’s account. However, he receives social security benefits paid directly into the account. Given the circumstances, are we required to give the customer thirty days’ notice before closing his account?
We believe that your bank may close the account without providing thirty days’ notice, given the physical risks posed by this customer to your employees and other customers, but we recommend consulting with bank counsel before doing so. The “Green Book” (the Treasury’s Guide to Federal Government ACH Payments and Collections) requires thirty days’ written…
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We received a tax levy from the Illinois Department of Revenue regarding a customer who has one account with us. The only funds that are deposited into the customer’s account are her monthly social security income payments. The amount of social security payments from the past two months exceeds the current balance in the account. Are the customer’s account funds subject to the levy?
No, we do not believe that the account funds would be subject to the tax levy. Social security payments are protected public benefit payments that are exempt from levy — provided that the payments were made by direct deposit and tagged as public benefit payments. When a bank receives a levy or other type of…