The Rights of Judgement Creditors Only federal and state government agencies can take your tax refund to offset a debt that you owe.
Who can intercept your tax refund?
There are only four types of debt for which the federal government will withhold your tax refund or send it to one of your creditors. These debts include past-due federal taxes, state income taxes, child support payments and amounts you owe to other federal agencies, such as federal student loans you fail to pay.
Can credit card debt be garnished?
Yes, your wages can be garnished over an unpaid credit card debt — especially if the debt ends up going to collections. Although many people associate wage garnishment with unpaid child support, defaulted student loans or back taxes, courts can also order your wages to be garnished over an outstanding credit card debt.
Can a credit card company garnish your savings account?
If a creditor obtains a judgment against you, they can garnish your bank account. That means they have obtained the right to dip into your savings and retrieve any money that’s owed them.
If you are behind on your credit payments, creditors will often do whatever is necessary to secure repayment of the debt, which can include filing a lawsuit against you in court to obtain a judgment. But when it comes to your tax refund, the IRS won’t allow a private creditor to intercept or garnish it.
Do you need a judgment to get your tax refund?
The IRS does not need a judgment against you to offset your tax refund if you owe back tax debt. Other government departments, however, may seek a judgment before withholding your tax refund.
Can a creditor take money from a tax refund?
If you selected on your tax return to have the IRS direct-deposit the money into your bank account and your creditor got a judgment allowing it to seize assets from that account, it can do so once the funds get there. Unlike Social Security benefits or federal student loans, a tax refund loses its protection from creditors once deposited.
What happens if your tax refund is held / offset to pay a debt?
If your individual income tax refund is held as a result of a garnishment, the State has received notice of the judgment against you and is required to withhold (offset) your income tax refund or credit to satisfy the debt.
What to do if your refund is used to pay a debt?
Contact the Plaintiff (creditor) or Plaintiff’s Attorney (this information is available on the “Request for Information” and “Notice of Income Tax Refund Used for Debts” notices.) For information regarding the debt.
