Credit card debt and tax refund

[kathyc2]

Client has debt that has gone through courts and he has a wage garnishment.  He was laid off from job recently and is asking if tax refund will be taken.

I didn't think private companies could do that, but found the following on an attorney webpage when I googled it:

"For instance, let’s say you owe a significant amount of money to a credit card company due to unpaid bills. If the company has exhausted other collection efforts, and you still haven’t settled the debt, they could seek legal action and obtain a court order to garnish your tax refunds as a means of recovering what is owed.

It’s important to note that non-governmental entities must first bring a lawsuit against you and obtain a judgment from the court before they can initiate tax refund garnishment. This means they must go through the appropriate legal channels and provide evidence of their claim against you. Once they have a judgment, they can then proceed with requesting the IRS to intercept your tax refunds."

Has anyone had a client refund garnished for CC debt?

[mcbreck]

Never have had that.

https://turbotax.intuit.com/tax-tips/tax-payments/who-can-garnish-an-income-tax-refund/L7cPPzDyc

 

Federal law allows only state and federal government agencies (not individual or private creditors) to take your refund as payment toward a debt.

The Treasury Offset Program (TOP) is administered by the United States Department of Treasury's Financial Management Service (FMS) and allows federal and state government agencies to collect outstanding debts owed to them by garnishing, or offsetting, your debt with your tax refund.