Income tax law allows individuals eligible to receive a refund to have one after all taxes are paid. In certain instances, the Internal Revenue Service may intercept the refund. A tax refund interception refers to taking the refund, or money sent to the individual, and giving it to a creditor. The refund is considered a payment on a debt owed.

Is a Wage Garnishment the Same as a Tax Refund Intercept?

No. A wage garnishment is an amount deducted from a paycheck to pay off a debt. Typically, the most money taken from a paycheck each pay period is 25 percent. A tax refund intercept is an amount of money taken from a tax refund sent during tax season.

When Can the IRS Intercept a Tax Refund?

A tax refund can be taken when an individual:

  • Defaults on a student loan
  • Has back child support
  • Has back income taxes

Can I Fight for My Tax Refund?

Yes. Prior to the IRS intercepting the refund, it has to notify the individual. The notification informs the person of the IRS’s plans to take the refund to pay the debt. The individual can request a hearing to fight the refund returned or present written evidence that:

  • The debt was paid
  • The amount of the tax refund taken is more than is owed to the creditor
  • The actual tax refund interception isn’t legally enforceable

What Happens to My Spouse’s Portion of the Refund It’s Taken for Child Support?

A married couple filing jointly, can have the refund intercepted for back child support. A spouse can file a claim for the share of the refund owed to him.

Can I Avoid Having My Tax Refund Taken?

Yes, an individual has several options to avoid having a tax refund intercept. One example is to increase the money amount received on each paycheck during the year. This decreases the amount of the tax refund amount at the end of the year.

Which is the Best Option for Me?

Your best option is to talk to a finance lawyer about stopping creditors from taking refunds.