by John G. Merna, Esq.

Tax time can be exciting if you anticipate receiving a tax refund. For some, the anticipation can turn to anxiety if they are significantly behind on paying their debt. But is your tax refund safe from creditors?
There are two ways a creditor can intercept your tax refund. The first is by getting it from the Internal Revenue Service (IRS) before your receive it. The second is to garnish the bank account you deposit or hold it in.

The general rule is federal law only let state or federal government agencies intercept your tax refund. Private creditors or individuals you owe money to cannot get your refund from the government.


The Treasury Offset Program (TOP) allows federal government agencies to collect outstanding debt by intercepting you tax refund to pay the debt. State agencies can also offset to pay past-due court-ordered child support payments and other debt owed to state agencies.

Who can take my tax refund directly from the IRS?
• Debt owed to federal agencies.
• Outstanding court-ordered child support
• Over-payment of federal benefits including social security
• Over-payment of unemployment benefits
• Student loan debt
• Debt owed to state government agencies

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As I said, private creditors and collection agencies are not able to go to the IRS and have them turnover our tax refund. However, once your refund is paid to you and deposited in your bank account either electronically or manually, the money can be garnished. The creditor will take the full amount owed. In order for a creditor to be able to garnish your tax refund from your bank account they must have first sued you and obtained a judgment.
If you have unpaid debt and have moved recently, you need to be careful. If you were sued and the notice or service did not find you because of the move there might be a judgment out there. You can check the court website in the cities or counties you lived in.


Check with a bankruptcy attorney to see if your outstanding debt is dischargeable in bankruptcy. If you file your bankruptcy before you file your tax return you can possibly eliminate the debt and protect your refund. The other option is to request your refund by check and take precautions when cashing it.
If you’re concerned about someone taking your tax refund it may be a sign you need to take to a bankruptcy attorney. Many people try to use their tax refund to plug the dike of bad debt only to end up using a bankruptcy to rebuild their credit. Wouldn’t you rather keep your refund and used the bankruptcy to rebuild your credit?

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