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May 28, 2024, 07:56:29 PM

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Preventing Unfair Seizure Of Tax Refunds

This may be due to sloppy or inaccurate bookkeeping, or the result of sluggish processing of funds that have been paid. In either case, the result is that your Income Tax refund is intercepted; once that happens, getting the money back is virtually impossible- even if the Support Enforcement office admits to making an error in accounting. The prevailing attitude can be summed up as "We have your money, and you're not getting it back."

If you don't want this to happen to you, here are the steps you should take:

If you have remarried, make sure your new wife files Form 8379, the 'Injured Spouse Claim and Allocation' form. According to the IRS Tax Topic 205,

"You are an injured spouse if you file a joint return and all or part of your share of the refund was, or will be, applied against your spouse's past-due Federal tax, child support, Federal nontax debt such as a student loan or a past-due state tax debt."

In other words, your ex IS NOT entitled to one dime of your new spouse's refund, and the 'Injured Spouse Claim' may offset, delay or prevent the intercept from occurring. (Note: You might also consider filing separate tax returns. This way the ex won't get your current wife's tax return and income information- information your ex is not entitled to.)

Next, try to estimate what your tax bill will be. Go to the Internal Revenue website or consult a tax advisor if you need information on how to do this. If you find that you have overpaid, have your employer immediately stop your income tax withholding for the remainder of the year. Then, in the future, try to estimate what your tax bill will be each year, and make sure you don't pay in any more than what is due. It may even be worthwhile to underpay slightly to make certain that you won't have a refund coming back.

No refund = no intercept, and there is nothing that the IRS, the Support Enforcement office or your ex can do about it. They can't intercept a refund that doesn't exist.


Additional notes on tax intercepts

Tax intercept notices generally go out in October, by which time it may be too late to change your filing status. In addition, you may have already paid in a considerable amount by this time of the year.

When you are sent a notice by a State agency that they plan to intercept your taxes and you disagree or wish to dispute the intercept, request an Administrative Review. It is your right under the law to get an Administrative Review, so make sure you take advantage it.

Each tax intercept notice has to explain to you how to dispute the claim. Send the agency a letter disputing the amount, or the claim altogether (whichever the case may be). State your reasons clearly, and keep a copy of your letter to them. ALWAYS send your letter by certified mail, as Child Support Enforcement offices tend to conveniently "lose" these notices.

By law, they must comply with your request for an Administrative Review, and they must respond to your request within a specified time limit. (This time limit varies from State to State.) When they do not comply with your request within the time limit (and they probably won't), send them another notice reminding them of the time limit for responding to your request for an Administrative Review. (They often have to be reminded of the law for some reason.) Direct their attention to the state statute covering this issue and United States Code 42 U.S.C. 664; 31 U.S.C 3716.

Do not send them this second notice until their time to respond has expired.

They CANNOT by law send your name to the IRS for a Federal Tax Intercept once an Administrative Review has been requested, and if by chance they do (very likely) remind them again in writing of the law.

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