Federal Tax Refund Garnishments

• Current federal laws do not limit the amount of money a state or federal agency can garnish from your federal tax refund. If you owe federal back taxes, the Financial Management Services or FMS at the Department of Treasury garnishes your refund. This department issues federal tax refund checks and deposits. State Treasuries typically handle child and spousal support garnishments of federal tax refunds. The U.S. Department of Education is the agency that garnishes defaulted federally insured student loans.
  
  

Notification

• State and federal agencies that intend to garnish your federal tax refund will give you notice of the federal income tax refund garnishment, usually by certified mail. Unlike creditors, they do not have to sue you in a local court and have a judge approve the order before the garnishment can begin. With the exception of defaulted federally insured student loans, the only way to prevent a federal tax refund garnishment is to pay off the total amount you owe.
  
  

Federally Insured Student Loans

• Examples of student loans that are federally insured include Stafford, Perkins and Plus loans. You can prevent federal tax refund garnishment for federally insured student loans by contacting the U.S. Departments of Education's Administrative Wage Garnishment Department. The AWG department will work with you to devise an installment payment agreement. You have one month from the day you receive the federal tax refund garnishment notice to contact the AWG department to work out such an arrangement.
  
  

Considerations

• If you owe multiple garnishments to state and federal agencies, FMS will generally pay them in the order in which the department receives them. If you file your taxes as married filing jointly, the garnishment only pertains to you and your spouse has a federal tax refund due, your spouse can file Form 8379 with the IRS. The IRS will then calculate the amount of the federal tax refund that is attributable to the garnishment and pay the remainder of the refund to your spouse.