The 2021 tax season is over and many of those who filed their tax return early and online, are hoping to receive some form of refund via their bank account. Checking has been made easier as the IRS released the IRS2Go App along with a guide on how to use the app to check one’s tax refund status. Yet a refund can hit some snag if a taxpayer has unpaid financial obligations that have become the subject of a court-approved notice of garnishment.

Th IRS refers to refund matters as tax topic 152, to which refund information, including where the refund was sent, appears on the user tax transcript. However, taxpayers are forewarned that not all refund notices appearing in your tax software does not necessarily denote that a tax refund is coming your way. A broader discussion of tax topic 152 is available in this web page:

How does a Notice of Garnishment Affect Your IRS Refund

If you’re a debtor with a long standing obligation that a creditor has been trying to collect, a notice of garnishment attached to your bank account can be applied on any deposit balance, including the tax refund credited in your bank account. While you might think that a check is a better option in claiming your refund , the IRS-issued check still has to pass through a banking system that accepts crossed checks only for deposit to the payee’s bank account.

What Exactly is a Notice of Garnishment?

A notice of garnishment is a legal notification after a court approved a garnishment order in favor of a creditor. The latter has shown adequate proof that the subject of the request for garnishment has not paid the creditor a specific sum of money despite credit collection efforts.

A judge may also approve a notice of garnishment addressed to an employer, who will be obliged to garnish the debtor’s salaries up to the court-approved amount owed to the creditor. In some cases and depending on the circumstances, a judge may order a wage garnishment of only up to 25% of wages after tax and social security deductions.

Be in the know that once a court order has been issued against you, a notice of garnishment can follow you anywhere, even if you quit your present job and find work elsewhere. A notice of garnishment is usually addressed to all banks under the jurisdiction of the court ordering the sequestration of a bank deposit.

In the event that you transferred to another state, the creditor can simply file a petition for writ of garnishment in that state, especially if there is already an existing notice of garnishment in the creditor’s home state.

The only course of action for a debtor therefore is to communicate with the creditor so you can work out ways by which an unpaid financial obligation can be settled. However, it would be reasonable to expect that your outstanding obligation will increase, if part of the court order includes reimbursing the creditor, the costs of court and attorneys’ fees.

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