How Will I Know if My Tax Return Has Been Garnished for a Debt?

The Financial Management Service (FMS), a division of the national treasury, is responsible for issuing refund payments and is authorized by Congress to offset any refund owed you when you have unpaid state taxes, owe back child support or have any other debt to a government agency caused by illicit means. This offset can occur even if you are currently on a payment plan.


Child Support Debt
Back child support debt will cause your tax refund to be garnished and sent to the appropriate state child support office to offset your debt, which will occur even if you are currently on a payment plan. In most cases the county clerk or child support office will send you a child support order informing you of the debt and the amount you owe. This order is sent well in advance of your filing federal taxes. However, ignored orders will warrant the state office soliciting the offset from the federal FMS department. Call your county clerk or local child support office to find out if you owe back child support and if it consequently garnished your tax refund.

State Tax Debt
The owing of state taxes such as income or sales tax will warrant an offset of your federal income tax. The state will send notice of the tax debt and, if not addressed immediately, the state will apply additional penalties and interest to the debt. If the issue continues to remain unpaid, the state will request an offset of your federal tax return to pay off the debt and will continue to request the offset until the entire debt is covered. Contact your state department of treasury to resolve any state taxes you owe --- preferably before you file your income tax return.

Unemployment Overpayment
If you owe your state compensation for misrepresenting yourself or your income when filing for unemployment benefits, the state will request the amount be offset in your federal income tax return. This misrepresentation can include using the personal information of another person, not disclosing extra income, offering misleading wage information or receiving benefits you are not entitled to. The state unemployment office will send you notice if any of these fraudulent actions are discovered. The notice will also inform you of the amount that was overpaid as a consequence to the fraudulent act. You are required to return this money, and failure to do so will warrant the state requesting an offset from the FMS. Contact the local unemployment office where you received benefits to see what your status is, what benefits were paid and what the overpaid amount is.

FMS Obligations
The FMS keeps refund and offset information. When a garnishment order is in place, the FMS will notify you by mail of the offset and the amount taken. If, however, you did not receive notice, get in touch with the local FMS office directly (see Resources.) Ask for garnishment information on your federal tax return. The FMS will confirm the offset of the funds and the department they are going to.