Can my tax refund be taken in a law suit?
If you were recently on the losing end of a law suit, you may be worried about your tax refund status. You could spend all that time figuring up your federal refund status only to find your money doesn’t end up in your pocket. In fact, you may end up handing your funds over to someone else as the result of your judgment. However, it’s not set in stone, as there are some things you should consider.
The main thing to consider when the money from your federal refund status is as stake is if it was part of the settlement. Often, this would have been read or explained to you after the court’s decision. If you’re uncertain, consult your lawyer.
What this would mean is the money from your refund status would be used to pay off anything you owe from the law suit. The IRS won’t send this out to the court or lawyers. Instead, you must submit the payment yourself. As such, it’s hard to say the payment was ‘taken.’ You must hand it over yourself.
If there is no mention of the court taking the money from your federal refund status in the settlement, you shouldn’t have anything to worry about. You’ll simply have to figure out how to pay your debts yourself. Unless’
Type of Law Suit
You also need to consider what the law suit was. This could affect whether you’ll ever see the funds from your refund status or not.
For instance, if the law suit involved student loans that are in default, the IRS may hand over your money from your federal refund status. Also, if you owe back alimony or child support, the same could happen.
The reason this is different is causes like these have organizations that will contact the IRS to garnish the money from your refund status. Most businesses, like credit card companies, don’t have any way of getting this money from the IRS. Some do try to go straight to the IRS but are often simply ignored. This is because the IRS has no obligation to hand over the money from your federal refund status unless it’s a specific case.