Treasury Refund Offsets
Under federal law, the Louisiana Department of Revenue can garnish federal income tax refunds to reduce or pay income tax debt owed to the state. To garnish a federal income tax refund, the Department files an offset claim with the United States Department of the Treasury. The Department can do this under the following conditions:
- It has been more than 180 days, but less than 10 years, since the assessment date (the date the debt was officially considered due)
- The Department sent a “notice of intent to offset” letter 60 days before filing the offset claim
- This letter is sent by certified mail to the taxpayer’s last known address
- The taxpayer is not in bankruptcy
When federal government sends offset funds directly to the Department of Revenue, the Dept. of the Treasury sends the taxpayer a “notice of payment offset” letter. The Department applies the payment to the taxpayer’s state income tax debt. The Department of Revenue cannot garnish Social Security income to offset a state income tax debt.
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