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UTILIZING INCOME TAX REFUND GARNISHMENTS AS A COLLECTIONS TOOL

Garnishing a debtor’s State of Michigan Income Tax Return is a powerful tool to collect on an outstanding balance on a current judgment—and can accompany an already existing period garnishment. Once funds have been garnished under this once annual/non-periodic income tax refund/credit writ, the writ is no longer valid. If there is a remaining balance on the judgment, then the creditor must seek an alternative writ to collect more money. It is important to note that there is no authority to garnish federal or city income tax refunds.

After the writ is filed (with an accompanying $15.00 filing fee) and issued by the appropriate court, the plaintiff must serve the correct number of copies of this writ on the State of Michigan Department of Treasury (i.e. the garnishee) along with a $6.00 fee.

            The defendant may then file objections to the writ with the court, provided that they are filed with the court within 14 days from the date of service of the writ on the defendant. There are a limited number of bases upon which a debtor can rely in order to negate an income tax garnishment—and they are different than the standards to set aside a periodic (e.g. wages) garnishment. If objections are filed, the court will schedule a hearing on the objections and set the matter for a hearing, at which the presence of an attorney is crucial.

            The State of Michigan cannot honor judgments from non-Michigan courts, with the exception of garnishments issued by federal courts. It is extremely important that the defendant's Social Security Number or Federal Employee Identification Number (FEIN) is correctly identified on the Request and Writ for Garnishment to specifically identify whose income tax refund and/or credit to intercept.

            The October 31, 2012 deadline to submit a Michigan Income Tax Written Request for Disclosure is rapidly approaching. Our firm handles thousands of these important requests every year, and we pride ourselves as being the first to get them to the courts and then the Department of Treasury—as income tax garnishments are a “first in time, first in right” method of seizing an individual’s tax return funds. That is why you should call us today at 248-443-5250 so that we may assist you in this garnishment process to promptly and properly intercept the upcoming tax refund of someone who owes you money!

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