Garnishment of tax refunds

The most common form of distraint or garnishment of movable assets is the garnishment of tax refunds. A tax refund can be garnished in full. However, the garnishment will be restricted to the total amount of the debts that the debtor has in enforcement.

The debtor is sent an advance notice of the garnishment, indicating inter alia the debt on which the garnishment is based and the time and place of the garnishment. If there are errors in the advance notice, or if the debt e.g. has already been repaid, this must be notified to the deputy bailiff in charge of the matter. After the garnishment has been effected, the debtor is sent a garnishment protocol.

The enforcement authority provides the tax authorities with information on the garnishments. The tax authorities may set any of their counter-receivables off against the refund. This right of set-off precedes the garnishment. Accordingly, the garnishment protocol does not yet prove that the tax refund has in fact been garnished and the amount of the debt thereby decreased.

If the debtor repays the debt after the tax refund has been garnished, the officer in charge will cancel the garnishment. If, however, the information on the garnishment has already been sent to the tax authorities, the garnished amount will be remitted to the enforcement authority. The enforcement authority will refund the excess to the debtor. In order to make the refund easier, it is useful for the debtor to inform the enforcement authority of his or her bank account number.

The tax authorities remits the garnished and withheld tax refunds to the enforcement authority at the same time as all tax refunds are sent out. Once the remittance has been completed, the bailiff sends to the debtor detailed receipts of each debt that has been serviced with the garnished tax refund.

Updated on 23 Juni 2009