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Treasury Offset Program (TOP) Frequently Asked QuestionsThe Treasury Offset Program (TOP) is a debt collection program administered by the Bureau of Fiscal Services (BFS), which is a division of the U.S. Department of the Treasury. Section 303(m) of the Social Security Act requires IDES to send eligible unemployment compensation debts to TOP for offset of the debtor’s federal income tax refund due to fraud or a person’s failure to correctly report earnings. Download a PDF copy of the FAQs Common QuestionsDisclaimer: The information listed here does not have the effect of law or
regulations, but may help answer questions you have about your claim. If you have questions or a problem with your claim that is not covered on this site, please contact IDES Claimant Services at 800-244-5631. If you repaid the overpayment of unemployment benefits in the same year you received them — Subtract the amount of unemployment repayment from the total taxable amount you received. Report the difference as unemployment compensation. If you didn’t repay overpayment of unemployment benefits in the same year — Include the benefits in income for the year they were paid. If the amount of unemployment repayment is $3,000 or less, deduct it
on Schedule A in the year you repaid. The deduction is subject to the limit of 2% of your adjusted gross income (AGI). If the amount of unemployment repayment is more than $3,000, calculate the tax under both of the following methods. Compare the results and use the method (deduction or credit) that results in less tax: How to Serve A Garnishment The Michigan Department of Treasury withholds income tax refunds or credits for payment of certain debts, such as delinquent taxes, state agency debts, garnishments, probate or child support orders, overpayment of unemployment benefits and IRS levies on individual income tax refunds. Why is My Refund Being Held? The Michigan Department of Treasury may apply income tax refunds or credits to an unpaid debt. For more information, select one of the following options: Refund Withheld for Payment of Delinquent Tax or State Agency Debt Refund Withheld for Payment of a Garnishment What Happens to My Refund or Credit if it's Held to Pay a Delinquent Tax or State Agency Debt?If you have unpaid past-due taxes or a state agency debt, the Michigan Department of Treasury is authorized by Michigan law to offset your income tax refund or credit to apply to the debt until the debt is paid in full. This includes debt(s) currently on a payment plan. Read more about Income Allocation for Delinquent Accounts. If all or part of your income tax refund was taken to pay a debt that you owe the State of Michigan, you will receive a Notice of Adjustment to Income Tax Refund letter that provides you with detailed information about your refund. If your refund is more than the amount you owe, Treasury will refund the difference to you. In the event that only one spouse is liable for the debt and you filed a joint income tax return you will receive a Notice of Hold on Income Tax Refund or Credit letter with an Income Allocation for Non-Obligated Spouse form to complete and return within 30 days from the date on the accompanying letter to the Michigan Department of Treasury. Read more about Non-Obligated Spouse. Updates may be obtained by using the Check My Income Tax Info site. For specific information about your account and the debt owed, contact the Office of Collections at 517-636-5265. What Happens to My Refund or Credit if it is garnished?The Michigan Department of Treasury, Third Party Withholding Unit, receives and processes garnishments, probate orders, child support orders, overpayment of unemployment benefits and IRS levies on individual income tax refunds under the authority of Public Act 211 of 1985. Treasury is required to provide notice to taxpayers before withholding individual income tax refunds or credits for payment of a debt. It could take up to 18 weeks longer to process a refund with a garnishment than it does a refund that has not been garnished. A garnishment is a legal process executed through a court order in favor of the creditor (plaintiff). Treasury withholds tax refunds or credits of the individual (defendant) to pay a debt owed to the creditor. If your individual income tax refund is held as a result of a garnishment, the State has received notice of the judgment against you and is required to withhold (offset) your income tax refund or credit to satisfy the debt. Prior to Treasury holding your income tax refund or credit, you should have received notification from the creditor who brought the case before the court. This notification is in the form of the defendant's copy of the "Request and Writ for Garnishment (Income Tax Refund/Credit)". See Example of Form. There are several steps involved in handling a garnishment, including Treasury's determination of the amount, if any, of the refund to be returned to the taxpayer. The process, from start to finish, can take up to 18 weeks longer than non-garnished refunds, due in part to legal requirements. (Home Heating credits are Federally funded, and are not subject to garnishment.) What is the Garnishment Process and Why Does It Take So Long? When the State receives a garnishment order, it is matched with income tax return information and the refund is held for possible offset. Treasury mails the taxpayer a notice of the pending offset. The kind of notice received and the time it takes to issue any remaining (residual) refund depends on filing status, method of filing (e-filed or mailed return), any reviews that occur in normal processing of the return and time-frames for response and actions that are required by law. Residual RefundsIf there is a debt that is owed to the State of Michigan either from a tax liability or a Third Party Garnishment that is only the responsibility of one of the taxpayers who file a joint return, the Michigan Department of Treasury will release a portion of the tax refund through the Residual Refund process. This process also applies to Single Filers as well. Single filers: If part of your refund is being applied to a debt owed to the State of Michigan, either for a tax liability or a third party garnishment, any remaining portion of your refund (residual refund), not subject to a debt will be refunded to you within 7-10 business days. Joint filers: Your residual refund may take up to 2 months longer. You will first receive an Income Allocation for Non-Obligated Spouse Form (743) personalized with specific information from your return. This form must be completed and returned to Michigan Department of Treasury within 30 days of receipt to allow the non-obligated spouse to claim their portion of the refund, if any. Garnishment Timeframe(s)Single Filer(May Take up to 8 Weeks after the Return Is Released from Normal Processing)
Married/Joint Filer(May Take up to 18 Weeks after the Return Is Released from Normal Processing)
How Can I Stop a Garnishment?If you disagree with the garnishment of your tax refund or credit, we encourage you to seek legal representation or advice. Reasons for disputing the garnishment may include:
For Treasury to release the garnishment on your income tax refund, we must receive one of the following court-validated documents prior to issuing payment to the plaintiff/creditor or their attorney. You may obtain these documents from the creditor, the creditor's attorney or the court.
Contact InformationIf you have questions regarding a garnishment of an individual income tax refund or credit, contact the following resources for additional information:
The Michigan Department of Treasury is unable to provide any legal advice on debt(s) that you may have with a creditor who has issued a garnishment. For legal advice, contact an attorney. Other Useful Information / Additional Resources
Can the IRS take my tax refund if I owe unemployment?Yes. Unpaid debts include past-due federal tax, state income tax, state unemployment compensation debts, child support, spousal support, or certain federal nontax debts, such as student loans. If the refund is offset to pay unpaid debts, a notice will be sent to inform you of the offset.
Can unemployment offset my federal taxes?The law requires the EDD to send the UI benefit overpayment to the IRS. Title 26, United States Code section 6402(f) allows the IRS to collect your federal income tax refund to apply it to your UI benefit fraud overpayment. This is called an offset.
Will tax refunds be garnished in 2022?But thanks to the latest student loan relief rules, your tax refund won't be taken in 2022 for past due student loan payments. Federal student loan payments and loans in collections are still on administrative pause.
How do you find out if your income tax refund will be garnished?The IRS provides a toll-free number, (800) 304-3107, to call for information about tax offsets. You can call this number, go through the automated prompts, and see if you have any offsets pending on your social security number.
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