Ameribank v Vicki Buford, unpublished, MI Ct App (Docket No 222186) (May 11, 2001); Income Tax; Refund Subject to Garnishment

An income tax refund is subject to garnishment regardless of a pre-existing, judicially-ordered installment payment plan.

The Court reversed the Circuit Court's affirmance of the District Court's order prohibiting garnishment of the defendant's state income tax refund for payment to a creditor. 

Ameribank filed a request for a writ of garnishment of the defendant's state income tax refund. In the meantime, the District Court entered an order allowing Defendant to make installment payments on the judgement owed to Ameribank. Defendant argued that once the Court entered the installment payment order, her income tax refund was not subject to garnishment under MCL 600.6231, which prohibits the garnishment of money due for personal work or labor upon the Court's entry of an installment payment order.

Ameribank argued that MCL 600.6231 does not preclude the tax refund garnishment because the law is silent on income tax refunds. The Court found that the District Court and Circuit Court interpreted the statute unnecessarily and that MCR 3.101(N)(1) was controlling. The rule states in part, “An order for installment payments does not suspend the effectiveness of a writ of garnishment of non-periodic payments or of an income tax refund or credit.” Therefore, the lower courts erred in finding that the income tax refund was not subject to garnishment.