If Your Refund is Held/Offset to Pay a Debt

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.

Why is My Refund Being Held?

The Michigan Department of Treasury may apply income tax refunds or credits to a taxpayer’s unpaid debt. This debt may be due to delinquent taxes, state agency debt or Third Party debt.

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 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.

If all or part of your income tax refund was taken to pay a State, you will receive a “Notice of Adjustment to Income Tax Refund” letter that provides you with information about your refund and the debt it was applied to. If your refund is more than the amount you owe, Treasury will refund the difference to you.

If 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 Department of Treasury. Read more about Non-Obligated Spouse.

You may check your refund status by using the Check My Income Tax Info site

For specific information about your account and the debt owed, contact the Department of Treasury’s Collections Unit at 517-636-5265.

What Happens to My Refund or Credit if it is garnished?

The Department of Treasury’s 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. (Home Heating credits are Federally funded and are not subject to garnishment.)

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 because 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.

What is the Garnishment Process and Why Does It Take So Long?

When the State receives a garnishment order, it is matched with the taxpayer’s tax return and the refund is held for possible offset. Treasury mails the taxpayer a notice of the pending offset. The type of garnishment 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 additional reviews that occur during processing of the return and timeframes for response and actions that are required by law.

Residual Refunds

If there is a debt that is owed to the State of Michigan either from tax liability or a Third Party Garnishment that is the sole responsibility of one of the taxpayers who file a joint return, the 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 the Department of Treasury within 30 days of receipt to allow the non-obligated spouse to claim their portion of the refund.

Garnishment Timeframe(s)

Single Filer

Step 1

After return is processed, refund goes to Department of Treasury's Third Party Garnishment in the Office of Collections for review.

Step 2 (Allow 8 More Weeks)

Treasury's Third Party receives "Court Ordered Garnishment Release.”
Taxpayer receives "Notice of Income Tax Refund Used for Debts" and a "Garnishment Disclosure.” These documents describe:

Type of debt
Amount of the refund to be withheld
Name, address and phone number of plaintiff (creditor)
Court where the garnishment was filed

The taxpayer has up to 28 days from the date of the "Garnishment Disclosure Notice" to provide Treasury with proof from the court that the garnishment has been resolved. For more information, see How Can I Stop a Garnishment?

Step 3 (Allow 4 More Weeks)

If the taxpayer (defendant) does not provide Treasury with proof from the court that the garnishment has been resolved:

Payment is issued to the plaintiff (creditor) and
Remaining refund, if any, is released to the taxpayer

Married/Joint Filer

Step 1 (Allow 4 Weeks)

After return is processed, refund goes to Treasury's Third Party Garnishment in the Office of Collections for review.

Taxpayer receives "Request for Income Information Notice" and
"Income Allocation for Non-Obligated Spouse" (NOS Form-743). The form allows joint filers to separate income by spouse.

The NOS form comes with preprinted information coming from the tax return or credit claim.

Income must be entered on the form and the total of both incomes must be equal to the amount reported on the income tax return/credit claim.
The form must be returned within 30 days of the date on the "Request for Information Notice.”

NOS forms are not available prior to submission and review of tax return

Step 2 (Allow 8 More Weeks)

Treasury verifies and processes the NOS Form-743.

Step 3 (Allow 4 More Weeks)

Treasury receives "Court Ordered Garnishment Release."
Taxpayer receives "Notice of Income Tax Refund Used for Debts" and a "Garnishment Disclosure." These documents describe:

Type of debt
Amount of the refund to be withheld
Name, address and phone number of plaintiff (creditor)
Court where the garnishment was filed

The taxpayer has up to 28 days from the date of the "Garnishment Disclosure Notice" to provide Treasury with proof from the court that the garnishment has been resolved. For more information, see How Can I Stop a Garnishment?

Step 4 (Allow 4 Weeks)

If taxpayer (defendant) does not provide Treasury with proof from the court that the garnishment has been resolved,

Payment is issued to the plaintiff (creditor) and
The remaining refund, if any, is released to the taxpayer

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 for advice. 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. Reasons for disputing the garnishment may include:

the debt is paid in full
you believe you don't owe this debt
the debt was discharged in bankruptcy court

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.

MC-51 Order on Objections to Garnishment: Accepted by Treasury only if it releases the full refund amount offset. Treasury cannot process partial payments.
MC-50 Garnishment Release: A garnishment release issued by a circuit or district court requires Treasury to release a refund offset to the taxpayer.
MC-17 Certificate of Satisfied Judgment: This form is issued when the debt has been paid in full (satisfied).
Bankruptcy Documents: If you are currently in bankruptcy proceedings, provide a Notice of Chapter 13 Bankruptcy Case (Form 309I) or Notice of Chapter 7 Bankruptcy Case (Form 309A). Once bankruptcy has been discharged, the State of Michigan can no longer accept "Proof of Bankruptcy." The State of Michigan must have a court validated release (Form MC50).

Contact Information

If you have questions regarding the garnishment of an individual income tax refund or credit, contact the following resources for additional information:

Contact the Plaintiff (creditor) or Plaintiff's Attorney (this information is available on the "Request for Information" and "Notice of Income Tax Refund Used for Debts" notices) regarding:

Information regarding the debt
Proof that the debt has been released or satisfied
If the amount of the debt is in question
If you are not the person listed as the debtor (defendant)
To make payment arrangements to secure a garnishment release

Contact the Court (this information is available on the "Request for Information" and "Notice of Income Tax Refund Used for Debts" notices.)

To file an objection (MC-49) and request a hearing
To question the legality of the garnishment
If you were not informed or served a copy of the garnishment by the plaintiff or plaintiff's attorney

Contact Treasury for refund status information:

Treasury's "Check My Income Tax Info" website is the quickest way to check the status of your refund. You will need to have your name, social security number, the tax year, filing status and either the adjusted gross income or household income for that tax year. You may also call 517-636-4486 to speak to the Individual Income Tax department.
For payment status, i.e., if the refund has been sent to the plaintiff or plaintiff's attorney, call 517-636-5333.
If you have obtained a Garnishment Release, Satisfaction of Judgment, or your debt was discharged due to bankruptcy, call 517-636-5333
For questions regarding Treasury's Income Allocation to Non-Obligated Spouse form (NOS Form-743), call 517-636-4486 or 517-636-5333.

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.