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What due process is there in federal refund offset? For instance, if a state contacts the IRS claiming that someone owes them a debt, will the IRS just take their word for it and deduct the amount from the alleged debtor's federal refund, or does the state have to file for a hearing in federal court?

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  • Terminology: Tax return is the document you file that states your income, deductions, etc. The money you get back, which may be subject to offset, is your tax refund. I edited to correct this. May 23, 2022 at 23:45

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This authority derives from 26 USC 6402, where Congress authorized the Treasury Department to reduce an internal revenue tax "overpayment" credit for certain purposes. Different paragraphs identify specific purposes: past-due support is in para (c). "Past-due support" is defined, for this purpose, in 42 USC 664. Para (c) they says that the Sec'y will reduce the refund and notify the taxpayer. The requirement there is simply that the State certify that this is "past-due support", and there is no required hearing.

42 USC 664, where the term is defined, says a little bit more, since the trigger is

Upon receiving notice from a State agency administering a plan approved under this part that a named individual owes past-due support which has been assigned to such State pursuant to section 608(a)(3) or section 671(a)(17) of this title

and then the Sec'y must determine if the taxpayer is entitled to a refund – if so, the refund will be reduced.

The "process" thus relies on the "plans" so established. The key is that the Sec'y must approve said plan, following 42 USC 654 (which is very long and comprehensive). One of the requirements of an approvable plan is that the agency "shall require the individual to supply additional necessary information and appear at interviews, hearings, and legal proceedings".

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  • As a practical matter, the past-due support debt is reduced to judgment in state court and the offset process is the moral equivalent of a garnishment.
    – ohwilleke
    May 24, 2022 at 21:10

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