Can Welfare Take My Income Tax Refund for an Overpayment?

If you find yourself or your family in a situation where you have limited income and assets, you'll be eligible for such welfare programs as food stamps and Temporary Assistance for Needy Families. The Department of Social Services will calculate your benefits based on your family's income, dependents and available resources. It is possible for the organization to pay you more benefits than you were actually due. This may be a result of clerical error or fraud. If Social Services determines that you received an overpayment, you must repay the excess benefits. If you don't, you could lose your tax refund.

Can Welfare Take My Income Tax Refund for an Overpayment?
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When Overpayments Occur

You may receive a welfare overpayment for one of three reasons. If you intentionally provided Social Services with false information to receive a higher benefit amount, your overpayment results from an intentional program violation. If you unintentionally provided incorrect information to Social Services, your overpayment results from an inadvertent household error. If you provided Social Services with the correct information but it made a clerical error, your overpayment resulted from an administrative error. In any case, however, you must reimburse Social Services for overpayment. If you don't, Social Services will send your account to the Department of Treasury for collection.

Collections While Receiving Benefits

If Social Services discovers that you have received an overpayment while you are still receiving welfare benefits, it will recover the excess funds by reducing your future benefits until you have repaid the debt. If Social Services determines that the error was intentional, it may deduct more of your benefits each month than it would for an unintentional error. If you received a cash or medical overpayment, Social Services can collect from all members of the household. However, if you received an overpayment of food assistance benefits, Social Services only collects from the adult members of the household. As long as you are still receiving benefits, Social Services won't require you to repay an overpayment out-of-pocket and it won't pursue any other collection action, including the interception of your tax refund.

Collections While Not Receiving Benefits

If Social Services determines that you received an overpayment of benefits and you are no longer receiving assistance, it still requires you to repay the debt. Either you can repay the debt in a lump sum or you can enter into a repayment agreement. If you haven't repaid the debt in full or you aren't meeting the terms of your repayment agreement after your debt is 180 days past due, Social Services will send your account to the Department of Treasury. The Department of Treasury may garnish your wages, levy your bank accounts, garnish your Social Security benefits or seize up to 100 percent of your tax refunds until you have repaid the debt.

Additional Considerations

If an overpayment resulted from an administrative error, Social Services must discover the error within 12 months and inform you within 24 months of discovery. If the overpayment resulted from an unintentional household error, Social Services must discover the error within 24 months and inform you within 24 months of discovery. If the overpayment was intentional, Social Services must discover the error within 72 months and inform you within 24 months of discovery. If Social Services doesn't follow this timeline, it can't garnish your tax refund or pursue any other collection action.

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