A non-tax federal debt is debt that an individual owes to the federal government other than taxes, according to the Internal Revenue Service. A federal student loan represents an example of a non-tax federal debt.
Effects on Tax Refund
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The Financial Management Service, an office of the Department of Treasury, can deduct an individual's non-tax federal debt from his or her federal income tax refund. If the Financial Management Service takes this action, it will state this in a letter to the taxpayer, according to the Internal Revenue Service.
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Debt Collection Improvement Act
The Department of Labor notes that under the Debt Collection Improvement Act, federal agencies or contracted collection agencies can withhold or garnish up to 15 percent of disposable earnings to repay defaulted non-tax debts to the federal government.
Higher Education Act
Under the Higher Education Act, the Department of Education's guaranty agencies can garnish up to 10 percent of disposable earnings to repay defaulted federal student loans, according to the Department of Labor.