Can a company garnish your federal income tax return or state tax return if you owe them money?

What happened was I went on a personal “unpaid” leave from a company and they failed to take me off their payroll (I worked as a salary employee) I notified the payroll department and they said that it was the way the system was set up. They told me not to worry about it that they would deduct it from future paychecks. Well, my leave was not approved and I ended up being voluntarily terminated from the position. The company has since went out of business as they where bought out by a competitor. Can they garnish my federal and state tax returns for the over payments?

Answer #1

No, a company can not touch government money thats being given to you.

Answer #2

No, but they can garnish your wages from a job.

Answer #3

Agreed with Mandy. I’m not from America but even I know a company cannot use your income tax to offset the debt you have with them. If, on the other hand, you do owe money to your government sectors (because you borrowed from them eg: financial assistance for schooling, housing etc) then definitely the answer changes to “yes”, as the Taxation department is the one giving you a tax rebate back and can deduct or forfeit the money on your tax return to you. The American and Australian tax regulations must have similar tax structures more or less. :-)

Answer #4

Actually, on another note. The company payroll department messed up your annual leave pay, so really it is their fault but at the end of the day, it is a human error but if you keep the money, you are in fact “stealing”. The company do have some legal entitlement to retrieve the money back from. If the company is really mean, they could hire a debt collection agency to chase you up for the money. Being chased by the debt collectors isn’t a good position for you to be in, as you end up having to paid the legal cost plus the money owing. If the money isn’t much, best to ask your folks to lend you the money and reimburse the company back for their payroll f-ck up or if the payroll amount is high, maybe reach an agreement with the business and try to pay them back in instalments, for example $50 per fortnight. This way, you don’t even up with extra legal cost. :-)

Answer #5

Thanks Samantha! No, this is a company not anything to do with the government. You put ease to my worries!

Answer #6

Thanks Mandyloo! I appreciate it!

Answer #7

Hehe, but I’m sure you will not like my second answer doll. :-( My second answer is the same scenario as a bank institute, when a teller accidently punches one extra zero too many and deposits money your bank account. You cannot withdraw the money and spend it all (or some of it) and when the bank realise their errors and want their money back, one has to give it back. Otherwise it is stealing. :-)

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