When the state collects taxes from you, it doesn’t give you a refund for the money it took from you. That money belongs to the state. Because Texas has a system of collection through garnishment, it’s important to understand it before you become a tax debtor. The process is so common, it’s become something of a normal part of life in Texas. To a Texas debtor, this tax debt will have the opposite effect of a tax refund; it’s a garnishment that may or may not end in a payday.

We explain what tax garnishment is, and how it can and will affect your financial life. After reading this article, you will know how to get out of debt. You’ll also know the best way to get a state tax refund in Texas. In the end, we’ll reveal the biggest Texas tax scam and how it affects your financial well-being.


Why Texas Doesn’t Refund Taxes

In every state, there are two fundamental elements of any taxation system: the ability to generate revenue and the ability to access it. In most states, the state levies taxes that generate revenues to fund services and infrastructure. In states like Texas, the primary services and infrastructure of government are funded through general taxation. However, the law also allows the state to levy taxes that are specific to the purpose for which the state is collecting them.

Most states have a mechanism to access revenue from these tax levies, a refund process that gives tax debtors the cash that’s rightfully theirs. But Texas lacks such a refund mechanism, and, under state law, doesn’t owe tax debtors the cash.

The Texas Comptroller of Public Accounts collects state income taxes, and the state of Texas has access to those taxes through a process called tax garnishment. Texas has over 5,000 taxing jurisdictions, and, under state law, it doesn’t refund any taxes collected in those jurisdictions, only in the areas that have their own levies. The Comptroller collects all state tax collections, and then divides them up by taxing jurisdiction, which is why you may have several tax collectors knocking on your door, asking for your money.

The process for tax collection in Texas is easy, and the state has perfected the mechanism. Tax garnishment in Texas is so well established, people who get letters threatening them with court action or other dire consequences may mistakenly believe they’ve been accused of tax evasion or tax fraud. But you have no obligation to pay state taxes if you don’t owe any to the state. Tax garnishment is simply a law enforcement mechanism for getting taxes paid.


How Texas Tax Garnishment Works

A garnishment is a legal process that allows a third party to collect debts owed by a debtor. You see, when you owe a debt to another person or business, you give that person or business permission to seize the property of the debtor to pay that debt.

When you’re delinquent on taxes, that’s exactly what the Comptroller does: it garnishes the salary or wages of people who owe taxes. A third party, an official with the Comptroller’s Office, begins collecting the money by seizing a portion of a debtor’s paycheck. And because Texas law does not allow the state to refund any of this money, the Comptroller cannot give you a tax refund, nor will you be allowed to apply for a credit for overpayment.

Garnishment also works when other businesses, like landlords and utility companies, attempt to recoup money owed to them. Many times, when people owe money on a debt, that’s all they have available. Garnishment allows a third party to seize those other debts, too.

This process of tax collection does not violate your property rights in any way. All it takes is notice. A business can garnish your wages for as long as they want to. You’ll have a garnishment, they’ll have a judgment, and you’ll owe a debt. There’s no violation of your due process rights or property rights. If you’re not paying a bill for service, you may not be able to make a payment on it. This is what makes Texas’ tax garnishment process so efficient; it’s simply a collection mechanism that gives you notice. You’ll owe taxes, but they can’t take your money.

In some cases, a debt collector may attempt to garnish your wages without giving you the opportunity to dispute the debt. If you believe you have valid reasons for denying the debt, you should notify the collection agency of your reasons. You can also contact the Comptroller’s Office, which holds many consumer complaints. If you feel that a debt is being improperly collected or if you feel you were unfairly targeted, you can send in your complaint and the Comptroller will investigate.

What Are the Rules in Texas?

Texas’ Tax Garnishment Laws:

There’s only one state rule for tax collection: the person who is owed the money must be notified of it before they can be held liable for the debt. It doesn’t matter what form of notification is used, including a phone call, a letter, or a postcard. The Comptroller doesn’t even have to show you the notification; they simply must show up at your place of employment and begin collecting your money. In fact, if you owe taxes and aren’t notified, you can claim a tax refund, but only if you pay the tax you believe you owe before the Comptroller gets their hands on it.

However, you do have a remedy to avoid being served with a garnishment. If you’ve been served with a notification, you have the right to respond with a written statement that gives the creditor no legal rights to your money. The response is sent to the creditor’s address; the Comptroller’s office may attempt to collect the money, but the creditor will no longer be allowed to seize your money. You also have a right to sue for improper garnishment within a state statute of limitations; you have six years to sue a creditor who has improperly garnished your wages.


What Are the Rules Outside Texas?

The majority of states in the United States have tax refund policies that allow taxpayers to get their money back after they file an incorrect return. But Texas does not.

States also have laws regarding the garnishment of wages, which vary by state. In Texas, there are no restrictions on the garnishment of wages. However, if a business tries to garnish your wages to pay an unsecured debt, you’re entitled to contest the garnishment. There are other rules and regulations regarding how creditors can garnish your wages.

Most states allow the garnishment of wages without giving you notice first. Texas doesn’t.


What to Do if You Get a Garnishment?

In most states, there’s a process for contesting the validity of a debt. The debtor may dispute the debt on the merits, or they may argue that they have no obligation to pay the creditor, and the creditor must go through a process of discovery to find out why that debt is owed.

In Texas, that process is more limited. Under Texas law, the taxpayer cannot ask the Comptroller to determine whether they owe a debt. Nor can the taxpayer demand the records of other entities or businesses that are garnishing their wages. A taxpayer can file a written request with the Comptroller to contest the debt, and the Comptroller will make a determination on whether or not the debt is owed. However, the Comptroller’s Office cannot release records in response to the written request, they simply determine if the taxpayer has any obligations to the creditor.

If you’re being garnished for a business debt, you may be able to take it to small claims court.

How to Get Out of Debt, and Get a Tax Refund

No one wants to be in debt. When people owe a debt, they tend to struggle and often give up. You can fight a garnishment, you can take it to small claims court, and you can work to pay off the debt. But most people don’t want to fight in court, and you can’t expect the other person to take your explanation and work to get you out of debt.


What’s the best solution? The answer depends on how much debt you owe and how you feel about your financial situation.

If you owe the minimum amount that your creditor claims you owe, and you don’t feel you can afford to pay the amount your creditor claims, then you should talk to a lawyer. A lawyer can represent you in court and they will be able to help you get a hearing to dispute the debt, negotiate with your creditor, and help you prepare for the hearing. Sometimes, they may even be able to persuade the court to drop the debt entirely.

If your debts are small, and you can afford to pay your debts, then pay your debts. You can pay them yourself or you can use your paycheck to pay them.

If you don’t pay what you owe, but you don’t owe enough to pay the creditor anything more than what’s on the minimum repayment amount, you can get a refund on your return. And if you’re certain that you owe nothing and your return has been completed, you can simply send a check for the refund to the U.S. Treasury.

However, if you owe a little more than the refund amount, and you’re filing a federal tax return, you’re entitled to a payment by check. You just need to fill out Form 1040X, then you can mail it to the Treasury. If you owe a little more than the refund, the government can still give you a refund, it just won’t send you a check. Instead, they’ll send you a check from the Federal Debt Collection Agency.

There are other ways to get a refund, but those are the three best ways to get a tax refund. If you owe a lot of money, or if you owe too much to qualify for any refund, you may need to talk to a lawyer or the Internal Revenue Service.


Tax Refund Laws:

The good news is that you can get a refund of what you owe if your return was filed in the year in which you earned the money. But there are exceptions. The IRS and the Comptroller both have procedures for collecting money if you didn’t file your return, and the amount is low enough that you owe less than the refund amount.

Here’s how the refund laws work, for those filing the 1040 form:

You have to file a federal tax return. The law allows you to use estimated tax payments to make up the difference if you’re owed more than the refund amount.

If you’re filing a 1040EZ form, then you do not need to make estimated tax payments.

If you do owe more than the refund, you can pay off the difference as you earn it.

But if you owe less than the refund, there are a few scenarios that allow you to get a refund.

Estate Refunds

If you file an estate tax return and the amount owed is less than the refund, you’ll get the refund on your tax return.

If you file a 1040 form and you don’t owe any taxes, you may still be able to get a refund.

There’s a catch; if you’re applying for an IRS credit card, or if you’re applying for an IRS loan or a refund advance on your return, you can only get the refund if you filed your tax return in that year.

If you don’t owe enough to get a refund, you can still get a refund if you filed the return and you have other income. If you do owe less than you would get in a refund, you can get a refund if you’re getting a Social Security check or a Federal Insurance Contributions Act payment.

For more details about how tax garnishment laws could help relieve your tax debts,  call(888)489-4889 for a free consultation.

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