Can the statute of limitations be re-aged by income tax intercept?


Can the statute of limitations be re-aged by income tax intercept?

Can the statute of limitations be re-aged by income tax intercept?

In one of our recent live Youtube Q&A sessions, a viewer asked if the statute of limitations can be re-aged by tax income intercept. 

An income tax refund intercept typically only happens with federal types of loans such as a federal student loan or small business act loan. 

Normally, these federal loans don’t have a statute of limitations anyway

On a federal student loan, they wouldn’t have to sue to get a judgment. 

Instead of suing, federal loans go through an administrative process. Once they complete the administrative process and you lose, they will notify the IRS that any income tax refund that would have gone to you should be redirected to the appropriate department to pay off your loan. 

Federal loans are not concerned with a statute of limitations. 

If it is not a federal type loan then I would be somewhat surprised that someone else could intercept your tax refunds. This may be permissible in certain states for creditors to do this, but this is not the case in Alabama. 

If you are dealing with a private loan or debt (Midland Funding, Synchrony, Portfolio Recovery, etc.) which is beyond the statute of limitations and then they are able to intercept your refund in your state, I would still check to make sure they are following the rules. 

In my experience, the intercept would not reset the statute of limitations because for most states (be sure to check in your own state) requires more than just a monetary payment.

In Alabama, both a payment and a written agreement are required to reset the Statute of Limitations. 

Check and see if they are getting your tax refund. If they are, check to see if they have a judgment. Once the company has a judgment, the statute of limitations doesn’t matter anymore.

Always be sure to check what these companies are doing.

Hold them accountable if they break the law.

If you live in Alabama, you are welcome to call us at 1-205-879-2447, or you can fill out a contact form and we will get in touch with you quickly.

Thanks for reading, and have a great day!

-John Watts

P.S if you are interested in more information about debt and taxes, check out our other articles below:

What’s the difference between a tax collector and a debt collector?

IRS back taxes — what is the big picture of the collection process?

The Impact Of Bankruptcy On Income Tax Debt

IRS back taxes — what is an offer in compromise?

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