A tax refund interception is the act of an agency responsible for sending tax refund

Tax refund

A tax refund or tax rebate is a refund on taxes when the tax liability is less than the taxes paid. Taxpayers can often get a tax refund on their income tax if the tax they owe is less than the sum of the total amount of the withholding taxes and estimated taxes that they paid, plus the...

s using all or part of a refund to fulfill an obligation of the taxpayer rather than sending the money to the taxpayer him/herself. Such provisions exist within the laws of some governments to force a taxpayer to pay off certain types of debt

Debt

A debt is an obligation owed by one party to a second party, the creditor; usually this refers to assets granted by the creditor to the debtor, but the term can also be used metaphorically to cover moral obligations and other interactions not based on economic value.A debt is created when a...

.

Some common obligations for which tax refunds are intercepted include outstanding taxes, student loan

Student loan

A student loan is designed to help students pay for university tuition, books, and living expenses. It may differ from other types of loans in that the interest rate may be substantially lower and the repayment schedule may be deferred while the student is still in education...

s, child support

Child support

In family law and public policy, child support is an ongoing, periodic payment made by a parent for the financial benefit of a child following the end of a marriage or other relationship...

, fines, restitution

Restitution

The law of restitution is the law of gains-based recovery. It is to be contrasted with the law of compensation, which is the law of loss-based recovery. Obligations to make restitution and obligations to pay compensation are each a type of legal response to events in the real world. When a court...

, and wage garnishment

Garnishment

A garnishment is a means of collecting a monetary judgment against a defendant by ordering a third party to pay money, otherwise owed to the defendant, directly to the plaintiff...

s. While taxes are sometimes intercepted to pay off the balance to a government-operated collection agency

Collection agency

A collection agency is a business that pursues payments of debts owed by individuals or businesses. Most collection agencies operate as agents of creditors and collect debts for a fee or percentage of the total amount owed....

, most places do not allow refunds to be intercepted to pay a private collection agency.

In the United States, the Internal Revenue Service

Internal Revenue Service

The Internal Revenue Service is the revenue service of the United States federal government. The agency is a bureau of the Department of the Treasury, and is under the immediate direction of the Commissioner of Internal Revenue...

 (IRS) allowed federal tax refunds to be intercepted to pay off obligations to a U.S. state

U.S. state

A U.S. state is any one of the 50 federated states of the United States of America that share sovereignty with the federal government. Because of this shared sovereignty, an American is a citizen both of the federal entity and of his or her state of domicile. Four states use the official title of...

 if that state has reported that obligation to the federal agency.

In 2008, nearly $2 billion of tax rebate funds from the Economic Stimulus Act of 2008

Economic Stimulus Act of 2008

The Economic Stimulus Act of 2008 was an Act of Congress providing for several kinds of economic stimuli intended to boost the United States economy in 2008 and to avert a recession, or ameliorate economic conditions. The stimulus package was passed by the U.S. House of Representatives on January...

were confiscated to pay off back taxes, child support, or student loans.