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IRS garnishment: find out everything

7 ИЮНЯ 2023
Dicas Autoridade Tributária e Aduaneira IRS Penhoras Finanças
We tell you in which situations this can occur and how to act in this circumstance, at a time when several taxpayers are receiving their refunds.
IRS garnishment: find out everything
Source: Freepik
Author: Redaction

The lack of information and financial literacy can often be the main catalysts for non-compliance and exceeding the law in situations as common and everyday as submitting IRS, contracting credit or failing to meet deadlines for any tax to the Tax Authorities. These situations, in the most extreme cases, may even lead to the attachment of assets and, similarly to an attachment of salary, the IRS reimbursement may also be considered as attachable income, subject to penalty. SUPERCASA Notícias brings you today an informative guide to this situation, helping you on what you should do and how to avoid it.  

As a rule, IRS attachment is a coercive measure applied by the IRS, which occurs following a tax debt on the part of the taxpayer, and which, according to article 89 of the Code of Tax Procedure and Proceedings, concerns the "credits of the executed party resulting from the refund, ex officio review, claim or judicial challenge of any tax act [applied] in the offsetting of his debts collected by the tax administration", due to:
  • Verified defaults in tax obligations;
  • Defaults in the payment of taxes;
  • Late submission of declarations.
The objective of the attachment is to effectively recover the debt amounts, for which purpose there is the blocking and eventual sale of the debtor's assets. Or, in the specific case, the withholding of amounts that are owed to you, such as IRS reimbursement.

How to avoid this situation?

The first step, desirable for any citizen, is to fulfil your tax obligations. You should submit, correctly and on time, all the declarations, and always meet the deadlines for payments due. Furthermore, it is important to maintain a good record of compliance with your obligations to the Tax Office, avoiding accumulating debts.

If you always proceed with the deliveries and payments on time, besides being rigorous in the information you provide to the guardianship, you will not have any problem!

Our advice is to check the IRS refund and be aware of its status. If you notice any irregularities, you can and should contest the situation, avoiding that it extends into more serious procedures.


What to do if IRS garnishment becomes a reality?

In the worst-case scenario, if there is in fact a failure on your part regarding any of the situations described above, it is important to act immediately to minimise the impact of this measure.

Firstly, you should seek specialist help to understand the reason for the fine and, as each case is unique, whether it is a mistake or an easily solved issue. Look for a lawyer or an accountant to help you understand your rights and legal options. Renegotiate with the IRS, for example, through a phased payment plan that avoids the forced sale of assets.

If this suggestion is not really possible, you can resort to legal mechanisms, such as personal insolvency, allowing you to negotiate your debts while protecting your assets.

Challenging the IRS garnishment. How to act?

The first thing to do is identify the type of attachment, which may be an attachment by a private creditor or a tax execution. In the case of the former, you should investigate any illegalities in the execution or check that the debt on which the execution is based has not already been paid.

If, however, you are incurring a tax execution, you can file an opposition to the tax execution provided that the reason behind your claim is one of the following:
  • Collection is not authorised at the date the assessment occurred;
  • The enforcement order is not true;
  • The debt is time-barred;
  • There is no tax, rate or contribution under the laws in force at the date of the facts;
  • The debtor himself who appears on the execution title is not the person cited, there being illegitimacy;
  •  The debt has already been paid or cancelled;
  • The collection has been duplicated.
The opposition to the final execution is presented through a petition in the state body to which you are a debtor (Social Security or Finance), and where the tax execution process is pending, including all the documents requested by the entity, witnesses and additional evidence. After this petition, the case will follow to court, specifically to the Administrative and Fiscal Courts Jurisdiction, where your opposition will be accepted or refused.

To file an opposition to the tax execution, you have 30 days from the date of notification of the execution to which you are subject, or from the date of the first attachment by the Tax Department, if you have not received notice.

If your attachment is indicated at the request of private creditors who have an enforcement order, you can request an opposition to the attachment, if assets have already been attached whose debt they have not settled. However, all these procedures are judicial and involve costs - court fees - which may vary according to the type of opposition, the debtor's history, the amount seized or the method of submitting the documents and, even if your opposition is accepted by the court, you will not see your debt disappear, but rather you will avoid your wages - where we include your income tax refund - being seized.

Attachment is not an automatic mechanism, and there are several stages and legal procedures that precede this moment. However, and because prevention is always the best approach, we suggest that you always keep yourself informed about your tax obligations and that you consult specialised professionals when necessary, in order to avoid getting into debt with the Finances.

So now you know! Review your tax calendar and stay in compliance with your taxes. You can follow: IRS: Everything you need to knowFamily supports: know all the dates
Dicas Autoridade Tributária e Aduaneira IRS Penhoras Finanças
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