HB 1358 – Garnishment of State Tax Refunds

Rep. Cox has introduced HB 1358 which creates a procedure for judgment creditors to garnish state tax refunds owed to judgment debtors. I have some questions about the how the timing is supposed to work. The legislation talks about the creditor filing a post judgment request for a garnishment with the trial court. The judgment debtor has some time to object and, failing a successful objection, the trial court issues a “writ of garnishment” which the judgment creditor serves on the Indiana Department of Revenue.

There is language that suggests, but not clearly, that the writ is good for only one tax year. It also says that, in the case of multiple writs, the department of revenue is to honor them in the order the department receives them. I’m wondering at what point in time IDOR makes the determination of whether there is money subject to garnishment. If it paid out a refund in March and it gets my writ in April, does the IDOR tell me there is no money to be garnished and then I have to file again in, say, February 2016? If I don’t have to wait until 2016, does the IDOR hold the writ until next year? Can I file a writ in April 2015 for the 2016 tax year, payable in 2017? Would that put me in the front of the line for the 2017 tax year or would prior writs unsuccessfully seeking refunds for the 2016 tax year be in front of me?

I don’t know that we need a special process for state tax refunds. Just say that the Indiana Dept. of Revenue is like any other third party with an account payable to a judgment debtor and let the courts process the proceedings supplemental and resulting garnishment orders accordingly.

I got a small chuckle out of one line in the proposed legislation that said, “The department is not liable for the department’s negligence in carrying out its duties under this chapter.” I guess the Department of Revenue’s reputation proceeds it.