Tax Refund Intercepted

Updated: Mar 26

As tax season is in full swing many of you may soon hear that your refund has been intercepted to pay off a debt. Alabama code section 40-18-100 allows the State Revenue service to intercept your tax refund to pay off certain types of debts. Including debts owed to Alabama Student Grant Program, Alabama Guaranteed Student Loan Program, Alabama Department of Human Resources, Alabama Medicaid, the Unified Judicial System, Alabama Department of Labor, Housing Authority, and Counties or Municipalities.

One of the new and major users of this tax intercept program are hospitals operated by the County. in 2018 Lawrence Medical Center in Moulton, Alabama, (which is a County owned hospital) used this program to collect $226,000.00. The CEO Dean Griffin stated he sends a list of patients that are over 180 days past due to the Association of County Commissions, who then forward it to the State Revenue Department, the Commission collects a $25.00 fee from the tax payer's refund on top of the Hospital debt.

If you have outstanding debts that could be collected in this manner keep an eye out for a letter from the State Revenue Department. (If you click the letter below it will take you to the Alabama Tax Intercept Website FAQ Section.)

There are instructions included in the letter for how to file a dispute of the debt. If you file jointly and the debt is not jointly held by your spouse then they would still be entitled to their portion of the refund. You will need to act quickly to notify the State Agency collecting the debt of your dispute within 30 days of the date on the letter in writing. You should also call the Tax Set Off Division at the phone number provided on the letter for further instructions on the process.

For public hospitals this is a must easier and cost effective method than employing a private collection agency.

If you have any additional questions, feel free to reach out to me via phone or email.

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