Revenue Recapture through Tax Refunds — January 2012, reviewed January 2013

Some tax payers will not receive the refund shown on their Minnesota State tax returns.  In some cases it is because their refund has been taken to pay another debt as a part of the revenue recapture program.  The Minnesota revenue recapture program allows certain agencies and hospitals to capture a taxpayer’s refund to repay a debt owed to the agency.

What agencies can use this tool to claim the money owed them?  In general it is state agencies, like the Revenue Collection Division, the University of Minnesota, any district court of the state, any county, any city, hospitals, public agencies responsible for child support enforcement, court ordered restitution or low-income public housing, and some private ambulance services.

In order to use the revenue recapture process an agency must send a letter verifying the debt to the Department of Revenue as well as to the taxpayer.  The taxpayer then has 45 days to contest the validity of the claim. (More information at: www.lawhelpmn.org/issues/taxes/tax-liens-revenue-recapture)

In the revenue recapture program, the debt does not include any legal obligation to pay a claiming agency for medical care, including hospitalization if the income of the debtor at the time when the care was received did not exceed the income limits outlined in Minnesota statue.

If a taxpayer’s refund is being captured by the Department of Revenue and turned over to a claimant for medical care the taxpayer should verify the year the care was received.  People with questions about receiving a notice of revenue recapture action may want to seek out legal representation.  If a persons’ income is low, Legal Aid offices should be able to assist them in understanding the action taken against them and possibly stop the recapture.  It’s important to verify the validity of the claim.