A section of the Internal Revenue Code authorizes the IRS to seize refunds in payments of non-tax debts. Restitution falls into this category. On the one hand, you could argue that this seizure violates the terms of your supervised release which calls for payment of $100 per month. On the other hand, the IRS is not bound by what the judge said in your case. It is something of a world apart. Especially, if the monthly payments will not pay off the total restitution order by the end of your supervised release, the IRS may have the power to seize your refund. You should call the number on your letter to find out why the government is seeking payment above and beyond what is required by your supervised release. In the future, try to minimize any refund. In addition, you and your husband may want to file separate returns, especially if his income is greater than yours.
A problem might be with an over focus on the "Federal Tax Offset Program". Treasury has other programs that take tax refunds for other types of debts; do you have another source of debt? such as student loans? The broader "Treasury Offset Program" feeds many other types of creditors.
The big key to prevent this from happening in future is to set your withholding so that you will have just above $0 in your refund each year.
Are you certain it was related to the restitution order?
Curt Harrington Patent & Tax Law Attorney Certified Tax Specialist by the California Board of Legal Specialization PATENTAX.COM This communication is general information and not legal advice, and does not create an attorney-client relationship. This communication should not be relied upon as any type of legal advice. Please note that no attorney-client relationship exists between the sender and the recipient of this message in the absence of either (1) a signed fee contract and (2) remission of an agreed-upon retainer. Absent such an agreement and retainer, I am not engaged by you as an attorney, nor is any other member of my law firm.
They can take your refund for:
1. Defaulted Student Loans
2. Overpaid Workers Comp
3. Federal Restitution
4. Back Taxes
5. Back child support
They can take your refund if you owe the money. If you owe restition or back taxes, you are on a payment plan based on your ability to pay. If you have a refund, they consider that "extra money."