The Florida rule—and why the source of the refund matters
| NOAM J COHEN, ESQ. | Founder and Managing Partner at Pinerock Law |
| EPHRAIM BERGER, ESQ. | Junior Partner at Pinerock Law |
What Garnishment Is—and Who Bears the Burden
Garnishment is a post-judgment process that allows a creditor to reach a debtor’s money or property held by a third party, such as a bank. If the debtor claims that garnished funds—including a tax refund—are exempt, the debtor bears the burden of proving the exemption and tracing the funds to a protected source; the creditor need not prove that the funds are nonexempt.
A tax refund deposited into a Florida bank account can generally be garnished to satisfy a money judgment. Simply labeling the funds an “IRS refund” does not create an exemption, and the fact that a refund stems from paycheck withholding does not automatically convert it into protected wages. A Florida appellate court has expressly recognized this distinction. Hancock Whitney Bank v. Adams, 288 So. 3d 759 (Fla. 1st DCA 2020).
However, precision is required: while tax refunds are not categorically exempt, specific components of a refund may qualify for independent legal protection. Effective judgment enforcement depends on identifying what the payment actually represents.
Why an Ordinary Tax Refund Can Be Garnished
Florida Statutes § 77.01 authorizes the garnishment of a judgment debtor’s property held by a third party. Once an ordinary tax refund is deposited into the debtor’s bank account, it generally falls within this collection framework unless the debtor establishes a specific statutory exemption or ownership defense. The fact that the government issued the refund does not shield the funds.
In Hancock Whitney Bank v. Adams, the First District Court of Appeal reversed an order granting an exemption because the debtor failed to prove that the garnished funds qualified for legal protection. The court clarified that IRS refunds are not “wages” exempt under § 222.11 and rejected reliance on general equitable considerations as a substitute for a recognized statutory exemption. The takeaway for creditors is clear: a debtor’s financial hardship alone does not establish a legal right to retain garnished funds.
A Refund of Wage Withholding Is Not a Paycheck
Florida law protects qualifying earnings under § 222.11, including wages paid to a head of family. Exempt earnings deposited into a financial institution retain their protection for up to six months if properly traced and identified. However, this six-month rule applies only to qualifying wage earnings; it does not grant a six-month blanket exemption to every tax refund simply because the money was originally withheld from a paycheck.
The U.S. Supreme Court addressed this fundamental distinction in Kokoszka v. Belford, 417 U.S. 642 (1974). In that bankruptcy decision, the Court held that an income tax refund falls outside the Consumer Credit Protection Act’s restrictions on wage garnishment. The federal protections target periodic compensation rather than every asset traceable to past earnings. While Kokoszka does not eliminate separate state-specific exemptions, it rejects the assumption that a wage-derived refund automatically enjoys federal wage-garnishment protections.
The Earned Income Tax Credit Is Expressly Protected
Florida Statutes § 222.25(3) specifically exempts a debtor’s interest in a refund or credit under Internal Revenue Code § 32—the Earned Income Tax Credit (EITC)—along with traceable bank deposits of those funds. Note that this exemption does not apply to child-support or spousal-support enforcement. For ordinary civil judgment creditors, distinguishing the EITC portion from the rest of the refund is critical.
Example: Assume a $6,000 tax refund consists of $2,500 attributable to the EITC and $3,500 from ordinary overpaid income tax. If both amounts remain identifiable in the bank account, the $2,500 EITC component is exempt, while the remaining $3,500 overpayment is potentially collectible, subject to any general exemptions. A single deposit can contain funds governed by entirely different legal rules.
Other Credits and Benefit-Derived Refunds Require Separate Analysis
The Child Tax Credit arises under Internal Revenue Code § 24, not § 32. Consequently, it does not inherit the EITC exemption simply because both credits appear on the same tax return. Any protection for child tax credit funds must rely on a different statutory provision; refundable credit status alone does not confer exempt status.
Refunds traceable to protected government benefits present a different issue. For instance, Social Security benefits receive broad protection under 42 U.S.C. § 407. Illustrating this point, the U.S. Bankruptcy Court for the Middle District of Florida upheld a refund exemption to the extent the funds were directly traceable to Social Security benefit payments. Order, Case No. 2:22-bk-00191-FMD, Doc. 27 (Bankr. M.D. Fla. July 20, 2022). This reinforces why wage-withholding rulings should not be mechanically applied to benefit-derived refunds.
This is always a source-specific inquiry. Relevant benefit statutes, withholding records, tax returns, and bank account histories must support the claimed exemption. Merely receiving Social Security does not render an entire tax refund or unrelated tax credit exempt.
Collection Strategy and Statutory Procedure
Garnishing funds after they are deposited into a bank account is fundamentally different from intercepting a refund directly at the U.S. Department of the Treasury. The Treasury Offset Program (TOP) operates under federal administrative authority for specific obligations, such as government debts and child support. Private civil judgment creditors cannot access the TOP framework directly.
Instead, Florida judgment creditors must follow Chapter 77 garnishment procedures. Section 77.041 sets forth explicit notice requirements and mechanisms for debtors to claim exemptions—and for creditors to timely contest them. Even an otherwise collectible tax refund requires strict procedural compliance to survive an exemption challenge.
For judgment creditors, an anticipated tax refund often presents a valuable collection opportunity—even when wage garnishment attempts have failed. Pinerock Law evaluates asset holdings, fund characterization, and statutory enforcement avenues to pursue lawful monetary recovery.