Transfiguration of the Deadbeat Dad and the Greedy Octogenarian: An Intratextualist Critique of Tax Refund Seizures

Abstract

In light of the federal government's plenary collection powers, the states have, for several years, sought and, with the help of Congress, managed to secure the assistance of the United States in obtaining various forms of revenue. As early as 1975, Congress authorized the Department of the Treasury to collect past-due, child-support payments in the same manner in which it assessed and collected certain federal taxes under emergency or exigent circumstances (i.e., jeopardy assessment/collection). Because such collection procedures were often considered cumbersome and costly, however, Congress soon authorized the direct seizure of pending income tax refunds as a more efficient means of reaching the assets of deadbeat dads (or the occasional deadbeat mom). The result has been a smashing success. Child-support-related refund seizures have resulted in the collection of billions of dollars of revenue. In fiscal year 2004 alone, child-support offsets totaled $1.49 billion, and in 2003, the Treasury offset almost 24 million advance child-tax-credit payments, resulting in the collection of $14.2 billion. Given the success of this approach to revenue collection, its rapid deployment to other areas should come as no surprise. In the Deficit Reduction Act of 1984 (DEFRA), Congress authorized the seizure of amounts due to federal agencies (e.g., student loan default amounts or overpayments of Old Age, Survivors, and Disability Insurance (OASDI or Social Security)). And more recently, in 1998, Congress authorized federal refund seizures to pay outstanding state income tax liabilities.

In this Article, I argue that despite various protective measures, procedural improvements are needed to minimize or eradicate erroneous refund-based property deprivations as an initial matter, especially with respect to nonobligated spouses. I proceed to argue, based largely on an intratextualist reading of the Constitution's major tax provisions, that regardless of whatever procedural safeguards exist or happen to be put in place, refund seizures, as a class, are unjustified as a matter of substantive due process because both the Sixteenth Amendment and Article I, section 8 of the Constitution expressly limit Congress's income taxing powers. Federal courts have had no recent opportunity to address substantive due process issues because the governing statute itself serves as a bar to jurisdiction.

Keywords: Child Support, Student Loan Debt, Disability Overpayment, Social Security Overpayment, Tax Refund, Refund Seizure, Federal Income Tax Refund, Procedural Due Process, Substantive Due Process, Section 6402, Section 6305, Intratextualism