Could Louisiana garnish a resident seaman's or master's federal income-tax refund to collect past-due state tax?

Plain-English summary

The Louisiana Department of Revenue said it could garnish the federal income-tax refund of a seaman or master who was a Louisiana resident to satisfy past-due state tax. The statutory protection for seamen's and masters' wages did not protect the refund because the Department treated an income-tax refund as something other than wages or earnings.

Why the wage protection did not apply

Federal law generally prohibited garnishing the wages of seamen and masters except for alimony and child support. The question was therefore whether an income-tax refund retained its character as wages.

The ruling noted that federal and Louisiana wage definitions covered remuneration for employment or employee services. It then cited bankruptcy and garnishment decisions concluding that refunds from excess withholding were debts owed to taxpayers, not wages or earnings themselves.

Federal refund offset authority

The ruling cited 26 U.S.C. § 6402(e) as authorizing the Internal Revenue Service to offset a resident's federal income-tax refund against debt owed to a state.

It also discussed cases allowing federal tax enforcement against seamen's property or wages and reasoned that Congress had not created an exemption for seamen's or masters' income-tax refunds.

Common questions

Q: Did the ruling say a tax refund was wages because it came from wage withholding?

A: No. It treated the refund as a debt owed to the taxpayer that was related to wages, not as wages itself.

Q: Did the conclusion apply regardless of residence?

A: The ruling addressed seamen and masters whose state of residency was Louisiana.

Q: What debt could the Department collect under the stated conclusion?

A: The ruling's final conclusion referred to a past-due state tax liability.

Q: Did the wage-garnishment statute protect a federal refund?

A: No. The Department concluded that the refund was not wages or earnings within that protection.

Citations and references

• 26 U.S.C. § 6402(e) — federal refund offset for debt owed to a state
• 46 U.S.C. § 11109 — garnishment protection for seamen's and masters' wages
• 26 U.S.C. § 3121 and La. R.S. 47:111 — wage definitions
• In re Wallerstedt, 930 F.2d 630 (8th Cir. 1991)
• In re Traux, 104 B.R. 471 (Bankr. M.D. Fla. 1989)
• In re Linn, 52 B.R. 63 (Bankr. W.D. Okla. 1985)
• In re Verill, 17 B.R. 652 (Bankr. D. Md. 1982)
• In re Fishbein, 245 B.R. 36 (Bankr. D. Md. 2000)
• Sea Land Service v. United States, 622 F. Supp. 769 (D.N.J. 1985)
• United States v. Offshore Logistics International, Inc., 483 F. Supp. 1055 (W.D. La. 1979)
• LAC 61:III.101(C) — Revenue Ruling authority and reliance statement

Source

• Landing page: Louisiana Department of Revenue Policies
• Original PDF: LA Revenue Ruling 01-001

Original ruling text

Revenue Ruling
No. 01-001
May 16, 2001
Garnishment of Seamen and Masters Federal Income Tax Refund
This Revenue Ruling addresses the authority of the Louisiana Department of Revenue to
garnish the federal income tax refunds of seamen and masters domiciled in Louisiana in order to
satisfy state tax liabilities. The Internal Revenue Service is authorized to offset federal income
tax refunds against debts owed to a state by its residents under the provisions of 26 USCA 6402 (e).
However, Title 46 Section 11109 prohibits the garnishment of the wages of seamen and masters
except for alimony and child support. If federal income tax refunds are considered wages, a
seaman’s or master’s federal income tax refund is exempt from garnishment because the liability
owed the Department is not for alimony or child support as specified in 46 USCA 11109. On the
contrary, if federal income tax refunds are not considered wages, a seaman’s or master’s federal
income tax refund is not exempt from garnishment.
Federal and state statutes are silent on the subject of whether income tax refunds constitute
wages. For federal tax purposes, 26 USCA 3121 defines wages as all remuneration for
employment, including the cash value of all remuneration (including benefits) paid in any medium
other than cash. Title 47 Section 111 of the Louisiana Revised Statutes defines wages as all
remuneration (other than fees paid to a public official) for services performed by an employee for
his employer, including the cash value of all remuneration paid in any medium other than cash.
However, jurisprudence has established that federal income tax refunds are not considered wages.
In Re Wallerstedt, 930 F2d. 630 (8th Cir. 1991), the court held that federal and state income tax
refunds that debtors received when their employers withheld too much of their earnings were not
themselves earnings within the meaning of the Missouri exemption statute. In Re Traux, 104 BR
471 (Bankr. M.D. Fla. 1989), the court held that a tax refund is not wages and thus is not exempt
from the bankruptcy estate under Florida’s garnishment law. In Re Linn, 52 BR 63 (Bankr. W.D.
Okla. 1985), the court held that a federal income tax refund is not earnings within the meaning of
Oklahoma’s garnishment statute. In Re Verill, 17 BR 652 (Bankr. D. Md. 1982), the court held that
excess income tax withholding is simply not wages within the meaning of the state garnishment
statute. In Re Fishbein, 245 BR 36 (Bankr. D. Md. 2000), the court held that tax refunds are not
wages, but debts owed to debtors that are related to the amount of wages earned. Based on this line
of jurisprudence, an income tax refund is not considered wages or earnings.
In Sea Land Service v. United States, 622 F. Supp. 769 (D. NJ 1985), the court held the
statute prohibiting attachment of a seaman’s wages did not preclude enforcement of federal tax
levies. In United States v. Offshore Logistics International, Inc., 483 F. Supp. 1055 (W.D. La.
1979), the court held that Congress has provided an exclusive listing of property that is exempt
from Internal Revenue Service garnishments for tax liabilities and seaman’s wages are not afforded
exempt status. Thus, a seaman’s wages are subject to garnishment for Internal Revenue Service
liabilities. If Congress desired for the wages or income tax refunds of seamen or masters to be

Garnishment of Seamen and Masters
Federal Income Tax Refund
Page 2 of 2

exempt from garnishment, it would have provided for the exemption. In light of the fact that no
federal or state statutes exist exempting the income tax refunds of seamen and masters from
garnishment, the federal income tax refund of seamen and masters can be garnished to satisfy an
income tax liability. Therefore, the Department can garnish the federal income tax refund of
seamen or masters who are Louisiana residents.
Based on the above cited statutes and jurisprudence, it is the position of the Louisiana
Department of Revenue that the Department is authorized to garnish a federal income tax refund of
a seaman or master whose state of residency is Louisiana in order to satisfy a past due state tax
liability.
Cynthia Bridges
Secretary
By:

Shanda J. McClain
Attorney
Policy Services Division

A Revenue Ruling is written to provide guidance to the public and to Department of Revenue
employees. It is issued under Section 61:III.101(C) of the Louisiana Administrative Code to apply
principles of law to a specific set of facts. A Revenue Ruling does not have the force and effect of
law and is not binding on the public. It is a statement of the department's position and is binding on
the department until superseded or modified by a subsequent change in statute, regulation,
declaratory ruling, or court decision.