There has been much made in recent months of Americans realizing that their 2018 tax refunds are significantly smaller than in past years thanks to the Republican tax scam. This phenomenon has been well documented in the media, both social and mainstream. The story that has yet to emerge, but I expect will as people start getting their refunds deposited, is that the amount TurboTax and the IRS refund status website initially tell you may well be a fantasy as well.

There is a little known unit within the vast bureaucracy of the Treasury Department called the Bureau of the Fiscal Service (BFS) and they are the ones responsible for getting your tax refund refunded. However, their other job is to find ways to prevent you from getting refunded through a process called refund offsetting. What this essentially means is that Treasury, unbeknownst to the taxpayer until it’s too late to plan for it, can (and will) seize tax return money to satisfy debts owed to the federal government. This might be a past tax debt, but it might also be court costs, fines, fees or student loan debt.

This is particularly worrisome to the millions of Americans who owe billions in student loans as their refunds, rather than being put towards credit card debt, home or auto repairs, health expenses, rent or even a much needed vacation, get redirected to the Department of Education. The insidious part of this scheme is that the taxpayer likely has no inkling that this A) is going to happen or B) even a possibility. The only reason I was aware of this was because I happened to have heard an NPR story several years ago that highlighted the myriad consequences of failing to meet one’s student loan obligations. The repayment of loans is not, in the strictest sense, the problem. The problem is the secretive way the BFS goes about collecting.

We were expecting a refund of over $6000 for 2018 dune in large part to the increase in child credit. This was, admittedly, higher than we had expected and more than we had ever received. In that narrow way, the GOP tax plan worked. However, even though the debt in question had been on the books for years, the feds decided this year to target our refund. I have no evidence to suggest that this sudden interest in recovering a nearly 10 year old debt has any connection to the Republican tax law, but the coincidence is remarkable and the timing certainly suggests a thread of causation. The only reason we discovered this at all was through some detective work that started with a largely unhelpful message on the IRS refund status website that informed us that the refund was being used to offset something and that we could expect a letter at some point and that we could call a phone number if we didn’t get said letter. That phone number informed us that the Department of Education was responsible for the offset and that we should call a private sector collection company for other details. That call to the appropriately named Immediate Collection Recovery Inc. finally revealed the final resting place of our refund.

To go from planning purchases and scheduling bill payments for $6000 to scrambling to cover rent over a weekend is anxiety provoking to say the least and could have been avoided if there had been any communication by anyone during the filing process. If we had not been so anxious to pay down debt and pay off bills and had simply waited for the refund to materialize, we might well have been waiting another three weeks to get a letter telling us that the skeleton in our financial closet suddenly came back to life and was going to snatch that money without so much as a thank you. In the broader sense, if we had seen this coming a decade ago maybe we would have ignored the prevailing myth that going into debt for higher education was worth it because everyone was going to be making six-figures and we’d all be driving flying cars.