Attorney General Bonta: In California, Federal Child Tax Credit Is Exempt from Garnishment
OAKLAND – California Attorney General Rob Bonta today warned financial institutions, creditors and debt collectors that in California, it is illegal to seize federal Child Tax Credit payments for individual debts. On July 15, roughly 39 million U.S. families – representing 88 percent of the nation’s children – are expected to begin receiving monthly Child Tax Credit payments. Governor Gavin Newsom’s April 23, 2020, Executive Order makes it unlawful to garnish any financial assistance provided to individuals as a result of the COVID-19 pandemic. The Executive Order’s protection extends to the Child Tax Credit, which was enacted as part of the American Rescue Plan in response to the pandemic.
“The pandemic has been tough on families across California,” said Attorney General Bonta. “The Child Tax Credit payments should be a bright spot for our families, putting money in their pockets as the country begins our recovery. No parent should go to bed worried that these payments will be seized by some debt collector.”
The new Child Tax Credit provides families with up to $300 per month for young children and up to $250 per month for kids ages six through 17, for the 2021 tax year. Eligible families will receive the credit as a monthly payment from the IRS.
The Child Tax Credit was part of President Biden’s $1.9 trillion economic aid package called the American Rescue Plan that became law in March. In California, Executive Order N-57-20 sought to ensure that COVID-19 assistance funds reached their intended recipients in full and weren’t withheld by debt collectors. This state protection for individuals includes pandemic-related financial assistance provided by local, state and federal government.