I think I know the answer but want to ask to be sure. If a customer has a tax refund and deposits the refund to their account with the bank whether direct deposited or by actual check, if the customer owes us money from a loan or a charged off account, can we use those funds to recover our loss?

I know you cannot use a social security fund.

Thanks

Follow-on with a different scenario:

If the refund is actually trying to be posted to the account which is charged off, can we accept it as payment for the charge-off or is this account considered 'closed' for that purpose and we have to return the funds?

FOUND MY ANSWER: previous threads indicate that the account is considered closed and we must return the tax refund.

The right of set-off is governed by state statute and state court decisions. It is oftentimes enhanced by contract terms.

I can tell you that a federal income tax refund does not have the same protections afforded to federal benefit payments. However, no one can responsibly say that you have a right of offset unless they are familiar with all of the above mentioned resources.