A Victorian woman is the second person to challenge Centrelink's controversial robo-debt program.
Victorian Legal Aid is representing Deanna Amato in her fight over Centrelink's claim she owed $2754 for Austudy she was paid while studying a diploma in 2012.
The 33-year-old only realised she had a debt when her entire tax return was taken as repayment.
"My tax return was $1709.87 and they took every cent. It was shocking that they could take the money without me even knowing that a debt existed and without actual proof," Ms Amato said.
"It was a lot of money, a big chunk to disappear without you knowing how or why."
The system needed to change, Ms Amato said.
"It's been going on a really long time now and it just hasn't changed, and it should."
Victoria's Legal Aid civil justice access executive director Rowan McRae said more than 500,000 debts had been raised in an "unfair and opaque" process.
"We think it's critical for a court to look at the process Centrelink relies on to decide that people owe them money," Ms McRae said.
Ms Amato's case has been filed in the Federal Court in Melbourne and proceedings are expected to be held in coming weeks.
Another woman, nurse Madeleine Masterton is also taking the department to court, despite Centrelink deciding to wipe her debt because she wanted the calculation process to be clear.
Department of Human Services general manager Hank Jongen has said it's inappropriate to comment on details because it was before the court.
"The Commonwealth Ombudsman, in reviewing our processes, found that it is reasonable and appropriate to ask people to explain discrepancies in data," he said on Wednesday.
The department is able to garnish taxes for repayment debt under the Social Security Act.
Australian Associated Press