Tax Refund Offsets Pay Unpaid Debts
Tax Refund Offsets Pay Unpaid DebtsMarch 2, 2018
If you cannot pay your taxes in full, the IRS will work with you. Past due debt s like taxes owed, however, can reduce your federal tax refund. The Treasury Offset Program can use all or part of your refund to settle certain unpaid federal or state debts, to include unpaid individual shared responsibility payments. Here are some facts to know about tax refund offsets.
1. Bureau of the Fiscal Service – The Department of the Treasury’s Bureau of the Fiscal Service, or BFS, runs the Treasury Offset Program.
2. Offsets to Pay Certain Debts – The BFS may also use part or all of your tax refund to pay certain other debts such as:
Federal tax debts.
Federal agency debts like a delinquent student loan State income tax obligations.
Past-due child and spousal support.
Certain unemployment compensation
debts owed to a state.
3. Notify by Mail. The BFS will mail you a notice if it offsets any part of your refund to pay your debt.
The notice will list the original refund and offset amount. It will also include the agency that received the offset payment. It will also give the agency’s contact information.
4. How to dispute Offset – If you wish to dispute the offset, you should contact the agency that received the offset payment. Only contact the IRS if your offset payment was applied to a federal tax debt.
5. Injured Spouse Allocation – You may be entitled to part or the entire offset if you filed a joint tax return with your spouse. This rule applies if your spouse is solely responsible for the debt. To get your part of the refund, file Form 8379, Injured Spouse Allocation. Call Tony Tax if you need additional help.
6. Health Care Law – Refund Offsets and the Individual Shared Responsibility Payment. While the law prohibits the IRS from using liens or levies to collect any individual shared responsibility payment, if you owe a shared responsibility payment, the IRS may offset your refund against that liability.
Our office represents clients before the IRS in each of the above situations. You have rights as a taxpayer and we believe they should be protected and defended.
If you have additional questions or want to discuss your unique tax issue, call :
Tony Motley, MS, MBA, EA
IRS Enrolled Agent / Tax Advisor