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What to Do If You Tax Refund is Seized

Some people count on their tax refund checks to make major purchases or catch up on debt payments. When their tax refund is seized, this can create severe financial problems.

Find Out Why the Tax Refund Was Offset

Refund offsets can occur due to many types of debt. It could be because you have IRS tax debt, but it could also be due to other debts, such as:

  • State tax debt
  • Past-due child support
  • Federal agency non-tax debts (such as delinquent federal student loans)
  • Certain unemployment compensation debts

Your refund can be seized for these other debts because of the Treasury Offset Program (TOP). You should receive a notice from the Bureau of the Fiscal Service informing you how much of your refund has been offset and which agency is receiving your refund money.

You’ll need to contact the agency listed on the notice if you want to work out a payment arrangement or dispute the debt. The IRS won’t be able to help you if the refund offset occurred due to a debt owed to another government agency.

If you don’t dispute the debt and don’t want to negotiate a payment plan, there’s nothing you need to do. Just be aware that your future tax refunds may also be seized if you still have outstanding debt.

Other Refund Offset Issues

Your tax refunds will also be offset if you are making payments on an IRS installment agreement. The refund offset does not count towards your regular monthly payment, so you’ll need to keep making those to avoid a payment plan default.

The other issue to look out for with refund offsets is injured spouse cases. If you filed a joint return and your refund was offset because of your spouse’s debt, you may be able to request an injured spouse allocation. This only applies if your spouse’s debt was incurred before you were married.

The injured spouse claim allows you to receive your portion of the refund. You can submit it along with your 1040, or at a later date once you make aware of the refund seizure.

If you’ve been notified of a refund offset and want to resolve your IRS tax problems, contact a tax attorney to discuss your case.

Get help with tax refund offsets by calling The Gartzman Law Firm at (770) 939-7710. We can listen to your concerns and help you find the best tax resolution strategy for your case.