Article Highlights:
- Bureau of the Fiscal Service
- Allowable Refund Offsets
- Disputing an Offset
- Injured Spouse Claim
We all look forward to receiving our tax refunds, but what if you were expecting a refund and it never arrived? It may be because you have outstanding federal or state debts—and not just tax-related debts. The Treasury Department’s Bureau of the Fiscal Service (BFS) issues federal tax refunds, and Congress authorizes BFS to reduce your refund through its Treasury Offset Program (TOP) to pay:
- Past-due child and parent support;
- Federal agency non-tax debts;
- State income tax obligations; or
- Certain unemployment compensation debts owed to a state (generally, these are debts for (1) compensation paid due to fraud or (2) contributions owed to a state fund that weren’t paid).
So, if you owe a debt that’s past due, all or part of your federal income tax refund may go to pay your outstanding federal or state debt if it has been submitted for tax refund offset by an agency of the federal or state government.
BFS will send you a notice if an offset occurs reflecting the original refund amount, your offset amount, the agency receiving the payment, and the address and telephone number of the agency. BFS will notify the IRS of the amount taken from your refund once your refund date has passed. You should contact the agency shown on the notice if you believe you don’t owe the debt or if you’re disputing the amount taken from your refund. The IRS should be contacted only if your original refund amount shown on the BFS offset notice differs from the refund amount shown on your tax return. If you don’t receive a notice, contact the BFS’s TOP call center at 800-304-3107 (or TTY/TDD 866-297-0517), Monday through Friday 7:30 a.m. to 5 p.m. CST.
If you filed a joint tax return and only one spouse is responsible for the debt, the other spouse may be entitled to part or all of the refund. To request a refund for the spouse not responsible for the offset, you can file for an injured spouse allocation. The IRS will compute the injured spouse’s share of the joint refund. If you lived in a community property state during the tax year, the IRS will divide the joint refund based upon state community property law. Not all debts are subject to a tax refund offset.
In the future, if you have an outstanding debt and want to be proactive, you can contact the agency with which you have a debt to determine if your debt was submitted for a tax refund offset.
Please contact this office if you have questions about refund offsets.
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