Can a tax refund offset be reversed?
You generally cannot stop a tax refund offset. The IRS service center processing the return will likely not honor the request. However, the documentation submitted with the tax return can help with other interactions with the IRS. This first option presupposes that the taxpayer knows of their Federal or other debt.
If your 2017 refund was offset for a federal debt, back taxes, or child support, you should have received a letter from the IRS stating the offset amount and who it went to. If not, you can contact the Bureau of the Fiscal Service (BFS) at 1-800-304-3107 to check with them about offsets on file for you.
If you have an objection to the debt, you have the right to request a review of your objection. If you're successful, your tax refund and other federal payments will not be offset, or the amount being offset may be reduced. If you're unsuccessful, your tax refund and other federal payments will be offset.
Taxpayers experiencing financial hardship may request an Offset Bypass Refund (OBR). An OBR allows for an overpayment that would otherwise be applied to a prior federal tax liability to instead be refunded.
You'll get an explanatory letter from the Bureau of the Fiscal Service if your refund is offset. The remainder of your refund will be processed as usual. An offset shouldn't delay it, unless your entire refund was applied to your debt.
Refundable tax offsets work as negative income taxes. If an individual's tax liability is zero, or falls to zero because of tax offsets, any remaining value of the offset will be directly paid to the individual as a tax refund.
To initiate an IRS Hardship Refund Request, the taxpayer must demonstrate to the IRS that returning the withheld funds is necessary to cover essential living expenses such as housing, food, medical costs, or transportation.
Your tax return may show you're due a refund from the IRS. However, if you owe a federal tax debt from a prior tax year, or a debt to another federal agency, or certain debts under state law, the IRS may keep (offset) some or all your tax refund to pay your debt.
You may call us toll-free at 800-829-1040, M - F, 7 a.m. - 7 p.m. Generally, if the financial institution recovers the funds and returns them to the IRS, the IRS will send a paper refund check to your last known address on file with the IRS.
While the IRS's authority to offset to a federal tax liability is discretionary, the IRS must offset refunds when the taxpayer owes any other non-tax federal debt or state liability including past due child support obligations.
What is the difference between refund and reversal?
Reversals are generally processed almost immediately since they occur before the transaction is finalised. On the other hand, refunds can take several days as they involve returning funds after completing the transaction.
The IRS will notify the State Department of the reversal of the certification when: The tax debt is fully satisfied or becomes legally unenforceable. The tax debt is no longer seriously delinquent. The certification is erroneous.
You generally cannot stop a tax refund offset. The IRS service center processing the return will likely not honor the request. However, the documentation submitted with the tax return can help with other interactions with the IRS. This first option presupposes that the taxpayer knows of their Federal or other debt.
See our Held or Stopped Refund page or the TAS video for more information. If the IRS is reviewing your return, the review process could take anywhere from 45 to 180 days, depending on the number and types of issues the IRS is reviewing.
To determine whether an offset will occur on a debt owed (other than federal tax), contact BFS's TOP call center at 800-304-3107 (800-877-8339 for TTY/TDD help).
If you believe you do not owe the amount listed on your Notice of Intent to Offset and want to dispute the tax offset, you should contact the agency that received the offset payment, not the IRS. The IRS is not in charge of the Treasury Offset Program and they cannot speak to the accuracy of their report.
We have 2 offset programs: Interagency Intercept Collections (IIC) Treasury Offset Program (TOP)
Pay the debt in full
For any changes to your balance for payments you make to us, we send updated account information to BFS weekly. Allow a minimum of 2 weeks for an offset to show on your account.
By proving you have little to no net disposable income with reasonable living expenses, you can meet the eligibility requirements and qualify for IRS hardship.
Qualifications for Tax Relief
The IRS ultimately determines whether you qualify for debt forgiveness. However, the agency generally considers taxpayers who meet these criteria: a total tax debt balance of $50,000 or less, and a total income below $100,000 for individuals (or $200,000 for married couples).
What kind of debt can be taken from tax refund?
Past-due child support money. Federal agency non-tax debts. State income tax debt. Unemployment compensation debts owed to a state (for fraudulent wages paid or contributions due to a state fund)
If an individual owes money to the federal government because of a delinquent debt, the Treasury Department can offset that individual's federal payment or withhold the entire amount to satisfy the debt.
Refundable tax offsets can reduce the amount of tax you are liable to pay to zero which may result in a refundable amount. The amount of tax offset may be affected by your net exempt income, income tax liabilities and the surplus in your franking account.
The payer of child support may be able to claim the child as a dependent: If the payer is the child's custodial parent for federal income tax purposes, the payer is generally the parent entitled to claim the child as a dependent under the rules for a qualifying child if the other tests for claiming the child are met.
Whom should I contact regarding the offset? If you have questions about the TOP offsets, or a notice you received from the Bureau of Fiscal Services (BFS), you may contact the Treasury Offset Program Call Center at 1-800-304-3107.
