If the IRS kept all or a portion of your federal refund, it may be because you owe money for certain delinquent debts. If that is true, the IRS or the Department of Treasury’s Financial Management Service (FMS), which issues IRS tax refunds, can offset or reduce your federal tax refund or withhold the entire amount to satisfy the debt.
Here are some important facts you should know about tax refund offsets.
- If you owe federal or state income taxes, your refund will be offset to pay those tax liabilities. If you had other debt such as child support or student loan debt that was submitted for offset, FMS will take as much of your refund as is needed to pay off the debt and will send it to the agency authorized to collect the debt. Any portion of your refund remaining after an offset will be refunded to you.
- You will receive a notice if an offset occurs. The notice will reflect the original refund amount, your offset amount, the agency receiving the payment, and the address and telephone number of the agency.
- You should contact the agency shown on the notice if you believe you do not owe the debt or if you are disputing the amount taken from your refund.
- If you filed a joint return and you are the spouse who is not responsible for the debt, but are entitled to a portion of the refund, you may request your portion by filing IRS Form 8379, Injured Spouse Allocation. If you know that your spouse has outstanding debts and anticipates an offset, you can attach Form 8379 to your original individual tax return. If not, it can be filed by itself after you are notified of an offset.
- If you reside in a community property state, overpayments (refunds) are considered joint property and are generally applied (offset) to legally owed past-due obligations of either spouse. There are exceptions; please call for additional details.
For assistance with completing Form 8379, please call.
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