Past due financial obligations can affect your current federal individual tax refund. The Department of Treasury’s Financial Management Service, which issues IRS tax refunds, can use part or all of your federal tax refund to satisfy certain unpaid debts.
It is called offsets. You may be upset; but the procedure is called offset.
Here are some important facts the IRS wants you to know about tax refund offsets.
If you owe federal or state income taxes, your refund will be offset to pay those taxes. The IRS and Missouri Department of Revenue work together. Surprise! Everybody wants their money.
If you had other debt such as child support or student loan debt that was submitted for offset, FMS will apply as much of your refund as is needed to pay off the debt and then issue any remaining refund to you. This generally equates to zero.
IRS has become a “big brother parent” – if you do not pay your child support, they will help you get caught up at year’s end. Offset.
Is your student loan in default? IRS will help you become current. Refund gone (offset).
You will receive a notice if an offset occurs. Not an apology a notice. The notice will include the original refund amount, your offset amount, the agency receiving the payment and its contact information.
If you believe you do not owe the debt or you are disputing the amount taken from your refund, you should contact the agency shown on the notice, not the IRS.
If you filed a joint return and you’re not responsible for the debt, but you are entitled to a portion of the refund, you may request your portion of the refund by filing IRS Form 8379, Injured Spouse Allocation. Attach Form 8379 to your original Form 1040, Form 1040A, or Form 1040EZ or file it by itself after you are notified of an offset.
The IRS will compute the injured spouse’s share of the joint return.
Contact the IRS only if your original refund amount shown on the FMS offset notice differs from the refund amount shown on your tax return.
Follow the instructions on Form 8379 carefully and be sure to attach the required forms to avoid delays. If you don’t receive a notice, contact the Financial Management Service at 800-304-3107, Monday through Friday from 7:30 a.m. to 5 p.m. (Central Time).
Please take note of this: IRS is the collecting agency for the federal government. Therefore, they have no intention of issuing you a refund when you are delinquent with other monies owed to them, be it Social Security, Medicaid, child support, food stamps, housing or a student loan.
This is the deal: no refund until you are either paid up or not in default.
There is a federal deficit out there, and it is huge. Your refund does not really make even a small ripple in the tsunami of the United States deficit, but they will pull what they can.
