The IRS isn’t always out to get you, despite what Hollywood movies want you to thing. If you owe taxes, and aren’t able to pay the entire amount in a single lump sum, the IRS will work with you to make payment arrangements. It’s important to note that any back taxes owed or past due amounts will decrease the amount of refund you may be expecting. Thankfully, the Treasury Offset Program settles debts by using either all or a portion of your federal tax refund, making it easier to get ahead of your debt.
If you plan on using your refund to offset any state or federal debts you have, be aware of the next five points:
- The Department of Treasury’s Bureau of the Fiscal Service (BFS) runs the Treasury Offset Program.
- The types of debts that can be paid with a refund offset include state income taxes, state-owed unemployment compensation, delinquent student loans, child and parental support.
- You will be notified through the mail in a statement that documents your refund amount, the portion which was used to pay the debt, and the agency, including contact information, which received the offset.
- If you dispute the offset, you need to handle it with the agency directly, and not the IRS. The IRS doesn’t handle disputes for offset payments.
- If you file jointly with your spouse, who is completely responsible themselves for the debt, you may file Form 8379, Injured Spouse Allocation to receive any portion of the offset you are entitled to.
The IRS can’t collect health care related individual shared responsibility payments using liens or levies. However, if you owe a payment, they can offset the liability using your refund.