If you cannot pay your taxes, the Internal Revenue Service (IRS) can work with you and provide a payment plan to keep you on track. Any debt you have with the IRS can be paid with a portion of your future reimbursements. Here is information about the types of debts that are collectible or could intersect your tax refund.
The Department of Treasury’s Bureau of the Fiscal Service (BFS), which issues the IRS tax refunds, has been authorized by Congress to execute the Treasury Offset Program (TOP), a Treasury Compensation Program to compensate debts. Through this program, your refund or overpayment could be decreased by the BFS to compensate:
- all arrears of child support payments for minor children;
- all federal non-tax debt (such as student loans in arrears);
- all-state income tax debt; or
- certain unemployment compensation debts owed to a state. (Generally, these are debts for (1) compensation that was paid due to fraud or (2) for contributions owed to a state fund that were not paid due to fraud).
You can contact the agency with which you have a debt to determine if the debt was remitted for your tax refund to be applied against it. You can call the BFS TOP call center at the telephone number listed below to obtain a certain agency’s address and telephone number. If your debt was remitted to the BFS for compensation, it would take your refund as much as necessary to settle the debt and send the payment to the agency to which you owe some amount. After being applied against your debt, any remaining part of your refund will be sent to you in a check or deposited directly into your bank account.
The BFS will inform the IRS of the amount it took from your refund. You should contact the agency indicated in the notice if you believe the debt is not due or if you want to dispute the amount of your refund that was applied against a debt. If you do not receive the notification, contact the BFS TOP call center at 800-304-3107 or, for TDD team users, at 866-297-0517. Only call the IRS if the original refund amount indicated on the notice sent to you by the BFS is different from the amount shown on your tax return.
If you filed a joint return and are not responsible for the debt but are entitled to a portion of the refund, you can request that portion of the refund by filing Form 8379, Injured Spouse Allocation, in English. You can file Form 8379 with your original joint return (Form 1040, Form 1040A, or Form 1040EZ), with your amended joint return (Form 1040X), or file it separately after receiving the notice telling you that your refund was applied against an amount owed. If you file Form 8379 with your joint return, write the words “INJURED SPOUSE” in English on the upper left corner of the first page of the joint return. The IRS will process your Form 8379 before your refund is applied against an amount owed. If you file Form 8379 along with your original or amended joint return, processing the electronic return may take up to 11 weeks or, if you file a paper return, it may take up to 14 weeks.
If you file Form 8379 separately, it must show the social security numbers of both spouses in the same order in which they appear on the joint income tax return. You, the “injured” spouse, have to sign the form. Carefully follow the instructions on Form 8379 and attach the necessary forms to avoid delays. Do not attach to Joint Form 8379 the joint income tax return presented above. Send Form 8379 to the Service Center where you filed your original return and wait at least 8 weeks for IRS to file your Form 8379. The IRS will calculate the portion of the joint return that corresponds to the injured spouse and, if you lived during the tax year in a state where the community property law governs, the IRS would divide the joint reimbursement according to state law. Not all debts are subject to compensation from the tax refund. To determine if you have a debt (other than federal tax) and if compensation will occur, call the BFS TOP call center at 800-304-3107 (for help if you use TTY / TDD equipment, call 866- 297-051.
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.
