Refund Inquiries made to the Internal Revenue Service
Question: What will happen if I owe both back taxes to the IRS and back child support, state taxes, student loans, etc?
Answer: If you owe delinquent federal taxes, the IRS will withhold the balance due from your refund.
If your refund exceeds the amount of your delinquent federal taxes, the IRS will adjust and your split will be refunded via direct debit. The IRS will deduct the difference from the amount you designated for the last account shown on Form 8888. If the difference exceeds the amount designated for the last account, the IRS will deduct the remainder from the amount designated to the next account, etc.
Additionally, if you owe delinquent state income taxes, back child support, or delinquent non-tax federal debts such as student loans, etc., the Department of Treasury’s Financial Management Service (FMS) will deduct the past-due amounts from the payment that appears first on the payment file received from the IRS (the IRS payment file orders accounts from the lowest to the highest routing number). If the debt exceeds the payment designated for the account that appears first on the payment file, FMS will reduce the payment designated for the account that appears next, etc. For questions about the deductions for past-due amounts, call FMS toll-free at 800-304-3107.
You will receive a letter explaining any adjustments the IRS made to your refund amount and direct deposit(s). You will receive a separate letter from FMS explaining any offset amount, the agency receiving the payment, the address and telephone number of the agency, and amount of your refund/direct deposit that was offset. If you dispute the debt on the letter you receive from FMS, you should contact the agency shown on the notice, not the IRS, because the IRS has no information about the validity of the debt.
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