Can the IRS Seize My Tax Refund?

If you are scratching your head wondering where your federal income tax refund is this year, it could be missing because the government has seized it. The United States Treasury Department has the authority to hold part or all of your tax refund to cover any debts you might owe.

Six Major Kinds of Debts

There are six major kinds of debts that can result in a government seizure of your federal tax refund:

Federal Income Taxes

If you owe back income taxes to the government, your refund may be seized to pay these back taxes. In this case, you should also receive a notice from the IRS providing an explanation as to why the money was withheld.

State Income Taxes

Believe it or not, the federal government can also intervene and withhold money from your tax refund to put toward unpaid state income taxes.

Student Loans

If you have defaulted on a federally insured student loan, the federal government can seize your refund to offset your defaulted loan. However, they are required to send you notice and provide you with an opportunity to challenge the claim or to pay it off in advance before the refund is withheld.

State Unemployment Compensation

If you have collected more in unemployment compensation than you were entitled to, according to your state, the state can ask the United States Treasury to redirect your tax refund towards this debt.

Child Support

The child support agency in your state can request the federal government to withhold money from your tax refund if you are delinquent in paying court ordered child support. You should receive advance notice of the amount owed, the offset process, and how to contest it.

Spousal Support

If an award for spousal support is included in a child support order, this can also result in a tax refund seizure if the spousal support payments are overdue.

If you believe your federal tax refund has been seized unfairly, it is highly recommended that you contact a skilled and experienced tax attorney to help you contest your IRS issue. The legal team at the Scammahorn Law Firm is well equipped to give you expert legal advice and help you fight unfair penalties from the IRS. If you have been targeted by the IRS and need legal advice about your options, give our office a call today at (903) 595-1000 for a confidential consultation about your tax situation.