Action Line: Tax refunds may be offset for certain unpaid debts
BY PHIL MULKINS World Action Line Editor
Sunday, May 27, 2012
5/27/12 at 8:42 AM
Dear Action Line: I was expecting an income tax refund but instead got this notice from something called the Financial Management Service saying my refund had been offset by some of my student loan debt. This really sucks! First the student loan people come after me and now even the IRS is involved. - M.R., Tulsa
Past-due financial obligations can affect your current federal tax refund, Internal Revenue Service spokesman David Stell said. The Department of Treasury's Financial Management Service, the agency issuing IRS income tax refunds, can use part or all of your refund to satisfy certain unpaid debts - including state or federal taxes, unpaid child support and student loan debt.
Owed state or federal debt: If you owe federal or state income taxes, your refund will be offset to pay those taxes. 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.
FMS notice: You will receive a notice if an offset occurs. 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.
Joint filers: 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" ( tulsaworld.com/IRSForm8379). 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.
Injured spouse: You can file Form 8379 electronically. If you file a paper tax return you can include Form 8379 with your return, write "INJURED SPOUSE" at the top left of the Form 1040, 1040A or 1040EZ. IRS will process your allocation request before an offset occurs.
Social Security numbers: If you are filing Form 8379 by itself, it must show both spouses' Social Security numbers in the same order as they appeared on your income tax return. You, the "injured" spouse, must sign the form. Do not attach the previously filed Form 1040 to the Form 8379. Send Form 8379 to the IRS Service Center where you filed your original return.
Compare amounts: 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, 7:30 a.m. to 5 p.m. Central Time.
Original Print Headline: Tax refund may be offset for certain unpaid debts
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