Why You May Not Get That Tax Refund After all

Craig Thomas

Craig Thomas

Managing Partner, CPA, Certified Tax Resolution Specialist at Streamline Tax Resolution, llc
Craig Thomas

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Imagine having spent a large portion of the year planning for that up-coming super summer vacation to Florida with the entire family.

You’ve covered all the bases for your getaway scheme, including financing, which is budgeted to come from your forthcoming tax refund.

Well, if you have an outstanding Federal or State debt, there’s a chance that you might not be receiving a tax refund at all.

What’s a BFS?

The Department of Treasury’s Bureau of the Fiscal Service (BFS) is the agency responsible for issuing IRS tax refunds. In addition, the BFS manages the government’s accounting, central payment systems, and public debt.

As a government accounting agency, The BFS may also allocate part or all of your tax refund to pay unpaid debts.

What Outstanding Debt?

Your tax refund may be used to offset the following:

  • Past-due child and parental support.
  • Federal agency non-tax debts, such as a delinquent student loan.
  • State income tax obligations.
  • Certain unemployment compensation debts owed to a state

How Will I Be Notified?

The BFS will mail you a notice if it offsets any part of your refund to pay your debt. The notice will list the original refund, and offset amount. It will also include the agency that received the offset payment, as well as their contact information.

If you feel that an error was made, you can dispute the offset by directly contacting the agency that received the offset payment. Do not contact the IRS.

Spouse’s Fault?

You may be entitled to part, or all of the offset if you filed a joint tax return with your spouse. This rule applies if your spouse is solely responsible for the debt. To get your part of the refund, file IRS Form 8379, Injured Spouse Allocation.

Health Care Law:

Under the new health care law, you may owe the government for any month in 2014 that you or any of your dependents don’t maintain coverage (Individual Shared Responsibility Payment). If so, your forthcoming tax refund could be diverted to cover this debt.

Final Thoughts:

If you’re worried that an existing government debt might jeopardize your tax refund, it’s best to know your status rather than be unpleasantly surprised.

If you haven’t received a refund-offset notice from the BFS, and your refund seems to be taking forever, don’t panic. Due to budget cuts, there have been delays in the IRS process.

You may also track the status of your tax refund by using the IRS2GO app.

For more information on tax resolution services,visit: www.streamlinetaxresolution.com
Craig Thomas can be reached at: cthomas@streamlinetaxresolution.com