If taxpayer receives a refund that is less than the amount that was submitted with the tax return, the refund may have been offset for a past due obligation. IRS Tax Topic 203 explains refund offsets, and the Department of Treasury's Bureau of the Fiscal Service (BFS), which issues IRS tax refunds, has been authorized by Congress to conduct the Treasury Offset Program.
If your client's refund has been offset, it may be have been reduced by BFS to pay:
- Past-due child support
- Federal agency non-tax debts
- State income tax obligations
- Certain unemployment compensation debts owed a state
If a refund has been offset to pay any of the items above, the "Where's My Refund" tool at irs.gov will indicate that the amount has been reduced. A reference code and contact number will be provided.
The taxpayer can also contact the agency for which they have the debt directly to determine if the debt was submitted for a tax refund offset, or they can contact BFS by phone at 800.304.3107 or TDD 866.297.0517. If a debt is submitted for offset, BFS will take as much of the refund as is needed to pay off the debt and send it to the agency that is owed. Any portion of the remaining refund will be issued to the taxpayer.