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Home > Notices > Refund from Another Year Applied to Debt
Published:   |   Last Updated: September 6, 2024

Refund from Another Year Applied to Debt

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Overview

Your tax return may show you’re due a refund from the IRS. However, if you owe a federal tax debt from a prior tax year, or a debt to another federal agency, or certain debts under state law, the IRS may keep (offset) some or all your tax refund to pay your debt.

Note that depending on the type of debt, the IRS must offset your refund to pay the debt.

I need more information

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What does this mean to me?

The IRS has kept (offset) some or all your tax refund to pay a debt you owe.  The IRS can offset your refund to pay debts such as:

    • Past-due federal tax
    • State income tax
    • State unemployment compensation debts
    • Child support
    • Federal nontax debt, like student loans

The IRS makes offsets for past due federal taxes.  All other offsets are handled by the Treasury Department’s Bureau of the Fiscal Service (BFS).  For offsets against past due federal tax, you’ll be mailed an IRS notice.  For all other offsets, the notice will come from BFS. The BFS notice will reflect the amount of your refund, the amount that was offset, the agency that received the payment, and an address and phone number for that agency.

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How did I get here?

You have an outstanding balance on your tax account or you owe other debts that must be paid before you are eligible to receive a refund.  A notice was mailed to your last known address, telling you that all or part of your refund has been applied to pay the debt.

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What are my next steps?

The notice explains how your refund was applied by the IRS or BFS.  If you agree with the changes that have been made, no response is required.  Please note that the offset will occur even if you are on a payment plan or if the IRS has placed your account in Currently Not Collectible (CNC) status.

If you didn’t file the return claiming the refund that was applied to another debt: Call the IRS immediately, as you may be a victim of tax-related identity theft.  For more information, see the

  • If you can full pay your remaining tax debt, see online payment
  • If you can’t pay the balance due and have not made payment arrangements with the IRS, contact the IRS to discuss payment options for your financial situation.

If it’s not from the IRS and the offset paid something other than a federal tax debt

  • If you need more information on the offset, contact the BFS toll-free at 1-800-304-3107 (or TTY/TDD 1-866-297-0517) (Monday through Friday, 7:30 a.m. to 5:00 p.m. CST) to find out where Treasury applied your tax refund.
  • If you believe you don’t owe a debt to another agency or have questions about it, contact the agency that received your tax refund as shown in your notice.
  • If part of your tax refund offset but you didn’t receive the remainder of your refund, contact the IRS to resolve the discrepancy.

If you didn’t get a notice about an offset but your tax refund is smaller than you expected, call the IRS toll-free at 1-800-829-1040 (or TTY/TDD 1-800-829-4059).

If you filed a joint tax return, you may be entitled to part or all the refund offset if you are not responsible for the debt because the debt belongs solely to your spouse. To request your part of the tax refund, file IRS Form 8379, Injured Spouse Allocation.

If your tax refund was offset to pay a joint federal tax debt and you believe only your spouse or former spouse should be held responsible for all or part of the balance due, you should request relief from the liability.

  • To request relief, file IRS Form 8857, Request for Innocent Spouse Relief. The instructions for Form 8857 have helpful directions.
  • The IRS will use the information you provide on IRS Form 8857, and any additional documentation you submit, to determine if you’re eligible for relief.

If you can’t pay the remaining amount due, you need to figure out what payment options might work for your situation, and contact the IRS to set up a payment plan or discuss other way to address your balance.

Being proactive in addressing the tax debt may prevent additional penalty and interest charges and eliminate the need for the IRS to take any further action to collect the balance. For specifics, see I got a notice from the IRS on TAS Get Help  and Revocation or Denial of Passport in Case of Certain Unpaid Taxes for further information.

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Additional Resources

Where can I get additional help?

Form 8857

Request for Innocent Spouse Relief

Download
Form 8857 Instructions

Request for Innocent Spouse Relief

Download
Form 8379

Injured Spouse Relief

Download
Form 8379 Instructions

Injured Spouse Relief

Download

General Resources

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The Taxpayer Advocate Service is an independent organization within the IRS. TAS helps taxpayers resolve problems with the IRS, makes administrative and legislative recommendations to prevent or correct the problems, and protects taxpayer rights. TAS helps all taxpayers (and their representatives), including individuals, businesses, and exempt organizations. You may be eligible for free TAS help if your IRS problem is causing financial difficulty, if you’ve tried and been unable to resolve your issue with the IRS, or if you believe an IRS system, process, or procedure just isn’t working as it should.

TAS has offices in every state, the District of Columbia, and Puerto Rico. To find your local advocate’s number:

Low Income Taxpayer Clinics (LITCs) assist individuals whose income is below a certain level who need to resolve tax problems with the IRS. They also provide education, outreach, and information on taxpayer rights to individuals who speak English as a second language. LITCs represent taxpayers in disputes before the IRS and courts and help taxpayers respond to IRS notices and correct account problems. Services are offered for free or a small fee. LITCs are independent from the IRS and TAS. For more information or to find an LITC near you, see the LITC Page or Publication 4134, Low Income Taxpayer Clinic List. You can also request Pub. 4134 by calling 800-TAX-FORM (800-829-3676).

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