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Why Was My Refund Reduced?


When submitting their tax returns, most people are able to calculate, with a relative degree of certainty, how much they can expect to receive in a tax refund. These amounts, however, are not absolute and are actually subject to change by the IRS. For instance, when issuing refunds, the IRS is authorized to reduce refund amounts and offset them to cover other debts, including overdue child support and federal tax debt. If you have questions about whether your own refund will be reduced or have already received a refund that was mistakenly reduced, you should contact an experienced Florida tax & IRS attorney who can walk you through your legal options.

Offsetting Debts

The IRS conducts what is referred to as the Treasury Offset Program (TOP), which is used to reduce individual refunds to offset certain debts, including:

  • State income tax obligations;
  • Federal agency non-tax debts;
  • Past-due child support; and
  • Unemployment compensation debts, including debts for payments that were the result of fraud or unpaid contributions owed to a state fund.

It’s important to note that the IRS is required to take certain steps before actually reducing a person’s refund, including sending a notice of offset to the taxpayer in question. These notices must also contain certain information, including:

  • The original refund amount;
  • The offset amount; and
  • The contact information of the agency receiving the payment.

Once a refund has been reduced to offset a debt, any remaining portion will be issued, either in a check or through direct deposit, to the taxpayer. Only certain debts meet the criteria for a tax refund offset, so if your own refund was reduced to pay off an ineligible debt, it is important to speak with an experienced attorney about recouping your losses.

Injured Spouse Claims

Taxpayers who file returns jointly with a spouse, but who are not responsible for their partner’s debts, are entitled to request that a portion of that refund be returned to them by filing Form 8379:

  • With their original joint tax return;
  • With their amended joint tax return; or
  • By itself after receiving notice of an offset.

Fortunately, the IRS can process these requests before an offset actually occurs, although processing could take up to 14 weeks. If a request for injured spouse relief is approved, the IRS will compute and issue the claimant’s share of the joint refund. For help filing your own injured spouse claim, please call our office today.

Reach Out to an Experienced Florida Tax Attorney

Not all debts are subject to a tax refund offset, so if you recently received notice that your refund has been reduced and you have questions about the legitimacy of the debt claimed, or you have another related concern, please call experienced tax attorney Ronald Cutler, P.A. to learn more about your legal rights and obligations. You can set up a free consultation today by reaching out to our dedicated legal team by calling our office at 386-490-9949 or by completing one of our brief online contact forms.