IRS tax refund dispute!!?

I did my taxes this year through turbotax, and supposed to get back about $2200 Federal. The IRS took my entire refund and applied it towards an outstanding debt I acquired after seperating from the military through the Dept. of the Treasury. I made a signed, written agreement - a contract; with this agency to pay them back in increments every month, which is what I have been doing. I budget my lifestyle based around it. They can't just take all my money and apply it. What can I do??

8 Answers

  • Anonymous
    9 years ago
    Best Answer

    You can take it up with your creditor. IRS is not concerned.

  • 9 years ago

    The Department of Treasury's Financial Management Service (FMS), which issues IRS tax refunds, has been authorized by Congress to conduct the Treasury Offset Program. Through this program, your refund or overpayment may be reduced by FMS and offset to pay: such as Past-due child support ; Federal agency non-tax debts; State income tax obligations, or Certain unemployment compensation debts owed a state. (Generally these are debts for compensation that was paid due to fraud or for contributions due to a state fund that were not paid due to fraud)

    Now you must contact the agency that you owe to see if they will reimburse you some of your money, I doubt since it is owed to them.

    Instead of getting such a large refund you should visit IRS website and use the withholding calculator to complete the W4 and give to your employer to have less taxes withheld, more take home pay. The calculator will get you close enough to where you won't owe IRS or be due such a large refund

    good luck

  • Anonymous
    9 years ago

    "They can't just take all my money and apply it. What can I do?"

    Actually they can. Being on a payment plan is good, but the whole debt is considered past-due because its something that you should have paid up front. They can and did take your entire refund.

    What can you do? Adjust your lifestyle to account for the fact that you're not getting a tax refund this year. You won't be getting a tax refund for ANY year until the debt is paid in full.

    The good news is that your debt is now $2200 less.

  • You have to take that up with the agency that you owed the money to. They are the only ones who can refund your money to you now that they have it.

    Before you contact them, review your contract agreement carefully. Most agreements with most federal agencies include an offset of any money due you from the federal government, including tax refunds, regardless of your payment status with the agency. This will continue until the debt is paid in full.

    The ONLY way to avoid an offset is to not be due a refund. Adjust your withholding so that you are not due a refund, or are only due a very small one.

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  • Judy
    Lv 7
    9 years ago

    You can't do anything. If you owe the govt, even if you are on a payment plan and making regular payments, any tax refund will be taken and applied to what you owe. That is most likely somewhere in the fine print of the repayment contract you signed.

  • MadMan
    Lv 7
    9 years ago

    Actually, they most likely can. Look carefully at the agreement and see if it says that any federal tax refunds will also be taken. Payment plans by the IRS always have this clause.

  • 9 years ago


    as long as you owe money they will take your tax refunds. The agreement just keeps them from taking you to collections or calling the note all at once.

    It is the same with student loans or ANY federal debt. Us taxpayers think this is a good thing.

  • 9 years ago

    "They can't just take all my money and apply it" - of course they can. Does your "signed, written agreement - a contract" specifically exclude taking your federal return to offset the debt? No? Then they can.

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