Talking Points: Tax Refund Offset and its Dynamics

Listen, last year, around 170 million folks (your fellow citizens) filed their tax returns. And guess what? Three-quarters of them, approximately 126 million, got a refund from Uncle Sam. Are you on the edge of your seat, eager to snag your piece of the IRS refund pie?

Fair warning, before you pop the champagne, consider this: Are you indebted to the federal government? Maybe you’ve got an SBA loan that hasn’t been fully paid off?

If you’re lagging on your financial commitments, brace yourself. Your eagerly-anticipated tax refund may be confiscated. This scenario is known as a tax refund offset.

Navigating the Labyrinth of Tax Refund Offset

Have you been dreaming about your tax refund, only to find your dreams dashed because the amount is much smaller than anticipated? Or, worse still, you didn’t get one at all? Well, my friend, you’re likely grappling with a tax refund offset.

Here’s the bottom line: if you’re swamped in debt or payment backlogs, the IRS can reroute your tax refund straight to the SBA instead of your bank account.

The good news is that the US Treasury Department will give you a heads up about the offset to cover a delinquent debt. If you’ve received such a notification, don’t hesitate to call 800-304-3107 for clarification.

The Unraveled Mystery of a Shrunken Refund Check

If you’re scratching your head because your IRS refund inexplicably shriveled up before reaching you, then reach out to the IRS for some answers.

Usually, though, there will be a notification letter before the offset occurs. This letter will typically outline the refund you would’ve gotten, the reduced (offset) amount, the entity receiving your money (in this case the SBA), and their contact information. If you need answers, your best bet is to reach out to the entity intended to receive your money.

Triggers for an IRS Tax Refund Offset

Wondering what could cause the IRS to enact an offset payment?

Don’t worry, the IRS isn’t about to snatch your tax refund just because you’re behind on your cable or credit card bill. Not all debts can trigger a tax refund offset.

However, if you’re in arrears with the federal government, anticipate a tax refund offset. The focus here is how a defaulted SBA loan could lead to a tax refund offset.

The IRS always prioritizes outstanding back taxes. They scoop up any refunds to cover those first before pondering a tax offset for an SBA loan.

Notably, if your offset is tied to a federal tax issue, the IRS will alert you. For any other reason, expect to hear from the Treasury Department’s Bureau of the Fiscal Service (BFS).

The Curious Case of Spousal Offset Payments

At times, one spouse might owe a debt triggering the IRS to implement a tax refund offset. This becomes rather tricky when the couple files their taxes jointly.

Imagine this: one spouse expects a tax refund only to discover that it’s been nabbed to offset the other’s debt. This can create a rather prickly situation, but do not despair.

Feel free to reach out by calling the IRS 800 number, dropping by your local IRS office, or navigating your way to the IRS website. Then download and complete IRS Form 8379.

Raising the Challenge Banner

If you believe the offset is wrong, you can challenge it.

Remember, don’t just challenge a tax offset because you dislike it. You must demonstrate to the IRS how it is in error. Maybe the debt’s paid off, or you’ve worked out a payment plan for the SBA loan.

For tax-related offsets, contact your local IRS office. If it’s non-tax related, get in touch with the Bureau of the Fiscal Service (BFS).

Navigating Your SBA Loan, With Lawscape

Our counsel to you is, if you haven’t sought advice regarding your debts, do so before challenging an offset. At Lawscape, our team spearheaded by Lawscape can guide you through the labyrinth of tax refund offset advice.

Never underestimate the value of professional guidance when in conflict with the IRS or the Treasury Department. With us, you’ll get tactical strategies for challenging an offset competently and ensure that you marshal the right documentation for your appeal.

The Bittersweet Taste of a Tax Refund Offset

Once you manage to get a coherent explanation of tax refund offset, it’s easy to understand the discontent and disappointment accompanying a notification letter.

If you have questions about your tax offset, no worries – we’re here to help. Connect with us at Lawscape, and we’ll roll up our sleeves to assist.

Why Hand Us the Reins of Your Treasury or SBA Debt Problems?

Our track record speaks for itself – millions of dollars in SBA debts have been resolved via offer in compromise and negotiated repayment agreements. And all of this without our clients filing for bankruptcy or facing home foreclosure.

Similarly, we’ve defended millions of dollars in Treasury Debts via AWG hearings, Treasury Offset Program resolution, cross-servicing disputes, private collection agency representation, compromise offers, and negotiated repayment agreements.

Our attorneys are greenlighted by the Agency Practice Act to represent Federal Debtors Nationwide before the SBA, The SBA Office of Hearings and Appeals, the Treasury Department, and the Bureau of Fiscal Service.