Contrary to popular belief and what is often portrayed in movies, the IRS isn’t always the bad guy. If you aren’t able to pay the full amount you owe in taxes, the IRS will make arrangements to make repayment easier. Though you should be aware that back taxes or past due amounts will reduce your refund amount. You are able to take advantage of the Treasury Offset Program to settle debts with federal or state taxes by using all or part of your federal tax refund.

Tax Refund Offsets Facts

The following five facts are important to know if you want to use an offset to pay back a debt.

1. The Treasury Offset Program is run by the Department of Treasury’s Bureau of the Fiscal Service (BFS).
2. You can pay a variety of debts with an offset from your federal tax refund including past-due child and parent support, delinquent student loans, state income taxes, state-owed unemployment compensation debts.
3. You will be notified via mail if an offset is used to pay outstanding debts. This report will list your refund amount, as well as how much was used to pay a debt, the agency who received the offset, and their contact information.
4. Offset disputes should be handled with the agency who received the payment. The IRS does not handle disputes concerning offset payments.
5. If you file a joint return with your spouse and your spouse is solely responsible for the debt, you may be entitled to all or part of the offset payment. You’ll need to file Form 8379, Injured Spouse Allocation.

The IRS is not able to use liens or levies to collect health care related individual shared responsibility payments. Though you should note that if you owe a payment, the IRS is allowed to offset the liability against tax refunds you may be owed.