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April 2017 Tip of the Month


Yep, two weeks from today your tax returns are due or at least your valid extensions (you should get in touch with us ASAP if you need one). 

Of course, many have already filed and are anxiously awaiting refunds. Here’s a little helper to find out “wassup”. If you go to the Tax Center tab on Abo and Company’s website, under the caption “Track Your Refund”  , you’ll find a link to check the status of your refund(s).

Alas, in the last few days we’ve gotten some calls from clients, who we’ve already filed for, dismayed from an IRS letter they just received informing them that they are holding the expected tax refund.  Are you kidding me Abo and Company? Hey, we’re just the messenger.

It’s left to us to advise them that certain financial debts from your past may affect your current federal tax refund. The law allows the use of part or all of your federal tax refund to pay other federal or state debts that you owe. Here are six facts that we (and even the IRS) believe that you should know about tax refund offsets.

  1. A tax refund offset generally means the U.S. Treasury has reduced your federal tax refund to pay for certain unpaid debts.
  2. The Treasury Department’s Bureau of the Fiscal Service (BFS) is the agency that issues tax refunds and conducts the Treasury Offset Program.
  3. If you have unpaid debts, BFS may apply part or all of your tax refund to pay that debt.  We’ve seen them include overdue child or spousal support; federal taxes; state income taxes; certain unemployment compensation debts owed back to the state; delinquent student loans; or other federal agency non-tax debts.  We’ve read that these offsets may include individual shared responsibility payments under the ever-confusing and in-flux health care law.
  4. You will receive a notice from BFS if an offset occurs (you should know by now from past Abo and Company advisories not to fall for emails or phone calls from the IRS). The notice will include the original tax refund amount and your offset amount. It will also include the agency receiving the offset payment and that agency’s contact information.
  5. If you believe you do not owe the debt or you want to dispute the amount taken from your refund, you should contact the agency that received the offset amount.  Only contact the IRS if your offset payment was applied to a federal tax debt.
  6. Here’s where Abo and Company has had some success lately. If you filed a joint tax return with your spouse, you may be entitled to part or all of the refund offset. This rule applies if your spouse is solely responsible for the debt. To get your part of the refund, we have filed form 8379, Injured Spouse Allocation.