If you owe money to the federal government, state government or certain government agencies, the Department of the Treasury may offset your tax refund. The Department of the Treasury uses your refund to repay the debt and provides you with any leftover money. Once the IRS has been notified of an offset, it may take up to 14 weeks for it to clear your debt and issue your new refund.
It usually takes the Internal Revenue Service eight weeks to clear your account after it receives notice that you're disputing an offset or that the debt was paid by offsetting your tax refund. The IRS processes your refund once it receives notice of an offset. It must calculate a new refund for you and then prepare the refund, if any, and send it to you.
If you filed a joint return and your spouse owes money to the IRS or another government agency, the Department of Treasury offsets your joint tax refund to pay your spouse's debt. You may file Form 8379 to claim "Injured Spouse" status, meaning that you had nothing to do with the original debt and want your part of the refund to remain untouched. If you file Form 8379 when you file your taxes, the IRS takes between 11 and 14 weeks to process your tax return and send your part of the refund to you. If you file it after you file your return, the IRS takes about eight weeks to process Form 8379 and provide your refund.
Eligibility for Offset
The Department of the Treasury offsets your refund if you owe money to the IRS or to your state's tax collection agency for past-due taxes, even if you're paying your back taxes using an installment agreement. Your refund may also be offset if you owe back child support, unemployment compensation repayments or money to any federal or state agency.
What to Do
If the Department of the Treasury offsets your tax refund, it sends you a notice informing you of the offset. If you agree with the debt, do nothing — the IRS receives notice that the debt has been paid and processes your new tax refund. If you dispute any portion of the debt, contact the Department of the Treasury's Financial Management Service, not the IRS. Only call the IRS if the original refund amount listed on your offset notice is incorrect. Once you receive a notice, check online on the Internal Revenue Service's "Where's My Refund?" page, or call the IRS to determine the status of your new refund amount.