If you pay more taxes during the year than you owe, the Internal Revenue Service refunds you your overpayment. However, if you owe back taxes to the IRS or owe money to other federal or state agencies such as student loan providers or child support enforcement authorities, the Department of the Treasury takes your refund and uses it to cover your debt. You can get any remaining funds after your debt is repaid. This process is called offsetting your taxes.
Once the federal government's Financial Management Service offsets your tax refund, the IRS process your remaining refund, if any, the same way that it processes full refunds. Thus, you will receive your refund based on the IRS' refund cycle. You can check the IRS' website to find out the status of your refund at any time after you receive your offset notice.
If you file a joint tax return and your spouse owes money to the IRS or other governmental agency, the Treasury Department may offset your tax return to settle your spouse's debt. File Form 8379 with your return to claim "innocent spouse" status. If the IRS accepts your claim, it will return your portion of the refund. It takes the IRS 11 to 14 weeks to process Form 8379 and give you your tax refund.
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Disputing the Debt
If you disagree with the offset, contact the agency that offset your tax return. The agency has to investigate your claim; there is no set time limit for determining whether an offset was legitimate. You still receive your partial refund from the IRS during the investigation. If the agency agrees that the offset is invalid, you receive the rest of your refund from the IRS in accordance with its refund schedules.
It is best to file form 8379 with your taxes so that the IRS can take action before any offset occurs. This allows you to receive one refund check in the entire amount that the IRS owes you. However, you can still file form 8379 after your spouse receives an offset notice. If you file this form separately from your tax return, it takes the IRS approximately eight weeks to process your form 8379 and provide your tax refund.