Automated Tax Credit - Tax Debt Resolution
Glossary

Tax Refund Offset

A tax refund offset occurs when the IRS applies a taxpayer’s federal tax refund to unpaid debts instead of issuing the refund to the taxpayer. The IRS has the authority to offset tax refunds to satisfy various types of debts, including:

  • Back taxes.
  • Child support arrears.
  • Student loan defaults.
  • State income tax debt.

The Treasury Offset Program (TOP) is responsible for identifying taxpayers with outstanding debts and applying their refunds to those balances. Taxpayers are notified of the offset through a letter, which explains the reason for the offset and the amount applied to the debt.

Taxpayers who believe the offset is incorrect or who are facing financial hardship as a result of the offset can contact the IRS or the agency responsible for the debt to request a review or appeal. In some cases, taxpayers may be eligible for relief or adjustments to the offset if they can demonstrate that the debt was not valid or that the offset would cause undue hardship.

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Tax Extension

A tax extension gives taxpayers an additional six months to file their tax return, but they must still pay any taxes owed by the original deadline.

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IRS Audit

An IRS audit is a review of a taxpayer’s financial records and tax return to ensure compliance with tax laws, often triggered by errors or inconsistencies.

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