CP92 Notice: Seizure of State Tax Refund Due to Federal Tax Debt

The CP92 Notice is sent by the IRS to inform taxpayers that their state tax refund has been seized to pay off an outstanding federal tax debt. This occurs when the taxpayer owes back taxes and the IRS intercepts their state refund to apply it toward the unpaid balance.

Key aspects of the CP92 Notice:

• Seizure of State Refund: The notice explains that the taxpayer’s state tax refund was seized and applied to their federal tax debt. This reduces the taxpayer’s federal balance but means they will not receive their state refund.
• Remaining Balance: If the state refund does not fully cover the federal tax debt, the notice will indicate the remaining balance that the taxpayer still owes.
• Next Steps: The notice provides options for paying off the remaining balance, such as setting up an installment agreement or paying in full. Taxpayers are encouraged to contact the IRS if they cannot pay the remaining amount immediately.
• Dispute Options: If the taxpayer believes the seizure was made in error or they have already resolved the debt, the notice includes instructions for disputing the seizure and providing documentation to correct the issue.

The CP92 Notice is a serious notice indicating that the IRS has taken steps to collect federal taxes by seizing the taxpayer’s state tax refund, and taxpayers should act quickly to resolve any remaining debt.