Tax Time: Know Who You Owe

Taxpayers, please keep in mind that if you owe back child support, student loans or back taxes to state or federal entities—they will get their money. Please don’t curse out H&R Block, Jackson Hewitt or even Internal Revenue Service, because you were expecting a $4,000 to $7,000 refund but were told that your refund will be reduced or completely offset because you owe a government agency.

I haven’t worked in the toll-free customer service department at IRS in 10 years, but I still remember getting cursed out on a daily basis. Based on a few conversations with my co-workers, things have gotten worse because of the recession.

As a newbie in the department, I dealt with the taxpayers that were expecting a refund and transferred the more complicated calls to the more experienced tax examiners. People would call to see if their returns have been processed and to find out when they could expect to receive the check or direct deposit. Most of the calls I handled ended on a happy note, but it never failed, by the end of the day, I always got at least two irate callers that were mad at me (at IRS, at the government, at their baby’s mama or daddy) because their money was going to be used to pay old debts. I used to get cursed out so bad that I cried. Not necessarily because they hurt my feelings, but because I couldn’t curse them out back.

Just so there won’t be any misunderstandings, I’m going to spell it out for those that may end up in this situation one day.

• If you have been ignoring those delinquent/default letters from Sallie Mae—your refund may be offset.

• If you know you haven’t made your child support payments in a while—your refund may be offset.

• If you owe state or federal taxes from a previous year—your refund may be offset.

• If your spouse owes any of these government entities—your refund may be offset—only if you do not file an Injured Spouse Claim (Form 8379) with the IRS.

If the IRS ever does reduce or offset your refund, you will get a letter in the mail letting you know how much money was sent to pay your debt. If there is any money left over, you will receive it by check or direct deposit.

Just in case you’re curious, you can either call your debtor or the Department of Treasury’s Financial Management Service (1-800-304-3107) ahead of time, just to see if your file has been submitted for a tax refund offset.

So if you call IRS, and the nice lady tells you, “I’m sorry but your refund has been offset to pay a debt owed to a federal agency,” just say “DAMN” and get off the phone. If you didn’t know you owed somebody, you should have.