How to Challenge a Tax Refund Offset

by Michelle Hogan ; Updated July 27, 2017

Having your tax refund taken away for a debt you owe is called an offset, and it can be a financial blow, especially if you depend on your tax refund each year to cover other expenses. The best way to deal with a tax refund offset by the Treasury Department is to arrange to pay the debt ahead of time or to file forms declaring your income insufficient to cover the debt. It's important in this case to be upfront and honest with the agency so you can clear up any issues before you lose your refund. If your refund is being taken anyway, you can challenge the offset through legal avenues.

Step 1

Contact the agency requesting the offset, and find out the circumstances under which you can challenge it. A student loan offset, for example, can be challenged if you paid the debt in full, the loan is not yours, or the school is closed or does not have appropriate certification.

Step 2

Look at the notice you received regarding your offset. There must be a contact name and address in the letter. Keep the address as well as any enclosed forms used for filing for a hearing or a financial disclosure.

Step 3

Write to the agency authorizing the offset, and ask for a formal hearing regarding your offset. Unless you provide a valid reason why you don't owe the debt, you will be subject to a tax refund offset until the debt is cleared.

Step 4

Present evidence regarding your challenge, and be prepared to defend your assertion that you shouldn't lose your tax refund to the debt. Needing the money is generally not considered a sufficient reason to regain access to your tax refund.

Step 5

Arrange to make payments on the debt, so your tax refund is not taken by the government. Some agencies may accept a payment arrangement, especially if you are able to arrange automatic payments from your employer or your bank account. Once a certain amount of payment is made, your tax refund may be released.

About the Author

Michelle Hogan is a writer and the author of 13 books including the 2005 bestselling memoir, "Without a Net: Middle Class and Homeless (With Kids) in America." Hogan studied English at American University and has been writing professionally since 1998. Her work has appeared in "The New York Times," "Redbook," "Family Circle" and many other publications.

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