Compensations For Tax Refunds 2019 Pay Outstanding Debts

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Here is five facts about the Treasury Compensation Program.
The Fiscal Service Office. The Treasury Department’s Tax Service Office (BFS) issues tax refunds from the IRS and Congress authorizes the BFS to operate the Treasury Compensation Program.

Compensations to pay certain debts. The BFS may use part or all of a tax refund to pay certain other debts, such as:

  • Federal tax debts.
  • Federal agency debt, such as a delinquent student loan.
  • Obligations of the state income tax.
  • Unpaid child support for children and spouse.
  • Certain debts of unemployment compensation owed to a state.

Notification by postal mail. The BFS will send a notice to a person if they compensate any part of their repayment to pay a debt. The notice will indicate the amount of the original reimbursement and compensation. It will also include the agency that received the compensation payment. It will also provide contact information for the agency.

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How to challenge compensation. Taxpayers who wish to question the payment of compensation should contact the agency receiving the compensated payment. Contact the IRS ONLY if reimbursement compensation pays a federal tax debt. The IRS does not have access to information about state debt compensation or other federal agencies.
Allocation to the injured spouse. Individuals who file joint returns may be entitled to some or all of the compensation. This rule applies if the spouse is solely responsible for the debt. Taxpayers must use Form 8379 Impaired Spouse Assignment, to obtain part of a tax refund. An injured spouse can use the Interactive Tax Assistance tool Can I or my spouse claim part of a refund applied to a debt incurred by the other spouse? (in English). This tool helps a taxpayer decide whether to file a claim for the part of a joint refund, applied to the overdue debt of their spouse, for which they are not responsible.
All taxpayers must keep a copy of their tax return. Beginning in 2019, taxpayers using a software program for the first time may need the amount of their adjusted gross income (AGI) from their previous year’s tax return to verify their identity. Taxpayers can learn more about how to verify your identity and electronically sign tax returns in Verify your tax return after filing electronically.


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