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SEIZED REFUNDS

Why It Happens

The Federal Government has bureau of the US Treasury called Financial Management Service (FMS). It’s FMS's job important to distribute all the funds, collect all money, and provide government-wide accounting and reporting. The IRS is simply involved in carrying out the tax laws.

By law, individuals and businesses that have certain state and federal debts are subject to having any revenue from other government agencies used to pay those debts directly. Debts that can be collected from expected refunds includes federally-guaranteed student loans, SBA loans, Social Security debts, and more. In addition, most states have an agreement with FMS to collect any delinquent family and child support, as well as state tax debts.

Did you know that we can sometimes get back partial refunds from FMS?

But you have to follow specific procedures in order to get the money.

How the IRS handles FMS Debts

When the IRS processes your tax return and determines you have a refund, it first checks its own Master Debtor File to see if you have any back taxes you owe. Then it checks against the FMS data to see if you have any other collectible debts. If a search of the FMS database comes back positive, the IRS does not know what type of debt is owed, only that the refund will be used to offset some or all of the debt.

Once the IRS has authorized the release of a refund, the authorization is sent to FMS. FMS then deducts any amounts owed to any agency with the authority to pull your refund. The remaining funds (if any) are sent to the taxpayer and a notice is sent to the taxpayer about 1-2 weeks later explaining the reduction of the refund.

What WBTax Can Do To Help

There are basically 3 situations where we can help.

Inaccurate Debts -- The debt is not yours or you paid off the debt in full.

Debts of a current spouse -- The debt was caused by a spouse prior to your marriage, or you live in a state where the innocent spouse cannot be held liable for the responsible party.

Debts of a prior spouse -- The debt was incurred by a former spouse and the courts have lifted your responsibility for the debt.

There is limited help available even with these situations, but sometimes we can get some or even all of the refunds released. Please speak with us about the specifics of your situation.