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Last Updated: 11/27/2013

Federal Offsets for Income Tax Debt

When you owe a state income tax debt, we can offset (take) your federal tax refunds to pay the debt. We can also take certain other money the federal government owes you.

To take your federal refund or payments, we file an “offset claim” under the Treasury Refund Offset Program (TRO). We can do this when all of the following are true:

  • It has been more than 180 days, but less than 10 years, since the assessment date (the date your debt was officially considered due).
  • We sent a “notice of intent to offset” letter 60 days before filing the offset claim. (This letter is sent by certified mail to your last known address.)
  • You’re not in bankruptcy.

For more information, see federal law 26 U.S. Code 6402(e).

What refunds or payments can we take for your debt?

We can only take certain refunds or payments from the federal government to offset your state income tax debt. Those we can legally take are “eligible for offset." For example:

​   We can take (eligible)

​   We cannot take (ineligible)

​Tax Refunds

​Social Security Income

​Expense Reimbursements

​Veterans Benefits

​Travel Advances

​Railroad Retirement Benefits

​Vendor or Contractor Payments

​Grants

What happens when we offset your refund or payment?

If the federal government owes you money that is eligible for offset, they will send it to us. When that happens, they will send you a “notice of payment offset” letter.

We will apply the payment to your state income tax debt. This can take up to several weeks.

Your right to review tax data about yourself

You have the right to see or get copies of data we have about you, unless it is confidential. For more information, see Your Right to Private Data About Yourself. For information about your right to review data on debt referred to us by another agency, contact that agency.