Getting a refund after completing your annual tax filing can be a rewarding feeling. However, there’s a chance that the IRS will seize the refund. Tax law permits this in select scenarios. Use this guide to discover a few of the reasons for a seizure.

How Can the IRS Seize a Tax Refund?

1. Back Taxes

If you owe past federal income taxes, the IRS may seize your refund and put it toward the balance owed. If there’s money left over, you’ll be refunded the difference.

The enforcers can also take the tax refund if you owe income taxes at the state level. Tax law requires the IRS to provide an explanation for any refund seizure, so you’ll know exactly why you didn’t receive the money.

2. Child Support

If you have a little one and the court has ordered you to pay child support, this is obligatory. If you don’t pay, the state’s child welfare agency can contact the U.S. Treasury Department and ask them to withhold the tax refund to go toward back payments. You’ll receive a notice explaining how much is owed and how to contest the offset.

3. Unemployment Compensation

The state closely monitors unemployment compensation. If they believe that you’ve collected more than you were supposed to or have fraudulently collected unemployment, they can ask the Treasury Department to offset the refund.

You’ll have to prove that you rightfully received the compensation to receive the money. If you’re not sure how to do that, contact an attorney to help you organize your finances.

4. Student Loan

The Treasury Department can also offset the tax refund if you’ve defaulted on a student loan. This applies to federally insured loans.

You’ll receive advance notice of the government’s intention to claim their money, which you can challenge. Alternatively, you can pay off the amount due before the refund is withheld.

If you believe your tax refund was wrongfully seized, contact Corey C. Davis, CPA, of Kerrville, TX. This attorney and his team provide legal guidance on tax law issues throughout Texas Hill Country. With over a decade of experience, these professionals prioritize a client-first approach. Visit their website to review their services, or call (830) 257-8800 to request a legal consultation.