Tax Refund Offset – Tax Topic 203

offsetDo you have a tax refund offset or Tax Topic 203 appearing when you check the WMR?

Topic 203 – Refund Offsets for Unpaid Child Support, Certain Federal and State Debts, and Unemployment Compensation Debts

Recently the topic of a tax refund offset came up in our forum.  There seems to be a lot of questions about what the IRS can take from a tax refund, and how it all works.  So, after doing a little research for some answers, here’s what we’ve come up with so far. First, the department that actually handles the offsets is Financial Management Services (FMS).

FMS is responsible for collecting delinquent debts and forwarding them to the agency to which they are owed. In most cases, FMS will send a letter prior to the offset to notify you that your refund is in danger of being offset. The letter includes both the name and Social Security number of the taxpayer for which the refund is being offset, as well as the organization to which the offset is being forwarded and the amount of the offset. If you do not receive the letter, however, call FMS to inquire as to the status of your income tax.

The phone number you should use to find out if you have an offset is: 800-304-3107.  I called this number myself just to see how it works.  Basically it will ask you for your social security number and run a search to see if there are any debts or offsets against you.  The message also states that the hotline is updated daily. If you’d like more information on the FMS, this is the link that was used for the above information: How to Check Your Income Tax Offset Refund Amount.

So, now that we have a better understand of who collects any offsets, you may be wondering what exactly could be taken from your tax refund.  The following list of was found here:

What Debts Can Be Taken From Your Federal Taxes?

Federal Debts The IRS pays itself first, so federal tax debts take precedence over other types of debts when it comes to offsetting your tax refund. If you failed to pay taxes due in previous years or you owe money to the IRS for any reason, the agency will partially or fully offset your refund to collect these funds.

Non-tax Federal Debts If you are up-to-date on your federal taxes, but you owe money to any other federal agency, the IRS can take money from your tax refund to satisfy these debts. Federal agency non-tax debts include past due or defaulted student loan payments, payments on HUD loans and any fines, penalties or fees due to any federal department. If you’ve accepted overpayments or fraudulent payments on Social Security or disability benefits or other federal insurance programs, these debts may also cause your refund amount to be reduced.

Child Support Any past-due child support payments may be taken out of your tax refund. Typically, the federal tax offset programs kicks in if you owe more than $150 in state-assigned tax support payments or more than $500 in child support payments to an individual, such as your child’s custodial parent. If the amount of the past due child support exceeds your
refund, the IRS may continue to garnish your refund for multiple years until the debt has been satisfied.

State Taxes If you owe state income taxes to any state, whether you still live there or not, the IRS can offset your refund to take care of these debts. The government can claim this money even if you have a payment plan in place with the state that you owe money
to.

Unemployment Compensation The IRS is also authorized to deduct funds from your tax refund check to cover fraudulent or unpaid unemployment compensation. For example, if you
once owned a business and failed to pay your unemployment insurance as required by the law, the government may withhold your refund to cover these missed or late payments. Even if you were never an employer, but you accepted fraudulent or double worker’s compensation payments as an employee or former employee, your refund may be adjusted to cover these payments. Pleased keep in mind that this list may not include everything, but in general gives a pretty good idea of the types of debts that can be taken.  If you have any concerns that your tax refund may be offset for a debt, your best bet is to call the number above for
FMS and see.

Best of luck to everyone this year!

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What Others Are Saying

  1. Waldemar Pagan

    My tax refund is going to be offset next year due to Unemployment over payments. Can I send a financial hardship letter? If yes, what is the process?

    Thanks
    [email protected]

    Reply
  2. [email protected]

    I owe back pay to the unemployment office in Albuquerque N.M. if i call to make arrangements to pay back in payments will they still keep my income taxes refund?

    Reply
  3. Curious mom

    Daughter dad is arrears of over $9,000.00 on child support. He said he filed in November, 2013 for the early refund loan. He stated HR Block advised him that since he was behind on child support, he wasn’t able to get the loan. He received a letter from IRS stating they intercept his tax’s due to child support. OK, this was in November, 2013, now it’s June 2014 (7 months later) still haven’t received no funds from the IRS. Just curious, why is it taking so long to get the refund?

    Reply
  4. Desiree

    We filed our taxes joint and married on Jan 31,14 along with an injured spouse form. My husband has an offset due to back child support/arrears. However we haven’t received a letter of offset from the FMS and the IRS website just shows our refund is still processing. IT is now week 13!! We can’t get any answers and only get automated calls. Anyone know what’s going on?

    Reply
  5. needmyrefund

    Help!! Filed on 2/22/2014, was accepted on 2/22/14 and status is still stating as accepted. It’s something wrong?? please, someone help. Thanks

    Reply
  6. crystal

    It’s stated the day I would get my money having this on my where’s my refund would it shyly when I get my money

    Reply
  7. Avega

    I called the department of treasury and it said it could be offset How do I know what’s going on if it could be? Any help would be awesome. Thank you!

    Reply
  8. Single momma

    If the offset number states there is no debt applied to my ss# and has been saying this should I get my refund. I’m asking because I’m recently divorced and found out my ex lied about a second job when he did our taxes in2012. I already filed or would have file injured. I’m in desperate need of my refund this I have 2 boys and just now recovering from a nasty divorce

    Reply
  9. parislovesmoney

    my refund says it will be offset. when I call the hotline it say 4800 was applied to my debt.. wheres the rest of my refund some one please respond!!!!!

    Reply
  10. Rae

    @Renee: Did you ever get an answer for this. My Srate tax gpt taken away because my Husband owed a traffic ticket he gpt within our state. He owes from another state the TOP number doesn’t listed any amounts due from either me or my Husband so I am hoping that they don’t take it. IRS approved my refund and said I should get it by the 20th. Im praying you get yours.

    Reply
  11. Renee

    Up to what point in your refund status can an offset be put on? Say the website says my refund is approved and I have a DD, can an offset be put on still? Currently there is no sign that I have an offset on the web or the 1800.. I just want to know when I can rest easy. Especially because it says it’s updated daily.

    Reply
  12. Mary


    @DEA There have been many ppl post they were told they have check coming, some say its because your account or routing numbers didn’t match, others say it because refund amount to large for a DD, but really don’t know a definite answer as to why it changed to a paper check

    Reply

  13. NCMom

    @wayne: If you haven’t contacted your loan holder yet, do so, to apply for a claim of financial hardship. They have a form they’ll send you, and you have to send proof of hardship (eviction notice, late utility bills, medical bills, etc.), then it’s up to them to approve your claim or not. I just tried to get the form from NYS HESC, but because of the storm, no one is answering calls. If you don’t know who your loan holder is, you can call the Federal Student Aid info center at 800-433-3243 or 800-730-8913 (TDD).

    Reply
  14. Cheetara

    Dang, i wont be getting anything back then.. oh well. Thank you for responding so fast, i appreciate it..

    Reply
  15. Michele


    @Cheetara: Most likely they will take what you owe and if there is any of your refund left over they will forward that amount to you. If your offset is more than your refund they will keep your entire refund.

    Reply
  16. Cheetara

    I too recieved tax topic 203, i owe for a school loan, on the check my refund it says my return as been approved. I have not recieved the letter in the mail stating they are taking it. But since it sat return approved and tax topic which one is it. Will i recieve them or be taken to clear my debt?? Help!! Thank you.

    Reply
  17. Colleen

    how much do they usually take when they offset ur refund because of a student loan? the dept of ed told me sometimes the irs takes all of it but sometimes only a portion i owe 9k but like 4700 of my loan is deferred….she told me the deferrment doesnt matter cause even in deferrment they still take ur taxes is this true?

    Reply
  18. melissa

    E-filed 1/26 accepted 1/29…still on bar one on wmr where friends filed later got their dd…i do have a small balance of a few hundred i owe which i know will come off our refund. Should i be worried that we havent seen progress?

    Reply
  19. lowill

    I have my tax return transcript and I need to know will it show a debt I owe the IRS? If so, where would I find it. Also can you tell on the tax return transcript when you will get your funds?

    Reply
  20. Nikki B

    The IRS accepted my return on 1/26/14 and I’ve yet to receive an update advising my refund has been approved. I filed the education credit for my son and daughter and wonder if this is delaying my refund. The IRS won’t answer any questions and said the only thing I can do is wait. I don’t owe any delinquent taxes. Can anyone shed light on why my refund is delayed?

    Reply
  21. david j

    i filed my taxes on january 15 they were accepted jan 26 the where my refund site said my bank would be deposited on feb 6.. well nothing happened and i got up today and checked to wheres my refund status and now it says there is a delay and to call i called and it says they are closed opens from 7-7 well its 7:07 .

    Reply
  22. wayne

    @mommy3: i called the number and they said i wasn’t scheduled for offset i made a hardship payment arrangement with the dept of ed collection agency to further secure that the offset would not happen later 10 days later to today i was scheduled to receive my return to help my get back on my feet …i got a notice instead that 100% was taken by the dept of ed that assured me it wouldn’t be taken…i’m destroyed right now and i don’t know what to do now

    Reply
  23. confused

    Its feb 6 and i dont owe still no,word on my refund why do they set a date and still nothing mailed

    Reply
  24. nisa

    When do I get my refund after receiving the FMS letter, and they already taken the money out from my federal from what I’ve owned. It’s said that I was scheduled to get my refund money in my bank by Feb. 6, 2014. Help!

    Reply
  25. dirty 3rd

    so i get a 2/10 ddd today and a topic 203

    how do i know how much will be taken from my tax return or will they take all?

    the offset is from us dept of edu

    no amount given

    Reply