Protect Your Tax Refund: Understanding and Avoiding Treasury Offset Program Intercepts

If you owe certain government debts, your tax refund may be in danger of being intercepted via the Treasury Offset Program. The Treasury Offset Program is a way for federal and state agencies to collect on debts owed to them. Past-due child support, unpaid state income tax obligations or federal non-tax debts are all reasons why your income tax refund might be confiscated by the Financial Management Service -- the government agency responsible for managing the Treasury Offset Program.

Step 1

Call the FMS at 800-304-3107 before you file your taxes and ask whether any agencies have requested a treasury offset. The FMS will be able to give you the name of any agency listed on your account as having requested a tax intercept.

Step 2

Repay your debt. If you can't afford to pay the debt in full, consider taking out a loan where you can make payments over time.

Step 3

Agree to a payment plan with the agency you owe money to. Some agencies may work with you to establish an acceptable payment plan. For example, the Maryland Department of Human Resources -- the agency responsible for allocating federal food stamp benefits in Maryland -- will work with you if you've had an overpayment of benefits.

Step 4

File for bankruptcy. This is a drastic step and will not erase certain debts, such as child support or student loans. If you are considering bankruptcy, contact a lawyer to find out how bankruptcy would affect your debt.

Warning

If your debt was submitted to the Treasury Offset Program, the FMS will take the amount needed to pay your debt and then send you a check or issue a direct deposit for the remainder. Depending on the size of your debt, this could result in your entire refund being taken.