Will the IRS Take My Refund if I owe back taxes?

Absolutely, if you are not in good standing with the IRS they can take or withhold your tax refund.

What does it take to be in “good standing” with the IRS? You must be in compliance and current with your tax filing and have no tax balance.

Listed below are possible reasons why the IRS is withholding or taking your tax return this year:

1. You owe back taxes.

What are back taxes? Simply, “back taxes” are taxes owed for a specific tax year that is not paid by the tax due date. Basically, if a taxpayer didn’t pay their yearly taxes, they will owe back taxes.

If you owe back taxes the IRS and local state have the authority to apply a tax refund towards any tax balance and the IRS or state will continue to apply your tax returns until the balance has been completely paid off.

What if I’m on an IRS Installment Agreement? The IRS will continue to levy your tax return until the balance is fully paid off.

2. The IRS or local state is questioning the amount of unemployment you received.

The IRS and local state departments may work in sync to collect a tax balance they believe you owe.

If the IRS and local state tax department concludes that the taxpayer received more unemployment benefits than you should have collected due to either failure to accurately report earnings or fraud. The IRS or local state may diminish your refund by the amount questioned.

3. Veracity of tax return in question.

The IRS may hold your tax return if they have a reasonable doubt about the accuracy of your tax return.

This commonly occurs when the IRS audits your taxes and if audited the IRS is authorized to hold your income tax refund until they conclude and verify the accuracy upon audit completion.

Immediately upon completion, the IRS will commonly discharge your income tax refund if an audit doesn’t determine a tax repayment.

4. You are delinquent on your student loan payment.

The IRS has the ability to hold your tax refund and apply it towards a past-due student loan balance.

The current United States Administration has extended the student loan re-payments freeze and is set to expire after August 31, 2022. However, if payments were missed pre-pandemic, your income tax refund may remain with the IRS.

5. You are behind in child support or alimony payments.

If you still haven’t received your tax refund it may be because you are not in compliance with your alimony or child support status/payments.

The IRS and local state may work together and refuse your tax refund due to failure to cover past-due child support or alimony balance.

Am I able to restore my “good standing” with the IRS?

Yes, Firstly, you must research your account with the IRS and determine if the IRS is still withholding your tax return. If the IRS is claiming that you are not in compliance with their standards then you may be at risk of accruing compound interest and penalties which may cause your tax debt to snowball uncontrollably.

Qualifying for the “Fresh Start Program” on your own may be difficult if you seek to achieve proper tax relief. However, your chances of qualification have already strengthened if a team of tax relief experts provides you with assistance in this manner.