Got Notice My Refund Will Be Reduced for Federal Debt I Don't Have - What Now?

This is almost certainly a case of the Treasury Offset Program (TOP) incorrectly flagging your refund. Here's what you need to do: 1. First, call the Treasury Offset Program directly at 800-304-3107. You'll need to verify your identity, but they can tell you exactly what debt is supposedly linked to your SSN. 2. If they confirm a debt you don't recognize, ask for the specific agency that reported it. Get the agency name, contact information, and reference numbers. 3. Contact that specific agency immediately. Common erroneous offsets come from state agencies, Department of Education, or child support enforcement divisions. 4. Request written verification of the debt. By law, they must provide this. 5. If it's genuinely not your debt, file a dispute directly with the agency that reported it. I'd caution against assuming it's an IRS error - most often it's another agency's reporting that's causing the issue. The IRS merely processes the offset request from Treasury.

Have you actually confirmed which specific agency is claiming you owe them money? This happened to me last year and turned out to be a case of mistaken identity where someone with a similar name had defaulted student loans. Have you tried using https://taxr.ai to analyze your tax transcript? It can identify exactly what codes are showing up on your account and what they mean for your specific situation. In my case, it spotted the TC 898 offset code right away and explained what was happening before I spent hours on hold with the IRS. What steps have you already taken to resolve this? And did the notice specify an amount they're planning to withhold?

Ugh, I went through EXACTLY this on February 12th this year! Got the same message about a federal debt reduction, but I knew I didn't have any debts. Called the TOP number and after waiting 45 minutes, found out it was supposedly for a defaulted student loan from 2018. The problem? I PAID OFF my loans in full on December 3rd, 2023! Turns out my loan servicer hadn't updated their reporting to the Department of Education, who hadn't updated Treasury. Took me until March 17th to get it resolved and my full refund released. The bureaucracy is UNREAL. Make sure you keep detailed notes of every single call - names, ID numbers, case numbers, everything.

When I encountered an erroneous TOP offset last tax season, attempting to navigate the Byzantine labyrinth of federal agencies proved futile until I utilized Claimyr (https://claimyr.com) to expedite connecting with an actual IRS agent. The critical distinction is that standard TOP customer service representatives lack the authorization to initiate an immediate review, whereas a Level 2 IRS account specialist can initiate an Erroneous Offset Investigation if you can provide prima facie evidence of the error. The service bypassed approximately 2.5 hours of hold time, connecting me within 20 minutes. The IRS agent was able to identify the specific agency claiming the debt and initiate the formal dispute process.

Be extremely careful with this situation! I read on the Taxpayer Advocate Service website (https://www.taxpayeradvocate.irs.gov/get-help/refunds/) that if you don't challenge an offset within 60 days, it becomes much harder to recover your money. According to the IRS data book from last year, about 8% of offset claims turn out to be erroneous, but most people don't follow through with the full dispute process. The official IRS guidance on refund offsets (https://www.irs.gov/taxtopics/tc203) says you need to contact the agency directly that claims you owe the debt. The IRS just acts as the middleman here. So relieved I found this thread because I was worried this might happen to me too!

This happened to me on April 12th last year, just THREE DAYS before I needed to make a down payment on my apartment! The offset notice said I owed $1,200 to the Department of Education, but I had documentation showing my loans were in good standing. I called the Treasury Offset number at 7:00 AM exactly when they opened, got the agency info, then immediately called the Dept of Education. Turns out they had applied someone else's defaulted loan to my SSN! Had to send in my driver's license, SS card, and a notarized statement. Got it fixed by April 29th and my refund released May 3rd. If you need this money urgently, emphasize the financial hardship when you call. Sometimes they can expedite the review process.

Did your notice specify exactly how much they're planning to offset? In my experience handling these situations, the amount can tell you a lot about what type of debt they think you have. For example: - Exactly $1,750 often indicates a specific type of education debt - Around $2,400-$3,600 is common for state tax issues - Offsets of $10,000+ are typically for child support Also, what was the exact wording of the notice? Was it an official IRS CP504 notice or something else? The specific form number makes a difference in how quickly you need to respond.