The Bureau Of The Fiscal Service (BFS), a part of the U.S. Department of the Treasury, plays a crucial role in managing government finances. One of its key responsibilities is issuing IRS tax refunds. However, BFS also administers the Treasury Offset Program (TOP), which can impact your refund if you have outstanding debts. This article explains how the Bureau of the Fiscal Service uses the TOP to offset debts against tax refunds and what you can do if you’re affected.
Bureau of the Fiscal Service: The Treasury Offset Program (TOP)
Congress authorized the BFS to operate the TOP, allowing them to reduce your tax refund (overpayment) to settle outstanding debts. These debts can include:
- Past-due child support: Unpaid child support obligations can be deducted from your refund.
- Federal agency nontax debts: Debts owed to federal agencies, excluding taxes, can be subject to offset.
- State income tax obligations: Unpaid state income taxes can also be recouped through the TOP.
- Certain unemployment compensation debts: This includes debts resulting from fraudulent unemployment compensation claims or unpaid contributions to state unemployment funds.
How the Offset Process Works
If you owe a debt that qualifies for offset, the BFS will reduce your refund to pay the debt. The remaining refund, if any, will be issued to you via check or direct deposit as you initially requested on your tax return.
The BFS will send you a notice if an offset occurs. This notice will detail:
- Original refund amount: The initial amount of your refund before any offset.
- Offset amount: The amount deducted from your refund to pay the debt.
- Receiving agency: The agency to which the payment was made.
- Agency contact information: The address and phone number of the agency receiving the payment.
Verifying and Disputing Debts
To determine if a debt has been submitted for a tax refund offset, contact the agency to which you believe you owe the debt. The BFS TOP call center can provide agency contact information. If you dispute the debt or the offset amount, contact the agency listed on the offset notice. Only contact the IRS if the refund amount on the BFS notice differs from the amount on your tax return.
You can reach the BFS TOP call center at 800-304-3107 (or TTY/TDD 800-877-8339), Monday through Friday, 7:30 a.m. to 5 p.m. CST.
Protecting Your Refund: The Injured Spouse Claim
If you filed a joint tax return and your spouse owes the debt subject to offset, you might be eligible to reclaim your portion of the refund. You can do this by filing Form 8379, Injured Spouse Allocation.
You can file Form 8379:
- With your original or amended joint tax return: File Form 8379 alongside Form 1040, Form 1040-SR, or Form 1040-X. Write “Injured Spouse” on the top left corner of the first page of your return.
- Separately after notification of an offset: You can file Form 8379 independently if you’ve already received an offset notice.
Processing times vary depending on how you file. Filing with your original return may take 11-14 weeks. Filing Form 8379 separately takes approximately eight weeks.
When filing Form 8379 separately, ensure you include both spouses’ taxpayer identification numbers, your signature, and required supporting documents like Forms W-2, W-2G, and any 1099s showing federal income tax withholding. Send the form to the IRS Service Center where you filed your original return.
Conclusion: Bureau of the Fiscal Service’s Role in Debt Collection
The Bureau of the Fiscal Service plays a critical role in ensuring financial accountability by facilitating the collection of outstanding debts through the Treasury Offset Program. Understanding the program and your rights can help you navigate the process and protect your tax refund. If you believe you may be subject to an offset or if you’re an injured spouse, contact the BFS or the IRS for assistance.
