# Tax refund offset: why part or all of your refund was taken

Source: https://taxrefunddesk.com/reduced-refunds
Publisher: Tax Refund Desk (taxrefunddesk.com), independent editorial site
Topic: Offsets and Reduced Refunds
Last updated: 2026-10-20

> A tax refund offset happens when the government uses some or all of your federal refund to pay a past-due debt, such as child support, a defaulted federal loan, state income tax or a state unemployment compensation debt. The Bureau of the Fiscal Service mails a notice naming the agency that got the money. You dispute the debt with that agency, not the IRS.

## Key facts

- Who takes the money: Bureau of the Fiscal Service, through the Treasury Offset Program (TOP)
- Federal tax debts: Applied by the IRS first; explained on a CP49 notice
- Share of a tax refund that can be taken: Up to 100% for non-tax, child support and state debts
- Advance warning required: Creditor agency letter at least 60 days before referral
- Where to dispute: The agency named on the offset notice
- Joint filers not liable for the debt: Form 8379, Injured Spouse Allocation

## What does a tax refund offset mean?

A tax refund offset is the legal term for money withheld from your federal refund to pay a debt you owe to another government agency. The IRS still processes your return and calculates the full refund. Before the payment reaches you, the Treasury checks your name and Social Security number against a database of delinquent debts and keeps whatever is needed to pay the match.

If the debt is smaller than the refund, you receive the rest by your chosen method. If the debt is equal to or larger than the refund, the whole refund goes to the creditor and nothing arrives. Either way, the reduction is not an IRS penalty and does not mean your return was wrong.

The matching is done by the Bureau of the Fiscal Service (BFS), a Treasury bureau that runs the [Treasury Offset Program](https://taxrefunddesk.com/reduced-refunds/treasury-offset-program). TOP recovered more than $3.8 billion in federal and state delinquent debts in fiscal year 2024, according to [BFS](https://fiscal.treasury.gov/debt-management/treasury-offset-program-top).

## Debts that can take a federal refund

Federal law lists the debts that can reduce an overpayment and sets the order they are paid in. The IRS applies your own unpaid federal tax first. Anything left then goes through TOP for the other debt types, in the order set by 26 U.S.C. 6402.

| Order | Debt type | Who is owed | Notice you get |
| --- | --- | --- | --- |
| 1 | Unpaid federal income tax from another year | IRS | CP49 from the IRS |
| 2 | Past-due child support | State child support agency | BFS offset notice |
| 3 | Federal non-tax debt, such as a defaulted federal student loan or a benefit overpayment | The federal agency, or Treasury Cross-Servicing | BFS offset notice |
| 4 | State income tax debt | State revenue department | BFS offset notice |
| 5 | Certain state unemployment compensation debts | State workforce agency | BFS offset notice |

Order in which a federal refund pays debts

Debts must be delinquent, legally enforceable and at least $25 to be in TOP, per the BFS program fact sheet. Debts in bankruptcy, forbearance or under appeal are not eligible. For a federal tax refund, TOP can take up to 100% of the payment for non-tax debts, child support and state debts.

### Each debt type has its own page

- Child support: see [tax refund offset for child support](https://taxrefunddesk.com/reduced-refunds/refund-offset-child-support) for state thresholds, joint-return holds and who to call.
- Federal student loans: collections through TOP were paused in January 2026. Read the [student loan offset status](https://taxrefunddesk.com/reduced-refunds/student-loan-tax-refund-offset) before the 2027 season.
- State tax debts: a state can also keep its own state refund. See [whether the IRS can take a state refund](https://taxrefunddesk.com/reduced-refunds/irs-take-state-refund).

## Tax refund offset meaning on Where's My Refund and your transcript

Where's My Refund follows your return through Return Received, Refund Approved and Refund Sent. The offset happens at the payment stage, after the IRS has approved the refund, so the tool is not where you learn which agency took the money or why.

Your IRS account transcript can confirm what happened. A TC 898 entry is a BFS offset that reduces the refund, and a TC 826 shows an overpayment moved to another IRS tax balance, according to IRS Document 6209. A later TC 766 carrying the same offset trace number means the offset was reversed. The account transcript is free in your IRS Individual Online Account.

## What the refund offset notice shows

BFS mails a letter when it takes money from a payment. The IRS says the notice lists the original refund amount, the amount offset, and the agency that received the money. The BFS fact sheet adds that TOP notices include the offset date and a contact point at the creditor agency.

Keep this letter with your tax records. It is the only document that names the agency, and you will need it for a dispute, an [injured spouse claim](https://taxrefunddesk.com/reduced-refunds/injured-spouse-form-8379), or a later request for a [refund offset reversal](https://taxrefunddesk.com/reduced-refunds/refund-offset-reversal).

| Line | Amount |
| --- | --- |
| Refund approved by the IRS | $3,200 |
| Past-due child support in TOP | $1,150 |
| Amount offset and sent to the state | $1,150 |
| Amount deposited to your account | $2,050 |

Worked example of an offset (illustrative figures)

> **Federal tax debts are handled differently:** If the IRS used your refund for your own unpaid federal tax, you get a CP49 notice from the IRS, not a BFS letter. Any leftover refund should follow within about 3 weeks unless other debts exist.

## Who to contact about an offset

Contact the agency that received the money. BFS and the IRS can confirm that an offset happened, but neither can change the debt, refund the offset or set up a payment plan for it. Only the creditor agency can review whether you owe the balance.

If you lost the notice or never received it, the TOP automated line at 800-304-3107 (TTY 800-877-8339) can tell you which agency referred a debt. The IRS lists it on [Tax Topic 203](https://www.irs.gov/taxtopics/tc203) with hours of Monday to Friday, 7:30 a.m. to 5 p.m. Central.

1. Find the agency name and phone number on the BFS notice.
2. Ask the agency for the debt balance, the original notice of intent to offset, and how to request a review.
3. If you already paid the debt or it is not yours, send proof in writing and keep copies.
4. If the agency agrees the offset was wrong, it, not the IRS, returns the money.
5. If you filed jointly and the debt belongs only to your spouse, file Form 8379 instead of disputing.

## Can you stop or get back a refund offset

You can only stop a future offset before the refund is issued, and only through the creditor agency. Under BFS rules, a debt stays in the TOP database until that agency tells TOP to stop collecting, which happens when the debt is paid, placed under a bankruptcy stay, or otherwise resolved.

Before any debt reaches TOP, the agency must mail you a letter at least 60 days in advance. That letter explains the debt and your rights to inspect records, request a review and set up repayment. Acting during that window is the most reliable way to keep your next refund.

Courts cannot block these offsets. Section 6402(g) of the tax code bars federal court suits to restrain or review a reduction for child support, federal agency debts, state tax or unemployment debts. Your recourse is the agency's own review process.

## Reduced refunds that are not offsets

Not every smaller refund is a debt offset. If the IRS corrected your return, for example by removing a credit or fixing a math error, it mails a math error or adjustment notice instead. A [CP12 notice](https://taxrefunddesk.com/reduced-refunds/irs-cp12-notice) means the refund changed after corrections, and you generally have 60 days to disagree.

Not sure which kind of reduction you have? Start with our step-by-step guide to [finding out why your refund was reduced](https://taxrefunddesk.com/reduced-refunds/why-was-tax-refund-reduced), which compares the letters, transcript entries and deadlines for each case.

## Common questions

### Why was my refund offset?

Your name and Social Security number matched a delinquent debt in the Treasury Offset Program, such as past-due child support, a defaulted federal loan or a state tax bill. The creditor agency referred the debt after mailing you a notice of intent. The BFS letter names that agency.

### How do I know if I have a refund offset before I file?

Look for a notice of intent to offset from any federal or state agency, which must arrive at least 60 days before a debt is referred. You can also call the TOP automated line to ask whether a debt is on file under your Social Security number.

### Does a refund offset notice come from the IRS?

No. For child support, federal non-tax, state tax and unemployment debts, the Bureau of the Fiscal Service mails the notice. Only offsets for your own federal tax debt come from the IRS, on a CP49.

### Can a tax refund offset take my whole refund?

Yes. For federal tax refunds, TOP can take up to 100% of the payment to cover non-tax debts, child support and state debts. It only takes up to the debt balance, so any surplus is still paid to you.

### Can I get an offset refund back?

Only if the creditor agency agrees the debt was wrong, already paid, or not yours, or if you are an injured spouse on a joint return. The agency refunds the money, not the IRS.

### How long does it take for the agency to receive an offset?

BFS says there can be a lag of two weeks or more between the offset and the creditor agency getting and posting the money. For child support, funds pass through the federal Office of Child Support Services before reaching the state.

## Sources

- [Tax Topic 203, Reduced refund](https://www.irs.gov/taxtopics/tc203)
- [BFS, How TOP works](https://fiscal.treasury.gov/debt-management/treasury-offset-program-top/how-top-works)
- [BFS, TOP program rules fact sheet](https://fiscal.treasury.gov/system/files/files/top/TOP-rules-reqs-fact-sheet.pdf)
- [26 U.S.C. 6402, Authority to make credits or refunds](https://www.law.cornell.edu/uscode/text/26/6402)
- [Understanding your CP49 notice](https://www.irs.gov/individuals/understanding-your-cp49-notice)