Was your IRS refund taken to pay a past IRS debt?
If your IRS refund was taken for a past IRS debt that you disagree with, you have 2 years to make a claim to get it back! The IRS generally gives people two years from the date a payment to an IRS debt is made to claim a refund of that payment.
That means that if your 2020 IRS refund was taken, or will be taken, for a past IRS debt that you dispute, you have two years -- from the date that the refund is applied to the past debt -- to ask the IRS to return it to you.
If your 2020 refund was issued before April 15th, it is considered applied to the past debt on that earlier date. The IRS usually mails you a notice (a CP49) saying that they applied your refund to a debt for a past year, and the date of that notice is usually the date that starts the two year time period for your claim.
But, if your 2020 tax refund was issued after April 15th of this year, April 15th is still the date on which it was considered applied to the past debt, so your claim would have to be filed by April 15, 2023.
There are various reasons why you might disagree with a past IRS debt.
- It could be because after you got a refund for a past year the IRS audited you, and you were not able to provide the proof that the IRS wanted in time. Maybe the IRS denied your claim for a dependent and now say that you owe some or all of that old refund back to them, and that’s why they are taking this year’s refund.
- It could be that you owe because you were an employee but you were misclassified as an independent contractor and given a 1099, and your tax return was prepared as if you were self-employed and owed self-employment tax, which is more than what employees pay.
- It could be that you owe because you had some debt canceled, which the IRS considers income, and you or your tax preparer didn’t know that you don’t have to pay tax on some or all of that “cancelled-debt income” if your total debts were more than all of your savings and assets, or if the debt had been discharged in bankruptcy, or in some cases if the cancelled debt was the mortgage on your home.
- It could be because you were the victim of Identity Theft, or because your tax preparer made a mistake or did something wrong which resulted in a debt. Or for any number of other reasons.
You can claim a refund by filing an Amended Return (Form 1040X) for the year that the IRS said you owed. Or, if you owe because you were audited, and even after your 2020 refund was taken you still owe, then you can claim a refund by filing a Request for Audit Reconsideration, but you’ll need to have some new proof that you didn’t already send to them.
If your 2020 refund was taken for a past IRS debt that you don’t agree with, you can contact us to see if we can help you get it back!