Quick summary
- If your refund was taken, you should receive a notice explaining the offset amount and the agency that received it. That notice tells you where to dispute the debt. Act quickly: some dispute windows and remedies are time‑sensitive.
How TOP works (plain language)
The Treasury Offset Program (TOP) is a centralized system run by the Bureau of the Fiscal Service that lets federal and participating state agencies collect past‑due, legally enforceable debts by intercepting federal payments. When an agency (for example, a state child support office, the Department of Education, or the IRS itself) refers a debt to TOP, the system flags future federal payments to that taxpayer — most commonly tax refunds — and applies the payment toward the debt.
Common types of debts collected through TOP
- Child support arrears
- Past‑due federal income tax balances
- Defaulted federal student loans
- State tax liabilities (for states that participate)
- Unemployment overpayments and other federal agency debts
You’ll often see one of the IRS/treasury notices listed as CP‑39, CP‑49, CP‑98, or CP297C in relation to offsets; those relate to notices that explain application of refunds or intent to levy. (See related glossary pages: Treasury Offset Program (TOP), CP49 Notice: Refund Applied to Other Federal Debts, and Injured Spouse Relief.)
Step‑by‑step: What to do right now
1) Read every notice you received
The Treasury or the agency that referred the debt must send notification. That notice explains the offset amount, the creditor agency that received the money, and how to dispute or contact the creditor. If you received an “intent to offset” notice before the offset, it will include dispute instructions and a deadline — often 60 days to act on certain referral types.
2) Identify the creditor agency
The notice should name the agency that received your offset (for example: state child support enforcement, the Department of Education, or another federal agency). You must contact that agency to dispute the debt or request a refund of the offset. The IRS is usually only the payer — it may not be the creditor.
3) Gather proof and records
Collect tax returns, bank statements, court orders, student loan records, proof of prior payments, and any correspondence showing the debt is incorrect or already paid. Clear documentation speeds disputes.
4) Dispute or confirm the debt with the creditor agency
- If you believe the debt is wrong, follow the creditor agency’s dispute process. The Treasury notice will usually list how to do this. Provide copies (not originals) of supporting documents.
- If the debt is valid but you think the offset amount was misapplied, ask the creditor how the offset was calculated and to provide an account statement.
5) Contact the Treasury/Bureau of the Fiscal Service for details if needed
If notices are missing or the creditor is unhelpful, you can contact the Bureau of the Fiscal Service’s Offset Program customer service. Their site explains procedures and provides contact numbers: https://www.fiscal.treasury.gov/about-fiscal-service/operations/offset-program/
6) If the debt was an IRS tax liability, work with the IRS directly
If the offset went to satisfy a federal tax liability, contact the IRS to get an account transcript and explanation of the balance. Your IRS online account can show balances and payment history. If you cannot pay, the IRS offers options such as installment agreements or an Offer in Compromise in qualifying cases.
Special situations — Injured spouse, joint returns, and Form 8379
If you filed a joint return and your spouse has a past‑due non‑tax debt (for example, child support), the refund may be offset even if part of it belongs to the other spouse. Injured spouse relief allocates the refund to the non‑liable spouse. To claim it:
- File Form 8379 (Injured Spouse Allocation) with your original joint tax return, or
- If the refund has already been offset, file Form 8379 separately to request re‑allocation of your share.
Filing Form 8379 can take several weeks to process; see the IRS page for current instructions and processing times. (See our injured spouse glossary for more detail.)
What if you qualify for a refund after disputing the debt?
If the creditor agency verifies the debt was incorrect or agrees with your dispute, it can request the Bureau of the Fiscal Service return the offset amount. That refund is not instant — it may take several weeks to a few months for Treasury to process the return and for the IRS to reissue funds. Keep documentation of the creditor’s decision and follow up until the refund posts.
Examples that illustrate common scenarios
- Child support offset: A state child support agency refers a $5,000 arrearage to TOP. A tax refund of $1,200 is intercepted and applied to child support. The taxpayer receives a notice showing the state as the creditor; they contact the state agency for the account balance and future payment plan options.
- Student loan offset: A taxpayer in default on a federal student loan gets an $800 refund that is applied to the loan balance. The taxpayer contacts their loan servicer to ask about loan rehabilitation or consolidation to stop future offsets.
- Disputed tax payment: A taxpayer believes a previous tax bill was paid. After providing proof to the IRS, the IRS and Treasury correct the error and the offset amount is refunded after processing.
Timing and what to expect
- Pre‑offset notice: In many cases, agencies provide notice before sending a debt to TOP, and Treasury may send a notice of intent. If you get a pre‑offset notice, there may be a limited window to dispute.
- Post‑offset notice: If you did not receive a prior notice, Treasury or the creditor agency should still send a notice explaining the offset after it occurs.
- Refund of an erroneous offset: If the creditor agency agrees the debt was incorrect, the return of funds typically requires formal communication from that agency to the Bureau of the Fiscal Service. This can take several weeks to a few months.
Common mistakes and misconceptions
- “The IRS is the creditor.” Often the IRS only disbursed the refund; the money was sent to another agency through TOP.
- “I can only dispute with the IRS.” The correct first step is to dispute with the agency that was paid. The Treasury handles remittances but defers to the creditor agency on validity.
- Ignoring notices. Not reading or ignoring notices removes your best chance to timely dispute or stop an offset.
How to prevent future offsets
- Stay current on child support, loan, and tax obligations.
- If you can’t pay a tax balance, proactively contact the IRS to set up an installment agreement before the debt is referred to TOP.
- Consider reestablishing student loans in good standing (rehabilitation or consolidation) if eligible.
- If you file jointly and one spouse has non‑tax debts, consider filing Form 8379 with the return if you believe you’re an injured spouse.
Where to get authoritative help and more information
- Bureau of the Fiscal Service (Treasury Offset Program): https://www.fiscal.treasury.gov/about-fiscal-service/operations/offset-program/
- IRS — Treasury Offset Program information and account resources: https://www.irs.gov/individuals/treasury-offset-program-top
- Consumer Financial Protection Bureau — practical guidance on tax refund offsets: https://www.consumerfinance.gov/ask-cfpb/what-happens-if-the-irs-takes-my-tax-refund-to-pay-a-debt-en-1975/
Related FinHelp glossary pages
- Treasury Offset Program (TOP): https://finhelp.io/glossary/treasury-offset-program-top/
- CP49 Notice: Refund Applied to Other Federal Debts: https://finhelp.io/glossary/cp49-notice-refund-applied-to-other-federal-debts/
- Injured Spouse Relief (Form 8379): https://finhelp.io/glossary/injured-spouse-relief/
- CP39 Notice: Refund Applied to Previous Year Taxes: https://finhelp.io/glossary/cp39-notice-refund-applied-to-previous-year-taxes/
Bottom line
A refund offset is usually the result of TOP matching a federal payment to a legally enforceable past‑due debt. Read the notice, contact the agency that received the funds, gather documentation, and follow the creditor’s dispute process. If the debt is valid, work with the creditor to manage or resolve remaining obligations; if not, insist on a formal review and the return of your funds.