Quick overview

An IRS refund offset happens when your federal refund is applied to another debt—federal tax, past-due child support, federal student loans, or state debts—without your immediate consent. Disputing that offset means proving the offset is incorrect, that the debt is invalid, or that part of the refund belongs to an “injured spouse.” This article walks through the forms you’ll need, who to contact, expected timelines, and practical steps I use in practice to increase the chances of a successful dispute.

(Authoritative resources: IRS pages on Injured Spouse and Offsets; Bureau of the Fiscal Service/Treasury Offset Program; U.S. Dept. of Education for student loan offsets.)

Who handles refunds and offsets and why it matters

There are three common players:

  • The IRS — processes tax returns and applies refunds. The IRS may perform offsets for past-due federal taxes and some other federal debts.
  • The Bureau of the Fiscal Service (Treasury) — operates the Treasury Offset Program (TOP) that applies federal payments (including tax refunds) to debts referred by federal and state agencies.
  • The creditor agency — the agency that referred the debt (for example, the Department of Education for federal student loans, state child support agency, or other federal agencies).

Understanding which agency placed the offset is essential because your first call and documentation should usually go to that creditor agency, not the IRS. See more on how TOP works and what to expect: https://finhelp.io/glossary/how-the-treasury-offset-program-works-and-how-to-challenge-an-offset/.

Step-by-step: How to dispute an IRS offset

  1. Read your offset notice immediately
  • You should receive a Notice of Refund Offset (example: CP49, or a notice from Treasury) explaining the offset, the referring agency, the amount taken, and contact information for the creditor agency.
  • Note deadlines (some disputes have short administrative deadlines) and the agency named on the notice.
  1. Identify the correct remedy
  • If you filed a joint return and only one spouse owes the debt, file Form 8379, Injured Spouse Allocation (instructions and filing options at https://finhelp.io/glossary/irs-form-8379-injured-spouse-allocation/ and on the IRS website). An injured spouse claim allocates the portion of the joint refund that belongs to the innocent spouse.
  • If the debt is the result of an error by the creditor agency (for example, debt was already paid or incorrectly reported), contact the creditor agency first and file the agency’s dispute process (Department of Education for student loans, state child support office for child support, etc.).
  • For collection due process or levy disputes unrelated to TOP, other IRS appeal procedures may apply.
  1. Gather and prepare supporting documentation
  • Proof of payment or settlement agreements for the disputed debt
  • Bank statements, cancelled checks, or payoff letters
  • Copies of tax returns, W-2s, 1099s, or other documents proving income allocation (important for injured spouse claims)
  • Copies of the offset notice and any prior letters with dates and names
  1. Complete the correct forms and send them properly
  • Form 8379 (Injured Spouse Allocation): can be filed with your original return or as a standalone claim after the return is filed. Filing it with the original return may delay processing; filing it separately (per IRS instructions) can speed the return to the injured spouse if only one spouse is entitled to the refund portion. (IRS Form 8379 instructions: https://www.irs.gov/forms-pubs/about-form-8379 and FinHelp reference: https://finhelp.io/glossary/irs-form-8379-injured-spouse-allocation/)
  • For disputes of non-tax debts referred to TOP, follow the creditor agency’s dispute process. For federal student loans, see Department of Education appeal and dispute channels; for child support, contact the state child support office.
  • If the offset was applied in error and you simply need the IRS to reissue a refunded portion after a corrected TOP response, follow the reissue instructions on the IRS notice.
  1. Send documents using tracked delivery and retain copies
  • Use certified mail or another tracked delivery method and keep proof of mailing. Upload or fax documents if the creditor agency or IRS provides secure fax/e-file options.
  • Never send originals unless specifically requested.
  1. Follow up and track timelines
  • Many injured spouse and offset disputes require weeks to months of processing. Typical ranges:
  • Form 8379: often processed within 8–14 weeks, though complex cases can take longer (check current IRS guidance at irs.gov).
  • TOP disputes: response time depends on the creditor agency. Some agencies respond in 30–90 days. Treasury’s TOP operations page lists agency contacts and timelines.
  • Make a calendar reminder to follow up at 6–8 weeks if you haven’t received a response. Keep a log of phone calls (date, time, name, badge number, summary) and reference numbers.
  1. If denied, use agency appeals and IRS appeal rights
  • If the creditor agency confirms the debt but you still dispute liability, ask for an administrative review or appeal within that agency. For Department of Education matters, follow its administrative appeal process.
  • If your injured spouse claim is rejected by the IRS, you may have appeal rights documented in the IRS denial letter.
  • For collection-related actions outside TOP, IRS Collection Due Process and Collection Appeals may apply.

Common scenarios and specific guidance

  • Injured spouse on a joint return: File Form 8379. If you file it with your return, the IRS may delay issuing any refund until the injured spouse claim is processed. To avoid delaying the entire refund, you can file Form 8379 after the return is filed following IRS instructions (filing separately often speeds the innocent spouse’s portion).

  • Student loans: If a refund was offset to pay a federal student loan, contact the Department of Education first. If the loan has been paid, obtain a payoff letter and submit it to the Department of Education and to TOP/Treasury.

  • Child support: Contact your state child support enforcement agency. They control whether the offset is valid and have their own review and appeal steps.

  • Debts reported in error by a third-party agency: Obtain written confirmation of the error from that agency and forward it to Treasury/IRS. If necessary, get help from your congressional representative’s office to expedite a response in urgent cases.

Practical tips I use with clients

  • Start with the notice: The creditor agency named on the notice is usually the right first contact. Many taxpayers waste time calling the IRS when the creditor can resolve the issue.
  • Avoid filing an injured spouse claim at the wrong time. If you file Form 8379 with your original return and the IRS delays the refund, you may be worse off. Consider filing Form 8379 only after the refund is issued if timing is critical.
  • Use clear, labeled exhibits. Number documents and include a short cover letter describing why the offset is wrong and the precise relief requested.
  • Keep a dispute packet for every offset: include a copy of the original offset notice, payoff statements, identity documents, and all correspondence.
  • Consider involving a tax professional or attorney for complex matters (for example, disputed liability, identity theft, or large sums). A professional can often accelerate agency responses and prepare appeals.

Timelines, realistic expectations, and red flags

  • Expect weeks to months. Administrative reviews across agencies can take 30–120 days depending on complexity and the referring agency’s workload.
  • Red flags a dispute is not progressing: repeated requests for the same documents, unclear contact information, or inconsistent answers between the creditor agency and Treasury. If you hit these, escalate to supervisors and document escalation attempts.
  • If you’re not getting a timely response, you can contact the Taxpayer Advocate Service (independent within the IRS) for help with systemic delays (https://www.taxpayeradvocate.irs.gov).

Appeals and legal remedies

  • Administrative appeals: Most agencies have an internal appeal process. Follow the denial letter instructions for appeals and note strict deadlines.
  • Innocent spouse relief: Different from injured spouse allocation, Innocent Spouse (Form 8857) can remove joint liability for tax if you meet specific tests — it is not used to allocate an offset of a refund for current-year credits (see IRS guidance on innocent spouse relief).
  • Lawsuits: As a last resort, taxpayers may pursue litigation in federal court, but that is time-consuming and costly. Consult a tax attorney before initiating litigation.

Useful links and references

Common mistakes to avoid

  • Waiting to act. The moment you receive the notice, start gathering documents.
  • Sending originals. Always send copies unless an agency explicitly asks for originals.
  • Failing to contact the creditor agency first. Many offsets can be reversed faster by the creditor than by the IRS.

Final notes and disclaimer

I’ve managed many offset disputes in practice; the most successful outcomes come from early, well-documented, and targeted actions: identify the creditor, send clear evidence, and use the correct form (Form 8379 for injured spouse situations). If you’re unsure which path applies, consult a CPA or tax attorney.

This article is educational and does not substitute for personalized tax or legal advice. For case-specific guidance, consult a licensed tax professional or attorney.

(Authority: IRS, Bureau of the Fiscal Service/Treasury, Department of Education, Taxpayer Advocate Service.)