What to Do If Your Federal Refund Is Applied to Someone Else’s Debt or Offset in Error

Overview

A refund offset happens when the Bureau of the Fiscal Service’s Treasury Offset Program (TOP) or another federal/state agency tells the IRS to use all or part of your federal refund to pay a debt. Legitimate offsets are common, but errors happen — wrong Social Security numbers, identity theft, or incorrectly linked accounts can cause your refund to be taken for someone else’s debt. (See Treasury TOP: https://fiscal.treasury.gov/top/ and IRS guidance: https://www.irs.gov/.)

Immediate steps to take (first 48–72 hours)

1. Read the offset notice right away. The IRS or Treasury will mail a written notice that names the agency that requested the offset and usually includes contact information and a reason code. Keep that notice — it’s your starting point.
2. Don’t assume the debt is valid. Errors occur when accounts are mixed, names change, or identity theft is involved.
3. Gather documentation. Typical evidence: proof of identity (SSN card), your recent tax return, divorce decree or separation agreement, payment records showing you paid the debt, and proof of a different Social Security number if names are similar.

Who to contact and how to dispute

• Contact the agency on the offset notice first. The notice identifies the creditor agency (for example, a state child‑support agency, the Department of Education for federal student loans, or a state tax agency). That agency is often the quickest route to a review and reversal.
• If the offset was for a spouse or joint return liability, file IRS Form 8379 (Injured Spouse Allocation) to claim your portion of a joint refund (https://www.irs.gov/forms-pubs/about-form-8379). You can file Form 8379 with the original return or after you learn of the offset.
• If you believe the offset resulted from identity theft, submit IRS Form 14039 (Identity Theft Affidavit) and follow IRS identity‑theft instructions (https://www.irs.gov/identity-theft-central). Also report identity theft at IdentityTheft.gov.
• For other wrongful offsets, ask the creditor agency how to request a review or appeal. Many agencies accept written disputes and supporting documents; TOP itself posts guidance at the Bureau of the Fiscal Service (https://fiscal.treasury.gov/top/).

Forms, timelines and what to expect

• Injured spouse claims (Form 8379): If you file with the original return, processing is often faster. If filed afterward, expect a delay while the IRS calculates your share — typically several weeks to a few months.
• Agency reviews: Response times vary. Some state agencies and federal departments resolve simple errors within a few weeks; complex identity or account‑mixing cases can take longer. Keep copies of everything and follow up in writing.
• If the offset is reversed, the agency or Treasury will send you a refund or credit; timelines vary.

When to involve a tax pro or attorney

• If the debt is large, the agency denies your dispute, or the case involves identity theft and potential criminal exposure, consult a tax attorney or an enrolled agent. In my 15 years helping clients, timely professional help often speeds documentation collection and communications with agencies.

Practical tips and documentation checklist

• Keep the offset notice and any correspondence. Photocopy and scan documents.
• Prepare a one‑page cover letter summarizing the dispute: your full name, SSN (last 4 if sending by unsecured email), the tax year and amount offset, why the offset is wrong, and a numbered list of attached documents.
• If the notice lists the agency phone number, call to confirm the mailing address and dispute process, then follow up in writing.

Avoid common mistakes

• Don’t ignore the notice; many opportunities to recover funds close after deadlines.
• Don’t send original documents unless requested — send copies and retain originals.
• Don’t assume an offset for a joint return is final — file Form 8379 if appropriate.

Related resources and further reading

• Protecting your refund and understanding common offsets: Protecting Your Refund From Offset: Understanding Common Offsets (internal link: https://finhelp.io/glossary/protecting-your-refund-from-offset-understanding-common-offsets/)
• How to dispute and appeal an offset (forms, timelines, tips): Steps to Dispute an IRS Offset: Forms, Timelines, and Practical Tips (internal link: https://finhelp.io/glossary/steps-to-dispute-an-irs-offset-forms-timelines-and-practical-tips/)
• How the Treasury Offset Program works and how to challenge an offset: How the Treasury Offset Program Works and How to Challenge an Offset (internal link: https://finhelp.io/glossary/how-the-treasury-offset-program-works-and-how-to-challenge-an-offset/)

Authoritative sources

• Treasury Bureau of the Fiscal Service — Treasury Offset Program (TOP): https://fiscal.treasury.gov/top/
• IRS — Injured spouse and identity‑theft resources: https://www.irs.gov/
• Consumer Financial Protection Bureau — debt collection and government offsets: https://www.consumerfinance.gov/

Disclaimer

This article is educational only and does not substitute for personalized legal or tax advice. If your refund was offset and you believe it was an error, consider consulting a qualified tax professional, an enrolled agent, or an attorney to review your documents and represent you with the agency.