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How to Stop a Tax Refund Offset Due to Hardship

Many taxpayers are not aware of the fact that the federal government has a Treasury Offset Program that lets any federal agency or state recover a debt by taking hold of a taxpayer's tax refund. This typically results in the taxpayer's return being wholly or partially garnished, as well as a significant time delay in the refund being processed. The good news is that taxpayers who find out early that their refund is in danger of being garnished can take several steps to halt the garnishment in its tracks. If you owe taxes but can prove that you are going through financial hardship, then the IRS could agree to give you your refund instead of allocating it towards your tax debt. Let's take a look at the four steps you need to take to stop your tax return from being garnished.

Step 1: Get Your Hands on an IRS Form 911

You can easily obtain an IRS Form by heading to the IRS’s website. You must use this form to ask for help from the Taxpayer Advocate Office. This is a division of the IRS that acts as an intermediary between the IRS and taxpayers to make sure that any concerns you have are taken care of and that your case is handled correctly. This is an entirely free service and gives you access to a direct method of contacting the IRS. It is only through this advocate office that you can apply for a hardship request for your tax refund.

Step 2: Submit Your Form 911

Find out the contact information of the Taxpayer Advocate Office in your area by looking at the IRS Publication 1546. You can submit your Form 911 to the office closest to you either by fax or in person. You'll find both the address and the fax number for your local office by looking at the publication. Submitting this form will open your case with the central Taxpayer Advocate office, and so you can expect to receive a phone call from an agent when he or she is ready to start looking into your case. In most cases an agent will be prepared to begin within just two business days of your request.

Step 3: Prepare the IRS Form 433-A

The next step is to prepare the IRS Form 433-A. This is the form that the agent will use to determine if you are actually going through a financial hardship worthy of not garnishing your tax refund. In most cases your hardship will be considered eligible if your monthly bills surpass your monthly income or if you recently lost your job or experienced a significant reduction in your income or increase in your expenses. Additionally, if there was a recent expansion to your family, this can make you eligible for a garnishment as well. You need to have documents that prove your expenses and income claims submitted on this form. Ensure that you have this information ready to hand over to your agent when he or she requests it. However, you do not need to give proof of your hardship on the Form 911 request itself.

Step 4: Work Carefully with Your Advocate

After all the forms are submitted, it is important that you work closely with your advocate and make sure that you listen to and adhere to his or her requests so that the process of proving your hardship is a quick and easy one. Your advocate may ask you to supplement them with additional documents or alternative forms of proof to support your claims, and so it is critical that you do your best to supplement them with these. Your advocate should keep you updated throughout the various stages of the process so that you are informed of what is going on. Do not file your tax return until after your advocate has processed your case and you have been approved.