Can Federal Refund be Reduced by mistake?

[brook-ballard]

I was supposed to get a $735 federal refund.  After 3 weeks, I ended up receiving only $94, and upon checking the IRS site saw that my "refund was reduced to offset debt".  However, I do not have any kids, so owed child support is not an option.  My Student Loans are in good standing (just logged in and verified that I haven't missed a payment).  I've filed my taxes each year that I've worked without ever having any issue.

I did NOT receive the letter, or bill totaling amount due, that the IRS site says I should've received.  This is the first I've heard of any debt to the IRS, and I am struggling to think of what could've even lead to the mix up.  I've tried calling the number listed all day but just get the automated list of options.  It says you can wait on hold but after the menu options play twice it just says try calling back later and hangs up. WTF?

[AnthonyC]

Mistakes can happen.  For offsets though, they usually occur when you had a prior offset on the books (i.e. a past-due student loan that you made current recently) and it was just never removed.  Also, you can have an offset for a state tax debt or other government programs such as unemployment compensation repayment obligations.

What you have experienced is called a "courtesy" disconnect.  It means the call volume is so high that they won't be able to get to your call within a reasonable timeframe so they disconnect you as a "courtesy".  Not sure if you have been calling the IRS (800.829.1040) or the offset program.  But, if you haven't called them yet, you should call the Department of Treasury Offset Program at 800-304-3107 and they should be able to tell you at least the agency that the offset went to and then how to dispute it.  My best advice is to call on a Wednesday and in the morning.  The beginning and end of the week have the highest call volume (same if you need to call the IRS).

The other possibility here (and maybe more likely given the facts of your case) is that you just may have received the wrong reason why your refund was reduced.  The IRS can sometimes recalculate your return if they show additional income on their end that you haven't reported or if they believe that you aren't eligible to claim a certain deduction or credit and then they reduce your refund accordingly.  So, if you can't get through to the Offset program, then you could also try calling the IRS to see if maybe there is another reason for the reduction (800.829.1040).  Either way, you should eventually get a letter, but it can take up to 30 days after your refund was paid.  

If this really drags on and you can't get any answers, then you could look into contacting the Taxpayer Advocate Service.  They are an independent organization that helps represent people with IRS issues.

https://taxpayeradvocate.irs.gov/

[ljs8596]

I tried calling the number shown on the IRS website and it is useless. No help!

The info. from the IRS.gov says that they changed the amount claimed as Recovery Rebate Credit on my tax return. The error was in one or more of the following:

. The S.S. number of one or more individuals claimed as a qualifying dependent was missing or incomplete.

. The last name of one or more individuals claimed as a qualifying dependent does not match our records.

. One or more individuals claimed as a qualifying dependent exceeds the age limit.

. Your adjusted gross income exceeds $75,000 ($150,000 if married filing jointly, $112,500 if head of household)

. The amount was computed incorrectly.

None of this is true!  Can you help?

I am expecting to receive my reduced refund with an explanation from the IRS on March 22, 2021.

Leo Sansone