I received an "Notice of proposed income tax refund offset" Letter, what does this mean?

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It means some of your refund is being taken due to some debt you have.

If you receive a notice from the Department of Treasury that your tax refund is subject to offset, it means your refund might be intercepted to pay another bill you or your spouse owe.

Some common examples of what money is taken for is past due child support, delinquent student loans, prior years Federal or State taxes.

You can call the IRS Financial Management System at 800-304-3107. This is an automated system and you won’t have an opportunity to speak with an agent when you call, but you can find out if you owe any debts subject to offset and the name of the agency you owe before you file your return.