Sorry to inform you but the IRS is most definitely seizing Recovery Rebate Credits, contrary to what is it isn’t legal.
My family never received all of our stimulus in 2020, so we made a claim on our 2020 tax return. We filed our 2020 taxes in January 2021, and our refund only consisted of the missing stimulus.
We were informed by the IRS in March 2021 that they reduced our refund to ZERO because it applied the 2020 Recovery Rebate Credit to an outstanding 2010 Federal tax obligation. I told the IRS what they were doing was against the law, but they said there was nothing we could do about it. To make matters worse, the IRS also placed a freeze on our account which is preventing us from receiving the 2021 stimulus as well.
Be very careful thinking you will receive your stimulus if you owe back taxes.
