If I’m owed a refund from both state and federal but still owe state from last year, why is the offset coming out of my federal refund and not my state refund?

[bocko-jeremy]

I called TOP and they said my federal refund will be used to pay the remaining state taxes but I’m due a refund from state for this year so why aren’t they using that refund from state? Also, it looks like the state refund shows $0 but it hasn’t been applied to the balance. Will I get my state refund after the offset from the federal refund pays the state balance or is state going to keep the entire refund and the offset from the federal? Wouldn’t I be due the original refund amount if the state balance is paid from the federal refund?

[bocko-jeremy]

Update - I just checked the MassTax Where’s My Refund and it says that it was applied to the outstanding balance, but the TOP hotline states that the entire amount of the outstanding balance is coming out of my federal refund so there is going to be an overpayment on the outstanding balance. Will state automatically issue refund of overpayment or will I need to get more involved and request? 

[SteamTrain]

No way to know at this stage.

Might be a couple months before the state computers notice the overpayment.

________________

What likely happened was that the state filed a lien with the IRS to collect your past-due taxes from any Federal refund they see....thus the Feds did so because they are completely unaware that the state is also doing so with your state refund.

BUT, it may take a few months for the Feds to actually transfer those offset funds to your state, so the state doesn't know you've overpaid ....yet..

Yep...a bureaucratic/computer matching nightmare, and not much anyone can do about it at this stage.

[bocko-jeremy]

Will the offset delay my refund or should I receive the amount less the offset on the date my transcript says which is 2/26? I’m a Thursday code so my transcript won’t be updated until 2/27 which will likely have the offset code but I’m just curious if the offset delays refund or if they’ll just subtract the offset from refund and issue the lesser amount…? If that makes sense?