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JEN912
New Member

If I owe the IRS for a previous tax year, but I'm on a payment plan, will the IRS take my state refund to reduce my balance I already owe?

I'm getting a state refund and wanted to know will the IRS take that state refund and add it to what I owe the IRS.

1 Reply
Melaine
New Member

If I owe the IRS for a previous tax year, but I'm on a payment plan, will the IRS take my state refund to reduce my balance I already owe?

Yes, based on the agreement you signed with the IRS when you had the installment agreement.  All refunds from Federal and State will be used to apply to the balanced owed until it is paid in full.  Also, while the amount may reduce the amount owed, it is important to keep up with the monthly payments as that will not change unless you call to renegotiate.  Regardless whether you are participating in an installment agreement or other payment arrangement with the IRS, you may not get all of your refund if you owe certain past-due amounts, such as federal tax, state tax, a student loan, or child support. For more information on these non-IRS refund offsets, you can call the Bureau of the Fiscal Service (BFS) at 800-304-3107 (toll-free)

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