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Will the IRS take my state refund even though I set up payment arrangements?

I forgot to report to the healthcare act that I took all of my 401k.I didn't qualify for the credit assistance that I received to help pay for my insurance from the government, so I have to pay it back.

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Will the IRS take my state refund even though I set up payment arrangements?

It depends on what year your federal tax debt is from - 2017 or a prior year.

If you are referring to a current federal tax liability for 2017, then its unlikely the IRS would be able to seize your state refund.  Your federal tax debt would not even become past due until at least April 17th, 2018 - so there would be no basis for the IRS to seize your 2017 state refund.

If this was a past federal tax debt from a prior year, then the IRS will likely seize your state refund to satisfy the past due federal taxes even with a payment arrangement (just like they will for any federal refund) if you reside in one of the states that participate in the IRS's selected income tax levy program.

Currently, the states that participate in SITLP are Alabama, Alaska (no income tax but will levy from the state’s permanent dividend fund), Arizona, Arkansas, California, Colorado, Connecticut, Delaware, District of Columbia, Georgia, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Nebraska, New Jersey, New Mexico, New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, Utah, Vermont, Virginia, West Virginia and Wisconsin.

To view more information about this IRS program, see this link -

https://www.irs.gov/businesses/small-businesses-self-employed/federal-and-state-levy-programs

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Will the IRS take my state refund even though I set up payment arrangements?

It depends on what year your federal tax debt is from - 2017 or a prior year.

If you are referring to a current federal tax liability for 2017, then its unlikely the IRS would be able to seize your state refund.  Your federal tax debt would not even become past due until at least April 17th, 2018 - so there would be no basis for the IRS to seize your 2017 state refund.

If this was a past federal tax debt from a prior year, then the IRS will likely seize your state refund to satisfy the past due federal taxes even with a payment arrangement (just like they will for any federal refund) if you reside in one of the states that participate in the IRS's selected income tax levy program.

Currently, the states that participate in SITLP are Alabama, Alaska (no income tax but will levy from the state’s permanent dividend fund), Arizona, Arkansas, California, Colorado, Connecticut, Delaware, District of Columbia, Georgia, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Nebraska, New Jersey, New Mexico, New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, Utah, Vermont, Virginia, West Virginia and Wisconsin.

To view more information about this IRS program, see this link -

https://www.irs.gov/businesses/small-businesses-self-employed/federal-and-state-levy-programs

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