Will My Refund Be Delayed If I Owe Back Taxes?

There are fewer things worse than anticipating a refund check that never arrives. Checking the mail or logging onto your bank's website to check for funds that aren't there is never fun. It does help, however, if you are clear on the reasons for the delay and what to expect in the days ahead.

The IRS pays itself first, which means that taxpayers who owe federal tax should anticipate having any tax they owe deducted from their refund. In addition, the Department of Treasury offsets non-tax debts, such as child support and delinquent student loans, using its Treasury Offset Program, TOP. An installment agreement with the IRS does not prevent an offset.

Once the IRS intercepts the tax you owe, the remainder of your refund is released. In most instances, the remainder of the refund is issued on the date which the refund was originally set to be released with no additional delay. However, if the debt is related to a prior year's tax return during which time you were filing joint with another taxpayer, there may be a delay of two to three weeks. For example, if you and your ex-spouse amassed a tax debt when you were filing jointly but you are now divorced, the IRS will cross reference the tax accounts of you and your spouse to match the debts, then intercept your refund and apply it to the debt. This accounts for the additional time.

If you file jointly with your spouse and he or she owes tax, then the IRS will intercept your joint refund and apply it to the tax owed. The IRS has the right to intercept your return because you and your spouse enter into joint and several liability when you filed the joint return. This means that you agreed to be both jointly and separately responsible for any tax debts relating to your income tax return. As the injured spouse, you can complete IRS form 8379 to request that your portion of the overpayment be refunded to you. The processing time frame for form 8379 is 11 weeks if filed electronically with the return or 14 weeks if filed separately, thus significantly delaying your refund.

You can determine the refund release date by logging onto the IRS website and clicking on the "Where's my Refund" link or calling the IRS refund hotline at 800-829-1954. If you do not receive your refund, wait 14 days from the refund release for the paper check to arrive or five days for the arrival of a direct deposit. After this period, complete IRS form 3911 and mail it to the service center that is responsible for processing your return. Once received, the service center will run a trace on the overpayment.