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Can the IRS Take My Tax Refund?

If you recently filed your taxes and you didn’t receive your refund, you might wonder if the Internal Revenue Service (IRS) has legal grounds to keep it. The truth is the IRS can hold your current-year refund for various reasons.

Your Income Tax Is Inaccurate

The IRS can hold your tax refund if they believe you made a mistake on your current-year tax return. A common mistake the IRS finds is an overclaim of deductions that the tax filer doesn’t qualify for. If this is the case, the IRS will likely conduct an audit to identify any discrepancies on past filed tax returns.

If you receive a notice of an inaccurate tax return, you have 60 days to prove your case to the IRS and ask for a reversal of your refund. To do this, you will need to file an amended return to reverse any mistakes and get your refund back.

You Owe Taxes

If you owe taxes to the IRS, they have the right to take all your refunds to pay your tax bill. The IRS can take your refund every year until your tax bill is paid off. Even if you currently have a payment plan with the IRS, they can still hold your tax refund.

You Have One or More Unfiled Tax Returns

If you have unfiled tax returns, the IRS can start a “delinquent return inquiry” to freeze your refund until you have filed all tax returns and paid all tax debt. Having a delinquent return inquiry can be daunting – for such reasons, it is important to have an experienced tax attorney on your side.

You Owe Other Outstanding Debts

If you owe other federal debts, such as student loans, child support, unemployment compensation repayments, or state taxes, the IRS can withhold your tax refunds. However, if this is an issue you are dealing with, you will need to solve the problem with the source (for example, make student loan payments). The IRS won’t be able to help you solve the issue if they are withholding taxes for other non-IRS-related reasons.

Contact our Rancho Cucamonga tax attorneys today at (909) 766-9996 for legal assistance.