Offset of Tax Refund Payments To Collect State Income Tax Obligations

Résumé

Under provisions of the Internal Revenue Service Restructuring and Reform Act of 1998 the Federal tax refund of a taxpayer who owes past-due, legally enforceable State income tax obligations may be reduced, or offset, by the amounts owed by the taxpayer. The funds offset from the taxpayers' Federal tax refunds are forwarded to the State that reported the State income tax obligation. Effective January 1, 2000, the Department of the Treasury will incorporate the procedures necessary to collect State income tax obligations reported by States as part of the centralized offset program operated by the Financial Management Service (FMS), a bureau of the Department of the Treasury. Under this interim rule, past-due, legally enforceable State income tax obligations include any local income tax that is administered by the chief tax administration agency of the State.