Generally, when a taxpayer makes an overpayment of tax, the IRS refunds the overpayment to the taxpayer. But this is not always the case. For example, the IRS has the statutory authority to credit (or offset) an overpayment against certain other tax debts, including pre-existing federal tax debts.
This offset issue is common with many types of taxpayers: individuals, corporations, etc. However, the issue becomes much more common and also confusing with married taxpayers. This article discusses some of these offset issues in the context of married individuals.
The IRS’s Right of Offset
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