The Virginia Tax Refund Offset Program

What to Do If Virginia Tax Keeps Your Tax Refund

Were you expecting a refund from Virginia Tax? Did the state keep your refund? Wondering why the state kept your tax refund? Generally, this happens when you owe state back taxes, IRS back taxes, or debts to several other organizations.

The process the state uses to claim tax refunds for unpaid debts is called the Virginia Tax Offset program. This guide provides an overview of the offset program, and it outlines options you can take if your refund has been offset.

What Does Virginia Tax Offset Mean?

Virginia Tax Offset is a program where Virginia Tax keeps your state tax refund to offset other bills you have. The agency can seize state tax refunds to cover unpaid state taxes, IRS back taxes, and debts from several different organizations.

There is also a federal refund offset program. For instance, if you owe state taxes but not IRS taxes, the IRS can keep your refund and send it to Virginia Tax to cover your tax bill.

Who Can Take Your State Tax Refund in Virginia?

If you owe money to any of the following organizations, the Virginia Department of Taxation can seize your state tax refund:

Virginia Tax
Internal Revenue Service (IRS)
The Department of Social Services
Other Virginia state agencies and courts
Local Virginia governments.
Some federal government agencies for non-tax debts

Virginia Tax will apply individual and business refunds to almost all of these debts. However, if you owe a non-tax debt to a federal government agency, the state can only offset individual income tax refunds, not business refunds.

How Does Virginia Tax Offset Work?

When you file a state tax return that shows a refund, Virginia Tax runs your name and tax ID through a claims system. The system shows if you owe money to any of the organizations listed above. If you do, Virginia Tax reduces your tax refund by the amount that you owe. Then, the agency sends the offset amount to the relevant agency.

If there's any money left, the rest goes to you. You can also get more information by checking out their website at tax.virginia.gov/offset. Or you could even call the Virginia state tax offset number at 804-367-2486.

Is It Legal for VA to Keep My Refund?

Yes, it is legal for the state to keep your tax refund if you owe a debt to one of the agencies listed above. The federal law that outlines the legality of the US Treasury Offset Program is US Code 31: 3716.

In Virginia, the Virginia Debt Collection Act makes offsets legal. You can read the exact law by checking out the VA Code 2.2-4800.

How Do I Know That Virginia Is Going to Keep My Refund?

In some cases, you may receive a notice before the state seizes your refund. The notice may be called something like Notice of Intent to Offset State Tax Refund. However, the state doesn't necessarily need to notify you in advance.

Generally, if Virginia Tax or the IRS plans to levy (seize) your assets, they must notify you a certain number of days before the seizure takes place. They also must notify you of your right to appeal. These rules don't apply to tax refunds. Tax refunds are one of the only assets that the state or the IRS can seize without much warning.

If you owe a debt to one of the above agencies, there is a good chance that you won't receive your tax refund. If you're unsure how your debt will affect your refund, you may want to contact the agency directly. They may be able to answer your questions about the offset program.

How to Contact the Virginia Department of Taxation About a Refund Offset

If your refund was claimed to cover a debt, you could contact the Virginia Department of Taxation with questions. Here are the contact details that you can use if you have offset questions:

If the offset was for a Virginia state tax debt, call (804) 367-8045.
If the offset was for an IRS tax debt, call the IRS at (800) 304-3107
You can contact that agency directly if the offset was for any other agency. Simply do a web search for their number.
If the offset was for a federal non-tax debt and you need help contacting the agency, you can call the Treasury Offset Program (TOP) at (800) 304-3107 or (800) 877-8339 if you are hearing impaired.

If you cannot get the answers you need, you may want to contact a tax attorney. They can explain what's happening, answer your question, and help you get your refund back if you didn't owe the debt.

What to Do If You Don't Owe the Debt

What happens if you already paid the debt and the state still took your refund? If the bill was for an unpaid state tax debt, you should contact Virginia Tax directly. Be prepared to share information about when you made the payment, and gather proof if you have it.

If the bill was for another agency, you need to contact them directly. If you already paid, they are in charge of refunding your claim. Unfortunately, you can't get a refund from Virginia tax if your tax refund was claimed to pay a debt from another agency.

What If My Refund Was Claimed Due to My Spouse's Debt?

What if Virginia Tax keeps a tax refund to pay off a bill that was just due to your spouse? Typically, in this situation, you can reach out to the state and let them know that you are not responsible for the bill. To give you an example, imagine that your spouse owed child support or imagine that you owe back taxes from a business return filed before you were married.

In these situations, Virginia Tax will only claim the portion of the refund that is due to the spouse with the debt. The agency will let the spouse without a debt receive their share of the refund. Generally, you have to reach out and request this option.

Virginia Tax won't just split the tax refund in half. Typically, the state will look at how much of the refund is from the non-debt spouse. Then, it will send you that portion of the refund.

Where Is My Virginia Tax Refund?

Wondering where your refund is? Worried that it's been seized for a debt? Just wondering if it's done being processed? You can look for information on your VA tax refund using the state's where's my refund tool. This can be found at https://www.tax.virginia.gov/wheres-my-refund.

Get Help With a Virginia Refund Offset

You can take all kinds of steps if you're worried about a VA tax offset. You can contact the agency you owe a debt to and try to make arrangements. Setting up a payment plan on your back taxes, for example, may allow you to avoid losing your tax refund. However, the rules vary. Alternatively, you may need to establish that the debt wasn't yours so that you can get back your refund.

You should contact a tax professional to help regardless of your exact situation. They can answer your questions, explain more about how state tax refund offsets work, and help you find the best resolution for your situation..

To get quality help with Virginia tax issues, use TaxCure to search for a local tax professional. You can narrow down the results to look for pros who have experience with the offset program. Then, you can read their profiles to find the perfect match for your needs. Don't let the state keep your tax refund — contact a VA tax pro today.