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  • How can I avoid having my federal income tax refund intercepted for payment of my state tax debt?
View All Federal Refund Offset - TOP, Individual Income Tax FAQs

How can I avoid having my federal income tax refund intercepted for payment of my state tax debt?

Prior to submitting debts to the U.S. Department of the Bureau of the Fiscal Service-Debt Management for inclusion in TOP, the Alabama Department of Revenue is required to notify each debtor that it intends to refer the debt for federal offset. If you received the LOI (Letter of Intent) notice, you have 60 days to do one of the following:

Pay your debt in full. A payment coupon is attached to the bottom of each notice for your convenience, or you can go to https://myalabamataxes.alabama.gov/, click on the “Pay a bill I received” link, to make a payment.
Provide proof of payment. If you believe that all or part of this debt has already been paid, fax your documentation to 334-353-2282.

Prior to submitting debts to the U.S. Department of the Bureau of the Fiscal Service-Debt Management for inclusion in TOP, the Alabama Department of Revenue is required to notify each debtor that it intends to refer the debt for federal offset. If you received the LOI (Letter of Intent) notice, you have 60 days to do one of the following:

Pay your debt in full. A payment coupon is attached to the bottom of each notice for your convenience, or you can go to https://myalabamataxes.alabama.gov/, click on the “Pay a bill I received” link, to make a payment.
Provide proof of payment. If you believe that all or part of this debt has already been paid, fax your documentation to 334-353-2282.

Related FAQs in Federal Refund Offset - TOP, Individual Income Tax

Yes. The Alabama Department of Revenue will send updated account information to TOP each Tuesday night.

The Alabama Department of Revenue did not offset the first or second Economic Impact (Stimulus) Payment for unpaid debts. The Economic Impact (Stimulus) Payment were approved and distributed by the U.S. Treasury. Alabama cannot legally offset social security benefits; however, the IRS does offset a percentage for unpaid federal taxes. Please contact the IRS at 1-800-829-1040.

No. The Alabama Department of Revenue does not charge a fee. However, the U.S. Department of the Bureau of the Fiscal Service-Debt Management charges a fee ($22.58) to offset federal tax refunds to pay tax debts. Bureau of Fiscal Service-Debt Management will deduct that fee before sending the funds to the Alabama Department of Revenue.

Prior to submitting debts to the U.S. Department of the Bureau of the Fiscal Service-Debt Management for inclusion in TOP, the Alabama Department of Revenue is required to notify each debtor that it intends to refer the debt for federal offset. If you received the LOI (Letter of Intent) notice, you have 60 days to do one of the following:

Pay your debt in full. A payment coupon is attached to the bottom of each notice for your convenience, or you can go to https://myalabamataxes.alabama.gov/, click on the “Pay a bill I received” link, to make a payment.
Provide proof of payment. If you believe that all or part of this debt has already been paid, fax your documentation to 334-353-2282.

It may take several weeks for the funds offset from your Federal tax refund to be applied to your State of Alabama debt.

The U.S. Department of the Bureau of the Fiscal Service-Debt Management will notify you in writing that an offset has occurred. TOP will provide information regarding the amount and date of the offset, the state to which the offset was paid, and a phone number to call where individuals may address your concerns and questions regarding the debt associated with the offset. The telephone number (334-353-0775) on the letter is to the Alabama Department of Revenue’s Examiner line.