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  • I have a payment plan in effect with the Alabama Department of Revenue. Will my federal refund still be offset?

I have a payment plan in effect with the Alabama Department of Revenue. Will my federal refund still be offset?

Yes. The Alabama Department of Revenue will continue to offset federal income tax refunds and state refunds even though you are meeting your payment arrangements. Alabama statute allows for the offset of an Income Tax refund until the account is paid in full even if you are on an approved Payment Plan. Your regular monthly payment must still be made to avoid defaulting on your Payment Plan which could lead to enforcement action.

Yes. The Alabama Department of Revenue will continue to offset federal income tax refunds and state refunds even though you are meeting your payment arrangements. Alabama statute allows for the offset of an Income Tax refund until the account is paid in full even if you are on an approved Payment Plan. Your regular monthly payment must still be made to avoid defaulting on your Payment Plan which could lead to enforcement action.

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

State and federal law authorizes the Alabama Department of Revenue to enter into agreements with the Internal Revenue Service (IRS) and the Department of the Bureau of the Fiscal Service-Debt Management to intercept or offset federal tax refunds and federal payments for Alabama state income tax debts.

If you have questions about the Treasury Offset Program (TOP) or the notice you received from the U.S. Department of the Bureau of the Fiscal Service-Debt Management, contact the U.S. Treasury Offset Program (TOP) Call Center at 1-800-304-3107. Many state and federal agencies offset debts through TOP. The notice you received from the Department of the Bureau of the Fiscal Service-Debt Management will outline the name of the state agency (or agencies) that requested the offset of your federal income tax refund, along with contact information for those agencies. A letter is sent for each offset.

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.