The Department of Treasury’s Bureau of the Fiscal Service (BFS), through the Treasury Offset Program (TOP), is authorized to intercept federal tax refunds to satisfy certain delinquent debts. This authority is derived from multiple statutes, including 26 U.S.C. § 6402 and 31 U.S.C. § 3720A.
Administered by the Department of Treasury’s BFS. Refunds may be offset to pay the following liabilities:
Federal law requires all State Workforce Agencies (SWAs) to participate in TOP to recover these categories of unemployment compensation debt. This mandate was established through Public Law No. 110-328 and reinforced by the Bipartisan Budget Act of 2013 (Pub. L. 113-67). As clarified by IRS guidance issued on November 5, 2015, all entities defined as a “person” under 26 U.S.C. § 7701(a)(1) are subject to recovery of these debts under 26 U.S.C. § 6402.8
Depending on the type of debt owed, TOP may offset a wide range of federal and state payments, including:9
If a joint return is filed and the debt subject to offset is owed solely by one spouse, the non-liable spouse may request the return of their portion of the refund from the IRS.10
Under 13 C.F.R. § 140.2(b)(3), the Small Business Administration (SBA) may request that the IRS reduce a debtor’s tax refund by the amount of a delinquent debt. This offset is authorized by 31 U.S.C. § 3720A. SBA debts eligible for offset include those arising from loans made or guaranteed by the United States, as well as debts from fees, leases, rents, royalties, services, sales of property, overpayment, fines, penalties, damages, interest, and forfeitures.11
A debt is considered past-due if it has been reduced to judgment, accelerated, or has been delinquent for at least 90 days. SBA must first pursue administrative and salary offsets before initiating a tax refund offset.12
The Social Security Fairness Act of 2023 (P.L. 118-273), signed into law on January 5, 2025, repealed the GPO for benefits payable for January 2024 and later. Prior to repeal, the GPO reduced Social Security spousal or survivor benefits for individuals receiving a government pension based on non-covered employment (i.e. work not subject to Social Security taxes).13
Although GPO no longer applies to benefits payable from January 2024 onward, it previously impacted refund offsets when Social Security benefits were used to satisfy obligations such as Medicare Part B premiums.14 The repeal does not affect other offset mechanisms under TOP.
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The Department of Treasury’s Bureau of the Fiscal Service (BFS), through the Treasury Offset Program (TOP), is authorized to intercept federal tax refunds to satisfy certain delinquent debts. This authority is derived from multiple statutes, including 26 U.S.C. § 6402 and 31 U.S.C. § 3720A.
Administered by the Department of Treasury’s BFS. Refunds may be offset to pay the following liabilities:
Federal law requires all State Workforce Agencies (SWAs) to participate in TOP to recover these categories of unemployment compensation debt. This mandate was established through Public Law No. 110-328 and reinforced by the Bipartisan Budget Act of 2013 (Pub. L. 113-67). As clarified by IRS guidance issued on November 5, 2015, all entities defined as a “person” under 26 U.S.C. § 7701(a)(1) are subject to recovery of these debts under 26 U.S.C. § 6402.8
Depending on the type of debt owed, TOP may offset a wide range of federal and state payments, including:9
If a joint return is filed and the debt subject to offset is owed solely by one spouse, the non-liable spouse may request the return of their portion of the refund from the IRS.10
Under 13 C.F.R. § 140.2(b)(3), the Small Business Administration (SBA) may request that the IRS reduce a debtor’s tax refund by the amount of a delinquent debt. This offset is authorized by 31 U.S.C. § 3720A. SBA debts eligible for offset include those arising from loans made or guaranteed by the United States, as well as debts from fees, leases, rents, royalties, services, sales of property, overpayment, fines, penalties, damages, interest, and forfeitures.11
A debt is considered past-due if it has been reduced to judgment, accelerated, or has been delinquent for at least 90 days. SBA must first pursue administrative and salary offsets before initiating a tax refund offset.12
The Social Security Fairness Act of 2023 (P.L. 118-273), signed into law on January 5, 2025, repealed the GPO for benefits payable for January 2024 and later. Prior to repeal, the GPO reduced Social Security spousal or survivor benefits for individuals receiving a government pension based on non-covered employment (i.e. work not subject to Social Security taxes).13
Although GPO no longer applies to benefits payable from January 2024 onward, it previously impacted refund offsets when Social Security benefits were used to satisfy obligations such as Medicare Part B premiums.14 The repeal does not affect other offset mechanisms under TOP.
