Refund Interception
- What is refund interception?
- What kinds of debts are eligible for refund interception?
- What happens if I filed a joint return and have a divorce decree, or I plan to file an injured spouse claim?
- How are disputed claims handled?
- Is my federal tax refund subject to refund interception?
- What is refund interception?
The Department of Revenue (DOR) is authorized to intercept, or set off, refunds, refundable credits, and lottery prizes against any tax-related debts owed to the Department. That is, if a taxpayer has a delinquent tax debt with DOR, the Department is entitled to deduct the amount of that debt from any state tax refund, refundable credit, or lottery prize issued by the Department to that taxpayer.
Similarly, DOR is authorized to intercept taxpayer refunds, refundable credits, and lottery prizes for debts owed to other state agencies and, in many cases, for debts owed to state counties and local governments and the Internal Revenue Service (IRS).
Refund interception for these entities will only occur after all amounts due to DOR are satisfied. Lottery prizes are prorated between DOR and other state agency debts, but are not eligible for interception for county, municipal, or IRS debts.
- What kinds of debts are eligible for refund interception?
Any delinquent tax debt is eligible for collection through refund interception.
State agencies may certify any unpaid debt that has been reduced to a judgment or debts where the taxpayer has been afforded reasonable notice and the opportunity to be heard in regard to the debt. Several other types of debts, as specified in section 71.93(1)(a), Wis. Stats., including delinquent child or spousal support payments are also eligible. State agency debts must exceed $20.
Counties and municipalities may certify any parking citation, fine, fee, restitution, forfeiture, debt related to property taxes or judgment of at least $20 that is unpaid. Any debt for which the county or municipality has provided the debtor reasonable notice and the opportunity to be heard is also eligible.
The Department of Revenue may also enter into agreements with other states that provide for offsetting Wisconsin tax refunds against tax obligations of other states, and offsetting tax refunds of other states against Wisconsin tax obligations, in accordance with section 73.03(52m), Wis. Stats.
- What happens if I filed a joint return and have a divorce decree, or I plan to file an injured spouse claim?
If your debt is owed to the DOR: If you were divorced after June 20, 1996, and your divorce decree apportions any tax liability owed to the Department, attach a copy of your divorce decree to your tax return and fill in "04" in the Special Conditions box on page 1 of your return.
If you are filing federal Form 8379 (Injured Spouse Claim and Allocation), attach a copy to your tax return and enter "05" in the Special Conditions box on page 1 of your return.
If you file your return electronically, please mail a copy of Form 8379 or your divorce decree to the address shown below.
In all instances, this will help DOR staff determine how to allocate your refund, but because these are manual processes, they may delay your refund.
If your debt is owed to another state agency or the IRS: Joint returns are automatically prorated by DOR staff if the debt is owed to a state agency or the IRS, so it is not necessary to attach a copy of your divorce decree or injured spouse claim to your return. Only the debtor's portion of your refund will be set off against the debt. Please note that refundable credits, such as the homestead and farmland preservation credits, are considered the property of both spouses and are not prorated prior to application to the debt.
If your debt is owed to a local government agency: Debts owed to local governments are presumed by DOR to be incurred during the marriage and are collectible from all marital property and owed by both spouses. In these cases, the refund will be set off up to the amount of the debt or the amount of the refund (whichever is lesser).
- How are disputed claims handled?
If you receive a notice that your refund was intercepted for a debt owed to a state agency, county, or municipality and you have questions or disagree with the claim, please call the agency telephone number listed on the notice.
If your refund was intercepted for a delinquent tax debt and you have questions or disagree with the claim, please call the Department at (608) 266-7879.
If your refund was intercepted for a debt owed to the Internal Revenue Service and you have questions or disagree with the claim, please call the IRS at 1-800-829-7650.
- Is my federal tax refund subject to refund interception?
Under provisions of the Internal Revenue Service Restructuring and Reform Act of 1998, taxpayers who owe past due, legally enforceable state income debts may have their federal tax refund reduced by the amount they owe their local state department of revenue. DOR has been participating in this program since January 2001.
FOR MORE INFORMATION PLEASE CONTACT:
WISCONSIN DEPARTMENT OF REVENUE
Refund Interception Assistance
P.O. Box 8901
Madison, WI 53708-8901
Phone: (608) 266-7879
Fax: (608) 261-8978
E-Mail Additional Questions
Last updated January 30, 2009