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Why The IRS Can Take Your Refund

written by: Summer Banks•edited by: Donna Cosmato•updated: 2/17/2012

There is nothing worse than filing your taxes and expecting a sizable tax refund only to receive a letter that the government has seized the money. There are real reasons why the IRS can keep your money and you should know every one of them.

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    The tax filing season can be filled with stress and anticipation. For some people, that tax refund helps to pay bills or plan once a year family vacations. When the check is supposed to be in the mail and a letter of refund seizure from the IRS is the only thing to show up, the time has come to look back and find out what government debt was left unpaid.

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    The Student Loan Repayment Program

    The Federal student loan program is directly linked to the IRS. If, at any time, the student loans you borrowed for college fall into default, the IRS has every legal right to take your income tax refunds until the time when all monies owed are paid in full. If the IRS took your refund check this year, try contacting your loan originator and setting up a payment plan to pull those loans out of default.

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    Unpaid Child Support

    Another huge government debt is child support. The Federal agency that collects child support reports any unpaid child support to the IRS. When the taxpayers who owe unpaid child support file their tax refund, the IRS will seize the refund and send the proceeds to the child or children on file.

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    Unpaid Back Taxes

    Some taxpayers file their federal taxes and never pay the amount owed to the government. When the taxpayer files and is due a tax refund, the IRS will keep all or a portion of that tax refund to cover the previous year's taxes. If the taxes owed are less than the refund for the current year, the taxpayer will receive a reduced refund.

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    Any Unpaid Federal or Government Debt

    The student loan repayment program, child support program and unpaid back taxes are the three top reasons the IRS will keep a taxpayers refund check. However, this list is not all inclusive. Any unpaid Federal or governmental debt accrued before the tax refund may be paid off with the tax refund without prior notice to the taxpayer.