Question

Can I receive a tax refund if I owe for a prior year's federal taxes since I am currently making payments under an installment agreement or payment plan?

Answer

No, one of the conditions of your installment agreement is that any refund due to you, the IRS will automatically apply against taxes you owe. Because your refund isn’t applied toward your regular monthly payment, continue making your installment agreement payments as scheduled until you pay your liability, including accrued penalties and interest, in full.

If your refund exceeds your total balance due on all outstanding liabilities including accruals, and you don’t owe certain past-due amounts, such as federal tax, state tax, a student loan, or child support, you’ll receive a refund of the amount over and above what you owe. For more information on these non-IRS refund offsets, you can call the Bureau of the Fiscal Service (BFS) at 800-304-3107 (toll-free).

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