IRS takebacks most commonly occur when a joint tax return is intercepted by Child Support Services (CSS) and the non-custodial parent’s (NCP) spouse files an injured spouse claim on their portion of their IRS refund. The IRS will “takeback” the spouse’s portion of the intercept and refund it to the injured spouse directly. Consequently, this can cause an overpayment if the funds have already been issued or refunded. The IRS takeback process is outlined below:
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Receipt has been distributed and:
- Issued – Custodial Person (CP) Bad Debt (BD) will be created automatically when the receipt adjustment is performed
- Pended – Because receipt has not been issued, a BD is not created
- Refunded – The Center for Finance and Budget (CFB) will create an NCP BD in OSIS
NOTE: There is no status of limitations on the length of time a spouse can complete an injured spouse request or the IRS can perform a take-back. For more information, see the Center for Coordinated Programs Infonet Page.