We currently owe federal back taxes from 04 and 05. Will the they take our state refund this year?
Saturday, March 20th, 2010 at
2:04 am
We were audited in 2007 for 2004 and 2005 and now owe a significant amount. We realize they will take this years federal return but there will still be a balance. Will they take our state refund this year? We did receive our homestead rebate from NJ this past summer (which occurred after the audit).
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No, I do not think that the IRS will take your state refund especially if you have a repayment plan in place.
In New Jersey I do not think that the IRS will. Do not know of a "reciprocity arrange-
ment that the IRS has with the New Jersey Division of Revenue.
From the New Jersey Division of Revenue website: Can I check the status (amount) of my 2006 homestead rebate? You can get information on the status of your homestead rebate either online or by phone at 1-877-658-2972 (toll-free within NJ, NY, PA, DE, and MD). Information about your rebate will not be available until your application has completed processing. Please allow at least 2 weeks for that to occur if you filed by phone or online. Additional time is required to process paper applications. Once your application has been processed, the system will provide the amount of your rebate and the date it was issued.
Reading the New Jersey website, it would appear that it will be less likely that the IRS will steal your NJ refund if you are age 65 or older or disabled. I cannot say 100% for sure that the IRS will not take it. It doesn’t happen in most states.
If your alleged liability for 2004 and 2005 was substantial, it may be better financially for you to contact an enrolled agent in your zipcode: http://www.naea.org
Don’t know for sure, but you may have been sold down the river by a tax attorney or CPA. Some enrolled agents specialize in representation before the IRS. ALL are authorized by the IRS. Even if you truly owed the extra income tax, and enrolled agent may be able to negotiate away some or all of the penalties and that would lower the interest that has been tacked on.