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Give you at least 60 days to show that some or all of

Processing Claims for Refund

the state income tax is not past due or not legally

enforceable,

Claims are usually processed shortly after they are filed.

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Your claim may be denied, accepted as filed, or it may be

Consider any evidence from you in determining that

examined. If a claim is examined, the procedures are

income tax is past due and legally enforceable,

almost the same as in the examination of a tax return.

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Satisfy any other requirements to ensure that there

However, if you are filing a claim for credit or refund

is a valid past-due, legally enforceable state income

based only on contested income tax or on estate tax or gift

tax obligation, and

tax issues considered in previously examined returns and

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you do not want to appeal within the IRS, you should

Show that all reasonable efforts to obtain payment

request in writing that the claim be immediately rejected. A

have been made before requesting the offset.

notice of claim disallowance will then be promptly sent to

you. You have 2 years from the date of mailing of the notice

Past-due, legally enforceable state income tax obli-

of disallowance to file a refund suit in the United States

gation. This is an obligation (debt):

District Court or in the United States Court of Federal

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Established by a court decision or administrative

Claims.

hearing and no longer subject to judicial review, or

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That is assessed, uncollected, can no longer be re-

Explanation of Any Claim

determined, and is less than 10 years overdue.

for Refund Disallowance

Offset priorities. Overpayments are offset in the fol-

The IRS must explain to you the specific reasons why your

lowing order.

claim for refund is disallowed or partially disallowed.

Claims for refund are disallowed based on a preliminary

1. Federal income tax owed.

review or on further examination. Some of the reasons

your claim may be disallowed include the following.

2. Past-due child support.

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It was filed late.

3. Past-due, legally enforceable debt owed to a federal

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agency.

It was based solely on the unconstitutionality of the

revenue acts.

4. Past-due, legally enforceable state income tax debt.

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It was waived as part of a settlement.

5. Future federal income tax liability.

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It covered a tax year or issues which were part of a

closing agreement or an offer in compromise.

Note. If more than one state agency requests an offset

for separate debts, the offsets apply against your overpay-

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It was related to a return closed by a final court

ment in the order in which the debts accrued. In addition,

order.

state income tax includes any local income tax adminis-

If your claim is disallowed for these reasons, or any other

tered by the chief tax administration agency of a state.

reason, the IRS must send you an explanation.

Note. The Tax Court cannot decide the validity or merits

of the credits or offsets (for example, collection of delin-

Reduced Refund

quent child support or student loan payments) made that

reduce or eliminate a refund to which you were otherwise

Your refund may be reduced by an additional tax liability.

entitled.

Also, your refund may be reduced by amounts you owe for

past-due child support, debts you owe to another federal

Injured spouse exception. When a joint return is filed

agency, or past-due legally enforceable state income tax

and only one spouse owes past-due child and spousal

obligations. You will be notified if this happens. For those

support or a federal debt, the other spouse can be consid-

reductions, you cannot use the appeal and refund proce-

ered an injured spouse. An injured spouse can get a refund

dures discussed in this publication. However, you may be

for his or her share of the overpayment that would other-

able to take action against the other agency.

wise be used to pay the past-due amount.

To be considered an injured spouse, you must have:

Offset of past-due state income tax obligations

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against overpayments. Federal tax overpayments can

Filed a joint return,

be used to offset past-due, legally enforceable state in-

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Received income (such as wages, interest, etc.),

come tax obligations. For the offset procedure to apply,

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your federal income tax return must show an address in

Made tax payments (such as federal income tax

the state that requests the offset. In addition, the state

withheld from wages or estimated tax payments) or

must first:

claimed a refundable credit (such as the earned in-

come credit), and

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Notify you by certified mail with return receipt that

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the state plans to ask for an offset against your

Reported the income and tax payments on the joint

federal income tax overpayment,

return.

Page 15

Publication 556 (Rev. August 2005) - Examination Of Returns, Appeal Rights,and Claims For Refund Page 15

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