Tax Offset in Grand Rapids MI - What is it & How to Avoid it

Tax Offset in Grand Rapids, MI – What is it & How to Avoid it?

Tax is the amount you owe to the treasury, and you have to pay what you owe. There are many tax relief programs to help the taxpayers with their taxes in Grand Rapids, MI. Similarly, the IRS has many tools on its arsenal to collect what is legally theirs, the unpaid taxes.  For the collection of the old unpaid taxes, there is a Treasury Offset Program (TOP) that collects Past-Due Unpaid Taxes that people owe to state and federal agencies. Then TOP matches this data of people and businesses who owe delinquent money from state or federal agencies in the form of tax refunds.

Typically the money is received by the state that submitted the case for a tax refund offset within two or three weeks. The agent from the program calculates for you any Low or Middle-Income Tax Offsets and factored into your tax return when you submit them, without you needing to do anything, while in some tax offsets cases, you may require to make a claim.

Many of your Tax offsets are non-refundable, meaning they generally cannot get you an actual tax refund on their own, although offsets can potentially reduce your payable income tax to zero accordingly. In other words, to make it more clear, if you were liable for $5,000 in tax but were eligible for $5,500 in tax offsets, in most cases, you would not receive $500 as a refund and would end up with a $0 tax liability.


The tax offset is a legal process adopted by the Federal Government’s treasury department or other departments, wherein any given financial year, they might pay for the Unpaid Taxes that you owe from your tax refunds, even before you get your hands on your refunds. This payment can be made on your behalf, with or without your consent.

Sometimes it depends upon the nature of the Unpaid Taxes, e.g. overdue federal Taxes, State Income Tax or student loans.

A tax offset, in short, directly reduces the taxable income of an eligible person.

Although tax deductions and offsets can potentially save you money on your taxes, they are totally different. A tax offset reduces the amount of income tax after it has been calculated based on your taxable income, thus sometimes called a tax rebate. While, on the other hand, tax deductions reduce your taxable income before tax has been calculated on it.

How To Avoid Tax Offsets in Grand Rapids, MI?

For many people, living on a fixed or small income, and having unpaid taxes that require additional support through federal or state income tax returns, the tax offsets are difficult. So there are several people who need to try to avoid a tax offset.

When taxpayers are not aware of a tax offset, they should contact FMS – Financial Management Service. 

The service authorities will determine and explain what a person owes, how much and why the offset is necessary. It isn’t that the TOP goes on a hunt to check on any Unpaid Taxes. The departments like the IRS to which you owe money report the unpaid amount to the program if a certain period, i.e. 90 days, has passed by without making a payment. It mainly depends upon the nature of Unpaid Taxes, e.g. overdue federal Taxes, State Income Tax or student loans, when the authorities are preparing the tax offset.

In a nutshell, your tax refunds are vulnerable to a tax offset if you have unpaid taxes on your balance, and you must plan ahead of the TOP or IRS to avoid your refund being eaten by the authorities.

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