Frequently Asked Questions on the Treasury Offset Program (TOP), IRS 2021 Child Tax Credit, Economic Impact Payments, and the Recovery Rebate Credit
Treasury Offset Program (TOP) and the IRS 2021 Child Tax Credit
IRS 2021 Child Tax Credit and Advanced Child Tax Credit Payments
Advance Child Tax Credit payments are early payments from the Internal Revenue Service (IRS) of 50 percent of the estimated amount of the Child Tax Credit that a taxpayer may claim on a 2021 tax return during the 2022 tax filing season. In some cases, these monthly payments will be made beginning July 15, 2021 and through December 2021.
The Advanced Child Tax Credit payments, authorized by the American Rescue Plan Act, are not subject to offset for any reason through the Treasury Offset Program (TOP).
IRS has prepared frequently asked questions (FAQs) to address debtor inquiries regarding this topic. These are available online at https://www.irs.gov/credits-deductions/2021-child-tax-credit-and-advance-child-tax-credit-payments-topic-g-receiving-advance-child-tax-credit-payments.
No. Advance Child Tax Credit payments will not be reduced (that is, offset) for overdue taxes from previous years or other federal or state debts that you owe.
However, if you receive a refund when you file your 2021 tax return, any remaining Child Tax Credit amounts included in your refund may be subject to offset for tax debts or other federal or state debts you owe.
Economic Impact Payments under the American Rescue Plan Act of 2021:
The 3rd Economic Impact Payment was authorized by the American Rescue Plan Act of 2021, which was signed into law on March 11, 2021.
No, the Economic Impact Payment, authorized by the American Rescue Plan Act of 2021, is not subject to offset for any reason through TOP, when paid as an advance.
The Recovery Rebate Credit
The Recovery Rebate Credit is authorized by the Coronavirus Aid, Relief, and Economic Security (CARES) Act, signed into law on March 27, 2020, and the COVID-related Tax Relief Act, signed into law on December 27, 2020. The Recovery Rebate Credit was eligible to be paid as rounds of advance payments during 2020 and 2021. These advanced payments of the Recovery Rebate Credit are referred to as Economic Impact Payments.
TOP, which collects delinquent federal and state debts, has prepared the following frequently asked questions (FAQs) to address debtor inquiries regarding whether and to what extent the advance payments of the Recovery Rebate Credit (i.e., the Economic Impact Payments) can be offset.
Economic Impact Payments under the Coronavirus Response and Relief Supplemental Appropriations Act of 2021:
No, the Economic Impact Payments, authorized by the Coronavirus Response and Relief Supplemental Appropriations Act of 2021 are not subject to offset for any reason through TOP, when paid as an advance.
Economic Impact Payments under the CARES Act:
The Economic Impact Payment under the CARES Act can be offset through TOP only to collect delinquent child support obligations that have been referred by the state to TOP.
Your entire Economic Impact Payment authorized by the CARES Act can be offset, up to the amount of your child support debt.
If you are receiving your Economic Impact Payment authorized by the CARES Act jointly with your spouse and only your spouse owes the child support debt, you can file an injured spouse form with the IRS. Please visit the IRS website at https://www.irs.gov/forms-pubs/about-form-8379 to file your claim.
If you have questions regarding whether you owe a child support debt that has been referred to TOP, you can call the TOP Interactive Voice Response (IVR) system at 800-304-3107.
Recovery Rebate Credits under the Coronavirus Response and Relief Supplemental Appropriations Act of 2021 and the CARES Act:
Generally, a credit increases the amount of your tax refund or decreases the amount of taxes owed. The amount you receive for the Recovery Rebate Credit will be included as part of your refund or applied to any tax owed.
If you owe debts to the United States or certain state agencies, your tax refund may be reduced to pay those debts.
For more information about the recovery rebate credit, please visit IRS’s website at www.irs.gov/newsroom/recovery-rebate-credit-topic-e-receiving-the-credit
For general information about tax refund offset, please visit our TOP webpage at https://fiscal.treasury.gov/top/.
These questions, and others, can be answered by visiting the IRS website at www.irs.gov/newsroom/recovery-rebate-credit and www.irs.gov/newsroom/economic-impact-payments-what-you-need-to-know.
During this time, TOP will continue to collect all certified delinquent federal nontax and state debts through TOP from all eligible payments. For debts that remain active for collection in TOP, offsets will continue until a debt has been paid in full or until we have been directed by the federal agency or state to stop offsets.
If you have questions about the collection of your federal tax debt, please visit IRS at https://www.irs.gov/coronavirus.
A full list of payments that are exempt from offset are available at https://fiscal.treasury.gov/files/dms/dmexmpt.pdf.
TOP’s IVR at 800-304-3107 can provide you with information about which debts of yours remain subject to collection through TOP. TOP's IVR will not disclose if an agency has suspended their collection activities.
If you are experiencing a financial hardship due to COVID-19, or for other reasons, you should contact the federal agency or state to which the debt is owed to discuss any options that may be available. TOP’s IVR at 800-304-3107 can provide you with the direct contact information for the federal agency or state to which the debt is owed.