An IRS levy does not only affect the money you have today. In many cases, the IRS can also seize your future federal tax refunds and apply them to your outstanding tax debt. This can happen even if you are current with your tax filings or if you were expecting a refund based on your income, withholding, or credits.
When the IRS places your account into refund offset status, your future refunds are automatically diverted until the debt is fully paid or another resolution is put into place. Understanding how refund levies work is important because taxpayers often do not realize they are affected until their expected refund disappears.
How IRS Refund Levies and Refund Offsets Work
Refund levies usually start when the IRS determines that your debt is collectible and you have not made arrangements to resolve your balance. The Treasury Offset Program (TOP) handles these automatic seizures. Once your refund is claimed through TOP, it is applied directly to your IRS balance. This process continues year after year unless you qualify for financial hardship or you enter a formal agreement with the IRS. Taxpayers often assume that filing early or adjusting their withholding can avoid refund seizure, but the IRS system automatically flags your account regardless of timing.
Exceptions to Refund Levies for Joint Filers
There are a few exceptions. In some cases, if you filed jointly and only one spouse owes the tax debt, the non-liable spouse may request relief through Form 8379, the Injured Spouse Allocation. This form may allow the non-liable spouse to reclaim their share of the refund, but it does not prevent the liable spouse’s portion from being seized. It also does not stop future offset actions unless the underlying tax issue is resolved.
How to Prevent the IRS From Taking Future Tax Refunds
To avoid refund levies, the best approach is to contact the IRS and establish a resolution plan. Even a simple installment agreement, if approved, can prevent your future refunds from being seized. However, taxpayers must know that while an installment agreement prevents new levies, the IRS may still apply future refunds to the outstanding balance until the debt is cleared. This is standard IRS practice, and the agency rarely makes exceptions unless there is documented hardship.
Another option is to request Currently Not Collectible (CNC) status if you cannot afford to pay anything at all. If CNC is granted, levies are usually paused because the IRS acknowledges that enforced collection would create financial hardship. This can stop wage levies, bank levies, and most enforced actions. In some cases, it may also stop refund seizures, although TOP offsets can sometimes continue depending on the year and type of tax owed.
Finally, taxpayers who qualify may explore an Offer in Compromise. If the IRS accepts your offer, all levy action, including refund levies, stops once the agreement is finalized. While the IRS may still keep your refund for the year your offer is accepted, future years are protected as long as you comply with all terms of the offer.
Final Thoughts
Refund levies are often overlooked because they happen silently, without taking money directly from your bank account or wages. But for many taxpayers counting on their refund, losing it can create financial strain. Acting early, understanding your options, and contacting a tax professional can help you avoid unnecessary surprises and move toward resolving your tax situation permanently. Talk to us at the Law Office of Steven N. Klitzner to explore solutions that can stop future refund levies and help you keep your tax refunds.
Steven N. Klitzner, P.A. is a tax attorney based in Miami, Florida. He has been practicing tax law for over 40 years, and currently holds a 10.0 rating by Avvo. Mr. Klitzner was appointed to the IRS Service Advisory Council in 2021 and is... 
