ECOA May Provide A Defense To The Personal Guarantee Of A Spouse
We help people avoid an SBA loan default by advising them about the SBA offer in compromise and solutions to other SBA loan problems.
Have you ever asked yourself the question: what is a tax refund offset? Do you want to know how it works? Read on to learn more.
Book a Consultation Call170 million people filed tax returns in the year 2020. 126 million of those taxpayers were happy because they also got an IRS refund. This means 74% of all the people in the US who file taxes typically garner a tax refund.
Are you one of the millions excitedly awaiting your tax refund?
Before you get too excited, do you owe the federal government any money? Do you have an SBA loan in default?
If you're behind, get prepared because your tax refund can be withheld. This is called a tax refund offset.
How does a tax refund offset work? How do you get your refund if you don't want the IRS keeping it?
Unfortunately, the SBA usually finds a way to get their money before letting you have it. Read on to learn more about tax refund offsets, how they work, and why the IRS can offset your refund for a defaulted SBA loan.
If you've been excitedly awaiting a tax refund and found the refund to be much smaller than anticipated, or even worse, you didn't get one.
You might be experiencing a tax refund offset.
When you owe monies or are in arrears, the IRS can prevent your tax refund from being paid out to you by sending the funds to the SBA.
The US Treasury Department would notify you they are about to do an offset to cover a delinquent debt. If you're notified of this and had questions about a delinquent debt, you can call 800-304-3107.
Now and then, there's a scenario where the reduced IRS refund beats the explanation letter. You can contact the IRS for an explanation.
In most cases, though, you'll receive a letter before the offset occurs. The letter will include:
If you get this letter, you would be best served to direct your questions to the entity listed as receiving your money.
You might be wondering what you're behind on, defaulted on, or in arrears before the IRS will make an offset payment?
The good news is that the IRS can't do an offset payment to cover any late bills for private lenders or utilities. They won't take your tax refund if you're behind on your cable bill or credit card bill.
There are, however, several reasons you might get a tax refund offset. If you have any arrears with the federal government, you should assume it could trigger a tax refund offset.
However, for purposes of this article, the reason you are most concerned about a tax refund offset is due to a defaulted SBA loan.
The IRS automatically take any refunds to cover back taxes before even considering a tax offset for an SBA loan.
It's also worth noting that if your offset is related to a federal tax issue, you'll be notified by the IRS. If your offset is for any other reason, then you'll be notified by the Treasury Department’s Bureau of the Fiscal Service (BFS).
There might be a situation where one spouse owes something, and the IRS triggers a tax refund offset. What's tricky is if the married couple files their taxes jointly.
This could mean that the expected tax refund that one spouse thought was coming is instead an offset for the other's debt. Aside from making for quite an awkward dinner conversation, there is something that can be done to get a refund for the non-owing spouse.
You can contact the IRS 800 number, visit your local IRS office, or perhaps the easiest option is to visit the IRS website. You can download and complete IRS Form 8379.
It may not be a fast process, and you'll likely need to provide some documentation, but you can request one spouse's part of the refund money.
If you believe the offset is in error, you can challenge it. In some cases, the offset will be processed while the challenge progresses.
In most cases, when you're notified of the offset, you'll also be provided with directions on how to challenge if you disagree.
Remember, don't start the challenge process just because you don't like the tax offset. You'll need to provide documentation of why the tax offset is being done in error.
Perhaps it's for a debt that's been paid off or you have a payment plan in place for the SBA loan.
A good place to start is by calling your local IRS office to get started. If your offset isn't tax related, contact the Bureau of the Fiscal Service (BFS) as they will have all other offset information for your case.
If you haven't already sought advice for your debts, it might be time to do that before you proceed with challenging an offset. Seek the advice of our SBA attorneys to get tax refund offset advice.
Once you find yourself in conflict with the IRS or the Treasury Department, it's time to seek some professional guidance on the best way to proceed. They may also be able to help you with the best way to challenge an offset and use the right documentation to win your appeal.
Once you have a tax refund offset explained, you can understand how frustrating and upsetting it will be to receive a letter notifying you of a tax refund offset.
If you have questions about your tax offset, we can help. Contact the Protect Law Group so we can get to work helping you.
Millions of Dollars in SBA Debts Resolved via Offer in Compromise and Negotiated Repayment Agreements without our Clients filing for Bankruptcy or Facing Home Foreclosure
Millions of Dollars in Treasury Debts Defended Against via AWG Hearings, Treasury Offset Program Resolution, Cross-servicing Disputes, Private Collection Agency Representation, Compromise Offers and Negotiated Repayment Agreements
Our Attorneys are Authorized by the Agency Practice Act to Represent Federal Debtors Nationwide before the SBA, The SBA Office of Hearings and Appeals, the Treasury Department, and the Bureau of Fiscal Service.
Clients personally guaranteed SBA 504 loan balance of $750,000. Clients also pledged the business’s equipment/inventory and their home as additional collateral. Clients had agreed to a voluntary sale of their home to pay down the balance. We intervened and rejected the proposed home sale. Instead, we negotiated an acceptable term repayment agreement and release of lien on the home.
Clients obtained an SBA 7(a) loan for $324,000 to buy a small business and its facility. The business and real estate had an appraisal value of $318,000 at the time of purchase. The business ultimately failed but the participating lender abandoned the business equipment and real estate collateral even though it had valid security liens. As a result, the lender recouped nearly nothing from the pledged collateral, leaving the business owners liable for the deficiency balance. The SBA paid the lender the 7(a) guaranty money and was assigned ownership of the debt, including the right to collect. However, the clients never received the SBA Official 60-Day Notice and were denied the opportunity to negotiate an Offer in Compromise (OIC) or a Workout directly with the SBA before being transferred to Treasury's Bureau of Fiscal Service, which added an additional $80,000 in collection fees. Treasury garnished and offset the clients' wages, federal salary and social security benefits. When the clients tried to negotiate with Treasury by themselves, they were offered an unaffordable repayment plan which would have caused severe financial hardship. Clients subsequently hired the Firm to litigate an Appeals Petition before the SBA Office & Hearings Appeals (OHA) challenging the legal enforceability and amount of the debt. The Firm successfully negotiated a term OIC that was approved by the SBA Office of General Counsel, saving the clients approximately $205,000.
Clients obtained an SBA 7(a) loan for their small business in the amount of $298,000. They pledged their primary residence and personal guarantees as direct collateral for the loan. The business failed, the lender was paid the 7(a) guaranty money and the debt was assigned to the SBA. Clients received the Official 60-Day Notice giving them a couple of options to resolve the debt balance directly with the SBA before referral to Treasury's Bureau of Fiscal Service. The risk of referral to Treasury would add nearly $95,000 to the SBA principal loan balance. With the default interest rate at 7.5%, the amount of money to pay toward interest was projected at $198,600. Clients hired the Firm with only 4 days left to respond to the 60-Day due process notice. Because the clients were not eligible for an Offer in Compromise (OIC) due to the significant equity in their home and the SBA lien encumbering it, the Firm Attorneys proposed a Structured Workout to resolve the SBA debt. After back and forth negotiations, the SBA Loan Specialist assigned to the case approved the Workout terms which prevented potential foreclosure of their home, but also saved the clients approximately $294,000 over the agreed-upon Workout term with a waiver of all contractual and statutory administrative fees, collection costs, penalties, and interest.
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