How to Stop the IRS From Taking Your Tax Refund

Back tax debt to the IRS means any future refunds will be applied to the total amount owed to the IRS until that entire debt is paid in full. You can prevent the IRS from taking that tax refund, but only for a short while.

Apply For an Extension on the Tax Filing Date

If you owe back taxes to the IRS, you can stop the IRS from taking your tax refund by filing an application for extension. Typically, taxpayers must file an income tax return by the middle of April. Depending on when the 15^th of April fall, the date could be extended to the 16th or 17th, but two days is not going to stop the IRS from taking your tax return.

The form you are looking to file is the IRS Form 4868. The form asks for estimated tax liability for the tax filing year and total payments made during the tax year. You are also asked to estimate how much you will owe the IRS this tax season. Payments on back taxes owed the IRS can be made with the form to reduce the tax burden. The automatic extension is six-months and may be long enough for you to pay off the back taxes before filing your return for a tax refund.

File for Bankruptcy

In some cases, bankruptcy can provide relief from back tax burden. When filing Chapter 7 or Chapter 13 bankruptcy, back tax debt can be relieved if the filer meets certain criteria. The tax returns for which money is due must have been filed at least two years before the petition for bankruptcy is filed. The IRS must have verified the amount owed at least 240 days before the bankruptcy petition and the tax return must be proven truthful. The IRS must agree that the taxpayer is not filing bankruptcy to try and evade tax debt. If a federal tax lien has been placed on a taxpayer for back taxes owed to the IRS, the debt cannot be discharged through bankruptcy.

Taxpayers cannot file for an extension on the current year's tax return before filing bankruptcy to prevent the IRS from taking a current year's tax return.

What Does Not Work to Stop the IRS From Taking a Refund

The IRS will not accept petitions for leniency based upon current financial situation, so you cannot file for relief from tax debt to receive a refund because you are currently in a financial position that prevents you from paying back taxes to the IRS.

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