Setoff Of Tax Refunds To Delinquent Tax Debt Or Debt Owed To Other State Agencies And Local Governments

Wisconsin statutes authorize the Department of Revenue to apply tax refunds to amounts due for delinquent taxes, and also to set off tax refunds to debts owed to other state agencies and local governments. In most cases, for joint income tax returns, the entire amount of the refund will be applied to the outstanding debts. Setoff of a refund to another state agency or local government debt will delay issuance of the remaining balance of the refund, if any, by approximately three to four weeks.

If the debt was incurred before the marriage, or a pre-marital agreement exists, the Department of Revenue may pro-rate the refund so the non-debtor spouse receives a partial refund if that person earned a portion of the Wisconsin income. Homestead Credits and Farmland Credits are not pro-rated.

See the instructions for the Special Conditions box on the Form WI-Z, Form 1A, and Form 1. Code 4 should be entered in the box for persons who are divorced, where the divorce decree apportions the income tax refund between the spouses. Enclose a copy of the divorce decree with the tax return.

Code 5 should be entered in the Special Conditions box if you are including federal Form 8379, Injured Spouse Claim and Allocation, with the income tax return.

Do not enter code 4 on the tax return if the taxpayer is divorced but the divorce decree does not allocate the refund in a specific manner. Doing so may delay the refund to the taxpayer.

When filing electronically, Form 8379 may be transmitted with the Federal income tax return copy to Wisconsin. The divorce decree may not be transmitted electronically. Form W-RA and a copy of the divorce decree should be mailed immediately to the Wisconsin Department of Revenue at PO Box 8967, Madison, WI 53708-8967.

Page last updated January 8, 2008