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Tax Season Is Year-Round

How the IRS collects back taxes, including tax liens, Offers in Compromise, payment plans, transcript use, and when refunds are taken to pay debts.

How the IRS collects back taxes, including tax liens, Offers in Compromise, payment plans, transcript use, and when refunds are taken to pay debts.

IRS Back Taxes, Liens & Collections

As the 2026 tax season unfolds, taxpayers face a complex and evolving IRS collection and refund environment shaped by expanded refund interception authority, refined enforcement tools, record refund volumes, persistent processing delays, and heightened digital engagement. Navigating this landscape requires informed vigilance, strategic use of IRS digital resources, timely responses to notices and rejections, and awareness of emerging risks such as sophisticated scams.

Expanded Refund Interception Authority Deepens Impact Across Multiple Debt Types

A defining feature of the 2026 IRS collection framework is the broadened scope of the Treasury Offset Program (TOP), which now reaches far beyond traditional IRS tax debts. Refunds are increasingly intercepted to satisfy a wider array of federal and state obligations, including:

  • Defaulted federal student loans
  • Child support arrears
  • State tax delinquencies
  • Other federal agency debts

This expansion means that even taxpayers without outstanding IRS tax liabilities may see their refunds reduced or fully offset to cover unrelated debts, raising the stakes for millions of filers this season.

Joint filers bear particular risk, as one spouse’s non-tax debt can trigger interception of the entire refund. The IRS strongly advises timely filing of Form 8379 (Injured Spouse Allocation) to protect the non-debtor spouse’s share of the refund. Failure to submit Form 8379 promptly can result in significant financial hardship, with families losing funds they might otherwise rightfully receive.

Core IRS Collection Tools Refined for Greater Flexibility and Fairness

While refund interception expands aggressively, the IRS continues to rely on its fundamental collection tools with important 2026 updates that promote compliance and taxpayer relief:

  • Tax Liens and Levies: The IRS has eased criteria for lien withdrawal and subordination, making it easier for compliant taxpayers to manage credit impacts and recover financially. This policy shift encourages voluntary compliance and supports taxpayers working in good faith.

  • Offers in Compromise (OICs): OIC approval rates remain consistent at approximately 21%, reflecting the program’s selective nature. Taxpayers should note that forgiven debt through an OIC is treated as taxable income, reported via Form 1099-C, which can create unexpected tax liabilities. Careful evaluation with tax professionals is recommended before applying.

  • Variable-Payment Installment Agreements (VPIAs): Expanded in 2026, VPIAs now accommodate fluctuating incomes common among freelancers, gig workers, and seasonal employees. These agreements can extend up to 72 months and require direct debit payments, fostering sustained compliance and reducing escalated enforcement actions.

Record Refund Payouts Amid Processing Delays and Rising Return Rejections

The IRS has issued over $129 billion in refunds this season, a record payout volume reflecting robust tax return activity and refundable credit claims. However, taxpayers continue to grapple with significant refund delays driven by:

  • Staffing shortages and resource reallocation, especially affecting returns requiring manual reviews
  • Enhanced identity verification and fraud detection protocols, prolonging processing times
  • Increased complexity from expanded TOP offsets and a surge in Form 8379 submissions
  • Heightened scrutiny of refundable credits such as the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC)
  • Backlogs in paper return processing, which can delay refunds by months compared to electronic filings

Compounding delays is a notable uptick in return rejections, caused by:

  • Identity verification mismatches
  • Social Security number and data entry errors
  • Duplicate filings and inconsistent information

Taxpayers are urged to carefully review rejection notices and promptly correct and resubmit returns electronically, as paper resubmissions tend to exacerbate delays.

Digital Modernization Enhances Account Transparency While Scam Risks Escalate

The IRS’s ongoing digital modernization initiatives have significantly improved taxpayer access and communication through:

  • Real-time email alerts for account updates and enforcement notices
  • Interactive online accounts featuring balance, payment tracking, and access to transcripts via the Get Transcript tool
  • Immediate notification of notices and collection actions
  • Expanded mobile access through the IRS2Go app and real-time refund status updates via the IRS Refund Tracker

These tools empower taxpayers to monitor their accounts proactively, reducing uncertainty and enabling timely responses.

However, this digital progress coincides with a surge in sophisticated IRS-related scams, including:

  • Fraudulent “ghost” tax preparers submitting fake returns or stealing refunds
  • Phishing and smishing campaigns impersonating the IRS with false claims of frozen refunds or urgent payment demands
  • Impostor phone calls demanding payment via gift cards or cryptocurrency—methods the IRS never accepts

The IRS reiterates that official communications are always mailed first, never demand immediate unconventional payments, and encourages taxpayers to verify contacts through official IRS portals or known phone numbers. Prompt reporting of scams to the IRS, TIGTA, FTC, and advocacy groups like AARP remains vital.

Complex Intersections of Student Loan Debt, Other Non-Tax Obligations, and Tax Collection

The handling of student loan debt and other government obligations has become more intricate in 2026:

  • TOP now intercepts refunds to repay defaulted federal student loans even when no IRS tax debt exists
  • Forgiven student loan balances are generally considered taxable income, reported on Form 1099-C, potentially increasing tax bills unexpectedly
  • Recent federal court rulings uphold the IRS’s stance that such forgiven loans are taxable income absent specific exemptions

Taxpayers are encouraged to maintain open communication with loan servicers and the IRS, anticipate potential tax consequences, and seek professional advice before accepting loan forgiveness or negotiating settlements.

Similarly, refund offsets for child support and state tax arrears have increased, heightening the likelihood that refunds may be reduced or eliminated to cover unrelated debts.

Enhanced Protections and Resources for Military Personnel

The IRS has introduced expanded 2026 protections for military members and their families, recognizing their unique challenges:

  • Extended filing deadlines and penalty relief for deployed or relocated service members
  • Dedicated assistance lines addressing military pay, benefits, and deployment-related tax issues
  • Tailored guidance and digital tools to prevent inadvertent collection actions and refund interceptions

These measures underscore the IRS’s commitment to easing tax burdens for military personnel while ensuring compliance.

New Focus: Verifying Tax Filing Status and Proof of Filing

Amid widespread processing delays and rejections, many taxpayers seek to confirm whether their 2024 tax returns were successfully filed. To address this, IRS resources and third-party tools now provide clear guidance on how to verify tax filing status, including:

  • Utilizing the IRS online account and Get Transcript tool to confirm filing acceptance and view return transcripts
  • Contacting the IRS directly via phone or secure portals for filing verification
  • Checking for electronic filing acknowledgments from tax software providers or preparers

This verification step is critical to avoid duplicate filings, reduce rejection risk, and ensure refunds are processed correctly.

Practical Strategies for Successfully Navigating the 2026 IRS Landscape

Given the complexities and challenges of this tax season, taxpayers should adopt these best practices:

  • Create and actively monitor IRS online accounts to track payments, balances, offsets, and notices using tools like Get Transcript and IRS Refund Tracker
  • File Form 8379 (Injured Spouse Allocation) promptly in joint filing situations to protect the non-debtor spouse’s refund share
  • Consider Variable-Payment Installment Agreements (VPIAs) to accommodate fluctuating income during tax debt repayment
  • Consult tax professionals before submitting Offers in Compromise to understand qualifications and tax implications of forgiven debt
  • Act swiftly on IRS return rejections — carefully review notices, correct errors, and resubmit electronically to avoid further delays
  • Maintain thorough records of all IRS communications, payments, and filings to support dispute resolution and minimize collection impact
  • Remain vigilant against scams by verifying IRS contacts, safeguarding personal information, and promptly reporting suspicious activity

Leveraging digital tools such as the IRS Refund Tracker and IRS2Go app can substantially reduce anxiety by providing real-time updates on refund status and IRS account activity.

Real-World Lessons: Vigilance and Persistence Are Crucial

High-profile cases, such as Brendan Byrne’s near two-year ordeal with misapplied payments and resultant tax liens, highlight the critical importance of:

  • Frequent IRS account reviews
  • Prompt reporting of discrepancies
  • Persistent follow-up to resolve errors and protect credit standing

Such vigilance can prevent prolonged collection actions and financial hardship.

Conclusion: Informed Vigilance and Digital Engagement Are Essential

The 2026 IRS collection and refund environment is marked by expanded refund interception, refined collection policies, record payout volumes amid persistent delays, and advanced digital engagement paired with rising scam threats. Taxpayers who proactively embrace IRS digital tools, understand and mitigate refund offset risks, respond quickly to return rejections, utilize protective filings like Form 8379, consider flexible installment plans, verify filing status, and seek expert guidance are best positioned to safeguard refunds, manage debts, and minimize financial disruption now and in the future.

Key 2026 IRS Resources

In 2026 and beyond, the key to successfully navigating the IRS collection and refund landscape lies in informed vigilance, proactive digital engagement, and strategic use of protective measures and expert advice.

Sources (40)
Updated Feb 26, 2026