Set-off or offset programs divert a taxpayer's refunds and government payments to pay federal or state debts such as unpaid taxes, traffic fines, or child support. The Division of Taxation participates in several set-off programs that collect funds for the State of New Jersey as well as other government entities. You can contact the Set-Off/Offset Unit by email at firstname.lastname@example.org.
These programs include:
Set-Off of Individual Liability (SOIL)
SOIL withholds New Jersey Income Tax refunds and Homestead Benefit payments from taxpayers who owe debts to other agencies such as the:
If an agency claims you have a debt, and a tax refund or benefit payment is available, you will receive a notice. The notice will tell you:
If the agency tells us the debt still exists, all or part of your refund or benefit payment may be used to pay the debt. We cannot release your refund unless that agency notifies us that the debt is paid.
If the debt was recently settled, the agency will notify us to release the refund or benefit.
If you have no debts with other agencies, the refund or benefit will be released and sent to you.Please note: If all or part of your refund or benefit payment is released, it may take up to 60 days from the date of the notice to receive your payment.
Federal Offset of Individual Liability (FOIL)
This program withholds federal income tax refunds and monthly federal pension payments.
Federal Income Tax Refund Setoff:
FOIL withholds federal income tax refunds and diverts them to reduce unpaid New Jersey Income Tax debts.
If you do not respond to a FOIL bill within 90 days, we send a Notice of Intended Federal Set-Off.
This notice informs you that you have 60 days to clear up your debt.
If you do not resolve your tax issues within the allotted period, the Division contacts the federal Bureau of the Fiscal Service (BFS). BFS sends your federal tax refund(s) to the New Jersey Division of Taxation.
The federal government charges a $22.57 processing fee per transaction that is deducted from the refund.
Federal Monthly Pension Payment Setoff:
As of 2019, New Jersey no longer participates in this program.
Prior to 2019, FOIL withheld monthly federal pension payments, up to 25% of the total payment amount, and diverted them to reduce unpaid New Jersey Income Tax debts.The Bureau of the Fiscal Service (BFS) would issue a notice to the taxpayer advising them they had two months to resolve their tax debt with New Jersey. If the taxpayer failed to resolve their tax issues during this time, BFS would withhold and send federal pension funds to the Division until the debt was resolved.