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Division of Taxation

Set-Off/Offset Programs

Set-off or offset programs divert taxpayer refunds and government payments to pay federal or state debts. These debts can include unpaid taxes, traffic fines, child support, or other government programs. We participate in several set-off programs that collect funds for the State of New Jersey as well as other government entities.

These programs include:

SOIL withholds New Jersey Income Tax refunds and property tax relief payments from taxpayers who owe debts for New Jersey taxes as well as municipal, State, and federal agencies.

SOIL process
If an agency claims you have a debt, and a tax refund or benefit payment is available, we will notify you by mail.

The notice will tell you:

  • The amount of tax refund or benefit payment available to pay that debt;
  • The name of the agency or agencies that requested payment and each agency’s contact information; and
  • You have 35 days to contact the agency with questions, disputes or proof of payment.

If you have questions about the hold or you dispute the debt, you must contact the holding agency or agencies directly. We cannot assist you with the release of funds.

Agency Outreach and Response
After a refund, rebate, or benefit is approved we will notify the holding agency or agencies that funds are available.

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.

Once all or part of your refund, or benefit payment is released, it may take up to 60 days to issue your payment.

The FOIL program consists of two types of set-offs. The first withholds federal income tax refunds and the second withholds monthly federal pension payments. As of 2019, we no longer participate in monthly federal pension payment set-offs.

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 will send you a Notice of Intended Federal Set-Off. This notice is to inform you that you have 60 days to clear up your debt. If you do not resolve your tax issues within the allotted period, we contact the federal Bureau of the Fiscal Service (BFS) that you owe a debt to us. BFS will also notify you that we have requested a set-off payment. Once funds are available, BFS sends your federal tax refund(s) to us.

In addition to the money owed to us, BFS charges a $23.64 processing fee per transaction that is deducted from the refund.

California, Connecticut, Maryland, and New York participate in an agreement to send individual income tax refunds to New Jersey to resolve tax debts. In turn, we send New Jersey Income Tax refunds to offset taxes owed in those states.

If your refund is on hold for another state it can take up to 60 days for the other state to receive the funds.

If you receive a notice that you owe another state and you believe it is an error you have 90 days to respond in writing to the address provided in the notice in order to appeal the claim.

State Vendor Set-Off

The New Jersey Office of Management and Budget (OMB) withholds payments to vendors that owe taxes to New Jersey. The payments are sent to us to reduce the vendor's New Jersey tax debt.

If you or your business do work with New Jersey, your payments can be diverted to resolve your tax debt. We will notify you and your caseworker after we receive the funds. If diverted payments exceed your tax debt we will process full or partial refunds directly to you.

Federal Treasury Offset Program (TOP)
TOP is based on an agreement between New Jersey and the federal Bureau of the Fiscal Service (BFS). BFS and New Jersey match debts (both tax and non-tax) against payments due to vendors.

If you do not respond to a bill sent under this program within 90 days, we send you a Notice of Intended Federal Set-Off. This notice informs you that you have 60 days to clear up your debt or your payment(s) will be diverted to reduce the debt.

The federal government imposes a $18.08 processing fee per transaction. The federal government deducts the fee from the payment amount.

 

We may be able to assist you with questions and concerns about certain set-offs:

  • If you received a notice stating your New Jersey or federal refund or a property tax benefit check is being applied to a debt you owe with the New Jersey Division of Taxation;
  • If you are appealing a debt held under the State Reciprocal Set-Off program;
  • If you are a vendor for either New Jersey or the federal government and you were notified that a check or payment is being held for us.

For these types of inquiries, you may email us by choosing the “contact us” button below

We cannot assist with any inquiries that are for another New Jersey agency. If your refund or other compensation is held by any other agency (Child Support, Motor Vehicle Commission, Probation, New Jersey Department of Labor and Workforce development, etc.) you must contact that agency directly, using the contact information located on your set-off notice for assistance.

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Last Updated: Friday, 09/30/22