If you received a letter from the Department of Revenue informing you that your North Carolina state tax refund has been setoff or checked your refund status online, here is some helpful information to explain what happened and who to contact:

  1. What happened? One or more local government entities submitted a debt to the NC Local Government Debt Setoff Clearinghouse with your information. We submitted this to the NC Department of Revenue and they took funds from your tax refund. The amount taken is listed on the letter. IMPORTANT: YOU ARE NOTIFIED OF THIS UP TO THREE WEEKS BEFORE THE NC LOCAL GOVERNMENT DEBT SETOFF CLEARINGHOUSE. AND IT TAKES UP TO THREE MORE DAYS BEFORE THE LOCAL GOVERNMENT IS MADE AWARE THAT FUNDS WERE TAKEN AND PROVIDED TO THEM. AND IT MAY TAKE SEVERAL MORE DAYS BEFORE THE FUNDS ARE DEPOSITED IN THEIR ACCOUNT.
  2. Who got the funds? Call the Interactive Voice Response toll free phone number listed on the letter, (877) 843-0330 and enter your Social Security Number (SSN). If you filed a joint tax return enter your spouse's SSN. You will be provided a local government and a contact and phone number for EACH local government that has a debt against your Social Security Number. We do not provide the debt amount nor the account number but the local government can provide this when you call them. Remember to listen to the entire recording as there may be more than one local government that submitted debts against you and/or your spouse. You may even hear local government contact information for a debt that has been paid in the past.
  3. We don't have your SSN? You call the toll free number on the letter (877) 843-0330, enter your SSN but it says it can't find that SSN. Try entering a spouse SSN, often times if a joint return the debt may be under the spouse. If not, call the Department of Revenue Setoff Unit (919) 814-1119. An alternate number is the Tax Care Assistance (877) 252-3052.
  4. You were setoff in a previous year and again this year, how can that happen? If there was not enough of your tax refund or education lottery winnings to pay off a debt, it carries over until it is paid in full or the local government removes the debt.
  5. You were setoff more than once this year? If you file more than one tax return in a short period of time, less than two weeks, you may be setoff by the Department of Revenue multiple times. We only receive the list of debtors setoff every 2-3 weeks. So it is possible that even though you were setoff, which paid all of your debt balances, you may still be setoff more than once.
  6. What happens when more funds were taken than owed? You will receive any surplus funds from the local government that received the funds. Contact the local government(s) listed by the toll free Interactive Voice Response line.
  7. Are fees charged each time there is a setoff? The Clearinghouse only takes one $15 fee per debt per year. So if you filed more than one tax return and were setoff more than once for the same debt, no more fees are taken. If there is a surplus amount the fees taken will also be returned to you. The Department of Revenue does take a $5 fee per tax refund.
  8. When will the local government receive the funds from your tax refund or education lottery winning? It can take up to three weeks before the local government is notified. It takes up to one additional week for the funds to be placed in their account. They wait until these funds are deposited before they can make any refunds due to surplus amounts withheld.
  9. How can a tax refund and lottery winnings both be setoff? The Clearinghouse sends a file of current debtors and debts to the Department of Revenue each week. The Department of Revenue provides it to the Education Lottery. If you file a tax return and win more than $600 in the lottery in a few weeks time span, you may be setoff by each.
  10. If you pay a debt to the local government how long does it take to ensure your tax refund or education lottery winning won't be taken? It can take up to 10 days before the local government gets your payment to the Clearinghouse who processes it and sends the update to the NC Department of Revenue and NC Education Lottery.
  11. Can a federal tax refund or stimulus check be setoff? No, the Clearinghouse only sends debtors and their debts to the North Carolina Department of Revenue.
  12. You didn't receive a letter of notification that your NC state tax refund or Education Lottery winning would be taken for an outstanding bill? By law, the local government was required to send by regular mail, not certified mail, a letter to your LAST KNOWN ADDRESS. If you moved and did not provide a forwarding address to the local government your notice may have been undelivered and even returned to the local government.
  13. Is your information shared with anyone other than the NC Department of Revenue and NC Education Lottery? No, the Clearinghouse only sends debtors and their debts to the North Carolina Department of Revenue who provides this information to the NC Education Lottery. It is not sold or shared in any way. We adhere to all privacy rules.