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25 Fla. Tax Rev. 1 (2021-2022)

handle is hein.journals/ftaxr25 and id is 1 raw text is: FLORIDA TAX REVIEW Volume 25 2021 Number] THE ROLE OF OFFSET IN THE COLLECTION OF FEDERAL TAXES by Keith Fogg* ABSTRACT The legal principle of offset has played a key role in debt collection by private parties for centuries. In 2021, offset continues to play an equally essential role in the United States government's collection of debts owed to it, accounting for billions of dollars in funds taken from outgo- ing payments. The right of offset arises when two parties owe each other debts. The party asserting offset can subtract what is owed to them from what they owe, allowing the parties to avoid an unnecessary transaction. Offset thus makes intuitive sense, simplifying two payment flows into one. But offset becomes far more complex when one of the parties is the federal government, which is unlike a traditional private creditor in important ways. Offset has perhaps its largest impact in the tax system, where Congress has legislated that the Internal Revenue Service (the Ser- vice') has the authority (and sometimes, the mandate) to offset tax refunds. Refunds are commonly offset when a taxpayer owes prior year * Keith Fogg directs the Tax Clinic at the Legal Services Center of Harvard Law School. Prior to coming to Harvard to found and direct the tax clinic, Clinical Professor Fogg directed the tax clinic at Villanova Law School for a decade. Before coming to Villanova, he worked for the Office of Chief Counsel, IRS for three decades. The author expresses thanks to Michael Waalkes (a recent graduate of Boston University School of Law), Rachel Radspinner, Grace Heinerikson, Ted Afield, Michelle Drumbl, Ken Weil, Bryan Camp, Les Book and Marilyn Ames for their helpful comments on the Article. 1