The window for disputing a federal tax offset closes faster than most people realize. If the IRS applies your refund against an outstanding debt — a process called a tax refund offset — you typically have a narrow timeframe to respond before that money is gone. For the 2025 tax year, the IRS’s Topic 203 guidance makes clear that offsets can apply to federal and state debts, child support, and certain other obligations, often with little advance warning to the taxpayer.
That timing problem is exactly what brought me to Ruben Kowalski.
A manager at a credit union branch in Kansas City, Missouri called me in late February 2026. She said a client had come in that week asking about hardship withdrawal options — a man who was clearly distressed, clearly embarrassed, and clearly in over his head with a tax situation he didn’t fully understand. She asked if I’d be willing to hear his story. I said yes.
When I sat down with Ruben Kowalski at a coffee shop near his office on a Tuesday morning in early March, he kept his voice low, even though the nearest table was empty. He’s 57 years old, works as a real estate agent — a field that’s been brutal in Kansas City’s shifting market — and is the primary caregiver for his 81-year-old mother, who lives with him. He told me he hadn’t discussed any of this with his friends. Not one of them.
“I’m not the kind of person who asks for help,” he said, turning his coffee cup in both hands. “I’ve always figured things out on my own. This time, I couldn’t.”
A Refund That Was Already Gone
Ruben filed his 2025 federal return on February 9, 2026, using a paid preparer he’d worked with for several years. His adjusted gross income for the year came in at roughly $31,400 — a tough number for someone in real estate commission work, but not unusual given how few deals he’d closed while managing his mother’s increasing care needs. His expected refund, based on withholding, was $2,847.
He checked the IRS’s “Where’s My Refund” tool on February 23. The status showed his return had been received and was being processed. Then, on March 4, he received a letter — not from the IRS, but from the Bureau of the Fiscal Service, the federal agency that administers the Treasury Offset Program. The letter informed him that $2,847 — his entire refund — had been applied to a debt owed to a collection agency that had purchased an old credit account from 2019.
The original balance on that account had been $1,104. By 2026, with fees and interest, the amount had grown to $2,983. The offset covered $2,847 of it.
Ruben told me he had no memory of this account being registered for offset. He had never received a prior notice — or if he had, he couldn’t find it. “I was already stretched thin,” he said. “My mom needs medication every month, and I was counting on that money. I had already told myself it was coming.”
When Identity Theft Entered the Picture
The offset was painful enough on its own. But as Ruben started trying to dispute the debt through the Bureau of the Fiscal Service’s review process, something else surfaced — something that had been quietly destroying his financial life for more than two years.
In attempting to pull documentation on the 2019 account, Ruben’s tax preparer ran a credit check and found accounts Ruben had never opened: two credit cards, a personal loan, and a retail store account, totaling approximately $14,200 in fraudulent balances. The activity traced back to early 2023. Someone had used Ruben’s Social Security number and personal information to open credit in his name.
Ruben told me he went pale when he saw the report. He had noticed his credit score dropping for over a year — it had fallen from approximately 610 to 514 — but assumed it was the result of his reduced income and a few late utility payments. He never connected it to fraud.
Identity theft that involves a Social Security number can create serious complications with the IRS specifically. When a fraudulent return is filed under a victim’s SSN — which can happen even if it hasn’t happened yet — it can trigger refund holds, processing delays, and mandatory identity verification steps. The IRS’s Identity Theft Central hub outlines several steps taxpayers must take, including filing a Form 14039 Identity Theft Affidavit.
The Forms, the Waiting, and the Frozen Ground
Between early March and the first week of April 2026, Ruben and his preparer filed four separate documents: a dispute letter to the Bureau of the Fiscal Service challenging the offset, a Form 14039 with the IRS, a dispute package with all three credit bureaus, and a police report with Kansas City PD, which is required as supporting documentation in most identity theft cases.
The IRS acknowledged receipt of the Form 14039 by mail. The acknowledgment letter stated that identity theft cases can take 120 to 180 days to resolve — a timeline Ruben described as devastating. “I don’t have 180 days,” he told me. “My mom’s prescriptions alone are $340 a month. That refund was supposed to cover that for several months.”
The offset dispute, meanwhile, was a separate and slower track. The Bureau of the Fiscal Service told Ruben’s preparer that even if the dispute was upheld, the refund amount could not be returned until the creditor responded to the challenge — a process that could take 60 to 90 additional days on its own.
What the Outcome Actually Looked Like
When I spoke with Ruben again by phone on April 4, 2026, the situation remained unresolved. The IRS had not yet assigned a case number for the identity theft affidavit. The offset dispute was in review. His credit was still showing the fraudulent accounts, though two of the three bureaus had placed provisional flags on them pending investigation.
He had gone back to the credit union — the same one whose manager had initially called me — and spoken with a counselor about hardship options for a small personal loan to cover near-term caregiving costs. He was embarrassed about that, too. “I’ve been a homeowner since I was 31,” he said quietly. “I’ve never been in a position where I was going to a bank asking for emergency money. It’s a hard thing to sit across the table from someone and explain.”
The IRS does have a dedicated Taxpayer Advocate Service for cases involving financial hardship. Ruben’s preparer had submitted a request to the TAS in mid-March, citing the caregiving situation and the loss of the full refund. As of our last conversation, that request had not yet been assigned to a local advocate. According to the Taxpayer Advocate Service, cases involving identity theft and financial hardship are prioritized, but processing times vary by volume.
The Silence Around Financial Shame
What stayed with me after both conversations with Ruben wasn’t the complexity of the tax and fraud processes — it was how long he had been carrying this alone. Two-plus years of identity theft eroding his credit. A debt growing in the background. A refund he had quietly planned around, vanished before he could spend a dollar of it.
He told me near the end of our first meeting that none of his friends knew about any of it. Not the debt. Not the identity theft. Not the struggle to keep his mother’s care costs managed on a commission income that had dropped nearly 40 percent since 2022. “People see me in this business and they think you’re doing fine,” he said. “They don’t ask. And I don’t tell.”
The credit union manager who connected us told me she sees this pattern constantly — people who wait until a crisis forces their hand before they reach out. By that point, the options are narrower and the timelines are tighter.
Ruben is still waiting. His refund is still in limbo. His identity theft case number still hasn’t been assigned. But he filed the forms. He made the calls. He walked into the credit union. For someone who describes himself as a person who figures things out alone, those steps were not small ones.
“I keep reminding myself I did everything right — eventually,” he told me. “I just wish I’d done it sooner.”
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