Official Site of The State of New Jersey

Set-Off/Offset Programs

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 njtaxsetoffprograms@treas.nj.gov. 

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:

• Internal Revenue Service (IRS) (e.g., federal taxes);
• New Jersey Division of Family Development, Office of Child Support services (e.g., child support in arrears);
• New Jersey Surcharge Violations System (e.g., traffic fines);
• Department of Labor & Workforce Development, Division of Unemployment Insurance (e.g., excess unemployment benefits paid);
• Office of the Public Defender (e.g., legal assistance); and
• Other State and municipal agencies (e.g., excess welfare benefits paid).

What happens if an agency holds your refund or benefit payment because it claims you owe it money?

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:

• The amount of tax refund or benefit payment available to pay that debt,
• The name of the agency and its contact information,
• You have 35 days to contact the agency with questions, disputes or proof of payment. (We strongly encourage you to contact the agency directly).
What happens after the agency responds?

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.

State Vendor Set-Off
The New Jersey Office of Management and Budget (OMB) withholds payments to vendors that owe taxes to the State. The payments are sent to the Division of Taxation to reduce the vendor's State 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. The Division processes full or partial refunds directly to the vendor if diverted payments exceed the vendor's tax debt.

Federal Treasury Offset Program (TOP)
The Treasury Offset Program (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 $12.50 processing fee per transaction. The federal government deducts the fee from the payment amount.

State Reciprocal Set-Off
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.