Received a Tax Topic 151 Letter. What Does It Mean?

Received a Tax Topic 151 Letter. What Does It Mean?

Did you file taxes expecting a refund but received a Tax Topic 151 letter from the IRS instead, either with a reduced refund or no refund at all? Getting an IRS 151 letter can be jarring, especially if you believed your taxes were fully in order. But it usually indicates a misunderstanding or tax situation that can be straightened out fairly easily.

Here are the answers to the most asked questions about Tax Code 151 and what to do if you received a Tax Topic 151 letter.

What Is Tax Topic 151?

Tax Topic 151 refers to the reduction or withholding of an individual’s tax refund to cover money the taxpayer allegedly owes the government. This might include:

  • Unpaid or back taxes
  • Unpaid child support
  • Defaulted federal student loans

If the IRS takes your tax refund to satisfy one of these debts, it will send you a Tax Topic 151 letter to explain why. You typically are not required to respond to an IRS 151 letter, although if the IRS believes you still owe money after they seize your refund, the IRS might pursue further collection efforts.

If you believe the IRS is withholding your tax refund in error, however, you have the right to file a dispute under Tax Code 151.

Why Did I Receive a Tax Topic 151 Letter From the IRS?

You received a Tax Topic 151 letter from the IRS because they believe you owe the government money, and they are taking some or all of your tax refund to satisfy your supposed government debt. The Tax Topic 151 letter is to inform you of what they are doing so that you do not have to wonder why you received a reduced tax refund or none at all.

How Much Time Do I Have to Respond to a Tax Topic 151 Letter?

Your timeframe to respond to a Tax Topic 151 letter depends on the course of action you choose to take. You can either appeal the decision directly with the IRS or take it to the U.S. Tax Court, District Court or Federal Claims Court.

If you choose to appeal directly with the IRS, you must do so within 30 days of receiving the Tax Topic 151 letter. If you instead opt to file an appeal with the courts, you may do so within 90 days.

What Are My Tax Topic 151 Letter Appeal Rights?

You may file a written protest with the IRS or an appeal in a U.S. Tax Court, District Court or Federal Claims Court. A written protest to the IRS should include the following information:

  • Your contact information
  • A clearly written statement of your intentions to appeal
  • A copy of the Tax Topic 151 letter you received
  • An explanation of the sections you believe are erroneous, along with evidence of why you believe this
  • A list of the tax years in question
  • References to any tax law you are citing in your argument

If you prefer to go to court, you should make sure your case is strong, as you can be fined as much as $25,000 for filing an IRS appeal that the judge determines to be frivolous.

How Long Does It Take to Appeal a Tax Topic 151 Letter?

You will get a resolution faster by appealing directly with the IRS rather than going to court, though there is no set timeline for how long they will take to get back to you. Generally, however, the IRS is known for responding to Tax Topic 151 appeals quickly.

6 Simple Questions. Free Evaluation.


Join our Newsletter

Enter your email address to join our free newsletter. Get all the latest news and updates.