Federal Tax Interception
DCSE has the authority, together with the Federal Department of Financial Management Services, to seize federal income tax returns to which the non-custodial parent (NCP) may be entitled.
For NPA (Non-Public Assistance) and MAO (Medicaid Only) cases, the amount of past due support must be at least $500. For Temporary Assistance for Needy Families (TANF) and Foster Care cases, the amount of past due support must be at least $150.
DCSE sends notices to NCPs who meet the criteria for federal income tax refund interception, informing them that they are not in compliance with their court orders and are subject to federal income tax refund interception. NCPs receiving a notice will have the opportunity to take action to avoid having their federal income tax refund intercepted. Within 30 days of receiving a notice of federal income tax refund interception, the NCP may pay their arrears in full, or request in writing an administrative hearing. NCPs who do not pay their delinquent child support or do not request an administrative hearing will be subject to federal income tax refund interception.
If the NCP is married or in a civil union, and files a joint return, the NCP's spouse may be entitled to receive a portion of any joint tax refund. This is possible when the NCP's spouse has incurred no legal responsibility for the NCP's child support debt and the spouse has income and withholding and/or estimated tax payments. For the NCP's spouse to receive their portion of the joint Federal Income Tax Refund, the spouse must file a Form 8379, Injured Spouse Claim and Allocation. Form 8379 can be obtained from the IRS web site . Form 8379 should be attached to the top of Form 1040 or 1040A when filing, or file this form according to other applicable instructions as described on Form 8379.
Additional facts custodial parents (CPs) should know include:
- There is no guarantee the NCP is due a tax refund; thus, there is no guarantee that any money will be collected by DCSE nor is there any way to predict when the money will be available for distribution.
- If a collection is made from a joint Federal income tax return, the NCP's spouse may be entitled to receive a portion of any joint tax refund. DCSE must hold the money for 6 months to allow the NCP's spouse to file a claim with the Internal Revenue Service (IRS).
- If the same NCP owes past due support to two or more child support cases, any money collected will be proportionately distributed among all cases according to federal regulations.
- The NCP may contest DCSE's finding that (s)he owes past due support by requesting an administrative hearing. If a hearing is requested by the NCP, the CP may be contacted to appear.
- If the CP has received public assistance and/or Medicaid in the past, any federal income tax refund intercepted must first be used to repay the State.
- There is a $25 fee deducted from tax offset collections over $100.