Yes, the tax refunds of individuals who owe back child support can be intercepted by the government through the Federal Tax Refund Offset Program. Since the program was enacted in 2010, child support agencies collected over $30 billion in child support through the federal tax refund offset program.
Requirements for IRS Interception
Every child support case does not qualify for the Federal Tax Refund Offset Program. In order for an individual's tax refund to be intercepted for unpaid child support through the program, certain minimums apply. If the child support recipient receives state benefits, child support must be at least $150 in arrears. If the recipient does not receive benefits, child support must be at least $500 in arrears. If you meet the minimum requirements, your name is submitted for the Federal Tax Refund Offset. The parent who is behind on payments will receive a separate notice for each state's debt and has the right to contest each state's debt amount.
How the Federal Tax Refund Offset Program Works
If a payor meet the requirements for a federal tax offset, the state child support agencies submit the names, Social Security numbers, and amounts of past-due support of people who are behind in their payments to the federal Office of Child Support Enforcement. The federal office then makes a list of those cases that are eligible for the Federal Tax Refund Offset Program. That list is submitted to the Treasury Department's Financial Management Service. The Treasury Department sends a Pre-Offset Notice to let the parent who is behind on payments know that part or all of their federal tax refund is scheduled to be intercepted and sent to the child support recipient. The notice explains the process and shows the amount of past-due support owed at the time of the notice. The Pre-Offset Notice includes information about the Federal Tax Refund Offset, passport denial, and other actions the child support agency may take to enforce a support obligation. It also includes information about how to contest the debt amount. The state that submitted the case typically receives money from a tax refund offset within two to three weeks. If the tax refund offset is from a jointly filed tax return, the state may hold the money for up to six months before disbursing. The actual amount that the Treasury Department deducts from the tax refund may differ from the amount on the Pre-Offset Notice based on updated activity on the support obligation. The state updates the debt amount regularly, but may not issue a new notice each time the debt amount changes.
Challenging the Government’s Claim
If you believe that the government is wrong in seizing your tax refund, or the amount of refund seized is incorrect, you can challenge the government’s claim by sending a request for a hearing of your case. You should contact the agency on the number provided on the notice you received via mail. Before challenging the government’s claim, make sure that you have strong arguments against their claims. It is advisable to speak with a lawyer regarding your claim. If you can’t afford a lawyer, gather written documents to back your arguments.
If the original refund amount on the offset notice is different from your original refund amount on your tax return, then you need to contact the IRS.
Some of the common reasons for contesting a tax refund offset include:
The debt does not belong to you or was a result of identity theft
You suffer from a permanent disability
You suffer from a significant financial hardship
You already repaid your debt in full
What if I filed taxes with my spouse?
If you file jointly with your spouse and they are not responsible for the debt, you can submit a claim for your portion of the tax refund. You must be able to prove that you had no knowledge of the debt and that the debt was in no way attributable to you. This claim is called the Injured Spouse Allocation.
To claim the Injured Spouse Allocation, you need to file Form 8379 after receiving the notice. You can attach this form with your joint tax return, your amended joint tax return or only send Form 8379. Usually, the IRS takes months to process an electronic tax return with Form 8379.
Note: This information is general in nature and should not be construed as tax advice. You should work with your attorney or tax professional to determine the tax advantages that will work best for your situation.
To arrange an initial consultation to discuss your specific matter, give us a call at 904-903-4522.
