STATE TAX INTERCEPT
CS 651P State Tax Intercept – Procedures
12/16/85
Revised 06/18/24 Training Completed 07/01/24 Last Reviewed 08/04/26
45 CFR 303.102; 42 U.S.C. 657; U.C.A. 59-10-529; R527-200 and R527-475
Procedures
Two times per month (on the 14th
and 28th), the Office of Recovery Services/ Child Support Services
(ORS/CSS) creates a file of qualified debts on ORSIS cases to match against the
State Finance records in order to submit debts for State tax refund intercept. For
additional information, refer to CS 650P State Tax Intercept – Criteria. If a
match is made against a noncustodial parent (NCP) who is due a State income tax
refund, the tax refund will be intercepted by the Utah State Tax Commission and
electronically sent to CSS.
Prior Notice
ORSIS automatically generates the
“Annual Notice of Past-due Child Support” letter to the NCP’s last known
residential address when the case meets automated enforcement criteria. The “Annual
Notice” notifies the NCP that his/her State tax refund may be intercepted. The
notice advises the NCP of the right to an administrative review or an
adjudicative proceeding if s/he disagrees with the action or the amount of the
offset. Refer to CS 802P Annual Notice of Past-due Child Support, General and
CS 802P-2 Annual Notice of Past-due Child Support, Contesting Options and
Reviews policy for details. Also refer to CS 090P Administrative Review and
Request for Agency Action (RAA) for specific instructions.
The notice also informs the NCP
about the steps his/her present spouse may take to claim his/her share of the
tax refund. Refer to CS 652P Unobligated Spouse for more information.
Distribution of State Tax
Intercept Payments
Section 457 of the Social
Security Act requires payments received from any source, other than Federal tax
intercept, be credited to current support first. Any amounts received that exceed
current support must be applied to Non-IV-A arrears debts before IV-A arrears
debts. See CS 541P Distribution of Collections - State Tax Intercept Payments
for more information about how State tax intercept payments are distributed to
the NCP’s debts and CS 537P Distribution of All Payments Other Than Discounted
Settlements and Federal Tax Intercept Payments for the order in which debts are
paid.
Notice to Noncustodial Parent at
Time of Intercept
ORSIS generates the “State Tax
Notice of Amount Intercepted” letter to the NCP when the state tax refund
intercept payment is posted. This letter:
1.
Notifies the
NCP of the intercept payment amount.
2.
Informs the
NCP’s unobligated spouse regarding procedures for claiming his/her share of the
refund. See CS 652P State Tax Intercept – Unobligated Spouse policy for more
information.
NOTE: The letter will not
generate if there is not a verified address for the NCP on ORSIS.
Refunding Overpaid State Tax
Payments to the Noncustodial Parent
If the State tax refund intercept
payment exceeds the NCP’s debt balance, the payment will continue to appear on
your funds remaining report. Before refunding the excess payment to the NCP and
his/her present spouse, you must ensure the CSS erroneous payment team (Team
60) and the DWS overpayment team receives State tax intercept payments on their
qualified debts. A Senior Agent, Regional Quality Assurance Specialist (QA), or
Manager must generate refund requests.
State Tax Intercept Fees
State Finance charges the NCP a
$15.00 fee each time his/her state tax refund is intercepted. This fee is
withheld before the tax intercept payment is forwarded to CSS. If the debt was
referred for state tax intercept in error, request a refund from the ORS
Account Disbursement (AD) Unit. Include information
justifying the need to refund the fee.
The NCP must
show that the debt did not meet the minimum state tax intercept criteria to receive
reimbursement for the fee. Do not refund the fee if the debt qualified for
state tax intercept, but was paid prior to CSS receiving the state tax refund.
Also refer to CS 585P Costs and Fees.