STATE TAX INTERCEPT
CS 651P State Tax Intercept – Procedures
12/16/85
Revised 06/18/24 Training Completed 07/01/24 Last Reviewed 08/04/25
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.