STATE TAX INTERCEPT
06/10/85
Revised 08/07/24 Training Completed 08/21/24 Last Reviewed 08/04/25
The Office of Recovery Services/Child Support Service (ORS/CSS)
sends the “Annual Notice of Past-due Child Support” form each year to
noncustodial parents (NCPs) who owe past due child support. The “Annual Notice”
explains the steps the NCP’s spouse should take to receive his/her a portion of
the State tax refund. See CS 802P Annual Notice of Past-due Child Support,
General for more information.
Notification
to Spouse at Time of Intercept
At the time the NCP’s State tax refund is posted, ORSIS generates
a “State Tax Notice of Amount Intercepted” form to the NCP. This letter
notifies the NCP of the tax intercept and of the steps his/her spouse may take
to receive a portion of the tax refund if the spouse had earnings and filed a
joint State tax return with the NCP. ORSIS places a 30-day hold on the state
offset intercept payment to prevent it from distributing to the NCP’s debts and
to allow the unobligated spouse an opportunity to request his/her portion of
the State tax refund.
Request for
Refund to Unobligated Spouse
In order for the NCP’s present spouse to receive his/her portion
of an intercepted State tax refund, s/he should send a letter to CSS requesting
his/her portion of the tax refund and attach copies of the joint Federal and State tax return schedules with
the appropriate W-2 forms. If W-2 forms are not available (e.g., NCP and/or
spouse are self employed), just the copies of the joint tax return will be used
to obtain each parties income for the tax year. A case narrative documenting
the spouse’s verbal request for his/her portion of the tax refund is an
acceptable substitute for a written request, if the spouse provides copies of
the tax schedules and W-2 forms but fails to send a letter.
The spouse must request his/her portion of the refund within 25
days of the date the State tax intercept payment posted. If the written request
is not made within 25 days of the intercept, CSS will NOT pay any portion of
the tax refund to the unobligated spouse if the payment has disbursed to the
custodial parent (CP). Consult with your management chain (Manager, Associate Regional
Director (ARD), Regional Director (RD), and CSS Director) if you think an
exception to the 25 day time frame should be made.
Procedures
1.
Calculate the unobligated spouse’s portion of the refund by
prorating the amount according to the percentage of income noted on the W-2
forms and reported as gross income on the federal return for the tax year. If
W-2 forms are not available, use the income amounts reported on the tax return
for each party.
EXAMPLE:
Total household income: $30,000.00
NCP’s income: $20,000.00
Unobligated spouse’s income: $10,000.00
Joint
refund amount $ 300.00
Divide
the unobligated spouse’s income by the total household income
($10,000.00/$30,000.00 = 0.333 or 33.3%). The unobligated spouse’s percentage
of the household income is 33.3%. Multiply the amount of the joint refund by
the unobligated spouse’s percent of income ($300.00 X 33.3% = $100.00). The
unobligated spouse’s share of the State tax return is $100.00.
2.
Mail the “State Tax Refund Assessment Notice” to the NCP and the
unobligated spouse. This letter itemizes the portion of the state tax refund
that was refunded to the unobligated spouse and the amount CSS will apply to
the NCP’s cases/debts.
3.
If the NCP’s spouse does not agree with the determination of
his/her share of the State tax refund, the unobligated spouse may review the
decision with the team manager. If the unobligated spouse still disagrees, s/he
may appeal the matter to a Regional Quality Assurance Specialist or seek legal
remedy through the courts.