FEDERAL TAX INTERCEPT

CS 670P-1 Economic Impact Payments (CARES Stimulus Payments)

05/08/20 Revised 08/17/23 Training 08/31/23 Last Reviewed 08/04/25

Introduction

On March 27, 2020, Congress passed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). This Act provides fast and direct economic assistance to individuals who qualify in the way of a one-time Economic Impact Payment (referred to from this point forward as CARES stimulus payment). The method for disbursing the CARES stimulus payment is similar to Federal tax refunds, and Congress specifically drafted the CARES Act so that these CARES stimulus payments can be intercepted to pay past-due child support debt. This means that the CARES stimulus payment may be intercepted if the child support case has been certified with the Federal Office of Child Support Services (OCSS) for Federal tax refund intercepts. For more information about Federal tax refund intercepts, refer to CS 670P Federal Tax Intercept – Criteria and other Federal Tax Intercept policies.

NOTE: Effective January 1, 2021, the Office of Recovery Services (ORS) will no longer adjust arrears to give additional credit for stimulus payments related to the CARES Act. If a noncustodial parent (NCP) believes that money received by ORS on or after January 1, 2021 is related to a stimulus payment resulting from the CARES Act as described in this policy, the NCP will need to provide ORS with documentation before ORS will make any adjustment matching the payment toward the arrears.

Because the method for disbursing the CARES stimulus payment is similar to Federal tax refunds, ORS will not be able to determine if a payment received by intercept is a Federal tax refund or a CARES stimulus payment. These two payment types will be identical in ORSIS. The amount of the payment may provide a clue, but that is not reliable.

Intercepting the CARES stimulus payment toward child support is not optional; however, ORS has authority to negotiate on state-owed debts. ORS has opted to use this authority to provide an additional credit (i.e., a matching debt settlement), essentially matching dollar for dollar up to the state-owed debt balance, up to the basic $1,200.00 of the individual CARES stimulus payment, the amount of intercepted funds posted to ORSIS after May 1, 2020. If an obligor provides proof (i.e., a copy of the CARES stimulus letter) showing that ORS intercepted more than $1,200.00 (because ORS cannot tell the difference between a tax refund intercept and a CARES stimulus payment), the amount above $1,200.00 will be matched with an additional credit. ORS does not have authority to negotiate on arrears owed directly to a custodial parent (CP), so this additional credit will not apply to any other debt type.

Juvenile Justice and Youth Services (JJYS) and the Division of Child and Family Services (DCFS) have requested that ORS refund any amount of the CARES stimulus payment that posts to a JJYS or DCFS case. If the obligated parent provides a copy of the CARES stimulus letter proving that ORS has intercepted funds (either directly to ORS or through JJYS/DCFS), ORS will issue a refund of the portion of the intercepted amount that posts to these case types.

Procedures When a Federal Intercept is Received – Single CSS Case

When an intercept payment is received on a single CSS case, follow the steps below.

1. Identify the amount of the payment that was received on the case in ORSIS.

2. Adjust the debt as follows:

a. If the payment amount is $1,200.00 or less. Adjust off the same amount of the payment from the NCP’s case.

b. If the payment amount is greater than $1,200.00:

i. Adjust case to remove $1,200.00 from the balance. Only make an adjustment of $1,200.00 to the NCP’s case based on the report.

ii. Send the Notice of Economic Impact Payment Received letter to the NCP, along with the Mail Cover Sheet.

ii.

iii. If the NCP provides a letter verifying that the CARES stimulus payment that was intercepted was in fact higher than $1,200.00, make the additional adjustment to account for the difference.

3. Add a detailed case narrative to the case regarding the adjustment(s) taken on the case. The case narrative should begin “COVID-19” and should include the specific amounts of the adjustment(s) made to the case.

Procedures When a Federal Intercept is Received – Multiple CSS Cases

When an intercept payment is received and the NCP has multiple CSS cases, follow the steps below.

1. Identify the total amount of the payment that was received for ALL of the NCP’s cases. This may include cases that are not assigned to you. Compare the amounts in ORSIS to the amounts listed on the report.

2. For the cases that are assigned to you, adjust the debts as follows:

a. If the total payment amount is $1,200.00 or less. Did the payment post to only one case with a state-owed debt?

i. No – Adjust off the same amount of the payment from each of the NCP’s cases.

ii. Yes – Adjust the same payment amount from that same case.

NOTE: If the adjustment amount exceeds the balance for that case, you may apply the remaining adjustment amount to the next oldest case with a state-owed debt.

b. If the total payment amount is greater than $1,200.00. Did the payment post to only one case with a state-owed debt?

i. No – ORS will provide the NCP a maximum of $1,200.00 prorated towards ALL of his/her cases with state-owed arrears unless or until s/he can provide verification that the payment received was from the CARES stimulus.

A. Calculate the percentage of the total payment that was applied to your case(s). This is done by dividing the payment applied to your case by the total amount of the payment received (see step #1 above). For example, if the total payment received for ALL of the NCP’s cases was $1,700.00, and the payment applied to your case was $727.60, the percentage of the payment applied to your case was 42.8% (727.60 ÷ 1,700 = .428, or 42.8%).

B. Multiply $1,200.00 (the maximum credit amount to be prorated to ALL of the NCP’s cases) by the calculated percentage. This will give you the amount that you will adjust off of the AFDC debts for your case.

From the example above, if you multiply $1,200.00 by .428 (42.8%), the credit to be applied to the NCP’s case would be $513.60.

C. Only adjust off the prorated amount of the payment from each of the NCP’s cases.

D. Send the Notice of Economic Impact Payment Received letter to the NCP along with the Mail Cover Sheet. If the NCP later provides a letter verifying that the CARES stimulus payment that was intercepted was in fact higher than $1,200.00, make the additional adjustment to account for the difference.

ii. Yes – ORS will provide the NCP a maximum of $1,200.00 towards his/her case that the payment posted to unless or until s/he can provide verification that the payment received was from the CARES stimulus.

A. Adjust up to $1,200.00 from that same case. For example, the payment was $1,700.00 and posted to only one case. After the payment, the case balance on that case is $1,400.00. Make a $1,200.00 adjustment on that case, bringing the case balance for that case down to $200.00.

NOTE: If the adjustment amount exceeds the balance for that case, you may apply the remaining adjustment amount to the next oldest case with a state-owed arrears debt. From the example above, if after the payment the case balance is $1,000.00, make an adjustment for $1,000.00 on that case. The additional $200.00 adjustment amount can then be applied to the next oldest case with a state-owed debt.

B. Send the Notice of Economic Impact Payment Received letter to the NCP along with the Mail Cover Sheet. If the NCP later provides a letter verifying that the CARES stimulus payment that was intercepted was in fact higher than $1,200.00, make the additional adjustment to account for the difference.

For example, the payment was $1,700.00 and posted to only one case. After the payment, the case balance on that case is $1,400.00. Do an AWOD adjustment for $1,200.00 on that case, bringing the case balance for that case down to $200.00. Later, the NCP provides a letter verifying that the payment amount was from his/her stimulus payment. Make an additional adjustment of $500.00. However, the case only has a remaining balance of $200.00. Adjust the remaining $200.00 from that case. Then apply the remaining $300.00 adjustment to the next oldest case with a state-owed debt.

3. Add a detailed case narrative to the case(s) regarding the adjustment(s) taken on the case(s). The case narrative should begin “COVID-19” and should include the specific amounts of the adjustment(s) made to the case.

Procedures When a Federal Intercept is Received – Single CIC Case

CIC cases will be handled differently than CSS cases as listed above. For CIC FSTR and YCOR cases, the NCP must provide the letter verifying that the payment was from his/her CARES stimulus payment before ORS will take any action. The CARES stimulus letter may be provided directly from the NCP, or it may be provided by DCFS/JJYS on behalf of the NCP. If that proof is provided on a CIC case with a Foster Care or Youth Corrections debt type, follow the steps below.

1. Ensure that the payment amount listed in the letter has already been received by ORS. If the letter arrives before the payment, wait for the payment to post before taking the rest of these steps.

2. Refund the payment amount that posted to the DCFS or JJYS case to the NCP;

NOTE: This refund is an exception to the policy regarding Federal tax refund intercepts, including the requirement to wait 30 days to provide a refund.

3. Write off the same amount from the arrears debt.

Procedures When a Federal Intercept is Received – Multiple Cases Including a CIC Case

When a stimulus payment is received and the NCP has multiple cases that include a CIC case, follow the steps below.

1. Identify the TOTAL amount of the payments that were received for ALL of the NCP’s cases. This may include cases that are not assigned to you. Compare the amounts in ORSIS to the amounts listed on the report.

2. Subtract the amount of the payment that posted to the CIC case(s). This will give you the total amount of payments that posted to the CSS cases. This is the total you will use for the rest of the calculations.

3. If you only have one CSS case, complete the steps outlined in subsection Procedures When a Federal Intercept is Received – Single CSS Case above.

4. If you have multiple CSS cases, complete the steps in Procedures When a Federal Intercept is Received – Multiple CSS Cases above.

If the NCP provides you with a copy of the CARES stimulus payment letter, the letter must be stored in the case file. Inform all of the other caseworkers on each of the NCP’s CIC and CSS cases that the letter is in the case file.

Injured Spouse Claims

If a CARES stimulus payment is received from an NCP who filed a joint tax return with his/her spouse, the unobligated spouse may have his/her portion of the payment returned by filing an injured spouse claim through the IRS. In these situations, follow the steps outlined in CS 676P Unobligated Spouse as you would for a tax refund intercept.

Takebacks

Takebacks on CSS cases will increase the balance due. ORS administration will monitor the number and amount of takebacks on CSS cases to determine if additional adjustments will occur. Additional instructions will be provided if more adjustments are needed.

Takebacks on DCFS and JJYS cases will increase the balance due on the case. Due to an agreement with DCFS and JJYS, no additional adjustments will occur on these cases.