FEDERAL TAX INTERCEPT

CS 676P Unobligated Spouse

03/12/84 Revised 08/17/23 Training Completed 08/31/23 Last Reviewed 08/04/25

45 CFR 303.72; IRC sec. 6103

 

 

Spouse Notification

 

ORSIS automatically generates the “Annual Notice of Past Due Child Support” to the noncustodial parent’s (NCP) last known residential address and his/her present spouse if and when the case meets the automatic enforcement criteria. A notice will be generated annually thereafter if the case continues to meet the criteria. The notice tells the NCP and his/her present spouse that the spouse should file the Internal Revenue Service (IRS) form 8379 “Injured Spouse Claim and Allocation” along with the joint Federal tax return if the spouse wants to obtain his/her share of the tax refund. For procedures and more information, refer to CS 671P Federal Tax Intercept – Notice of Offset and CS 802P Annual Notice of Past-due Child Support, General for more information

 

The United States Department of the Treasury, Financial Management Services (FMS) will also send a Tax Offset Notice to the unobligated spouse at the time the tax refund is intercepted to inform the spouse of the steps to take to receive his/ her portion of the tax refund.

 

Release of information about the NCP’s federal tax intercept is restricted under federal regulation found at IRC sec. 6103. Therefore, you may only discuss the NCP’s federal tax refund with his/her current spouse if the spouse has received a notice from CSS or FMS related to a joint filing, or if the NCP has disclosed the Federal tax information on his/her own to the spouse. Otherwise the information may not be discussed or disclosed with anyone other than the NCP or the custodial parent (CP).

 

If the NCP or his/her current spouse has questions or concerns regarding the intercept process or the procedures for obtaining the spouse’s portion of the refund, refer them to the IRS Service Center that is listed on the FMS notice.

 

The unobligated spouse may recover his/her portion of the joint tax refund by completing IRS form 8379. (In 2011, IRS removed the statute of limitations for requesting and processing injured spouse claims.) Upon receipt of the form, FMS will determine the unobligated spouse’s portion of the refund and take-back the unobligated spouse’s portion that was sent to the Office of Recovery Services/Child Support Services (ORS/CSS), if appropriate. The unobligated spouse must request his/her share of the tax refund from the IRS

 

CSS will not refund the unobligated spouse’s portion even if the tax refund has been received. The unobligated spouse must file an IRS form 8379.

 

If the NCP and his/her spouse live in a community property state, the unobligated spouse’s portion may still be intercepted. Each community property state has its own rules and the outcome may vary from state to state.

 

 

Federal Tax Hold (HTAX)

 

Federal regulations allow states to hold a Federal tax refund payment for up to six months before disbursing the funds to a Non-IV-A custodial parent, if the refund is a result of a joint income tax return. This allows time for the United States Department of the Treasury Financial Management Services (FMS) to adjust the intercept amount in the event the current spouse files an injured spouse form for his/her portion of the joint refund, or the NCP files an amended tax return to reduce the refund amount, or FMS determines there is another reason to take back a portion of the joint tax refund.
 
45 CFR 303.72(h)(5) states: 
“In cases where the Secretary of the Treasury, through OCSS, notifies the state than offset is being made to satisfy non-IV-A past-due support from a refund based on a joint return, the State may delay distribution until notified that the unobligated spouse’s proper share of the refund has been paid or for a period not to exceed six months from notification of offset, whichever is earlier.”

 

·                     Six (6) Month Hold: If a joint return was filed, ORSIS automatically adds a six (6) month HTAX (Hold Tax Disbursement) transaction hold to Federal tax refund intercept payments posted to Non-IV-A debts and cases. The six (6) month hold prevents the intercept payment from disbursing in the event FMS does a take-back of the tax intercept amount.

 

·                     30 Day Hold: If a single return was filed, ORSIS automatically adds a 30 day HTAX hold to Federal Tax Refund offset payments posted to Non IV-A debts and debts on incoming interstate cases. The 30 day hold allows the NCP to request a refund of the earned income credit portion of the tax refund.