DCL-99-128, Repayment of Negative Collections in the Federal Offset Program

DCL-99-128 NOV 24, 1999

TO: ALL STATE IV-D DIRECTORS

RE: Repayment of Negative Collections in the Federal Offset Program

Dear Colleague:

At the beginning of 1999, the Internal Revenue Service (IRS) initiated a processing change that caused reversals to be three times greater than what we had experienced in the past. Part of the reason for the increase in reversals was the timing of processing injured spouse claims. In addition, IRS experienced a technical problem and withheld processing of several cycles. Consequently, reversals in cycles 27 through 32 were all processed in cycle 33. This resulted in 34 States having negative balances in August, one State having a negative balance in September and no States having a negative balance in October and November. We do not expect December collections and reversals to result in significant negative balances. OCSE worked with IRS and FMS to offer the options for repayment detailed in Attachment 1. The cost of this repayment cannot be recouped as an administrative cost.

The IRS has stated that in Processing Year (PY) 2000, they will change the way injured spouse claims are processed to reduce the amount of reversals. A comparison of the PY 1999 and the new PY 2000 procedures for IRS is detailed in Attachment 2.

If applicable, please let OCSE know what option your State intends to use by filling out Attachment 3 and returning it to OCSE by December 15, 1999. If you have any questions, please contact Scott Hale at (202) 401-9390.

Sincerely,

David Gray Ross
Commissioner
Office of Child Support Enforcement

Attachment

cc: Regional Program Managers
Federal Offset Coordinators