Federal Tax Refund Offset Program

The Federal Tax Refund Offset Program collects past-due child support payments from the tax refunds of parents who have been ordered to pay child support. The program is a cooperative effort between the federal Office of Child Support Enforcement (OCSE), the Internal Revenue Service (IRS), the Financial Management Service of the Department of the Treasury, and state child support agencies.

The Federal Tax Refund Offset Program was enacted by Congress in 1981 and was originally restricted to child support debts owed in public assistance cases. It was expanded in 1984 to include child support debts in non-assistance cases. The Federal Tax Refund Offset remedy is mandatory, and must be used if a case meets the criteria.

Under this offset program, tax refunds owed to noncustodial parents are intercepted, and sent to the state child support agency through OCSE, to pay the noncustodial parent's past-due child support.

Since the program began in 1982 through the beginning of March 2011, more than $31 billion in past-due support was collected from 35 million intercepted tax refunds.

What cases are submitted for Federal Tax Refund Offset?

Only cases receiving full services through the state child support agency are eligible for Federal Tax Refund Offset. In some states, the custodial party may be charged a fee (not greater than $25) for this service.

Cases eligible for tax refund offset are those cases that have a delinquent child support debt. If the child support order includes an award for spousal support, the tax refund may also cover the past-due spousal support. For a case receiving Temporary Assistance for Needy Families (TANF), the noncustodial parent must owe at least $150; in a non-TANF case, the amount owed must be at least $500.

How does the program work?

State child support agencies submit (certify), through OCSE to the Department of Treasury, the names, Social Security numbers, and amounts of past-due child support of people who are delinquent in their payments.

Noncustodial parents, whose child support debts meet the criteria for Federal Tax Refund Offset, receive a Pre-Offset Notice explaining the process. The notice includes an initial debt amount--the amount of past-due child support owed at the time the notice is sent. The actual amount deducted from the tax refund may differ to account for payment or non-payment of child support after the Pre-Offset Notice is mailed. The state will update the debt amount regularly, but may not issue a new notice each time the debt changes. The Pre-Offset Notice also includes information about the Administrative Offset and Passport Denial programs and other actions the state may take to enforce a child support obligation. The notice will also include information about how to contest the debt amount.

When tax refunds are processed, those who owe past-due child support are identified and all or part of the refund is intercepted.  The intercepted funds are forwarded through OCSE to the state child support agency to repay the past-due support.

At the time of the Federal Tax Refund Offset, the Financial Management Service will mail a Notice of Offset to the debtor stating that all or part of the federal tax refund has been intercepted (offset) because of the child support debt owed. The notice will advise the noncustodial parent to contact the local child support agency for further information.

It normally takes three to five weeks from the time of the offset until the money is sent to the state that submitted the case for offset. For non-TANF cases, the state may hold the money for up to six months if the offset involves a joint tax return.

Are interstate cases handled differently?

Usually the state in which the custodial party lives will submit the debt for Federal Tax Refund Offset. In cases where the noncustodial parent owes a child support debt to more than one state, each state will submit their case for offset. The noncustodial parent will receive a separate notice for each state's debt, and will have the right to contest each state's debt amount.

As the noncustodial parent, what happens if I have remarried and part of the income tax refund belongs to my new spouse?

Depending on state laws regarding community property, all or part of your spouse's Federal Tax Refund may be taken to pay your child support debt.

If you and your new spouse (called a non-obligated or "injured" spouse) file a joint income tax return, your spouse may be able to get back his or her share of the refund.  To claim his or her portion of any refund due, your spouse may file a request for an Injured Spouse Allocation of a Joint Return (Form 8379) with the IRS. The IRS encourages an injured spouse to file the claim at the same time the tax return is filed.

If the state child support agency is aware that you have filed a joint IRS return with your new spouse, the state may hold part or all of the tax refund for up to six months.

My child(ren) is no longer a minor.  Will the debt still be submitted for Federal Tax Refund Offset?

Effective October 1, 2007, the Deficit Reduction Act of 2005 will allow states to submit cases for non-TANF debts regardless of the child's age.