STATE TAX INTERCEPT
CS 652P Unobligated Spouse
07/21/04 Training Completed
45 CFR 303.102; R527-475
The Office of Recovery Services/Child Support Service (ORS/CSS) sends the “Annual Notice of Past-due Child Support” each year to non-custodial parents (NCP) 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.
At the time the NCP’s State tax refund is posted, ORSIS generates a “State Tax Notice of Amount Intercepted” 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 and the appropriate W-2 forms. If W-2s 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).
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.
Total household income: $30,000
NCP’s income: $20,000
Unobligated spouse’s income: $10,000
Joint refund amount $ 300
Divide the unobligated spouse’s income by the total household income ($10,000/$30,000 = 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 X 33.3% = $100). The unobligated spouse’s share of the State tax return is $100.
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.