Child Support – Federal Tax Refund Offset

The Federal Tax Refund Offset program, also known as Project Intercept (PI), is a way the child support agency collects child support arrears.

The child support agency files a claim against any federal income tax refund the noncustodial parent may receive no matter how they file their tax return - electronic, mail, or rapid refund.

  • Criteria
  • Exclusions
  • Notification Process
  • Federal Tax Intercept Fee
  • Holding Funds
  • Filing an Injured Spouse Claim
  • Authority
  • Criteria

    The child support agency can take federal income tax refunds to pay arrears the noncustodial parent’s owes.

  • • Cases with monthly support due: the amount of arrears is more than one month of total court-ordered child support payments and at least one of the following:
  • • $500 if there are no arrears owed to the state
  • • $150 if there are arrears owed to the state.
  • • Arrears-only cases: the amount of arrears is at least:
  • • $500 if there are no arrears owed to the state, or
  • • $150 if there are arrears owed to the state.
  • Exclusions

    The child support agency will not take federal tax refunds if any of the following are true:

  • • the case does not meet the criteria
  • • the noncustodial parent filed bankruptcy before October 17, 2005 and remains protected, unless the arrears were certified for federal tax refund offset at least 90 days before the bankruptcy filing date
  • • the court order prohibits the use of federal tax refund offset
  • • the custodial parent has claimed or been granted Good Cause.
  • Notification process

    The child support agency sends an Administrative Offset and Federal Tax Refund Offset Programs notice to the noncustodial parent. The notice informs the noncustodial parent that the child support agency has or will file a claim with the United States Department of Treasury for the amount of the child support arrears.

    The notice explains the noncustodial parent’s right to a review. It also explains what will happen if the noncustodial parent does not take action.

    Federal Tax Intercept Fee

    Minnesota law requires the child support agency to charge the custodial parent a $25 fee when the federal tax refund offset is over $100 and applies to nonpublic assistance arrears. The child support agency deducts the fee from the amount collected before sending the payment to the custodial parent.

    The fee is charged for each refund if the amount of the federal tax refund offset applied on a case is over $100. If multiple cases are involved, a $25 fee is charged for each case that meets the criteria.

    When the arrears owed to the custodial parent are eligible for an offset, the child support agency sends the custodial parent a Notice of Federal Tax Intercept Fee.

    Holding funds

    When the child support agency receives the offset funds, it applies the money to the cases that qualify for a federal tax refund offset. The funds are held before releasing to pay the custodial parent.

  • • Single returns
  • The state child support agency holds funds received from the offset of a single federal tax refund for arrears owed to the custodial parent for 30 days before releasing to the custodial parent.

  • • Joint returns
  • The state child support agency holds funds received from the offset of a joint federal tax refund for six months to allow time for the non-obligated spouse to file an Injured Spouse Claim with the Internal Revenue Service (IRS).

    Filing an Injured Spouse Claim

    If the noncustodial parent filed a joint tax return with a spouse, the non-obligated spouse can file an Injured Spouse Claim. An Injured Spouse Claim prorates refunds from joint tax returns so the non-obligated spouse’s portion of the tax refund is not used to pay the noncustodial parent’s child support obligation.

    The non-obligated spouse must file IRS Form 8379 to claim their portion of the joint tax refund. For questions about this form, call the IRS at (800) 829-1040.

    Authority

    Minnesota Statutes can be found on the Minnesota Office of the Revisor Web site.

  • • 31 Code of Federal Regulations, section 285.3
  • • 45 Code of Federal Regulations, section 302.60
  • • 45 Code of Federal Regulations, section 303.6(c)(3)
  • • 45 Code of Federal Regulations, section 303.72
  • • 11 United States Code, section 362(b)(2)(F)
  • • 26 United States Code, section 6402(c)
  • • 31 United States Code, section 3720A
  • • 42 United States Code, section 652(b) and (c)
  • • 42 United States Code, section 664
  • • Minnesota Statutes Section 518A.51(f)

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