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Federal Offset Program - Injured Spouse Claims


Published: May 14, 1999


RE:   Federal Offset Program

Dear Colleague:

In the recent Dear Colleague letter 99-30, dated March 22, 1999, OCSE notified you of a significant change concerning the Federal tax refund offset program and the Internal Revenue Service’s (IRS) processing of injured spouse claims. As you may recall, IRS changed the procedures for processing the injured spouse claims and was no longer processing the original return and the injured spouse claim simultaneously, even if they were filed at the same time. Instead, they were processing the injured spouse claim 8 to 12 weeks later. This could result in approximately 90,000 reversals relating to child support offsets representing about 60,000 more reversals than we have seen in previous years.

Through our continued partnership with IRS, and the Department of Treasury’s Financial Management Service (FMS) and with the assistance of many of you, the Office of Child Support Enforcement (OCSE) is pleased to inform you that next year IRS has agreed to manually process the injured spouse claims when the correct paperwork is simultaneously filed with the original return. Injured spouse claims filed after the original return may continue, as always, to cause reversals. It is important to note that this corrective measure will begin next year, in processing year (PY) 2000. Timing issues and the fact that the majority of returns have already been filed for PY 1999, make the fix impractical for this year. Also, processing the injured spouse claims manually may increase the cost per offset in processing year 2000. Many factors, including the caseload, effect the cost per offset and negotiations have not yet taken place for next year. OCSE will continue to be a part of the negotiations and will inform you when a final cost is determined.

Simultaneous processing of the initial return and injured spouse claim when the injured spouse claim is electronically filed is still problematic. OCSE is committed to working with Treasury to hopefully find a remedy for this in the future since the number of electronic filings will continue to increase.

OCSE would also like to remind you that States now have the ability to access their Federal tax refund and/or administrative offset file on-line. This access will allow States to know the status of case collections and updates as soon as they are posted on OCSE’s masterfile. This access should expedite the State’s ability to respond to inquiries from obligors and/or custodial parents. States should complete SSA Form 120 to obtain access. The form is available through OCSE’s Special Collections Unit.

If you have any questions, please contact OCSE’s Special Collections Unit at (202) 401-9389.


David Gray Ross
Office of Child Support Enforcement

cc:   Regional Administrators
        Program Managers
        Federal Offset Coordinators

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