Economic Impact Payments under the Coronavirus Aid, Relief, and Economic Security (CARES) Act
DEAR COLLEAGUE LETTER
DATE: April 13, 2020
TO: State and Tribal IV-D Agencies
SUBJECT: Economic Impact Payments under the Coronavirus Aid, Relief, and Economic Security (CARES) Act
On March 27, 2020, Congress passed and President Trump signed into law the Coronavirus Aid, Relief, and Economic Security (CARES) Act (the “Act”). The Act, in part, provides qualifying individuals with a recovery rebate of up to $1,200 (or $2,400 if married and filing jointly), plus up to $500 for each qualifying child. The Internal Revenue Service (IRS) and Bureau of the Fiscal Service (BFS) of the Department of the Treasury are preparing to process advances of the rebates, in the form of economic impact payments, in the coming days.
While the Act intentionally exempts these rebates from reduction or offset against certain debts, there is no exemption for child support debt. As a result, the economic impact payments made to eligible noncustodial parents who owe past-due child support and who are subject to intercept under the Federal Income Tax Refund Offset Program will be offset by the amount of past-due child support. Because these economic impact payments are treated as a tax refund offset, and not an administrative offset, the Act does not provide states the option to suspend federal tax refund offset in cases meeting the eligibility criteria under section 464 of the Social Security Act and 45 CFR 303.72.
BFS will not intercept a noncustodial parent’s economic impact payment if the debt does not exceed the minimum requirement for federal tax refund offset at the time of the match. As a reminder, TANF or title IV-E foster care cases must have at least $150 in past-due support for the offset requirement to apply. Non-TANF/IV-E or Medicaid-only cases must have at least $500 of past-due support for the offset requirement to apply. The economic impact payment offsets will adhere to the same fees, distribution timeframes, and hold periods as federal tax refund offsets.
At this time, it is our understanding that the economic impact payment offsets will not have a unique identifier and will be commingled with other non-economic impact payment tax refund offsets in your state’s collection files.
While we cannot confirm specific dates yet, we anticipate that states may see an increase in offset collections beginning as early as late April 2020. We are meeting regularly with IRS and BFS to confirm additional information, including how Treasury will handle injured spouse claims. We will continue to inform you as it becomes available. IRS will also post updates and periodic news releases to their website at www.irs.gov.
Scott M. Lekan
Office of Child Support Enforcement