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Erroneous Federal Tax Refund Offsets Based Upon Fraudulent Returns


Published: September 9, 2011



DATE: September 9, 2011


RE: Erroneous Federal Tax Refund Offsets based upon Fraudulent Returns

Dear Colleague:

As you may be aware, the Internal Revenue Service (IRS) is experiencing an increase this year in the number of fraudulent returns filed and income claimed as earnings. As a result, several states have reported an increase in the number of potentially erroneous tax refund intercepts (a person using someone else’s Social Security number). In most cases, the state determined that at the time of the intercept, the noncustodial parent was either incarcerated long term, deceased, did not file a return, or had insufficient income to justify the offset amount. While the majority of these filings are identified by the IRS and acted on prior to processing, some are not being discovered until well after processing, resulting in the erroneous intercepts.

States are concerned about disbursing a potentially erroneous intercept payment within the required distribution timeframes. If the IRS subsequently discovers the error and reverses the intercept after the disbursement, the state must either absorb the loss to repay the adjusted amount or attempt to recoup the disbursement from the family. For that reason, states may delay distribution of a referred offset until the IRS investigation is complete as long as there is clear documentation on their system as to why the payment is held.

The Federal Collections and Enforcement team is communicating with the IRS investigation team handling these referrals and providing updates to states on a case by case basis. If your state suspects it received an erroneous offset or you have questions about this process, please contact Lamonda Fraley at (202) 260-7859 or email scollections@acf.hhs.gov.

We will continue to provide updates on this topic through monthly Federal Offset calls, as well as through other correspondence as needed.


Vicki Turetsky
Office of Child Support Enforcement

cc: ACF/OCSE Regional Program Managers

Last Reviewed: June 1, 2019

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