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Important Change Concerning the Tax Offset Program


Published: April 22, 1999


RE:  Important Change Concerning the Tax Offset Program

Dear Colleague:

The purpose of this letter is to make you aware of a significant change concerning the tax offset program which will impact States concerning the distribution of collections.

When IRS operated the tax offset program, and the taxpayer filed his original return along with an injured spouse claim, IRS processed both at the same time. This meant that the injured spouse’s portion of the refund was subtracted from the original refund and the State received the net amount. It also meant the number of subsequent adjustments to the original collection was drastically reduced.

OCSE has just been informed that due to FMS taking over the tax offset program, IRS will no longer be processing the original return and the injured spouse claim simultaneously. Instead, the injured spouse claim will be processed roughly 8 to 12 weeks after the original return. Thus, any reversals will now be processed 8 to 12 weeks after the offsets occurred – even if the injured spouse submits the correct paperwork at the time the tax return is filed. IRS estimates that there will be approximately 90,000 reversals relating to child support offsets, which represents an increase of approximately 60,000 more reversals than we have had in previous years.

Because of the timing in the processing of offsets and reversals, States are strongly encouraged to review your policy concerning distribution of collections in Non-TANF cases. As you know, the law allows States to hold collections for six months. Delaying delivery will prevent you from losing money resulting from reversals or having to try to recapture money you have already distributed to custodial parents.

Furthermore, because of this change, it is even more important that States notify OCSE of any refunds (State payments) immediately so that FMS does not adjust a case if the State no longer has the collection.

OCSE remains committed to working with you and FMS to ensure the continued success of the Federal Offset Program. If you have any questions, please call the Special Collections Unit at: (202) 401-9389.


David Gray Ross
Office of Child Support Enforcement

cc:  Regional Administrators
       Program Managers
       Federal Offset Coordinators

Last Reviewed: June 1, 2019

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