Intercepting Tax Refunds
The Child Support program uses intercepted tax refunds to collect past-due child support, family support, maintenance (alimony), medical support, interest, fees, and other debts such as birth expenses paid by the Medicaid and BadgerCare Plus programs.
How Tax Intercept Works:
- Child support mails a one-time notice to parents who owe past-due support the first year that child support reports the debt to the federal Internal Revenue Service (IRS) or Wisconsin Department of Revenue (DOR). The notice includes information about appealing the intercept.
- If the parent pays off the debt, but the debt builds up again, child support will mail another notice to the parent.
- Child support sends the names of parents owing past-due support and the amount owed to the IRS and state Department of Revenue.
- The payer's tax refund is sent to the Child Support Trust Fund and applied to the payer's past-due debts.
Intercepting Tax Refunds for Families Receiving Public Aid/Benefits:
- Past-due support that built up while a family received cash benefits from
W-2, SSI Caretaker Supplement, Temporary Assistance for Needy Families (TANF)
may be "
assigned" (signed over) to the state. A child’s birth costs paid by the Medicaid and BadgerCare Plus programs are also assigned debts.
- Intercepted federal income tax refunds first pay past-due support and debts
that are "assigned,"
and then pays past due support owed to the family.
- If the family no longer gets cash benefits, and no birth costs or TANF debts are owed, the family will get the intercepted federal income tax refund.
Important Points About Intercepting Tax Refunds
- The amount of past-due support is regularly updated. The amount to be intercepted may go up or down depending on how much support is paid or not paid.
- No matter how much past-due support a parent owes, the most that can be intercepted is the amount of the tax refund itself. For example, if the refund is $200, and the past-due support owed is $500. Only $200 (the full refund) can be intercepted.
- If the IRS or state Department of Revenue recalls the intercepted tax refund, the parent who received the intercepted money must return the money to the Wisconsin Support Collections Trust Fund. Recalls can happen for a number of reasons, such as a mistake on a tax return. If the parent cannot repay all the money at once, half of all future support payments will be used to repay the recalled amount.
- When the Trust Fund gets a federal tax intercept from a joint return, the paying parent gets immediate credit. The parent getting the payment will receive the money about six months later.
- If a parent is certified for state tax intercept, lottery winnings may also be intercepted to pay past-due support.
- If a parent is certified for state tax intercept,
payments from the Wisconsin Department of
Administration (DOA) may also be intercepted to pay
- If a parent is certified for federal tax intercept for $2,500 or more, the parent will not be issued a passport.