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. 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 Internal Revenue Service (IRS) or the 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 DOR. The payer's tax refund is sent to the Child Support Trust Fund and applied to the past-due child support debt. How Arrears are Certified for Tax Intercept Federal and State Tax Intercept Certification Criteria An arrearage on a court case is certified for federal tax intercept when the arrears balance minus the current support order (if there is one), known as the threshold, has a remaining balance that is $150 or greater for current and former assistance (TANF) court cases, and $500 or greater for never assistance (NonTANF) court cases. State tax intercept uses the same arrearage calculation except the threshold is $150 or greater for all court cases combined. The state tax intercept program includes lottery and vendor payments, unclaimed property, and state tax refunds, including the Homestead credit. In addition, the arrears threshold must be 30 days or older to be submitted for federal and/or state tax intercept certification. Support obligations subject to federal and state tax intercept are: Child Support Arrears Family Support Arrears Spousal Support Arrears (except spousal support cases only) Substitute Care Arrears Birth Costs Some cost debts (i.e. court costs, service of process) on a court case are subject to state tax intercept only. Tax Intercept and Families Receiving Public Benefits/Assistance Past-due support that builds up while a family receives cash benefits from W-2, SSI Caretaker Supplement, or Temporary Assistance for Needy Families (TANF) may be signed over to the state. A child's birth costs paid by Medicaid and BadgerCare Plus programs are also signed over to the state for repayment. Intercepted federal income tax refunds past-due support signed over to the state first, and then pay 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 Information About Tax Intercept The amount of past-due support owed is updated with the IRS and DOR regularly. No matter how much past-due support a parent owes, the most that can be intercepted is the amount of the tax refund itself. If the IRS or DOR 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. This waiting period is to ensure that the money will not be recalled. If a parent is certified for state tax intercept, lottery winnings may also be intercepted. If a parent is certified for state tax intercept, payments from the Wisconsin Department of Administration may also be intercepted. If a parent is certified for federal tax intercept for $2,500 or more, the parent will be denied a passport. Intercepting Federal Tax Refunds Criteria Federal tax refunds are intercepted if the case meets all three conditions below: The past-due amount owed to the family is $500 or more on a court case -OR- $150 or more if part of the past-due amount is owed to the state. The child support agency knows the Social Security number or Tax Identification number of the parent who owes past-due support. The case gets child support services from a local child support agency. If the three conditions above are met, the paying parent is certified for federal tax intercept. Who Gets the Federal Tax Refund? Intercepted federal tax refunds pay debts that are owed to the state first, and then pays the past-due support owed to the family. If the family no longer gets cash benefits, and no birth costs or AFDC debts are owed, the family will get the intercepted tax refund. Holds on Joint Refunds Refunds intercepted from federal joint returns are held for six months. The paying parent gets credit for the refund immediately in the child support system. The hold protects the parent who receives the money from having to repay intercepted refunds if the IRS recalls the payment. The hold does not guarantee that the IRS will not recall the intercepted refund after the six months. After the six month hold, the Trust Fund sends the money to the parent receiving support. More Tax Resources for Parents Tax Information for Parents Intercepting State Tax Refunds and Lottery Winnings Intercepting State Tax Refunds and Lottery Winnings Criteria State tax refunds are intercepted if all four of the conditions below are met: The past-due amount on a court case is $150 or more. The child support agency knows the Social Security number or Tax Identification number of the parent who owes past-due support. The case gets child support services from a local child support agency. The case is a Wisconsin child support case. If the payer files a state return in another state, Wisconsin might work with that state to intercept that state's tax return. If the four conditions above are met, the paying parent is certified for state tax intercept. When certified for state tax intercept, the parent's lottery winnings may also be taken to pay past-due support. See section below for more information on intercept of lottery winnings. Who Gets the State Tax Refund? Intercepted state tax refunds first pays current support owed to the family on all the paying parent's cases certified for tax intercept. Any remaining refund money will go to past-due support on cases certified for tax intercept. After current support, past-due support, and debts are paid off, any remaining refund is sent to the paying parent. Lottery Winnings If the paying parent wins a Wisconsin state lottery prize worth $1,000 or more and is certified for state tax intercept: More Tax Resources for Parents The certified child support debt amount will automatically be taken from the prize winnings and used to pay support. The intercepted lottery winnings are paid out the same way as intercepted state tax refunds, as outline above. The lottery winnings will be intercepted if the parent gets a full jackpot at once, or if the winnings are paid out over time. Tax Information for Parents Federal Enforcement Actions The Wisconsin Child Support program reports the amount of unpaid support for its cases to federal offices. When a parent does not pay his or her child support, that parent cannot receive certain services from the federal government. The following actions are taken without a court hearing. Denial of Loans & Grants When the past-due amounts reach a certain level, the parent will not be able to receive some college grants or small business loans. Setting up and following a payment plan may help the parent get a loan or grant. Denial of a Passport The U.S. State Department will not issue or renew a passport if a parent was ever certified for tax intercept with a debt of $2,500 or more and has not paid the debt in full. The debt includes all unpaid support and interest. If the State Department denies your passport, contact your local child support agency. With very few exceptions, you will be expected to pay the full amount owed before your passport will be granted or renewed. The exceptions are: A mistake in identity or mistake of fact - If you are not the person certified for tax intercept or you do not owe past-due support. A matter of life or death involving someone in your immediate family. Examples are imminent death or funeral, serious illness, or a dangerous operation. You must give the child support agency a letter from a doctor or the Red Cross to verify the life or death matter. Payments must be made by money order or a cashier's check. Additional Information from the Federal Office of Child Support Services: Overview of the Passport Denial Program Passport Denial: Information for Families Questions Parents ask about Intercepting Tax Refunds Questions From Parents Who Pay Support How will I know if my tax refunds have been intercepted? The U.S. Treasury and the Wisconsin Department of Revenue will mail you a notice when they intercept your refund. The notice will tell you the amount they intercepted and where they sent the money. You can call the IRS to get more information about your intercepted federal tax refund. Phone: 1-800-304-3107 Will my tax refunds be taken to pay birth costs even if I live with the mother of our child? Yes, if: the Medicaid or BadgerCare Plus program paid for your child's birth costs, and the court orders you to pay these costs, and your case meets the requirements for tax intercept. What happens if I paid all the past-due child support before my tax refund was intercepted? The IRS and the Wisconsin Department of Revenue only intercept the reported amount owed at the time they process your tax return. If your intercepted refund is more than the support amount owed when the Trust Fund gets your intercepted refund, the Trust Fund will immediately send the rest of the refund to you. If I am paying on my past-due support (or birth costs), will my tax refund(s) still be intercepted? Yes, if your case meets the requirements listed on the Federal Tax Refund and/or State Tax Refund criteria. I owe $500 in past-due support. Why did they take $500 from both my federal and state refund? Child support sends the names of parents who owe past-due support to both the IRS and the Wisconsin Department of Revenue. If the IRS and State Department of Revenue process your returns at the same time, both agencies might intercept your refunds. If just one of your refunds pays the entire amount owed, your other refund is immediately refunded to you upon receipt at the Trust Fund. I plan on filing a joint return with my spouse. Will the IRS take my spouse's tax refund too? No, not if you file an Injured Spouse Claim" (IRS form 8379) with your federal joint return. The Injured Spouse Claim will allow your spouse to receive his or her share of the refund. If you have questions about the Injured Spouse Claim, or if your spouse's portion of a refund was intercepted after you filed an Injured Spouse Claim, contact the IRS. Phone: 1-800-829-1040 You do not need to file an Injured Spouse Claim with your joint Wisconsin state tax return. The state Department of Revenue calculates your share of a joint refund and only intercepts your share. Questions From Parents Who Receive Support When will I receive the child support payment from tax intercept? First, the parent owing support must file a tax return and have a refund due. Then: You will usually get the support payment from federal joint returns about six months after the Trust Fund gets the payment. You will usually receive the support payment from all state refunds and federal non-joint refunds about two days after the Trust Fund receives the tax intercept. If the paying parent requests a hearing about the tax intercept, the money cannot be sent to you until after the hearing. How do I find out when I am going to get the tax intercept? Payments from intercepted tax returns listed on the Child Support Online Services site will list the payment source as "other." The date listed for a federal tax intercept from a joint return is the date the Trust Fund gets the money. You can expect the payment about six months later. The Child Support Online Services website is updated every night except Sundays. Do I pay a fee for getting an intercepted tax refund? Yes. The fee is 10% of any collection $10 or more. The fee will not be more than $25. The other parent owes past-due support to more than one family. How much will I get? The state refund must first pay any current support for all the payer's court orders that are certified for tax intercept. Then any remaining state refund is split among the families who are owed past-due support and whose cases are certified for tax intercept.
