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Child Support Services ENFORCEMENT

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TAX INTERCEPT

    1. Tax intercept policy;
    2. The Davis Decision;
    3. Information related to tax intercept that should provided to custodial parents and noncustodial parents (NCPs);
    4. Tax intercept submittals;
    5. Tax intercept appeals;
    6. Tax intercept processing;
    7. Federal refunds to NCPs.
    1. Federal law requires that cases for which overdue support is owed must be submitted for tax intercept.
    2. Federal regulations require the recovery of arrearages in the following order: WFFA/TANF, IV-E, Medical, NPA, and SFHF.
    3. The Financial Management Service (FMS) charges a fee for processing Federal tax intercepts, which is deducted from the refund. These fees are prorated across all of the cases that are certified.
    1. If a refund for a joint return is intercepted, distribution of some or all of the intercepted funds to the NCP's case(s) can be delayed for up to six (6) months.
    2. Payments that are made to a custodial parent can be subject to adjustment for six (6) years after the end of the tax year. (This includes amended returns filed by the NCP's spouse.) Any payments to the custodial parent might have to be repaid due to this process.
    1. CSS cases for which payments are in compliance with the criteria set by the Davis Decision are excluded.
    2. NCPs whose total arrearages equal or exceed the minimum prescribed amounts are selected.
    1. Either a verified current mailing or old address record must be present in the NCP's address history in ACTS.
    2. The NCP's name, address, and Social Security number (SSN) must be present in the proper formats in the case record.
    3. NCPs who filed for bankruptcy on or after October 17, 2005, are selected whether the bankruptcy action has ended or remains open.
    4. Only open CSS cases are selected for certification.
    5. NCPs in N.C. Initiating Interstate cases with arrearages are selected. ACTS notifies the other state of tax intercept submittals, as well as collections.
    6. For State tax certification, NCPs who qualify and were not certified in the previous year are selected when the Federal submittal occurs.
    7. Certifications from the previous year that no longer qualify for intercept processing are submitted for deletion on a weekly basis.
    1. The payor declared bankruptcy since tax certification and prior to October 17, 2005. The funds from the tax intercept collection are placed on hold for six (6) months or until the bankruptcy is resolved.
    2. The tax intercept is under an administrative appeal. The funds are placed on hold until the appeal is resolved.
    3. The collection record from the IRS/FMS indicates a joint tax return. The funds are usually placed on hold for six (6) months.
    1. If the NCP files an appeal, CSS must place a hold on that NCP’s participant account until the appeal is resolved. If the NCP wins an appeal, the Tax Intercept Unit at the CSS Central Office must issue a refund to the NCP immediately.
    2. Recoupment accounts must be set up for any custodial parent who received funds that must now be recouped.
    1. Pay the full amount overpaid in thirty (30) days;
    2. Have CSS recoup ten percent (10%) of the current support and one hundred percent (100%) of any arrearage payments until paid in full; or
    3. Request a hearing to appeal the distribution.

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  For questions or clarification on any of the policy contained in these manuals, please contact your local county office.


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