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Child Support – Federal Tax Refund Offset
The Federal Tax Refund Offset program, also known as Project Intercept (PI), is a way the child support agency collects child support arrears.
The child support agency files a claim against any federal income tax refund the noncustodial parent may receive no matter how they file their tax return - electronic, mail, or rapid refund.
The child support agency will not take federal tax refunds if any of the following are true:
The child support agency sends an Administrative Offset and Federal Tax Refund Offset Programs notice to the noncustodial parent. The notice informs the noncustodial parent that the child support agency has or will file a claim with the United States Department of Treasury for the amount of the child support arrears.
The notice explains the noncustodial parent’s right to a review. It also explains what will happen if the noncustodial parent does not take action.
Minnesota law requires the child support agency to charge the custodial parent a $25 fee when the federal tax refund offset is over $100 and applies to nonpublic assistance arrears. The child support agency deducts the fee from the amount collected before sending the payment to the custodial parent.
The fee is charged for each refund if the amount of the federal tax refund offset applied on a case is over $100. If multiple cases are involved, a $25 fee is charged for each case that meets the criteria.
When the arrears owed to the custodial parent are eligible for an offset, the child support agency sends the custodial parent a Notice of Federal Tax Intercept Fee.
When the child support agency receives the offset funds, it applies the money to the cases that qualify for a federal tax refund offset. The funds are held before releasing to pay the custodial parent.
The state child support agency holds funds received from the offset of a single federal tax refund for arrears owed to the custodial parent for 30 days before releasing to the custodial parent.
The state child support agency holds funds received from the offset of a joint federal tax refund for six months to allow time for the non-obligated spouse to file an Injured Spouse Claim with the Internal Revenue Service (IRS).
If the noncustodial parent filed a joint tax return with a spouse, the non-obligated spouse can file an Injured Spouse Claim. An Injured Spouse Claim prorates refunds from joint tax returns so the non-obligated spouse’s portion of the tax refund is not used to pay the noncustodial parent’s child support obligation.
The non-obligated spouse must file IRS Form 8379 to claim their portion of the joint tax refund. For questions about this form, call the IRS at (800) 829-1040.
Minnesota Statutes can be found on the Minnesota Office of the Revisor Web site.
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