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Fiscal Service, Treasury § 285.

any other amounts payable to such § 285.3 Offset of tax refund payments
agency have been paid). to collect past-due support.
(i) Fees. The creditor agency will re- (a) Definitions. For purposes of this
imburse FMS and the IRS for the full section:
cost of administering the tax refund Debt as used in this section is syn-
offset program. FMS will deduct the onymous with the term past-due sup-
fees from amounts collected prior to port unless otherwise indicated.
disposition and transmit a portion of Debtor as used in this section means
the fees deducted to reimburse the IRS a person who owes past-due support.
for its share of the cost of admin- FMS means the Financial Manage-
istering the tax refund offset program. ment Service, a bureau of the Depart-
To the extent allowed by law, creditor ment of the Treasury.
agencies may add the offset fees to the HHS means the Department of Health
debt. and Human Services, Office of Child
(j) Review of tax refund offsets. Any re- Support Enforcement.
duction of a taxpayer’s refund made IRS means the Internal Revenue
Service, a bureau of the Department of
pursuant to 26 U.S.C. 6402(d) shall not
the Treasury.
be subject to review by any court of
Past-due support means the amount of
the United States or by the Secretary
support, determined under a court
of the Treasury, FMS or IRS in an ad- order, or an order of an administrative
ministrative proceeding. No action process established under State law,
brought against the United States to for support and maintenance of a child,
recover the amount of this reduction or of a child and the parent with whom
shall be considered to be a suit for re- the child is living, which has not been
fund of tax. Any legal, equitable, or ad- paid, as defined in 42 U.S.C. 664(c).
ministrative action by any person Qualified child means a child:
seeking to recover the amount of the (i) Who is a minor, or
reduction of the overpayment must be (ii) Who, while a minor, was deter-
taken against the Federal creditor mined to be disabled under subchapters
agency to which the amount of the re- II or XVI, Chapter 7, Title 42, United
duction was paid. Any action which is States Code, and for whom an order of
otherwise available with respect to re- support is in force.
coveries of overpayments of benefits State means the several States of the
under 42 U.S.C. 404 must be taken United States. The term ‘‘State’’ also
against the Commissioner of Social Se- includes the District of Columbia,
curity. American Samoa, Guam, the United
(k) Access to and use of confidential tax States Virgin Islands, the Common-
information. Access to and use of con- wealth of the Northern Mariana Is-
fidential tax information in connection lands, and the Commonwealth of Puer-
with the tax refund offset program are to Rico.
Tax refund offset means withholding
restricted by 26 U.S.C. 6103. Generally,
or reducing a tax refund payment by an
agencies will not receive confidential
amount necessary to satisfy a debt
tax information from FMS. To the ex-
owed by the payee(s) of a tax refund
tent such information is received,
payment.
agencies are subject to the safeguard, Tax refund payment means any over-
recordkeeping, and reporting require- payment of Federal taxes to be re-
ments of 26 U.S.C. 6103(p)(4) and the funded to the person making the over-
regulations thereunder. The agency payment after the IRS makes the ap-
shall inform its officers and employees propriate credits as provided in 26
who access or use confidential tax in- U.S.C. 6402(a) and 26 CFR 6402–3(a)(6)(i)
formation of the restrictions and pen- for any liabilities for any Federal tax
alties under the Internal Revenue Code on the part of the person who made the
for misuse of confidential tax informa- overpayment.
tion. (b) General rule. (1) Past-due support
(l) Effective date. This section applies will be collected by tax refund offset
to tax refund payments payable under upon notification to FMS in accord-
26 U.S.C. 6402 after January 1, 1998. ance with 26 U.S.C. 6402(c), 42 U.S.C. 664

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§ 285.3 31 CFR Ch. II (7–1–04 Edition)

and this section. Collection by offset The notification of liability shall be


under 26 U.S.C. 6402(c) is a collection accompanied by a certification that
procedure separate from the collection the State has complied with the re-
procedures provided by 26 U.S.C. 6305 quirements contained in paragraph
and 26 CFR 301.6305–1, relating to the (c)(4) of this section and with any re-
assessment and collection of certain quirements applicable to the offset of
child and spousal support liabilities. Federal tax refunds to collect past-due
Tax refund offset may be used sepa- support imposed by State law or proce-
rately or in conjunction with the col- dures. HHS shall consolidate and trans-
lection procedures provided in 26 U.S.C. mit to FMS the information contained
6305, as well as other collection proce- in the notifications of liability for
dures. past-due support submitted by the
(2) FMS will compare tax refund pay- States provided that the State has cer-
ment records, as certified by the IRS, tified that the requirements of para-
with records of debts submitted to graph (c)(4) of this section have been
FMS. A match will occur when the tax- met.
payer identifying number (as that term (3) Notification of liability for past-due
is used in 26 U.S.C. 6109) and name of a support transmitted directly to FMS by
payment certification record are the States. States must notify HHS of past-
same as the taxpayer identifying num- due support in accordance with the
ber and name of a delinquent debtor provisions of paragraph (c)(2) of this
record. When a match occurs and all section unless HHS rules authorize no-
other requirements for tax refund off- tification to FMS directly. If author-
set have been met, FMS will reduce the ized by HHS rules, States may notify
amount of any tax refund payment FMS directly of past-due support.
payable to a debtor by the amount of States notifying FMS directly of past-
any past-due support debt owed by the due support shall do so in the manner
debtor. Any amounts not offset will be and format prescribed by FMS. The no-
paid to the payee(s) listed in the pay- tification of liability shall be accom-
ment certification record. panied by a certification that the State
(c) Notification of past-due support—(1) has complied with the requirements
Past-due support eligible for tax refund contained in paragraph (c)(4) of this
offset. Past-due support qualifies for section and with any requirements ap-
tax refund offset if: plicable to the offset of Federal tax re-
(i)(A) There has been an assignment funds to collect past-due support im-
of the support obligation to a State posed by State law or procedures. FMS
and the amount of past-due support is may reject a notification of past-due
not less than $25.00, or such higher support which does not comply with
amount as HHS rules may allow, the requirements of this section. Upon
whichever is greater; or notification of the rejection and the
(B) A State agency is providing sup- reason for rejection, the State may re-
port collection services under 42 U.S.C. submit a corrected notification.
654(4), the amount of past-due support (4) Advance notification to debtor of in-
is not less than $500.00, and the past- tent to collect by tax refund offset. The
due support is owed to or on behalf of State, or HHS if the State requests and
a qualified child (or a qualified child HHS agrees, is required to provide a
and the parent with whom the child is written notification to the debtor, pur-
living if the same support order in- suant to the provisions of 42 U.S.C.
cludes support for the child and the 664(a)(3) and 45 CFR 303.72(e), informing
parent); and the debtor that the State intends to
(ii) A notification of liability for refer the debt for collection by tax re-
past-due support has been received by fund offset. The notice also shall:
FMS as prescribed by paragraphs (c)(2) (i) Instruct the debtor of the steps
or (c)(3) of this section. which may be taken to contest the
(2) Notification of liability for past-due State’s determination that past-due
support and transmission of information support is owed or the amount of the
to FMS by HHS. States notifying HHS past-due support;
of past-due support shall do so in the (ii) Advise any non-debtor who may
manner and format prescribed by HHS. file a joint tax return with the debtor

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Fiscal Service, Treasury § 285.3

of the steps which a non-debtor spouse (2) Reduction of the tax refund pay-
may take in order to secure his or her ment pursuant to 26 U.S.C. 6402(a), (c),
proper share of the tax refund; and (d), and (e) shall occur prior to cred-
(iii) In cases when a debt is being en- iting the overpayment to any future li-
forced by more than one State, advise ability for an internal revenue tax.
the debtor of his or her opportunities Any amount remaining after tax re-
to request a review with the State en- fund offset under 26 U.S.C. 6402(a), (c),
forcing collection or the State issuing (d), and (e) shall be refunded to the tax-
the support order as prescribed by the payer, or applied to estimated tax, if
provisions of 45 CFR 303.72(g). elected by the taxpayer pursuant to
(5) Correcting and updating notifica- IRS regulations.
tion. The State shall, in the manner (e) Post-offset notice. (1)(i) FMS shall
and in the time frames provided by notify the debtor in writing of:
FMS or HHS, notify FMS or HHS of (A) The amount and date of the offset
any deletion or net decrease in the to satisfy past-due support;
amount of past-due support referred to (B) The State to which this amount
FMS, or HHS as the case may be, for has been paid or credited; and
collection by tax refund offset. The (C) A contact point within the State
State may notify FMS or HHS of any that will handle concerns or questions
increases in the amount of the debt re- regarding the offset.
ferred to FMS for collection by tax re- (ii) The notice in paragraph (e)(1)(i)
fund offset provided that the State has of this section also will advise any non-
complied with the requirements of debtor who may have filed a joint tax
paragraph (c)(4) of this section with re- return with the debtor of the steps
gard to those debts. which a non-debtor spouse may take in
order to secure his or her proper share
(6) Collection of past-due support en-
of the tax refund. See paragraph (f) of
forced by multiple States. When a State
this section.
has knowledge that the debt is being
(2) FMS will advise HHS of the
enforced by more than one State, the
names, mailing addresses, and identi-
State notifying FMS, or HHS as the
fying numbers of the debtors from
case may be, of the debt shall inform
whom amounts of past-due support
any such other State involved in en-
were collected, of the amounts col-
forcing the debt when it receives the
lected from each debtor through tax re-
offset amount.
fund offset, the names of any non-debt-
(d) Priorities for offset. (1) As provided or spouses who may have filed a joint
in 26 U.S.C. 6402 as amended, a tax re- return with the debtor, and of the
fund payment shall be reduced in the State on whose behalf each collection
following order of priority: was made. Alternatively, FMS will pro-
(i) First by the amount of any past- vide such information to each State
due support assigned to a State (wel- that refers debts directly to FMS. FMS
fare cases) which is to be offset under will inform HHS and each State that
26 U.S.C. 6402(c), 42 U.S.C. 664 and this the payment source is a tax refund
section; payment.
(ii) Second, by the amount of any (3) At least weekly, FMS will notify
past-due, legally enforceable debt owed the IRS of the names and taxpayer
to a Federal agency which is to be off- identifying numbers of the debtors
set under 26 U.S.C. 6402(d), 31 U.S.C. from whom amounts owed for past-due
3720A and § 285.2 of this part; support were collected from tax refund
(iii) Third, by the amount of any offsets and the amounts collected from
qualifying past-due support not as- each debtor.
signed to a State (non-welfare cases) (4) At such time and in such manner
which is to be offset under 26 U.S.C. as FMS and HHS agree, but no less
6402(c), 42 U.S.C. 664 and this section; than annually, FMS will advise HHS of
and the States which have furnished no-
(iv) Fourth, by the amount of any tices of past-due support, the number
past-due, legally enforceable State in- of cases in each State with respect to
come tax obligation which is to be off- which such notices have been fur-
set under 26 U.S.C. 6402(e). nished, the amount of past-due support

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§ 285.4 31 CFR Ch. II (7–1–04 Edition)

sought to be collected by each State, burse the IRS for its share of the cost
and the amount of such tax refund off- of administering the tax refund offset
set collections actually made in the program. Fees will be charged only for
case of each State. As FMS and HHS actual tax refund offsets completed.
may agree, FMS may provide addi- (i) Review of tax refund offsets. In ac-
tional offset-related information about cordance with 26 U.S.C. 6402(f), any re-
States which have furnished notices of duction of a taxpayer’s refund made
past-due support. pursuant to 26 U.S.C. 6402(c), (d), or (e)
(f) Offset made with regard to a tax re- shall not be subject to review by any
fund payment based upon joint return. If court of the United States or by the
the person filing a joint return with a Secretary of the Treasury, FMS or IRS
debtor owing the past-due support in an administrative proceeding. No ac-
takes appropriate action to secure his tion brought against the United States
or her proper share of a tax refund to recover the amount of this reduction
from which an offset was made, the shall be considered to be a suit for re-
IRS will pay the person his or her fund of tax.
share of the refund and request that (j) Access to and use of confidential tax
FMS deduct that amount from information. Access to and use of con-
amounts payable to HHS or the State, fidential tax information in connection
as the case may be. FMS and HHS, or with the tax refund offset program is
the appropriate State, will adjust their permitted to the extent necessary in
debtor records accordingly. establishing appropriate agency
(g) Disposition of amounts collected. records, locating any person with re-
FMS will transmit amounts collected spect to whom a reduction under 26
for debts, less fees charged under para- U.S.C. 6402(c) is sought for purposes of
graph (h) of this section, to HHS or to collecting the debt, and in the defense
the appropriate State. If FMS learns of any litigation or administrative pro-
that an erroneous offset payment is cedure ensuing from a reduction made
made to HHS or any State, FMS will under section 6402(c).
notify HHS or the appropriate State (k) Effective date. This section applies
that an erroneous offset payment has to tax refund payments payable under
been made. FMS may deduct the 26 U.S.C. 6402 after January 1, 1999.
amount of the erroneous offset pay-
ment from amounts payable to HHS or [63 FR 72094, Dec. 30, 1998]
the State, as the case may be. Alter-
natively, upon FMS’ request, the State § 285.4 Offset of Federal benefit pay-
shall return promptly to the affected ments to collect past-due, legally
enforceable nontax debt.
taxpayer or FMS an amount equal to
the amount of the erroneous payment (a) Scope. (1) This section sets forth
(unless the State previously has paid special rules applicable to the offset of
such amounts, or any portion of such Federal benefit payments payable to an
amounts, to the affected taxpayer). individual under the Social Security
HHS and States shall notify FMS any Act (other than Supplemental Security
time HHS or a State returns an erro- Income (SSI) payments), part B of the
neous offset payment to an affected Black Lung Benefits Act, or any law
taxpayer. FMS and HHS, or the appro- administered by the Railroad Retire-
priate State, will adjust their debtor ment Board (other than payments that
records accordingly. such Board determines to be tier 2 ben-
(h) Fees. The State will pay a fee to efits) to collect delinquent nontax debt
FMS for the full cost of administering owed to the United States.
the tax refund offset program. The fee (2) As used in this section, benefit
(not to exceed $25 per case submitted) payments ‘‘due to’’ an individual,
will be established annually in such ‘‘payable to’’ an individual, and/or ben-
amount as FMS and HHS agree to be efit payments ‘‘received by’’ an indi-
sufficient to reimburse FMS for the vidual, refer to those benefit payments
full cost of the offset procedure. FMS expected to be paid to an individual be-
will deduct the fees from amounts col- fore any amounts are offset to satisfy
lected prior to disposition and transmit the payee’s delinquent debt owed to the
a portion of the fees deducted to reim- United States. Nothing in these

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