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Tax Refund Offset Program 

Federal Tax Refund Offset Program
State Tax Refund Offset Program
Where the Money Goes
How Long the Offset Funds are Held
Federal Tax Refund Offset Fee
Filing an Injured Spouse Claim

Federal Tax Refund Offset
The Federal Tax Refund Offset program is a way OCSE collects the noncustodial parent's child support arrears by filing a claim against the noncustodial parent’s federal income tax refund. OCSE can take the noncustodial parent’s federal tax refund if the noncustodial parent owes past due child support, even if the children are emancipated.

State Tax Refund Offset
The State Tax Refund Offset program is a way OCSE collects the noncustodial parent's child support arrears by filing a claim against the noncustodial parent's Arkansas state income tax refund. OCSE can intercept the noncustodial parent's state tax refunds if the noncustodial parent owes past due support.

A custodial party's state tax refund may also be intercepted to repay debts owed to OCSE or for overpayment of child support.

Where the Money Goes
Federal tax offset funds are paid in the following order:

1. To the state if the custodial party has received cash assistance in the past and a debt is still owed
2. To the custodial party to pay towards or pay off arrears
3. Any remaining amount will be returned to the noncustodial parent

State tax offset funds are paid in the following order:

1. To the custodial party to pay the current month's child support obligation
2. To the custodial party to pay towards or pay off arrears
3. To the state if the custodial party has received cash assistance in the past and there is a debt owed to the state
4. To OCSE to pay any fees that the noncustodial parent owes
5. Any remaining amount will be returned to the noncustodial parent

How Long Tax Offset Funds are Held

Federal tax returns
Single returns
- If a noncustodial parent files a single return and arrears are owed to the custodial party, OCSE does not hold the federal tax refund offset. The funds are treated like any other payment – once they are received and identified, they are sent to the State and/or custodial party within two business days.

Joint returns - Federal joint tax refunds are held for six months to allow the noncustodial parent's non-obligated spouse to file an Injured Spouse Claim with the Internal Revenue Service (IRS). The reason OCSE holds these funds is that, if the funds are sent to the custodial party, and then the non-obligated spouse decides to file an Injured Spouse Claim, an overpayment would be created. This means that, regardless of the past due support that is owed, the custodial party will be have to return a portion of the funds he or she received.

State tax returns
OCSE does not hold any Arkansas state tax refund returns. They are treated like any other payment that comes in – once they are received and identified, they are sent to the custodial party within two business days.

Federal Tax Refund Offset Fee
OCSE charges the custodial party a $25 fee when the federal tax refund applies to cases where the custodial party does not have arrears owed to the state. The fee is automatically deducted from the amount collected before the payment is sent to the custodial party. This fee is charged once per calendar year per case and only if the amount of the offset is over $100.

Filing an Injured Spouse Claim
Federal tax refund offsets:

If the noncustodial parent's non-obligated spouse wants to file an injured spouse claim for his or her portion of the intercepted joint tax refund, then he or she must file IRS Form 8379 – Injured Spouse Allocation. For questions regarding this form, call the IRS at (800) 829-1040.

State tax refund offsets:
Arkansas does not have a form that a non-obligated spouse can fill out to receive their portion of the state tax refund. A non-obligated spouse can contact the local child support office and request his or her share of the refund.