Child Support and the Federal Stimulus Payment
On March 27, 2020 the Coronavirus Aid, Relief, and Economic Security (CARES) Act was enacted which provides recovery rebate payments to qualifying individuals, commonly called “stimulus payments.” The United States Congress added a number of exemptions concerning the stimulus rebate payments within the CARES Act but did not exempt child support arrears. If a person owes child support arrears (past-due support) and is receiving child support enforcement services, the stimulus payment can be intercepted to pay those arrears in the same manner as a federal tax refund.
Please note: Stimulus payments will only be intercepted if OCSE has an open enforcement case or in a case that is no longer being enforced but a debt is owed to the state for the time a custodial parent received Transitional Employment Assistance (TEA). Payment processing cases (those where OCSE is not actively enforcing a court order but is only receiving and disbursing payments) or private child support cases are not eligible to receive an intercepted stimulus payment.
IRS AND INJURED SPOUSE CLAIMS
Recently, the IRS announced payments will be automatically issued to individuals whose share of a stimulus payment was intercepted to pay back child support owed by their spouse even if they didn't file an injured spouse claim. For more information, visit the IRS website. This will require reductions to the amount of many stimulus payments that have already been offset for child support. In order to minimize the negative impact on custodial parents who might otherwise be required to pay a portion of this payment back, the federal government has authorized child support programs to hold stimulus payments to allow time for the adjustment to be processed.
FAQs FOR PARENTS PAYING SUPPORT
How will I know if my stimulus payment is intercepted?
If your stimulus payment has been intercepted, the IRS will send you a letter notifying you that the payment will be sent to the Arkansas OCSE.
If I owe child support, will my federal stimulus rebate payment be intercepted and applied to my child support arrears?
Stimulus payments are subject to intercept in the same manner as federal tax refunds. If your federal payments are subject to offset, a notice was sent to you when you first met the required criteria under federal law and annually thereafter. If Transitional Employment Assistance (TEA) has been received for your child, the total amount of past due support on all of your child support cases must be at least $150. If TEA has not been received for your child, the total amount of past due support on all of your child support cases must be at least $500.
FAQs FOR PARENTS RECEIVING SUPPORT
I’m the custodial party. Will I receive the noncustodial parent’s full federal stimulus payment?
Maybe. The amount of money you receive will depend on the amount of federal stimulus payment intercepted, the amount owed to you in your case, whether you received Transitional Employment Assistance (TEA), and whether the noncustodial parent owes child support arrears for other children. You must have an enforcement case open with the child support program to receive any money from an intercepted federal stimulus payment. If the noncustodial parent owes child support on another case in another state, it is possible that other state could receive the full federal stimulus payment.
When will I get the noncustodial parent’s federal stimulus payment?
If the noncustodial parent filed an individual return, the payment will disburse immediately, similar to regular child support payments.
If the noncustodial parent is married and filed a joint return, payments are typically held for up to six months to allow the spouse to claim his or her share of a federal tax offset as an injured spouse. The IRS recently announced that a spouse will automatically receive his or her share of the stimulus payment. This will requrie reductions to the amount of many stimulus payments that have already been offset for child support. In order to minimize the negative impact on custodial parents who might otherwise be required to repay a portion of this payment, the federal government has authorized child support programs to hold stimulus payments longer to allow for the adjustment to be processed.
If the noncustodial parent has a case in another state, it is possible the other state could receive the federal stimulus payment instead of Arkansas.
I’m the custodial party and am receiving or have in the past received TEA for my child. Will I receive any money from a federal stimulus payment?
Maybe. Federal law dictates how payments received by a state child support agency under the Federal Tax Refund Offset Program are distributed. In Arkansas, federal tax offsets are applied first to arrears owed to the state (arrears owed for the repayment of TEA) and then to arrears owed to the family. If there is money owed to the state in your case, the intercept stimulus payments up to the amount owed to the state will be retained by the state. Any remaining money will be sent to you.
There was a case open with OCSE but it's closed because I didn't want OCSE to take action to collect child support. Why did OCSE intercept the noncustodial parent's stimulus payment?
If you received TEA benefits in the past and child support from that time period was still owed when you requested to close your case, the debt remains owed to the state and is called "un-reimbursed cash assistance" or "assigned arrears." You were notified of the amount of un-reimbursed cash assistance when your case closed for enforcement. In such cases, the debt continues to be collectible through the Federal Tax Offset Program until it has been paid. Any collection received as an IRS Tax Offset will pay what is owed to the state of Arkansas. Once the debt to the state is paid, any remaining amount will be refunded to the noncustodial parent.
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