Can the IRS take my tax refund for child support arrears?

The Treasury Offset Program

Under the federal Treasury Offset Program, state child support enforcement agencies share information with the Treasury Department regarding parents that are behind on child support. With this information, the agency can intercept (take) federal tax returns and other payments to offset overdue child support.

If your state child support enforcement office has reported your overdue child support to the Treasury Department, the IRS will take your tax refund to cover the arrears (often called a tax refund seizure). The IRS will then give the money to the appropriate child support agency.

This same rule applies to coronavirus stimulus payments.

The Coronavirus Relief Act, Stimulus Checks, and Overdue Child Support

In March, Congress passed the Coronavirus Aid, Relief, and Economic Security Act (the CARES act), which is a $2 trillion stimulus package to provide financial relief to businesses and individuals dealing with the COVID-19 economic fallout.

Under this package, American households will receive stimulus checks based on annual income: up to $1,200 per person, $2,400 for couples, and $500 per child under 17. You can see how much you'll receive using Nolo's online stimulus calculator.

However, if you're on the Treasury Offset list for unpaid child support, your stimulus check will be reduced by the amount you owe. It's unclear if you'll receive a notice in advance—to find out if your name is on the Treasury Offset list, call the toll-free IRS number at 1-800-304-3107.

Other past due debts to the government, like back taxes or overdue student loans will not trigger an automatic offset.

What to Do If You Receive Notice of an IRS Tax Refund Seizure

The Financial Management Service division of Treasury Department will send you a notice of a proposed tax refund seizure before it happens. Take this opportunity to address the proposed tax refund offset to decide on a course of action—you might be able to minimize the effect of the seizure on your finances.

The best way to avoid receiving a notice of an IRS Tax Refund Seizure is to pay child support on time. If you've lost your job or or are having trouble making your payments on time, you must take action. Contact your local child support agency for help or go back to court to see if you can modify child support based on your current income.

Ignoring your child support obligation or failing to make payments on time can subject you to contempt of court proceeding, fines, and other sanctions, like a tax refund seizure.

If you receive an IRS notice of tax refund seizure to cover child support arrears, here are some options:

If married, file an "Injured Spouse Allocation" form. If you're married to someone who owes child support—and you're not responsible for the debt—you can file an "Injured Spouse Allocation" form with the IRS. If you submit this properly, the IRS may allow you to keep your portion of the tax refund.

The IRS typically calculates this amount based on how much money your employer withheld from your wages for taxes the previous year. File this form with your return or immediately after receiving a notice of seizure.

File Chapter 13 bankruptcy. The bankruptcy code does not allow you to erase your child support arrears but it does allow you to restructure that arrearage and pay it down over a three to five year period. The bankruptcy court considers child support arrears a priority debt that gets paid before any other debt. (Learn more about paying child support in a Chapter 13 bankruptcy.)

What to Do If You Are Owed Child Support

If you want the IRS to seize the refund of the person who owes you child support, it will do so automatically if the state child support enforcement office collects payments from your child's other parent.

However, if the child support enforcement office doesn't collect child support funds on your child's behalf, then you need to petition the court to request it be collected this way. That way, if your child's other parent falls behind on payments, the child support enforcement office will automatically report it to the Treasury Office to begin the process of intercepting tax refunds.