N.M. Admin. Code § 8.50.112.11 - COLLECTION OF PAST DUE SUPPORT BY FEDERAL TAX REFUND OFFSET

Federal tax refund offset is utilized to pay support arrearages, including child support, medical support, and spousal support. Cases meeting specific criteria are referred to the U.S. department of treasury's financial management service.

A. Criteria for federal income tax offset: A Title IV-D case may be referred for federal income tax offset, regardless of whether the child(ren) are emancipated, so long as there is a child support delinquency or arrearage Title IV-D cases having spousal support delinquencies or arrearages will not be referred for federal income tax offset unless there is an ongoing child support obligation, delinquency, or arrearage. Title IV-D cases that are solely for processing payments will not be referred. Only Title IV-D cases that meet at least one of the criteria in 45 CFR § 303.72(a) are to be referred for federal income tax offset.

B. Periodic updates on referred obligors are sent by the Title IV-D agency to the treasury department. Those updates may result in modifications up or down on the balance due or deletions from the referral.

C. Joint return: The U. S. internal revenue service (IRS) will offset a refund from a joint income tax return to pay a past due support obligation if either tax filer is certified as being legally responsible for providing support. Complaints, questions, and forms (i.e., injured spouse claim and allocation) concerning joint refund cases can only be addressed by the IRS. If the obligor's spouse is not liable for the support debt, the IRS will issue a pro rata refund to the spouse (upon the filing of an IRS injured spouse claim and allocation form by the obligor's spouse) and the Title IV-D agency will be required to reimburse the IRS in the amount of the pro rata refund. The federal government will advise the Title IV-D agency of any adjustments to Title IV-D collections. The injured spouse may also agree to voluntarily release the claim of his or her portion of the joint refund to have it applied towards the child support obligation. This will result in an immediate distribution of the refund amount to the Title IV-D case. An injured spouse may request the release form from the Title IV-D agency, or may provide a notarized letter authorizing the release. The notarized letter shall set forth the injured spouse's name, the name of the obligor, and the obligor's CSED case number(s).

D. Bankruptcy cases: The Title IV-D agency will review the non-custodial party's bankruptcy case to determine what action, if any, the Title IV-D agency should take.

E. Notification of federal income tax offset:

(1) Written advance notice is sent to inform an obligor that the amount of his or her past due support will be referred to the secretary of the U.S. treasury for collection by federal tax refund offset and that any amounts collected will be applied towards the obligor's child support obligation. The notice shall be sent to the obligor's last address of record with the Title IV-D agency and shall inform the obligor:

(a) of the right to contest the department's determination that past due support is owed;

(b) of the right to contest the amount of past due support;

(c) of the right to request an administrative review;

(d) of the procedures and time frame for requesting an administrative review;

(e) notice will be provided to any individual who filed a joint return with the obligor, advising of the process for requesting the obligor's share of the refund; and

(f) that the U.S. treasury will notify the obligor's spouse at the time of offset regarding steps to take to protect the share of the refund that may be payable to that spouse.

(2) At the time the offset occurs, the secretary of the U.S. treasury will notify the obligor that the offset has been made.

F. Contesting referral for federal offset: The obligor has 30 days from the date of mailing of the notification of a referral for federal tax intercept to notify the Title IV-D agency that he or she contests the referral. The notification issued by the Title IV-D agency provides the obligor with the address and telephone number to request a hearing to contest the referral.

(1) Upon receipt of an appeal request from the obligor, a notice is generated by the administrative law judge and sent to the obligor and the Title IV-D agency.

(2) The notice shall set forth the time and place of the administrative hearing. The hearing is conducted in accordance with 8.50.130 NMAC.

(3) If the appeal request concerns a joint tax refund that has not yet been intercepted, the obligor is informed that the secretary of the U.S. treasury will notify the obligor's spouse at the time of offset regarding steps to take to secure his or her proper share of the refund.

(4) If the appeal concerns a joint tax refund which has already been offset, the obligor will be referred to the secretary of the U.S. treasury to address the refund due to the obligor's spouse.

(5) If the hearing decision results in a deletion or decrease in the amount referred for offset, the federal office of child support enforcement will be notified.

(6) If an amount which has already been offset is found to have exceeded the amount of past due support owed, steps to refund the excess amount to the obligor will be promptly taken.

G. Interstate cases: The following applies to the New Mexico Title IV-D agency when it is the state that submits a case for federal income tax offset. The obligor shall request an administrative review be conducted by the New Mexico Title IV-D agency. If the underlying order upon which the referral for federal income tax offset is based has not been issued by a New Mexico district court, within 10 days of the receipt of the obligor's request for administrative review, the New Mexico Title IV-D agency must notify the Title IV-D agency in the state that referred the case to New Mexico of the obligor's request for administrative review. Within 45 days of receipt of the request for administrative review from the New Mexico Title IV-D agency, the Title IV-D agency in the state that referred the case to New Mexico should:

(1) Send notice to all appropriate parties setting forth the time and place of the administrative review; and

(2) Conduct the review and render a decision. If the administrative review conducted by the Title IV-D agency in the other state results in a reduction or elimination of the amount referred for offset, the Title IV-D agency that conducted the administrative review should inform the New Mexico Title IV-D agency and the OCSE of the decision. The New Mexico Title IV-D agency shall be bound by the determination of the Title IV-D agency in the state that conducted the review.

H. Distribution of collections from federal income tax offset: Single filer federal tax refund offsets will be placed on hold for 30 days and joint filer federal tax refund offsets will be split in half and the obligor's portion will be placed on hold for 30 days and the injured spouse's portion will be placed on hold for six months. Past-due support amounts collected as a result of the federal income tax refund offset shall be distributed pursuant to 8.50.125.12 NMAC after the appropriate holds have elapsed. The obligor shall receive full credit for the entire amount of tax intercept that is applied to his or her case(s), including fees. Distribution of tax intercept money for obligors with multiple Title IV-D cases shall be in accordance with federal and state laws. If an offset is made to satisfy non-TANF past due support from a refund based upon a joint return, the Title IV-D agency may delay distribution until notified that the injured spouse's proper share of the refund has been paid or for a period not to exceed six months from notification of offset, whichever is shorter.

I. Fees: A non-TANF custodial party who has applied for Title IV-D services is assessed fees for the federal income tax refund. The fees are deducted from the tax refund when it is intercepted but are credited to the obligor's support payment.

Notes

N.M. Admin. Code § 8.50.112.11

8.50.112.11 NMAC - Rp, 8.50.112.11 NMAC, 12/30/10, Amended and Renumbered from 8.50.112.10 New Mexico Register, Volume XXXII, Issue 23, December 14, 2021, eff. 1/1/2022