BENEFIT RECOVERY
STATE TAX OFFSET
4025 - STATE TAX OFFSET REQUIREMENT BASIC CONSIDERATIONS State Income Tax refunds are intercepted as payment for delinquent debts. Claims are selected for tax offset according to the following criteria: claim status is active case is not active claim amount is $25 or more claim is delinquent
Delinquent and Referral criteria: A client will remain in State Debt Setoff (SDSO) if referred at least once in the present calendar year (January – December) For new Claims, clients who have a valid monthly reduction applied toward their claim every month within the grace period will not be referred to SDSO The grace period for a claim is one full calendar month from the Supervisor approval date with no valid monthly reduction posted. Example: If the supervisor approval date is 01.02/08, and no valid payment type is posted for the whole of 02/08 and 03/08, the client is referred to SDSO in 04/08. However, if a valid monthly reduction type is posted to the claim on 03/08, and misses 04/08, the client will be referred in 05/08. Once the delinquency date is established, the system will determine if a valid monthly payment has be posted on a monthly basis (this date is no longer based on 30 days). The “Payment Made” date field is used in calculating if a client is delinquent. Deletion process from DSO: Once a client is referred to SDSO, a payment towards a claim will not delete the client from SDSO until the “First cycle of the Year” is run. For old claims, clients who have a valid monthly reduction type posted towards their claim for one full calendar year (January – December) will be deleted whenever the first cycle of the year is run. The State Debt Set Off System provides the Georgia Department of Revenue a file of individuals who have claims meeting the criteria.
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STATE TAX OFFSET
BASIC CONSIDERATIONS (cont.)
As state tax returns are filed, the Revenue system identifies SSNs designated as belonging to individuals owing a debt to the state. The tax set-off notices are mailed to the AU from the State Department of Revenue and the Office of Financial Services. The AU is notified of the intent to apply the state tax refund to a debt unless action is taken within 30 days from the date of the notice. The address and toll free telephone number of the State Claims/Fiscal Services Office is on the notice. The individual may contact the state office during the 30 day period to request a hearing on the intent to set off the refund but not the fact of or amount of the claim. Requests must be made in writing. Failure to apply for a hearing within 30 days is considered a waiver of the opportunity to contest the set off. During the 30-day period, the refund check is held by the Office of Financial Services pending notification of either: A hearing request, or A decision by the county that the set off was in error and the refund, or a part of it, should be released
If neither action is taken, the tax refund is applied to the claim after the 30th day from the notice date. Postings discovered to be in error after they have been applied to a debt are refunded by the county.
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STATE TAX OFFSET
BASIC CONSIDERATIONS (cont.)
If a hearing is requested, the Administrative Hearing Office notifies the agency of the decision: If the set off is determined to be incorrect, the refund check will be released to the AU. If the set off is determined to be correct, the refund check will be applied to the claim.
The following reports are available for county use: “Notified Clients of 30 Day Waiting Period” (DMJ 5701I) provides a list of AUs with intercepts pending posting. “State Tax Postings” (DMJ 5702I) provides a list of posted claim payments by AU.
County Office The county office responds to the AU’s request for information. Procedures The request may come from the State Claims/Fiscal Services Staff or directly from the AU. The county reviews the “Notified Clients With A 30 Day Waiting Period Report” (DM5701I) and “State Tax Postings” (DMD5702I). The county reviews the record immediately to determine if the set off is incorrect because of any of the following conditions: The social security number shown is incorrect. The debt has been paid. The obligation has been satisfied or set aside by court order. The obligation has been included in bankruptcy. A third party has failed to forward payments to the agency. An alternative means of collection is pending. The claim is assigned to the AU in error.
Follows the procedures below if the set off is incorrect: Fax or mail Form 18, Case Summary Settlement, to the State Claims/Fiscal Services Staff with instructions to release all or part of the refund check; or allow request to process through SUCCESS by suspending or terminating the claim balance. Inform the AU that the refund check will be released directly from the DHR Office of Financial Services.
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STATE TAX OFFSET
BASIC CONSIDERATION (cont.) County Office Follows the procedures below if a hearing is requested: Procedures (cont.) Respond to Form 17, Notice of Request for Hearing to Contest Tax Setoff, from the State Claims/Fiscal Services Staff by return mail. Complete Form 19, Case Summary, and attach documents necessary for the Administrative Law Judge if claim is valid. Fax or mail Form 18, Case Summary Settlement, to the State Claims/Fiscal Services Staff if the claim is not valid. Adjust the claim in SUCCESS to correct any errors. NOTE: All forms must be transmitted to the State Claims/Fiscal Services staff within 30 days. Forms may be faxed to expedite the process. INNOCENT SPOUSE A spouse not included in the AU at the time the debt was incurred is not responsible for the debt. The filing of a joint tax return may result in the intercept of an individual’s tax refund, who is not responsible for the debt. This money must be refunded to the nonliable individual.
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STATE TAX OFFSET
The county is responsible for determining the amount of refund the innocent spouse is due. Procedures Determine that one of the taxpayers was not a member of the AU during the months of the overpayment. Obtain from the taxpayers copies of each of their W-2 forms and a copy of the joint tax return for the appropriate year. Calculate the percentage of the refund to be returned to the innocent spouse. If the calculation is made within 30 days from the date on the Department of Revenue notice, notify the State Claims/Fiscal Services Staff, with Form 18, to release all or part of the tax refund. If the calculation is made after the 30 days expire, and the refund is already applied to the claim, the county refunds the amount due the non-responsible spouse. Either spouse may request a hearing if they do not agree with the calculations. Note on the hearing form that the hearing involves an innocent spouse provision.
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