California is harsh on parents who do not keep their child support payments current. The state will intercept both your federal and state tax refunds if you owe any past due support, even if you’re making current payments. California law obligates each county to submit a report to the state’s Franchise Tax Board almost as soon as you miss a payment or two, and the FTB will immediately take action. The FTB currently oversees all child support collections in California.
If you are a California resident and you fall behind on your child support payments, the IRS and state Franchise Tax Board will work together to ensure that you contribute the legally required funds. After receiving a "Demand for Payment" from the FTB, you will have 10 days to pay the money you owe before the IRS gets involved. Once the IRS has been notified, you risk losing your upcoming tax refund if you do not pay the money you owe.
Identifying the Amount of Arrears
If your child’s other parent is getting public assistance from the state to make ends meet, California law allows the FTB to submit a report to the Internal Revenue Service when your arrears add up to only $150. Otherwise, it will not happen until you fall behind by $500. The FTB will intercept your state refund as soon as you’re $100 past due.
Notice of Demand for Payment
When you fall behind in your payments, the FTB sends a “Demand for Payment.” California law gives you 10 days to pay your arrears after you receive the demand. You can’t make a partial payment; you’ve got to remit the entire balance. If you don’t, the FTB sends notification to the IRS to intercept your refund. Once the IRS is notified, you should receive a second notice from them, telling you either that you won’t be receiving your refund or that the amount of your arrears will be deducted from it if you owe less than what you expect to receive.
Understanding The Interception Process
If you receive notice of the intercept in May after you already received your refund in April, this doesn’t mean you don’t have anything to worry about. Once the FTB submits your information to the IRS the first time, it continues to send monthly updates regarding your account. If you pay your arrears before you file your next tax return, nothing will happen. Otherwise, your account is flagged. As soon as you do file a tax return, it triggers attention. There’s no statute of limitations. The flag remains until you pay your arrears and the FTB sends its next monthly report to the IRS, advising of that.
Other Important Considerations
If your child is over 19 years old and no longer living at home with her custodial parent, and your arrears accumulated before she reached the age of majority, a loophole in the law might help you avoid an interception of your refund. You still owe the arrears until you pay them, however, and other actions might be taken against you. If you receive a demand notice and your child no longer lives at home, contact an attorney immediately.
If you’re married and paying support for a child from a previous relationship, and if you and your spouse file a joint tax return, she won’t necessarily lose her half of it. Under California law, she’s not responsible for your child support obligation. She can file Form 8379 along with your tax return and the IRS will send her portion. Only your half will go toward your arrears.
Beverly Bird has been writing professionally for over 30 years. She is also a paralegal, specializing in areas of personal finance, bankruptcy and estate law. She writes as the tax expert for The Balance.