Federal Administrative Offset (FAO) Program

DCSS-POL-06-9 v.3

 

1. OVERVIEW

1. The purpose of this policy is to provide staff and members of the public a working knowledge of referrals of all support payor (SP) owing past due-child support for the Federal Administrative Offset (FAO) program. Submissions are processed electronically through the Federal Office of Child Support Enforcement (OCSE) for certification.

2. APPLICABILITY

1. This policy applies to all Arizona IV-D program staff performing Title IV-D services.

3. POLICY

1. The Division of Child Support Services (DCSS)certifies and submits all open title IV-D SPs owing past-due child support for Federal Administrative Offsets, Federal Income Tax Refunds, and Passport Denial.

4. CRITERIA

1. The DCSS shall have an assignment of rights, an application for Title IV-D services, and/or an assignment of medical support rights to process a case for FAO.
2. The support obligation must be established under a court order or an order of an administrative process established under state law.

1. In Current Assistance (CAI) and Foster Care cases, the right to support obligation is assigned to the State;
2. In Never Assistance (NA) cases, the claim must represent arrears that accrued on behalf of the child(ren) for which the State is enforcing current support.
3. In Medicaid-only cases, the past-due support may include medical support, but only if a specific dollar amount is included in the court order. The rights of the medical support obligation must be assigned to the State.

3. Prior to certification, the DCSS shall verify that each obligation is past-due, minus fees, court costs, or any other non-child support debts owed to the state or family, and enforceable. Cases meeting submission are automatically identified and processed by the DCSS automation.
4. The OCSE notifies the SP in writing by first class mail to their last known address. The notice provides the following information:

1. The intent to collect the debt by administrative offset;
2. The amount of the support owed/certified;
3. The right to inspect and obtain copies of the court orders and pay history for review of the debt determination;
4. The option to enter into a payment agreement in lieu of being referred for administrative offset; and
5. The right to an administrative review in Arizona when it is an Arizona order, or in the state which issued the order for an out of state order (See Administrative Review Policy).

5. Federal law prohibits the use of administrative offsets to collect state debts and/or past-due support from federal payments due to an individual from the following:

1. Title IV of the Higher Education Act of 1965;
2. Social Security Act;
3. Part B of the Black Lung Benefits Act;
4. Any law administered by the Railroad Retirement Board;
5. Tariff laws of the United States;
6. Certain Veteran’s Benefits payments;
7. Payments under needs-based assistant programs; and
8. Any other law that expressly prohibits collection of past-due support by administrative offset.

1. A bankruptcy petition filed by the SP and spouse in federal court excludes submission for IRS unless a lift stay is obtained.
2. A bankruptcy petition filed by the SP in a state or county court excludes submission for Passport Denial.
3. Interstate cases in which the support recipient (SR) receives Temporary Assistance for Needy Families (TANF) and the State of Arizona does not have an assignment of rights.

6. IRS Income Tax Return Offsets (Federal Income Tax Return and other non-IRS Federal payments (FAO payments)

1. Minimum arrears criteria for certification:

1. $500.00 for non-TANF cases; or
2. $150.00 for TANF and IV-E cases
3. Both public and never assistance arrears include spousal maintenance to meet the threshold if it is in the same order as the child support.

2. In a Uniform Interstate Family Support Act (UIFSA) action initiated to Arizona, the initiating state shall be the state to certify to the IRS. An exception to this is when there are local arrears from a time prior to the case becoming a Responding case.
3. The DCSS shall verify the accuracy of the arrears, have a copy of the order and any modifications, and have a copy of the payment record and/or affidavit signed by the SR attesting to the amount of support owed.
4. Once an offset occurs, the Notice of Offset is issued to the SP detailing:

1. The certified amount of the payment offset; and

1. When issued by the IRS, the notice explains whether all or part of a tax refund for full or partial satisfaction of a past-due support obligation was retained. The SP receives this notice before the State receives notification of the offset.

2. The name of the submitting state and contact person for that state.

7. Passport Denial

1. The minimum arrears threshold for certification shall meet or exceed $2,500.00.
2. The DCSS shall electronically notify the OCSE to withdraw certification for passport denial for an SP  if one or more of the following apply:

1. The DCSS final determination during an administrative review indicates the SP did not meet the criteria for passport denial;
2. When the DCSS submits an SPs social security number to OCSE in error, or mistaken identity is proven by appropriate documentation;
3. The SP pays the past-due down to:

1. Zero;

1. This includes current child support, current child support arrears, judgment arrears, judgment interest on arrears and all fees.

2. An amount less than the amount that qualifies for certification under the federal threshold of $2,500.00, and has entered into a payment agreement with the DCSS; or
3. An amount agreed upon by the DCSS if the past-due amount is owed to both the state and the SR, provided the SP agrees to and complies will all terms required by the DCSS.

4. The SR agrees to accept partial payment of the total past-due owed by the SP to the SR, even though the payment does not comply with the requirement to pay the past-due support down to zero or an amount less than $2,500.00; and

1. The SP and SR agree to the amount of the partial payment in writing, signed by both parties; and
2. The DCSS advises the SR that the DCSS may not have another opportunity to request passport denial (once issued) for another 10 years; and

1. Once renewed or issued, a passport is good for 10 years. The DCSS cannot revoke an issued passport and can only deny a passport upon request for a passport, renewal, or to add pages.

3. The SR provides the DCSS with a signed, notarized statement acknowledging receipt of (d)(2)(a) advisement before notifying OCSE to withdraw certification for passport denial; and
4. The SP enters into a payment agreement with the DCSS for the remainder of the past-due owed; and
5. The DCSS consents to the agreement between SR and SP.

5. Upon written evidence that the SP has extenuating circumstances due to employment, or has a verified hardship and is unable to pay an amount that satisfies the arrears.

1. If the circumstance is due to employment issues, the OCSE requires a letter from the SPs employer on company letterhead stating the urgency for releasing the passport.

6. When the SP or immediate family member has a medical emergency or a life-threatening situation that requires a passport for travel.

1. The SP must provide documentation to the DCSS from a medical professional or doctor, of the Red Cross to support the claim.
2. The OCSE defines immediate families members as one of the following:

1. A parent or guardian of the SP
2. A natural or adopted child
3. A grandparent
4. A sibling
5. An Aunt or Uncle
6. A step-child or step-parent

7. When an SP files for bankruptcy after the original submission for Passport Denial.
8. When the SR claims good cause after the SP was submitted for Passport Denial.

3. If the SP fails to complete the terms of any payment agreement with the DCSS, and the past-due meets or exceeds $2,500.00, the DCSS shall re-certify the SP to OCSE for passport denial.

5. PROCEDURE

1. This policy is supported by staff procedures, which identify how action related to this policy will be conducted, including responsibilities, time frames, and required actions.

6. AUTHORITY

Federal Authority
42 U.S.C. § 652	Duties of the Secretary
42 U.S.C. § 664	Collection of Past-Due Support From Federal Tax Refunds
45 C.F.R. § 303.72	Requests for collection of past-due support by Federal tax refund offset
O.C.S.E. AT-16-03	Timeframe to Distribute Tax Offsets Referred for Fraud
O.C.S.E. AT-09-01	Administrative Offset of Economic Recovery Payments
O.C.S.E. AT-10-04	Collection and Enforcement of Past Due Child Support Obligations
O.C.S.E. DCL-00-79	Department of State Passport Denial Procedures
O.C.S.E. DCL-15-21	Offset of Tax Refund Payments to Collect Past-Due Support Interim Final Rule
O.C.S.E. PIQ-01-06	Thresholds for Federal Income Tax Refund Offset
O.C.S.E. PIQ-11-01	Spousal Support Only

 

State Authority
Arizona Administrative Code R6-7-401 to 406	Passport Denial

Return to beginning of the FAO Program Policy

Policy Revision Date: 04/20/2026

Policy Review Date: 04/20/2026

Policy Next Review Date: 04/20/2027

Back to HOME