Child support overpayments and other payee debt 277-04260000

When an overpayment occurs:

• a Payee Overpayment intray generates, and
• a letter issues to the payee

Identify the events that caused the overpayment to determine if the overpayment is a carer debt or was created in error.

To identify the date the overpayment was created, review the:

• payer maintenance liability window from the Case window to identify when the account went into credit, and
• payer account summary window to identify the period affected and review the historical case liability rates to identify reason the rate changed

On the date the overpayment was created, check:

• RPO-01 (Receiving Parent Overpayment) letter to the payee and identify any decision letters sent at the same time
• NOA-01 CS Notice of Assessment and Covering page consolidating the RPO-01 and decision letter. Consider when the NOA-01 letter issues
• Check RAS to identify any staff or automated activity on the case

If the overpayment was due to

• a carer debt, go to Step 3
• an error, go to Step 4
• a non-agency payment (NAP) credit, go to Step 5

A carer debt arises when a payee received more than they were entitled to. This occurs when the liability has been retrospectively reduced after disbursements have been made.

Examples

• A payee has a provisional income since the start of the child support period (CS Period). They lodge their tax return which is significantly higher than the provisional income
• A payer notified Centrelink of their care increase. This is applied to the assessment 3 months later, creating a reduction in the annual rate payable

An overpayment may be created when:

• the agency makes an error
• funds have been received in error from a third party and need to be refunded
• the Australian Taxation Office (ATO) advises that a tax refund was paid to the agency incorrectly, and needs to be returned

Agency errors can result from:

• system errors
• errors of fact in decision making (including keying errors), and
• decisions found to be invalid

Examples

• The agency applies FAO care to reflect 0% to the payer. On review of Customer First, it is identified Centrelink has not made a decision about care. Rather, FAO made a decision they are no longer in de facto relationship with a third party
• The agency added a stepchild as a relevant dependent based on FAO’s care decision

See Correcting errors on Child Support cases.

Funds received in error from a third party occurs when a third party mistakenly pays amounts from, or to a wrong account. An overpayment is created when the funds that have been disbursed to the payee are refunded to the third party. The refund is made from consolidated revenue, which must then be recovered from the payee.

Example

A financial institution actions a section 72A (garnishee) notice and sends funds to Child Support. The funds are disbursed to the payee. The financial institution later advises the funds were incorrectly deducted from an account that did not belong to the payer.

Follow the process in Using consolidated revenue to repay funds.

Tax refund paid incorrectly occurs when the ATO discovers a tax refund was paid in error. An overpayment is created when the funds that have been disbursed the payee, need to be returned to the ATO. The refund is made from consolidated revenue, which must then be recovered from the payee.

Example

The ATO seeks repayment of a TRIP because someone other than the customer is involved in fraudulent activity or

Child Support has used an incorrect tax file number (TFN) and received a TRIP belonging to a taxpayer other than the customer

Follow the process in Using consolidated revenue to repay funds.

NAP excess credit may be created when:

• a NAP is credited to a case as child support, and
• the assessment is later varied

Cuba will display the excess NAP credit as an overpayment.

If an excess NAP credit is displaying as an overpayment, see Table 1 on the Resources page for examples. Seek help from a Service Support Officer (SSO) if needed.

Contact both customers to explain:

• NAP excess credit cannot be recovered from the payee or refunded to the payer
• The credit must remain on the case and can be used against any payable ongoing liability
• If there is no ongoing liability payable, the excess NAP credit will be reviewed as it cannot apply to any future enforceable periods. See Table 13 in Non-agency payment (NAP)

Is the overpayment correct?

Consider:

• income correction
• estimate reconciliation
• terminating event
• care decision
• the payee electing to end the assessment
• section 107 order ends the liability for a child from the start date
• court order
• payer residency decision

Finalise any outstanding issues before addressing the overpayment.

All overpayments are recoverable if payments have been received by the agency and transferred to the payee unless:

• the registered maintenance liability should never have existed (ends from the start date)
• the payer of the registered maintenance liability stops being a resident of Australia or a reciprocating jurisdiction which causes the liability to end from a date after the start date

Overpayments from non-cash payments such as non-agency payments or discharged arrears are not recoverable.

Overpayments arising before 1 July 2018 (15 May 2019 for WA ex-nuptial cases) have a different criterion applied. These are recoverable unless a retrospective variation was caused by:

• the payer failing to comply with their legal obligation to lodge their tax return on time
• the payer failing to tell Child Support of a change of address which resulted in a terminating event
• the assessment ending because of an objection, Administrative Review Tribunal (ART) decision or court order which determined the application for assessment should not have been accepted

Seek help from an SSO to confirm that an overpayment is not recoverable. Prevent automatic recovery of the overpayment by removing the overpayment while seeking technical advice.

Examples of retrospective variations when an overpayment is not recoverable include:

• A terminating event occurs from a past date when a payers’ address changes to a non-reciprocating jurisdiction, and the customers did not tell Child Support of the change in circumstances within 14 days
• A declaration under section 107 of the Child Support (Assessment) Act 1989 that there is no longer a registered maintenance liability

If the overpayment is:

• not legally recoverable, go to Step 8
• recoverable, see Table 2

Any amount of a non-recoverable overpayment already recovered cannot be reversed. If an amount has been repaid by the payee but not yet refunded to the payer, this must be returned to the payee. To remove the overpayment, see Table 2 > Step 3.

If the overpayment is not legally recoverable, contact both parents.

Explain Child Support cannot recover the overpayment, and there are no objection rights to this decision. Explain the reason:

The overpayment was created by:

• giving effect to a Section 107 order, or a Section 106A declaration
• a payee was not an eligible carer on the day of the application
• a child was not an eligible child on the day of the application
• an objection decision or ART decision
• the payer was not a resident of Australia or a reciprocating jurisdiction on the day of the application, see Residency decisions for Child Support customers
• court order, Stage 1

Paying parents can seek a recovery order under section 143 for these types of overpayments. See, Section 107 and Section 143 orders for Child Support customers.

A residency decision resulted in a terminating event. The overpayment is not a debt due to the Commonwealth. No recovery mechanisms are available under child support legislation.

A payer may seek legal advice about what other options are available to them. These amounts are not recoverable under a Section 143 order. See Section 107 and Section 143 orders for Child Support customers.

Contact the payer to discuss the overpayment.

Use Overpayments – talking to payers macro and paste the document in the Payee Collection window, Level 1 > OVP Payer Contact-> Successful/Unsuccessful contact.

Explain:

• How the overpayment occurred
• The amount of the overpayment
• If the overpayment is recoverable

Was contact with the payer successful?

• Yes, go to Step 2
• No, contact the payee, see Table 3

A payer can:

• instruct Child Support not to recover the full or partial overpayment, and/or
• recover the overpayment through Child Support by reducing the ongoing liability payable, and/or have the overpayment repaid by the payee, or
• recover the overpayment through private court action

• Play the Automated Message Election to have the liability no longer enforced to the customer, using Services Australia Workspace, select CSP_Discharge Arrears English
• Once the customer confirmed they understand their responsibilities, select the Election to have the liability no longer enforced message played to the customer check box in the macro

Go to Step 3 to remove the overpayment.

An overpayment can be recovered by reducing the ongoing liability by 100%. This means no payments need to be made until the overpayment has been fully recovered.

If the payer is making payments via Employer Withholding or Centrelink deduction, consider suspending the payment method until their overpaid credit reduces to $0.00.

Advise the payer:

• They do not need to make a payment to the payee until the overpayment has been fully recovered
• If the ongoing liability does not recover the overpayment in a reasonable time, the agency will negotiate repayment with the payee:
• Amounts will be refunded after payments have been received
• Make sure the payers’ bank details are correct in the Bank Details window
• The agency may recover these amounts sooner if they have any information to help with collection, and
• Any repaid amounts may first be redirected to any debts owed

Note: if the payer asks about what action the agency is taking to recover the overpayment, be aware of the information that can legally be disclosed. See Disclosing information under child support law.

Contact the payee. See Table 3.

The payer can enforce payment of the overpayment in a court with jurisdiction, in the same way as with child support debt.

Manage the payer's expectations about court action, see Recovery of debts by customers in court.

Continue with recovery and contact the payee. See Table 3.

Remove the overpayment immediately to prevent the overpayment being auto-recovered from the payee's next entitlement.

• Go to the Manage Gift and Overpayment window
• In the Detail group box, key the amount of the overpayment being removed in the Amount field
• In the Action Type group box, select the relevant option
• Select to document all information about the removal of the overpayment. Use a descriptive subject line e.g.:
• 'Overpayment not recoverable'
• ‘Payer elects not to recover overpayment’
• Select

Review system generated letters for accuracy. If a system generated letter is not available or inaccurate, create a unique letter for both customers.

• If a residency decision caused the overpayment, send both letters:
• UQ14.03 - Removal of overpayment - Residency - payee (payer no longer a resident)
• UQ14.04 - Removal of overpayment - Residency – payer no longer a resident

If the payer instructs not to recover the overpayment:

• issue the cooling off letter – the letter asks the payer to contact Child Support within 7 days of receipt if they elect to reverse their instruction not to recover the overpayment
• complete the UQ14.00 - Overpayment removal cooling off - Payer letter template
• paste it into a unique letter in Cuba (MX0-1 letter). See Letters for Child Support customers

Allow the customer time to respond. See Standard response times.

Is there an amount that still needs recovering?

• Yes, contact the payee, see Table 3
• No, procedure ends here

Contact the payee to discuss the overpayment.

Explain:

• How the overpayment occurred
• The amount of the overpayment
• The overpayment must be repaid

Discuss how the overpayment is to be repaid.

• For carer debts, the overpayment will automatically be reduced by the child support due to be paid each month, and any excess NAP credits. This means they will not receive a child support payment until the overpayment has been recovered in full. See Debt offset
• Any funds paid in error must be returned to the agency
• Negotiate an arrangement to repay the overpayment. See Debt repayment, and
• If the payee is a salary and wage earner, payments must be deducted from their pay. Confirm their employment details. See Service Officer role in setting up EW linking
• The agency will intercept tax refunds to repay the overpayment

Document the repayment discussion in the Payee Collection window, Level 1 > OVP Payee Contact > Successful contact.

Check the payee overpayment summary indicator is set to Standard or Always. To determine if it is appropriate to suppress the account statement, see Payment options in Child Support.

Finalise the issue when all customer contact and decisions have been documented, and arrangements have been made to recover the overpayment:

• Delete the Payee Overpayment intray
• Auto-unlock the customers

see Customer Management Approach (CMA) for Child Support.

Overpayments are automatically reduced by offsetting 100% of the ongoing liability payable to the person who has been overpaid.

When each parent owes a debt to the other, a one-off offset will reduce the larger debt by the smaller debt. The lower amount will remain payable by one parent.

See Debt Offset.

Apportionment will happen when a customer owes debt to more than one person and the amount received is less than the total amount owed.

The payment received is split in proportion to the amount each parent is owed to each parent. See Table 2 > Item 1 on the Resources page for an example.

Note: where a payment is paid in accordance with a court order, the amount must be disbursed according to the terms of that order.

If a payment is received from a payee to repay an overpayment and the payer has other child support debts, the repaid amount can be redirected to pay those debts. See Table 2 > Item 2 on the Resources page for an example.

Excess cash from a repaid overpayment only auto-direct to overdue child support. It will not auto-direct to other debts a customer owes.

An auto-redirect will not occur when a payee receives child support, and they owe an overpayment in another case.

To have auto-redirected funds, the customer must have:

• an overdue child support debt, and
• no current Special Recovery Condition with Reason ‘Stay Order’. See Recovery Conditions Window Help

If funds do not auto-redirect and remain in a payer’s Excess Cash account, seek help from an SSO to manually reallocate the overpayment funds. See Table 6 in Accounting Cuba Process Help.

There are no objections rights to the decision to redirect, or not redirect, funds. Amounts will continue to be auto-redirected until the child support debt is recovered.

A CE18-1 Section 71AB Redirection of Payment to Overdue Child Support Debt letter will be sent to the payer advising that funds have been redirected. See Table 2 > Item 3 on the Resources page for an example.

Note: the letter only generates once for each payee from whom the customer had an overpayment refund redirected.

Suspending redirection

A re-direction may be suspended due to a stay order on the payer’s case that the money is being redirected to. In limited circumstances, there may be other reasons to suspend a redirection discuss this with an SSO.

To suspend a redirection, document the decision and record a Special Recovery Condition – Stay Order. See Applying a special recovery condition in Pluto and Cuba.

When a Special Recovery Condition – Stay Order is recorded, any payments received as repayment of the overpayment will auto-refund to the payer.

Seek help from an SSO to consider creating a consolidated revenue debt for the payer when funds are auto-redirected and it is found:

• this should not have occurred, or
• the initial payment towards the overpayment should not have been credited to the payer’s account

See Reassign or transfer a missing or incorrectly receipted child support payment.

Amounts received to repay an overpayment will auto-refund to the payer if the payer does not have a deceased client indicator, and they have:

• a valid Australian bank details in their Bank Details window
• a disbursement option of ‘Cheque’ recorded, and
• a current postal address, and
• an amount to refund greater than $5.00

Check and update the payers bank details to deliver faster payments.

Funds can be manually refunded if an automatic refund does not occur.

See Excess cash on a Child Support customer's account.

Go to the Gift and Overpayment List window:

• Select the record to reverse
• Select

• Select to document the information about the reversal decision
• Select

• Select Reverse to finalise the overpayment removal or gift amount in full. The reversal date will display the current date when finalised
• Select