Capitol Connection
By State Senator Joe Leibham
October 1, 2008
Just Ask Joe: Child Support Tax
I was recently contacted by a number of constituents who asked me to explain a new tax that is assessed on individuals receiving child support. Even though this is mostly a federal matter, I am happy to provide the following information, as many people will be affected by this new tax. Read on for the “Just Ask Joe” information!
Effective October 1, 2008, the Wisconsin Department of Children and Families will implement a new federal law requiring the deduction of a yearly $25 tax from child support collections. Court ordered child support payees – also known as custodial parents – receiving $500 or more in child support during the federal fiscal year will be charged this $25 tax, which will be deducted directly from the child support payments. The federal fiscal year starts on October 1 and ends on September 30 each year.
The $25 tax is part of the Federal Deficit Reduction Act of 2005. This Act reduced federal funding that states use to operate their child support programs, and imposed the new tax that states can use to partially offset the lost funding. The federal Act stipulates that each state must return two-thirds of the taxes collected to the federal government, and the remaining one-third will be available to help fund the child support program.
Because of the passage of this federal law, the State of Wisconsin decided to implement the new tax. The tax was placed in the Wisconsin State Statutes with the passage of the 2007-09 Biennial Budget, and now goes into effect with the beginning of the federal fiscal year. I opposed this federal mandate and especially disagreed with the requirement that two-thirds of the tax collected go to the federal government. This was one additional reason why I voted against the budget plan.
It is my understanding that the tax is charged per court case. If a payee is receiving child support on two different court cases, they will be charged a tax on each case once $500 was been disbursed in that case. Parents who also pay child support – also known as non-custodial parents – also pay a yearly tax of $65 for each court case. I am told that both taxes are intended to pay the costs for processing child support payments.
Because the tax was mandated by a federal act, I would encourage you to direct any concerns or input you have regarding the tax to our federal legislators. They may be contacted at:
Rep. Tom Petri
2462 Rayburn Building
Washington, DC 20515
Tel: 202/225-2476
Toll-free in Wisconsin: 800/242-4883
http://www.house.gov/writerep/
Sen. Russ Feingold
506 Hart Senate Office Building
Washington, DC 20510
Tel: 202-224-5323
russell_feingold@feingold.senate.gov
Sen. Herb Kohl
330 Hart Senate Office Building
Washington, DC 20510
Tel: 202-224-5653
Senator_Kohl@kohl.senate.gov
The Wisconsin Department of Children and Families has compiled a list of Frequently Asked Questions about the tax. This may be viewed at: http://dcf.wisconsin.gov/bcs/fee_faq.htm . I hope this information is helpful to you!
Is there a state program, law or issue you would like me to address? “Just ask Joe” by calling me at 888-295-8750, writing to P.O. Box 7882, Madison, WI 53707-7882, or by e-mailing me at Sen.Leibham@legis.wi.gov . You can also log on to the 9th Senate District on-line office at
www.leibhamsenate.com.
As always, it has been a pleasure communicating with you. It is an honor representing the residents of the 9th District in the State Senate!