California Department of Social Services (CDSS) can use the Franchise Tax Board (FTB) Interagency Intercept Collection Program to intercept state income tax refunds, lottery winnings and unclaimed property disbursements for CalWORKs overpayments. FTB intercepts were suspended effective March, 2020 because of COVID-19. FTB intercepts restarted on July 13, 2022.
Prior to a CalWORKs debt being submitted to FTB, the CalWORKs recipient can request a county administrative review if they believe that all or part of the debt is either not delinquent or not legally enforceable. The recipient must submit a written request to the county for an administrative review within 30 days of receiving the FTB pre-offset notice. If the request for administrative review is submitted within this period, the county must not submit the debt to FTB until the conclusion of the administrative review process. If the administrative review review request is submitted after that period, the county must submit the debt to FTB, and stop collection only if the recipient wins the administrative review.
If requested, recipients are entitled to inspect and copy county records related to the debt prior to the administrative review. Counties must mail copies of records to the recipient as a reasonable accommodation for recipients unable to come to the county office.
The administrative review must: confirm the notice was adequate and language compliant, verify that a demand letter/notice was properly issued; ensure CalWORKs overpayments resulting from client error and administrative error do not exceed the $250 collection threshold and are within the two-year collection period from the date of computatation; verify that the recipient was given the opportunity to appeal the claim and any state hearing decision; verify that no responsible party to the claim is an active member of a CalWORKs assistance unit; verify the current balance of the claim and any collections or payment agreements; verify the claim meets the criteria for referral to the FTB per MPP section 20-403; and consider any evidence provided by the recipient.
The county must issue a decision on the administrative review within 30 days of receiving the request. The administrative review decision must include: the reason the debt is past due and legally enforceable; that the county intends to refer the claim to the FTB; and that the recipient may request a State Hearing to review the county’s decision.
If the administrative review finds for the claimant, the county must delete the debt and return any intercepted money within 10 days of receiving the decision.
If the recipient requests a state hearing either before requesting an administrative review, or while the administrative review is pending, the request will be considered an appeal of the CalWORKs overpayment.
The recipient can request a state hearing to appeal the administrative review decision within 90 days of either the initial notice of action establishing the overpayment or the county administrative review decision. If the hearing request is submitted within this time period, the debt cannot be submitted to FTB.
If the hearing request is submitted within 180 days of either the initial notice of action establishing the overpayment or the county administrative review decision, and the Administrative Law Judge finds good cause for late filing, FTB intercept must stop.
If the hearing request is submitted after 180 days of either the initial notice of action establishing the overpayment or the county administrative review decision, FTB intercept continues pending the hearing decision.
If the hearing request is submitted more than 90 days after either the initial notice of action establishing the overpayment or the county administrative review decision, or the county believes the issues were decided in a prior state hearing, the county can request bifurcation of the hearing in order to address state hearing jurisdiction first.
If the county wins the state hearing, the decision will state a new payment date. If it does not, the county must issue a new demand letter or notice. If the recipient wins the state hearing, the county must delete the debt and return any intercepted money within 10 days of receiving the decision.
If the county requests rehearing, it must comply with the hearing decision pending the outcome of the rehearing request. If the recipient requests rehearing, and rehearing is granted within 180 days of either the initial notice of action or demand letter for payment, FTB intercept continues pending issuance of the rehearing decision. (ACL 23-86, October 4, 2023.)