$90 million in Wisconsin child support payments under review for possible over-payment
STEVENS POINT, Wis. (WSAW) -
Nearly all of the impacts the coronavirus pandemic has had on people has happened to Michael Clermont and his family in Stevens Point.
“It’s been a struggle. It’s been very stressful,” he said. “Lots and lots of sleepless nights up worrying are we going to homeless? Are we going to be evicted? Are our utilities going to be shut off? How do we pay this bill? How do we pay that bill? I mean, it’s been an absolute three months of worry and struggle.”
He owns his own tech support company and he says March-August is typically his busy season, but not this year.
“The sound of the silence of the phone not ringing was alarming,” he said.
He and his wife both filed for unemployment in March. On Saturday, more than three months later, he learned his benefits were approved. His wife is still waiting.
They have been working to apply for the Wisconsin Rental Assistance Program since it opened June 4. They are still waiting on their landlord to finish the form.
“We were counting on the federal stimulus check to kind of float us through,” he explained, but then most of it did not come. Clermont got behind on child support a few years ago.
“I had gotten pneumonia and wound up in the hospital and spent most of that year recovering and didn’t work a whole lot and during that time I fell behind on child support, $2,498,” he said adding that the initial amount owed was less at the time, but accrued interest. “Although when I got back to work I was able to continue paying monthly as required, I was never able to bridge that gap.”
Clermont knew his $1,200 stimulus check would go to that child support debt, but then his wife’s full check (who does not owe child support), one of his children’s $500 check, and $98 from his other child’s cut were also taken. That is not supposed to happen, however, it covered the debt owed.
Then his tax refund double-dipped, taking the full $2,498 previously owed again.
“Part of the perfect storm is it takes government entities so long to move that paperwork is crossing in the mail, things aren’t being updated as they should,” Clermont stated.
The Clermonts are not the only ones affected.
The Wisconsin Department of Children and Families told 7 Investigates a total of roughly $90 million was collected from 60,000 Wisconsinites delinquent on their payments through stimulus checks and tax refunds. Tom McCarthy in DCF’s communications office said in an email, “The IRS acknowledged to states from the beginning of the stimulus process that the withholdings likely contained errors.”
He explained typically these types of errors do not happen and that “the stimulus payments presented a different challenge than a normal tax refund. Typically, a taxpayer knows they are getting a refund. And if they are remarried, their spouse will have filed an injured spouse return if they anticipate that the refund will be intercepted. However, with the stimulus payments, it was challenging for people to determine their payment eligibility and amount. The payments also rolled out very quickly, leaving many of the recipients who were child support payers without the proper paperwork needed (the injured spouse return). This is completely different than an average year volume.”
McCarthy said four DCF staff members have spent 600 hours over the last five weeks manually going through those cases to correct any errors. As of last week, he said about 54,000 cases have been manually reviewed clearing $82 million, with 6,000 cases totaling $8 million left to go. DCF can hold the money until October, where it will otherwise be released back to the person who paid it. Any interest the Wisconsin Kids Trust Fund accrues DCF uses to offset bank charges, but McCarthy said the interest rate is very low and is never sufficient to cover those charges.
He noted the Office of Child Support Enforcement also is currently holding 811 joint returns for Wisconsinites totaling $1,176,591 in addition to the money DCF is going through.
7 Investigates reached out to the IRS, but was told this was not an IRS issue and redirected us to the Bureau of Fiscal Service, despite the IRS being noted as acknowledging the errors in the notice to child support agencies. 7 Investigates reached out to the Bureau of Fiscal Service, but have not heard back. We also reached out to OCSE, which acknowledge our inquiry, but did not respond to questions before airing or publishing this story. This story will be updated as agencies respond to our questions.
The Clermonts learned Monday their overpayment was being returned. While their case no longer shows a debt on the DCF website, Clermont said it continues to show up on his credit score, impacting his ability to receive small business grants meant to help companies during the pandemic.
“I mean, I worked my whole life to get to a point where I could open my own business and the financial and time investment to get to a place in life to where you can open your own small business was significant,” Clermont said. “It’s going to be so hard to bounce back, I’m not sure we ever will.”
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