[I. Overview 3](#i.-overview)

[II. Definitions used in this Action Transmittal
3](#ii.-definitions-used-in-this-action-transmittal)

[(a) ASSISTANCE PAID TO THE FAMILY 3](#__RefHeading___Toc171915467)

[(b) ASSISTANCE FROM THE STATE 3](#__RefHeading___Toc171915468)

[(c) FEDERAL SHARE 3](#__RefHeading___Toc171915469)

[(d) FEDERAL MEDICAL ASSISTANCE PERCENTAGE
3](#__RefHeading___Toc171915470)

[(e) STATE SHARE 3](#__RefHeading___Toc171915471)

[(f) CURRENT-ASSISTANCE CASE 3](#__RefHeading___Toc171915472)

[(g) FORMER-ASSISTANCE CASE 3](#__RefHeading___Toc171915473)

[(h) NEVER-ASSISTANCE CASE 3](#__RefHeading___Toc171915474)

[(i) CURRENT SUPPORT 3](#__RefHeading___Toc171915475)

[(j) ASSIGNED ARREARAGES 3](#__RefHeading___Toc171915476)

[(k) FAMILY ARREARAGES 3](#__RefHeading___Toc171915477)

[(l) PRE-ASSISTANCE ARREARAGES 3](#__RefHeading___Toc171915478)

[(m) POST-ASSISTANCE ARREARAGES 3](#__RefHeading___Toc171915479)

[(n) DISCONTINUED ASSIGNMENTS 3](#__RefHeading___Toc171915480)

[(o) UNREIMBURSED ASSISTANCE or "URA" 3](#__RefHeading___Toc171915481)

[(p) PASS-THROUGH 3](#__RefHeading___Toc171915482)

[(q) EXCEPTED PORTION 3](#__RefHeading___Toc171915483)

[(r) DISREGARD 3](#__RefHeading___Toc171915484)

[III. Assignment of support rights under section 408(a)(3) of the Act
3](#iii.-assignment-of-support-rights-under-section-408a3-of-the-act)

[(a) Assignment of support rights effective October 1, 2009.
3](#a-assignment-of-support-rights-effective-october-1-2009.)

[(b) Assignment of support rights prior to October 1, 2009.
3](#b-assignment-of-support-rights-prior-to-october-1-2009.)

[(c) Section 457([a]{.smallcaps})(3) of the Act regarding limitations.
3](#c-section-457a3-of-the-act-regarding-limitations.)

[IV. Distribution of child support collections under the DRA
3](#iv.-distribution-of-child-support-collections-under-the-dra)

[(a) In General. 3](#a-in-general)

[(b) Distribution of Federal Tax Refund Offset Payments.
3](#b-distribution-of-federal-tax-refund-offset-payments)

[(c) Distribution in Never-Assistance Cases.
3](#c-distribution-in-never-assistance-cases)

[(d) Distribution in Current-Assistance Cases.
3](#d-distribution-in-current-assistance-cases)

[(e) Distribution in Former-Assistance Cases.
3](#e-distribution-in-former-assistance-cases)

[(f) Comparing DRA Distribution and PRWORA Distribution Rules
3](#f-comparing-dra-distribution-and-prwora-distribution-rules)

[V. Pass-Through payments 3](#v.-pass-through-payments)

[(a) Current-Assistance Cases. 3](#a-current-assistance-cases)

[(b) Former-Assistance Cases. 3](#b-former-assistance-cases)

[VI. Discontinuation of assignments
3](#vi.-discontinuation-of-assignments)

[(a) State option to discontinue its assignments executed prior to
October 1, 1997.
3](#a-state-option-to-discontinue-its-assignments-executed-prior-to-october-1-1997)

[(b) State option to discontinue its assignments executed from October
1, 1997 through September 30, 2009.
3](#b-state-option-to-discontinue-its-assignments-executed-from-october-1-1997-through-september-30-2009)

[VII. State options for the distribution of child support
3](#vii.-state-options-for-the-distribution-of-child-support)

[(a) Options regarding Current-Assistance cases
3](#a-options-regarding-current-assistance-cases)

[(b) Options regarding Former-Assistance cases
3](#b-options-regarding-former-assistance-cases)

[(c) Options regarding both Current-Assistance and Former-Assistance
cases
3](#c-options-regarding-both-current-assistance-and-former-assistance-cases)

[(d) Summary of State Options for Distribution of Support and
Discontinuation of Assignments
3](#d-summary-of-state-options-for-distribution-of-support-and-discontinuation-of-assignments)

[VIII. Arrearage Category Conversions
3](#viii.-arrearage-category-conversions)

[IX. Questions and answers 3](#ix.-questions-and-answers)

[ASSIGNMENT OF RIGHTS TO SUPPORT 3](#assignment-of-rights-to-support)

[CONDITIONALLY-ASSIGNED ARREARAGES
3](#conditionally-assigned-arrearages)

[TEMPORARILY-ASSIGNED ARREARAGES 3](#temporarily-assigned-arrearages)

[UNASSIGNING ARREARAGES 3](#unassigning-arrearages)

[DISTRIBUTION IN CURRENT-ASSISTANCE CASES
3](#distribution-in-current-assistance-cases)

[PASS-THROUGH PAYMENTS 3](#pass-through-payments)

[DISCONTINUED ASSIGNMENTS 3](#discontinued-assignments)

[FEDERAL TAX REFUND OFFSET 3](#federal-tax-refund-offset)

[ARREARAGE CATEGORIES 3](#arrearage-categories)

[FEDERAL REPORTING REQUIREMENTS 3](#federal-reporting-requirements)

[MAINTENANCE OF EFFORT (MOE) UNDER TITLE IV-A
3](#maintenance-of-effort-moe-under-title-iv-a)

[DISTRIBUTION IN TITLE IV-E FOSTER CARE CASES
3](#distribution-in-title-iv-e-foster-care-cases)

[DISTRIBUTION IN TRIBAL IV-D CASES
3](#distribution-in-tribal-iv-d-cases)

[MEDICAL SUPPORT 3](#medical-support)

[INTERSTATE 3](#interstate)

#   {#section .unnumbered}

# I. Overview

The Deficit Reduction Act of 2005 (the DRA) establishes a number of new
options and requirements for the assignment of support rights and the
distribution of child support collections. Under the DRA provisions,
State IV-D programs will have much greater flexibility in determining
how much support is paid directly to Current-Assistance and
Former-Assistance families, as well as the order in which assigned and
unassigned arrearages are paid.

This Action Transmittal (AT) sets forth the requirements and the range
of options available to States. An overview of these provisions follows.

[Assignment of Support Rights]{.underline}

The DRA revises section 408(a)(3) of the Act to eliminate the assignment
of Pre-Assistance Arrearages in new assistance cases, effective not
later than October 1, 2009, or as early as October 1, 2008 at State
option. Under this requirement, assignments executed on or after the
effective date will be limited to the amount of support that accrues
during the assistance period, not to exceed the cumulative amount of
Unreimbursed Assistance (URA). Such support may include retroactive
support for the period that the family received assistance. See [Q&A
2.](#Question2)

[Distribution Sequence in Former-Assistance Cases]{.underline}

Under the DRA, States must choose to distribute arrearages in
Former-Assistance cases using PRWORA distribution rules, or using the
new DRA distribution rules contained under the amended section
457(a)(2)(B) of the Act. The new DRA distribution rules for
Former-Assistance cases require States to first pay all arrearages owed
to the family before paying Assigned Arrearages.

States choosing DRA distribution in Former-Assistance cases will apply
these rules regardless of the payment type, including payments received
via the Federal tax refund offset program. There may be situations where
both a PRWORA and a DRA State may collect support through Federal income
tax refund offset. In such cases, each State would follow its own rules
for distribution.

[Federal Tax Refund Offset Collections]{.underline}

Under former section 457(a)(2)(B)(iv) of the Act, Federal tax refund
offset collections must be distributed to arrearages only, and must be
applied first to any arrearages owed to the State to reimburse public
assistance. If States choose the new distribution sequence for
Former-Assistance cases under the DRA, States must treat Federal tax
refund offset collections the same as any other collections for purposes
of distribution. States choosing to follow the DRA distribution rules
will distribute Federal tax refund offset collections first to current
support, then to arrearages. Also, for Former-Assistance families,
States selecting this option will distribute these collections to Family
Arrearages before Assigned Arrearages.

For those States that choose to continue using PRWORA distribution rules
in Former-Assistance cases, payments received via Federal tax refund
offset will apply the distribution rules contained under former section
457(a)(2)(B)(iv) of the Act. These distribution rules require that
Federal tax refund offset payments be applied first to Conditionally-
and/or Permanently-Assigned Arrearages, then to arrearages owed to the
family, and never to current support.

For both PRWORA and DRA distribution States, section 464(a)(3)(B) of the
Act and 45 CFR 303.72(h)(5) still apply and permit a delay in
distribution of Federal tax refund offset amounts to satisfy non-IV-A
past-due support for up to six months in joint return cases. This is an
exception to the normal two-day disbursement rules under section 454B of
the Act.

[Child Support Pass-Through Payments]{.underline}

States may pass through both the Federal and State share of certain
amounts of assigned support collections to both Current-Assistance and
Former-Assistance families without paying to the Federal government the
Federal share of the amounts passed through. In Current-Assistance
cases, the Federal share will be waived for up to \$100 per month for
families with one child and up to \$200 per month for families with two
or more children, as long as both the Federal and State share of the
Pass-Through is paid to the family and is disregarded in determining the
type and amount of assistance provided to the family.[^1] In
Former-Assistance cases, the Federal share will be waived for any
amounts applied to Assigned Arrearages as long as both the Federal and
State share of those amounts are paid to the family, and not retained by
the State.

[Discontinuation of Assignments]{.underline}[^2]

As noted above, the DRA provides that States may not take any
assignments of Pre-Assistance Arrearages in any new TANF cases, starting
not later than October 1, 2009.[^3] However, older assignments of
Pre-Assistance Arrearages in effect when the State implements the DRA
requirement will remain in effect, unless the State chooses to
discontinue these assignments. The DRA permits States to discontinue
some or all of its (PRWORA) assignments executed between October 1, 1997
and the date the State implements the DRA assignment change, to the
extent that Pre-Assistance Arrearages were assigned.[^4]

A State may also discontinue some or all of its assignments executed
prior to October 1, 1997. Because assignments executed before October 1,
1997 encompass both Pre-Assistance and During-Assistance Arrearages
without making any distinction between these two types of arrearages
(both types are "permanently-assigned"), the discontinuation of these
assignments allows States to discontinue the assignments of any or all
of its Pre-Assistance and/or During-Assistance Arrearages that accrued
under such assignments. See [Question and Answer 23](#Question23) for
more discussion on this option.

States have wide discretion on which of the many DRA distribution
options they choose to implement. Once the options become effective, as
early as October 1, 2008, States may choose to implement these options
at any time and may change options regarding DRA/PRWORA distribution or
pass-through policies over time.

# II. Definitions used in this Action Transmittal 

As used in this document:

[]{#__RefHeading___Toc171915467 .anchor}**(a) ASSISTANCE PAID TO THE
FAMILY** -- The term \"assistance paid to the family\" for child support
enforcement collection purposes, means assistance under the Temporary
Assistance for Needy Families (TANF) program as defined in 45 CFR
260.31, that is in the form of money payments in cash, checks, or
warrants immediately redeemable at par (see Action Transmittal
[OCSE-AT-99-10](http://www.acf.dhhs.gov/programs/cse/pol/AT/1999/at-9910.htm),
dated September 15, 1999). The definition of "Assistance Paid to the
Family" includes assistance paid to the family under the former Aid to
Families with Dependent Children (AFDC) program.

[]{#__RefHeading___Toc171915468 .anchor}**(b) ASSISTANCE FROM THE
STATE** -- The term "assistance from the State" means TANF assistance
under the State program funded under title IV-A of the Act as defined in
45 CFR 260.31.

The definition "Assistance from the State" also includes assistance paid
to the family under the former Aid to Families with Dependent Children
(AFDC) program.

[]{#__RefHeading___Toc171915469 .anchor}**(c) FEDERAL SHARE** -- The
term "Federal share" means that portion of the amount collected, which
does not exceed the cumulative unreimbursed assistance, resulting from
the application of the Federal medical assistance percentage in effect
for the fiscal year in which the amount is distributed.

[]{#__RefHeading___Toc171915470 .anchor}**(d) FEDERAL MEDICAL ASSISTANCE
PERCENTAGE** -- The term "Federal medical assistance percentage" means‑‑

> \(1\) 75 percent, in the case of Puerto Rico, the Virgin Islands,
> Guam, and American Samoa; or
>
> \(2\) The Federal medical assistance percentage (as defined in section
> 1905(b) of the Act, as such section was in effect on September 30,
> 1995) in the case of any other State.

[]{#__RefHeading___Toc171915471 .anchor}**(e) STATE SHARE** -- The term
"State share" means 100 percent of the amount collected which does not
exceed the cumulative unreimbursed assistance, minus the Federal share.

[]{#__RefHeading___Toc171915472 .anchor}**(f) CURRENT-ASSISTANCE CASE**
-- The term "current-assistance case" means any IV-D case which is
currently receiving assistance.

[]{#__RefHeading___Toc171915473 .anchor}**(g) FORMER-ASSISTANCE CASE**
-- The term "former-assistance case" means any IV-D case which formerly
received AFDC or TANF.

[]{#__RefHeading___Toc171915474 .anchor}**(h) NEVER-ASSISTANCE CASE** --
The term "never-assistance case" means any IV-D case which has never
received AFDC or TANF.

[]{#__RefHeading___Toc171915475 .anchor}**(i) CURRENT SUPPORT** -- The
term "current support" means, with respect to amounts collected as
support on behalf of a family, the amount designated as the monthly
support obligation of the noncustodial parent in the order requiring the
support or calculated by the State based on the order.[^5]

[]{#__RefHeading___Toc171915476 .anchor}**(j) ASSIGNED ARREARAGES** --
The term "assigned arrearages" means those arrearages assigned to the
State under section 408(a)(3) of the Act that do not exceed the
cumulative amount of unreimbursed assistance paid to the family on the
date the family leaves assistance.

> \(1\) For assignments executed before October 1, 2009, the term
> "assigned arrearages" could include:
>
> \(A\) "Permanently-Assigned Arrearages" -- The term
> "permanently-assigned arrearages" means those arrearages that do not
> exceed the cumulative amount of unreimbursed assistance paid to the
> family as of the date the family leaves the assistance rolls and
> include:
>
> \(i\) Arrearages that are or were assigned under an assignment of
> support rights in effect on September 30, 1997, or 1998,[^6] and
>
> \(ii\) Arrearages that accrued under an assignment executed on or
> after October 1, 1997, or 1998, during the time a family received
> assistance;
>
> \(B\) "Temporarily-Assigned Arrearages" -- The term
> \"temporarily-assigned arrearages\" means those arrearages that do not
> exceed the cumulative amount of unreimbursed assistance paid to the
> family as of the date the family leaves the assistance rolls, which
> accrued prior to the family receiving assistance (pre-assistance) and
> which were assigned to the State after September 30, 1997, or 1998,
> and before October 1, 2009. These arrearages are not permanently
> assigned. However, the temporary assignment converts to a conditional
> assignment when the family leaves the assistance program. Under the
> DRA, there will be no new assignments in this category. Only
> Current-Assistance cases with Assigned Arrearages under assignments
> executed prior to October 1, 2009 may contain Temporarily-Assigned
> Arrearages;[^7] and
>
> []{#ConditionallyAssignedArrearages .anchor}(C)
> "Conditionally-Assigned Arrearages" -- The term
> \"conditionally-assigned arrearages\" means those arrearages that do
> not exceed the cumulative amount of unreimbursed assistance paid to
> the family as of the date the family leaves the assistance rolls and
> which are owed to the family unless they are collected through Federal
> tax refund offset. They are arrearages which were temporarily assigned
> to the State under an assignment executed between October 1, 1997 and
> September 30, 2009 and became conditionally assigned to the State when
> the temporary assignment expired under PRWORA. If a
> Conditionally-Assigned Arrearage is collected through a Federal tax
> refund offset, the collection is retained by the State to reimburse
> the State and the Federal government up to the cumulative amount of
> unreimbursed assistance paid to the family. Collections of
> Conditionally-Assigned Arrearages by any other enforcement mechanism
> are paid to the family. Under the DRA, there will be no new
> assignments in this category.[^8]
>
> \(2\) For Assignments executed on or after October 1, 2009, the term
> "assigned arrearages" includes only those arrearages for support that
> accrues during the period that the family receives assistance.

[]{#__RefHeading___Toc171915477 .anchor}**(k) FAMILY ARREARAGES** -- The
term "family arrearages" means those arrearages that are owed to the
family. There is no prescribed distribution hierarchy for the different
types of arrearages that comprise "family arrearages." Family Arrearages
could include:

> \(1\) "Never-Assigned Arrearages" -- The term "never-assigned
> arrearages" means:
>
> \(A\) All arrearages in Never-Assistance cases;
>
> \(B\) "Pre-Assistance Arrearages," as defined in (l), that accrued
> prior to assignments executed on or after October 1, 2009 that were
> not previously assigned in Current-Assistance and Former-Assistance
> cases;
>
> \(C\) "Post-Assistance Arrearages" as defined in (m); and
>
> \(D\) Arrearages under "Discontinued Assignments" as defined in (n).
>
> \(2\) "Unassigned Pre-Assistance Arrearages" -- The term "unassigned
> pre-assistance arrearages" means all previously-assigned arrearages
> which exceed the cumulative amount of unreimbursed assistance paid to
> the family when the family leaves the assistance rolls, and which
> accrued prior to the receipt of assistance; and
>
> \(3\) "Unassigned During-Assistance Arrearages" -- The term
> "unassigned during-assistance arrearages" means all
> previously-assigned arrearages which exceed the cumulative amount of
> unreimbursed assistance paid to the family when the family leaves the
> assistance rolls and which accrued during the receipt of assistance.

[]{#__RefHeading___Toc171915478 .anchor}**(l) PRE-ASSISTANCE
ARREARAGES** -- The term "pre-assistance arrearages" means those
arrearages that accrued prior to each period of assistance.

[]{#__RefHeading___Toc171915479 .anchor}**(m) POST-ASSISTANCE
ARREARAGES** -- The term "post-assistance arrearages" means those
arrearages that accrued after the family's most recent period of
assistance.

[]{#__RefHeading___Toc171915480 .anchor}**(n) DISCONTINUED ASSIGNMENTS**
-- The term "discontinued assignments" means those assignments that a
State elects to discontinue under the authority in section 457(b)(1) and
(b)(2) of the Act. The State may treat amounts collected pursuant to
these discontinued assignments as if the amounts had never been assigned
and may distribute the amounts to the family. Assignments that may be
discontinued include:

> \(1\) Pre-1997 Support Assignments -- Any rights to support
> obligations assigned to a State as a condition of receiving assistance
> from the State under title IV-A of the Act and in effect on September
> 30, 1997 (or such earlier date on or after August 22, 1996, as the
> State may choose); and
>
> \(2\) Post-1997 Support Assignments -- Any rights to support
> obligations accruing before the date on which a family first receives
> assistance under title IV-A of the Act that are assigned to a State
> and in effect before October 1, 2009.[^9]

[]{#__RefHeading___Toc171915481 .anchor}**(o) UNREIMBURSED ASSISTANCE or
"URA"** -- The term "unreimbursed assistance" (URA) means the cumulative
amount of assistance paid to a family for all months that has not been
repaid by assigned support collections. The total amount of assistance
paid to the family that a State may recover through the IV-D program is
limited by the total amount of its assigned support obligation.[^10]

[]{#__RefHeading___Toc171915482 .anchor}**(p) PASS-THROUGH** -- The term
"pass-through" means an assigned support collection (applied to either
current support or arrearages) that the State elects to pay to the
family rather than retain to reimburse assistance. The State may pass
through its assigned support collections in Current-Assistance
cases[^11] and/or in Former-Assistance cases.[^12]

[]{#__RefHeading___Toc171915483 .anchor}**(q) EXCEPTED PORTION** -- The
term "excepted portion" is one type of pass-through and means that
portion of an amount collected on behalf of a family in a
Current-Assistance case during a month that does not exceed an amount
established by the State that is not more than \$100 per month, or in
the case of a family that includes two or more children, that does not
exceed \$200 per month. The "excepted portion" may include collections
applied to current support and/or arrearages. A State shall not be
required to pay the federal government the Federal share of the excepted
portion.[^13]

[]{#__RefHeading___Toc171915484 .anchor}**(r) DISREGARD** -- The term
"disregard" is the amount of a pass-through payment to a family that is
disregarded by the IV-A agency for the purposes of determining
eligibility for and the amount of assistance from the State that is
provided to the family.

# III. Assignment of support rights under section 408(a)(3) of the Act

Prior to the enactment of the DRA, and until September 30, 2009, section
408(a)(3) of the Act reads in part as follows:

> "A State to which a grant is made under section 403 of this title
> shall require, as a condition of providing assistance to a family
> under the State program funded under this part, that a member of the
> family assign to the State any rights the family member may have (on
> behalf of the family member or of any other person for whom the family
> member has applied for or is receiving such assistance) to support
> from any other person, not exceeding the total amount of assistance so
> provided to the family, which accrue (or have accrued) before the date
> the family ceases to receive assistance under the program, which
> assignment, on and after such date, shall not apply with respect to
> any support (other than support collected pursuant to section 464 of
> this title) which accrued before the family received such assistance
> ..."

With the enactment of the DRA, section 408(a)(3) of the Act, effective
October 1, 2009, reads as follows:

> "A State to which a grant is made under section 403 shall require, as
> a condition of paying assistance to a family under the State program
> funded under this part, that a member of the family assign to the
> State any right the family member may have (on behalf of the family
> member or of any other person for whom the family member has applied
> for or is receiving such assistance) to support from any other person,
> not exceeding the total amount of assistance so paid to the family,
> **which accrues during the period that the family receives
> assistance** under the program." Emphasis provided.

The following is a summary of changes in the Act that are pertinent to
the assignment of support rights. These changes will take effect on
October 1, 2009, or as early as October 1, 2008 at State option.

## (a) Assignment of support rights effective October 1, 2009. 

Effective October 1, 2009, those families who execute an assignment of
support rights as a condition of eligibility for assistance assign to
the State only the support that accrues during the period the family
receives assistance. See section 408(a)(3) of the Act.

## (b) Assignment of support rights prior to October 1, 2009.

For guidance on assignments executed prior to October 1, 2009 (or
earlier, if the State implements the new assignment after September 30,
2008), please refer to
[OCSE-AT-97-17](http://www.acf.dhhs.gov/programs/cse/pol/AT/1997/at-9717.htm).

## (c) Section 457(a)(3) of the Act regarding limitations.

Section 457(a)(3) of the Act, added by the DRA, specifically limits the
amounts retained by the State and Federal governments to amounts
assigned under section 408(a)(3) of the Act. The limitation applies to
the distribution of support in Current-Assistance and Former-Assistance
cases as follows:

> \(1\) The total amounts paid by the State to the Federal government in
> Current-Assistance and Former-Assistance cases shall not exceed the
> Federal share of the amount assigned under section 408(a)(3) of the
> Act.
>
> \(2\) The total amounts retained by the State in Current-Assistance
> and Former-Assistance cases shall not exceed the State share of the
> amount assigned under section 408(a)(3) of the Act.

# IV. Distribution of child support collections under the DRA

## (a) In General 

For purposes of distribution in a IV-D case, amounts collected must be
treated first as current support for the month in which the support was
collected[^14] and if any amounts collected are in excess of such
amount, these excess amounts shall be treated as amounts which represent
payment on the required support obligation for previous months.

The requirement to apply collections first to satisfy the current
support obligation is critical in all IV-D cases to ensure that payment
records are consistent in interstate cases, regardless of whether the
amount applied to current support is paid to the family or retained by
the State to reimburse unreimbursed assistance in a Current-Assistance
case.

## (b) Distribution of Federal Tax Refund Offset Payments

The provision at the former section 457(a)(2)(B)(iv) of the Act
requiring Federal tax refund offset collections to be applied first to
Assigned Arrearages, then to arrearages owed to the family, and never to
current support is deleted from the statute, effective October 1, 2009.
Former section 457(a)(2)(B)(iv) read as follows:

> "Notwithstanding any other provision of this section, any amount of
> support collected pursuant to section 464 of this title shall be
> retained by the State to the extent past-due support has been assigned
> to the State as a condition of receiving assistance from the State, up
> to the amount necessary to reimburse the State for amounts paid to the
> family as assistance by the State. The State shall pay to the Federal
> Government the Federal share of the amounts so retained. To the extent
> the amount collected pursuant to section 464 of this title exceeds the
> amount so retained, the State shall distribute the excess to the
> family."

The former section 457(a)(2)(B)(iv) is the only provision in Federal
statute that requires Federal tax refund offset payments to be applied
to arrearages. Neither section 464 of the Act nor section 6402 of the
Internal Revenue Code of 1986 address the distribution of Federal tax
refund offset payments.[^15] Therefore, for States electing to follow
the new [DRA Distribution rules[^16]](#DRADistribution) in
Former-Assistance cases, Federal tax refund offset collections must be
distributed as any other collection. This means that in
Former-Assistance cases, Federal tax refund offset payments must be
applied first to satisfy current support, but then to satisfy Family
Arrearages before Assigned Arrearages may be satisfied.[^17] In
Current-Assistance cases, Federal tax refund offset collections must
also be applied first to satisfy current support, then to Assigned
Arrearages and last to any Family Arrearages.

States that elect to continue to follow [PRWORA Distribution
rules](#PRWORADistribution) in Former-Assistance cases will not change
the way Federal tax refund offset collections are distributed, but will
instead follow the rules contained in former section 457(a)(2)(B)(iv) of
the Act.

For further discussion on Federal tax refund offset distribution, see
[Q&A 26](#Question26) of this AT.

## (c) Distribution in Never-Assistance Cases

The State shall pay to the family the portion of the support collected
in Never-Assistance cases that remains after withholding any \$25 annual
fee, pursuant to section 454(6)(B)(ii) of the Act.

## (d) Distribution in Current-Assistance Cases 

> \(1\) [Arrearage Categories]{.underline}
>
> \(A\) The following arrearage categories will exist in
> Current-Assistance cases with DRA assignments executed on or after
> October 1, 2009, or up to a year earlier at State option:
>
> \(i\) Family Arrearages;
>
> \(ii\) Conditionally-Assigned Arrearages from pre-DRA assignments
> executed between October 1, 1997 and September 30, 2009;[^18] and
>
> \(iii\) Permanently-Assigned Arrearages.
>
> \(B\) After September 30, 2009, Temporarily-Assigned Arrearages will
> continue to exist in Current-Assistance cases in which assignments
> were executed after September 30, 1997 but before October 1, 2009,
> until such time as the family leaves assistance.[^19] See [Q&A
> 9.](#Question9)
>
> \(2\) [Distribution Sequence]{.underline}[^20]
>
> \(A\) For the distribution of all support collected in
> Current-Assistance cases, including Federal tax refund offset
> payments,[^21] the State shall (not exceeding the cumulative amount of
> unreimbursed assistance paid to the family):
>
> \(i\) Pay to the Federal government the Federal share of the amount
> collected, not to exceed the Federal share of the amount assigned (see
> sections 457(a)(1)(A) and 457(a)(3)(A) of the Act);[^22]
>
> \(ii\) Retain, or pay to the family, the State share of the amount
> collected. The total amount retained by the State shall not exceed the
> amount assigned (see sections 457(a)(1)(B) and 457(a)(3)(B) of the
> Act); and
>
> \(iii\) Reduce the cumulative amount of unreimbursed assistance by the
> total amount collected and distributed under (i) and (ii), and
> distribute collections exceeding the amounts distributed under (i) and
> (ii) to the family (see section 457(a)(1)(C) of the Act).
>
> \(B\) The Federal statute does not specify the order in which
> collections are applied to satisfy Assigned Arrearages in
> Current-Assistance cases. The State must have procedures which specify
> the order in which Assigned Arrearages will be satisfied.[^23]

## (e) Distribution in Former-Assistance Cases

> \(1\) [State Option]{.underline}
>
> States must elect to distribute arrearages in Former-Assistance cases:
>
> \(A\) As specified in section 457(a)(2)(B) of the Act, as amended by
> the DRA (DRA Distribution); [or]{.underline}
>
> \(B\) As specified in former section 457(a)(2)(B) of the Act as in
> effect prior to the enactment of the DRA (PRWORA Distribution). See
> section 454(34) of the Act, and [sections
> VII(b)](#b-options-regarding-former-assistance-cases) and
> [VIII](#viii.-arrearage-category-conversions) of this Action
> Transmittal, for additional discussion relating to this option.
>
> \(2\) [Arrearage Categories for DRA Distribution States]{.underline}
>
> For States electing to apply [DRA Distribution](#DRADistribution)
> rules, the following arrearage categories will exist in
> Former-Assistance cases effective October 1, 2009, or up to a year
> earlier at State option:
>
> \(A\) Family Arrearages;
>
> \(B\) Conditionally-Assigned Arrearages from pre-DRA assignments
> (unless these assignments are discontinued pursuant to section
> 457(b)(2) of the Act); and
>
> \(C\) Permanently-Assigned Arrearages.
>
> []{#DRADistribution .anchor}(3) [Distribution Sequence for DRA
> Distribution States]{.underline}
>
> For the distribution of all support in Former-Assistance cases under
> [DRA Distribution](#DRADistribution), including Federal tax refund
> offset payments,[^24] the State shall:
>
> \(A\) First, distribute the amount collected to satisfy the current
> monthly support obligation and pay that amount to the family;
>
> \(B\) Second (unless a State elects to continue PRWORA
> Distribution),[^25] pay to the family any amount above the current
> monthly support obligation to satisfy support arrearages not assigned;
>
> \(C\) Third, if the amount collected exceeds the amounts distributed
> in (A) and (B) above:
>
> \(i\) Pay to the Federal government the Federal share of the amount
> applied to Assigned Arrearages (see sections 457(a)(2)(B)(ii)(I) and
> 457(a)(3)(A) of the Act);[^26]
>
> \(ii\) Retain, or distribute to the family, the State share of the
> amount applied to Assigned Arrearages (see sections
> 457(a)(2)(B)(ii)(II) and 457(a)(3)(B) of the Act); and
>
> \(iii\) Reduce the cumulative amount of unreimbursed assistance by the
> total amount collected and distributed under (i) and (ii) above, and
> distribute collections exceeding the amounts distributed under (i) and
> (ii) to the family. See section 457(a)(2)(B)(iii) of the Act.
>
> []{#SectionIVe4 .anchor}(4) [Arrearage Categories for PRWORA
> Distribution States]{.underline}
>
> \(A\) The following arrearage categories will exist in
> Former-Assistance cases for States electing to apply PRWORA
> Distribution rules, effective October 1, 2009, or up to a year earlier
> at State option:
>
> \(i\) Never-Assigned Arrearages;
>
> \(ii\) Unassigned Pre-Assistance Arrearages;
>
> \(iii\) Conditionally-Assigned Arrearages;[^27]
>
> \(iv\) Permanently-Assigned Arrearages;[^28] and
>
> \(v\) Unassigned During-Assistance Arrearages.
>
> []{#PRWORADistribution .anchor}(5) [Distribution Sequence for PRWORA
> Distribution States]{.underline}
>
> States making the PRWORA Distribution election in Former-Assistance
> cases must follow the guidance issued under
> [OCSE-AT-97-17](http://www.acf.dhhs.gov/programs/cse/pol/AT/1997/at-9717.htm),[^29]
> including the order in which various arrearage categories are
> satisfied. For states that make this election, Federal tax refund
> offset payments must be distributed to assigned past-due support first
> pursuant to the former section 457(a)(2)(B)(iv) of the Act.

## (f) Comparing DRA Distribution and PRWORA Distribution Rules

The following table compares the State requirements that will apply to
States electing to apply DRA or PRWORA Distribution rules once the
limited assignment under section 403(a)(8) of the Act is effective
October 1, 2009:

**Table 1: Comparison of DRA and PRWORA Distribution Rules Effective
October 1, 2009**

+-------+-------------------------------+------------------------------+
|       | **State Requirements for DRA  | **State Requirements for     |
|       | Distribution Election**       | PRWORA Distribution          |
|       |                               | Election**                   |
+=======+===============================+==============================+
| **CUR | Pre-Assistance Arrearages are | Pre-Assistance Arrearages    |
| RENT- | not assigned when family goes | are not assigned when family |
| ASSIS | on assistance. 408(a)(3)      | goes on assistance.          |
| TANCE |                               | 408(a)(3)                    |
| CA    |                               |                              |
| SES** |                               |                              |
+-------+-------------------------------+------------------------------+
|       | Collections in excess of      | Collections in excess of     |
|       | Assigned Arrearages are       | Conditionally-Assigned       |
|       | distributed to the family.    | Arrearages under a pre-DRA   |
|       | 457(a)(1)(C)                  | assignment and               |
|       |                               | Permanently-Assigned         |
|       |                               | Arrearages are distributed   |
|       |                               | to the family. 457(a)(1)(C)  |
+-------+-------------------------------+------------------------------+
|       | Apply collections, [including | Apply Federal tax refund     |
|       | Federal tax refund            | offset collections to        |
|       | offset,]{.underline} to       | Conditionally-Assigned       |
|       | current support and Assigned  | Arrearages under a pre-DRA   |
|       | Arrearages before applying to | assignment and               |
|       | Family Arrearages.[^30] Once  | Permanently-Assigned         |
|       | Assigned Arrearages are paid  | Arrearages and then to       |
|       | off, any remaining amount is  | past-due support owed to the |
|       | paid to the family. 457(a)(1) | family. Former               |
|       | and (3)[^31]                  | 457(a)(2)(B)(iv)             |
+-------+-------------------------------+------------------------------+
| **FO  | Apply collections, [including | Apply collections (except    |
| RMER- | Federal tax refund            | those from Federal tax       |
| ASSIS | offset,]{.underline} first to | refund offset) first to      |
| TANCE | current support and then to   | current support, then to     |
| CA    | Family Arrearages before      | arrearages in the following  |
| SES** | applying to Assigned          | order:                       |
|       | Arrearages.                   |                              |
|       |                               | 1\) NA, 2) UPA and CA (in    |
|       | Once assigned arrears are     | any order), 3) PA, 4)        |
|       | paid off, any remaining       | UDA[^32]                     |
|       | amount is paid to the family. |                              |
|       | 457(a)(2)(A), (a)(2)(B), and  | Former 457(a)(2)(B)          |
|       | (a)(3)                        |                              |
+-------+-------------------------------+------------------------------+
|       |                               | Apply Federal tax refund     |
|       |                               | offset collections to        |
|       |                               | Conditionally-Assigned       |
|       |                               | Arrearages under a pre-DRA   |
|       |                               | assignment and Permanently-  |
|       |                               | Assigned Arrearages and then |
|       |                               | to past due support owed to  |
|       |                               | the family.                  |
|       |                               |                              |
|       |                               | Former 457(a)(2)(B)(iv)      |
+-------+-------------------------------+------------------------------+

# V. Pass-Through payments

In addition to the continued authority to pass through the State share
of an amount collected in Current and Former-Assistance cases, the DRA
also provides States with a new option to pass through a portion of the
Federal share of the amount collected in Current-Assistance cases and
all or a portion of the Federal share in Former-Assistance cases.
Therefore, the State does not have to pay to the Federal government the
Federal share of the Pass-Through payment as long as the State passes
through both the Federal and State share to the family, and in
Current-Assistance cases, disregards the amount passed through in
determining the amount and type of assistance provided to the family.

## (a) Current-Assistance Cases

States shall not be required to pay to the Federal government the
Federal share of amounts collected that are passed through to the family
as follows:

> \(1\) Up to \$100 per month, if the amount passed through to the
> family is disregarded in determining the amount and type of assistance
> provided to the family; or
>
> \(2\) In the case of a family that includes two or more children, up
> to \$200 per month, if the amount is disregarded in determining the
> amount and type of assistance provided to the family. See section
> 457(a)(7)(B) of the Act.

## (b) Former-Assistance Cases

In Former-Assistance cases, the State shall not be required to pay to
the Federal government the Federal share of amounts applied to Assigned
Arrearages and paid to the family, provided that the State passes
through both the Federal and State share to the family. See section
457(a)(7)(A) of the Act.

# VI. Discontinuation of assignments

Under the DRA a State now has the option to discontinue certain of its
assignments of support. The discontinuation of these assignments allows
a State to pay to the family some or all of the collections applied to
its Assigned Arrearages that accrued under such assignments.

The following explains the options available to States in discontinuing
assignments:

## (a) State option to discontinue its assignments executed prior to October 1, 1997

A State may discontinue some or all of its assignments executed prior to
October 1, 1997. Because assignments executed before October 1, 1997
encompass both Pre-Assistance and During-Assistance Arrearages without
making any distinction between these two types of arrearages, the
discontinuation of these assignments allows a State to discontinue its
assignments of any or all Pre-Assistance and/or During-Assistance
Arrearages that accrued under such assignments.

Under section 457(b) of the Act, as amended by the DRA, a State has the
option to discontinue any of its assignments that were in effect as of
September 30, 1997.[^33] [^34] If a State chooses to discontinue such
assignments, the State may treat amounts collected pursuant to the
assignment as if the amounts had never been assigned, and pay these
collections to the family. See section 457(b)(1)(B) of the Act.

## (b) State option to discontinue its assignments executed from October 1, 1997 through September 30, 2009 

As noted above, the DRA provides that States may not take any new
assignments of Pre-Assistance Arrearages in TANF cases, starting not
later than October 1, 2009. However, a State's older assignments of
Pre-Assistance Arrearages in effect when the State implements the DRA
requirement will remain in effect, unless the State chooses to
discontinue these assignments.[^35] The DRA permits a State to
discontinue some or all of its (PRWORA) assignments executed between
October 1, 1997 and September 30, 2009 (or such earlier date after
October 1 ,2008, that the State implements the DRA assignment change) to
the extent that Pre-Assistance Arrearages were assigned.[^36]

If a State chooses to discontinue these assignments, the State may treat
amounts collected pursuant to the assignment as if the amounts had never
been assigned, and pay these collections to the family. See section
457(b)(2)(B) of the Act.

The authority contained under section 457(b)(2) of the Act does not
allow States to discontinue assignments of support that accrued during
assistance periods if the assignment was executed after September 30,
1997.

# VII. State options for the distribution of child support 

Section 457 of the Act, as amended by the DRA, provides numerous State
options with respect to the distribution of support and the
discontinuation of assignments of support. The States' distribution
options provided by the DRA are summarized below:

## (a) Options regarding Current-Assistance cases

> \(1\) States may continue to elect to pay to the Current-Assistance
> family the State share of the amount collected on behalf of the family
> as support. See section 457(a)(1)(B) of the Act.
>
> \(2\) States may elect to pay to the Current-Assistance family and
> disregard for purposes of determining the amount and type of
> assistance all or a portion of the amount collected up to \$100 per
> month (or up to \$200 for more than one child). If the State makes
> this election, the State is not required to pay the Federal share of
> such payment as long as the State passes through both the Federal and
> State share to the family, and disregards the amount passed through
> for purposes of determining the amount and type of assistance provided
> to the family. See section 457(a)(7)(B)(i) of the Act and [section
> V(a)](#a-current-assistance-cases) of this AT.[^37]

## (b) Options regarding Former-Assistance cases

> \(1\) For States that elect to continue PRWORA Distribution -- The
> State may retain or distribute to the family, the State share of the
> amount collected and applied to arrearages that accrued while the
> family received assistance. See former section 457(a)(2)(B)(iii) of
> the Act.
>
> \(2\) For States that elect to follow DRA Distribution -- To the
> extent that the amount collected in a Former-Assistance case exceeds
> both the current support amount and the amount used to satisfy Family
> Arrearages, the State may elect to pay to the family the State share
> of the excess. See section 457(a)(2)(B)(ii)(II) of the Act.
>
> \(3\) For all States -- The State is not required to pay the Federal
> share of an amount collected on behalf of a family that formerly
> received assistance from the State to the extent that the State pays
> both the Federal and State share of the amount to the family. See
> section 457(a)(7)(A) of the Act and [section
> V(b)](#b-former-assistance-cases) of this AT

## (c) Options regarding both Current-Assistance and Former-Assistance cases

The State may elect to discontinue its assignments for one or both of
the following categories of arrearages:

> \(1\) Permanently-Assigned Arrearages that accrued under assignments
> executed before October 1, 1997. See section 457(b)(1) of the Act and
> [section
> VI(a)](#a-state-option-to-discontinue-its-assignments-executed-prior-to-october-1-1997)
> of this AT.
>
> \(2\) Pre-Assistance arrearages that were Temporarily-Assigned or
> Conditionally-Assigned to the State under assignments executed on or
> after October 1, 1997, and before October 1, 2009. See section
> 457(b)(2) of the Act and [section
> VI(b)](#b-state-option-to-discontinue-its-assignments-executed-from-october-1-1997-through-september-30-2009)
> of this AT.

## (d) Summary of State Options for Distribution of Support and Discontinuation of Assignments 

The table below summarizes the options discussed above:

**Table 2: Matrix of State Options for Distribution of Support and
Discontinuation of Assignments**

+-------+--------------------------------+------------+---------------+
|       | **State Options**              | *          | **Statutory   |
|       |                                | *Effective | Citation**    |
|       |                                | D          |               |
|       |                                | ate**[^38] |               |
+=======+================================+============+===============+
| IN    | Continue PRWORA Distribution   | October 1, | 454(34)       |
| GE    | in Former-Assistance cases;    | 2009       |               |
| NERAL |                                |            |               |
|       | OR                             |            |               |
|       |                                |            |               |
|       | Apply DRA Distribution rules   |            |               |
|       | in Former-Assistance cases     |            |               |
+-------+--------------------------------+------------+---------------+
|       |                                | October 1, | 454(34)       |
|       |                                | 2009       |               |
+-------+--------------------------------+------------+---------------+
| CUR   | Retain or pay to family State  | In Effect  | 457(a)(1)(B)  |
| RENT- | share of collection            |            |               |
| ASSIS |                                |            |               |
| TANCE |                                |            |               |
| CASES |                                |            |               |
+-------+--------------------------------+------------+---------------+
|       | Pay family and disregard       | October 1, | 457(a)(7)(B)  |
|       | "excepted portion" (as defined | 2008       |               |
|       | by the DRA) as a Pass-Through  |            |               |
|       | in Current-Assistance Cases    |            |               |
|       | (Federal Government waives its |            |               |
|       | share of collection)           |            |               |
+-------+--------------------------------+------------+---------------+
| FO    | Retain, or pay to              | In Effect  | Former        |
| RMER- | Former-Assistance family,      |            | 457(          |
| ASSIS | State share of collections     |            | a)(2)(B)(iii) |
| TANCE | applied to During-Assistance   |            |               |
| CASES | Arrearages[^39]                |            |               |
|       |                                |            |               |
|       | OR                             |            |               |
|       |                                |            |               |
|       | Retain, or pay to              |            |               |
|       | Former-Assistance family,      |            |               |
|       | State share of collections     |            |               |
|       | applied to any of its Assigned |            |               |
|       | Arrearages[^40]                |            |               |
+-------+--------------------------------+------------+---------------+
|       |                                | October 1, | 457(a)(       |
|       |                                | 2009       | 2)(B)(ii)(II) |
+-------+--------------------------------+------------+---------------+
|       | If State pays to               | October 1, | 457(a)(7)(A)  |
|       | Former-Assistance family any   | 2008       |               |
|       | amount applied to its Assigned |            |               |
|       | Arrearages, the State is not   |            |               |
|       | required to pay to the Federal |            |               |
|       | Government the Federal share.  |            |               |
+-------+--------------------------------+------------+---------------+
| CUR   | Discontinue some or all        | October 1, | 457(b)(1)     |
| RENT- | pre-October 1997 assignments   | 2009       |               |
| &     | (Pre-Assistance and            |            |               |
| FO    | During-Assistance Arrearages)  |            |               |
| RMER- |                                |            |               |
| ASSIS |                                |            |               |
| TANCE |                                |            |               |
| CASES |                                |            |               |
+-------+--------------------------------+------------+---------------+
|       | Discontinue some or all        | October 1, | 457(b)(2)     |
|       | post-September 1997            | 2009       |               |
|       | assignments of Pre-Assistance  |            |               |
|       | Arrearages                     |            |               |
+-------+--------------------------------+------------+---------------+

# VIII. Arrearage Category Conversions

When deciding which of the above options with respect to the
distribution of support and the discontinuation of assignments of
support to select, States must consider how the composition of the
PRWORA arrearage categories may convert to new or existing arrearage
categories. For example, if a State elects to discontinue post-1997
assignments of Pre-Assistance Arrearages, these Temporarily-Assigned or
Conditionally-Assigned Arrearages would convert to Never-Assigned
Arrearages.[^41]

What follows are a series of figures that illustrate the conversion of
arrearage categories, depending on the distribution and assignment
discontinuation options selected by the State. These examples assume
that, where assignments are discontinued, a State would discontinue all
(rather than a portion) of its assignments contained under each type of
discontinuation option.

A State has flexibility to determine which of its assignments within the
statutory categories to discontinue, if any. Factors that a State may
want to consider include how arrearage categories will convert, how
statewide automated systems have tracked Assigned Arrearages over time,
and other implications for automated systems.

[Figure 1](#Figure1) provides an overview of how the arrearage
categories would differ between States choosing DRA Distribution versus
States choosing PRWORA Distribution, if all assignments are continued.

[]{#Figure1 .anchor}**Figure 1: Arrearage Conversion for both DRA and
PRWORA Distribution in Former-Assistance Cases, All Assignments
Continued**[^42]

![](media/image1.wmf){width="5.993055555555555in"
height="4.392361111111111in"}

[Figures 2 through 6](#Figure2) show how a State may convert existing
PRWORA arrearages to DRA Distribution arrearage categories in instances
where the State has discontinued all of its post-1997 and/or pre-1997
assignments.

[]{#Figure2 .anchor}Figure 2: Arrearage Conversion for DRA Distribution,
Post-1997 Assignments Discontinued

![](media/image2.wmf){width="5.993055555555555in"
height="2.941666666666667in"}

Figure 3: Arrearage Conversion for DRA Distribution, Pre-1997
Assignments of a State's Pre-Assistance Arrearages Discontinued; (the
State can Distinguish Between Pre-Assistance and During-Assistance
Arrearages)

![](media/image3.wmf){width="5.993055555555555in"
height="2.941666666666667in"}

Figure 4: Arrearage Conversion for DRA Distribution, All of a State's
Pre-Assistance Assignments Discontinued; (the State can Distinguish
Between Pre-Assistance and During-Assistance Arrearages)

![](media/image4.wmf){width="5.993055555555555in"
height="2.941666666666667in"}

Figure 5: Arrearage Conversion for DRA Distribution, All of a State's
Pre-1997 Assignments Discontinued

![](media/image5.wmf){width="5.993055555555555in"
height="2.941666666666667in"}

Figure 6: Arrearage Conversion for DRA Distribution, Both a State's Pre-
and Post-1997 Assignments Discontinued

![](media/image6.wmf){width="5.993055555555555in"
height="2.941666666666667in"}

[Figures 7 through 11](#Figures7through11) show how a State may convert
existing PRWORA arrearages to various PRWORA Distribution arrearage
categories if the State chooses to discontinue its post-1997 and/or
pre-1997 assignments.

[]{#Figures7through11 .anchor}Figure 7: Arrearage Conversion for PRWORA
Distribution, a State's Post-1997 Assignments Discontinued

![](media/image7.wmf){width="5.993055555555555in"
height="2.941666666666667in"}

Figure 8: Arrearage Conversion for PRWORA Distribution, a State's
Pre-1997 Assignments of Pre-assistance Arrearages Discontinued; (the
State can Distinguish Between Pre-Assistance and During-Assistance
Arrearages)

![](media/image8.wmf){width="5.993055555555555in"
height="2.941666666666667in"}

Figure 9: Arrearage Conversion for PRWORA Distribution, All of a State's
Pre-Assistance Assignments Discontinued; (the State can Distinguish
Between Pre-Assistance and During-Assistance Arrearages)

![](media/image9.wmf){width="5.993055555555555in"
height="2.941666666666667in"}

Figure 10: Arrearage Conversion for PRWORA Distribution, All of a
State's Pre-1997 Assignments Discontinued

![](media/image10.wmf){width="5.993055555555555in"
height="2.941666666666667in"}

Figure 11: Arrearage Conversion for PRWORA Distribution, Both a State's
Pre- and Post-1997 Assignments Discontinued

![](media/image11.wmf){width="5.993055555555555in"
height="2.941666666666667in"}

# IX. Questions and answers

For the following set of questions and answers, all references to the
DRA implementation date are October 1, 2009. States that have elected to
implement at an earlier date on or after October 1, 2008, should change
these dates to the appropriate date.

## ASSIGNMENT OF RIGHTS TO SUPPORT

**QUESTION 1**: Were there any changes to the assignment of rights
provision in section 408(a)(3) of the Act in the DRA of 2005?

**ANSWER 1**: Yes. The statute's provisions at section 408(a)(3) of the
Act were amended to limit Assigned Arrearages to those that accrue while
a family receives assistance, not to exceed the cumulative amount of
Unreimbursed Assistance. [See footnote 10.](#Footnote10)

[]{#Question2 .anchor}**QUESTION 2**: In some instances, an agency
cannot establish support during the period of assistance because the
agency cannot successfully locate and serve notice on the noncustodial
parent. For cases falling under the new DRA assignment, if the agency
establishes a support order after the family leaves assistance, is
retroactive support for the time period the family received assistance
covered by the assignment?

**ANSWER 2**: Yes. The assignment pursuant to section 408(a)(3) of the
Act includes any right a family member may have to support for the
period that the family receives assistance.

**QUESTION 3**: If a State elects to continue PRWORA Distribution, would
the Conditionally-Assigned Arrearages in a Former-Assistance case become
Temporarily-Assigned again if the family returns to assistance after the
effective date of the DRA provisions (October 1, 2009)?

**ANSWER 3**: No. The distribution option in Former-Assistance cases
(PRWORA or DRA Distribution) only controls the order of distribution. It
is the DRA assignment provision in the amended statute at section
408(a)(3) which controls the scope of the assignment of support. The
amended statute limits the assignment prospectively to support
obligations accruing while the family receives assistance, not to exceed
the total amount of assistance paid to the family during that period.
Therefore, any Never-Assigned or Unassigned Arrearages for prior periods
will not be assigned under assignments executed on or after October 1,
2009. However, since any Conditionally-Assigned Arrearages accrued under
assignments executed prior to October 1, 2009, these arrearages remain
Conditionally-Assigned until they are satisfied, or until the assignment
is discontinued.

## CONDITIONALLY-ASSIGNED ARREARAGES

**QUESTION 4**: After the implementation of the DRA, do
Conditionally-Assigned Arrearages continue to exist in Former-Assistance
cases?

**ANSWER 4**: Yes. Conditionally-Assigned Arrearages continue to exist
in Former-Assistance cases, until they are satisfied. Also, some
Current-Assistance cases after October 1, 2009 may continue to operate
with PRWORA assignments and may continue to have Conditionally-Assigned
Arrearages after that date. [See Footnote 43.](#Footnote43)

A State may opt to discontinue some or all of its assignments of
Conditionally-Assigned Arrearages as provided under section 457(b)(2) of
the Act. If all of these assignments are discontinued,
Conditionally-Assigned Arrearages would no longer exist.

**QUESTION** **5**: If a State elects to implement DRA Distribution in a
Former-Assistance case, may the State add Conditionally-Assigned
Arrearages to Family Arrearages rather than keeping them in a separate
category?

**ANSWER 5**: No. The conditional assignment that attaches to this
category of arrearages was not eliminated by the DRA. Only the
distribution hierarchy was altered. If a State wants to combine
Conditionally-Assigned Arrearages with Family Arrearages, then the State
should elect to discontinue its post-1997 assignments of Pre-Assistance
Arrearages. See [section
VI(b)](#b-state-option-to-discontinue-its-assignments-executed-from-october-1-1997-through-september-30-2009)
and [Q&A 7](#Question7) of this Action Transmittal.

[]{#Q6 .anchor}**QUESTION 6**: When a Former-Assistance family returns
to assistance after the implementation of the limited assignment in
section 408(a)(3) of the Act, as amended by the DRA, do its
Conditionally-Assigned Arrearages continue to exist or do these
arrearages convert to Family Arrearages?

**ANSWER 6**: Yes. Conditionally-Assigned Arrearages will continue to
exist in these cases unless the State elects to discontinue its
post-1997 assignments of Pre-Assistance Arrearages. The limited
assignment operates prospectively and does not change the nature of
prior assignments of support. Due to the change in the assignment
statute that prohibits the assignment of Pre-Assistance Arrearages,
Conditionally-Assigned Arrearages in a Former-Assistance case will not
convert to Temporarily-Assigned Arrearages if the family returns to
assistance after September 30, 2009.

See Example 1 below for an illustration of how Conditionally-Assigned
Arrearages will continue to exist after September 30, 2009.

[]{#Example1 .anchor}**Example 1: Example of case with
Conditionally-Assigned Arrearages after DRA implementation**

For the purposes of this example assume:

1\. There is a support order in effect when the case is opened,

2\. None of the State's assignments are discontinued,

3\. No support is paid during periods shown,

4\. URA exceeds the State's Assigned Arrearages, and

5\. State elects to continue PRWORA Distribution.

![](media/image12.wmf){width="3.375in" height="1.6652777777777779in"}

[January 2006 -- April 2006]{.underline}:

Family receives IV-D services in a Never-Assistance case.

![](media/image13.wmf){width="5.052777777777778in"
height="0.7048611111111112in"}

[May 2006 -- February 2008]{.underline}:

The family goes on assistance. Never-Assigned Arrearages are
Temporarily-Assigned to the State and Permanently-Assigned Arrearages
begin to accrue.

![](media/image14.wmf){width="5.052777777777778in"
height="1.0319444444444446in"}

[March 2008 -- April 2009]{.underline}:

The Current-Assistance case closes and converts to a Former-Assistance
case. Temporarily-Assigned Arrearages convert to Conditionally-Assigned
Arrearages.

![](media/image15.wmf){width="5.052777777777778in"
height="1.3819444444444444in"}

[May 2009 -- April 2010]{.underline}:

The family returns to assistance. Never-Assigned and
Conditionally-Assigned Arrearages convert to Temporarily-Assigned
Arrearages.[^43]

![](media/image16.wmf){width="5.052777777777778in"
height="1.7090277777777778in"}

[May 2010 -- January 2011]{.underline}:

The Current-Assistance case closes and converts to a Former-Assistance
case. The Temporarily-Assigned Arrearages convert to
Conditionally-Assigned Arrearages.

![](media/image17.wmf){width="5.052777777777778in"
height="2.0430555555555556in"}

[February 2011]{.underline}:

The family returns to assistance under a new DRA assignment. All
Never-Assigned Arrearages continue to belong to the family.
Conditionally-Assigned Arrearages remain Conditionally-Assigned.
Permanently-Assigned Arrearages remain Permanently-Assigned, and new
Permanently-Assigned Arrearages begin to accrue only during the
assistance period.

![](media/image18.wmf){width="5.047916666666667in" height="2.4125in"}

[]{#Question7 .anchor}**QUESTION 7**: If the State elects to implement
DRA Distribution, how will the distribution of collections from Federal
tax refund offset payments affect the manner in which
Conditionally-Assigned Arrearages are satisfied?

**ANSWER 7**: For States electing to apply the DRA Distribution rules,
all collections, including Federal tax refund offset collections, must
be applied to current support and Family Arrearages before
Conditionally-Assigned Arrearages. See [section
IV(b)](#b-distribution-of-federal-tax-refund-offset-payments), [section
III](#iii.-assignment-of-support-rights-under-section-408a3-of-the-act)
and [footnote 23](#Footnote23) of this AT.

Example 2 below illustrates how Federal tax refund offset collections
would be distributed under DRA Distribution rules, and under PRWORA
Distribution rules.

**Example 2: Example of case with a Federal tax refund offset collection
under DRA and PRWORA Distribution elections**

Key for Example 2:

F = Family Arrearages; NA = Never-Assigned Arrearages; C =
Conditionally-Assigned Arrearages; A = Assigned Arrearages; PA =
Permanently-Assigned Arrearages.

For this example, we will assume we have a Former-Assistance family with
an order for \$100 per month. Arrearages are as follows: F or NA =
\$200; C = \$500; A or PA = \$500.

[EXAMPLE 2A]{.underline}

The State has elected to apply DRA Distribution rules. A Federal tax
refund offset payment of \$300 is received; the payment is applied
according to DRA Distribution rules. \$100 is applied to Current
Support; \$200 is applied to Family Arrearages. Balances at month's end:
F = \$0; C = \$500; A = \$500.

[EXAMPLE 2B]{.underline}

Now assume the same facts as above, but this time the State has elected
to continue to apply PRWORA Distribution rules. All of the payment would
be applied to Conditionally-Assigned Arrearages and retained by the
State. Balances at month's end: NA = \$300; C = \$200; PA = \$500.

**QUESTION 8:** If the State elects to implement DRA Distribution, is it
possible that a family may receive all collections applied to
Conditionally-Assigned Arrearages?

**ANSWER 8:** Yes. Under PRWORA assignments pursuant to former section
408(a)(3) of the Act, support rights which "accrued before the family
received assistance" were Conditionally-Assigned. See definition of
[Conditionally-Assigned Arrearages](#ConditionallyAssignedArrearages) in
this AT. The assignment only applies, after the family ceases to receive
assistance, with respect to any "**support collected pursuant to section
464"** of the Act (support collected by way of Federal Tax Refund Offset
payments). Therefore, if payments other than Federal Tax Refund Offset
(FTRO) payments are received and applied to Conditionally-Assigned
Arrearages, these other payments could pay down the balance of
Conditionally-Assigned Arrearages before a FTRO payment is received.

## TEMPORARILY-ASSIGNED ARREARAGES

[]{#Question9 .anchor}**QUESTION 9**: Will there be any new
Temporarily-Assigned Arrearages for cases with an assignment entered
subsequent to September 30, 2009?

**ANSWER 9**: No, there will be no new Temporarily-Assigned Arrearages
for cases with assignments executed after September 30, 2009. However,
if in a Current -Assistance case under a PRWORA assignment, there are
Temporarily-Assigned Arrearages, those arrearages will remain
temporarily assigned until the family leaves assistance, at which time
they convert to Conditionally-Assigned Arrearages.

Example 4 below illustrates how a Current-Assistance case may or may not
have Temporarily-Assigned Arrearages after September 30, 2009.

**Example 4: Example of Current-Assistance cases with and without
Temporarily-Assigned Arrearages after September 30, 2009**

[Key for Example 4]{.underline}:

CASE TYPES: NA = Never Assistance; CA = Current Assistance.

ARREARAGE TYPES: NA = Never-Assigned Arrearages; C =
Conditionally-Assigned Arrearages; PA = Permanently-Assigned Arrearages;
T = Temporarily-Assigned Arrearages.

In this example, both Family A and Family B have the same arrearage
balances as of 7/31/2009 and both have current support obligations of
\$100 per month. However, Family A executes an assignment of support
rights on 9/1/2009, and Family B executes an assignment of support
rights on 10/1/2009. Here is how the two families' arrearages would
accumulate from July 2009 through November 2009 under these two
different assignments:

[Family A (PRWORA assignment executed 9/1/2009)]{.underline}:

  ------------------------------------------------------------------------------
                                      Cumulative                      
                                      Balances at                     
  ----------- ---------- ------------ ------------ --------- -------- ----------
                                      End of Month                    

                                      Family                 State    

  Month       Case Type  Pmt Amt      NA           C         PA       T[^44]

  7/09        NA         0            500                             

  8/09        NA         0            600                             

  9/09        CA         0                                   100      600

  10/09       CA         0                                   200      600

  11/09       CA         0                                   300      600
  ------------------------------------------------------------------------------

[Family B (DRA assignment executed 10/1/2009)]{.underline}:

  ------------------------------------------------------------------------------
                                      Cumulative                      
                                      Balances at                     
  ----------- ---------- ------------ ------------ --------- -------- ----------
                                      End of Month                    

                                      Family                 State    

  Month       Case Type  Pmt Amt      NA           C         PA       T[^45]

  7/09        NA         0            500                             

  8/09        NA         0            600                             

  9/09        NA         0            700                             

  10/09       CA         0            700                    100      

  11/09       CA         0            700                    200      
  ------------------------------------------------------------------------------

## UNASSIGNING ARREARAGES

**QUESTION 10**: Must a State continuously monitor Current-Assistance
cases and unassign any excess Assigned Arrearages as soon as they
appear?

**ANSWER 10**: No. The amount of Assigned Arrearages may exceed the URA
balance while the family is receiving assistance. It is not necessary to
unassign the excess as soon as it occurs. Distribution rules prohibit
States from retaining more than the URA. Amounts applied to Assigned
Arrearages that exceed URA must be distributed to the family. However,
if the family remains on assistance, Unreimbursed Assistance (URA) may
continue to accrue in each subsequent month until the family leaves
assistance. See [footnote 10.](#Footnote10)

## DISTRIBUTION IN CURRENT-ASSISTANCE CASES

**QUESTION 11**: Must URA under a DRA limited assignment be reduced by
arrearage collections in a Current-Assistance case that are used to
satisfy Family Arrearages?

**ANSWER 11**: No. The URA is not reduced by amounts applied to Family
Arrearages because those arrearages are not assigned. However, if
amounts are applied to Assigned Arrearages, URA must be reduced by those
amounts ([See Q&A 17](#Q17)).

**QUESTION 12**: Since Pre-Assistance Arrearages are no longer assigned
when a TANF case opens after September 30, 2009, they remain Family, or
Never- Assigned Arrearages while the family is receiving assistance. Can
payments from collections applied to these arrearages, pursuant to
section 457(a)(1)(C), be disregarded in determining the amount and type
of TANF assistance paid to the family?

**ANSWER 12**: It is up to the State to determine which, if any payments
made to a Current-Assistance family will be disregarded for purposes of
determining eligibility for and payment of TANF assistance.

## PASS-THROUGH PAYMENTS

**QUESTION 13**: How many "excepted portion" Pass-Through payments may a
TANF family receive in a one-month period? For example, if a custodial
parent (CP) is on a TANF assistance case with three children, two of the
children with the same noncustodial parent (NCP) and one of the children
with a different NCP, may the CP receive two "excepted portion"
Pass-Through payments (one up to \$200, plus another up to \$100)?

**ANSWER 13**: The amount of the "excepted portion" is based on the
total TANF family assistance unit(s), not the number of separate IV-D
cases associated with the TANF assistance unit. Therefore under this
scenario, the CP would only be entitled to one "excepted portion"
Pass-Through payment of up to \$200.

**QUESTION 14**: Must Pass-Through payments come out of current support?

**ANSWER 14**: No. Pass-Through payments allowed at section 457(a)(7)(B)
of the Act are not required to come from current support collections. As
stated at section 457(a)(7)(B)(ii) of the Act, the excepted portion is
that portion of any [amount collected]{.underline} on behalf of a
Current-Assistance family, not exceeding \$100 for one child per month,
or \$200 for two or more children in the family. Although the
distribution rules require that collections must first be applied to
current support, the Pass-Through payment may be paid from collections
applied to either assigned current support or arrearages. For example, a
State may choose to retain current support and pass through Assigned
Arrearages, or retain arrearages and pass through payments applied to
current support.

[]{#Question15 .anchor}**QUESTION 15**: In a Current-Assistance case,
what amounts may a State pass through to the family? Does the State owe
the Federal share of amounts passed through?

**ANSWER 15**: As under prior law, the DRA permits States to pass
through to the family the State share of amounts collected for families
receiving assistance, with no dollar limitations. In general, the State
still must pay the Federal government the Federal share of these
passed-through amounts. However, new section 457(a)(7)(B) of the Act
provides that a State is not required to pay the Federal share of an
amount collected for a family receiving assistance under specific
conditions. If a State passes through to the family up to \$100 per
month for a family with one child, or up to \$200 per month for a family
with two or more children, the Federal share of these amounts need not
be paid to the Federal government to the extent the State disregards
these amounts (the "excepted portion") in determining eligibility for
and the amount of TANF assistance provided to the family. Therefore, a
State only owes the Federal share of assigned amounts passed through to
a Current-Assistance family that exceed these \$100 or \$200
limitations, or of assigned amounts that are not disregarded.

[]{#Question16 .anchor}**QUESTION 16**: In a Former-Assistance case,
what amounts may a State pass through to the family? Does the State owe
the Federal share of amounts passed through?

**ANSWER 16**: New section 457(a)(7)(A) of the Act permits a State to
pay to a Former-Assistance family any amount collected and applied to
Assigned Arrearages. The State does not need to pay to the Federal
government the Federal share of such passed-through amount as long as
the State passes through both the State and Federal share. There is no
dollar limit to the amount that may be passed through. Therefore, a
State may pay some or all collections applied to Assigned Arrearages in
a Former-Assistance case to the family and will not owe a Federal share
of those collections.

[]{#Q17 .anchor}**QUESTION 17**: Do Pass-Through payments in
Current-Assistance cases under section 457(a)(7)(B) of the Act reduce
URA?

**ANSWER 17**: Yes. The amount of assigned support, which could be
retained but which is paid to the family from the State and Federal
share of collections, must reduce URA.

The early, pre-PRWORA, \$50 Pass-Through was a mandatory payment
distributed to the family, and the first \$50 of monthly collections
could not be retained by the State. Accordingly, these payments did
**not** reduce URA. Under PRWORA and DRA, Pass-Through payments are
optional, and support collections must reduce URA. See
[OCSE-AT-97-17](http://www.acf.dhhs.gov/programs/cse/pol/AT/1997/at-9717.htm).
The State may retain the collection, and share it with the Federal
government, or pay it to the family. In Current-Assistance cases, the
State share of such payments would be considered a "Qualified State
Expenditure" and, if disregarded in determining eligibility for TANF,
would count towards the State's Maintenance of Effort (MOE) requirement.
See section 409(a)(7)(B)(i)(l)(aa) of the Act.

**QUESTION 18**: In a Current-Assistance case, if the State collects
\$125 on a case with one child, the DRA allows a Pass-Through payment
and disregard of up to \$100. If the State elects to limit the
Pass-Through payment to \$50 and disregards that amount, \$50 of the
\$125 is sent to the family. A collection of \$75 remains. Is the
Federal share based upon that \$75? Or is it based on the \$25
difference between the collection of \$125 and the \$100 Pass-Through
limit set by law?

**ANSWER 18**: The Federal share is based on the \$75 remaining after
the Pass-Through and disregard payment.

## DISCONTINUED ASSIGNMENTS

[]{#Question19 .anchor}**QUESTION 19**: If a State elects to discontinue
its old assignments under section 457(b) of the Act, must it discontinue
its assignments for all pre-1997 Assigned Arrearages or all post-1997
Pre-Assistance Arrearages? If not, how much flexibility does a State
have in determining which of its assignments to discontinue?

**ANSWER 19**: A State is not required to discontinue all of its
assignments of pre-1997 Assigned Arrearages or all of its assignments of
post-1997 Pre-Assistance Arrearages. A State has maximum flexibility to
discontinue some, all, or none of its assignments within the
authorization of the DRA. Factors that States might consider could
include how arrearage categories will convert to new categories under
DRA distribution, how statewide automated systems have tracked Assigned
Arrearages over time, and other implications for automated systems.

**QUESTION 20**: The State options regarding the discontinuation of
older support assignments under section 457(b)(2)(A) of the Act refer
only to "support obligations accruing before the date on which the
family FIRST (emphasis added) receives assistance under part A ..." Does
this provision allow a State to discontinue [all]{.underline} of its
Temporarily-Assigned or Conditionally-Assigned Arrearages or only those
that accrued prior to the first date on which the family ever received
assistance from the State?

**ANSWER 20**: Section 457(b) of the Act is intended to allow a State to
discontinue some or all of its Conditionally-Assigned or
Temporarily-Assigned Arrearages (whichever exists for the case at the
time of discontinuation); these arrearages accrued prior to the first
date of any given period of assistance. Support arrearages which accrue
during the assistance period remain assigned.

**QUESTION 21**: If a State elects to discontinue any of its assignments
authorized under the DRA, but the State has already collected and
retained some or all of the arrearages under those assignments, will the
State be required to now pay the family the arrearages it had retained?

**ANSWER 21**: No. The law applies prospectively to amounts as they are
collected, not to amounts previously collected and retained by the State
as required by prior law.

**QUESTION 22**: Does electing to follow the DRA Distribution sequence
automatically trigger the discontinuation of assignments of
Pre-Assistance Arrearages?

**ANSWER 22**: No. These choices are independent of each other. A State
must decide whether to adopt DRA Distribution or to continue to follow
PRWORA Distribution rules. The only way in which assignments of its
Pre-Assistance Arrearages may be discontinued is through the authority
provided in section 457(b) of the Act.

[]{#Question23 .anchor}**QUESTION 23**: If a State elects to discontinue
its assignments of pre-1997 arrearages under section 457(b)(1) of the
Act, but is unable to distinguish its pre-1997 Assigned Arrearages from
its post-1997 Permanently-Assigned Arrearages, may the State discontinue
the assignment of a portion of those arrearages if the exact amount
cannot be determined?

[Example]{.underline}: A State's Permanently-Assigned Arrearages on a
case prior to DRA implementation are \$8,000 and the State knows at
least some of its Assigned Arrearages accrued prior to the 1997 PRWORA
implementation date, but cannot determine exactly how much. May the
State discontinue \$3,000 of the Assigned Arrearages?

  ---------------- ------------------- ------------------- ------------------
  Pre-1997                             Post-1997           

  Pre-Assistance   During-Assistance   During-Assistance   Pre-Assistance
  Arrearages       Arrearages          Arrearages          Arrearages

  PERMANENTLY-                         ASSIGNED            TEMPORARILY/
                                                           CONDITIONALLY-
                                                           ASSIGNED
  ---------------- ------------------- ------------------- ------------------

**ANSWER 23**: No. In order for a State to discontinue its assignments
of pre-1997 arrearages, the State must be able to differentiate between
pre- and post-PRWORA Permanently-Assigned Arrearages because there is no
statutory authority to discontinue the assignments of post-1997
During-Assistance (Permanently-Assigned) Arrearages.

**QUESTION 24:** If a State discontinues its assignment of arrearages
should the URA be reduced by an equal amount?

**ANSWER 24:** No, URA is not reduced by discontinued assignments.

**QUESTION 25**: If a State elects to discontinue its pre-1997
assignments under section 457(b)(1) of the Act, would the State only
discontinue its assignments of support obligations accruing before
October 1, 1997?

**ANSWER 25**: No, not in all cases. If a State elects to discontinue
[all]{.underline} of its pre-1997 assignments pursuant to section
457(b)(1) of the Act, the discontinuation applies to support obligations
falling under any of its assignments executed prior to October 1, 1997.

For example, if a family executes an assignment of support rights on
September 1, 1997 and remains on assistance until June 30, 1998, all
support that accrued prior to July 1, 1998 is assigned under a pre-1997
assignment and may be discontinued.

However, if a State wishes to limit the discontinuation of its
assignments to support that accrued prior to October 1, 1997, the State
may choose to do so (see [Question and Answer 19](#Question19) of this
AT).

## FEDERAL TAX REFUND OFFSET

[]{#Question26 .anchor}**QUESTION 26**: What are the changes to the
provisions regarding the distribution of collections resulting through
the Federal tax refund offset program?

**ANSWER 26**: The treatment of Federal tax refund offset collections is
the key difference between the DRA and PRWORA distribution rules. For
States electing to follow DRA Distribution, Federal tax refund offset
collections must be distributed in the same manner as any other
collection. This means that in Former-Assistance cases, they must be
applied first to current support, but then to Family Arrearages before
Assigned Arrearages may be paid.[^46] In Current-Assistance cases,
Federal tax refund offset collections must also be applied first to
current support, but then to Assigned Arrearages and last to any Family
Arrearages.

For States that elect to continue to follow PRWORA Distribution, Federal
tax refund offset collections must be applied to arrearages, not to
current support. For both Current-Assistance and Former-Assistance cases
under PRWORA Distribution, Federal tax refund offset collections must
first be applied to arrearages assigned to the State with any remainder
paid to the family

Displayed below is a chart that lays out the ways in which Federal tax
refund offset collections should be distributed by case type and by
distribution election (DRA Distribution vs. PRWORA Distribution).

**Table 3: Distribution of Federal Tax Refund Offset Collections**

+-------+-------------------------------+------------------------------+
|       | **DRA Distribution Election** | **PRWORA Distribution        |
|       |                               | Election**                   |
+=======+===============================+==============================+
| CUR   | Apply FTRO[^47] to current    | Apply FTRO to arrearages     |
| RENT- | support first, then to        | only: first to Temporarily-  |
| ASSIS | Assigned Arrearages, then to  | and Permanently-Assigned     |
| TANCE | Family Arrearages             | Arrearages, then to          |
| CASES |                               | arrearages owed to the       |
|       | \(1\) Current, (2) Assigned,  | family                       |
|       | (3) Family                    |                              |
|       |                               | \(1\) Permanently-Assigned/  |
|       |                               | Temporarily-Assigned, (2)    |
|       |                               | Never-Assigned               |
+-------+-------------------------------+------------------------------+
| FO    | Apply FTRO to current support | Apply FTRO to arrearages     |
| RMER- | first, then to Family         | only: first to               |
| ASSIS | Arrearages, then to Assigned  | Conditionally- and           |
| TANCE | Arrearages                    | Permanently-Assigned         |
| CASES |                               | Arrearages, then to          |
|       | \(1\) Current, (2) Family,    | arrearages owed to the       |
|       | (3) Assigned                  | family.                      |
|       |                               |                              |
|       |                               | \(1\) Permanently-Assigned/  |
|       |                               | Conditionally-Assigned, (2)  |
|       |                               | Never-Assigned               |
+-------+-------------------------------+------------------------------+

For further discussion on Federal tax refund offset distribution, see
[section IV(b)](#b-distribution-of-federal-tax-refund-offset-payments)
of this AT.

## ARREARAGE CATEGORIES

**QUESTION 27**: Is the approach taken in the definitions section and
the section regarding arrearage category conversion contained in this AT
meant to dictate the actual terms and number of "buckets" used within a
State's automated system? For example, is a State required to create a
"family arrearages" bucket within its statewide system, or may the State
maintain the Never-Assigned, Unassigned Pre-Assistance, and Unassigned
During-Assistance categories as long as they function the same as the
Family Arrearages category?

**ANSWER 27**: It is permissible for a State to maintain its
Never-Assigned, Unassigned Pre-Assistance and Unassigned
During-Assistance categories if the State has elected to implement DRA
Distribution *[and]{.underline} the State ensures that collections in
Former-Assistance cases are applied to these buckets
[before]{.underline} applying anything to Assigned Arrearages.* States
may opt to use the terms and the number of buckets it deems appropriate
as long as it upholds the requirements under the DRA.

## FEDERAL REPORTING REQUIREMENTS

**QUESTION 28**: Will collections on Current-Assistance and
Former-Assistance cases continue to be counted twice in the collections
base for Federal incentives purposes even if the collections are part of
a Pass-Through or DRA distribution?

**ANSWER 28**: Yes. There is no change to the calculation of the
collections base for Federal incentives purposes under section 458 of
the Act.

## MAINTENANCE OF EFFORT (MOE) UNDER TITLE IV-A

**Question 29**: Does the State share of any Pass-Through amounts in a
Current-Assistance case count as a Qualified State Expenditure for
purposes of the State's MOE requirement?

**ANSWER 29**:  Yes.  A State's share of the Pass-Through payment can be
counted towards MOE when the Pass-Through is from the assigned support
collection in a Current-Assistance case and the amount of the
Pass-Through is disregarded in determining the eligibility for and the
amount of TANF assistance. See section 409(a)(7)(B)(i)(l)(aa) of the
Act. For further information on, or questions about, MOE requirements,
please contact your TANF Regional Program Manager for the Office of
Family Assistance, ACF.

## DISTRIBUTION IN TITLE IV-E FOSTER CARE CASES

**QUESTION 30**: Are there any changes to section 457 of the Act in the
DRA that would affect the distribution rules for title IV-E Foster Care
case collections under section 457(e) of the Act and 45 CFR 302.52?

**ANSWER 30**: No. There are no changes contained in the DRA affecting
the distribution of child support collections for IV-E Foster Care
cases. Distribution for IV-E Foster Care cases is governed by section
457(e) of the Act and 45 CFR 302.52. See also guidance contained under
question and answers 16 through 19 in
[OCSE-AT-98-24](http://www.acf.dhhs.gov/programs/cse/pol/AT/1998/at-9824.htm).

## DISTRIBUTION IN TRIBAL IV-D CASES

**QUESTION 31**: Does anything contained in the DRA change how child
support is distributed in Tribal IV-D cases?

**ANSWER 31**: No. Nothing contained in the DRA addresses distribution
in Tribal IV-D cases. However an inter-governmental case with support
assigned to a State may be impacted by the distribution options a State
may select. Under 45 CFR 309.115, if the Tribal IV-D agency has received
a request for assistance in collecting support on behalf of the family
from a State under §309.120, the Tribal IV-D agency must send support
collected to the State IV-D agency for distribution in accordance with
section 457 of the Act and 45 CFR 302.51 and 302.52, unless the Tribal
IV-D agency contacts the State and distributes the collection as
directed by the State.

**GAP PAYMENTS**

**QUESTION 32**: What, if any, impact does the DRA have on the GAP
payment provisions?

**ANSWER 32**: Former section 402(a)(28) of the Act provided for the
payment to the family of child support collected by the State as a
protection against reduction in the total income available to a family
in a month. This section only applies to those States whose State title
IV-A plan, in July 1975, permitted a portion of the monthly child
support payment after application of appropriate disregards to be
retained by a family receiving AFDC/TANF without causing a
dollar-for-dollar reduction in the AFDC/TANF payment made to the family.
There were no changes in the DRA that would affect the GAP payment
provision.

## MEDICAL SUPPORT

**QUESTION 33**: How is medical support assigned to the State under
section 1912 of the Act distributed?

**ANSWER 33**: 45 CFR 302.51(c) addresses distribution of assigned
medical support collections. See also question and answer 22 in
[OCSE-AT-98-24](http://www.acf.dhhs.gov/programs/cse/pol/AT/1998/at-9824.htm).

## INTERSTATE

**QUESTION 34**: Which State is responsible for distribution in
interstate cases?

**ANSWER 34**: 45 CFR 303.7(c)(7)(iv) requires responding States to
forward collections to the location specified by the IV-D agency in the
initiating State. Therefore, the IV-D agency in the initiating State is
responsible for distribution of collections in an interstate case.

[^1]:  The total amount of the Pass-Through which meets these criteria
    is called the "[excepted portion](#__RefHeading___Toc171915483)" and
    is defined in section 457(a)(7)(B)(ii) of the Act.

[^2]:  A State may only discontinue its own assignments.

[^3]:  At state option, the effective date of the DRA provision may be
    as early as October 1, 2008, but no later than October 1, 2009.
    Reference throughout this Action Transmittal to October 1, 2009
    implementation dates should generally to be taken to mean "as early
    as October 1, 2008, but no later than October 1, 2009."

[^4]:  These Pre-Assistance arrearages are also known as
    Temporarily-Assigned or Conditionally-Assigned arrearages.

[^5]:  See section 457(c) of the Act.

[^6]:  These assignments are eligible for discontinuation under the
    authority in section 457(b)(1) of the Act, as amended by the DRA.

[^7]:  Both Temporary and Conditional assignments are eligible for
    discontinuation under the authority in section 457(b)(2) of the Act,
    as amended by the DRA.

[^8]:  See further discussion on Conditionally-Assigned arrearages under
    [Q&A 6](#Q6) in this AT.

[^9]:  These support obligations would include Pre-Assistance arrearages
    that were Temporarily-Assigned or Conditionally-Assigned, but would
    not include Permanently-Assigned arrearages accruing during the
    period of assistance.

[^10]: []{#Footnote10 .anchor} URA includes assistance paid to the
    family for more than one period of receiving assistance. Also, the
    same family may have a URA balance in more than one state if the
    family has received assistance in more than one state.

[^11]:  See sections 457(a)(1)(B) and 457(a)(7)(B)(i) of the Act.

[^12]:  See sections 457(a)(2)(B)(ii)(II) and 457(a)(7)(A) of the Act.

[^13]: See section 457(a)(7)(B) of the Act.

[^14]: If the state elects to continue PRWORA Distribution in
    Former-Assistance Cases, this does not apply to Federal tax refund
    offset payments. See [section
    IV(b)](#b-distribution-of-federal-tax-refund-offset-payments) and
    [section IV(e)(5)](#PRWORADistribution) of this AT.

[^15]: While the DRA requires collections from Federal tax refund offset
    payments to be applied to current support and then to arrearages,
    states must still certify cases for Federal tax refund offset based
    on the amount of *past-due* support. See section 464 of the Act.

[^16]:  See section [IV(e)](#e-distribution-in-former-assistance-cases)
    for more information about the state election to be made regarding
    DRA vs. PRWORA distribution in Former-Assistance cases (section
    454(34) of the Act).

[^17]: See 45 CFR 302.51(a). In addition, section 464(a)(3)(B) still
    applies and permits a delay in distribution in non-IV-A cases for up
    to six months in joint return cases. This is an exception to normal
    two-day disbursement requirement in section 454B of the Act.

[^18]: Conditionally-Assigned arrearages will continue to exist unless
    these assignments are discontinued pursuant to section 457(b)(2) of
    the Act

[^19]: See [section VI](#vi.-discontinuation-of-assignments) of this AT
    for details on the discontinuation of assignments. Also see [Example
    1](#Example1) for an illustration for how both Temporarily- and
    Conditionally-Assigned arrearages will exist in some cases after
    September 30, 2009.

[^20]: Once distributed, states may pay any Pass-Through payments to the
    family. See [section V](#v.-pass-through-payments) of this AT for
    more information about Pass-Through payments.

[^21]: []{#Footnote21 .anchor} Federal tax refund offset payments must
    be applied to current support first unless an election is made by
    the state to continue PRWORA Distribution in Former-Assistance
    Cases. Regulations contained at 45 CFR 302.51 will be amended for
    consistency with section 457 of the Act. See also [section
    IV(b)](#b-distribution-of-federal-tax-refund-offset-payments) and
    [Question and Answer 26](#Question26) of this AT.

[^22]: Section 457(a)(7)(B) of the Act provides that a state is not
    required to pay to the Federal Government the Federal share of the
    "excepted portion" of any amount collected on behalf of a family
    currently receiving assistance. If a State chooses to pass-through
    the Federal share of collections, it must also pass-through the
    State share of such collections and disregard the pass-through
    amount in determining the eligibility for and the amount of the TANF
    assistance paid to the family for that month. [See Q&A
    15](#Question15) and [Section V(a)](#a-current-assistance-cases) of
    this AT.

[^23]: []{#Footnote23 .anchor} Each state with the responsibility to
    distribute a collection will apply its own rules, including a
    situation in which two states submit past-due support for Federal
    tax refund offset and each state receives an offset.

[^24]: Federal tax refund offset payments must be applied first to
    current support and then to family arrearages, unless an election is
    made by the state to continue PRWORA Distribution. See discussion
    under [Question and Answer 26](#Question26) of this AT.

[^25]: See [section IV(e)(4)](#SectionIVe4) of this AT.

[^26]: New section 457(a)(7)(A) of the Act permits a state to pay to a
    Former-Assistance family any amount collected and applied to
    Assigned Arrearages. The state does not need to pay the Federal
    government the federal share of such passed-through amount as long
    as the state passes through both the state and Federal share. [See
    Q&A 16](#Question16) and [Section V(b)](#b-former-assistance-cases)
    of this AT.

[^27]: Conditionally-Assigned arrearages will continue to exist unless
    these assignments are discontinued pursuant to section 457(b)(2) of
    the Act

[^28]: Pre-1997 Permanently-Assigned arrearages will continue to exist
    unless they are discontinued pursuant to section 457(b)(1) of the
    Act.

[^29]: Action Transmittal
    [OCSE-AT-97-17](http://www.acf.dhhs.gov/programs/cse/pol/AT/1997/at-9717.htm),
    dated October 21, 1997, "Instructions for the distribution of child
    support under section 457 of the Social Security Act."

[^30]: If a state elects to implement DRA Distribution, Federal income
    tax refund offset collections will no longer be applied pursuant to
    the former 457(a)(2)(B)(iv).

[^31]: [See Footnote 21.](#Footnote21)

[^32]: NA = Never-Assigned; UPA = Unassigned Pre-Assistance; CA =
    Conditionally-Assigned; PA = Permanently-Assigned; UDA = Unassigned
    During-Assistance. Any remaining arrearages should be paid to the
    family.

[^33]: See section 457(b)(1) of the Act.

[^34]: See also discussion contained in [Question and Answer
    19.](#Question19)

[^35]: See section 457(b)(2) of the Act.

[^36]: These Pre-Assistance arrearages are also known as
    Temporarily-Assigned or Conditionally-Assigned arrearages.

[^37]: The effective date for this pass-through option is October 1,
    2008.

[^38]: State option to accelerate effective date to no earlier than
    October 1, 2008, but no later than October 1, 2009.

[^39]: PRWORA Distribution election.

[^40]: DRA Distribution election.

[^41]: Under DRA Distribution, Never-Assigned arrearages are a part of
    Family Arrearages. See [section
    II](#ii.-definitions-used-in-this-action-transmittal) of this AT for
    the definition of [Family Arrearages](#__RefHeading___Toc171915477).

[^42]: Figures 3 through 6, and 8 through 11 show Permanently-Assigned
    arrearages as a 3-part bucket: (1) Pre-Assistance Pre-97 arrearages,
    (2) During-Assistance Pre-97 arrearages, and (3) During-Assistance
    Post-97 arrearages. Showing these arrearages in a 3-part graphic
    allows us to illustrate the variety in discontinued assignments the
    states may elect to implement.

[^43]: []{#Footnote43 .anchor} While the DRA limited assignment takes
    effect October 1, 2009, this case is still operating under a pre-DRA
    assignment. In such cases, it is not necessary to take a new
    assignment on October 1, 2009. Therefore, Temporarily-Assigned
    arrearages continue in this Current TANF case past September 30,
    2009, until the family terminates from assistance (at which time the
    Temporarily-Assigned arrearages convert to Conditionally-Assigned
    arrearages).

[^44]: When a family stops receiving assistance the Temporarily-Assigned
    arrearages would become Conditionally-Assigned arrearages.

[^45]: [See Footnote 43](#Footnote43).

[^46]: See 45 CFR 302.51(a). In addition, section 464(a)(3)(B) of the
    Act still applies and permits a delay in distribution for six months
    in cases in which a joint return has been filed. This is an
    exception to normal "two-day" disbursement rules in section 454B of
    the Act.

[^47]: FTRO = Federal tax refund offset.