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‘‘(ii) if the amount collected exceeds the 
amount required to be paid to the family 
under clause (i), shall—
‘‘(I) pay to the Federal Govern-
ment the Federal share of the excess 
amount described in this clause, subject 
to paragraph (3)(A); and 
‘‘(II) retain, or pay to the family, 
the State share of the excess amount 
described in this clause, subject to 
paragraph (3)(B); and 
‘‘(iii) shall pay to the family any re-
maining amount. 
‘‘(3) LIMITATIONS.—
‘‘(A) 
FEDERAL
REIMBURSEMENTS.—The 
total of the amounts paid by the State to the 
Federal Government under paragraphs (1) and 
(2) of this subsection with respect to a family 
shall not exceed the Federal share of the amount 
assigned with respect to the family pursuant to 
section 408(a)(3). 
‘‘(B) STATE REIMBURSEMENTS.—The total 
of the amounts retained by the State under para-
graphs (1) and (2) of this subsection with respect 
to a family shall not exceed the State share of the
301
amount assigned with respect to the family pur-
suant to section 408(a)(3). 
‘‘(4) FAMILIES THAT NEVER RECEIVED ASSIST-
ANCE.—In the case of any other family, the State 
shall pay the amount collected to the family. 
‘‘(5) FAMILIES UNDER CERTAIN AGREEMENTS.—
Notwithstanding paragraphs (1) through (3), in the 
case of an amount collected for a family in accord-
ance with a cooperative agreement under section 
454(33), the State shall distribute the amount col-
lected pursuant to the terms of the agreement. 
‘‘(6) STATE FINANCING OPTIONS.—To the extent 
that the State’s share of the amount payable to a fam-
ily pursuant to paragraph (2)(B) of this subsection 
exceeds the amount that the State estimates (under 
procedures approved by the Secretary) would have 
been payable to the family pursuant to former section 
457(a)(2)(B) (as in effect for the State immediately 
before the date this subsection first applies to the 
State) if such former section had remained in effect, 
the State may elect to have the payment considered 
a qualified State expenditure for purposes of section 
409(a)(7).
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‘‘(7) STATE OPTION TO PASS THROUGH ADDI-
TIONAL SUPPORT WITH FEDERAL FINANCIAL PARTICI-
PATION.—
‘‘(A) FAMILIES THAT FORMERLY RECEIVED 
ASSISTANCE.—Notwithstanding paragraph (2), a 
State shall not be required to pay to the Federal 
Government the Federal share of an amount col-
lected on behalf of a family that formerly re-
ceived assistance from the State to the extent that 
the State pays the amount to the family. 
‘‘(B) FAMILIES THAT CURRENTLY RECEIVE 
ASSISTANCE.—
‘‘(i) IN
GENERAL.—Notwithstanding 
paragraph (1), in the case of a family that 
receives assistance from the State, a State 
shall not be required to pay to the Federal 
Government the Federal share of the ex-
cepted portion (as defined in clause (ii)) of 
any amount collected on behalf of such fam-
ily during a month to the extent that—
‘‘(I) the State pays the excepted 
portion to the family; and 
‘‘(II) the excepted portion is dis-
regarded in determining the amount
303
and type of assistance provided to the 
family under such program. 
‘‘(ii) EXCEPTED PORTION DEFINED.—
For purposes of this subparagraph, the term 
‘excepted portion’ means that portion of the 
amount collected on behalf of a family dur-
ing a month that does not exceed $400 per 
month, or in the case of a family that in-
cludes 2 or more children, that does not ex-
ceed an amount established by the State 
that is not more than $600 per month. 
‘‘(8) STATES WITH DEMONSTRATION WAIVERS.—
Notwithstanding the preceding paragraphs, in the 
case of a State that, on the date of enactment of this 
paragraph, has had in effect since October 1, 1997, a 
waiver under section 1115 permitting passthrough 
payments of child support collections—
‘‘(A) the State may continue to distribute 
such payments to families without regard to the 
expiration date of such waiver; and 
‘‘(B) the requirement under paragraph (1) 
to pay to the Federal Government the Federal 
share of the amount collected on behalf of a fam-
ily shall not apply to the extent that—
304
‘‘(i) the State distributes such amount 
to the family; and 
‘‘(ii) such amount is disregarded in de-
termining the amount and type of assist-
ance paid to the family.’’. 
(B) STATE PLAN TO INCLUDE ELECTION AS 
TO WHICH RULES TO APPLY IN DISTRIBUTING 
CHILD
SUPPORT
ARREARAGES
COLLECTED
ON 
BEHALF OF FAMILIES FORMERLY RECEIVING AS-
SISTANCE.—Section 454 (42 U.S.C. 654) is 
amended—
(i) by striking ‘‘and’’ at the end of 
paragraph (32); 
(ii) by striking the period at the end of 
paragraph (33) and inserting ‘‘; and’’; and 
(iii) by inserting after paragraph (33) 
the following: 
‘‘(34) include an election by the State to apply 
section 457(a)(2)(B) of this Act or former section 
457(a)(2)(B) of this Act (as in effect for the State im-
mediately before the date this paragraph first applies 
to the State) to the distribution of the amounts which 
are the subject of such sections and, for so long as the 
State elects to so apply such former section, the 
amendments made by section 301(d)(1) of the Per-
305
sonal Responsibility and Individual Development for 
Everyone Act shall not apply with respect to the 
State, notwithstanding section 301(e) of that Act.’’. 
(C) APPROVAL
OF
ESTIMATION
PROCE-
DURES.—Not later than the date that is 6 
months after the date of enactment of this Act, 
the Secretary of Health and Human Services, in 
consultation with the States (as defined for pur-
poses of part D of title IV of the Social Security 
Act (42 U.S.C. 651 et seq.)), shall establish the 
procedures to be used to make the estimate de-
scribed in section 457(a)(6) of such Act (42 
U.S.C. 657(a)(6)). 
(2) CURRENT SUPPORT AMOUNT DEFINED.—Sec-
tion 457(c) (42 U.S.C. 657(c)) is amended by adding 
at the end the following: 
‘‘(5) CURRENT
SUPPORT
AMOUNT.—The term 
‘current support amount’ means, with respect to 
amounts collected as support on behalf of a family, 
the amount designated as the monthly support obliga-
tion of the noncustodial parent in the order requiring 
the support.’’. 
(c) STATE OPTION TO DISCONTINUE OLDER SUPPORT 
ASSIGNMENTS.—Section 457(b) (42 U.S.C. 657(b)) is 
amended to read as follows:
306
‘‘(b) CONTINUATION OF ASSIGNMENTS.—
‘‘(1) STATE OPTION TO DISCONTINUE PRE-1997 
SUPPORT ASSIGNMENTS.—
‘‘(A) IN GENERAL.—Any rights to support 
obligations assigned to a State as a condition of 
receiving assistance from the State under part A 
and in effect on September 30, 1997 (or such 
earlier date on or after August 22, 1996, as the 
State may choose), may remain assigned after 
such date. 
‘‘(B) DISTRIBUTION OF AMOUNTS AFTER AS-
SIGNMENT DISCONTINUATION.—If a State chooses 
to discontinue the assignment of a support obli-
gation described in subparagraph (A), the State 
may treat amounts collected pursuant to such as-
signment as if such amounts had never been as-
signed and may distribute such amounts to the 
family in accordance with subsection (a)(4). 
‘‘(2) STATE OPTION TO DISCONTINUE POST-1997 
ASSIGNMENTS.—
‘‘(A) IN GENERAL.—Any rights to support 
obligations accruing before the date on which a 
family first receives assistance under part A that 
are assigned to a State under that part and in
307
effect before the implementation date of this sec-
tion may remain assigned after such date. 
‘‘(B) DISTRIBUTION OF AMOUNTS AFTER AS-
SIGNMENT DISCONTINUATION.—If a State chooses 
to discontinue the assignment of a support obli-
gation described in subparagraph (A), the State 
may treat amounts collected pursuant to such as-
signment as if such amounts had never been as-
signed and may distribute such amounts to the 
family in accordance with subsection (a)(4).’’. 
(d) CONFORMING AMENDMENTS.—
(1) 
Section 
409(a)(7)(B)(i) 
(42 
U.S.C. 
609(a)(7)(B)(i)), as amended by section 103(c), is 
amended— 
(A) in subclause (I)(aa), by striking 
‘‘457(a)(1)(B)’’ and inserting ‘‘457(a)(1)’’; and 
(B) by adding at the end the following: 
‘‘(VI) 
PORTIONS
OF
CERTAIN 
CHILD SUPPORT PAYMENTS COLLECTED 
ON BEHALF OF AND DISTRIBUTED TO 
FAMILIES NO LONGER RECEIVING AS-
SISTANCE.—Any amount paid by a 
State pursuant to clause (i) or (ii) of 
section 457(a)(2)(B), but only to the 
extent that the State properly elects
308
under section 457(a)(6) to have the 
payment considered a qualified State 
expenditure.’’. 
(2) Section 6402(c) of the Internal Revenue Code 
of 1986 (relating to offset of past-due support against 
overpayments) is amended—
(A) in the first sentence, by striking ‘‘the 
Social Security Act.’’ and inserting ‘‘of such 
Act.’’; and 
(B) by striking the third sentence and in-
serting the following: ‘‘The Secretary shall apply 
a reduction under this subsection first to an 
amount certified by the State as past due sup-
port under section 464 of the Social Security Act 
before any other reductions allowed by law.’’. 
(e) EFFECTIVE DATE.—
(1) IN
GENERAL.—The amendments made by 
this section shall take effect on October 1, 2007, and 
shall apply to payments under parts A and D of title 
IV of the Social Security Act for calendar quarters be-
ginning on or after such date, and without regard to 
whether regulations to implement such amendments 
(in the case of State programs operated under such 
part D) are promulgated by such date.
309
(2) STATE OPTION TO ACCELERATE EFFECTIVE 
DATE.—In addition, a State may elect to have the 
amendments made by this section apply to the State 
and to amounts collected by the State (and such pay-
ments under parts A and D), on and after such date 
as the State may select that is after the date of enact-
ment of this Act and before October 1, 2007. 
SEC. 302. MANDATORY REVIEW AND ADJUSTMENT OF 
CHILD SUPPORT ORDERS FOR FAMILIES RE-
CEIVING TANF. 
(a) IN
GENERAL.—Section 466(a)(10)(A)(i) (42 
U.S.C. 666(a)(10)(A)(i)) is amended—
(1) by striking ‘‘parent, or,’’ and inserting ‘‘par-
ent or’’; and 
(2) by striking ‘‘upon the request of the State 
agency under the State plan or of either parent,’’. 
(b) EFFECTIVE DATE.—The amendments made by sub-
section (a) shall take effect on October 1, 2005. 
SEC. 303. REPORT ON UNDISTRIBUTED CHILD SUPPORT 
PAYMENTS. 
Not later than 6 months after the date of enactment 
of this Act, the Secretary of Health and Human Services 
shall submit to the Committee on Ways and Means of the 
House of Representatives and the Committee on Finance 
of the Senate a report on the procedures that the States use