H. R. 3734—103
SEC. 312. COLLECTION AND DISBURSEMENT OF SUPPORT PAYMENTS.
(a) STATE PLAN REQUIREMENT.—Section 454 (42 U.S.C. 654),
as amended by sections 301(b) and 303(a) of this Act, is amended—
(1) by striking ‘‘and’’ at the end of paragraph (25);
(2) by striking the period at the end of paragraph (26)
and inserting ‘‘; and’’; and
(3) by adding after paragraph (26) the following new para-
graph:
‘‘(27) provide that, on and after October 1, 1998, the State
agency will—
‘‘(A) operate a State disbursement unit in accordance
with section 454B; and
‘‘(B) have sufficient State staff (consisting of State
employees) and (at State option) contractors reporting
directly to the State agency to—
‘‘(i) monitor and enforce support collections
through the unit in cases being enforced by the State
pursuant to section 454(4) (including carrying out the
automated data processing responsibilities described
in section 454A(g)); and
‘‘(ii) take the actions described in section 466(c)(1)
in appropriate cases.’’.
(b) ESTABLISHMENT OF STATE DISBURSEMENT UNIT.—Part D
of title IV (42 U.S.C. 651–669), as amended by section 344(a)(2)
of this Act, is amended by inserting after section 454A the following
new section:
‘‘SEC. 454B. COLLECTION AND DISBURSEMENT OF SUPPORT PAY-
MENTS.
‘‘(a) STATE DISBURSEMENT UNIT.—
‘‘(1) IN GENERAL.—In order for a State to meet the require-
ments of this section, the State agency must establish and
operate a unit (which shall be known as the ‘State disbursement
unit’) for the collection and disbursement of payments under
support orders—
‘‘(A) in all cases being enforced by the State pursuant
to section 454(4); and
‘‘(B) in all cases not being enforced by the State under
this part in which the support order is initially issued
in the State on or after January 1, 1994, and in which
the income of the noncustodial parent is subject to
withholding pursuant to section 466(a)(8)(B).
‘‘(2) OPERATION.—The State disbursement unit shall be
operated—
‘‘(A) directly by the State agency (or 2 or more State
agencies under a regional cooperative agreement), or (to
the extent appropriate) by a contractor responsible directly
to the State agency; and
‘‘(B) except in cases described in paragraph (1)(B), in
coordination with the automated system established by
the State pursuant to section 454A.
‘‘(3) LINKING OF LOCAL DISBURSEMENT UNITS.—The State
disbursement unit may be established by linking local disburse-
ment units through an automated information network, subject
to this section, if the Secretary agrees that the system will
not cost more nor take more time to establish or operate than
H. R. 3734—104
a centralized system. In addition, employers shall be given
1 location to which income withholding is sent.
‘‘(b) REQUIRED PROCEDURES.—The State disbursement unit
shall use automated procedures, electronic processes, and computer-
driven technology to the maximum extent feasible, efficient, and
economical, for the collection and disbursement of support pay-
ments, including procedures—
‘‘(1) for receipt of payments from parents, employers, and
other States, and for disbursements to custodial parents and
other obligees, the State agency, and the agencies of other
States;
‘‘(2) for accurate identification of payments;
‘‘(3) to ensure prompt disbursement of the custodial parent’s
share of any payment; and
‘‘(4) to furnish to any parent, upon request, timely informa-
tion on the current status of support payments under an order
requiring payments to be made by or to the parent, except
that in cases described in subsection (a)(1)(B), the State
disbursement unit shall not be required to convert and maintain
in automated form records of payments kept pursuant to section
466(a)(8)(B)(iii) before the effective date of this section.
‘‘(c) TIMING OF DISBURSEMENTS.—
‘‘(1) IN GENERAL.—Except as provided in paragraph (2),
the State disbursement unit shall distribute all amounts pay-
able under section 457(a) within 2 business days after receipt
from the employer or other source of periodic income, if suffi-
cient information identifying the payee is provided.
‘‘(2) PERMISSIVE
RETENTION
OF
ARREARAGES.—The State
disbursement unit may delay the distribution of collections
toward arrearages until the resolution of any timely appeal
with respect to such arrearages.
‘‘(d) BUSINESS DAY DEFINED.—As used in this section, the term
‘business day’ means a day on which State offices are open for
regular business.’’.
(c) USE OF AUTOMATED SYSTEM.—Section 454A, as added by
section 344(a)(2) and as amended by section 311 of this Act, is
amended by adding at the end the following new subsection:
‘‘(g) COLLECTION AND DISTRIBUTION OF SUPPORT PAYMENTS.—
‘‘(1) IN GENERAL.—The State shall use the automated sys-
tem required by this section, to the maximum extent feasible,
to assist and facilitate the collection and disbursement of sup-
port payments through the State disbursement unit operated
under section 454B, through the performance of functions,
including, at a minimum—
‘‘(A) transmission of orders and notices to employers
(and other debtors) for the withholding of income—
‘‘(i) within 2 business days after receipt of notice
of, and the income source subject to, such withholding
from a court, another State, an employer, the Federal
Parent Locator Service, or another source recognized
by the State; and
‘‘(ii) using uniform formats prescribed by the Sec-
retary;
‘‘(B) ongoing monitoring to promptly identify failures
to make timely payment of support; and
H. R. 3734—105
‘‘(C) automatic use of enforcement procedures (includ-
ing procedures authorized pursuant to section 466(c)) if
payments are not timely made.
‘‘(2) BUSINESS DAY DEFINED.—As used in paragraph (1),
the term ‘business day’ means a day on which State offices
are open for regular business.’’.
(d) EFFECTIVE DATES.—
(1) IN GENERAL.—Except as provided in paragraph (2), the
amendments made by this section shall become effective on
October 1, 1998.
(2) LIMITED
EXCEPTION
TO
UNIT
HANDLING
PAYMENTS.—
Notwithstanding section 454B(b)(1) of the Social Security Act,
as added by this section, any State which, as of the date
of the enactment of this Act, processes the receipt of child
support payments through local courts may, at the option of
the State, continue to process through September 30, 1999,
such payments through such courts as processed such payments
on or before such date of enactment.
SEC. 313. STATE DIRECTORY OF NEW HIRES.
(a) STATE PLAN REQUIREMENT.—Section 454 (42 U.S.C. 654),
as amended by sections 301(b), 303(a), and 312(a) of this Act,
is amended—
(1) by striking ‘‘and’’ at the end of paragraph (26);
(2) by striking the period at the end of paragraph (27)
and inserting ‘‘; and’’; and
(3) by adding after paragraph (27) the following new para-
graph:
‘‘(28) provide that, on and after October 1, 1997, the State
will operate a State Directory of New Hires in accordance
with section 453A.’’.
(b) STATE DIRECTORY OF NEW HIRES.—Part D of title IV (42
U.S.C. 651–669) is amended by inserting after section 453 the
following new section:
‘‘SEC. 453A. STATE DIRECTORY OF NEW HIRES.
‘‘(a) ESTABLISHMENT.—
‘‘(1) IN GENERAL.—
‘‘(A) REQUIREMENT FOR STATES THAT HAVE NO DIREC-
TORY.—Except as provided in subparagraph (B), not later
than October 1, 1997, each State shall establish an auto-
mated directory (to be known as the ‘State Directory of
New Hires’) which shall contain information supplied in
accordance with subsection (b) by employers on each newly
hired employee.
‘‘(B) STATES WITH NEW HIRE REPORTING LAW IN EXIST-
ENCE.—A State which has a new hire reporting law in
existence on the date of the enactment of this section
may continue to operate under the State law, but the
State must meet the requirements of subsection (g)(2) not
later than October 1, 1997, and the requirements of this
section (other than subsection (g)(2)) not later than October
1, 1998.
‘‘(2) DEFINITIONS.—As used in this section:
‘‘(A) EMPLOYEE.—The term ‘employee’—
‘‘(i) means an individual who is an employee within
the meaning of chapter 24 of the Internal Revenue
Code of 1986; and
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‘‘(ii) does not include an employee of a Federal
or State agency performing intelligence or counterintel-
ligence functions, if the head of such agency has deter-
mined that reporting pursuant to paragraph (1) with
respect to the employee could endanger the safety of
the employee or compromise an ongoing investigation
or intelligence mission.
‘‘(B) EMPLOYER.—
‘‘(i) IN
GENERAL.—The term ‘employer’ has the
meaning given such term in section 3401(d) of the
Internal Revenue Code of 1986 and includes any
governmental entity and any labor organization.
‘‘(ii) 
LABOR
ORGANIZATION.—The 
term 
‘labor
organization’ shall have the meaning given such term
in section 2(5) of the National Labor Relations Act,
and includes any entity (also known as a ‘hiring hall’)
which is used by the organization and an employer
to carry out requirements described in section 8(f)(3)
of such Act of an agreement between the organization
and the employer.
‘‘(b) EMPLOYER INFORMATION.—
‘‘(1) REPORTING REQUIREMENT.—
‘‘(A) IN
GENERAL.—Except as provided in subpara-
graphs (B) and (C), each employer shall furnish to the
Directory of New Hires of the State in which a newly
hired employee works, a report that contains the name,
address, and social security number of the employee, and
the name and address of, and identifying number assigned
under section 6109 of the Internal Revenue Code of 1986
to, the employer.
‘‘(B) MULTISTATE EMPLOYERS.—An employer that has
employees who are employed in 2 or more States and
that transmits reports magnetically or electronically may
comply with subparagraph (A) by designating 1 State in
which such employer has employees to which the employer
will transmit the report described in subparagraph (A),
and transmitting such report to such State. Any employer
that transmits reports pursuant to this subparagraph shall
notify the Secretary in writing as to which State such
employer designates for the purpose of sending reports.
‘‘(C) FEDERAL GOVERNMENT EMPLOYERS.—Any depart-
ment, agency, or instrumentality of the United States shall
comply with subparagraph (A) by transmitting the report
described in subparagraph (A) to the National Directory
of New Hires established pursuant to section 453.
‘‘(2) TIMING OF REPORT.—Each State may provide the time
within which the report required by paragraph (1) shall be
made with respect to an employee, but such report shall
be made—
‘‘(A) not later than 20 days after the date the employer
hires the employee; or
‘‘(B) in the case of an employer transmitting reports
magnetically or electronically, by 2 monthly transmissions
(if necessary) not less than 12 days nor more than 16
days apart.
‘‘(c) REPORTING FORMAT AND METHOD.—Each report required
by subsection (b) shall be made on a W–4 form or, at the option