Source: http://www.acf.hhs.gov/programs/css/resource/final-rule-implementation-of-child-support-enforcement-amendments-of-1984
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Final Rule: Implementation of Child Support Enforcement Amendments of 1984 | Office of Child Support Enforcement | Administration for Children and Families
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Published: May 9, 1985 Information About:
Case Management, Collections/Distribution/State Disbursement Unit (SDU), Enforcement, Employer Responsibilities, Income/Wage Withholding, Federal Reporting, State Plan, Federal Systems, Federal Offset Program (FOP), Funding, Federal Financial Participation (FFP), Intergovernmental/Interstate
Child Support Guidelines, Collection & Enforcement Systems, Internal Revenue Service (IRS), User Fees
OCSE-AT-85-06
Implementation of Child Support Enforcement Amendments of 1984
SUBJECT: Implementation of Child Support Enforcement Amendments of 1984
ATTACHMENT: Attached are final regulations that implement the majority of the requirements of P. L. 98-378, the Child Support Enforcement Amendments of 1984. P. L. 98-378 amends title IV-D of the Social Security Act to require several new or expanded State practices under the Child Support Enforcement program. The statutory changes fall within three basic categories:
Enforcement techniques; and
Program administration and financing.
The following provisions of P.L. 98-378 are being implemented in separate regulations:
Audit, compliance and penalty provisions;
Requirement that State IV-D agencies petition to include medical support as part of any child support order whenever health care coverage is available to the obligated parent at a reasonable cost;
Requirement that States provide Medicaid benefits for four calendar months beginning with the first month of AFDC ineligibility when ineligibility for AFDC is a result of support collected under
SUPERSEDED MATERIAL: OCSE-AT-84-08, dated September 17,1984
REGULATION REFERENCE: 45 CFR Parts 301 through 305 and 307.
OCSE Regional Representatives.
45 CFR Parts 301,302,303,304,305, and 307
Summary: This final rule implements the Child Support Enforcement Amendments of 1984, Pub. L. 98-378, which amend title IV-D of the Social Security Act (the Act). The statutory changes implemented by these regulations fall within three basic categories.
(1) Availability of Services;
(2) Enforcement Techniques; and
(3) Program Administration and Financing.
For a detailed discussion of these categories see SUPPLEMENTARY INFORMATION. These regulations are effective (May 9, 1985).
DATES: The various compliance dates of the statutory requirements are listed below:
September 1, 1984--Imposition of Optional Late Payment Fees on
Obligated Parents Who Owe Overdue Support (s. 302.75)
Collection and Distribution of Support in Foster Care Maintenance Cases (§302.52)
Continuing IV-D Services for Families that Lose AFDC Eligibility (§ 302.51)
Computerized Support Enforcement Systems (45 CFR Part 307)
December 1, 1984--State Commissions on Child Support (§ 304.95)
October 1,1985:
Mandatory State Procedures (§§ 302.70, and 303.100 through 303.105)
Incentive Payments to States and Political Subdivisions (§s.302.55 and 303.52)
Notice of Collection of Assigned Support (S. 302.541)
Publicizing the Availability of Support Enforcement Services (§ 302.30)
Mandatory Collection of Spousal Support (§s. 302.17 and 302.31)
Payment of Support through the IV-D Agency or Other Entity (§ 302.57)
Effective for refunds payable after December 31, 1985, and before January 1, 1991--Collection of Past due Support from Federal Income Tax Refunds in non-AFDC Cases (§ 303.72)
October 1, 1987--State Guidelines for Child Support Awards (§302.56)
October 1,1987 and thereafter--Reduction in the Federal Matching Rate (45 CFR Parts 301, 304, 305 and 307)
See also the discussion under the heading "Paperwork Reduction Act" regarding information collection requirements.
At (301)443-5350:
Craig Hathaway (Foster Care; Publicizing Services; Spousal Support; Notice of Collection; Date of Collections; Income or Wage Withholding; State Commissions)
Marianne Rufty (Expedited Processes; Liens; Posting Security, Bond or Guarantee; Information to Consumer Reporting Agencies; Delays in Implementation of Required Practices; Exemptions from Required Practices; Payment through IV-D Agency or Other Entity; Incentive Payments; Reductions in Federal Matching Rate)
Carol Jordan (Federal and State Income Tax Refund Offset; Access to Federal Parent Locator Service; Continuing IV-D Services for Families that Lose AFDC Eligibility; Guidelines for Setting Child Support Awards; Late Payment Fees)
Michael Fitzgerald (90 Percent Funding for Automated Systems Hardware; Required Application Fee)
SUPPLEMENTARY INFORMATION: The preamble to these regulations contains a detailed summary of the regulatory requirements followed by responses to comments received on the proposed regulations. To help readers locate corresponding portions of the preamble, identical headings are used to describe each section of the summary and each section of the responses to comments.
The following is a summary of the requirements implemented by these regulations.
Mandatory State Procedures
Since the inception of the Federal Child Support Enforcement program there has been a marked difference in the level of success of the programs operated by the various States. In the nine years the Federal program has been in existence, certain procedures which have noticeably increased the effectiveness of State programs have been identified. As a result of this experience, Congress has enacted sections 454(20)a and 466 of the Act to require all States to implement these proven procedures by October 1, 1985. However, if a State demonstrates to the Secretary that State legislation is required to conform the State plan to one or more of the requirements of the new statute, the State's plan shall not be regarded as failing to comply solely by reason of its failure to meet the requirements imposed by the new amendments until four months after the end of the first session of the State's legislature which ends on or after October 1, 1985.
These regulations: (A) require that a State plan for child support enforcement must provide that the State has in effect laws governing the mandatory enforcement procedures specified in section 466 of the Act; (B) specify how a State should proceed in order to obtain an exemption from one or more of these procedures and the basis for granting exemptions, and (C) specify the criteria that a State must meet in implementing the mandatory enforcement procedures.
State Plan Requirement (§302.70)
The regulation at 45 CFR 302.70 contains the State plan requirement for the use of mandatory practices to improve program effectiveness as specified in the paragraph 454(20) of the Act. The definition of "overdue support" from section 466(e) of the Act that is applicable to all mandatory practices is in the general definitions section 45 CFR 301.1. "Overdue support" means a delinquency pursuant to an obligation determined under a court order, or an order of an administrative process established under State law, for support and maintenance of a minor child which is owed to or on behalf of the child or for the absent parent's spouse (or former spouse) with whom the child is living, if and to the extent that a spousal support obligation has been established and the child support obligation is being enforced under the State's IV-D plan. At the option of the State, overdue support may include amounts which otherwise meet the definition in the previous sentence, but which are owed to or on behalf of a child who is not a minor child. The option to include support owed to children who are not minors applies independently to the procedures under section 466 and these regulations at § 302.70.
Under § 302.70(a), a State plan for child support enforcement must provide that the State has in effect and has implemented laws and procedures specified in section 466(a) of the Act for: (1) Carrying out a program for the withholding of amounts from the wages of individuals to comply with support orders; (2) establishing and enforcing support orders by expedited processes; (3) obtaining overdue support from State income tax refunds in cases where support is assigned to the State under sections 402(a)(26) or 471(a)(17) of the Act and where support is collected under section 454(6) of the Act; (4) imposing liens against real or personal property for amounts of overdue support; (5) establishing a child's paternity at least up to the child's 18th birthday; (6) requiring the absent parent to give security, post a bond or give some guarantee to secure payment of overdue support (7) making available to consumer reporting agencies at their request information regarding the amount of support owed by an absent parent if the amount is more than $1,000 or at the option of the State if the amount is less than $1,009; and (6) including a provision for wage withholding in child support orders issued or modified in the State.
Section 466 requires States to use procedures 3, 4, 6 and 7 except when they determine that the procedures are inappropriate in an individual case. Using guidelines generally available to the public, States must take into account the payment record of the absent parent, the availability of other remedies, and other relevant considerations in determining whether use of a particular procedure is inappropriate in an individual case. States may not develop guidelines that determine a majority of cases in which no other remedy is being used to be inappropriate. We have implemented this requirement in § 302.70(b). Under 302.70(c), State laws enacted to implement these effective practices must give States sufficient authority to comply with the requirements contained in 45 CFR 303.100 through 303.105. We have not included a section under Part 300 of the regulations on paternity established up to the child's 18th birthday because including the requirement under § 302.70 is adequate to regulate this mandatory procedure.
Section 466(d) of the Act allows the Secretary of HHS to grant a State (or a political subdivision with respect to expedited process) an exemption from enacting and using any of the procedures mandated by the new law if the State demonstrates that the procedure would not increase the effectiveness and efficiency of the State's Child Support Enforcement program. Such demonstration must be supported through the presentation of data pertaining to caseloads, processing time, administrative costs, average support collections or other actual or estimated data that the Secretary may require. The Secretary will review the exemption periodically and terminate it if circumstances, including effectiveness, should change.
Under § 302.70(d)(1), a State may request an exemption from the State plan requirements of paragraph (a) by submitting a request for exemption to the appropriate Regional Office. Under this process, a State may also request an exemption from the requirement for expedited processes for a political subdivision of the State Under § 302.70(d)(2) the Secretary will grant an exemption for up to three years upon a demonstration by the State that compliance would not increase the effectiveness and efficiency of its Child Support Enforcement program. To support an initial exemption, the information required by section 466(d) of the Act must be provided and documented by the State. Because the Congress has given the Secretary discretion to determine whether or not to grant an exemption, disapproval by the Secretary of a request for exemption is not subject to appeal.
Section 302.70(d)(3) provides for review by the Secretary and termination of the exemption for the State (or political subdivision in the case of expedited process) if the State cannot demonstrate that it continues to warrant an exemption in accordance with paragraph (d). Under paragraph (d)(4), a State must request an extension of an exemption 90 days prior to the end of the exemption period granted by the Secretary by submitting current data that demonstrates that compliance with the required procedure will not increase the efficiency and effectiveness of its Child Support Enforcement program.
If the Secretary revokes an extension or does not grant an extension of an exemption, paragraph (d)(5) requires the State to enact the appropriate laws and procedures to implement the mandatory practice by the beginning of the fourth month after the end of the first session of the State's legislature which ends after the date the exemption is revoked or the extension denied. If no State law is necessary the State must establish and use the procedure by the beginning of the fourth month after the date the exemption is revoked.
Procedures for Wage or Income Withholding
Section 466 of the Act requires that States provide for by law and have in effect two distinct procedures for dealing with wage withholding. The first, required under section 466(a)(1) and (b) of the Act, pertains only to cases being enforced through the IV-D agency. Under this requirement, States must have and use a procedure that requires wage withholding to be triggered in IV-D cases whenever an arrearage accrues that is equal to the amount of support payable for one month. Withholding is to begin without amendment to the order or further action by the court. Section 468(b) also specifies other elements of the withholding system for IV-D cases such as the basis for appeal, maximum amounts of withholding, imposing fines on noncooperative employers and so forth.
The second procedure, required by section 466(a)(8) of the Act, provides that all new or modified orders issued in the State include a provision in the order for wage withholding when an arrearage occurs. The intent of the second required State procedure is to ensure that orders not being enforced through the IV-D agency will include in them the authority necessary to permit wage withholding to be initiated by someone other than the IV-D agency (e.g., a private attorney).
The specific requirements for applying wage withholding that are set out for IV-D cases do not apply to wage withholding that ensues solely from the inclusion of a wage withholding clause in an order. States are free to establish the conditions and procedures to be applied for wage withholding for cases not being enforced through the IV-D agency. It is likely that most States will conform these conditions and procedures to those required to be used for IV-D cases. Should the conditions and provisions of the two required procedures differ, however, the procedures required to be used for IV-D cases must be applied in IV-D cases. For example, if an order calls for withholding to begin when the arrearage amount equals the amount payable for two months in accordance with the State's procedure for orders not being enforced under title IV-D, withholding must still begin after one month's arrearage accrues in accordance with the State procedure that applies to all lV-D cases, if that order is now being enforced under the State's IV-D plan.
We implemented sections 466(a)(1) and (8) and (b) of the Act which provide for withholding of income or wages of individuals who owe overdue support by adding a section 45 CFR 303.100,Procedures for wage or income withholding. To implement section 466(b)(1) of the Act, § 303.100(a)(1) requires that States must ensure that in the case of each absent parent subject to a support order in the State which is being enforced under the State plan, so much of his or her wages must be withheld as is necessary to comply with the order. In addition to withholding the amount due for current support, paragraph (a)(2) requires the State to withhold an additional amount of wages to be applied toward liquidation of overdue support. Paragraph (a)(3) limits the total amount withheld for support and other purposes to an amount not to exceed the maximum permitted under section 303(b) of the Consumer Credit Protection Act (15 U.S.C. 1673(b)).
In accordance with section 466(b)(2) of the Act, § 303.100(a)(4) requires that the State law be designed so that, in the case of a support order being enforced under the State plan, withholding occurs without the need for any amendment to the support order involved or any further action by the court or entity that issued it. This blanket provision of State law must apply to both existing and new support orders.
Section 466(a)(8) of the Act and § 303.100(h), which implements the second required State procedure discussed above, provide that new or modified support orders established after the effective date of the new law must have a specific provision for withholding. As stated earlier, this is to ensure that withholding as a means of collecting support is available if arrearages occur without the necessity of applying for IV-D services. Notwithstanding, if a new or modified support order does not include a provision for withholding and the order is being enforced by the IV-D agency, withholding must occur as required in § 303.100 (a) through (g).
To implement the requirements under section 466(b)(3) of the Act for triggering withholding § 303.100(a)(4) requires that the State take steps to begin withholding on the date on which the parent fails to make payments in an amount equal to one month's support obligation. This does not mean that the individual must miss paying the support obligation for one month. Any combination of unpaid support totalling one month's accrued arrearages would trigger a withholding. Paragraph (a)(4) also requires the State to take steps to implement the withholding at any earlier time that is in accordance with State law or that the absent parent may request. This means that a State could use withholding to collect support in all cases if it chose to do so.
In accordance with section 466(b)(4) of the Act, § 303.100(a)(5) specifies that the only basis for contesting a withholding is a mistake of fact, which means only an error in the amount of current or overdue support or the identity of the alleged absent parent.
Section 303.100(a)(6) requires that States prorate amounts available for withholding where there is more than one notice of withholding against a single absent parent, and that current support be given priority up to the limits imposed by section 303(b) of the Consumer Credit Protection Act.
Section 466(b)(4) of the Act and § 303.100(a)(7) require that withholding be carried out in full compliance with all procedural due process requirements under the State's laws. Paragraph (a)(8) specifies that the absent parent may not avoid imposition of wage withholding simply by paying the overdue support. Section 303.100(a)(9) requires States to have procedures for terminating the withholding promptly, in accordance with section 466(b)(10) of the Act, but in no case should the payment of overdue support be the sole reason for termination. In paragraph (a)(10) we require States to have procedures for promptly refunding to individuals monies that have been improperly withheld.
Under section 466(b)(4), States must provide notice to an individual before notifying the individual's employer concerning a withholding. The notice must inform the individual of the intent to withhold and of the procedures to follow to contest the withholding. An individual may contest the withholding only on the basis of a mistake of fact. If the individual contests the proposed withholding, the State must determine whether or not the withholding will occur and, if so, notify the individual, within no more than 45 days after the provision of the advance notice, of the timeframe within which the withholding is the begin. To implement these requirements, § 303.100(b) and (c) set forth the criteria that States must meet in giving advance notice and providing an opportunity to contest the withholding. In paragraph (b)(1) on the date the absent parent fails to make payments in an amount equal to the support payable for one month, States must take steps to provide advance notice to the absent parent of the delinquency of support payments and the potential withholding. The notice must inform individuals: (1) of the amount of overdue support that is owed and the amount of wages to be withheld; (2) that the withholding applies to any current or subsequent employer or period of employment; (3) of the methods available for contesting the withholding on the grounds that the withholding is not proper because of mistakes of fact; (4) of the period within which the State must be contacted in order to contest the withholding and that failure to contact the State within the specified time limit will result in the State notifying the employer to begin the withholding; and (5) of the actions the State will take if the individual contests the withholding. Although we are not specifying a period of time within which an individual must notify the State to contest the withholding, States should establish a standard time period (for example, 10 days) that would allow them to complete all required action within the statutory 45-day limit contained in paragraph (c).
As specified in section 466(b)(4) of the Act, paragraph (b)(2)(i) exempts from the requirements for advance notice and State procedures when the absent parent contests the withholding in response to the advance notice any State which has a withholding system in effect as of August 16, 1984, if the system provides, on that date and afterwards, any other procedures necessary to meet the State's procedural due process requirements. Paragraph (b)(2)(ii) requires these States to take steps to send the employer the notice required in paragraph (d) on the date on which the absent parent fails to make payments in an amount equal to the support payable for one month and to meet all other requirements of § 303.100.
Paragraph (c) requires that States establish procedures for use when an absent parent contests a withholding in response to the advance notice. At a minimum, the procedures must provide that the State, within 45 days of giving advance notice to the individual, will: (1) give the individual an opportunity to present his or her case; (2) decide if the withholding will occur based on an evaluation of the facts; (3) notify the individual whether or not the withholding is to occur and if so, include in the notice the timeframe within which withholding will begin and the information provided to the employer in the notice required in paragraph (d); and (4) if the withholding is to occur, send the notice to the employer required under paragraph (d).
When the absent parent does not contest the withholding within the timeframe specified by the State or has exhausted all procedures established by the State in accordance with paragraph (c), the State must give notice of the withholding to the employer, in accordance with section 466(b)(6)(A) of the Act and § 303.100(d). Clear Congressional intent in the Conference report indicates that Federal employees are subject to the withholding provisions of the new statute. Therefore, in cases involving Federal employees and members of the uniformed services, the notice to the employer must be directed to the appropriate designated official identified in: Appendix A of 5 CFR Part 581 for Federal employees; 32 CFR 54.6(g) of proposed regulations issued October 18, 1982 (47 FR 46297) for members of the military; 42 CFR 21.74 for members of the Public Health Service; and 33 CFR 54.07 for members of the Coast Guard,
Section 466(b)(6) of the Act sets forth specific requirements with respect to notice to the employer as well as responsibilities of the employer and the State in withholding wages. To meet these requirements, the notice to the employer must contain the elements listed in § 303.100(d)(1). Under paragraph (d)(1)(i) the notice must require the employer to withhold the amount specified in the notice (and include a statement that the amount actually withheld for support and for other purposes, including the fee specified under paragraph (d)(1)(iii), may not be in excess of the amount allowed under section 303(b) of the Consumer Credit Protection Act). Under paragraph (d)(1)(ii), the notice must instruct the employer to pay the amount to the State (or other individual or entity that the State designates) within 10 days of the date the employee is paid. Under paragraph (d)(1)(iii), the State may allow the employer to deduct a fee established by the State and specified in the notice for the administrative costs of each withholding. Under this provision, the State must specify that the fee be withheld from the absent parent's wages in addition to the amount to be withheld to satisfy support.
Under paragraph (d)(1)(iv), the notice must state that the withholding is binding on the employer until further notice by the State. In addition, paragraph (d)(1)(v) requires the notice to specify that the employer is subject to a fine for discharging, refusing to employ or taking disciplinary action against an individual because of a withholding. Paragraph (d)(1)(iv) require the notice to specify that, if the employer fails to withhold wages, the employer is liable for the accumulated amount the employer should have withheld. In paragraph (d)(1)(vii), the withholding must have priority over any other legal process under State law against the same wages as required by section 466(b)(7) of the Act. This means that an employer must withhold amounts for support before complying with any other legal process imposed in accordance with State law. In paragraph (d)(1)(viii), employers may combine withheld amounts in a single payment for each appropriate agency requesting withholding and separately identify the portion of the payment which is attributable to each individual employee, in accordance with section 466(b)(6)(B) of the Act.
In 303.100 (d)(1)(ix) and (x) and (d)(2), using the authority granted to the Secretary under section 1102 of the Act we require some general requirements to facilitate withholding. Section 1102 authorizes the Secretary of HHS to publish regulations not inconsistent with the Act which may be necessary to efficiently administer the Secretary's functions under the Act.
Paragraph (d)(1)(ix] requires the employer to implement the withholding no later than the first pay period that occurs after 14 days from the mailing date on the notice. In paragraph (d)(1)(x), we require that employers must notify the State promptly of the termination of the individuals employment and provide the individual's last known address and the name and address of the individual's new employer, if known. We believe these requirements will ensure the proper implementation of withholding. Under paragraph (d)(2), if the absent parent does not contest the withholding within the time period specified in the advance notice, the State must immediately send the notice to the employer. Paragraph (d)(3) requires that, if the absent parent changes employment within the State while the withholding is in effect, the State must notify the new employer, in accordance with the requirements of paragraph (d)(1), that the withholding is binding on the new employer.
Section 303.100(e) outlines the procedures for the administration of withholding as provided by section 466(b)(5) of the Act. Under § 303.100(e)(1), a State must designate a public agency to administer withholding in accordance with procedures specified by the State for keeping adequate records to document, track and monitor support payments. The State may designate public or private entities to administer the withholding on a State or local basis under the supervision of the designated State withholding agency if the entity, or entities are publicly accountable and follow the procedures specified by the State. The State may designate only one entity to administer withholding in each jurisdiction. Paragraph (e)(2) requires the State under (e)(1) to distribute amounts withheld promptly in accordance with section 457 of the Act and related regulations. A State may contract with private firms for the collection and distribution of withheld amounts. If a State contracts with a private firm, the State must reduce its IV-D expenditures by any interest earned by the firm on withheld amounts in the same manner as it would for interest earned on any other IV-D transactions. This is in accordance with section 455 of the Act. Under this requirement, a State may allow the firm to keep interest earned as payment for services provided, but the interest amount must be deducted from the State's IV-D expenditures.
The new section 466(b)(8) gives a State the option to expand its withholding system to include withholding from forms of income other than wages in order to ensure that support owed by absent parents will be collected regardless of the nature of their income-producing activities. Section 303.100(f) implements this optional provision.
Under § 303.100(g)(1), we implemented the requirement in section 466(b)(9) that States extend their withholding systems to include withholding in cases where the support orders were issued in other States. As specified in the statute, this provision is necessary to ensure that support owed to children and their custodial parents will be collected without regard to the residence of the absent parent.
Although the requirements contained in § 303.100(g)(2) through (g)(7) are not specifically required by the statute, we believe they are necessary for the proper implementation of the statute and to clarify the responsibilities of each State involved in an interstate withholding. We are, therefore, using the authority granted to us under section 1102 of the Act to impose these requirements.
In paragraph (g)(2). we require that the State law require employers within the State's jurisdiction to comply with a withholding notice. Under paragraph (g)(3), we require that once withholding in a particular case is required, the IV-D agency of a State in which the custodial parent applied for IV-D services must promptly notify the IV-D agency of any other State in which the absent parent is employed in order to implement interstate withholding. We require this notification to contain all the information necessary to carry out the withholding, including the amount requested to be withheld, a copy of the support order and a statement of arrearages. If necessary, the State where the support order is entered must promptly provide the information necessary to carry out the withholding when requested by the State where the custodial parent applied for services. Paragraph (g)(4) requires the State in which the individual is employed to implement withholding promptly upon receipt of the notice to withhold from the State where the custodial parent applied for services.
Since the State where the absent parent is employed must carry out the withholding with the employer, in paragraph (g)(5) we require that State provide the advance notice to the absent parent, the opportunity to contest the withholding and the notice to the employer. In addition, under paragraph (g)(5), when an absent parent terminates employment within the State, that State must notify the State in which the custodial parent applied for services that the absent parent is no longer employed in the State and provide the name-and address of the absent parent and new employer, if known. This will allow the State where the custodial parent applied for services to notify the new State where the absent parent is currently employed to implement withholding. Under paragraph (g)(6), all procedural due process requirements of the State where the absent parent is employed would apply. Finally, paragraph (g)(7) provides that, except for specifying when the withholding shall apply which is controlled by the State where the support order was entered, the law and procedures of the State where the absent parent is employed shall apply.
Paragraph (h) requires support orders issued or modified in the State beginning October 1, 1985, to include a provision for wage withholding, as discussed earlier in this preamble.
We implemented the requirements of section 466(a)(2) by adding 45 CFR 303.101, Expedited processes. Paragraph (a) of § 303.101 defines the term "expedited processes" as administrative or expedited judicial processes or both which increase effectiveness and meet processing times specified in paragraph (b)(2) and under which the presiding officer is not a judge of the court.
To implement the specific requirements of section 466(a)(2) of the Act, paragraph (b)(1) requires States to have in effect and use expedited processes to establish and enforce support orders in intrastate and interstate cases. Under paragraph (b)(2), actions to establish or enforce support obligations in IV-D cases must be completed from time of filing to time of disposition within the following time frames: (1) 90 percent in 3 months; (2) 98 percent in 6 months; and (3) 100 percent in 12 months. Under paragraph (b)(3) the State may use expedited processes for paternity establishment. A State may not simply enact a law authorizing the use of expedited processes but must in fact use them in lieu of full judicial process to ensure more effective and efficient processing of support establishment and enforcement actions. Under paragraph (b)(4), in cases which involve complicated issues requiring judicial resolution, the State must establish a temporary support order under its expedited processes and may then refer the remaining complex issues to the full judicial system for resolution.
Section 303.101(c) sets forth the safeguards that a State's expedited processes must provide. Paragraph (c)(1) requires that orders established under the State's expedited processes have the same force and effect under State law as orders established by full judicial process. Under paragraph (c)(2), the State's processes must ensure that the rights of the individuals involved are protected. Paragraph (c)(3) requires that the State's processes provide the parties with a copy of the support order.
To ensure that presiding officers in the State's expedited processes are qualified, paragraph (c)(4) requires States to have written procedures to ensure their qualifications. Paragraph (c)(5) permits the recommendations of presiding officers under the State's expedited processes to be ratified by a judge. Lastly, paragraph (c)(6) allows any action taken under the State's expedited processes to be reviewed under the State's generally applicable judicial procedures.
Section 303.101(d) sets forth the minimum functions that a presiding officer under a State's expedited processes must perform. In effect, presiding officers must, at a minimum, be delegated the authority to: (1) Take testimony and establish a record; (2) evaluate evidence and make recommendations or decisions to establish and enforce orders; (3) accept voluntary acknowledge of support liability and stipulated agreements setting the amount of support to be paid and, if the State establishes paternity using expedited processes, accept voluntary acknowledge of paternity, and (4) enter default orders if the absent parent does not respond to notice or other State process within a reasonable period of time specified by the State.
The experience of States which use some form of expedited process has shown that presiding officers must have authority to perform the above functions. States may expand the authority of presiding officers to include enforcement of support obligations and issuance of default judgments or may delegate more authority to them based on their particular needs. For example, where a high percentage of absent parents fail to appear for hearings a State might delegate the authority to issue bench warrants to presiding officers. A State must delegate enough authority to presiding officers to allow them to perform in a truly expedited manner.
Under § 303.101(e), in accordance with the statute, a State may be granted an exemption from the requirements of §303.101 for a political subdivision on the basis of the political subdivision's effectiveness and timeliness of support order issuance and enforcement in the same manner that States may be granted exemptions from required procedures in accordance with § 302.70(d).
We implemented section 466(a)(3) by adding 45 CFR 303.102 which sets out the criteria for implementing State income tax refund offset procedures. The offset process is mandatory for all appropriate IV-D cases, including AFDC, non-AFDC and foster care maintenance cases regardless of whether they are intrastate cases or interstate cases referred from other States.
Section 303.102(a) specifies which overdue support qualifies for offset. Paragraph (a)(1) clarifies that overdue support in all IV-D cases qualifies for State income tax offset. Paragraph (a)(2) specifies that overdue support qualifies for offset if the State does not determine that the case is inappropriate for use of this procedure using guidelines it must develop which are generally available to the public. We have given States maximum flexibility to set which overdue support qualifies for offset to permit each State to establish the most effective and efficient procedures for offsetting State income tax refunds. We recognize that one set of criteria in Federal regulations will not be suitable for all States.
Paragraph (b)(1) requires the IV-D agency to establish procedures to ensure that amounts referred for offset have been verified and are accurate. The regulations do not specify the procedures States must use to ensure accuracy, since procedures may vary from State to State. Paragraph (b)(2) requires the IV-D agency to notify the appropriate State office or agency of any significant reductions in amounts referred for offset.
Under § 303.102(c), a State must inform non-AFDC individuals in advance if the State will first use any offset amount to satisfy any unreimbursed AFDC or foster care maintenance payments. This is in accordance with current policy which allows States to use overdue support collected in non-AFDC cases either to satisfy unreimbursed assistance or to pay non-AFDC individuals.
In accordance with section 466(a)(3)(A) of the Act, § 303.102(d) requires States to send advance notice to the absent parent of the referral for offset and provide an opportunity to contest it. Section 303.102(e)(1) requires States to establish procedures for contesting the referral for offset. Paragraph (e)(2) requires States to have a mechanism for promptly reimbursing the absent parent if the offset amount is found to be in error or to exceed the amount of overdue support. Paragraph (e)(3) requires States to establish procedures, with respect to joint refunds, for ensuring that the absent parent's spouse has an opportunity to request a share of the refund, if appropriate, in accordance with State law.
Section 363.102(f) allows a State to charge a reasonable fee in non-AFDC cases to cover the cost of collecting overdue support using State income tax refund offset, in accordance with section 466(a)(3)(B) of the Act.
Section 303.102(g) sets forth the requirements specified in section 460(a)(3)(B) of the Act for distribution of amounts offset. Paragraph (g)(1) requires States to distribute amounts collected from State tax refund offsets within a reasonable time period in accordance with the State law. In AFDC or foster care maintenance cases, distribution procedures at § 302.51(b)(4) and (5) or 302.52(b)(3), and (4) respectively, are applicable because the State must treat amounts collected under the State tax refund offset as past-due support. Under § 302.51.(b)(4), amounts collected in an AFDC case are retained by the State as reimbursement for past assistance payments. Section 302.51(b)(5) provides that any excess amounts remaining after the State is reimbursed in an AFDC case shall be paid to the family. Under
§ 302.52(b)(3), which governs distribution in foster care maintenance cases, the distribution is the same as for AFDC cases. Under § 302.52(b)(4), excess amounts remaining after the State is reimbursed for AFDC and foster care maintenance payments are retained by the State to be used in the child's best interest. In non-AFDC cases, the State may pay offset amounts to the family first or use them first to reimburse the State, depending on the State's method for distributing arrearage collections in non-AFDC cases. Under § 303.102(g)(2), if the amount collected is in excess of amounts required to be distributed, the excess amount must be refunded to the absent parent within a reasonable period. Paragraph (g)(3) of this section requires the State to credit amounts offset on individual payment records.
Section 303.102(h) requires the State agency responsible for processing State income tax refunds to notify the State IV-D agency of the absent parent's home address and social security number or numbers. The State IV-D agency must provide this information to any other State involved in enforcing the support order. This provision is required by the statute in section 466(a)(3)(C).
We implemented section 466(a)(4) by adding 45 CFR 303.103, Procedures for the imposition of liens against real and personal property. Under paragraph (a) of this section, States must have in effect and use procedures for the imposition of liens against the real and personal property of an absent parent who owes overdue support and who resides or owns property in the State. Under paragraph (b), this procedure is applicable for cases not deemed inappropriate under guidelines that must be developed by the State and made generally available to the public.
Posting Security, Bonds or Guarantees
We implemented the requirements of section 466(a)(6) by adding 45 CFR 303.104, Procedures for posting security, bond or guarantee to secure payment of overdue support. In § 303.104(a), States must have in effect and use procedures under which absent parents must post security, bond, or give some other guarantee to secure payment of overdue support. This procedure is applicable for cases not considered inappropriate under the State's generally available guidelines. Examples of appropriate cases might be those in which the absent parent is self-employed or realizes income from commissions or other irregular payments, unless the income realized is so small that it would be counterproductive to require security because the cost of meeting the security would preclude payment of the support obligation. States should screen cases for use of this procedure very carefully in order to use it to its fullest advantage.
Paragraph (b) requires a State to give the absent parent advance notice, in full compliance with the State's procedural due process requirements, of the requirement to post security, bond or give some other guarantee and of the methods to use to contest the action. Under paragraph (c), this procedure is applicable for cases not deemed inappropriate under guidelines that must be developed by the State and made generally available to the public.
Making Information Available to Consumer Reporting Agencies
We implemented requirements of section 466(a)(7) by adding 45 CFR 303.105, Procedures for making information available to consumer reporting agencies. Under § 303.105(a), we define "consumer reporting agency" to mean any person which, for monetary fees, dues, or on a cooperative nonprofit basis, regularly engages in whole or in part in the practice of assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing consumer reports to third parties and which uses any means or facility of interstate commerce for the purpose of preparing or furnishing consumer reports. This definition is mandated by the statute and found in the Fair Credit Reporting Act (15 U.S.C. 1681a(f)).
Under paragraph (b), in accordance with section 466(a)(7) of the Act, States must use this procedure when an absent parent is more than $1,000 in arrears and information regarding the amount of overdue support owed by these absent parents is requested by such agencies. The cases in which information is sent to the consumer reporting agency may be further limited by the State under generally available guidelines used to determine cases inappropriate for this procedure.
States have the option of using such procedures in cases where the absent parent is less than $1,000 in arrears. Under paragraph (c), States may charge the agency a fee for providing this information. Any fee charged would be limited to the actual cost of providing the information. Under this requirement, a State may establish a uniform fee to be applied in all cases or develop a fee schedule based on the volume of requests. Paragraph (d) requires the State to provide the absent parent an advance notice and an opportunity to contest the accuracy of the information. Paragraph (e) requires the State to comply with all applicable procedural due process requirements of the State before releasing the information. The requirements imposed in paragraph (d) and (e) are required by the statute.
The requirements of this section do not preclude a State from obtaining information from consumer reporting agencies.
Section 302.51(a) provides that the date of collection is the date on which payment is received by the IV-D agency or the legal entity of the State or political subdivision actually making the collection.
In interstate cases, the date of collection is the date the collection is received by the IV-D agency of the State in which the family is receiving aid. In any case in which collections are received by an entity other than the agency responsible for final distribution under § 302.51, the entity must transmit the collection within 10 days of receipt.
Incentive Parents
Under current section 458 of the Act, States and political subdivisions that enforce and collect support are eligible to receive as an incentive 12 percent of collections made on behalf of AFDC families. States deduct the incentive payment from the Federal share of collections before reimbursing the Federal government for its contribution toward the AFDC assistance payment. The incentive payment is thus set at a fixed rate of the support collection.
The fixed incentive payment rewards States for collections made in AFDC cases, but it does not encourage States to improve program efficiency and effectiveness. The great variance in the efficiency and effectiveness of Child Support Enforcement programs operated by States has become a matter of increasing concern. This disparity has led to a search for ways in which Federal funding might be used to encourage improvement in the performance of State Child Support Enforcement programs.
To encourage and reward States that operate Child Support Enforcement programs in an efficient and effective manner and to stimulate collections, Congress added a net section 454(22) and revised section 458 of the Act. Effective October 1, 1985, section 458 will replace the current incentives system with a new system under which States will receive a minimum incentive payment based on amounts collected on behalf of AFDC families and on behalf of non-AFDC families. States could also receive additional amounts above the minimum payment if their performance meets the criteria established by Congress and promulgated in this document. In addition, section 454(22) requires the State to pass through an appropriate share of its incentive payment to those political subdivisions within the State that financially participate in the program. Since the emphasis of the new system is on program performance, we believe that States will be encouraged to select and develop more effective and efficient methods of operating their programs.
Section 5(c)(2)(A) of the new statute provides that through FY 1985, States will receive incentives on AFDC collections retained to repay assistance payments, and the first $50 collected which is returned to the family in accordance with section 457(b) of the Act as amended by section 2640(b) of the Deficit Reduction Act of 1984. Prior to this provision, incentives were paid only on collections retained to reduce or repay assistance payments.
Revised section 458(b)(4) provides for a transition between the current funding system (12 percent incentives and 70 percent Federal matching rate) and the new system which becomes effective October 1, 1985. Under the transition provision, in FY 1986 and FY 1987, States will be paid an amount equal to the greater of the amount they qualify for under the new incentive and Federal matching rate system or 80 percent of the amount that they would have received under the 12 percent incentive payment (as amended by the new statute to allow incentives to be paid on collections retained to repay assistance payments, and the $50 which is passed through to the family under the Deficit Reduction Act of 1984 (Pub. L. 93-369)) and 70 percent matching rate system, had they remained in effect as they were in effect for FY 1985.
We implemented section 454(22) and the revised section 458 of the Act by adding § 302.55 and revising § 303.52, Incentive payments to States and political subdivisions. In accordance with the new State plan requirement in section 454(22), regulations at § 302.55 require the State plan to provide that, in order for the State to be eligible to receive incentive payments under § 303.52, if one or more political subdivisions participate in the cost of carrying out the IV-D program, those subdivisions shall be entitled to receive an appropriate share of any incentive payment made to the State for the period, as determined by the State in accordance with § 303.52(d), taking into account the efficiency and effectiveness of the political subdivision in carrying out its activities under the IV-D State plan. For example, the State may determine the appropriate share of each locality that participates in the costs of the program using a formula such as the one specified in statute and contained in this document at § 303.52(b). We strongly recommend that if States use that formula, they supplement each locality's share, if necessary, so that localities receive the total incentive payment which would be computed for their performance with respect to the criteria in § 303.52(d).
We implemented the revised section 458 of the Act by revising the current § 303.52. Paragraph (a) of § 303.52 contains four definitions. The definition of "political subdivision" is unchanged from the former § 303.52. To clarify the use of the terms "AFDC collections," "non-AFDC collections" and "total IV-D administrative costs," we added definitions of these terms to § 303.52(a). The definitions of AFDC and non-AFDC collections reflect the provision in section 458(b) which allows States to count collections made in foster care maintenance cases as AFDC collections for purposes of calculating incentive payments.
Paragraph (b) provides that OCSE will pay an incentive payment to a State for each fiscal year in recognition of AFDC collections and of non-AFDC collections. Under paragraph (b)(1), a portion of the State's incentive payment is computed as a percentage of its AFDC collections, and a portion of its incentive payment is computed as a percentage of its non-AFDC collections. The percentage, determined separately for AFDC and non-AFDC incentives, is based on the ratio of the State's AFDC and non-AFDC collections to the State's total IV-D administrative costs, in accordance with section 458(c) of the Act. The percent of collections payable as an incentive to a State in a given fiscal year is specified in the schedule contained in paragraph (b)(1). To implement section 458(b) of the Act, each State will receive an incentive payment of at least six percent of its AFDC and non-AFDC collections. The schedule also sets forth increased incentive payments equal to 5.5 percent of each type of collection if the ratio of AFDC or non-AFDC collections to total IV-D administrative costs equals at least 1.4. An additional incentive of one-half of one percent of AFDC and non-AFDC collections, up to a limit of 10 percent, will be paid for each full two-tenths by which the ratio exceeds 1.4. These two provisions governing increased incentive payments implement section 458(c) of the Act.
Under § 303.52(b)(2), the ratios of the State's AFDC and non-AFDC collections to total IV-D administrative costs will be truncated at one decimal place, since rounding is not permitted under the statute. For example a State will receive an incentive of seven percent of its AFDC collections if the ratio of AFDC collections to total IV-D administrative costs is 1.79, because in order to receive an incentive of 7.5 percent, the ratio must be at least 1.8.
As provided under section 458(b), paragraph (b)(3) provides that the portion of the incentive payment paid to a State for non-AFDC collections may not exceed the portion paid the State for AFDC collections in FY 1986 and 1987. However, in FY 1988, the non-AFDC portion of the incentive may equal 105 percent of the AFDC portion of the incentive: in FY 1989, the non-AFDC portion may equal 110 percent of the AFDC portion of the incentive: and in FY 1990 and thereafter it may equal 115 percent of the AFDC portion of the State's incentive payment.
Under paragraph (b)(4), we list conditions that apply in the calculation of incentive payments. In paragraph (b)(4)(i), we specify that collection distributed and expenditures claimed by a State in a specified fiscal year will be those used to calculate the ratio under paragraph (b)(1).
In paragraph (b)(4)(ii), both the responding State and the initiating State receive credit for collections made in interstate cases. This provision, which implements section 458(d), is designed to encourage States to work interstate cases. It also represents a significant change from current law under which only the responding State receives the incentive payment.
In paragraph (b)(4)(iii), we exclude fees paid by individuals, recovered costs and program income such as interest earned on collections from IV-D expenditures when computing incentives. Excluding these amounts from IV-D expenditures is provided for in section 455(a) of the Act. Section 455(a) requires the Secretary, in determining the total amount expended by a State during a quarter, to exclude the total amount of any fees collected or other income resulting from services provided for both AFDC and non-AFDC cases under the title IV-D State plan. As provided for in section 458(c), paragraph (b)(4)(iv) allows States to exclude laboratory costs incurred in determining paternity from their total IV-D administrative costs when computing incentives. Congress provided this option in an effort to encourage States to pursue paternity cases which may not be cost-effective initially but which may pay off over a longer period of time and which also benefit the child. Lastly, under paragraph (b)(4)(v), States must add amounts expended by the State in carrying out specific interstate projects which are provided for under section 455(e) of the Act to their IV-D administrative expenditures when computing incentives. This is in accordance with section 455(e)(4) of the Act.
Under § 303.52(c)(1), we will estimate the amount of the incentive payment to be received by a State for the upcoming year, in accordance with section 458(e) which requires the Secretary to estimate the incentive payment due a State based on the best information available. In order to obtain this information, however, the reports currently submitted by the State must be revised. A revision is currently in process and will be submitted separately to the Office of Management and Budget (OMB) for review in accordance with the Paperwork Reduction Act of 1980 (P.L. 96-511).
In paragraph (c)(2), we require States to include one-quarter of the estimated annual incentive payment amount in their quarterly collection report which will result in a reduction to the Federal share of AFDC collections reported for that quarter. We require this because section 458(e) of the Act provides that estimated incentives be paid quarterly and because this practice is being used currently by States to obtain the 12 percent fixed incentive. Adjustments for any overpayments or underpayments which might have been made in prior quarters will be made in the following fiscal year. Thus, States will know in advance an estimate of the incentive payment they can expect to receive for a year which will allow them to budget for their title IV-D programs with some degree of certainty.
Paragraph (c)(3) provides that OCSE would calculate the State's actual incentive payment for the fiscal year after the end of the current fiscal year based on State performance data. If adjustments to the estimate made at the beginning of the fiscal year are necessary, the State's IV-A grant award will be reduced or increased to ensure that the State receives the appropriate incentive payment.
Paragraphs (c)(4) and (5) contain the special conditions relating to the payment of incentives during FY 1985, FY 1986, and FY 1987 which are specified in section 458(b)(4) of the Act and section 5(c)(2)(A) of the Child Support Enforcement Amendments of 1934, and described earlier in this preamble.
In accordance with section 454(22) of the Act, paragraph 303.52(d) requires States to calculate and promptly pay incentive payments to political subdivisions that participate in the costs of the IV-D program. Under paragraph (3)(1), we require the State to develop & standard methodology for passing through an appropriate share of its incentive payment to political subdivisions that participate in the costs of the IV-D program, taking into account the efficiency and effectiveness of the activities carried out under the State plan by the political subdivisions. Since many localities perform a substantial amount of work in the enforcement and collection of support, Congress specified in section 454(22) that they must receive an appropriate share of the State's incentive payment, if they participate in program costs. Therefore, under paragraph (d)(1) States must develop a standard methodology that best fits their needs.
Paragraph (d)(2) requires the State to seek local participation in the development of its standard methodology. We require this because we believe that local participation will ensure that the methodology is both fair and equitable. To comply, States may use whatever rulemaking process that includes an opportunity for review and comment that is available under State law or submit a draft methodology to participating localities for review and comment.
Under § 303.52(e), we require an initiating State to identify the case as an AFDC, non-AFDC or IV-E case at the time that the State asks the responding State to make a collection. We also require the initiating State to inform the responding State of any changes in the status of the case.
Lastly, in § 303.52(f) we require that States continue touse the time frame for the transmission of interstate collections and the codes required under the current § 303.52. Therefore, responding jurisdictions are required to forward collections to the initiating State within 10 days and include the code identifying the collecting State or political subdivision as defined by the Federal Information Processing Standards Publication or in the Worldwide Geographical Location Codes.
Reduction in the Federal Matching Rate
Federal funding is available to States for administrative costs incurred pursuant to a State plan for child support enforcement approved under title IV-D of the Act. This funding is authorized by section 455(a)(1) of the Act. Revised section 455(a)(1) reduces the Federal funding rate from 70 to 66 percent over a three-year period beginning in FY 1958.
Federal funding at the 70 percent rate is available for FY 1983 through FY 1937. The rate of 68 percent applies to FY 1988 and FY 1989. Each fiscal year thereafter the matching rate will be 66 percent. To implement this change, we defined the term "applicable matching rate" in 45 CFR Part 301 and substituted that phrase for the phrase "70 percent rate" wherever it appears in 45 CFR Parts 304 and 307. Also, we made a conforming change to § 305.22, State financial participation, to specify that the State share in funding the administrative costs of the program will increase from 30 to 34 percent over same period.
Collection of Past-Due Support From Federal Income Tax Refunds
Revised section 464 of the Act provides for the use of Federal income tax refund offsets to collect past-due support owed in non-AFDC and foster care cases, as well as AFDC cases. Previously, this means of collection was available for AFDC cases only. The statutory amendments apply with respect to refunds payable under section 6402 of the Internal Revenue Code of 1954 after December 31, 1985 and before January 1,1991.
The regulations implement revised sections 454 and 464 of the Act by amending § 303.72 which governs the use of Federal income tax refund offset. The regulations do not amend § 302.60, the State plan requirement section, because § 302.60 is written broadly enough to cover submittal of AFDC, foster care maintenance and non-AFDC cases for refund offset.
Former § 303.72(a) defined "past-due support." We moved the definition to § 301.1 because it applies to all sections in the regulations governing Federal tax refund offset. We also added a sentence to the definition which, in non-AFDC cases, limits past-due support which may be referred for Federal income tax refund offset to support due a minor child. Spousal support due in non-AFDC cases may not be referred for Federal tax refund offset. Section 303.72(b) contains the criteria for determining which past-due support qualifies for Federal tax refund offset. Current § 303.72(b)(f) states, in part, that past-due support qualifies for offset if the support has been assigned to the State making the referral. To implement revised section 464(a)of the Act, § 303.72(a)(1) permits States to refer amounts for offset if there has been an assignment under § 232.11 or section 471(a)(17) of the Act of an application for IV-D services under § 302.33 filed with the State IV-D agency.
The regulations at § 303.72(a)(2)(i) require the amount referred for offset in AFDC and foster care maintenance cases to be at least $150 as specified in current regulations for AFDC cases. The regulations at § 303.72(a)(2)(ii), (5) and (6) require any past-due support referred for offset in AFDC and foster care maintenance cases to have been delinquent for three months or longer require the State to verify the accuracy of the name, social security number and arrearage amount in all cases and provide that the IRS must have received notification of liability for past-due support in all cases.
Section 303.72(a)(3) requires, in non-AFDC cases: that the support is due to or on behalf of a minor, that the amount of past-due support is at least $500; at State option that the amount has accrued since the State IV-D agency began to enforce the support order; and that the State has checked its records to determine if an AFDC or foster care maintenance assigned arrearage exists with respect to the non-AFDC individual or family. Section 464(c) limits the amount referred for offset in non-AFDC cases to support due to or on behalf of a minor. Spousal support owed in non-AFDC cases may not be referred for Federal income tax refund offset. Section 464(b)(2) of the Act imposes the $500 minimum amount to be referred for offset in non-AFDC cases and allows States to limit amounts referred to those accrued since the State began to enforce the order.
We used the Secretary's authority under section 1102 of the Act to add a new § 303.72(a)(3)(iv) which require States to check their records for assigned AFDC or foster care maintenance arrearages in non-AFDC cases. It is possible that a non-AFDC individual who has applied for IV-D services and is seeking Federal tax refund offset to satisfy past-due support may provide locate or other information which the State previously lacked and therefore was unable to collect assigned arrearages which accrued when the non-AFDC individual was receiving AFDC or foster care maintenance payments. Section 303.72(a)(4) requires that the IV-D agency must have in its records a copy of the order and any modifications specifying the date of issuance and the amount of support; a copy of the payment record or an affidavit signed by the custodial parent attesting to the amount owed; and, in non-AFDC cases the current address of the custodial parent.
Section 303.72(h) sets forth requirements for notification OCSE of liability for past-due support. Paragraph (b)(1) which requires IV-D agencies to submit to OCSE a notification on magnetic tape of liability for past-due support, by the date specified by OCSE in instructions. Paragraph (b)(2)(v) requires the notification of liability for past-due support to indicate for each delinquency whether the past due support is due a non-AFDC individual who applies for services under 302.33. Therefore, the State must certify for offset separately amounts to satisfy assigned AFDC and foster care arrearages and other arrearages due in non-AFDC cases. Paragraph (b)(3) addresses additional information a State may include in the notification of liability for past-due support. The remainder of paragraph (b) (formerly paragraph (c)) is unchanged by these regulations.
Former § 303.72(d), governing review of requests for offset was redesignated as § 303.72(c) and paragraph (d)(2), redesignated as paragraph (c)(2), is revised by deleting "December 1." Former §303.72(e), governing notification of changes in case status, is redesignated as § 303.72(d) and minor editorial changes have been made for consistency.
Former § 303.72(f) redesignated as § 303.72(e), requires OCSE or the State IV-D agency to send a pre-offset notice. Section 464(a)(3) of the Act specifies that the notice must include a statement informing the absent parent of the steps which may be taken to contest the State's determination that past-due support is owed or the amount of past-due support and the procedures to be followed in the case of a joint return to protect the share of the refund which is payable to another person. Section 303.72(e) implements the requirement for advance notice to the absent parent, including the procedures and deadlines for responding to the notice. These requirements provide the absent parent with an opportunity to be heard either in the submitting State or if the support order was issued in another State, in that State at the request of the absent parent if he or she does not agree that past-due support is owed or that the amount being referred for offset in accurate. In addition, § 303.72(e)(1) requires the State or OCSE to include a statement in the notice that, in the case of a joint return, the IRS will contact the absent parent's spouse at the time of offset regarding the steps to take to protect the share of the refund which may be payable to that spouse. Section 464(a) (1) and (2) of the Act specify that the IRS will notify the taxpayer that the withholding has been made. The IRS will also notify any individual who filed a joint return with the absent parent of the steps to take in order to secure his or her proper share of the refund Determination if the proper share of a refund depends on the community property laws of the jurisdiction where the absent parent and spouse reside. Section § 303.72(e)(2) sets forth IRS procedures with respect to notice at the time of offset.
The regulations at paragraph (f) address procedures for handling complaints received from absent parents in intrastate cases.
The IV-D agency must send a notice to the absent parent and, in non-AFDC cases the custodial parent, of the time and place of the administrative review of the complaint and conduct the review to determine the validity of the complaint. If a complaint concerns a joint tax refund that has not yet been offset, the IV-D agency must inform the absent parent that the IRS will notify the absent parent's spouse at the time of offset regarding the steps to take to secure a proper share of the refund. If the complaint concerns a joint tax refund which as already been offset, the IV-D agency must refer the absent parent to the IRS. If the review results in a deletion of, or a decrease in, the amount referred for offset, the IV-D agency must notify OCSE in writing of the deletion or modification. If as a result of the administrative review, an amount which has already been offset is found to exceed the amounts of past-due support owed, the IV-D agency must refund the excess amount to the absent parent promptly.
Section 303.72(g) of these regulations describes the procedures for contesting in interstate cases. If the absent parent requests an administrative review in the submitting State, the IV-D agency must meet the requirements of § 303.72(f). If the complaint cannot be resolved by the submitting State and the absent parent requests a review in the State with the order upon which the referral for offset is based, the submitting State must notify the State with the order of the request and provide all necessary information within 10 days of the absent parent's request for an administrative review. The State with the order sends a notice to the absent parent, and in non-AFDC cases the custodial parent, of the time and place of the administrative review, conducts the review, and makes a decision within 45 days of receipt of the notice and information from the submitting State.
The State with the order notifies OCSE in writing of the administrative review results in a deletion of or decrease in the offset amount and notifies the submitting State promptly upon resolution of a complaint. The submitting State is bound by the decision of the State with the order. If a refund is due the absent parent, the IV-D agency in the submitting State must take steps to refund any excess amount to the absent parent promptly. For purposes of incentive payments, collections will be treated as having been collected in full by both the submitting State and the State with the order.
OMB Circular A-87 (Cost Principles for State and Local Governments) Attachment B, Section D(1), precludes Federal funding for "any loss arising from uncollectible accounts and other claims, and related costs." In addition Section 1102 of the Act requires the Secretary to establish rules necessary for efficient administration of the program. Therefore, costs incurred hv States as a result of tax refund offset payments to individuals which are subsequently determined to be erroneous and which the State is unable to recoup from the individual may not be claimed as administrative costs under the IV-D program as these are not appropriate expenditures for which federal funding is available.
Paragraph (h) requires that collections made as a result of refund offset in AFDC and non-AFDC cases shall be distributed as past-due support under § 302.51(b) (4) and (5). Paragraph (h)(2) requires that collections made as a result of refund offset where there has been an assignment of this support obligation in a foster care maintenance case under section 471(a)(17) of the Act be distributed under § 302.25(b) (3) and 4). Under these provisions, a State must apply amounts offset to AFDC and foster care assigned arrearages submitted for offset first and only pay the non-AFDC family any amounts offset which have not been assigned. Although this distribution order is not specifically mandated in the Act, amended section 6402(c) of the Internal Revenue Code 1954 requires the IRS to apply amounts offset first to satisfy past-due support assigned to the State in AFDC and foster care maintenance cases. We believe Congress intended this distribution order to be followed by States. Therefore, under the authority granted to the Secretary in section 1102 of the Act, we require States to apply amounts offset first to past-due support assigned to the State and submitted for federal tax refund offset. Paragraph (h)(3) requires States to inform individuals who apply for non-AFDC offset services how the amounts offset will be distributed.
Section 464(a)(3)(D) of the Act requires a State, in any case in which an amount is offset and the State subsequently determines that the amount certified for offset was in excess of the amount owed at the time of offset, to pay the excess to the absent parent or, in the case of amounts withheld on the basis of a joint return, jointly to the parties filing the return. Section 303.72(h)(4) requires IV-D agencies to repay excess amounts offset to the absent parent or the parties filing a joint return within a reasonable period in accordance with State law.
Section 464(a)(3)(B) of the Act provides that, when the Secretary of the Treasury offsets a refund that is based on a joint return, the Secretary of the Treasury shall notify the State that the offset is being made from a refund based upon a joint return and shall furnish the State with the names and addresses of each taxpayer filing the joint return. In the case of an offset made to satisfy past-due support in a non-AFDC case, the State may delay distribution of the offset amount until the State is notified that the other person filing the joint return has received his or her proper share of the refund but the delay may not exceed six months. Section 464(a)(3)(C) of the Act provides that, when an offset is made, if the absent parent's spouse filing the joint return takes appropriate action to secure his or her proper share of the refund that was offset, the Secretary of the Treasury will pay the spouse his or her share of the refund and deduct that amount from amounts payable to the State agency.
To implement section 464(a)(3)(D), § 303.72(h)(5) permits States to delay distribution in non-AFDC cases until notified that the unobligated spouse's proper share of the refund has been paid or for a period not to exceed six months from the date the State is informed that an offset is being made from a refund based on a joint return, whichever is earlier. States may wish to send absent parents a second notice at the time of offset to inform them that, unless the absent parent contacts the State within a certain period of time to contest the offset, the State will distribute the amount offset to the family. T