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Revised Program Instructions for Immediate Wage Withholding

AT-94-02

Published: March 11, 1994

ACTION TRANSMITTAL

AT-94-02

Date: March 11, 1994

TO: STATE AGENCIES ADMINISTERING CHILD SUPPORT ENFORCEMENT PLANS UNDER TITLE IV-D OF THE SOCIAL SECURITY ACT AND OTHER INTERESTED INDIVIDUALS

SUBJECT: Revised Program Instructions for the Statutory Requirements for Immediate Wage Withholding in All Child Support Orders Initially Issued In the State Not Being Enforced Under Title IV-D of the Social Security Act

STATUTORY REFERENCE: 42 U.S.C. 666(a)(8)(B)

POLICY ISSUANCES: PIQ-93-08, PIQ-93-09 and DCL-94-01

EFFECTIVE DATE: January 1, 1994

BACKGROUND: This Program Instruction supersedes instructions contained in OCSE-AT-93-06 issued on April 5, 1993, and consolidates PIQs 93-08, 93-09 and Dear Colleague Letter 94-01.

Section 101 of the Family Support Act of 1988 (P.L. 100-485) requires that, effective January 1, 1994, States implement immediate withholding in all support orders initially issued in the State which are not being enforced under title IV-D of the Social Security Act (the Act). This program instruction provides guidance for States in enacting laws and developing procedures, in accordance with 42 U.S.C. 666(a)(8)(B),
under which all child support orders which are initially issued in the State on or after January 1, 1994, and are not being enforced under title IV-D of the Act are subject to immediate withholding.

Subsequent to the issuance of OCSE-AT-93-06, we received several inquiries regarding the requirement at 666(a)(8)(B)(iii) and 666(b)(5) of the Act that non-IV-D withholding be administered by a public agency or publicly accountable entity. In response to these inquiries we further emphasized and clarified options available to States in administering a non-IV-D withholding program. These clarifications are contained in OCSE PIQ-93-08 dated December 28, 1993, OCSE PIQ-93-09 dated December 30, 1993 and Dear Colleague Letter DC-94-01 dated January 4, 1994. The information contained in these policy issuances has been used to update Section VI. Questions & Answers Regarding Statutory Requirements in this updated program instruction.

SUPERSEDED MATERIAL: AT-93-06, except for attachment: State Plan Preprint page 2-12-8B.

INQUIRIES: ACF Regional Administrators

David Gray Ross
Deputy Director
Office of Child Support Enforcement


1. INTRODUCTION

This Action Transmittal sets forth the statutory requirements which States must meet in implementing section 466(a)(8)(B) of the Act. States may choose to extend these immediate wage withholding requirements to apply to orders in non-IV-D cases which are modified after January 1, 1994, in addition to orders initially issued after that date. The instructions also address issues raised with respect to implementing immediate withholding in non-IV-D cases.

2. STATE PLAN REQUIREMENTS

As a condition of Federal funding, a State must comply with the statutory requirements of Section 454 of the Act. Section 454(20) requires that the State IV-D plan provide that the State shall have in effect all of the laws required under the mandatory procedures established in section 466 of the Act. Since the requirements for non-IV-D withholding are part of the mandatory procedures set forth in section 466, States must demonstrate conformity with these requirements as a condition for having an approved State IV-D plan. Section 466(a)(8)(B) of the Act specifies that each State must have laws requiring the use of procedures under which all child support orders initially issued in the State on and after January 1, 1994 and which are not being enforced under Title IV-D will include provisions for:

  • Immediate withholding, with exceptions for good cause and alternative arrangements;
  • Withholding for overdue support in addition to current support;
  • Limitations on amounts withheld based on the Federal Consumer Credit Protection Act (CCPA);
  • Withholding without the need to apply for IV-D services or amendment to the order or further action by court/administrative authority;
  • Administration of withholding by a public agency or a publicly-accountable alternative;
  • Prompt distribution of amounts withheld;
  • Employer requirements;
  • Priority over other legal process against the same wages under State law;
  • Optional extension to other forms of income;
  • Extension to enforcement of orders of other States;
  • Provisions for terminating withholding.

These requirements will be described and discussed in the following section.

States failing to demonstrate conformity with the statutory requirements will be subject to State plan disapproval procedures outlined in OCSE-AT-86-21. Non-conformity could
result in the suspension of all IV-D funding as well as a portion of title IV-A funding to the State.

3. EXPLANATION OF NON-IV-D WITHHOLDING REQUIREMENTS

Section 466(a)(8)(B) of the Act requires immediate withholding for all non-IV-D child support orders initially issued in the State on or after January 1, 1994. In addition, by cross-reference, it extends the same statutory requirements applicable to title IV-D at paragraph (1) and, where applicable, paragraphs (2), (4), (5), (6), (7), (8), (9) and (10) of section
466(b). The specific requirements applicable in non-IV-D cases effective January 1, 1994, are:

A. When Immediate Withholding Is Required; Exceptions

The wages of a non-custodial parent must be subject to withholding, regardless of whether support payments by such parent are in arrears, on the effective date of the order. As
in the case of orders being enforced in IV-D cases, two exceptions to immediate withholding are permitted. Wages shall not be subject to withholding in any case where: (1) one of the parties demonstrates, and the court (or administrative process) finds, that there is good cause not to require immediate withholding; or (2) a written agreement is reached between both parties which provides for an alternative arrangement.

B. Limitations on Amounts Withheld
 

  1. So much of the non-custodial parent's wages must be withheld as is necessary to comply with the order and provide for any fee to the employer which may be required, up to the maximum amount permitted under section 303(b) of the Consumer Credit Protection Act (15 U.S.C. 1673(b)) [CCPA].
  2. If there are arrearages to be collected, amounts withheld to pay such arrearages, when added to the amounts withheld to pay current support and provide for the fee, may not exceed the limit permitted under such section 303(b), but the State need not withhold up to the maximum amount permitted under such section in order to satisfy arrearages.

C. No Further Action By Court

Withholding must occur without the need for further action (other than those actions required under these procedures) by the court or other entity which issued such order.

D. Administration of Withholding by Public Agency

Withholding must be administered by a public agency designated by the State, and the amounts withheld must be expeditiously distributed by the State or such agency under procedures (specified by the State) adequate to document payments of support and to track and monitor such payments.

The law also allows a State to establish or permit the establishment of alternative procedures for the collection and distribution of such amounts (under the supervision of a public
agency) otherwise than through a public agency so long as:

  1. The entity making the collection and distribution is publicly accountable for its actions taken in carrying out such procedures; and,
  2. The procedures assure prompt distribution, provide for the keeping of adequate records to document payments of support, and permit the tracking and monitoring of such payments.

E. Employer Responsibilities

  1. The employer of any parent who is subject to immediate withholding in a non-IV-D case, upon being given notice of such action, must be required by the State to withhold from the non-custodial parent's wages the amount specified by the notice (which may include a fee, established by the State, to be paid to the employer unless waived by the employer).
  2. The employer must pay such amount (after deducting any fee) to the appropriate agency (or other entity authorized to collect such amounts withheld under the alternative procedure established by the State) for distribution.
  3. The notice given to the employer shall contain only such information as may be necessary for the employer to comply with the withholding order.
  4. Methods must be established by the State to simplify the withholding process for employers to the greatest extent possible, including permitting any employer to combine all
    withheld amounts into a single payment to each appropriate agency or entity (with the portion which is attributable to each individual employee being separately designated).
  5. The employer must be held liable to the State for any amount which the employer fails to withhold from wages due an employee following receipt by the employer of notice, but the employer shall not be required to vary the normal pay and disbursement cycles in order to comply with this paragraph.
  6. Provision must be made for the imposition of a fine against any employer who discharges from employment, refuses to employ, or takes disciplinary action against a non-custodial parent subject to wage withholding because of the existence of the withholding or additional obligations which it imposes upon the employer.

F. Priority Over Other Legal Process

The State must provide that withholding of child support obligations be given priority over any other legal process under State law against the same wages.

G. Other Forms of Income

The State may take such actions as may be necessary to extend its system of withholding so that the system will include withholding from forms of income other than wages, in order to assure that child support owed by non-custodial parents in the State will be collected without regard to the types of such parents' income or the nature of their income-producing
activities.

H. Interstate Requirements

The State must extend its withholding system so that such system will include withholding from income derived within the State in cases where the applicable support orders were issued in other States, in order to assure that child support owed by non-custodial parents in the State or any other State will be collected without regard to the residence of the child for whom the support is payable or of the child's custodial parent.

I. Termination

Provision must be made for terminating withholding.

J. Due Process Requirements

Withholding from income of amounts payable as support must be carried out in full compliance with all procedural due process requirements of the State.

4. AVAILABILITY OF FEDERAL FINANCIAL PARTICIPATION (FFP)

Although States are required to enact laws and procedures for non-IV-D withholding as a condition of having an approved State IV-D plan, the activities mandated at section 466(a)(8)(B) of the Act are for cases not being enforced under a IV-D State plan. FFP is only available for services provided in cases receiving services under title IV-D of the Act.

However, in cases where a State has chosen to use its IV-D agency to implement non-IV-D withholding, FFP would only be available for the IV-D costs incurred in implementing a cost allocation system to identify expenditures in IV-D and non-IV-D cases.

5. EXEMPTIONS

The provisions at section 466(d) of the Act with respect to exemptions apply to the non-IV-D withholding requirements. States may request, and OCSE may approve, an exemption from one or more of the requirements for the enactment of any law or the use of any procedure or procedures for non-IV-D withholding if the State can demonstrate that the adoption of such laws or procedures would not improve the effectiveness and efficiency of the State child support program. Requests should be sent to the appropriate ACF Regional Office in accordance with regulations at 45 CFR 302.70(d) and program instructions set forth in OCSE-AT-88-19.

6. QUESTIONS & ANSWERS REGARDING STATUTORY REQUIREMENTS

1. Question: Must a public agency administer non-IV-D withholding? What are possible options a State may consider in meeting the administrative requirements?

Answer: The State must specify which public entity is responsible for immediate wage withholding in non-IV-D cases. As the Federal statute provides, a State may establish, or
permit the establishment of, alternative procedures to carry out non-IV-D withholding as long as the entity it designates is under the supervision of a public agency. The entity must
follow procedures which will assure prompt distribution of amounts withheld, provide for the keeping of adequate records to document payments of support, and permit the tracking and monitoring of such payments.

A State could designate the IV-D agency, or the entity which administers withholding in IV-D cases, to be responsible for the administration of non-IV-D withholding. If so, there must be a system for allocating costs between IV-D and non-IV-D operations, since FFP is not available for providing services to non-IV-D cases.

A State could also opt to designate clerks of court or other appropriate judicial entities to administer non-IV-D withholding, since immediate withholding is applied at the time the support order is initially entered.

Alternatively, the State could choose a private entity, such as a bank, to administer this activity in non-IV-D cases, or opt for a procedure where the employer sends the withheld amount directly to the custodial parent's bank account through electronic funds transfer (EFT) or by check. The bank records associated with the custodial parent's account would provide an adequate payment record. A bank, whether under contract to the State to handle all payments, or a number of banks with individual custodial parent bank accounts, would meet the test for an alternative system, since a bank is publicly accountable entity under both State and Federal law. This approach would assure prompt distribution, provide for keeping adequate records to document payment of support, and permit the tracking and monitoring of such payments.

2. Question: Must the State designate only one entity in each jurisdiction to administer withholding?

Answer: No. Although IV-D regulations at 45 CFR 303.100(g)(2)(ii) require that States may designate only one entity to administer withholding in each jurisdiction, such a restriction does not apply to withholding in non-IV-D cases.

3. Question: If there is no FFP for non-IV-D withholding activities, may the State pass costs on to the user through fees or other cost recovery systems?

Answer: Yes. States may finance their withholding responsibilities in non-IV-D cases by charging fees and recovering costs. States may recover the full cost of administering withholding in non-IV-D cases from the custodial parent or non-custodial parent. The $25 annual fee restriction in 45 CFR 302.57(b)(3) does not apply to recovery of costs for
performing non-IV-D withholding activities.

4. Question: Is non-IV-D withholding subject to specific regulatory requirements at 45 CFR 303.100, for timeframes for distribution of amounts withheld?

Answer: No. Federal regulatory requirements applicable to IV-D cases do not apply to immediate wage withholding in non-IV-D cases.

5. Question: Must States meet the criteria in Federal regulations for a finding of good cause or for an alternative arrangement in IV-D cases in extending immediate withholding to non-IV-D cases?

Answer: No. Federal regulations at 45 CFR 303.100(b)(2) and (3), which set certain minimum criteria for good cause findings and alternative arrangements in IV-D cases, do not apply to non-IV-D cases. Consequently, States may develop their own criteria for non-IV-D cases which differ from or are consistent with those required under IV-D regulations. States could, for example, design criteria for alternative arrangements which allow the parents, in cases in which they do not want payments to go through the public agency or publicly accountable entity, or do not want to pay any fee that may be imposed, to choose on a case-by-case basis to have withholding implemented through a system where the employer would send withheld amounts directly to the custodial parent (as opposed to the public agency or publicly accountable entity). States would still need to establish a system for non-IV-D withholding which meets the mandatory requirements at 42 USC 666(a)(8)(B), but the volume of cases under that procedure may be lessened by affording parents an alternative arrangement.

6. Question: Is the State responsible for sending the notice of withholding to the employer in non-IV-D cases effective January 1, 1994?

Answer: No. Federal statutory requirements for withholding in non-IV-D cases do not require States to send the withholding notice to the employer. States may choose to do so or may direct the obligor, obligee, or their attorneys, to send the withholding notice to the employer as soon as the initial child support order is issued.

Many States have already developed standardized wage withholding notices which incorporate the information which must be given to employers. States may adapt these documents for use in non-IV-D situations.

7. Question: Is the State required to take enforcement actions in non-IV-D cases when there have been good cause findings, or alternative arrangements and the non-custodial parent subsequently becomes delinquent in an amount which would trigger an initiated withholding under IV-D requirements? Or when the non-custodial parent leaves employment and becomes delinquent?

Answer: No. The statute does not require the State to take enforcement actions, initiate, or to re-initiate withholding in non-IV-D cases beyond subjecting the non-custodial parent to immediate withholding when a child support order is initially issued in the State. Enforcement of withholding orders may be done by States or left to obligees or their attorneys to take such action. Any individual who wants child support enforcement services may also apply for IV-D services.

8. Question: What are the State's responsibilities with respect to allocation of withheld amounts when there are multiple withholding notices involving both non-IV-D and IV-D cases for a single non-custodial parent?

Answer: If multiple withholdings from a single non-custodial parent's earnings involve both a IV-D and a non-IV-D case, Federal requirements must be applied to all withholdings with respect to that non-custodial parent. Federal regulations at 45 CFR 303.100(a)(5), governing IV-D cases, require States, in cases where there are more than one withholding against a single non-custodial parent, to allocate withholding, but in no case should the allocation result in one family getting nothing. For consistency, States may choose to adopt allocation methods mandated in Federal regulations for IV-D cases for all withholdings, whether IV-D or non-IV-D. Since receipt of current support is essential to many families, the State should attempt to ensure that current support is paid first to any family due current support.

9. Question: Do the specific criteria for termination of withholding in IV-D cases apply to non-IV-D withholding?

Answer: No. Federal regulations at 45 CFR 303.100(a)(7) which set certain minimum criteria for termination of withholding in IV-D cases do not apply to non-IV-D cases.

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