ACYF-IM-83-8 5/5/83

ACF Administration for Children and Families	U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES Administration for Children, Youth and Families
	1. Log No. ACYF-IM-83-8	2. Issuance Date: May 5, 1983
	3. Originating Office: Children's Bureau
	4. Key Words: Tax Treatment of Foster Care Payments: Special Foster Care

INFORMATION MEMORANDUM

TO: STATE ADMINISTRATORS OF STATE PUBLIC WELFARE AGENCIES, CHILD WELFARE SERVICES STATE GRANT PROGRAMS, TITLE IV-E FOSTER CARE MAINTENANCE PAYMENTS PROGRAMS; STATE FOSTER CARE PROGRAMS.

SUBJECT: Exclusion From Gross Income (for Federal Income tax Purposes) of Certain Foster Care Maintenance payments.

LEGAL AND RELATED REFERENCES: Section 102 of Public Law 97-473; Section 130, 131 and 132 of the Internal Revenue Code of 1954, as amended.

INFORMATION: New statutory provisions governing the Federal income tax treatment of certain foster care maintenance payments and "difficulty of care" enacted as section 102 of the Periodic Payments Settlement Act of 1982, P.L. 97-473. These new provisions resolve several long standing questions regarding the treatment of foster care payments as income to the care provider. Until passage of this new law, the issue of how to handle foster care payments under the Internal Revenue Code's definition and tax treatment of "income" was unclear. Federal statutory language now clearly establishes the definitions, exclusions and policy necessary to resolve this matter. A copy of the new law is attached for your reference and use. The section references in the statutory language are to sections of the Internal Revenue Code of 1954, as amended by P.L. 97-473.

INQUIRIES TO: Regional Program Directors, ACYF.

Signed: Clarence E. Hodges Commissioner

Attachment - Public Law 97-473