PIQ-9904 Direct Unemployment Compensation Intercepts

U.S. Department of Health and Human Services
Administration for Children & Families
Office of Child Support Enforcement

PIQ-99-04

DATE: March 22, 1999

TO: State IV-D Directors Regional Program Managers

FROM: David Gray Ross
Commissioner
Office of Child Support Enforcement

RE: Direct Unemployment Compensation Intercepts

Over the last couple of months we have had some confusion over the issue of direct income withholding from unemployment compensation (UC) benefits across State lines. We have had two requests for assistance and clarification on this issue from two different States, as follows:

Question 1: Are State Employment Security Agencies (SESAs) required to process UC intercepts from States other than their own?

Answer: Yes. If the State UI agency is encompassed by the definition of "employer" within section 501 of the Uniform Interstate Family Support Act (UIFSA) as enacted by the receiving state, an income withholding order may be sent directly to the UI agency since it is "the person or entity defined as the obligor’s employer under [the income withholding laws of the State]...". Withholding for UI benefits is also governed by sections 303(e) and 454(a)(19) of the Social Security Act (the Act). Under these sections there are requirements for reimbursement of SESA costs, as addressed in question 2.

Question 2: If they do process these intercepts, who pays for them and how?

Answer: Under section 303(e)(2)(C) of the Act, the State or local IV-D agency must reimburse the SESA for administrative costs attributable to child support obligation payments. The Department of Labor requires (in UIPL no. 1-82) that the SESA have a fee agreement in place before performing any intercepts. No intercept can be performed until there is a fee agreement with the State or local IV-D agency which is requesting the intercept.

No State has fee agreements with all other States’ SESAs for reimbursement, so there are two options for State IV-D agencies who wish to do direct UC intercepts:

The State IV-D agency may sign an agreement with each State or specific States’ SESA for reimbursement. This would satisfy the requirements of section 303(e)(2)(C) of the Act and UIPL no. 1-82.

IV-D agencies may send intercepts through the other State’s IV-D agency. This is how the issue has traditionally been addressed, and because of funding issues involved in working with SESAs, it may continue to be the most efficient method.