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Direct Imposition of Liens and Levies Across State Lines

PIQ-99-06

Published: August 16, 1999
Information About:
Other Private Partners, Financial Institutions, State/Local Child Support Agencies
Topics:
Intergovernmental/Interstate
Types:
Policy, Policy Interpretation Questions (PIQ)
Tags:
Lien and Levy

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

PIQ-99-06

DATE: August 16, 1999

TO: State IV-D Directors and Regional Program Managers

FROM: David Gray Ross
Commissioner
Office of Child Support Enforcement

SUBJECT: Direct Imposition of Liens and Levies Across State Lines

We have recently received several inquiries regarding the imposition of liens and levies on financial institutions across State lines without involving the IV-D agency of the State in which the lien is being executed. Please be advised that Federal law does not prohibit this practice. We are providing the following information as general guidance.

The mechanisms by which assets are attached and seized vary from State to State. It is, therefore, impossible to discuss the issue in terminology that is directly applicable in every State. Generally, for purposes of this document, we use the term "lien" to refer to a claim against real or personal property, based upon a debt or obligation. We use the term "levy" to refer to the actual collection or seizure of the property. The process for placing a lien and executing upon a levy will vary by State. In some States, the process may be a single step, while in others, multiple steps may be required.

Question 1: What are the Federal requirements regarding liens and levies?

Answer 1: Section 466(a)(4) of the Social Security Act (the Act) requires that States enact laws under which liens arise by operation of law for child support arrearages. Under section 466(c)(1)(G), the State must have the ability, through administrative process, to secure assets by intercepting or seizing periodic or lump-sum payments, attaching and seizing assets of the obligor held in financial institutions, attaching public and private retirement funds, imposing liens and forcing the sale of property and distribution of proceeds. Section 466(a)(4) also requires that States provide full faith and credit to child support liens arising in another State, as long as the party seeking to enforce the lien complies with procedural rules regarding recording and service of liens in the State in which the real or personal property is located. Under section 466(c)(1), the State must also "recognize and enforce the authority of State agencies of other States to take these actions." Thus, the IV-D agency must have the power to enforce a lien that arises in another State against property held in the IV-D agency’s State.

Question 2: Can liens or levies be imposed directly against property in another State?

Answer 2: States could enact laws which would give immediate force and effect to another State’s liens or levies, much as States were required to do under UIFSA for direct income withholding.

Question 3: Would a State that sent a levy directly to a financial institution in another State be violating Title IV-D of the Social Security Act?

Answer 3: No. Federal law governing the IV-D program does not prohibit the State from attempting a direct levy. In such a case, the law of the State where the financial institution is located is applicable.

Question 4: Would a financial institution which responded and sent money to another State in response to a direct levy be violating Title IV-D of the Social Security Act?

Answer 4: No, a financial institution would not be violating any provision of Title IV-D of the Social Security Act by doing so, although the financial institution should ensure that it complies with applicable law of the State in which the seizure action is occurring.

Question 5: Would the financial institution be required to respond to the direct lien or levy?

Answer 5: It depends upon the law in the State where the financial institution is located and whether that State’s procedural rules relating to recording or serving liens or levies have been properly followed. If the State in which the financial institution is located has a law requiring the financial institution to honor a lien or levy sent directly from another State, the financial institution would, of course, be bound to comply.

Question 6: Must a State attempting to issue the lien or levy go through the IV-D agency in the State where the property is located?

Answer 6: Section 466(c)(1) requires that the State IV-D agency assist another State in enforcing a lien that arises in the other State against property held in the IV-D agency’s State. As discussed above, a State IV-D agency would not violate Title IV-D if it sent a levy directly to a financial institution across State lines. However, if problems arise, it may be better for practical purposes to go through the IV-D agency in the State where the property is located. A State may take its own initiative to record and enforce the lien in the other State directly if it is fully aware of the procedural rules of that State. In the interest of ensuring the most effective use of this enforcement technique, without creating avoidable confusion and burden on those who might receive such direct liens or levies, we urge States to proceed with caution when sending liens or levies across State lines.