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Distribution of Collections After the Family Ceases to Receive AFDC

AT-86-04

Published: March 13, 1986
Information About:
State/Local Child Support Agencies, Other Public Partners, TANF (IV-A)
Topics:
Case Management, Collections/Distribution/State Disbursement Unit (SDU)
Types:
Policy, Action Transmittals (AT)

OCSE-AT-86-4

DATE: March 13, 1986

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

SUBJECT: Distribution of Collections After the Family Ceases to Receive AFDC

PURPOSE: The purpose of this Action Transmittal is to clarify the distribution of child support collections after the family ceases to receive AFDC.

CONTENT: Distribution of Collections During the Period of up to 5 Months after a Family Ceases to Receive

Prior to October l, 1984, section 457(c)(1) of the Social Security Act and the implementing regulations at 45 CFR 302.51(e) permitted States to continue to collect current support payments from the absent parent for up to 5 months after the family ceased to receive AFDC, and pay all such amounts to the family. Under this provision, if the absent parent, because of not paying current support in a timely fashion, made more than one month's current support payment in a month, the State was required to pay all such amounts to the family. This policy was set forth in OCSE PIQ-81-15 dated August 14, 1981. In addition, amounts collected during this optional service period which represented payment on prior months' support obligations were used to reimburse past assistance payments made to the family with any excess paid to the family in accordance with section 457(c)of the Act and 45 CFR 302.51(f). Finally, Federal regulations at 45 CFR 302.51(f)(4) required States that elected to continue to collect child support payments to give priority to, collecting current support.

Federal regulations at 45 CFR 302.51(e) were revised, effective October 1, 1984, pursuant to the Child Support Enforcement Amendments of 1984, to require States to continue to provide all appropriate IV-D services for up to five months after a family is terminated from AFDC. The revised regulation requires the IV-D agency to pay any amounts collected during this mandatory service period which represent monthly support payments to the family. Please note that this provision does not apply to collections made via the Federal income tax refund offset process set forth at 45 CFR 303.72 or collections made via the State income tax refund offset process set forth at 45 CFR 303.102 of arrearages which accrued prior to the mandatory service period. (See the discussion below regarding the distribution of these collections.)

Although the provisions in section 457(c)(1) of the Act and 45 CFR 302.51(e) regarding the treatment of monthly support payments during this period were unchanged as a result of the Child Support Enforcement Amendments of 1984, we are now interpreting these provisions in a broader sense in order to ease the transition of AFDC recipients to non-AFDC status. Therefore, under the revised regulation, any amounts collected for support must be applied first to the current monthly support obligation and any arrearages accruing during the mandatory service period. These amounts must be paid to the family. Amounts collected during this period in excess of these amounts are used to pay the State for unreimbursed AFDC payments made to the family with any further excess paid to the family in accordance with section 457(c) of the Act and 45 CFR 302.51(f). This policy is consistent with the preamble discussion of the distribution of child support collections under the revised 45 CFR 302.51(e) published in the Federal Register on May 9, 1985 (see 50 FR 19642, transmitted by OCSE-AT-85-06, dated May 9, 1985). We believe this policy will help former AFDC recipients remain off the welfare rolls during the mandatory service period.

The only exceptions to this policy involve arrearages collected via Federal and State income tax refund offset. Federal tax refund offset collections must be applied to arrearages (past-due support) owing to the State in accordance with 45 CFR 303.72(h) regardless of the status of the family at the time of distribution. With the following exception, the State may pay State tax refund 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 (see 45 CFR 303.102(g)(1)(iii). If State tax refund offset collections received during the mandatory service period include arrearages which accrued during that period, the collections must be applied first to these arrearages. These amounts are paid to the family. Amounts collected in excess of these amounts may be paid to the family first, or used first to reimburse the State, depending upon the State's method for distributing arrearages in non-AFDC cases.

Distribution of Child Support Collections Following the Period of up to 5 Months After the Family Ceases to Receive AFDC

Prior to October 1, 1984, section 457(c) of the Act and the implementing regulations at 45 CFR 302.51(e) provided that, at the end of the period of up to 5 months after the family ceases to receive AFDC, the State may, if authorized to do so by the individual on whose behalf the collection will be made, continue to collect current support payments from the absent parent. Under these provisions, the State paid all amounts collected to the family after deducting any costs incurred in making the collection. Because section 457(c) of the Act did not prescribe a distribution pattern after the optional service period with respect to amounts collected in excess of the current monthly support obligation, the State could apply these amounts either to non-AFDC arrearages first, which were paid to the family, or to unreimbursed AFDC payments first. Amounts applied to unreimbursed AFDC payments were distributed in accordance with 45 CFR 302.51(f). The only exception to this policy applied to arrearages collected via Federal income tax refund offset. These collections could not be considered current support and were applied first to any AFDC arrearages certified for offset regardless of the status of the family at the time of distribution.

Federal regulations at 45 CFR 302.51(e) were revised, effective October 1, 1984, pursuant to the Child Support Enforcement Amendments of 1984, to specify that, if continued IV-D services are authorized after the mandatory service period, any amounts collected which represent monthly support payments must be paid to the family except when the State has elected to recover costs incurred in providing IV-D services from the custodial parent. Federal regulations at 45 CFR 302.33(d) permit the State to elect in its State plan to recover costs incurred in providing IV-D services either from the absent parent or the custodial parent. If the State elects to recover costs from the custodial parent, the IV-D agency may recover costs directly from the custodial parent or from any support collected on behalf of the custodial parent. However, if the State elects to recover costs from the absent parent, the IV-D agency cannot treat any amounts collected from the absent parent as recovered costs except amounts that exceed the current monthly support obligation. Amounts collected up to the current monthly support obligation must be paid to the family.

Because section 457(c) of the Act remains silent regarding the distribution of amounts collected in excess of the current monthly support obligation, the State may apply these amounts either to non-AFDC arrearages first, which are paid to the family, or to unreimbursed AFDC payments first, depending upon how the State distributes collections of arrearages in non-AFDC cases. Amounts applied to unreimbursed AFDC payments must continue to be distributed in accordance with 45 CFR 302.51(f). The only exception to this policy involves arrearages collected via Federal income tax refund offset. These collections must be applied to arrearages (past-due support) owing to the State in accordance with 45 CFR 303.72(h) regardless of the status of the family at the time of distribution.

RELATED MATERLAL: OCSE-AT-85-06, dated May 9, 1985

INQUIRIES TO: OCSE Regional Representatives

Deputy Director

Office of Child Support Enforcement