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Electronic Disbursement of Child Support Payments

PIQ-04-02

Published: July 2, 2004

POLICY INTERPRETATION QUESTIONS

PIQ-04-02

DATE: July 2. 2004

TO: State IV-D Directors

FROM: Sherri Z. Heller, Ed.D.
Commissioner
Office of Child Support Enforcement

SUBJECT: Electronic Disbursement of Child Support Payments

The Office of Child Support Enforcement has received several inquiries for policy guidance and approval to disburse child support payments electronically. Electronic disbursement of child support complies with the requirement of section 454B(g) of the Social Security Act for states to use the automated system to the maximum extent feasible for the effective and efficient collection and disbursement of support payments. Electronic child support payments include direct deposits to the custodial parent’s bank account (checking or savings) or payments to a stored value card account. Direct deposit is a safe and quick method to receive payment and most banks offer free checking accounts when a direct deposit is established. Direct deposit gives many people an opportunity to become involved in the banking environment. A stored value card is the commercial term for a card-accessed account system where payments are electronically deposited into an account accessible for cash withdrawal or for credit purchases, similar to a debit card. Custodial parents must be informed of fees associated with accessing money from a stored value card.

QUESTION 1: Does Federal law or regulation prohibit electronic disbursement of child support payments to families?

RESPONSE 1: No. Neither Federal statute nor regulations establish requirements for how payments are to be made to families, as long as the timing of disbursement requirement of section 454B(c) of the Social Security Act is met: “… the state disbursement unit shall distribute all amounts payable under section 457(a) within 2 business days after receipt from the employer or other source of periodic income, if sufficient information identifying the payee is provided.”

QUESTION 2: Does electronic delivery or transferring funds to a stored value card constitute disbursement of a child support collection?

RESPONSE 2: Yes. Electronic delivery such as a direct deposit to the custodial parent’s bank account or the transferring of funds to a stored value card, which has been provided to the custodial parent, constitutes disbursement of a child support collection.

Inquiries should be directed to the appropriate ACF Regional Office.

cc: Regional Program Managers

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