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Final Rule with Comment Period: Assigned Support Received by AFDC Applicants or Recipients

AT-82-13

Published: October 18, 1982
Information About:
State/Local Child Support Agencies, Other Public Partners, TANF (IV-A)
Topics:
Case Management, Collections/Distribution/State Disbursement Unit (SDU), Federal Reporting, State Plan
Types:
Policy, Action Transmittals (AT), Regulations

Treatment of Assigned Support Payments Received Directly and Retained by AFDC Applicants or Recipients

REGULATION

ACTION TRANSMITTAL

OCSE-AT-82-13

October 18, 1982

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

SUBJECT: Final rule with comment period-Treatment of Assigned Support Payments Received Directly and Retained by AFDC Applicants or Recipients

REGULATION REFERENCE: 45 CFR Parts 232, 233, 302 and 303

ATTACHMENT: Attached is a final rule with a comment period which allows States to use, on a Statewide basis, one of two methods for the treatment of support payments which have been assigned to the State, but which are received directly and retained by AFDC applicants or recipients:

(1) IV-A Income Method. The IV-A agency must treat assigned support payments retained in a current month as income in determining need and amount of the assistance payment. Under the IV-A income method of accounting for retained support payments, the role of the IV-D agency is limited to contacting the recipient in the month in which a payment is due to be forwarded to the IV-D agency, and informing the IV-A agency when it discovers that a recipient is retaining or has retained directly paid support.

(2) IV-D Recovery Method. The IV-D agency will recover retained support payments through a repayment plan established with the AFDC recipient in accordance with the requirements of the new 303.80.

These regulations codify the policy contained in joint Action Transmittal - Program Instruction SSA-AT-81-7 (OFA); OCSE-AT-81-7 issued March 27, 1981.

RELATED REFERENCE: Joint Action Transmittal - Program Instruction SSA-AT-81-7 (OFA); OCSE-AT-81-7 issued March 27, 1981.

EFFECTIVE DATE: October 5, 1982

COMMENT PERIOD: Consideration will be given to written comments and suggestions received by the Director, Office of Child Support Enforcement, Department of Health and Human Services, Room 1010, 6110 Executive Boulevard, Rockville, Maryland 20852 on or before December 6, 1982.

INQUIRIES TO: OCSE Regional Representatives

_________________________

Deputy Director

Office of Child Support Enforcement

DEPARTMENT OF HEALTH AND

HUMAN SERVICES

Office of Child Support Enforcement

Social Security Administration

45 CFR Parts 232, 233, 302, and 303

Child Support Enforcement Program; Aid to Families With Dependent Children Program; Treatment of Assigned Support Payments Received Directly and Retained by AFDC Applicants or Recipients

AGENCY: Office of Child Support Enforcement (OCSE), and Social Security Administration, (SSA), HHS.

ACTION: Final rule with comment period.

SUMMARY: The Child Support Enforcement program under title IV-D of the Social Security Act (the Act) is charged with establishing paternity and securing support on behalf of recipients of Aid to Families with Dependent Children (AFDC) under title IV-A of the Act. As a condition of eligibility for AFDC, applicants and recipients must assign to the State the support rights of any person on whose behalf aid is sought or received. Assigned support collections are used, in part, to reimburse the assistance payments provided by the State and Federal governments, and generally do not affect the amount of the AFDC grant.

Another condition of eligibility for AFDC is that the recipient or applicant "cooperate with the State. . . in obtaining supports." Current AFDC regulations at 45 CFR 232.12(b)(4) specify that cooperation includes "paying to the child support agency any (assigned) child support payments received from the absent parent." In some cases, however, recipients fail to forward these payments to the IV-D agency, and as a result have the use of the payments as income. The purpose of these regulations is to codify joint AFDC and Child Support Enforcement policy for handling those situations in which an AFDC recipient receives and retains child support payments from an absent parent.

EFFECTIVE DATE: October 5, 1982. We will consider written comments received on or before December 6, 1982 and make any changes necessary in response to those comments.

ADDRESS: Address comments to: Director, Office of Child Support Enforcement, Department of Health and Human Services, Room 1610, 6110 Executive Blvd., Rockville, Maryland 20852, Att'n: Policy Branch. Agencies and organizations are requested to submit comments in duplicate. The comments will be available for public inspection Monday through Friday, 8:30 a.m. to 5:00 p.m., in Room 1010 of the Department's offices at the above address.

FOR FURTHER INFORMATION CONTACT:

Elizabeth Matheson, OCSE, Policy Branch, (301) 443-5350; or Mr. David Siegel, Transpoint Building, 2100 2nd Street, SW., Washington, D.C. 20201, (202) 245-2736.

SUPPLEMENTARY INFORMATION:

Background

When an assignment of support rights has been made by an AFDC applicant or recipient under Section 402(a)(26)(A) of the Act (42 U.S.C. 602(a)(26)(A)), it is the responsibility of the IV-D agency under Section 454(4) of the Act (42 U.S.C. 654(4)) to establish, enforce, and collect a support obligation for anyone covered by that assignment. Section 454(5) of the Act (42 U.S.C 654(5)) specifically requires the IV-D agency to ensure that assigned payments "shall be made to the State for distribution pursuant to section 457 (with one exception) and shall not be paid directly to the family." Section 457 provides the method for assigned support collections to be either distributed among the State and Federal governments or given to the family.

The distribution requirements cannot be implemented when support payments are permitted to flow directly from the absent parent to the family, for several reasons: first, the statutory requirements for distribution of assigned collections by the IV-D agency cannot be carried out when the IV-D agency does not receive the collection; second, the enforcement function of the IV-D agency is hampered because the agency cannot monitor payments by the absent parent. It is, therefore, a primary responsibility of the IV-D agency to take prompt action to redirect payments which are being received by the family so that these payments flow from the absent parent to the IV-D agency and not to the family. However, there are circumstances, such as a backlog of cases or the need to change the payee of a court ordered support obligation, in which the AFDC recipient continues to receive support payments directly from the absent parent for some time after the case has been referred to the IV-D agency. For this reason, as noted above, AFDC regulations require that direct support payments be paid by the recipient to the IV-D agency, as a condition of AFDC eligibility.

A problem arises when a recipient fails to forward to the IV-D agency assigned support payments received directly from an absent parent (direct payments). For this reason, the Office of Family Assistance and the Office of Child Support Enforcement issued a joint Action Transmittal - Program Instruction (SSA-AT-81-7 (OFA) and OCSE-AT-81-07, dated March 27, 1981) to provide Federal policy on treatment of support payments received and retained by AFDC applicants or recipients until publication of final regulations on this subject. The Action Transmittal also provides for the application of the sanction for failure to cooperate for retention of past as well as current support payments.

What These Regulations Provide

These regulations codify the policy contained in Action Transmittal 81-07. Under these regulations, States must implement on a Statewide basis one of two methods for the treatment of retained direct support payments. We emphasize that the two methods for treatment of retained direct support payments are not intended to preclude or restrict the prosecution for fraud under applicable State civil or criminal law where warranted.

1. IV-A Income Method. Current AFDC regulations at 45 CFR 233.20(a) (1) and (3) require that the IV-A agency treat assigned support payments retained in the current month as income in determining need and amount of the assistance payment. An over payment of assistance occurs for each month in which a direct support payment is retained by the recipient and not counted by the IV-A agency to reduce the AFDC payment, the Under IV-A income method, all States must implement the IV-A Plan provisions of 45 CFR 233.20(a)(13) for recovering these overpayments.

States that currently treat retained direct payments as income will not be required to change. Under the IV-A income method of accounting for retained support payments, the role of the IV-D agency is essentially limited to: (1) Contacting the recipient in the month in which a payment is due to be forwarded to the IV-D agency, and (2) informing the IV-A agency when it discovers that a recipient is retaining or has retained directly paid support.

Notwithstanding these provisions for IV-A agencies to account for retained direct support payments, recipients must still forward directly received support payments to the IV-D agency as a condition of eligibility under 45 CFR 232.12. If, in a IV-A income State, a recipient receives and retains a support payment in one month and consequently receives an overpayment of assistance for that month, the IV-A agency will implement recovery procedures consistent with the IV-A State plan.

2. IV-D Recovery Method. We are amending IV-D State plan regulations at 45 CFR 302.31 to provide a second method for treatment of retained direct payments whereby the IV-D agency recovers the retained amounts through a repayment agreement with the recipient. This requires an exception to 45 CFR 233.20(a)(3) which currently provides that retained support payments covered by an assignment be counted as income by the IV-A agency. When a State IV-D agency elects this method in its State plan, the IV-A agency will not count any retained direct support payments as income to meet need, except for the redetermination of eligibility under 45 CFR 232.20 and when a sanction for failure to cooperate is applied under 45 CFR 232.12(d). The procedures for IV-D recovery are specified at the new 45 CFR 302.31(a)(3) and 303.80.

The provisions for IV-D recovery in the amended 45 CFR 302.31 and in the new 45 CFR 303.80 are the same as those provided in our joint action transmittal. We are establishing a IV-D State plan provision for IV-D recovery in a new paragraph (a)(3) under 45 CFR 302.31. This amended IV-D State plan requirement provides that if a State elects the IV-D recovery method of accounting for retained direct payments, the IV-D agency will establish a repayment plan with the AFDC recipient in accordance with the requirements of 303.80.

The new 303.80 establishes specific procedures and limitations for repayment agreement between IV-D agencies and AFDC recipients. First, the IV-D agency must document that directly paid support has been retained and the amounts. Second, the IV-D agency must provide the recipient prior written notice of its intent to recover the amounts. This notice must specify both the amounts retained and the proposed method for recovery. The specific elements of this notice are provided at 303.80(c)(2)(i) through (iv).

In addition to the written notice of intent to recover, the IV-D agency must provide the AFDC recipient with the opportunity for an informal meeting for the purpose of resolving any differences regarding repayment of the directly received retained support. The requirements for this meeting are provided in 303.80(c)(3). At this meeting, the IV-D agency will explain the nature and amount of the recipient's debt. The recipient can submit documentation to rebut any part of the State's claim.

After these requirements have been met, the recipient enters into a repayment agreement with the IV-D agency subject to the requirement of 303.80(d). This subsection provides that the repayment agreement must be individually structured so as to account for both the recipients ability to repay and the size of the debt. We believe that an individualized agreement is essential to avoid both undue hardship on the recipient and unreasonably long repayment periods in relation to the amount of retained support.

Under the new 303.80(e), when a recipient does not enter into or comply with the terms of a repayment agreement with the IV-D agency, the IV-A agency must refer the case to the IV-A agency with evidence of failure to cooperate. The new 303.80(f) requires the IV-D agency to refer a case to the IV-D agency for a determination of the recipient's failure to cooperate with a repayment plan, and also to notify the IV-A agency when the recipient begins to cooperate. In the case of a recipient who fails to cooperate by initially refusing to enter into an agreement, cooperation is restored when that recipient signs a repayment agreement with the IV-D agency. In the case of a recipient who defaults on a repayment agreement, cooperation is restored when the recipient begins making regularly scheduled payments according to that agreement. At the new 303.80(f)(2), we specifically provide that the resumption of payment in the case of a default does not mean payment of past due amounts which went unpaid during the period of default. Rather, cooperation is restored when the recipient makes a current, regularly scheduled payment according to the terms of the agreement. Amounts due from any period of default simply extend the duration of the repayment agreement by the number of months in which payments were not made. We also specify at 303.80(f)(2) that repayment agreements may not include provisions for balloon payments or an acceleration clause as a condition for restoring cooperation in the case of a default.

State Plan Amendments

We are requiring amendments to both the IV-A State plan and the IV-D State plan which will indicate whether a given State elects the IV-A income method or the IV-D recovery method. This will assure that all retained direct payments are accounted for while protecting recipients from the possibility of duplicate accounting systems. The necessary plan preprint pages will be issued shortly after publication of these regulations. We urge State IV-A agencies and State IV-D agencies in each State to consult one another in the very near future to arrive at a decision as to which method will be used in that State, so that when the respective IV-A and IV-D State plan amendments are submitted for Departmental approval they will be consistent and hence approvable.

Additional Regulatory Change

We are making a technical change in 45 CFR 233.20(a)(3)(vi) to delete the first full sentence, because it no longer applies under new statutory requirements. The remaining two sentences in this subparagraph remain unchanged.

Rulemaking

Under the Administrative Procedure Act, 5 U.S.C. 553(b)(B), if the Department finds good cause that proposed rulemaking is unnecessary, impractical or contrary to the public interest, it may waive publication of proposed rules. We believe there is a good cause for dispensing with a Notice of Proposed Rulemaking for the following reasons.

(1) This regulation reflects established policy that the Department previously published in Action Transmittal-Program Instruction 81-07, dated March 27, 1981. This Action Transmittal was included in an amicus curiae brief filed by the Government with the United States Supreme Court in Thompson v. Berry, Docket No. 80-456, cert. denied. 49 U.S.L.W. 3882 (1981), as representing current Departmental policy. Consequently, we believe that publication of proposed rules would be unnecessary.

(2) The Action Transmittal provides the only definitive statement of current Federal policy with regard to the treatment of retained direct support payments. We believe it would be contrary to the public interest and disruptive to the AFDC and Child Support Enforcement programs to publish regulations in proposed form, implying that the policy set forth in the Action Transmittal was no longer in effect. We believe publication of proposed rules would create the mistaken public impression that the policy has not been settled, when in fact it has been both settled and submitted to the Supreme Court as operating Federal policy. We believe it would be a disservice to the public to create such an impression. Moreover, the necessary State plan amendments to reflect State practices cannot be issued until publication of regulations in final form. Thus, it is in the interests of the States and the public to publish final rules as quickly as possible so that these plan amendments can be executed.

(3) This final rule will codify the Department's existing policies and procedures for accounting for all support payments received by an AFDC recipient from an absent parent. The regulation ensures that either the IV-A or the IV-D agency must account for all collections. This will result in immediate and long term savings to Federal, State and local governments participating in the AFDC and Child Support Enforcement programs. Thus, publication of proposed rule making would be contrary to the public interest.

(4) This regulation authorizes the two methods which our research indicates are already being employed to address the problem of retained direct support payments. It ensures a greater degree of uniformly among IV-A income States and among IV-D recovery States, but does not significantly alter what we know to be existing State and local agency practices. The regulation favorably affects recipients by requiring certain due process protections. Both the States and recipients will thus be served by publication of this regulation as a final rule, which will not disrupt existing permissible program practices.

Although the regulation is published in final form, we encourage public comments and will make any changes necessary in response to those comments.

OMB Clearance

In accordance with the Paperwork Reduction Act of 1980 (Pub. L. 96-511), the revisions to the IV-A and IV-D State plans (232.12(b)(4), 233.20(a)(3) (v) and (vi) and 302.31(a)(3)) have been approved by the Office of Management and Budget under existing OMB Nos. 0960-0252(OFA) and 0960-0253 (OCSE).

List of Subjects

45 CFR Part 232

Aid to Families with Dependent Children, Child support (new term), Child welfare, Family Assistance Office, Grant Programs-social programs.

45 CFR Part 233

Aid to Families with Dependent Children, Aliens, Family Assistance Office, Public assistance programs, Reporting requirements.

45 CFR Parts 302 and 303

Child welfare, Grant programs/social programs.

(Sec. 1102 of the Social Security Act, 49 Stat. 647 (42 U.S.C.1302))

(Catalog of Federal Domestic Assistance Program No. 13.679, Child Support Enforcement Program, and Program No. 13.761, Public Assistance-Maintenance Assistance (State Aid))

Note 1-The Secretary has determined that this document is not a major rule as described by Executive Order 12291, because it does not meet any of the criteria set forth in Section 1 of the Executive Order.

Note 2-The Secretary certifies that because these regulations apply to States and will not have a significant economic impact on a substantial number of small entities, they do not require a regulatory flexibility analysis as provided in Pub. L. 96-354, the Regulatory Flexibility Act of 1980.

Dated: July 13, 1982.

John A. Svahn,

Commissioner of Social Security, and Director,

Office of Child Support Enforcement.

Approved: September 1, 1982

Richard S. Schweiker.

Secretary.

For the reasons discussed in the preamble, 45 CFR Parts 232, 233, 302 and 303 are amended to read as follows:

PART 232 (AMENDED)

1. In 45 CFR 232.12 paragraph (b)(4) is revised to read as follows:

232.12 Cooperation in obtaining support.

The State plan must meet all requirements of this section.

* * * * *

(b)The plan shall specify that cooperate includes any of the following actions that are relevant to, or necessary for, the achievement of the objectives specified in paragraph (a) of this section.

* * * * *

(4) Paying to the child support agency any support payments received from the absent parent after an assignment under 232.11 has been made. This includes support payments received in the current month and any amounts due to the IV-D agency under the IV-D State plan provisions for recovery of retained direct support payments at 45 CFR 302.31(a)(3)(ii).

* * * * *

PART 233 [AMENDED]

2. In 45 CFR 233.20, paragraphs (a)(3)(v) and (vi) are revised to read as follows:

232.20 Need and amount of assistance.

(a) Requirements for State Plans. A State Plan for OAA, AFDC, AB, APTD or AABD must as specified below:

* * * * *

(3) Income and resources: OAA, AFDC, AB, APTD, AABD.* * *

(v) provide that agency policies will assure that:

(A) in determining eligibility for an assistance payment, support payments assigned under 232.11 of this chapter will be treated in accordance with 232.20 of this chapter; and

(B) in determining the amount of an assistance payment, assigned support payments retained in violation of payments of

§ 232.12(b)(4) of this chapter, will be counted as income to meet need unless the approved IV-A State plan provides that such support payments are subject to IV-D recovery under 302.31(a)(3) and 303.80 of this title or unless such payments are sufficient to render the family ineligible as provided at 232.20 of this chapter.

(vi) In family groups living together, income of the spouse is considered available for his spouse and income of a parent is considered available for children under 21, except that, under the AFDC plan, if a spouse or parent is receiving SSI benefits under title XVI, then, for the period for which such benefits are received, his income and resources shall not be counted as income and resources available to the AFDC unit. For purposes of this exception, "a spouse or parent receiving SSI benefits" includes a spouse or parent receiving mandatory or optional State supplementary payments under section 1616(a) of the Act or under section 212 of Pub. L. 93-66.

PART 302 [AMENDED]

3. In 45 CFR 302.31, paragraph (a) is amended by adding a new paragraph (a)(3) to read as follows:

302.31 Establishing paternity and securing support.

The State plan shall provide that: (a) The IV-D agency will undertake:

* * * * *

(3) When assigned support payments are received and retained by an AFDC recipient, to proceed as follows:

(i) In States that implement the IV-A State plan requirements to count retained support payments as income under 45 CFR 233.20(a)(3)(v), the IV-D agency shall notify the IV-A agency whenever it discovers that directly received payments are being, or have been, retained; or

(ii) In States that do not implement the IV-A State plan requirements to count retained support payments as income to meet need, the IV-D agency shall recover the retained support payments. This recovery by the IV-D agency shall be carried out in accordance with the standards for program operations provides in 303.80 of this chapter.

* * * * *

PART 303 [AMENDED]

4. In 45 CFR Part 303, 303.80 is added to read as follows:

303.80 Recovery of direct payments.

(a) Definition. "Direct payment" means an assigned support payment from an absent parent which is received directly by an AFDC recipient.

(b) Direct payments that must be recovered by the IV-D agency. In States that place the responsibility for recovery of direct payments with the IV-D agency under the State plan option at 302.31(a)(3)(ii) of this chapter, the IV-D agency must recover all such payments. The only exceptions are those direct payments retained by the recipient during the period when the sanction for failure to cooperate is in effect, as provided at 45 CFR 232.12(d), or those retained amounts which are used by the IV-A agency to determine an assistance unit ineligible for continued assistance under 232.20 of this title.

(c) What the IV-D agency must do prior to establishing a repayment agreement with an AFDC recipient. Before establishing a repayment agreement with an AFDC recipient, the IV-D agency must:

(1) Document that the recipient has, in fact, received and retained direct payments, and the amounts;

(2) Provide written notice of intent to recover the payments to the recipient that includes the following:

(i) An explanation of the recipient's responsibility to cooperate by turning over direct payments as a condition of eligibility for AFDC, and the sanction for failure to cooperate as provided at 232.12(d) of this title;

(ii) A detailed list of the direct payments which have been retained by the recipient, as documented by the IV-D agency, including the dates and amounts of these payments as well as a description of any documentary evidence (such as photocopies of the checks) which the IV-D agency possesses;

(iii) A proposal for a repayment plan between the recipient and the IV-D agency;

(iv) An explanation that repaying retained direct payments to the IV-D agency according to a signed repayment plan which meets the conditions of paragraph (d) below is a condition of cooperation under 232.12(b)(4) of this title.

(3) Provide the recipient with an opportunity for an informal meeting to clarify the recipient's responsibilities and to resolve any differences regarding repayment of the directly received support by the recipient.

(d) Requirements of the repayment agreement. The repayment agreement between the IV-D agency and the recipient who has received and retained direct payments must be reasonably related to:

(1) The recipient's income and resources including the AFDC grant: and

(2) The total amount of retained support.

(e) Referrals to the IV-A agency for a determination of failure to cooperate. The IV-D agency must refer a case to the IV-A agency with evidence of failure to cooperate if:

(1) The recipient refuses to sign a repayment agreement; or

(2) The recipient enters into a repayment agreement but subsequently fails to make a payment under the terms of the agreement.

(f) Subsequent notification to the IV-A agency as required. If the IV-D agency has referred a case to the IV-A agency with evidence of failure to cooperate for either of the reasons in paragraph (e) above, the IV-D agency must notify the IV-A agency when either of the following changes in circumstances occurs:

(1) The recipient who refused to enter into a repayment agreement consents to do so and signs the agreement; or

(2) The recipient who defaulted on an agreement begins making regularly scheduled payments according to the agreement. Under this paragraph, resumption of regularly scheduled payments cannot be interpreted to mean payment of amounts which were not paid during the period of default, nor amounts which could be categorized as balloon payments or which would be due as a result of an acceleration clause.

FR doc. 82-27395 Filed 10-4-82:8.44am