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NPRM: Immediate Income Withholding; Review and Modification; Notice of Support Collected

AT-90-07

Published: August 17, 1990
Information About:
State/Local Child Support Agencies
Topics:
Case Management, Collections/Distribution/State Disbursement Unit (SDU), Review and Modification, Employer Responsibilities, Income/Wage Withholding
Types:
Policy, Action Transmittals (AT), Regulations

ACTION TRANSMITTAL

OCSE-AT-90-07

August 17, 1990

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

SUBJECT:Immediate Income Withholding; Review and Modification of Orders; Notice of Assigned Support Collected

ATTACHMENT:Attached are proposed regulations which implement three provisions of the Family Support Act of 1988 (P.L. 100-485). Section 101 of this Act requires immediate wage withholding, with certain exceptions, in the case of support orders issued or modified on or after November 1, 1990, and being enforced under the IV-D State plan. Immediate wage withholding begins January 1, 1994, for orders issued on or after that date, if the case is not being enforced by the IV-D program. Section 103(c) of this Act requires periodic review of support orders and modification, if appropriate, in accordance with State guidelines for support award amounts, effective October 13, 1990. Effective October 13, 1993, requirements for review become more specific. Section 104 of this Act requires monthly notices of collections to individuals who have assigned their rights to support to the State. Monthly notices are required beginning January 1, 1993, unless the State obtains a waiver in order to send quarterly notices.

REGULATION REFERENCE:45 CFR 302.54, 302.70, 303.4, 303.8, 303.100 and 303.101

COMMENT PERIOD:Consideration will be given to written comments received by October 15, 1990. Address comments to: Deputy Director, Office of Child Support Enforcement, Department of Health and Human Services, 370 L'Enfant Promenade, S. W., Washington, D.C. 20447, Attention: Director, Policy and Planning Division.

INQUIRIES TO: OCSE Regional Representatives.

_________________________

Allie Page Matthews

Deputy Director

Office of Child Support

Enforcement

Federal Register / Vol. 55, No. 158 / Wednesday, August 15, 1990/Proposed Rules 33416

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Families Support Administration

Office of Child Support Enforcement

45 CFR Parts 302, 303 and 304

RIN 0970-AA63

Child Support Enforcement Program;

Immediate Income Withholding;

Review and Modification of Orders;

Notice of Assigned Support Collected

AGENCY: Office of Child Support Enforcement (OCSE), FSA, HHS

ACTION: Notice of Proposed Rulemaking

SUMMARY: These proposed regulations would implement three provisions of the Family Support Act of l988 (P.L. 100-485). Section 101 of this Act requires immediate wage withholding, with certain exceptions, in the case of support orders issued or modified on or after November 1, 1990, and being enforced under the IV-D State plan. Immediate wage withholding begins January 1, 1994, for orders issued on or after that date, if the case is not being enforced by the IV-D program. Section 103(c) of this Act requires periodic review of support orders and modification, if appropriate, in accordance with State guidelines for support award amounts, effective October 13, 1990. Effective October 13, 1993, requirements for review become more specific. Section 104 of this Act requires monthly notices of collections to individuals who have assigned their rights to support to the State. Monthly notices are required beginning January 1, 1993, unless the State obtains a waiver in order to send quarterly notices.

DATES: Consideration will be given to written comments received by [insert date 60 days after publication in the Federal Register].

ADDRESS: Address comments to: Office of Child Support Enforcement, Department of Health and Human Services, 370 L'Enfant Promenade, S.W., Washington, D.C. 20447, Attention: Director, Policy and Planning Division. Comments will be available for public inspection Monday through Friday, 8:30 a.m. to 5:00 p.m. on the 4th floor of the Department's offices at the above address.

FOR FURTHER INFORMATION CONTACT:

Andrew Hagan (202) 252-5375 regarding review and modification of orders

Lourdes Henry (202) 252-5440 regarding monthly notice of support collected

Craig Hathaway (202) 252-5367 regarding immediate wage withholding

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

Public reporting burden for the collection of information requirements in this proposed regulation, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information, is estimated as follows:

Requirement Average Time per Response

õ302.54(b)(1) and (2): 30 seconds

notices

õ302.54(c): waiver .................... 1 hour, one time

õ302.70(a)(10): 8 hours, one time

procedures

õ303.8(b)(1): plan .................... 8 hours, one time

(d): notices ..................... 30 seconds

õ303.100(b)(3): 1 minute

agreement

(f)(1)(ii): payment .............. 30 seconds

Send comments regarding this burden estimate or any other aspect of this collection of information, including suggestions for reducing this burden, to the Office of Child Support Enforcement, Family Support Administration, 370 L'Enfant Promenade, S.W., Washington, D.C., 20447, and to the Office of Information and Regulatory Affairs, Office of Management and Budget, Washington, D.C. 20503.

STATUTORY AUTHORITY

These proposed regulations are published under the authority of the following provisions of the Social Security Act (the Act), as amended by P.L. 100-485: sections 466(a)(8) and (b)(3) with respect to immediate income withholding; section 466(a)(10) with respect to periodic review of individual support award amounts; and section 454(5)(A) covering timing of notice of support collections. These proposed regulations are also published under the general authority of section 1102 of the Act, which requires the Secretary to publish regulations that may be necessary forthe efficient administration of the functions for which he is responsible under the Act.

BACKGROUND AND DESCRIPTION OF REGULATORY PROVISIONS

1. Notice of Assigned Support Collected

Currently, 45 CFR 302.54 requires States, at least annually, to provide notice of the amount of support payments collected during the past year to individuals who have assigned rights to support under 45 CFR 232.11. The notice must list separately payments collected from each absent parent when more than one absent parent owes support to the family and indicate the amount of support collected which was paid to the family. This regulation implemented section 454(5) of the Act as amended by the Child Support Enforcement Amendments of 1984.

Section 104 of the Family Support Act of 1988 amended section 454(5)(A) of the Act to require States to send a monthly notice of support payments to individuals who have assigned support rights to the State. A State may provide quarterly notices if the Secretary determines that a monthly notice would impose an unreasonable administrative burden on the State.

To implement these statutory changes, we propose to redesignate the current õõ302.54(a) and (b) as new paragraphs (a)(1) and (2) which remain in effect until December 31, 1992.

We are proposing a new paragraph (b) which, effective January 1, 1993, provides that the State have in effect procedures for issuing monthly notices. Paragraph (b)(1) would require the IV-D agency to notify individuals who have assigned rights to support under õ232.11, with respect to whom a support obligation has been established, that a monthly notice will be provided containing the information set forth in the proposed õ302.54(b)(3) for each month in which support payments are collected. Thus, each individual covered by this paragraph will be informed of State notification policies. It has come to our attention that some States may be interested in providing monthly notice to individuals through an automated voice response system. Through such a system, an individual would place a toll free call to a specified telephone number, provide certain personal identification information to guarantee confidentiality, and through a recording prepared by the State or local child support office, receive a verbal message over the telephone regarding the amount of support collected during the month on his or her behalf. We agree that a system of this type has merit, and it will meet the requirements for monthly notice, if it is designed to be simple, effective, and efficient and provides all of the information required by these regulations.

Under the proposed paragraph (b)(2), the IV-D agency would be required to provide a monthly notice of the amount of support payments collected for each month to individuals who haveassigned rights to support under õ232.11, unless no collection is made in the month, the assignment is no longer in effect, or the condition for issuance of a quarterly notice set forth in paragraph (c) is met. If, in a former AFDC case which continues to receive IV-D services, a State is collecting support for a previous period for which the assignment remains in effect in accordance with õ302.51(f), the State must send a monthly notice to the family.

The proposed paragraph (b)(3) would require the monthly notice to list separately payments collected from each absent parent when more than one absent parent owes support to the family and indicate the amount of current support and arrearages collected and the amount of support collected which was paid to the family. If no support collection is made during a month, the State is not required to provide a notice to the family. Current policy requires an annual notice even if no collections are made during the year. We would revise current policy to reduce the burden on States of providing notice of no collections since, we believe, the statute technically requires only a notice when collections are made. However, a State may provide a monthly notice when no support collections are received, if that is considered to be of some value to the families.

Under the proposed paragraph (c), until September 30, 1995, a State may provide quarterly, rather than monthly, notices if the State does not have an automated system that performs child support enforcement program activities, or has an automated system that is unable to generate monthly notices. Effective October 1, 1995, States are required to have in effect automated systems that perform child support enforcement activities, and all States must then provide monthly notices. A State will be granted a waiver to send quarterly notices throughout the State until October 1, 1995, if it can demonstrate that the monthly notice requirement would impose an administrative burden, either due to the lack of an automated system that performs child support enforcement activities, or that its automated system is unable to generate monthly notices. A quarterly notice must be sent in accordance with conditions set forth in paragraph (b)(2) and must contain the information specified in paragraph (b)(3) of this section. States must submit requests for waivers, including justification, to the appropriate Regional Office.

2. Mandatory Automated Systems

Section 123 of P.L. 100-485 makes several changes regarding automated systems. Proposed rules implementing this provision will be published separately.

3. Review and Modification of Child Support Obligations

Beginning with the enactment of the Child Support Enforcement Amendments of 1984 (P.L.98-378), each State had to establish guidelines for child support award amounts in the State, as a condition for State IV-D plan approval. These guidelines werenot binding, but had to be made available to all judges and other officials with authority to determine award amounts.

Under section 103 of P.L. 100-485, Congress required the use of State guidelines and created a rebuttable presumption that the amount of the award computed according to the guidelines is the correct amount to be awarded. A written or specific finding on the record that the application of the guidelines would be unjust or inappropriate in a particular case, as determined by State criteria, is sufficient to rebut the presumption in that case. To ensure further that the use of the guidelines will result in appropriate support award amounts, section 103 requires that the guidelines be reviewed at least once every four years. Proposed regulations governing these aspects of section 103 are being published separately.

Use of guidelines does not ensure that orders, over time, continue to meet the support standards set by the guidelines. To address this problem, section 103 of P.L. 100-485 phases in a requirement for the periodic review and adjustment of support orders, in accordance with the support guidelines in the State.

Under section 103, the Act is amended by inserting a new section 466(a)(10). Section 466(a)(10)(A), effective October 13, 1990, requires State procedures for review and adjustment of orders, consistent with a State plan indicating how and when review and adjustment would occur. Review may take place at the request of either parent subject to the order or may be initiated by the State itself. An adjustment to the award is required, as appropriate, if the award amount is found not to be in accordance with the State's guidelines, which must be used as a rebuttable presumption in establishing or modifying support obligations in the State.

The new section 466(a)(10)(B), effective October 13, 1993 (or earlier at State option), requires the State to have implemented a process whereby orders enforced under title IV-D will be reviewed within 36 months after establishment of the order or the most recent review of the order and modified in accordance with the State's guidelines for support award amounts. Review is required in an AFDC case unless the State has determined that it would not be in the best interests of the child and neither parent has requested a review. Review is required in a non-AFDC case at least once every 36 months only if a parent requests it. In all IV-D cases, if a review indicates that modification is appropriate, the State must proceed with the modification.

This section effectively requires that orders in AFDC cases that were entered or last modified before October 13, 1990 must be reviewed before October 13, 1993, upon request of either parent or a State child support enforcement agency. Analysis done by the HHS Office of the Inspector General (OIG) suggests that States and AFDC recipients would benefit substantially if State IV-D agencies reviewed support orders of $50 a month or less incases in which State and/or Federal wage data indicates that the absent parent's income is more than $10,000 a year (see OAI-05-87-00035, dated August 1987). In addition, in accordance with section 103(e) of P. L. 100-485, OCSE is conducting demonstration projects in Delaware, Colorado, Illinois, Florida and Oregon, to test and evaluate model procedures for reviewing child support award amounts. We urge interested parties to review the OIG study and follow the demonstration projects closely.

The new section 466(a)(10)(C) requires States to have procedures for notifying each parent subject to an order in effect in the State, that is being enforced under the State plan, of their rights concerning reviews and proposed adjustments. Each parent must be notified: of the right to request the State to review the order; of any review, at least 30 days before it commences; and of a proposed adjustment or of a determination that there should be no change in the award amount. In the latter case, the parent must have at least 30 days after notification to initiate proceedings to challenge the proposed adjustment or determination.

The OIG analysis discussed above suggests that non-AFDC families would benefit substantially if State IV-D agencies determined absent parents' income from State and/or Federal wage data in non-AFDC cases with low support orders and informed custodial parents how a modification might affect the amount of support awarded. Again, we urge States to follow our demonstration projects closely and consider what assistance they might give parents in deciding whether to request a review of a support award.

Currently, regulations at 45 CFR 302.70 require that States enact certain laws and implement certain procedures designed to improve the effectiveness of the Child Support Enforcement program. We propose to add a new õ302.70(a)(10) that would require States to enact necessary laws and have procedures in effect for the periodic review and modification of child support orders in accordance with the requirements of a new proposed 45 CFR 303.8. As specified in the statute, some of these procedures would be effective on October 13, 1990 and others would be effective no later than October 13, 1993.

The proposed õ303.8(a)(1) would reiterate that the State must implement procedures for the periodic review and modification of child support orders in effect in the State and being enforced under the Child Support Enforcement program. The proposed paragraphs (a)(2) and (a)(3) contain definitions designed to clarify two key aspects of the review and modification process. Paragraph (a)(2) defines "modification" to include only support provisions of an order, since that conveys the intent of Congress in enacting these provisions for modification of orders consistent with guidelines for support award amounts. These regulations are not meant to create an avenue under the IV-D program for review and modification of ancillary provisions oforders, such as custody or visitation rights. Paragraph (a)(3) defines "parent" for purposes of õ303.8 to include any custodial beneficiary of the support order, such as a grandparent. This will ensure that the appropriate persons who are affected by a review and/or modification will be contacted during the process.

The proposed paragraph (b) of this section would contain the requirements that take effect on October 13, 1990. Under paragraph (b)(1), the State must determine whether an order being enforced under the program should be reviewed for possible modification pursuant to a written and publicly available State plan for the periodic review and modification of orders. The plan must target for review, and modification, if appropriate, orders in IV-D cases in which there is an assignment of support rights to the State, and show the commitment of resources necessary to review orders in all IV-D cases upon the request of either parent subject to the order or of a State child support enforcement agency. Under paragraph (b)(2), the State must initiate a review, in accordance with its plan, at the request of either parent subject to the order or of a IV-D agency. Under paragraph (b)(3), the review, and modification, if appropriate, must be accomplished in accordance with the State's guidelines for setting support award amounts.

Under the requirements of paragraph (b) outlined above, each State would be required to develop and implement a plan for the review and modification of orders by October 13, 1990. The plan would indicate how and when child support orders in effect in the State are to be looked at. Thus, between October 13, 1990 and October 13, 1993, each State's plan would specify the conditions for triggering a review and, if desired, time frames or other schedules for accomplishing the reviews. Because more specific requirements for review and modification of support award amounts come into play in 1993, we advise States to consider implementing these requirements from the very beginning in both statute, where needed, and in the State's plan for review. This would ensure a minimum of disruption from an administrative standpoint, as well as encourage a more rapid implementation of the program changes that Congress envisioned. Between now and 1993, States must address and target for review their existing backlog of IV-D cases in which support is assigned to the State in anticipation of the proposed requirement that, effective October 13, 1993, the State must review, in accordance with new requirements, and modify if appropriate, most orders in IV-D cases in which support is assigned to the State and which have not been reviewed or modified in 36 months.

The proposed õ303.8(c) contains the requirements that become effective on October 13, 1993 or earlier at State option. Beginning at that time, under paragraph (c)(1), in a IV-D case in which there is an assignment of support rights to the State, with certain exceptions discussed later under paragraph (c)(4), a review of each order must take place no less frequently than 36 months after the establishment of the order or the most recent

review. In a case in which there is no such assignment of support rights, a review must occur as described above only if one of the parents requests it. Although the new statute only refers to AFDC and non-AFDC cases, we are using our authority under section 1102 of the Act to publish regulations that are necessary for the efficient administration of the IV-D program to include all IV-D cases in which support rights have been assigned to the State. We believe that all IV-D cases in which support is assigned to the State, including title IV-E foster care cases and Medicaid cases in addition to AFDC cases, should be targeted by States for review and modification, if appropriate.

Although States are not required to conduct reviews more frequently than every 36 months, there are certainly circumstances which would warrant a review sooner than 36 months after an order is established or the most recent review. For example, if a minimum support amount is ordered because the absent parent is unemployed or employed part time at the time the order is entered, and the custodial parent or IV-D agency learns one year later that the absent parent has secured significantly higher paying employment, a review would be warranted. Or if an absent parent becomes permanently disabled and three years has not passed since the last review, a review would be warranted. By the same token, States should be able to deny frivolous requests for review, for example, if the absent parent's income has increased or decreased by a minimal amount, or the absent parent is temporarily out of work or injured and unable to work. Because States will be faced with requests for review more frequently than once every three years, we believe they should establish well-formulated grounds for determining whether to respond favorably or unfavorably to a request for review that occurs within the three-year timeframe. Therefore, we propose that States must establish procedures specifying the circumstances under which orders will be reviewed more frequently than every 36 months.

"Review" is defined in paragraph (c)(2) as an objective evaluation of complete, accurate, up-to-date information necessary for the application of the State's guidelines for support. Paragraph (c)(2) further states that the State must require a parent to provide any necessary information otherwise unavailable to the State. This could be done by making the provision of information a condition of the support order. This definition and the related provision for requiring a parent to respond with needed information have been added to the proposed regulation to make clear that the State must make every effort to obtain and use in its determination as much information as is available consistent with the requirements of the State's own guidelines. States should first attempt to secure the necessary information by accessing employment security or other records rather than by relying totally on the absent parent providing the information. It is important to note that submitted information should be shared between the parties, so that informed decisionscan be made regarding challenges to any proposed modification to the order.

In all cases, orders would be required to be modified, if appropriate, in accordance with the State's guidelines for support award amounts and within the timeframe specified in õ303.4(d). To ensure that States are subject to timeframes for modifying, or petitioning to modify support orders, we propose to add reference to modification in õ303.4(d), which was added by final regulations establishing timeframes for processing cases, published August 4, 1989 (54 FR 32284). Proposed õ303.4(d) would require States to establish or modify an order for support, or complete service of process necessary to commence proceedings to establish or modify a support order, within 90 days of locating an absent parent or of establishing paternity. In this way, if a review indicates modification is warranted and the absent parent has been located, a State would be required to take action to modify the order within 90 days of locating the absent parent.

We are proposing a similar change to õ303.101, governing expedited processes for the establishment and enforcement of support orders, to explicitly include reference to modification of orders.

The proposed õ303.8(c)(3) provides that inconsistency with the State's guidelines for support must be adequate grounds for petitioning for a modification of an order regardless of whether the order was originally established under the guidelines, unless the inconsistency is considered negligible under the State's procedures. Proposed paragraph (c)(3) would also require a State's procedures to treat the availability of reasonably-priced health insurance coverage, as defined in õ306.51((a)(1), as adequate grounds to petition for modification of the order.

These proposed requirements address a problem in some States where modification of orders is extremely difficult to initiate because the basis for access to the courts for modification is very narrowly defined. In these situations, without the proposed paragraph (c)(3), the intent of the statute on review and modification of orders would be frustrated and the benefits of the new requirements would be lost. The availability of additional income to a parent should be adequate grounds for reviewing the order and if that additional income results in an inconsistency in the amount of support under the guidelines, petitioning for modification should be warranted. However, to avoid unnecessary effort on the part of the State and to discourage frivolous requests for review and modification, we have included the proviso that a petition for modification is not necessary if the inconsistency with the State's guidelines is negligible, as defined by the State's procedures. In addition, because of the value of providing medical support for children, we believe that States' procedures must define the availability of health insurance coverage as sufficient to warrant seeking modification of the order. We advise States that are affected by the proposed paragraph (c)(3) not to wait until 1993 to requireinconsistency with the State's guidelines for support to be adequate grounds to seek modification of orders in the State.

We believe that orders entered prior to adoption of guidelines should also be subject to the guidelines during any modification. Because guidelines serve as a rebuttable presumption of the amount of support which should be awarded, inconsistency with the guidelines may require increasing or decreasing the amount of the order. Conditions which warranted a prior award amount which is inconsistent with any newly mandated guidelines may still be sufficient to rebut the presumption that the guidelines amount is the correct amount of support during any review process.

The proposed paragraph (c)(4) requires that, in a IV-D case in which there is an assignment of support rights to the State, the State need not conduct a review if neither parent has requested it and the State has determined that a review would not be in the best interests of the child. We are also proposing that, in IV-D cases in which there is such an assignment, an increase in support or the availability of health insurance must be considered to be in the best interests of the child, unless either parent demonstrates, after a hearing in accordance with paragraph (d), that it would not be in the child's interests. This is consistent with the goal of enabling AFDC, title IV-E foster care and Medicaid recipients to gain self-sufficiency by securing adequate cash and medical support and, thereby, eliminating the need for public assistance.

We have not otherwise defined the best interests of the child in the proposed rule, and solicit comments regarding this provision. One approach to establishing a complete definition of the best interests of the child would be to tie the definition to that contained in AFDC regulations at 45 CFR 232.41 for refusal to cooperate. Another approach would allow States to establish criteria, within the constraints of paragraph (c)(4), which would define the best interests of the child for purposes of reviewing an order, since a review and modification of a previously established order may not necessitate the cooperation of the custodial parent.

Proposed paragraph (d) of õ303.8 specifies the requirements for notice that States must meet as part of the review and modification process. The State must notify each parent subject to a child support order in the State that is being enforced under the Child Support Enforcement program of the following: (1) That they have the right to request a review of the order; (2) that a review will occur; and (3) that a modification is being proposed or a determination has been made that there should be no change in the order, and they have the right to initiate proceedings to challenge the modification or determination. In the second instance, notice must be given at least 30 calendar days before commencement of the review. In the third instance, the parent must have 30 calendar days after notification to initiate proceedings to challenge the proposed modification ordetermination. These notice provisions are effective beginning October 13, 1990, and continue in effect after October 13, 1993. We have not specified in these regulations any conditions for challenging a modification or related determination since, under section 467(b)(2) of the Act, States must develop their own criteria for rebutting the amount of support proposed in accordance with the guidelines.

When the requirements for notice become effective in 1990, States may find it expeditious to request that courts and administrative authorities include a notice in new orders apprising each parent of his or her right to request a review of the order consistent with the requirements of õ303.8 or States may send a one-time notice to each parent. These options are specified in paragraph (e) of õ303.8, along with a requirement for regularly publicizing this right as part of the services provided under the program, consistent with regulations at 45 CFR 302.30.

With the enactment of the Family Support Act of l988, States will be required to refocus their thinking and their efforts in the area of support awards. For the first time, emphasis will be placed on ensuring the continued appropriateness of the amount of support awarded. The State will have discretion concerning whether or not a review is warranted during the period before October 1, 1993, consistent with its plan for review and modification of orders. After that time, in each IV-D case in which support is assigned to the State, the State will have to ensure that a review takes place no less frequently than 36 months after the establishment of the order or the most recent review, unless the State determines it is not in the best interest of the child and neither parent requests review. In each IV-D case in which there is no such assignment, the State must publicize the availability of the service and must review on the same schedule, but only if a parent requests it. The State must establish procedures specifying the circumstances under which orders will be reviewed more recently than every 36 months. For instance, if information becomes available that an absent parent now has a higher paying job and less than 36 months have elapsed since the last review, the State would be required to use its procedures to determine whether a review should be conducted. As a result of these changes, States can expect both upward and downward modifications of ordered support amounts. This would be consistent with the increased emphasis being placed on the guidelines for support amounts in the provisions of the Family Support Act.

To bring regulations at 45 CFR 303.4 in line with these new requirements, we propose to amend paragraph (c) of this section to eliminate the requirement for State IV-D agencies to initiate a review when they become aware of changes in factors affecting the support award amount. This deletion does not preclude reviews performed more frequently than every three years, if, based on the State's procedures, circumstances warrant it. If, for example, a parent subject to an order brings to the State'sattention a significant increase in the obligor's income which under the State's guidelines would likely lead to an increase in the support award amount, the State would be required to use its procedures to determine whether or not to proceed with a review regardless of the time elapsed since the last review or modification.

In the next few paragraphs, we discuss issues related to the implementation of review and modification of support orders, specifically, the requests of absent parents, interstate cases, and the question of guardian ad litem.

First, we believe States may have questions regarding the significant provision that they respond to requests by absent parents for review and modification of support orders. While the statute clearly requires the IV-D agency to respond to such requests, one concern may be the perception that there is a conflict of interests in providing "services" to both absent and custodial parents.

Our longstanding position has been that the IV-D agency does not provide legal services per se. Support rights are assigned to the State in AFDC cases, and even in non-AFDC cases the traditional attorney-client type of relationship does not exist. Custodial parents have no right, for instance, to dictate what enforcement actions are taken in the case. When arrearages for current and former AFDC recipients are recovered, the State may take its share of the recovery first and the custodial parent may be left with only the current support payment. Clearly the State does not always have interests which are identical to the custodial parent's. Where good cause for noncooperation is claimed, for example, the State may be enforcing the support obligation of the absent parent over the custodial parent's express objection.

As States move away from an adversarial method of establishing, reviewing and modifying orders, and toward an expeditious process based on application of objective guidelines, the less there should be an issue of apparent "conflict of interest." We encourage States to establish a simple pro se process for establishment and modification of orders whereby the parents may essentially represent themselves. Some States already have successfully implemented such a process.

There is an immediate need to educate and convince those involved in child support enforcement - courts, administrative agencies,

IV-D agencies, and absent and custodial parents - that it is in all of their best interests, and especially in the interests of the children involved, that non-adversarial processes be put in place to equitably establish and modify orders. States must prepare to respond to absent parent requests which may result in downward modification of orders because Congress has required them to do so. How States respond to the challenge of developinga system to accomplish this requirement will determine its impact on children and the IV-D program.

Other questions may arise regarding the treatment of reviews in interstate cases. If a State is enforcing an order from another State and a review is requested by the absent parent or the enforcing State otherwise determines a review is warranted because of some change in the absent parent's circumstances, the responding State should contact the State with the order, provide pertinent information, and request that the State with the order conduct the review. The State with the order should conduct the review, according to its guidelines for setting support award amounts, and modify the order, if appropriate. In addition, the State with the order in an interstate case should conduct reviews in accordance with the requirements of õ303.8 and its procedures for review and modification of orders in its intrastate cases. The State conducting the review is responsible for sending the required notices to the parents involved and for notifying the other State of the results of any review and modification.

We believe an additional concern may center on the recovery of costs incurred by the State under these regulations. Recovery of costs is permissible under 45 CFR 302.33(d) in non-AFDC cases, either from the custodial parent or the absent parent. If a State chooses to recover costs under the IV-D program, it would do so subject to the regulatory provisions cited above in the case of review and modification costs.

We are also aware that questions may be raised regarding whether we consider a guardian an litem to be necessary to protect the interests of the child, for example, when an absent parent requests a review and a downward modification of a support order may be warranted. In our view, a guardian ad litem is unnecessary with the advent of support award guidelines in each State and the rebuttable presumption that the guidelines result in a correct and appropriate computation of the support award amount. Assuming income verification, we believe the IV-D agency is not in a position to second guess the amount of an award computed under its State guidelines for support and should view its role as ensuring that the maximum appropriate award is obtained. We stress, however, the need for income verification to determine that the information presented is accurate before any modification takes place.

4. Wage or Income Withholding

Section 3 of the Child Support Enforcement Amendments of 1984 (P.L. 98-378) added sections 454(20) and 466 of the Act to require all States to implement certain mandatory procedures which had been proven to noticeably increase the effectiveness of State programs, including procedures for wage withholding.

Section 466 required that States have in effect two distinct procedures for carrying out a program for wage withholding. The first, required under section 466(a)(1) and (b) of the Act, pertained only to cases being enforced through the IV-D agency. Under this requirement, States must have and use a procedure under which wages of an absent parent shall be subject to withholding in IV-D cases on the date the absent parent fails to make payments in an amount equal to one-month's support obligation. States were also required to implement the withholding at any earlier date that is in accordance with State law or that the absent parent may request. Withholding was to begin without amendment to the order or further action by the court. The Act also specified other elements of the withholding system for IV-D cases such as requirements for prior notice to the absent parent, basis for appeal, restrictions on the maximum amounts to be withheld, notice to the employer, and interstate withholding. These requirements were implemented in regulations at 45 CFR 303.100(a) through (g).

The second procedure, required by section 466(a)(8) of the Act, and implemented at õ303.100(h), provided that all new or modified orders issued in the State include a provision for wage withholding when an arrearage occurs, in order to ensure that withholding is available without the necessity of filing an application for IV-D services.

Section 101 of P.L.100-485 amends section 466 of the Act to require that States enact laws and implement procedures for immediate income withholding in certain cases. Under amended section 466(b)(3), a new subparagraph (A) provides that immediate withholding is required, effective November 1, 1990, for all IV-D cases with new or modified orders on the effective date of the order, unless one of the parties demonstrates, and the court or other administrative process finds good cause not to require the withholding, or a written agreement is reached between both parties which provides for an alternative arrangement.

For cases being enforced by the IV-D agency which are not subject to immediate withholding, section 101 of P.L.100-485 amends the current requirements at section 466(b)(3) by creating a new subparagraph (B) which provides that the absent parent's wage shall be subject to withholding on the earliest of: the date on which arrearages occur which are at least equal to the support payable for one month; the date on which the absent parent requests that withholding begin; the date on which the custodial parent requests that withholding begin (in accordance with thestandards and procedures the State may establish); or an earlier date the State may select.

Section 101 of P.L.100-485 also amends section 466(a)(8) of the Act by revising the current language as redesignated subparagraph (A) to require that child support orders not described in subparagraph (B) contain wage withholding provisions, and creating a new subparagraph (B) to require that, effective January 1, 1994, States have procedures providing for withholding in all support orders not being enforced by the IV-D agency, regardless of whether support payments are in arrears, on the effective date of the order.

To address these statutory changes we are proposing the following regulatory amendments:

We propose to amend õ303.100 to reiterate the statutory changes outlined above by revising paragraph (a) so that it will now cover withholding requirements which are common to all orders being enforced under the IV-D State plan, and redesignating paragraphs (b) and (c) as new paragraphs (d) and (e), to provide for advance notice to the absent parent and for procedures when the absent parent contests the withholding in cases where it is not immediate (i.e., initiated withholding). We propose to create a new paragraph (b) providing for immediate withholding for those orders which are issued or modified on or after November 1, 1990, and a new paragraph (c) providing for initiated withholding for orders not subject to immediate withholding under paragraph (b). We also propose to redesignate paragraphs (d), (e) and (g) as new paragraphs (f), (g), and (h) to provide for, in both immediate and initiated IV-D withholding, notice to the employer, procedures for administration, and interstate withholding. Current paragraph (f), which allows States the option to extend withholding to other forms of income, has been moved to a new paragraph (a)(9) since it is applicable to all types of withholding. We propose to create a new paragraph (i) providing for immediate withholding in all non-IV-D child support orders, issued on and after January 1, 1994, and to redesignate paragraph (h) as new paragraph (j) to address provision for withholding in other non-IV-D child support orders. Finally, we propose to amend õ302.70(a)(8) governing withholding in non-IV-D cases for consistency with the revised section 466(a)(8) of the Act and to refer to proposed õõ303.100(i) and (j).

General Withholding Requirements

We propose to consolidate the requirements which are common to all IV-D withholdings in proposed õ303.100(a) using the unchanged statutory authority of section 466(b) of the Act. Proposed paragraphs (a)(1) and (2) remain unchanged from the current regulations, and will continue to require that States must provide for wage withholding for all IV-D cases for both current and overdue support. Current paragraph (a)(3) establishes limits of amounts to be withheld in all IV-D cases, as required by theConsumer Credit Protection Act (hereinafter CCPA). We propose to replace the reference to fees which may be withheld by employers under paragraph (d)(1)(iii) with reference to the new citation regarding fees at paragraph (f)(1)(iii). Paragraph (a)(4) would be revised by retaining the first sentence requiring that withholding in all IV-D cases occur without the need for any amendment to the order, and moving the rest of the paragraph, with revised language establishing conditions which would initiate withholding, to proposed paragraph (c)(1). Current paragraph (a)(5), which establishes that the only basis for contesting withholding is a mistake of fact, is moved to new paragraph (c)(2), as we believe that this requirement, at section 466(b)(4) of the Act, applies only to delinquency initiated withholding, since the procedures for immediate withholding afford the absent parent opportunity to contest any mistakes of fact during the establishment or modification of the order itself.

Current paragraph (a)(6), providing that the State allocate support to each family when there is more than one withholding in a case, is redesignated as paragraph (a)(5) and revised to require that States must develop procedures for allocation of support among families but in no case shall the allocation result in a withholding for one of the support obligations not being implemented. This proposed revision is not specified in the statute. However, we are using the authority granted to the Secretary at section 1102 of the Act to publish regulations not inconsistent with the Act which may be necessary to efficiently administer the Secretary's functions under the Act. Upon publication of the current requirement in 1985, we stated that, in response to comments received on the proposed rule, we had changed the requirement that the employer respond to multiple withholdings on a first-come-first-served basis to one in which the State would allocate among the families. We also suggested several mechanisms States could use in allocating amounts to be withheld, one of which was to give top priority to AFDC cases. We have since become aware that some States may have implemented this suggestion by deciding to allocate all available withholding up to the CCPA limit to the AFDC family, leaving no amounts available for a second non-AFDC family. This was not our intent, and this language clarifies that, although a State may give priority to AFDC families, the resulting allocation should not mean that another non-AFDC family gets no collection through the withholding process.

Current paragraph (a)(7), requiring that IV-D withholdings be carried out in full compliance with all procedural and due process requirements of the State, is redesignated as paragraph (a)(6). Paragraph (a)(8), providing that payment of overdue support upon receiving notice of withholding may not be the sole basis for not implementing withholding, is redesignated as new paragraph (c)(3) since overdue support is only an issue for initiated withholding.

Current paragraph (a)(9), requiring that the State have procedures for promptly terminating withholding but in no case should the payment of overdue support be the sole basis for termination, is revised and redesignated as new paragraph (a)(7). The new paragraph (a)(7) requires the State to have procedures for promptly terminating withholding when: (i) There is no longer a current order and all arrearages have been satisfied; or, (ii) the absent parent requests termination and withholding has never been terminated previously and subsequently initiated; and, the absent parent meets the condition for an alternative arrangement set forth under paragraph (b)(3). Proposed paragraph (b)(3) requires an absent parent, under an agreement not to implement withholding, at least (in addition to other conditions the parties agree to) to keep the IV-D agency apprised of his or her current employer and information on employment-related health insurance coverage to which the absent parent has access. Under this proposed requirement, if, subsequent to initiation of withholding, both parents, and, at State option, the State in IV-D cases in which there is an assignment of support rights to the State, agree to an alternative arrangement that meets these conditions, withholding may be terminated.

Current paragraph (a)(10), providing that the State must have procedures for promptly refunding amounts improperly withheld, is redesignated as new paragraph (a)(8). Current paragraph (f), permitting a State to extend its withholding system to include forms of income other than wages, has been moved and redesignated as paragraph (a)(9), since this option is available in all withholding situations covered by these regulations.

Under proposed paragraph (a)(10), support orders issued or modified in IV-D cases must require absent parents to keep the IV-D agency informed of the name and address of his or her current employer, whether the absent parent has access to employment-related health insurance coverage and, if so, the health insurance policy information. This will simplify implementation of withholding.

Immediate Withholding in IV-D Cases

We propose to implement section 466(b)(3)(A) of the Act by creating a new õ303.100(b) providing for immediate wage withholding. Proposed paragraph (b)(1) requires that, in the case of a support order being enforced under title IV-D that is issued or modified on or after November 1, 1990, the wages of an absent parent shall be subject to withholding, regardless of whether support payments are in arrears, on the effective date of the order, except that such wages shall not be subject to withholding in any case where one of the parties demonstrates, and the court or administrative process finds, that there is good cause not to require immediate withholding, or a written agreement is reached between the parties which provides for an alternative arrangement.

We are aware that some States currently have a form of immediate wage withholding in force, and that some of these States do not provide for good cause and/or alternative arrangements. Our reading of the Federal statute is that the good cause and alternative arrangement provisions are mandatory, and we have therefore included these requirements in the proposed regulations. However, we would note that the provision for exemptions established at section 466(d) of the Act will apply to these new wage withholding requirements. States will have the option of applying for such an exemption if they can demonstrate that the enactment of any withholding provision would not increase the effectiveness and efficiency of the State Child Support Enforcement program (see OCSE-AT-88-12 dated December 12, 1988, for instructions for applying for an exemption).

We are proposing that paragraphs (b)(2) and (b)(3) establish the meanings of "good cause" and "written agreement." Although not specified in the statute, we are using our authority under section 1102 of the Act to set these requirements because we believe that Congress intended that immediate withholding would be implemented in most cases. Consequently, proposed paragraph (b)(2) provides that a finding of good cause by the court or administrative authority must be based on, at a minimum: (i) A written determination and explanation of why implementing immediate withholding would not be in the best interests of the child; (ii) proof of timely payment of previously ordered support in cases involving the modification of support orders; and (iii) agreement by the absent parent to keep the IV-D agency apprised of his or her current employer and information on any employment-related health insurance coverage to which the absent parent has access. We believe that for all support issues the best interests of the child should remain paramount and other concerns secondary. Certainly, payment of past-ordered support will provide a measure of the absent parent's good faith. Providing employer and health insurance information will help to ensure that the absent parent takes his or her obligation seriously. In modification proceedings, States may choose not to allow past timely payment to justify avoiding immediate withholding.

These criteria were formulated to exclude certain other considerations. For example, we do not believe that good cause would be demonstrated if the absent parent objects to immediate withholding on the grounds that it would be inconvenient, since the purpose of the support order and withholding is to provide for the best interests of the child. Payroll deduction is a convenient means of paying debts. Moreover, the overall thrust of the immediate withholding provisions have, in effect, removed any reason for an employer to believe that the employee is not meeting his or her obligations in a responsible manner, since all child support orders (IV-D and non-IV-D) will eventually be subject to this automatic provision. This also means that a demonstration by the absent parent that he or she has established a good credit rating should not qualify for good cause, since theimposition of immediate withholding contains no assumption that the absent parent would default on support payments. Also, a credit rating may or may not take into consideration an absent parent's support obligation, or that obligation may not be heavily weighted.

It should also be noted that a finding of good cause not to require immediate withholding should not be construed in any way as a "termination" of withholding, since a good cause finding is subject to revocation with subsequent implementation of withholding as discussed below under the provisions of paragraph (c).

Proposed paragraph (b)(3) provides that a "written agreement" means a written alternative arrangement signed by both parents, and, at State option, the State in IV-D cases in which there is an assignment of support rights to the State, and reviewed and entered in the record by the court or by an administrative authority which provides that the absent parent shall at least (in addition to other conditions the parties agree to) keep the IV-D agency apprised of his or her current employer and information on employment-related health insurance coverage to which the absent parent has access. We propose to give the States the option in IV-D cases in which there is an assignment of support rights to the State to be a party to any alternative arrangement between the absent and custodial parents which meets the above condition because of the State and Federal interest in securing support for those in need of public assistance. We solicit comments on whether the State should be a required party in any alternative agreement. We have proposed that such written agreement be reviewed and entered in the record by the court or administrative authority for protection of the best interests of the child as well as the parents. Such an agreement may contain stipulations between the custodial and absent parents, and, at State option, the State in IV-D cases in which support rights have been assigned, which are in addition to that required under this paragraph. We particularly request public comment on the proposed requirements regarding the agreements.

A number of States allow absent parents to set up an escrow account to avoid income withholding. Such accounts ensure that current support is available if the absent parent misses a payment. While we have not proposed such an approach as a condition of an alternative arrangement, or good cause finding,

we are specifically soliciting comments on whether or not such a condition is warranted in IV-D cases, and on individual or State experience with such an approach, as well as alternative approaches States have required or allowed.

A question has arisen concerning whether a parent may claim good cause or whether the parents may enter into a written agreement

as an alternative to wage withholding after wage withholding has been implemented as described in paragraph (b). Our position is that an agreement may be entered into subsequent to initiation of wage withholding if the requirements of paragraphs (a)(7) with respect to termination of withholding and (b) with respect to not implementing withholding are met. We are interested in receiving comments on this issue, however, particularly with respect to the administrative burden this process might entail.

Finally, where the absent parent does not have income which can be reached through withholding at the time the support order is entered, the order must require immediate withholding, and the State must implement withholding without further action by the court or administrative authority which entered the order, when it determines the obligor has income that can be withheld.

Initiated Wage Withholding

We propose to implement revised section 466(b)(3)(B) of the Act by creating a new õ303.100(c) for initiated wage withholding in cases where immediate withholding, as set forth in proposed õ303.100(b), would not apply because the support order was issued before, and not modified after, November 1, 1990. Proposed paragraph (c), in conjunction with proposed paragraphs (a), (d), (e) and (f) would continue, with some modification, the original wage withholding requirements contained in P.L. 98-378 for existing orders being enforced under title IV-D.

Proposed õ303.100(c) would set forth requirements with respect to cases in which wages are not subject to immediate withholding in proposed paragraph (b), including cases subject to a good cause finding or a written agreement. Under the proposal, the wages of the absent parent shall become subject to withholding on the date on which payments which the absent parent has failed to make under a support order are at least equal to the support payable for one month or, if earlier, and without regard to whether there is an arrearage, the earliest of: (i) The date on which the absent parent requests that withholding begin; (ii) The date on which the custodial parent requests that withholding begin, if the State determines, in accordance with such procedures and standards as it may establish, that the request should be approved; or (iii) Such earlier date as State law or procedure may provide. In the latter instance, we have specified that the State may select an earlier date via law or procedure to indicate that this would apply on an across-the-board, rather than a case-by-case basis. For example, a State may wish to set a lower trigger of, say, one week's support delinquency, rather than the outside limit of a month's delinquency required by statute and regulation. The State may not apply a tougher standard on an individual case basis, but must apply it to all cases if this approach is selected.

These provisions parallel the requirements of P.L.98-378 with one important exception. The new requirement at section 466(b)(3)(B)(ii) of the Act and at proposed õ303.100(c)(1)(ii) now allows the custodial parent to request that withholding be imposed without regard to whether support payments are in arrears, if the State agrees based on procedures to determine when this is appropriate. Under this proposal, custodial parents could request withholding if an absent parent is not meeting the terms of a written agreement for an alternative arrangement. This provision will also enable States which desire to do so to bridge the gap between the original initiated withholding mandated in P.L.98-378 and the new immediate withholding requirements of P.L.100-485 by incorporating either some, or all, of the new immediate withholding provisions on behalf of their existing initiated withholding caseload if due process is accorded the absent parent.

Proposed paragraph (c)(2) would require the State to send the advance notice required under paragraph (d) to the absent parent within 5 working days of the appropriate date under paragraph (c)(1) if the absent parent's address is known on that date, or, if the absent parent's address is not known on that date, within 5 working days of locating the absent parent.

Proposed paragraph (c)(3) would require that, if there has been a determination of good cause not to require immediate withholding under paragraph (b), a State may not take steps to implement withholding upon request of a custodial parent under paragraph (c)(1)(ii) unless the court or administrative authority removes its determination of good cause not to initiate immediate withholdingg. States may not use their authority to select an earlier date to take steps to initiate withholding in cases in which there is no arrearage and good cause not to initiate withholding has been claimed and determined unless and until the court or administrative authority has determined that good cause no longer exists.

Proposed paragraph (c)(4) has been moved from current paragraph (a)(5) and requires that the only basis for contesting a initiated withholding is a mistake of fact, defined as an error in identity of the absent parent or in the amount of support due. Current paragraph (a)(8), which provides that payment of overdue support upon receiving notice of withholding may not be the sole basis for not implementing withholding, would be deleted by these proposed regulations, since under the new statute on wage withholding, we believe there is no basis for not triggering withholding unless the conditions of paragraphs (b) and (c) are met.

Advance Notice to the Absent Parent in Cases of Initiated Withholding

Proposed õ303.100(d) incorporates all the provisions of current õ303.100(b) for providing timely advance notice to the absent parent in cases of initiated withholding. Several citations within the paragraph have been changed to reflect the redesignation of other paragraphs in this publication. We propose to revise paragraph (d)(1) by inserting the phrase "On the date specified in paragraph (c)(2) of this section," at the beginning of the first sentence. This revision was added in order to make clear that advance notice to the absent parent is within the timeframe specified in paragraph (c)(2). We propose to add "if appropriate" after "the amount of overdue support" in paragraph (d)(1)(i) because withholding may be triggered under paragraph (c) if there is no arrearage.

We propose to change the citation in paragraph (d)(2)(i) from the current reference to paragraph (b)(1) to the new paragraph (d)(1), and in the same sentence change the citation of paragraph (c) to paragraph (e). We also propose to establish a timeframe, in paragraph (d)(2)(ii), for sending notice to the employer in States which are not required to provide advance notice to the absent parent because they had a withholding system in effect on August 16, 1984, which provides any other procedures necessary to meet the procedural due process requirements of State law. Under that timeframe, a State would be required to send notice to the employer under paragraph (f) within 5 working days of the appropriate date specified in paragraph (c)(1) if the employer's address is known on that date, or, if the employer's address is not known on that date, within 5 working days of locating the employer's address.

State Procedures When the Absent Parent Contests Initiated Withholding in Response to the Advance Notice

Proposed õ303.100(e) incorporates all the provisions of current õ303.100(c) for State procedures to be followed when the absent parent contests a proposed initiated withholding. We propose to change the citations within this paragraph to reflect the redesignation of other paragraphs in this section. We propose to change the citation in the second sentence of proposed paragraph (e) referring to advance notice to the absent parent in initiated withholding cases from current paragraph (b) to redesignated paragraph (d). In addition, we propose to change the citations in proposed paragraphs (e)(3) and (4) referring to notice to the employer from current paragraph (d) to redesignated paragraph (f).

Notice to the Employer for Immediate and Initiated Withholding

Proposed õ303.100(f) incorporates most of the provisions of current õ303.100(d) providing for notice to the employer. We propose to indicate in the heading of this paragraph that it willapply to both immediate and initiated wage withholding. We are also proposing to make revisions in this paragraph which require specific timeframes for the issuance of notices, a revision involving employer reporting to the State, and notice to the employer of health insurance coverage, if it has been required under the court order. These proposals are consistent with our current policy which is designed to minimize the burden on employers of withholding wages to meet support obligations. States are encouraged to develop innovative ways to help employers, especially small employers, meet withholding requirements. Finally, we propose to change citations within this paragraph to reflect the redesignation of other paragraphs in this section.

We propose to change the citation in paragraph (f)(1)(i) referring to the fee specified later in the section from the current (d)(1)(iii) to redesignated (f)(1)(iii). In paragraph (f)(1)(ii), we propose to add a requirement that the employer report to the State the date on which the amount sent to the State was withheld from the absent parent's wages. This date is needed by the State to ensure proper distribution of support under current statute and regulations.

We are proposing in paragraph (xi) to require the State to notify the employer if the absent parent is required under a support order to provide health insurance coverage for his or her child or child(ren). Clearly Congress intended for employers to remit support on behalf of employees. Though Congress focused on cash support, we believe that Congressional intent extends to all support employees owe, including medical support. For many children, medical support is as vital as cash support.

We also propose to create a new paragraph (f)(2) and to redesignate the current paragraphs (d)(2) and (d)(3) as new paragraphs (f)(3) and (f)(4). New paragraph (f)(2) requires that, in the case of an immediate wage withholding under paragraph (b) of this section, the State must issue the notice to the employer specified in paragraph (f)(1) of this section within 5 working days from the effective date of the support order if the employer's address is known on that date, or, if the address is unknown on that date, within 5 working days of locating the employer's address. We believe that a 5-day turnaround is consistent with the intent of immediate wage withholding. We propose that redesignated paragraph (f)(3), which requires that, if the absent parent fails to contact the State to express intent to contest withholding within the period specified, the State must immediately send the notice to the employer, be revised to require that the notice be sent within 5 working days of the end of the contact period if the employer's address is known on that date, or, if the address is unknown on that date, within 5 working days of locating the employer's address. This is consistent with revised paragraph (f)(2) and with the general intent of the phrase "immediately."

Administration of Withholding

Proposed õ303.100(g), providing for certain administrative actions by the States, incorporates most of the provisions of current õ303.100(e) and will be applicable to both immediate and initiated withholding.

With the technology available to transfer funds electronically, many employers have payroll systems (or contract with service bureaus) which can automatically deposit wages in more than one financial account. We encourage employers, who currently have the capability to do so, to begin remitting withheld wages electronically as soon as possible to any State's withholding agency which has the capability to receive such funds electronically on the same day funds are deposited in employees' bank accounts. OCSE is developing model procedures for electronic transfer of child support and will keep States informed of efforts in this area. In anticipation of the requirement that all States have operational automated child support enforcement systems by October 1, 1995, in accordance with section 123 of P. L. 100-485, we propose in paragraph (g)(2) that, effective October 1, 1995, the State must be capable of receiving withheld amounts and accounting information which are electronically transmitted by the employer to the State. This will greatly reduce the time it takes for support payments to reach families in need of them.

Currently, under õ303.100(g), States are allowed to designate more than one public or private entity to administer withholding on a State or local basis under the supervision of the State withholding agency. However, because of the need to reduce the burden on employers and to simplify procedures for electronic transfer of withheld amounts, we encourage States to designate a single public agency to administer withholding in IV-D cases. This will simplify withholding for employers in both intrastate and interstate cases whether it is accomplished through electronic transfer or other means, and is essential to ensure a simple process for electronic transfer of withheld child support obligations.

We also encourage States to use electronic funds transfer for withholding wages in non-IV-D cases. In many States, funds paid through wage withholding could be deposited directly in custodial parents' bank accounts. Custodial parents' bank account statements would provide good documentation of payments received. Using direct deposit in non-IV-D cases would enable States to implement wage withholding easily in non-IV-D cases. (Payment in IV-D cases must go through the IV-D system rather than directly to custodial parents' accounts because of additional information needed in IV-D cases.)

Interstate Withholding

Proposed õ303.100(h), requiring that State law must provide for procedures to extend the State's withholding system so that system will include interstate cases, incorporates all the provisions of current õ303.100(g) and will be applicable to immediate and initiated withholding. Proposed paragraph (h)(1) has been revised to provide that a responding State may register orders for purposes of withholding only if registration is for the sole purpose of obtaining jurisdiction for enforcement of the order; does not confer jurisdiction on the court or agency for any other purpose (such as modification of the original support order or resolution of custody or visitation disputes); and does not delay implementation of withholding. This is a formal statement in the regulations of our policy since wage withholding was originally enacted in 1984.

In addition, we propose to revise certain parts of this paragraph to provide for more specific time frames, as well as correct citations as required by the redesignation of other paragraphs in this section. We propose to revise paragraph (h)(3) by deleting the general language in the first part of the first sentence and substituting the requirement that the State must act within 5 working days of a determination that withholding is required, unless information from the State where the order was entered is necessary. Therefore, we also propose to revise the last sentence of paragraph (h)(3) by requiring that, if necessary, the State where the support order is entered must provide the information necessary to carry out the withholding within 30 calendar days of receipt of the request for information.

Finally, we propose to revise paragraph (h)(5)(i) to require that the State where the absent parent is employed must, within 5 working days of location of the absent parent and his or her employer, send notice to the absent parent. We believe that these proposed changes are consistent with the overall statutory requirements that withholding be provided on a timely basis.

Provision for Immediate Withholding in Non-IV-D Child Support Orders

We propose to implement section 466(a)(8)(B) of the Act by creating a new õ303.100(i), providing for immediate wage withholding in child support orders which are initially issued in the State on or after January 1, 1994, and are not being enforced under the State plan. We propose to implement 466(a)(8)(B)(i) with proposed paragraph (i)(1), which requires that the wages of an absent parent shall be subject to withholding, regardless of whether support payments are in arrears, on the effective date of the order, except that such wages shall not be subject to withholding under this paragraph in any case where: (i) One of the parties demonstrates, and the court or administrative process finds, that there is good cause not to require immediatewithholding; or (ii) A written agreement is reached between both parties which provides for an alternative arrangement. One of the advantages of wage withholding is the clear record of payment. In case where support is not paid by wage withholding or through a public agency, documentation of payments made or missed may not be as clear. These cases may become IV-D cases at any time. We request comments on whether these alternative arrangements that do not include payment through a public agency should specify the type of documentation that will be considered acceptable evidence of payment or non-payment.

States may choose to extend this wage withholding requirement to apply to non-IV-D cases in which orders are modified after January 1, 1994, in addition to orders issued after that date. In response to concerns which have been raised about protecting absent parents' due process rights in such cases, we urge States to ensure the protection of those rights for absent parents who may become subject to withholding as a result of implementation of such a requirement.

We propose to implement section 466(a)(8)(B)(ii) with proposed paragraphs (i)(2) and (i)(3) which require that, in addition to the amount withheld to pay the current month's obligation, the amount to be withheld must include an amount to be applied toward liquidation of any arrearages, and that the total amount to be withheld, including any employer fee, may not exceed the maximum amount permitted under the CCPA.

We propose to implement section 466(a)(8)(B)(iii) with proposed paragraphs (i)(4) through (i)(10). Section 466(a)(8)(B)(iii) applies the requirements for IV-D withholding in section 466(b)(2), (5), (6), (7), (8), (9) and (10), where applicable, to these non-IV-D cases.

We propose to implement the requirements of section 466(b)(2) in new paragraph (i)(4) by providing that the withholding must be provided without the need for any amendment to the order or for any other action by the court or entity that issued it. The wording of section 466(b)(2) specifies that withholding "must be provided in accordance with this subsection on the basis of an application for services under the State plan in the case of any other child in whose behalf a support order has been issued or modified in the State." We believe this reference was intended to cover only voluntary applications for IV-D services and not intended to make the IV-D application a prerequisite for receiving wage withholding services in a State. Section 466(a)(8)(B)(iii) on wage withholding in non-IV-D cases refers to section 466(b)(2) "where applicable." In our view, the IV-D application reference could not logically apply to these cases or Congress would have simply designed the statute to treat all cases, whether IV-D or non-IV-D, the same for purposes of wage withholding.

Proposed paragraph (i)(5) implements the requirements of section 466(b)(5) by requiring that the State must designate a public agency to administer wage withholding. Proposed paragraph (i)(6) implements the requirements of section 466(b)(6) by requiring the State to provide for notice to the employer to initiate wage withholding. Proposed paragraph (i)(7) implements the requirements of section 466(b)(7) by requiring that withholding shall have priority over any other legal process under State law against the same wages. Proposed paragraph (i)(8) implements the requirements of section 466(b)(8) by requiring that the State may extend its system of withholding to include withholding from forms of income other than wages. Proposed paragraph (i)(9) implements the requirements of section 466(b)(9) by requiring that the State must extend its withholding system so that the system will include withholding from income or wages derived within the State in cases where the applicable support orders were issued in other States. Proposed paragraph (i)(10) implements the requirements of section 466(b)(10) by requiring that the State must have procedures for promptly terminating withholding.

Provision for Withholding in Other Non-IV-D Child Support Orders

Proposed paragraph (j) amends the current requirement in 45 CFR 303.100(h) which implements the requirement in section 466(a)(8) of the Act that all child support orders include provision for withholding, to assure that withholding is available if arrearages occur, without the necessity of filing application for IV-D services. In requiring all non-IV-D orders issued after January 1, 1994, to be subject to immediate withholding, section 101(b) of P.L.100-485 redesignated prior section 466(a)(8) (which was effective October 1, 1985) as section 466(a)(8)(A) and limited its applicability to orders not covered under the immediate withholding requirement for all non-IV-D orders. Therefore, since prior section 466(a)(8) was effective October 1, 1985, we propose to limit the applicability of 45 CFR 303.100(j) to orders in non-IV-D cases which were issued between October 1, 1985 and January 1, 1994, or are modified on or after January 1, 1994.

LIST OF SUBJECTS

45 CFR Part 302

Child support

Grant programs--social programs

Penalties

Reporting and recordkeeping requirements

Unemployment compensation

45 CFR Parts 303 and 304

Child support

Grant programs--social programs

Reporting and recordkeeping requirements

EXECUTIVE ORDER 12291

The Secretary has determined, in accordance with Executive Order 12291, that this rule does not constitute a "major" rule. A major rule is one that is likely to result in:

(1) An annual effect on the economy of $100 million;

(2) A major increase in costs or prices for consumers, individual industries, Federal, State or local government agencies, or geographic regions; or

(3) Significant adverse effects on competition, employment, investment, productivity, innovation, or the ability of United States-based enterprises to compete with foreign-based enterprises in domestic or export markets.

This rule implements specific requirements of P. L. 100-485 and we expect the additional costs to the States will be less than $100 million. Any costs will be administrative and can be minimized although we are not able to provide an estimate. We believe increased collections as a result of modifications andimmediate wage withholding will exceed increased administrative costs.

REGULATORY FLEXIBILITY ANALYSIS

The Secretary certifies, under 5 U.S.C. 605(b), as enacted by the Regulatory Flexibility Act (P.L.96-354), that this regulation will not result in a significant impact on a substantial number of small entities. The primary impact is on State governments and individuals, which are not considered small entities under the Act.

(Catalog of Federal Domestic Assistance Program No. 13,783, Child Support Enforcement Program.)

Dated: June 18, 1990.

_____________________________________

Jo Anne B. Barnhart

Director

Office of Child Support Enforcement

Dated: July 5, 1990.

_____________________________________

Louis W. Sullivan

Secretary

For the reasons set out in the preamble, we propose to amend 45 CFR Chapter III as follows:

PART 302--STATE PLAN REQUIREMENTS [AMENDED]

1. The authority citation for Part 302 continues to read as follows:

Authority: 42 U.S.C. 651 through 658, 660, 664, 666, 667, 1302, 1396a(a)(25), 1396b(d)(2), 1396b(o), 1396b(p) and 1396(k).

2. Section 302.54 is revised to read as follows:

õ302.54 Notice of collection of assigned support.

(a) Until December 31, 1992, the State plan shall provide as follows:

(1) The IV-D agency, at least annually, must send a notice of the amount of support payments collected during the past year to individuals who have assigned rights to support under õ232.11 of this title.

(2) The notice must list separately payments collected from each absent parent when more than one absent parent owes support to the family and must indicate the amount of support collected which was paid to the family.

(b) Effective January 1, 1993, the State plan shall provide that the State has in effect procedures for issuing monthly notices of collections as follows:

(1) The IV-D agency must notify individuals who have assigned rights to support under õ232.11 of this title, with respect to whom a support obligation has been established, that a monthly notice will be provided as described in paragraph (b)(3) of this section for each month in which support payments are collected.

(2) The IV-D agency must provide a monthly notice of the amount of support payments collected for each month to individuals who have assigned rights to support under õ232.11 of this title, unless no collection is made in the month, the assignment is no longer in effect, or the condition in paragraph (c) is met.

(3) The monthly notice must list separately payments collected from each absent parent when more than one absent parent owes support to the family and must indicate the amount of current support and arrearages collected and the amount of support collected which was paid to the family.

(c) The Office may grant a waiver effective through September 30, 1995, to permit a State to provide quarterly, rather than monthly, notices, if the State does not have an automated system that performs child support enforcement activities consistent with õ302.85 of this part or has an automated system that is unable to generate monthly notices. A quarterly notice must be provided in accordance with conditions set forth in paragraph (b)(2) of this section and must contain the information set forth in paragraph (b)(3) of this section.

3. Section 302.70 is amended by amending paragraphs (a) and (a)(8) and adding a new paragraph (a)(10) to read as follows:

õ302.70 Required State laws.

(a) Required laws. Unless otherwise indicated, effective October 1, 1985, * * *

(1) * * *

(8) Procedures under which all child support orders which are issued or modified in the State will include provision for withholding from wages, in order to assure that withholding as a means of collecting child support is available without the necessity of filing an application for services under section302.33 of this part, in accordance with sections 303.100(i) and (j) of this chapter;

(9) * * *

(10) Effective October 13, 1990 or October 13, 1993, as appropriate, procedures for the review and modification of child support orders, in accordance with the requirements of õ303.8 of this chapter.

PART 303--STANDARDS FOR PROGRAM OPERATIONS [AMENDED]

4. The authority citation for Part 303 continues to read as follows:

AUTHORITY: 42 U.S.C. 651 through 658, 660, 663, 664, 666, 667, 1302, 1396a(a)(25), 1396b(d)(2), 1396b(o), 1396b(p) and 1396(k).

5. In õ303.4, paragraphs (c) and (d) are amended to read as follows:

õ303.4 Establishment of support obligations.

* * * * *

(c) Periodically review and modify the support obligation, as appropriate, in accordance with õ302.70(a)(10) of this chapter and õ303.8 of this part.

(d) Within 90 calendar days of locating an absent parent or of establishing paternity, establish or modify an order for support, or complete service of process necessary to commence proceedings to establish or modify a support order (or document unsuccessful attempts to serve process, in accordance with the State's guidelines defining diligent efforts under õ303.3(c)).

6. A new õ303.8 is added to read as follows:

õ303.8 Review and modification of child support obligations.

(a)(1) The State must implement procedures for the periodic review and modification of child support orders being enforced under this chapter.

(2) For purposes of this section, "modification" applies only to support provisions of the order.

(3) For purposes of this section, "parent" includes any custodial beneficiary of the support order.

(b) Effective on October 13, 1990: (1) The State must determine whether an order being enforced under this chapter should be reviewed pursuant to a written and publicly available State plan for the periodic review and modification of orders. The planmust target for review, and modification, if appropriate, orders in IV-D cases in which there is an assignment of support rights to the State and show the commitment of resources necessary to review orders in all IV-D cases upon the request of either parent subject to the order or of a State child support enforcement agency;

(2) The State must initiate a review, in accordance with its plan, at the request of either parent subject to the order or of a IV-D agency; and

(3) The review, and modification if appropriate, must be accomplished in accordance with the State's guidelines for support described in õ302.56 of this chapter.

(c) Effective on October 13, 1993 or an earlier date the State may select: (1) Except as specified in paragraph (c)(4) of this section, in IV-D cases in which there is an assignment of support rights to the State, a review of each order must take place no less frequently than 36 months after the establishment of the order or the most recent review. In IV-D cases in which there is no such assignment of support rights to the State, a review of the order must take place no less frequently than 36 months after the establishment of the order or the most recent review at the request of either parent. The State must establish procedures specifying circumstances under which orders will be reviewed more frequently than every 36 months. In all IV-D cases, orders must be modified, if appropriate, in accordance with the State's guidelines for support and within the timeframe specified in õ303.4(d) of this part.

(2) "Review" means an objective evaluation of complete, accurate, up-to-date information necessary for application of the State's guidelines for support. The State must require a parent to provide any necessary information otherwise unavailable to the State.

(3) Inconsistency with the State's guidelines for support must be adequate grounds for petitioning for modification of an order regardless of whether the order was established under the guidelines, unless the inconsistency is considered negligible under the State's procedures. A State's procedures must treat the availability of reasonably-priced health insurance coverage, as defined in õ306.51(a), as adequate grounds for petitioning for modification of the order.

(4) Exception. In a IV-D case in which there is an assignment of support rights to the State, the State need not conduct a review if neither parent has requested a review and the State has determined that a review would not be in the best interests of the child. In these cases, an increase in support or the availability of health insurance must be considered to be in thebest interests of the child, unless either parent demonstrates it would not be in the child's interests after a hearing in accordance with paragraph (d) of this section.

(d) The State must notify each parent subject to a child support order in the State that is being enforced under this chapter:

(1) Of the right to request a review of the order;

(2) Of any review of the order at least 30 calendar days before commencement of the review;

(3) Of a proposed modification (or determination that there should be no change) in the order, and of their right to initiate proceedings to challenge the modification or determination within 30 calendar days after notification.

(e) The State may meet the requirements of paragraph (d)(1) by sending a one-time notice to each parent or requesting that the court or administrative authority provide a similar one-time notice in the order. The State must also periodically publicize the right to request a review as part of its support enforcement services as required under õ302.30 of this chapter.

7. Section 303.100 is revised as follows:

õ303.100 Procedures for wage or income withholding.

(a) General withholding requirements. (1) The State must ensure that in the case of each absent parent against whom a support order is or has been issued or modified in the State, and is being enforced under the State plan, so much of his or her wages must be withheld, in accordance with this section, as is necessary to comply with the order.

(2) In addition to the amount to be withheld to pay the current month's obligation, the amount to be withheld must include an amount to be applied toward liquidation of overdue support.

(3) The total amount to be withheld under paragraphs (a)(1), (a)(2) and, if applicable, (f)(1)(iii) of this section may not exceed the maximum amount permitted under section 303(b) of the Consumer Credit Protection Act (15 U.S.C. 1673(b)).

(4) In the case of a support order being enforced under the State plan, the withholding must occur without the need for any amendment to the support order involved or any other action by the court or entity that issued it.

(5) If there is more than one notice for withholding against a single absent parent, the State must allocate amounts available for withholding giving priority to current support up to the limits imposed under section 303(b) of the Consumer Credit Protection Act (15 U.S.C. 1673(b)). The State must establish procedures for allocation of support among families, but in no case shall the allocation result in a withholding for one of the support obligations not being implemented.

(6) The withholding must be carried out in full compliance with all procedural due process requirements of the State.

(7) The State must have procedures for promptly terminating the withholding when:

(i) There is no longer a current order for support and all arrearages have been satisfied; or,

(ii) The absent parent requests termination and withholding has not been terminated previously and subsequently initiated; and,the absent parent meets the conditions for an alternative arrangement set forth under paragraph (b)(3) of this section.

(8) The State must have procedures for promptly refunding to absent parents amounts which have been improperly withheld.

(9) The State may extend its withholding to include withholding from forms of income other than wages.

(10) Support orders issued or modified in IV-D cases must include a provision requiring the absent parent to keep the IV-D agency informed of the name and address of his or her current employer, whether the absent parent has access to employment-related health insurance coverage and, if so, the health insurance policy information.

(b) Immediate withholding in IV-D cases. (1) In the case of a support order being enforced under this part that is issued or modified on or after November 1, 1990, the wages of an absent parent shall be subject to withholding, regardless of whether support payments by such parent are in arrears, on the effective date of the order, except that such wages shall not be subject to withholding under this paragraph in any case where:

(i) Either the absent or custodial parent demonstrates, and the court or administrative authority finds, that there is good cause not to require immediate withholding; or

(ii) A written agreement is reached between the absent and custodial parent, and, at State option, the State in IV-D cases in which there is an assignment of support rights to the State, which provides for an alternative arrangement.

(2) For the purposes of this paragraph, any finding that there is good cause not to require immediate withholding must be based on at least:

(i) A written determination that, and explanation by the court or administrative authority of why, implementing immediate wage withholding would not be in the best interests of the child;

(ii) Proof of timely payment of previously ordered support in cases involving the modification of support orders; and

(iii) Agreement by the absent parent that he or she shall keep the IV-D agency apprised of his or her current employer and information on any employment-related health insurance coverage to which the absent parent has access.

(3) For purposes of this paragraph, "written agreement" means a written alternative arrangement signed by both the custodial and absent parent, and, at State option, by the State in IV-D cases in which there is an assignment of support rights to the State,and reviewed and entered in the record by the court or administrative authority which provides that the absent parent shall at least (in addition to other conditions the parties agree to) keep the IV-D agency apprised of his or her current employer and information on employment-related health insurance coverage to which the absent parent has access.

(c) Initiated withholding in IV-D cases. In the case of wages not subject to immediate withholding under paragraph (b), including cases subject to a finding of good cause or to a written agreement:

(1) The wages of the absent parent shall become subject to withholding on the date on which the payments which the absent parent has failed to make under a support order are at least equal to the support payable for one month or, if earlier, and without regard to whether there is an arrearage, the earliest of:

(i) The date on which the absent parent requests that withholding begin;

(ii) The date on which the custodial parent requests that withholding begin, if the State determines, in accordance with such procedures and standards as it may establish, that the request should be approved; or

(iii) Such earlier date as State law or procedure may provide.

(2) The State must send the advance notice required under paragraph (d) of this section to the absent parent within 5 working days of the appropriate date under paragraph (c)(1) of this section if the absent parent's address is known on that date, or, if the absent parent's address is not known on that date, within 5 working days of locating the absent parent.

(3) If there has been a determination of good cause not to require immediate withholding under paragraph (b) of this section, a State may not take steps to implement withholding under paragraph (c)(1)(ii) of this section unless the court or administrative authority changes its determination of good cause not to initiate immediate withholding.

(4) The only basis for contesting a withholding under this paragraph is a mistake of fact, which for purposes of this paragraph means an error in the amount of current or overdue support or in the identity of the alleged absent parent.

(d) Advance notice to the absent parent in cases of initiated withholding. (1) On the date specified in paragraph (c)(2) of this section, the State must send advance notice to the absent parent regarding the initiated withholding. The notice must inform the absent parent:

(i) Of the amount of overdue support that is owed, if any, and the amount of wages that will be withheld;

(ii) That the provision for withholding applies to any current or subsequent employer or period of employment;

(iii) Of the procedures available for contesting the withholding and that the only basis for contesting the withholding is a mistake of fact;

(iv) Of the period within which the absent parent must contact the State in order to contest the withholding and that failure to contact the State within the specified time limit will result in the State notifying the employer to begin withholding; and

(v) Of the actions the State will take if the individual contests the withholding, including the procedures established under paragraph (e) of this section.

(2)(i) The requirements for advance notice to the absent parent under paragraph (d)(1) of this section and for State procedures when the absent parent contests the withholding in response to the advance notice under paragraph (e) of this section do not apply in the case of any State which had a withholding system in effect on August 16, 1984 if the system provided on that date, and continues to provide, any other procedures as may be necessary to meet the procedural due process requirements of State law.

(ii) Any State in which paragraph (d)(2)(i) of this section applies must meet all other requirements of this section and must send notice to the employer under paragraph (f) of this section within 5 working days of the appropriate date specified in paragraph (c)(1) of this section if the employer's address is known on that date, or, if the employer's address is not known on that date, within 5 working days of locating the employer's address.

(e) State procedures when the absent parent contests initiated withholding in response to the advance notice. The State must establish procedures for use when an absent parent contests the withholding. Within 45 calendar days of sending advance notice to the absent parent under paragraph (d) of this section, the State must:

(1) Provide the absent parent an opportunity to present his or her case to the State;

(2) Determine if the withholding shall occur based on an evaluation of the facts, including the absent parent's statement of his or her case;

(3) Notify the absent parent whether or not the withholding is to occur and, if it is to occur, include in the notice the time frames within which the withholding will begin and the information given to the employer in the notice required under paragraph (f) of this section; and

(4) If withholding is to occur, send the notice required under paragraph (f) of this section.

(f) Notice to the employer for immediate and initiated withholding. (1) To initiate withholding, the State must send the absent parent's employer a notice which includes the following:

(i) The amount to be withheld from the absent parent's wages, and a statement that the amount actually withheld for support and other purposes, including the fee specified under paragraph (f)(1)(iii) of this section, may not be in excess of the maximum amounts permitted under section 303(b) of the Consumer Credit Protection Act (15 U.S.C. 1673(b));

(ii) That the employer must send the amount to the State within 10 working days of the date the absent parent is paid, unless the State directs that payment be made to another individual or entity, and must report to the State (or to such other individual or entity as the State may direct) the date on which the amount was withheld from the absent parent's wages;

(iii) That, in addition to the amount withheld for support, the employer may deduct a fee established by the State for administrative costs incurred for each withholding, if the State permits a fee to be deducted;

(iv) That the withholding is binding upon the employer until further notice by the State;

(v) That the employer is subject to a fine to be determined under State law for discharging an absent parent from employment,refusing to employ, or taking disciplinary action against any absent parent because of the withholding;

(vi) That, if the employer fails to withhold wages in accordance with the provisions of the notice, the employer is liable for the accumulated amount the employer should have withheld from the absent parent's wages;

(vii) That the withholding under this section shall have priority over any other legal process under State law against the same wages;

(viii) That the employer may combine withheld amounts from absent parents' wages in a single payment to each appropriate agency requesting withholding and separately identify the portion of the single payment which is attributable to each individual absent parent;

(ix) That the employer must implement withholding no later than the first pay period that occurs after 14 working days following the date the notice was mailed;

(x) That the employer must notify the State promptly when the absent parent terminates employment and provide the absent parent's last known address and the name and address of the absent parent's new employer, if known, and;

(xi) That the absent parent is required under a support order to provide health insurance coverage, as defined in õ306.51(a), for his or her child or child(ren), if appropriate.

(2) In the case of an immediate wage withholding under paragraph (b) of this section, the State must issue the notice to the employer specified in paragraph (f)(1) of this section within 5 working days of the effective date of the support order if the employer's address is known on that date, or, if the address is unknown on that date, within 5 working days of locating the employer's address.

(3) If the absent parent fails to contact the State to contest withholding within the period specified in the advance notice in accordance with the requirements of paragraph (d)(1)(iv) of this section, the State must send the notice to the employer required under paragraph (f)(1) of this section within 5 working days of the end of the contact period if the employer's address is known on that date, or, if the address is unknown on that date, within 5 working days of locating the employer's address.

(4) If the absent parent changes employment within the State when a withholding is in effect, the State must notify the absent parent's new employer, in accordance with the requirements ofparagraph (f)(1) of this section, that the withholding is binding on the new employer.

(g) Administration of withholding. (1) The State must designate a public agency to administer withholding in accordance with procedures specified by the State for keeping adequate records to document, track, and monitor support payments.

(2)(i) The State may designate public or private entities to administer withholding on a State or local basis under the supervision of the State withholding agency if the entity or entities are publicly accountable and follow the procedures specified by the State; and (ii) The State may designate only one entity to administer withholding in each jurisdiction.

(3) Effective October 1, 1995, the State must be capable of receiving withheld amounts and accounting information which are electronically transmitted by the employer to the State.

(4) Amounts withheld must be distributed in accordance with section 457 of the Act and õõ302.32, 302.51 and 302.52 of this chapter.

(5) The State must reduce its IV-D expenditures by any interest earned by the State's designee on withheld amounts.

(h) Interstate withholding. (1) The State law must provide for procedures to extend the State's withholding system so that the system will include withholding from income or wages derived within the State in cases where the applicable support orders were issued in other States. A State may register orders from other States for purposes of withholding only if registration is for the sole purpose of obtaining jurisdiction for enforcement of the order; does not confer jurisdiction on the court or agency for any other purpose (such as modification of the original support order or resolution of custody or visitation disputes); and does not delay implementation of withholding.

(2) The State law must require employers to comply with a withholding notice issued by the State.

(3) Within 5 working days of a determination that withholding is required in a particular case, and, if appropriate, receipt of any information necessary to carry out withholding addressed under the last sentence of this paragraph, the initiating State must notify the IV-D agency of the State in which the absent parent is employed to implement interstate withholding. The notice must contain all information necessary to carry out the withholding, including the amount requested to be withheld, a copy of the support order and a statement of arrearages, if appropriate. If necessary, the State where the support order is entered must provide the information necessary to carry out thewithholding within 30 calendar days of receipt of a request for information by the initiating State.

(4) The State in which the absent parent is employed must implement withholding in accordance with paragraph (h)(5) of this section upon receipt of the notice required in paragraph (h)(3) of this section.

(5) The State in which the absent parent is employed must:

(i) Within 5 working days of location of the absent parent and his or her employer, send notice to the absent parent in accordance with the requirements of paragraph (d) of this section;

(ii) Provide the absent parent with an opportunity to contest the withholding in accordance with paragraph (e) of this section;

(iii) Send notice to the employer in accordance with the requirements of paragraph (f) of this section; and

(iv) Notify the State in which the custodial parent applied for services when the absent parent is no longer employed in the State and provide the name and address of the absent parent and new employer, if known.

(6) The withholding must be carried out in full compliance with all procedural due process requirements of the State in which the absent parent is employed.

(7) Except with respect to when withholding must be implemented which is controlled by the State where the support order was entered, the law and procedures of the State in which the absent parent is employed shall apply.

(i) Provision for immediate withholding in non-IV-D child support orders. With respect to all child support orders which are initially issued in the State on or after January 1, 1994, and are not being enforced under the State plan, the following requirements apply:

(1) The wages of an absent parent shall be subject to withholding, regardless of whether support payments by such parent are in arrears, on the effective date of the order, except that such wages shall not be subject to withholding under this paragraph in any case where:

(i) One of the parties demonstrates, and the court or administrative process finds, that there is good cause not to require immediate withholding; or

(ii) A written agreement is reached between both parties which provides for an alternative arrangement;

(2) In addition to the amount to be withheld to pay the current month's obligation, the amount to be withheld must include an amount to be applied toward liquidation of any overdue support;

(3) The total amount to be withheld under paragraphs (i)(1), (i)(2) and, if applicable, (f)(1)(iii) of this section may not exceed the maximum amount permitted under section 303(b) of the Consumer Credit Protection Act (15 U.S.C. 1673(b));

(4) Withholding must be provided without the need for any amendment to the order or for any further action by the court or entity that issued it;

(5) The State must designate a public agency to administer wage withholding under this paragraph;

(6) The State must provide for notice to the employer to initiate wage withholding;

(7) The withholding shall have priority over any other legal process under State law against the same wages;

(8) The State may extend its system of withholding to include withholding from forms of income other than wages;

(9) The State must extend its withholding system under this paragraph so that the system will include withholding from income or wages derived within the State in cases where the applicable support orders were issued in other States; and

(10) The State must have procedures for promptly terminating withholding.

(j) Provision for withholding in other non-IV-D child support orders. Child support orders issued or modified in the State between October 1, 1985, and January 1, 1994, or are modified on or after January 1, 1994, must have a provision for withholding of wages, in order to ensure that withholding as a means of support is available if arrearages occur without the necessity of filing an application for IV-D services. This requirement does not alter the requirement governing all IV-D cases in paragraph (a)(4) of this section that enforcement under the State plan must proceed without the need for a withholding provision in the order.

8. Section 303.101 is amended by adding ", modify," after the word "establish" in paragraphs (b)(1) and (2); by adding the words "or modified" after the word "established" wherever it appears in paragraph (c)(1); and by adding ", modification," after the word "issuance" in paragraph (e).

[FR Doc. 90-19072 Filed 8-14-90; 8:45 am]

Billing Code