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Revised Program Instructions for Immediate Wage Withholding

AT-94-02

Published: March 11, 1994
Information About:
State/Local Child Support Agencies
Topics:
Case Management, Enforcement, Employer Responsibilities, Income/Wage Withholding
Types:
Policy, Action Transmittals (AT)

ACTION TRANSMITTAL

OCSE-AT-94-02 

March 11, 1994

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

SUBJECT:       Revised Program Instructions for the Statutory
               Requirements for Immediate Wage Withholding in All
               Child Support Orders Initially Issued In the State Not
               Being Enforced Under Title IV-D of the Social Security
               Act

STATUTORY
REFERENCE:     42 U.S.C. 666(a)(8)(B)

POLICY
ISSUANCES:     PIQ-93-08, PIQ-93-09 and DC-94-01

EFFECTIVE
DATE:          January 1, 1994


BACKGROUND:    This Program Instruction supersedes instructions
               contained in OCSE-AT-93-06 issued on April 5, 1993,
               and consolidates PIQs 93-08, 93-09 and Dear Colleague
               letter 94-01.

               Section 101 of the Family Support Act of 1988 (P.L.
               100-485) requires that, effective January 1, 1994,
               States implement immediate withholding in all support
               orders initially issued in the State which are not
               being enforced under title IV-D of the Social Security
               Act (the Act).  This program instruction provides
               guidance for States in enacting laws and developing
               procedures, in accordance with 42 U.S.C. 666(a)(8)(B),
               under which all child support orders which are
               initially issued in the State on or after January 1,
               1994, and are not being enforced under title IV-D of
               the Act are subject to immediate withholding.

               Subsequent to the issuance of OCSE-AT-93-06, we
               received several inquiries regarding the requirement
               at 666(a)(8)(B)(iii) and 666(b)(5) of the Act that
               non-IV-D withholding be administered by a public
               agency or publicly accountable entity.  In response to
               these inquiries we further emphasized and clarified
               options available to States in administering a
               non-IV-D withholding program.  These clarifications
               are contained in OCSE PIQ-93-08 dated December 28,
               1993, OCSE PIQ-93-09 dated December 30, 1993 and Dear
               Colleague Letter DC-94-01 dated January 4, 1994.  The
               information contained in these policy issuances has
               been used to update Section VI. Questions & Answers
               Regarding Statutory Requirements in this updated
               program instruction.


SUPERSEDED
MATERIAL:      OCSE-AT-93-06, except for Attachment:  State Plan
               Preprint page
               2-12-8B.

INQUIRIES:          ACF Regional Administrators

                                                              
                              David Gray Ross
                              Deputy Director
                              Office of Child Support Enforcement

I.   Introduction  

     This Action Transmittal sets forth the statutory requirements
     which States must meet in implementing section 466(a)(8)(B) of
     the Act.  States may choose to extend these immediate wage
     withholding requirements to apply to orders in non-IV-D cases
     which are modified after January 1, 1994, in addition to orders
     initially issued after that date. The instructions also address
     issues raised with respect to implementing immediate withholding
     in non-IV-D cases. 

II.  State Plan Requirements

     As a condition of Federal funding, a State must comply with the
     statutory requirements of Section 454 of the Act.  Section
     454(20) requires that the State IV-D plan provide that the State
     shall have in effect all of the laws required under the
     mandatory procedures established in section 466 of the Act.
     Since the requirements for non-IV-D withholding are part of the
     mandatory procedures set forth in section 466, States must
     demonstrate conformity with these requirements as a condition
     for having an approved State IV-D plan. Section 466(a)(8)(B) of
     the Act specifies that each State must have laws requiring the
     use of procedures under which all child support orders initially
     issued in the State on and after January 1, 1994 and which are
     not being enforced under Title IV-D will include provisions for:

              Immediate withholding, with exceptions for good cause
               and alternative arrangements;
              Withholding for overdue support in addition to current
               support;
              Limitations on amounts withheld based on the Federal
               Consumer Credit Protection Act (CCPA);
              Withholding without the need to apply for IV-D
               services or amendment to the order or further action
               by court/administrative authority;
              Administration of withholding by a public agency or a
               publicly-accountable alternative;
              Prompt distribution of amounts withheld;
              Employer requirements;
              Priority over other legal process against the same
               wages under State law;
              Optional extension to other forms of income;
              Extension to enforcement of orders of other States;
              Provisions for terminating withholding.

     These requirements will be described and discussed in the
following section.
  
     States failing to demonstrate conformity with the statutory
     requirements will be subject to State plan disapproval
     procedures outlined in OCSE-AT-86-21.  Non-conformity could
     result in the suspension of all IV-D funding as well as a
     portion of title IV-A funding to the State.


III. Explanation of Non-IV-D Withholding Requirements 

     Section 466(a)(8)(B) of the Act requires immediate withholding
     for all non-IV-D child support orders initially issued in the
     State on or after January 1, 1994.  In addition, by
     cross-reference, it extends the same statutory requirements
     applicable to title IV-D at paragraph (1) and, where applicable,
     paragraphs (2), (4), (5), (6), (7), (8), (9) and (10) of section
     466(b).  The specific requirements applicable in non-IV-D cases
     effective January 1, 1994, are:

A.   When Immediate Withholding Is Required;  Exceptions   

     The wages of a non-custodial parent must be subject to
     withholding, regardless of whether support payments by such
     parent are in arrears, on the effective date of the order.  As
     in the case of orders being enforced in IV-D cases, two
     exceptions to immediate withholding are permitted.  Wages shall
     not be subject to withholding in any case where: (1) one of the
     parties demonstrates, and the court (or administrative process)
     finds, that there is good cause not to require immediate
     withholding; or (2) a written agreement is reached between both
     parties which provides for an alternative arrangement.

B.   Limitations on Amounts Withheld 

     (1)  So much of the non-custodial parent's wages must be
     withheld as is necessary to comply with the order and provide
     for any fee to the employer which may be required, up to the
     maximum amount permitted under section 303(b) of the Consumer
     Credit Protection Act (15 U.S.C. 1673(b)) [CCPA]. 

     (2) If there are arrearages to be collected, amounts withheld to
     pay such arrearages, when added to the amounts withheld to pay
     current support and provide for the fee, may not exceed the
     limit permitted under such section 303(b), but the State need
     not withhold up to the maximum amount permitted under such
     section in order to satisfy arrearages.
    
C.  No Further Action By Court
    
     Withholding must occur without the need for further action
     (other than those actions required under these procedures) by
     the court or other entity which issued such order.

D.   Administration of Withholding by Public Agency 

     Withholding must be administered by a public agency designated
     by the State, and the amounts withheld must be expeditiously
     distributed by the State or such agency under procedures
     (specified by the State) adequate to document payments of
     support and to track and monitor such payments.

     The law also allows a State to establish or permit the
     establishment of alternative procedures for the collection and
     distribution of such amounts (under the supervision of a public
     agency) otherwise than through a public agency so long as:

     (a) The entity making the collection and distribution is
     publicly accountable for its actions taken in carrying out such
     procedures; and,

     (b) The procedures assure prompt distribution, provide for the
     keeping of adequate records to document payments of support, and
     permit the tracking and monitoring of such payments.

E.   Employer Responsibilities

     (1) The employer of any parent who is subject to immediate
     withholding in a non-IV-D case, upon being given notice of such
     action, must be required by the State to withhold from the
     non-custodial parent's wages the amount specified by the notice
     (which may include a fee, established by the State, to be paid
     to the employer unless waived by the employer). 

     (2) The employer must pay such amount (after deducting any fee)
     to the appropriate agency (or other entity authorized to collect
     such amounts withheld under the alternative procedure
     established by the State) for distribution.

     (3)  The notice given to the employer shall contain only such
     information as may be necessary for the employer to comply with
     the withholding order.

     (4)  Methods must be established by the State to simplify the
     withholding process for employers to the greatest extent
     possible, including permitting any employer to combine all
     withheld amounts into a single payment to each appropriate
     agency or entity (with the portion which is attributable to each
     individual employee being separately designated).

     (5)  The employer must be held liable to the State for any
     amount which the employer fails to withhold from wages due an
     employee following receipt by the employer of notice, but the
     employer shall not be required to vary the normal pay and
     disbursement cycles in order to comply with this paragraph.

     (6)  Provision must be made for the imposition of a fine against
     any employer who discharges from employment, refuses to employ,
     or takes disciplinary action against a non-custodial parent
     subject to wage withholding because of the existence of the
     withholding or additional obligations which it imposes upon the
     employer.

F.   Priority Over Other Legal Process 

     The State must provide that withholding of child support
     obligations be given priority over any other legal process under
     State law against the same wages.

G.   Other Forms of Income

     The State may take such actions as may be necessary to extend
     its system of withholding so that the system will include
     withholding from forms of income other than wages, in order to
     assure that child support owed by non-custodial parents in the
     State will be collected without regard to the types of such
     parents' income or the nature of their income-producing
     activities.

H.   Interstate Requirements

     The State must extend its withholding system so that such system
     will include withholding from income derived within the State in
     cases where the applicable support orders were issued in other
     States, in order to assure that child support owed by
     non-custodial parents in the State or any other State will be
     collected without regard to the residence of the child for whom
     the support is payable or of the child's custodial parent.

I.   Termination

     Provision must be made for terminating withholding.

J.   Due Process Requirements

     Withholding from income of amounts payable as support must be
     carried out in full compliance with all procedural due process
     requirements of the State. 

IV.   Availability of Federal Financial Participation (FFP)

     Although States are required to enact laws and procedures for
     non-IV-D withholding as a condition of having an approved State
     IV-D plan, the activities mandated at section 466(a)(8)(B) of
     the Act are for cases not being enforced under a IV-D State
     plan.  FFP is only available for services provided in cases
     receiving services under title IV-D of the Act. 

     However, in cases where a State has chosen to use its IV-D
     agency to implement
     non-IV-D withholding, FFP would only be available for the IV-D
     costs incurred in implementing a cost allocation system to
     identify expenditures in IV-D and non-IV-D cases.

V.   Exemptions

     The provisions at section 466(d) of the Act with respect to
     exemptions apply to the non-IV-D withholding requirements. 
     States may request, and OCSE may approve, an exemption from one
     or more of the requirements for the enactment of any law or the
     use of any procedure or procedures for non-IV-D withholding if
     the State can demonstrate that the adoption of such laws or
     procedures would not improve the effectiveness and efficiency of
     the State child support program.  Requests should be sent to the
     appropriate ACF Regional Office in accordance with regulations
     at 45 CFR 302.70(d) and program instructions set forth in
     OCSE-AT-88-19.

VI.  Questions & Answers Regarding Statutory Requirements

     1.  Question:  Must a public agency administer non-IV-D
     withholding?  What are possible options a State may consider in
     meeting the administrative requirements?

     Answer:  The State must specify which public entity is
     responsible for immediate wage withholding in non-IV-D cases. 
     As the Federal statute provides, a State may establish, or
     permit the establishment of, alternative procedures to carry out
     non-IV-D withholding as long as the entity it designates is
     under the supervision of a public agency.  The entity must
     follow procedures which will assure prompt distribution of
     amounts withheld, provide for the keeping of adequate records to
     document payments of support, and permit the tracking and
     monitoring of such payments.
 
     A State could designate the IV-D agency, or the entity which
     administers withholding in IV-D cases, to be responsible  for
     the administration of non-IV-D withholding.  If so, there must
     be a system for allocating costs between IV-D and non-IV-D
     operations, since FFP is not available for providing services to
     non-IV-D cases.

     A State could also opt to designate clerks of court or other
     appropriate judicial entities to administer non-IV-D
     withholding, since immediate withholding is applied at the time
     the support order is initially entered. 

     Alternatively, the State could choose a private entity, such as
     a bank, to administer this activity in non-IV-D cases, or opt
     for a procedure where the employer sends the withheld amount
     directly to the custodial parent's bank account through
     electronic funds transfer (EFT) or by check.  The bank records
     associated with the custodial parent's account would provide an
     adequate payment record.  A bank, whether under contract to the
     State to handle all payments, or a number of banks with
     individual custodial parent bank accounts, would meet the test
     for an alternative system, since a bank is publicly accountable
     entity under both State and Federal law.  This approach would
     assure prompt distribution, provide for keeping adequate records
     to document payment of support, and permit the tracking and
     monitoring of such payments. 

     2.  Question:  Must the State designate only one entity in each
     jurisdiction to administer withholding?

     Answer:  No.  Although IV-D regulations at 45 CFR
     303.100(g)(2)(ii) require that States may designate only one
     entity to administer withholding in each jurisdiction, such a
     restriction does not apply to withholding in non-IV-D cases.

     3.  Question:  If there is no FFP for non-IV-D withholding
     activities, may the State pass costs on to the user through fees
     or other cost recovery systems? 

     Answer:  Yes. States may finance their withholding
     responsibilities in non-IV-D cases by charging fees and
     recovering costs.  States may recover the full cost of
     administering withholding in non-IV-D cases from the custodial
     parent or non-custodial parent.  The $25 annual fee restriction
     in 45 CFR 302.57(b)(3) does not apply to recovery of costs for
     performing non-IV-D withholding activities.

     4.  Question:  Is non-IV-D withholding subject to specific
     regulatory requirements at 45 CFR 303.100, for timeframes for
     distribution of amounts withheld?

     Answer:  No.  Federal regulatory requirements applicable to IV-D
     cases do not apply to immediate wage withholding in non-IV-D
     cases.
     5.  Question:  Must States meet the criteria in Federal
     regulations for a finding of good cause or for an alternative
     arrangement in IV-D cases in extending immediate withholding to
     non-IV-D cases?

     Answer:  No.  Federal regulations at 45 CFR 303.100(b)(2) and
     (3), which set certain minimum criteria for good cause findings
     and alternative arrangements in IV-D cases, do not apply to
     non-IV-D cases.  Consequently, States may develop their own
     criteria for non-IV-D cases which differ from or are consistent
     with those required under IV-D regulations.   States could, for
     example, design criteria for alternative arrangements which
     allow the parents, in cases in which they do not want payments
     to go through the public agency or publicly accountable entity,
     or do not want to pay any fee that may be imposed, to choose on
     a case-by-case basis to have withholding implemented through a
     system where the employer would send withheld amounts directly
     to the custodial parent (as opposed to the public agency or
     publicly accountable entity).  States would still need to
     establish a system for non-IV-D withholding which meets the
     mandatory requirements at 42 USC 666(a)(8)(B), but the volume of
     cases under that procedure may be lessened by affording parents
     an alternative arrangement.
     6.  Question:  Is the State responsible for sending the notice
     of withholding to the employer in non-IV-D cases effective
     January 1, 1994?

     Answer:  No.  Federal statutory requirements for withholding in
     non-IV-D cases do not require States to send the withholding
     notice to the employer.  States may choose to do so or may
     direct the obligor, obligee, or their attorneys, to send the
     withholding notice to the employer as soon as the initial child
     support order is issued.

     Many States have already developed standardized wage withholding
     notices which incorporate the information which must be given to
     employers.  States may adapt these documents for use in non-IV-D
     situations.

     7.  Question:  Is the State required to take enforcement actions
     in non-IV-D cases when there have been good cause findings, or
     alternative arrangements and the non-custodial parent
     subsequently becomes delinquent in an amount which would trigger
     an initiated withholding under IV-D requirements?  Or when the
     non-custodial parent leaves employment and becomes delinquent?

     Answer:  No.  The statute does not require the State to take
     enforcement actions, initiate, or to re-initiate withholding in
     non-IV-D cases beyond subjecting the non-custodial parent to
     immediate withholding when a child support order is initially
     issued in the State.  Enforcement of withholding orders may be
     done by States or left to obligees or their attorneys to take
     such action.  Any individual who wants child support enforcement
     services may also apply for IV-D services.

     8.  Question:  What are the State's responsibilities with
     respect to allocation of withheld amounts when there are
     multiple withholding notices involving both non-IV-D and IV-D
     cases for a single non-custodial parent? 

     Answer:  If multiple withholdings from a single non-custodial
     parent's earnings involve both a IV-D and a non-IV-D case,
     Federal requirements must be applied to all withholdings with
     respect to that non-custodial parent.  Federal regulations at 45
     CFR 303.100(a)(5), governing IV-D cases, require States, in
     cases where there are more than one withholding against a single
     non-custodial parent, to allocate withholding, but in no case
     should the allocation result in one family getting nothing.  For
     consistency, States may choose to adopt allocation methods
     mandated in Federal regulations for IV-D cases for all
     withholdings, whether IV-D or non-IV-D. Since receipt of current
     support is essential to many families, the State should attempt
     to ensure that current support is paid first to any family due
     current support.

     9.  Question:  Do the specific criteria for termination of
     withholding in IV-D cases apply to non-IV-D withholding?

     Answer:  No.  Federal regulations at 45 CFR 303.100(a)(7)  which
     set certain minimum criteria for termination of withholding in
     IV-D cases do not apply to non-IV-D cases.