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Project 1099 - New York's Process

DCL-94-16

Published: February 15, 1994
Information About:
State/Local Child Support Agencies
Topics:
Case Management, Enforcement
Types:
Policy, Dear Colleague Letters (DCL), Promising Practices
Tags:
Independent Contractor, Internal Revenue Service (IRS), Toolkit & Training

Project 1099

February 15, 1994

DC94-16

TO ALL STATE IV-D DIRECTORS

Dear Colleague:

The purpose of this letter is to encourage States to use Project 1099
and to share with you New York's one-step process for verifying and
freezing accounts.  Project 1099 information can
facilitate States' efforts to locate income and asset sources of
not only self-employed and other non-wage earning obligors, but
also to locate additional non-wage income and assets of regular
wage earning obligors.  Such information is useful in determining
the non-custodial parent's ability to pay; reviewing and modifying
child support orders; and/or levying financial accounts, real or
personal property to pay delinquent child support.

As you know, OCSE obtains Project 1099 information from the Internal
Revenue Service (IRS) to assist State Child Support Enforcement
Agencies in their efforts to establish and enforce child support
orders.  There is a requirement, however, that the data must be
verified before it is used in court or redisclosed to third parties. 
New York's verification notices to financial institutions contain
one-step orders for verifying, levying and freezing accounts; thus
integrating verification into the procedure to reduce paperwork and
delay.

New York Process

New York plans to use Project 1099 data to attach accounts from a
variety of sources.  After receiving the 1099 data from OCSE, New
York loads the information on their statewide system, of which all
jurisdictions have access.  New York then determines whether
the obligor is in arrears.  Based on the Project 1099 data, New York
sends an information subpoena and restraining notice to the payor of
the income.  This may, for example, involve freezing and seizing
liquid assets such as bank accounts.  In other words, New York's
one-step process for  verification of a bank account also contains a
provision for freezing the asset.

New York's procedures, which were approved by the Internal Revenue
Service (IRS), are listed below:

     • Receive the Project 1099 information;

     • Determine that the absent parent is delinquent in making
          his/her child support payments;

     • Send an "information subpoena and restraining notice" to
          the financial institution identified in the Project 1099
          data.  The information subpoena requires the financial
          institution to verify the asset information from the
          Project 1099 data and the restraining notice prevents the
          absent parent from accessing the account.  No money,
          however, is taken from the account/asset at this point;

     • Notify the non-custodial parent of the intent to seize
          his/her assets to provide an opportunity for him/her to
          claim a "mistake of fact" (e.g., he/she is not the
          individual, the child support arrearage is incorrect, the
          order has been vacated, etc.);

     • When the "mistake of fact" determination is completed, send
          the appropriate document to the bank.  If the obligor does
          not contest the action or if the obligor is unsuccessful in
          contesting, the child support agency sends an execution
          order to the bank.  If the obligor is successful in
          contesting, the restraining notice is vacated and the
          obligor has full use of the asset.  If the obligor is
          successful in contesting the action, any fees or costs for
          freezing the account are reimbursed by the local child
          support agency.

States are encouraged to implement a similar approach for verifying
and freezing assets.

We hope that this information will assist you in utilizing the
Project 1099 information to the maximum extent possible.  If you have
any questions or need additional information, please contact Jim
Cudzilo of my staff on 202-401-9389.

                               Sincerely,



                        
                               David Gray Ross
                               Deputy Director
                               Office of Child Support Enforcement