Recoupment of a Child Support Overpayment, Guidance 2002
DATE: August 5, 2002
TO: State IV-D Directors
FROM: Sherrie Z. Heller, Ed.D.
Office of Child Support Enforcement
SUBJECT: Recoupment of a Child Support Overpayment
The Office of Child Support Enforcement (OCSE) has received several inquiries from states asking for policy guidance regarding options available for a state to recoup a child support overpayment. An overpayment can be a misdirected payment (payment sent to the wrong custodial parent by the state disbursement unit (SDU) vendor or state) or an erroneous payment based on a bad check or the reversal of an electronic payment due to insufficient funds. OCSE realizes that parents should not keep overpayments made in error. However, distribution rules for child support collections do not allow a state to recoup an overpayment of support through the intercept of a subsequent child support payment unless the custodial parent agrees. Many states require the state disbursement unit vendors to absorb overpayment errors when the vendor causes the error.
OMB Circular A-87 (attachment B, section 7) does not allow the Federal government to share in losses arising from uncollectible accounts and other claims, and related costs, unless specifically provided for in Federal program award regulations. Federal regulations for the IV-D program do not provide for participation in these costs. Therefore, as set forth in PIQ 97-03 dated May 20, 1997, the option for states to claim child support overpayments as an administrative expenditure is not allowed.
However, as explained in the response to question #13 in OCSE Action Transmittal 97-13, a state may recoup the overpayment from the next or subsequent child support payment only if the custodial parent agrees to allow the state to do so. Permission should be documented written authority from the custodial parent allowing the state to recoup any payment the parent receives in error. States have indicated that custodial parents often do not respond to state letters requesting permission to recoup an overpayment from the next or subsequent child support payment and have asked for additional acceptable methods for obtaining client permission.
States should have processes in place that minimize the need to pursue the recoupment of an overpayment. These include processes such as refusing further personal checks or requiring certified checks from obligors who have written bad checks and if the SDU is managed by a vendor, requiring the vendor to absorb its own errors. States with these processes in place can obtain client permission as follows:
- Client permission to recoup an overpayment may be obtained during the IV-D application process. A state may consider client permission as a document that the custodial parent signs and indicates by checking a ‘yes’ or ‘no’ box, that the state may withhold an incremental amount, at a reasonable rate, from future child support payments to correct an overpayment.
- When custodial parents do not respond to letters from the state requesting permission to recoup an overpayment from the next or subsequent child support payment, permission may be assumed when no response is received after a third letter asking for permission is sent to a custodial parent. Each letter of request needs to allow the custodial parent a specified number of days to respond. The final letter needs to indicate that if the parent does not respond within the specified period of time, permission to recoup the overpayment from subsequent child support payments will be assumed by default. Default consent is only valid for a particular overpayment occurrence and does not automatically authorize the state to recoup for future overpayments.
cc: ACF Regional Administrators
Regional Program Managers