Multistate Financial Institution Data Match
February 22-23, 2001
On February 22-23, 2001, the Federal Office of Child Support Enforcement (OCSE) convened the Multistate Financial Institution Data Match (MSFIDM) Working Session at the Grand Hyatt in Washington D.C. There were 123 participants, including representatives from 40 states, 22 financial institutions and OCSE.
Acting Commissioner, Frank Fuentes welcomed the participants. He noted that the purpose of the working meeting was to affirm what is working well and what components need improvement in the multistate data exchange and the ensuing lien and levy actions on matched accounts. The format of the meeting encouraged participation by all attendees to assure that all issues were correctly identified and the widest number of solutions were proposed. The format included two plenary sessions, full group discussions and four breakout sessions. A copy of the agenda is included in the attached presentation.
The following information summarizes the discussions on what is working well in data processing, data quality, and lien and levy processing.
Data Processing/Data Quality
The partnership between 54 States and Territories, OCSE, and 4,231 multistate financial institutions (MSFIs) is working extremely well. OCSE’s Fourth Quarter 2000 statistics reveal that over one million accounts associated with 696,274 obligors were transmitted to the States and territories. Donna Bonar recognized the wonderful support the program has received from the financial institution associations, including:
Gordon Glaza, American Banking Association
Steve Neiss, Securities Industry Association
Colleen Kelly, Credit Union National Association
Kathleen Joaquin, Investment Company Institute
The communications between OCSE and the MSFIs is also working well. The OCSE Help Desk has provided high level technical service to MSFIs, and MSFIs have been very responsive to the concerns expressed by OCSE. These communication links have resulted in prompt responses to errors in the data identified by the States. For example, some MSFIs, in error, match the OCSE Inquiry File against FEINs, the tax identification number for businesses and estates. Once notified, these institutions have quickly altered their subsequent runs to match against SSNs only.
The Data Match Specifications, approved March 5, 1999, have been adopted by 54 States and Territories and all financial institutions nationwide. The specifications are used for the Single State as well as the Multistate matching processes.
Use of this common language reduces the financial institution/transmitter programming costs and greatly enhances the exchange of information and pursuit of assets in interstate cases. MSFIs are complying with the terms of their MSFIDM Election Forms. With few exceptions, MSFIs are submitting the response files within the 45-day timeframe and OCSE is forwarding all matched data received within 48 hours to States and Territories.
Liens and Levies
OCSE and States believe that MSFIs and their associations are extremely positive about the Child Support Enforcement program and asset seizures. Conference participants noted that this positive approach to problem solving was deeply appreciated.
States report that they have received courteous response to their actions from Multistate levy processing staff. In most cases, States are also pleased with the prompt responses to their liens and levy. States like the accurate payments and explanatory statements received from Multistate institutions when a levy is not honored.
MSFIs are honoring a significant number of interstate actions. OCSE estimates 78% of all matches distributed in the fourth quarter 2000 can be acted on by a single state.
Overall, MSFIs are returning good account and address information and are acting in a prompt manner on lien and levy actions.
Multistate representatives appreciate that the quarterly data match has resulted in levies that accurately identify the account holder and the account(s) to be attached. This accurate identification, which eliminates the "shot gun" approach to asset seizure, greatly reduces the institution’s cost of processing lien and levy actions.
Multistate representatives are happy to see that the quarterly match has eliminated the need for most states to issue an information subpoena before acting on identified accounts. This practice was common when using Form 1099 data which was more than a year old when distributed to the states; it is no longer necessary with the quarterly reporting.
WHAT DOESN’T WORK
COMMENTS AND PROPOSED SOLUTIONS
The following information summarizes the discussions on what is not working well in the program and provides the comments and proposed solutions for each issue.
Data Processing/Data Quality
Problem: MSFIs are often involved in mergers and acquisitions. OCSE is not always notified when an institution is merged or acquires another institution. Tracking compliance with the OCSE Election Form and notifying States of changes in response files is compromised if OCSE is not informed.
Proposed Solutions: OCSE should enclose a reminder sheet in the Inquiry File package that informs MSFIs of the importance of notifying OCSE of pending changes/mergers and acquisitions. MSFIs should notify the central points of contact at OCSE: the Help Desk and/or OCSE. Once informed, OCSE should notify State MSFIDM Coordinators of mergers and/or acquisitions, including changes in multistate FEINs. Notification should be via e-mail and similar information should be posted on the OCSE website.
Problem: The "A" Record address (Data Specification fields 131-210) is the address to which a levy should be mailed. OCSE assumes that MSFIs that provide only one address for all matched accounts in the "B" Record are notifying all States that they will honor interstate liens and levies on the matched accounts. Some MSFIs have refused to honor interstate liens and levies although they submit only one "A" Record.
Comments: Quarterly, OCSE provides MSFIDM Coordinators with a list of MSFIs with a single "A" Record. This list is used by States to determine which MSFIs will accept interstate liens and levies. Currently, OCSE notes that 78% of all quarterly matched accounts are associated with one "A" Record. OCSE asks that State MSFIDM Coordinators notify Ann when an institution on the list fails to honor an interstate lien or levy. Ann then works with the institution in an effort to get them to accept interstate actions or provide multiple "A" records with associated "B" Records for each State in which they do business. This line of communication seems to be working and there were no new solutions proposed.
Problem: OCSE has the capability to support a variety of media for data transmission. However, OCSE is not currently supporting electronic responses to the Inquiry File.
Proposed Solution: OCSE should ask the MSFIs and their transmitters for volunteers to pilot electronic data transmission. This pilot would include provisions for and testing of all required security measures.
Problem: Some MSFIs have matched the Inquiry File SSN against account holder FEINs resulting in an erroneous match.
Comment: SSA issues SSNs with 9 digits. IRS also issues FEINs with 9 digits. It is entirely possible that an obligor’s SSN is the same as a business or trust FEIN. States are asked to look carefully at all matched records, particularly at the full legal title on the account to assure accurate liens and levies. States are also asked to notify OCSE immediately when a SSN/FEIN match is discovered so that the institution and their transmitter can make the required programming changes. OCSE has found that institutions are very prompt in rectifying this error.
Problem: The Data Match Specifications do not clearly describe how to indicate that a matched account has been closed. The same value (0) can be used in position 359 to indicate if the matched account is not registered as a trust or escrow or if the matched account is closed.
Proposed Solution: 1) Allow for an account closed indicator in Data Specifications field 359. The description accompanying position 359 would need to be edited to insure that the new indicator was used properly, or 2) use Data Specifications field 360, currently blank, exclusively for closed accounts.
Participants suggested a "1" if the account is closed and a blank if the account is open and active, or 3) use Data Specifications field 362 for Method Two as this field is used for identifying closed accounts for Method One.
Problem: Foreign banks do not maintain SSNs on account holders. Non-Resident Aliens have been given a unique Individual Taxpayer Identification Number (ITIN) by the IRS which is not recorded or maintained by the SSA.
Comments: Southern, southwestern and northern boarder States often have delinquent obligors who have deposited sums in foreign institutions and/or are non-resident aliens. ITINs cannot be verified by SSA. Further, all MSFIDM obligor names and SSNs are verified by SSA before they are added to the MSFIDM Inquiry File.
Proposed Solution: OCSE should work with the IRS to determine if there is a way to verify ITIN data.
Problem: MSFI transmitters subject to internal revisions to their systems may decide to delay response records and become non-compliant with the terms of OCSE’s Election Form without notifying the MSFI Compliance Officer.
Solution: Remind MSFIs that compliance with the federal and state law is their responsibility. Transmitters are the agents of MSFIs and have no direct agreements with OCSE or the States.
Problem: The Data Match Specifications Response Record’s field162-201 (matched name) and field 202-241 (2nd payee name) do not have required formats. Therefore, the names returned to States may or may not be last name first. This disparity makes it difficult for some State systems to accurately compare the matched record with their delinquent obligors.
Comments: MSFIs do not have a common format for entering names into their systems. Requirements to reorder the matched name to a common format would not be supported by the industry since doing so would be very costly. Some States, Florida for example, have developed an automated process to deal with this problem.
Proposed Solutions: 1)Add an indicator to the "B" and "MC" records stating whether the institution is submitting last name first or last. The indicator must apply to both primary and joint account holders, or 2) Ask MSFI transmitters to inform OCSE of their unique name formats so that OCSE can reorder the names to a uniform format before sending the file onto States.
Problem: States are concerned when certain data fields are not filled in. If the balance in the account is not provided, the State may be required to issue a subpoena for the information creating a great deal of paperwork for the MSFI. Some MSFIs are not populating field 401indicating whether the account is a sole or joint account. Also, field 162-201, may echo the name MSFIs receive on the Inquiry File.
Proposed Solution: Educate MSFIs and their transmitters on the importance of populating the account balance field and account identification fields. Also, educate MSFIs about providing the account holder name from their records.
Problem: Some States commented that the delinquent obligor addresses returned by MSFIs were not as current as the addresses maintained by the State. Also, some States are required to notify all account holders when a lien is issued but the address of the other account holders is not always provided in Data Specifications field 419.
Comments: MSFIs return the most recent or current address they maintain on their account records. These addresses are used routinely to provide the account holder with account status updates (monthly statements).
Proposed Solution: Educate the MSFIs and their transmitters about the importance of providing the second account holder address.
Lien and Levy Processing
Comments and Solutions
Problem: Volumes and the uniqueness of each state’s lien and levy forms and processes are a problem for many MSFIs. Some MSFIs have received far more liens than they can process before the notice to the obligor is sent by the State. In these circumstances, the obligor receives the notice of lien before the account is actually frozen and often removes the account funds before the lien is entered into the MSFI system. Unique State forms also slow lien processing. Some States issue only one form for both the lien and levy while others issue their liens and levies forms separately; some States have a 10 day lien period before the release of funds while others may freeze an account for months before requesting the release of funds. Some States require that all assets located in the institution be frozen, other States seek to freeze only the identified account. The variations are endless. This combination of large volumes of distinctly different forms and processes impedes the timely processing of State actions.
Proposed Solutions: Several solutions were proposed by a breakout group.
With regard to volumes, participants suggested that States and MSFIs explore the advantages of electronic transfer of lien requests. New Jersey is currently working with several institutions to electronically transmit liens. State electronic transmissions interface directly with MSFI databases to freeze (or lien) accounts thereby eliminating the costly and time consuming MSFI clerical processes required to receive, extract, and key data for each and every action received.
Volumes can also be better managed by States if they have the ability to stagger large numbers of liens and levies over a predetermined period of time. Typically, States that have centralized systems are capable of issuing large numbers of liens and levies in a single day. These States could work with those MSFIs with large numbers of actions in the queue to determine the optimal lien release numbers and dates. California’s Franchise Tax Board (FTB) has several years of experience doing this with their large institutions.
With regard to the many unique-to-state forms, the overall consensus of the breakout group was to develop a three-part form. The first page would be the levy, the second would be the reply from the financial institution to the child support agency, and the third would act as a notification to the obligor if the financial institution had the requirement to notify the obligor.
Financial institutions noted that they liked the IRS service of lien and levy processes and their three-part form. Participants urged exploration of the possibility of using electronic signature(s) on the form, as financial institutions require a signature.
The breakout group recommended the following data elements be included in the three-part form:
Breakout group participants noted that there were several internal-to-states barriers to overcome in order to gain universal use of a common lien and levy form. They include changes in State law (the single largest barrier), changes in State administrative rules and automated systems and the resultant costs. Financial Institution barriers were far fewer, if not non-existent. MSFIs present saw need for training, but no noticeable barriers.
Participants recommended that a small, formal workgroup be tasked to propose a standardized form. Members should consist of State and regional staff, financial institutions (large and small) and OCSE.
Problem: Although the majority of MSFIs accept and process interstate liens and levies, some do not. Some MSFIs believe that the Social Security Act does not explicitly mandate that MSFIs accept interstate actions and in the absence of such a provision State jurisdictional boundaries should be honored. Institutions that refuse to accept interstate actions require that liens and levies arise from the State in which the account is located. States, in these instances, must open a two state case or attempt the current Administrative Enforcement of Interstate Cases (AEI) substitute process: sending a Transmittal #3 requesting that the account be attached by the other/account location State. Both of these options are slow and costly to States.
Proposed Solutions: Three proposed solutions were discussed: 1) Assess the potential for Affidavits to authorize interstate lien and levy actions, 2) Amend the Social Security Act to provide the needed authority, or 3) centralize the MSFIDM lien and levy process at OCSE. Other solutions include urging all States pass laws to require their financial institutions (FIs) give "full faith and credit" to all interstate lien and levy requests.
The Affidavit proposal was discussed at length. The proposal envisions a form that accompanies each interstate lien attesting to the fact that the State placing the lien has complied with requirements of the account location State and it’s due process laws before submitting the lien. The perceived advantages include: 1) the lien (freeze) is in effect as soon as possible and questions arising from the Affidavit can be answered while the asset is frozen, 2) the States recognized authority completes the Affidavit, shielding the MSFI.
The disadvantages are 1) due process is the problem and this solution does not seem to address that point, 2) States would have to sign Reciprocal Agreements and each State would still need to be familiar with every other State’s laws on due process and certification requirements related to liens and levies, and 3) a State Affidavit will likely carry no legal weight/protection since it does not shield the FI’s for liability or provide a legal authority. Unless a 145global’ Affidavit is developed and required, States would still have different forms. Such a form would likely still need to be federally required in order that all States comply 150 a long and difficult process.
Revisions to Section 466 of the Social Security Act and/or UIFSA to require that financial institutions accept interstate liens and levies were also discussed at length. The driving concept was one of standardization; until forms and processes are standardized in law and practice, inefficient and often ineffective interstate actions will prevail. Standardization included: 1) a common and federally required form, similar to the federally developed Income Withholding document, 2) revision of the Social Security Act and UIFSA to include specific language for forms and requirements that FIs honor interstate liens and levies. Should Congress make these revisions, each and every State would have to revise their laws accordingly.
Participants also discussed revisions to account definitions. Section 466 is account specific. A proposal to add "including, but not limited to" language to the account definitions was opposed by MSFI participants who preferred that the lien process be standardized to direct the lien action to the obligor and all assets held by that obligor. This would allow the FI to work with their customer to determine which accounts and assets will be used to satisfy the debt.
Centralizing the MSFIDM lien and levy process in OCSE would involve changes in law, but the changes may be preferable to revisions in Section 466 and UIFSA as they can be made solely at the federal level. This concept envisions OCSE acting as an agent of the States, processing state actions similar to the current Federal Offset Program process. As with the offset process, the debt would remain a State obligation and States would be obliged to provide all due process and appeals. This option also envisions a common form, electronic transmissions and where needed streaming out actions to MSFIs in an agreed upon manner to avoid peak volume processing.
The breakout group participants recommended that OCSE establish, with the sponsorship of the IV-D Directors, a workgroup tasked to develop language and requirements for a common lien and levy form draft changes in law to either Section 466 and UIFSA, and/or centralize the process at OCSE.
The Workgroup could also be tasked to develop and model State adoption language, if the changes to Section 466 and UFISA option is pursued. Breakout participants recommended that the recommendations for a revised standardized form and proposals for changes in law be proposed to the new administration as an efficiency measure.
Problem: If an FI refuses to accept Interstate actions, States with accounts located in another State must use a process to request action on an identified account. Federal law envisioned that these requests could be automated. However, to date no automated process has been adopted.
Comments: MSFIDM locates accounts nationwide. Instate consortia can also use automation to locate accounts once States have agreed on a process. Pilot projects and the examination of Limited Services has yet to uncover a cost/effective means of automating account lien and levy requests nationwide.
Proposed Solutions: The breakout group proposed a short-term solution, one to use until an automated process is developed. The breakout group recommended the use of UIFSA Transmittal #3 to pursue accounts located and unattainable in other states. The breakout group acknowledged that OCSE maintains a State matrix of Transmittal #3 information on its website for each State’s threshold and requirements. Until recently, Transmittal #3 was voluntary and only 29 States had agreed to accept and process Transmittal #3 requests for MSFIDM identified accounts. Action Transmittal (AT) 00-11 made acceptance of Transmittal #3 requests mandatory for UFISA requests, but not specifically MSFIDM requests. The group recommended that OCSE work with all States to accept Transmittal #3 until a nation wide automated exchange is adopted. The other short-term proposal is to register orders and open a two-State process.
Problem: State personnel often lack knowledge of financial institution terminology, and are unclear about the laws and process of other States and the processes used by MSFIs. Similarly, financial institutions are often seeking a common point of reference for State terminology and processes.
Proposed Solutions: OCSE could provide an expanded website for both the Instate and MSFIDM that could include a dictionary of State and financial institution terms, list State law and lien and levy process, list States with law providing for the "Full Faith and Credit" to all interstate liens and levies, and maintain copies of every State’s lien and levy form. The website could also include a note pad, where States could record their MSFI experience (e.g., does the FI attach only those funds that are in the account at the time of attachment or are funds added during the lien processes also attached?) and MSFI contact name and phone numbers.
Problem: MSFIs are not attaching payment coupons to their asset seizures. Typically, State Disbursement Units use coupons to associate payments to case data.
Solution: MSFIs explained that they often use data imaging to record and process seizures. Tracking coupons or attaching coupons is simply impossible. MSFIs advised States to place a tracking number and request on the levy document to "provide this case account number on all payments" or "make payable to account #________". Some States noted that they had worked around this problem by directing all their MSFIDM lien and levy mail to a special P.O. Box number.
Donna Bonar closed the conference noting that this truly had been a working conference. OCSE is committed to taking the next steps: