Tanguler Gray, Commissioner, OCSE

Happy new year, everyone! This time of year is always a good opportunity to reset, assess, and chart a vision for the future. After a month in my new role as OCSE Commissioner, I’m starting to settle in and engage in this important process.

Part of this process is meeting staff and stakeholders at all levels, and I want to thank everyone so much for the warm welcome. I look forward to working with you to support children, families, individuals, and communities, especially as many continue to struggle during the pandemic. In FY 2020, the child support program collected $34.9 billion (PDF) and 95% went to families. This support was—and continues to be—a critical lifeline for families during the public health emergency. I applaud child support professionals nationwide who work every day to make our program so successful.

We must also continue our long tradition of developing innovative solutions that support families. I’m excited to join you in this endeavor and leverage my 27 years of child support and leadership experience in human services, including as deputy commissioner and IV-D director for the great state of Georgia. You’ll hear me often talk about engagement through my three Ps: People, Process, and Performance. Here is what those pillars mean to me:

• People: We must always prioritize the people we serve in our efforts to promote their economic and social well-being. It’s also important to cultivate good working relationships with our colleagues to successfully collaborate and advance our mission.
   
• Process: We should be open to revisiting and streamlining processes to ensure we are working efficiently and effectively.
   
• Performance: We should make data-driven decisions that support people and reflect progress or opportunities for improvement.

I hope this helped you learn a little about my communication and leadership styles and how I work. I will continue to share important updates with you directly through this monthly newsletter. You can make sure other child support professionals and stakeholders stay up-to-date, too, by encouraging them to sign up for the Child Support Report.

I look forward to engaging with you to set goals, gather ideas, share innovations, communicate openly, and move the child support program forward. Here’s to a great 2022 and beyond!

Scott Hale, Federal Collections and Enforcement Manager, OCSE

Going into January 2020, OCSE identified more than $118 billion in past-due support owed by more than five million noncustodial parents for the federal income tax refund offset program. Unfortunately, this staggering certified debt amount has continued to climb over the years. The good news is that we saw a decrease in certified debt for the first time when it dropped by more than $3 billion in 2020. We also received an unprecedented number of federal tax refund offsets disbursed to children and families.

The tax refund offset program collected more than $5.2 billion in 2020, a whopping 201% increase over 2019 ($1.7 billion) and easily eclipsing the previous highest collection year in 2008 ($2.8 billion). The 2020 record-shattering offset collections included intercepts from the first series of 2020 Economic Impact Payments (EIP) that were part of the Coronavirus Aid, Relief, and Economic Security Act. The law made the first round of EIPs subject to offset for past-due support, the same as any other tax refunds. As a result, child support offsets from EIPs netted nearly $3.5 billion (according to the Treasury Department), or 67% of total 2020 offset collections.

These record collections were not without their challenges. Because of their unprecedented nature and the speed in which the Treasury was required to issue EIPs, we also saw a record number of tax refund offset reversals (IRS “claw-backs”) for various reasons. OCSE’s federal collections team and senior leadership worked side-by-side with Treasury’s Bureau of the Fiscal Service and child support programs to identify, report, and resolve these issues as effectively and efficiently as possible.

2021 is the third-highest offset collection year

In 2021, the tax refund offset program collected nearly $2.7 billion, the third-highest year since the offset program started in 1992. While we don’t know specifically, we believe major contributors to 2021’s success were monies collected from the recovery rebate credits and unemployment compensation adjustments , both of which were eligible for tax refund offset. The advance child tax credit payments in 2021 were not eligible for tax refund offset.   

2022 may see lower collections

Without a crystal ball, it’s too early to tell what offset collections may be in 2022. If there are no special payments or additional credits available like in 2020 and 2021, we expect 2022 to be a normal offset year. However, we also believe that the advance child tax credit payments by the IRS in 2021 could have a large impact on what’s offset in 2022. Since many families have already received up to half of the child tax credit they’ll be eligible to claim when filing in 2022, that reduction may point to a lower collection year.

For more information, visit our OCSE webpage or email scollections@acf.hhs.gov.

Alice P. Jacobsohn, Esq., Government Relations, American Payroll Association

As the gig economy grows, more states are passing laws requiring employers to report independent contractors as new hires and to withhold and remit payments for child support. State definitions of “independent contractor” differ, and withholding amounts for them are not limited by the Consumer Credit Protection Act. While employers must comply with these laws, they may not be aware of the requirements or know what to do.

Steps to compliance

The first step for employers is to understand internal processes between payroll and accounts payable operations and how contractors are identified in management systems. Withholding from payments to gig workers would be managed differently than withholding from payroll. In general, independent contractors are paid through accounting departments that do not have systems established for child support withholding.

An employer’s automated payroll system may reject an order because the worker is not an employee, and the employer must add a manual process to send the order to accounts payable for a determination. Even then, individual contractor names may not be known because accounts payable entries use contractor business names.

The second step for the employer’s accounting department is determining the type of contractor and how they’re paid. If a hiring employer pays a contractor company where an individual works, the employer should notify the issuing agency, so that the issuing agency can send the child support order to the contractor company for processing. The individual is an employee of the contractor company, and child support can be managed through that company’s payroll department.

If an independent contractor is paid directly by the hiring employer, the employer should implement the withholding. Check state requirements for any supplemental information about maximum withholding percentages for nonemployees/independent contractors. Employers should be careful not to rely on “1099 workers” to determine if an individual is subject to withholding. The Internal Revenue Service’s 1099 forms are used to record a taxpayer's non-employment income. This may include stock dividends paid to employees or be required only for payments of $600 or more. State law may not define workers the same way for child support purposes.

Going forward, new procedures might be necessary for accounts payable to track independent contractors and for hiring managers to keep payroll departments informed. Payroll professionals could help develop these procedures because they are more familiar with child support processes.

Calculating withholding

Calculating withholding amounts for contractors can be difficult. Workers may not be paid on a set schedule and in consistent pay amounts. If an agency has not addressed this issue in guidance, employers should contact the agency for a determination on the amount of child support.

Creating awareness

Child support agencies can help employers and independent contractors understand what is required. Agencies can promote information in media that employers read. Educational sessions should include legal requirements for withholding child support from contractors and how to calculate the amount to withhold.