Final Rule: Disregard of Child Support Payments
DATE: July 1, 1988
SUBJECT: Disregard of Child Support Payments--Final Regulations
TO: STATE AGENCIES ADMINISTERING CHILD SUPPORT ENFORCEMENT PLANS UNDER TITLE IV-D OF THE SOCIAL SECURITY ACT AND OTHER INTERESTED INDIVIDUALS
ATTACHMENT: Attached are final regulations issued by the Office of Child Support Enforcement, Department of Health and Human Services (HHS) which revise the Disregard of Child Support Payments regulations at 45 CFR Parts 302 and 303. These final rules implement section 2640 of the Deficit Reduction Act of 1984 (DRA) which amended the Social Security Act to require that the first $50 collected on a monthly support obligation be paid to the Aid to Families with Dependent Children (AFDC) family. This amount does not affect the family's AFDC eligibility or the amount of assistance to which they are entitled. In addition, this final rule revises current requirements which result in AFDC families not receiving the $50 pass-through when support payments are made to a State IV-D agency or a legal entity of the State or political subdivision on time but are not received on time by the agency responsible for final distribution of the collection.
EFFECTIVE DATE: October 1, 1988, except for the definition of date of collection in §302.51(a) which is effective June 9, 1988.
RELATED REFERENCE: OCSE-AT-84-9, dated September 19, 1984.
INQUIRIES TO: OCSE Regional Representatives
Wayne A. Stanton
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Office of Child Support Enforcement
45 CFR Parts 302 and 303
Child Support Enforcement Program; Disregard of Child Support Payments
AGENCY: Office of Child Support Enforcement (OCSE)
ACTION: Final rules
SUMMARY: These final rules implement section 2640 of the Deficit Reduction Act of 1984 (DRA) which amends the Social Security Act to require that the first $50 collected on a monthly support obligation be paid to the Aid to Families with Dependent Children (AFDC) family. This amount does not affect the family's AFDC eligibility or the amount of assistance to which they are entitled. In addition, this final rule revises current requirements which result in AFDC families not receiving the $50 pass-through when support payments are made to a State IV-D agency or a legal entity of the State or political subdivision on time but are not received on time by the agency responsible for final distribution of the collection.
EFFECTIVE DATE: October 1, 1984.
FOR FURTHER INFORMATION CONTACT: Carol Jordan, (202) 245-1979.
Section 2640 of the DRA (P.L. 98-369) amended section 457(b) of the Social Security Act (the Act) to require States to pay the first $50 of support collected on the monthly support obligation to the AFDC family. This statute also amended section 402(a)(8)(A) of the Act to require States to disregard "the first $50 of any child support payments received in such month" when determining AFDC eligibility and the amount of the AFDC payment. The result of these changes is that AFDC families affected by this statute will have up to $50 of additional disposable income each month.
Interim Final Regulatory Provisions
Interim final regulations published on September 10, 1984 (49 FR 35604) amended paragraphs (b)(1) and (b)(2) of 45 CFR 302.51 to conform Child Support Enforcement program regulations with amended section 457(b) of the Act. The resultant distribution policy is that the first $50 of a current supportcollection is paid to the AFDC family. If the current support collection is less than $50, that amount is paid to the family.
These regulations apply to collections of current support only, not to collections of arrearages and provide that, if an AFDC family receives support from more than one absent parent, only the first $50 of the total amount collected shall be paid to the family.
45 CFR 302.32(b) of current regulations requires the IV-D agency to inform the IV-A agency of the amount collected on the monthly support obligation as determined under §302.51(a). State IV-D agencies and State IV-A agencies should consult on the best means of transmitting information on amounts collected and monthly support obligations to facilitate the payments by the IV-A agencies to AFDC families and the related disregard in determining AFDC eligibility and payments.
Related interim final regulations were published in the Federal Register (49 FR 35586) on September 10, 1984 by the Office of Family Assistance (OFA) to address AFDC program requirements concerning the $50 disregard.
Changes in Response to Comments
In addition to changes made in response to comments, this final regulation includes a technical change to the fourth sentence in paragraph (b)(1) of §302.51. The word "represents" is changed to "represent".
In response to comments from an advocacy group, this final regulation revises the definition of "date of collection" contained in paragraph (a) of §302.51. This final regulation defines the "date of collection" as the date a payment is received by the IV-D agency or the legal entity of the State or political subdivision actually making the collection, whichever is earliest. It deletes the separate definition of date of collection in interstate cases and makes a conforming change to §303.7(c)(7)(iv).
Response to Comments
We received eleven comments on the interim final regulation. Ten were from State and local government agencies and one was from an advocacy group. A discussion of these comments and our responses follows:
Comment: One State agency and two local jurisdictions requested clarification regarding whether incentives are paid on the $50 payment made to the family under these regulations.
Response: The State is eligible for incentives on the $50 payment to the family. Prior to enactment of the Child Support Enforcement Amendments of 1984(Pub. L. 96-378), only amounts collected which were used to reimburse assistance payments were eligible for incentive payments under section 458 of the Act. Section 5 of Pub. L. 98-378 amended section 458 of the Act effective October 1, 1985 to provide incentives on all AFDC and non-AFDC collections, regardless of whether they are retained by the State or paid to the family. Section 5 of Pub. L. 98-378also amended section 458(a) of the Act through September 30, 1985 to provide incentives on the $50 payment prior to the October 1, 1985 effective date of the expanded incentive payments system. Therefore, incentives will be paid on the $50 payments beginning with the effective date of October 1, 1984 and will continue to be paid on such payments thereafter.
Comment: One State agency recommended that a $50 increase in the AFDC payment standard for all AFDC recipients be substituted for the $50 payment.
Response: These regulations merely implement the requirements in the amended statute. This recommendation cannot be implemented under current law.
Comment: One State commented that the October 1, 1984 effective date does not permit States to plan for program changes.
Response: The effective date is statutory and cannot be changed by regulation. The program changes required by these regulations should not be substantial, since both IV-A and IV-D agencies are already involved in distributing money to families and therefore have mechanisms in place for distribution.
Comment: Two State agencies asked if the $50 disregard includes a spousal support.
Response: The $50 payment applies to both child and spousal support. This conforms to section 12 of Pub. L. 98-378 which requires State IV-D agencies to collect spousal support if a support obligation has been established with respect to the spouse and the IV-D agency is enforcing the child support order.
Comment: One State commented on the administrative difficulty of disregarding the $50 payment for purposes of AFDC benefits while ensuring that this amount is considered in the computation of Food Stamp benefits.
Response: The statute mandates the disregard only for determining AFDC eligibility and the amount of the assistance payment. Under current statute, no comparable disregard applies to the computation of Food Stamp benefits.
Comment: One State and one advocacy group recommended that either the IV-D agency issue the $50 payment to the family or States be given the flexibility to determine which agency makes the payment to the family.
Response: The IV-A agency already has a system for making assistance payments each month to individuals receiving AFDC. We believe the administrative burden will be less if the IV-A agency makes these $50 payments as well. However, the regulations do not prohibit the IV-A agency from entering into an agreement with the IV-D agency to make the payments, as long as the IV-A agency retains overall responsibility for the payments.
Comment: One State agency recommended that no disregard be allowed on direct support payments retained in violation of 45 CFR 232.12(b)(4). (This section requires that support payments received by an AFDC applicant or recipient from an absent parent be paid to the IV-D agency.)
Response: Cooperation of an AFDC applicant or recipient in obtaining support is required under title IV-A of the Act and regulations at 45 CFR 232.12. If an AFDC applicant or recipient refuses to cooperate without good cause as determined under 45 CFR 232.41, the IV-A agency must deny assistance to the caretaker relative and provide assistance to the eligible child(ren) in the form of a protective payment. However, if there is an AFDC payment made on behalf of a child, the first $50 of current support must be paid to the family pursuant to section 457(b)(1) of the Act (regardless of whether it is received directly by the family). The amount of the assistance payment or the actions of the payee do not affect distribution of the support collection.
Comment: Two State agencies recommended that each household be paid $50 from the support collection when the children for whom support is collected are living in different households.
Response: We agree with the commenters that, in the situation described above, each family should receive a $50 payment as a result of a support collection. If the collection is insufficient, the amount collected should be prorated between the households.
Comment: One State agency recommended we add to §302.51(b)(1) that "* * * in no case shall the total amount paid and disregarded exceed $50 per month per assistance unit." This would prevent duplicate payments when an AFDC family receives a direct payment from one absent parent and the IV-D agency makes a current support collection from another absent parent in the same month.
Response: We believe that this issue is adequately addressed in §302.51(b)(1) which provides that only the first $50 of the total amount collected shall be paid to them. If a family receives a direct payment from one absent parent and the IV-D agency collects current support from another absent parent for the same month, the State would recover the direct payment in full if it has already paid $50 from the direct payment, any other IV-D collections for that month would be distributed without making another $50 payment. For this reason, we are not revising the language contained in the interim final regulations.
Comment: One advocacy group opposed limiting the $50 payment to amounts paid from current support only.
Response: Section 457(b) of the Act as amended by section 2640 of the DRA refers to "amounts as are collected periodically which represent monthly support payments." We interpret this phrase to refer to current support payments only. This is consistent with our 1975-76 policy interpretation of a similar provision in the original law which established the Child Support Enforcement Program under title IV-D of the Act (Pub. L. 93-647). Under that provision, 40 percent of the first $50 collected which represented partial or complete payment of the support obligation for the current month was passed through to the AFDC family. This policy interpretation encourages voluntary and timely compliances with support orders. Congress clearly intended the $50 payment to serve the purpose of promoting cooperation of both absent parents and custodial parents. This purpose can be promoted only if incentives are ties to compliance with the support order when each payment is due.
After consideration of this comment and concern that $50 payments should be made to AFDC families whenever a current support payment is received timely be a legally accountable public entity, this final rule revises the date of collection for distribution purposes. This regulation defines the date of collection for distribution purposes in all cases as the date on which payment is received by the IV-D agency or the legal entity of the State or political subdivision actually making the collection, whichever is earliest. It deletes reference to the legal entity of the State or political subdivision "making the collection on behalf of the IV-D agency" to ensure that, when payments are received timely be entities other than the IV-D agency, regardless of whether or not the entity is under cooperative agreement with the IV-D agency, the date of collection is tied to the initial point of receipt.
This revision to the definition of the date of collection will reduce the possibility that payments made on time will be distributed as payments on arrearages because of delays in transmitting collections between legal entities of the State or between States. It also furthers the intended purpose of the statute, i.e., to encourage voluntary and timely compliance with support orders. We would like to stress that the legal entity of the State or political subdivision actually making the collection includes Clerks of the Court, whether or not under cooperative agreement with the IV-D agency, and the wage withholding agency , if it is not the IV-D agency.
We have deleted the separate definition of date of collection for interstate cases because that definition may result in distribution of current support paid timely as past-due support. Under that definition, even if an absent parent paid support timely in the responding State, the definition of date of collection for interstate cases allowed the initiating State to consider the date it received the collection as the collection date and to distribute the payment as an arrearage if a payment was not forwarded by the responding State collected the July support obligation on July 28 and the initiating State received the payment on August 2, the payment was considered a current payment for August and the family received the $50 pass-through for August. If the responding State then collected the August payment on August 10 and the initiating State received this payment on August 15, it was considered an arrearage payment for the July support obligation. No $50 payment was made to the AFDC family for July even though the absent parent paid his support timely. Deleting this definition will ensure payment of $50 to the AFDC family when support is paid timely and avoid possible inequities resulting from delays in forwarding payments by responding States in interstate cases.
OCSE published proposed regulations implementing the requirements of the Child Support Enforcement Amendments of 1984 (Pub. L. 98-378) in the Federal Register (49 FR 36780) on September 19, 1984. These regulations included a proposal to require the collection date for distribution purposes in interstate cases to be the date the payment is received by the IV-D agency of the state in which the collection is made and in wage withholding cases the date the employer withholds the wages. Comments from State IV-D agencies cited the high cost of reprogramming their automated systems to comply with such a change and the difficulty of tracking and monitoring payments when the responding State and the employer do not specify the date of collection. As a result of the comments, the proposed changes were not included in the final regulation published in the Federal Register on May 9, 1985 (50 FR 19634). However, since that time, problems with states distributing current support as past-due support and not paying $50 to AFDC families because of the date of collection definition persist. We believe that the problem has grown to the point that this change is essential to ensure support collections are treated accurately for distribution. States have been aware of the potential for this change for over three years.
We did not tie the date of collection to the date the employer withholds wages because IV-D agencies cannot control employer pay practices, especially in interstate wage withholding cases. However, States should strictly enforce the requirement that employers must remit amounts withheld within 10 days of the date the absent parent is paid. States also have no way of verifying when an absent parent made a payment other than to track receipt by the IV-D agency (or its agent) or the legal entity of a State or political subdivision actually making the collection, whichever is earliest.
With respect to interstate cases, final regulations published February 22, 1988 in the Federal Register (53 FR 5246) require responding States to indicate when the payment was received by the initial point of receipt within the State IV-D agency when forwarding payments to the responding State (see 45 CFR 303.7(c)(7)(iv)). We are making a conforming change to that section to require responding States to notify initiating States of the initial point of receipt by the IV-D agency or local entity of the State or political subdivision actually making the collection, whichever is earlier. Therefore, initiating States will know the date of collection in interstate cases, thereby removing one of the problems cited by States in response to the change when it was proposed in September of 1984.
Comment: One advocacy group requested clarification on the treatment of lump sum payments in cases where a delay occurs in sending a $50 payment resulting in more than one payment going to a family in a later month.
Response: Lump sum payments resulting from the State's delay in forwarding $50 pass-through payments will be disregarded as if they had been made in the months the support collections were received. If the State collects current support and does not make the $50 payment that month, the IV-A agency will disregard the payment whenever it is made to the family. This is consistent with the intended purpose of the statute, which is to provide the obligor an incentive to make regular and timely payments so that his or her family will receive the $50 pass-through for each month in which current support is paid.
Comment: Two State agencies requested clarification regarding whether the $50 payment applies to court-ordered support only.
Response: The $50 payment applies to any support which has been assigned to the State pursuant to section 402(a)(26) of the Act, and is distributed under section 347(b) of the Act, including voluntary support.
Comment: One State agency requested clarification regarding the effective date of the $50 payment provision.
Response: The statute requires an effective date of October 1, 1984. Thus, States must make the first $50 payment from current support collected for the month of October, 1984.
Paperwork Reduction Act
This regulation contains no information collection requirements which require Office of Management and Budget approval under the Paperwork Reduction Act of 1980 (Pub. L. 96-511.)
Executive Order 12291
The Secretary has determined that his document does not meet any of the criteria for a major rule as described by Executive Order 12291. The Secretary certifies that because these regulations apply to States and will not have a significant economic impact on a substantial number of small entities, they do not require a regulatory flexibility analysis as provided in Pub. L. 96-354, the Regulatory Flexibility Act of 1980. The administrative costs are expected to be negligible (less than $500,000) and the effect of additional disregards is expected to be less than $7.5 million, of which $3.7 million is the Federal share. Therefore this proposed regulation does not meet the threshold for an economic analysis under E.O. 12291.
List of Subjects in 45 CFR Part 302
Child Support, Grant programs/social programs, Penalties, Reporting and recording requirements, Unemployment compensation.
(Catalog of Federal and Domestic Assistance Program No. 13.783, Child Support Enforcement Program.)
Dated: February 19, 1988.
Wayne A. Stanton,
Director, Office of Child Support
Approved: May 10, 1988.
Otis R. Bowen,
For the reasons set forth in the preamble, 45 CFR Parts 302 and 303 are amended as follows:
PART 302 - STATE PLAN REQUIREMENTS
1. The authority citation for Part 302 continues to read as follows:
Authority: 42 U.S.C. 651 through 658, 660, 664, 666, 667, 1302, 1396a(a)(25), 1396b(d)(2), 1396b(o), 1396b(p), and 1396(k).
2. Section 302.51 is amended by republishing the introductory text and revising paragraphs (a) and (b)(1) as follows:
§302.51 Distribution of support collections.
The State plan shall provide as follows:
(a) For the purposes of distribution under this section, amounts collected shall be treated first as payment on the required support obligation for the month in which the support was collected and if any amounts are collected which are in excess of such amount, these excess amounts shall be treated as amounts which represent payment on the required support obligation for previous months. (The IV-D agency may round off the converted amount to whole dollar amounts for the purposes of distribution under this section, §302.52 and §303.52.) Effective June 9, 1988, the date of collection shall be the date on which the payment is received by the IV-D agency or the legal entity of any State or political subdivision actually making the collection, whichever is earliest. In any case in which collections are received by an entity other than the agency responsible for final distribution under this section, the entity must transmit the collection within 10 days of receipt.
(b)* * *
(1) Of any amount that is collected in a month which presents payment on the required support obligation for that month, the first $50 of such amount shall be paid to the family. This payment may not be used in determining the amount paid, if any, to the family in paragraph (b)(3) of this section. If the amount collected includes payment on the required support obligation for a previous month or months, the family shall only receive the first $50 of the amount which represents the required support obligation for the month in which the support was collected. If amounts are collected for one family which represent support payments from two or more absent parents, only the first $50 of the amount collected which represents the total required support obligation for the month in which the support was collected shall be paid to the family under this paragraph. No payment shall be made to a family under this paragraph for a month in which there is no child support collection.
* * * * *
PART 303 - STANDARDS FOR PROGRAM OPERATIONS
1. The authority citation for Part 303 continues to read as follows:
Authority: 42 U.S.C. 651 through 658, 660, 663, 664, 666,667, 1302, 1396a(a)(25), 1396b(d)(2), 1396b(o), 1396b(p) and 1396(k).
2. Section 303.7 (c)(7)(iv) is revised to read as follows:
§303.7 Provision of services in interstate IV-D cases.
* * * * *
(c)* * *
(7)* * *
(iv) Collecting and monitoring any support payments from the absent parent and forwarding payments to the location specified by the IV-D agency in the initiating State no later than 10 days after the collection is received by the responding State IV-D agency except with respect to certain Federal tax refund offset collections as specified in §303.72(h)(5) of this part. The IV-D agency must include sufficient information to identify the case, indicate when the payment was received at the initial point of receipt by the IV-D agency or legal entity of the State or political subdivision actually making the collection, whichever is earlier, and include the responding State's identifying code as defined in the Federal Information Processing Standards Publication (FIPS) issued by the National Bureau of Standards or the Worldwide Geographic Location Code issued by the General Services Administration.
* * * * *
[FR Doc. 88-12895 Filed 6-8-88; 8:45 am]
BILLING CODE 4150-04-M