Final Rule: Requests for Full Collection Services
Requests for Full Collection Services by the Secretary of the Treasury
April 28, 1982
TO:STATE AGENCIES ADMINISTERING CHILD SUPPORT ENFORCEMENT PLANS APPROVED UNDER TITLE IV-D OF THE SOCIAL SECURITY ACT AND OTHER INTERESTED INDIVIDUALS
SUBJECT: Final Regulations on Requests for Full Collection Services by the Secretary of the Treasury.
ATTACHMENT: Attached are final regulations implementing section 402 of P.L. 96-265, the Social Security Disability Amendments of 1980. Section 402 provides authority to State IV-D agencies to use the Internal Revenue Service (IRS) to collect child support for families not receiving AFDC.
REGULATION REFERENCES: 45 CFR 303.71; 45 CFR 302.71 (deleted)
EFFECTIVE DATE: April 14, 1982
RELATED REFERENCES: OCSE issued two Action Transmittals on the provisions of section 402: OCSE-AT-80-14, dated August 29, 1980, transmitting interim program instructions and OCSE-AT-81-2, dated January 29, 1981, transmitting the notice of proposed rulemaking. The provisions on full collection services in OCSE-AT-80-14 are superseded by these final regulations.
INQUIRIES TO: OCSE Regional Representatives
Office of Child Support Enforcement
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Office of Child Support Enforcement
45 CFR Parts 302 and 303
Child Support Enforcement Program;
Requests for Full Collection Services
by the Secretary of the Treasury
AGENCY: Office of Child Support Enforcement (OCSE),HHS.
ACTION: Final rule.
SUMMARY: These regulations implement section 402 of Pub. L 96-265, the Social Security Disability Amendments of 1980. Section 402 provided authority to State child support agencies to use the Internal Revenue Service (IRS) full collection process to collect child support for families not receiving Aid to Families with Dependent Children (AFDC). In addition, we are incorporating a technical change required by section 2332(b)(2)(B) of Pub. L.97-35, the Omnibus Budget Reconciliation Act of 1981. This technical change authorizes use of the full IRS collection process for debts established by administrative order, effective October 1, 1981. Previously, only court ordered amounts could be referred for IRS collection. We are also making several changes to the regulations to improve the IRS collection process and to remove the State plan requirement. Finally, we are revising the regulations to make them clearer and easier to understand.
DATES: Effective April 14, 1982.
FOR FURTHER INFORMATION CONTACT:
Eileen Brooks-(301) 443-5350
SUPPLEMENTARY INFORMATION: Previous regulations at 45 CFR 302.71 specified the requirements that IV-D agencies had to meet in requesting OCSE to certify a case to the Secretary of the Treasury for collection of child support. Under those regulations, the IRS could be used only for collecting assigned, court-ordered support payments on behalf of families receiving AFDC.
This document redesignates 45 CFR 302.71 as 45 CFR 303.71 and implements section 402 of Pub. L. 96-265, which authorizes the use of the IRS collection mechanism for families not receiving AFDC, subject to the same requirements applicable to families receiving AFDC. This document also extends IRS collection services to support obligations set by administrative process, as specified in Pub. L. 97-35, effective October 1, 1981. We are taking this opportunity to make other changes to the regulations to improve the procedures for requesting IRS collection and to improve the State plan requirement. These changes are discussed below along with the public comments we received on the proposed regulations and our responses to those comments.
On January 6, 1981 we published a notice of proposed rulemaking (NPRM) in the Federal Register at 46 FR 1321. The NPRM contained provisions for requesting the full range of IRS collection services for court-ordered child support debts in both AFDC and non-AFDC cases. We received comments from 12 State and local agencies. Below we summarize the major provisions of the final regulations as well as respond to the comments on the NPRM.
Prior Collection Action by the Client or Client's Representative
45 CFR 302.71 previously required a case to meet certain criteria before it could be referred to the Secretary of the Treasury for collection of support. One of the criteria was that the IV-D agency must have made diligent and reasonable efforts to collect support through the State's own collection mechanisms. In the case of non-AFDC families, normally only the IV-D agency would have attempted collection. In the case of AFDC families, the client or client's representative may have tried to secure support before requesting the IV-D agency to take action.
To avoid duplication of effort in cases in which the client or client's representative has already attempted collection, the revised regulations at 45 CFR 303.71(c)(4) specify that the IV-D agency shall compare the prior actions taken with the collection mechanisms that the State IV-D agency would use to collect the support. If the agency finds the prior actions to be comparable. the agency need not repeat them. In describing the collection actions taken and their outcomes as required in the revised 45 CFR 303.71(e)(4), the agency must assure that reasonable efforts have been made by the agency itself, the client, or the client's representative to collect the support via the State's collection mechanisms or mechanisms that are comparable.
No unfavorable comments were received on this provision and we have retained it in this final rule as proposed in the NPRM.
Minimum Dollar Limit on Cases Referred to IRS
When 45 CFR 302.71 was adopted on June 26, 1975, we could not anticipate the volume of requests for IRS collection or the average amounts of support owed. Because of our lack of data, we set a low figure of $75 as the minimum amount that could be referred to IRS for collection. As noted in the NPRM, it has since become apparent through discussions with IRS that the current minimum of $75 is unreasonably low, given the time and effort required of the IRS to take collection action on a child support claim. In the NPRM we presented an analysis which showed that 87 percent of the cases active with IRS involved child support debts of over $2,000, 8 percent involved debts between $1,000 and $2,000, and 5 percent involved debts under $1,000. Based on these figures, we proposed raising to $2,000 the minimum debt that could be referred to IRS for collection.
Nine of the commenters objected to the proposed $2,000 minimum debt, and suggested lower minimums ranging from $200 to $1,000. Most frequently suggested were limits approximating $500 and $1,000. One commenter suggested an exception to the $2,000 limit for cases in which the arrearage equals one year's support obligation. Another commenter suggested setting the minimum debt to equal the average tax refund, which the commenter believed to be $490. One commenter suggested setting a "much lower" limit for cases that are terminated (by which we assume the commenter means inactive because the debts are uncollectible) with arrearages still owed. Another commenter asked that we make allowances for cases in which additional indebtedness arises after the State's merchanisms result in only partial repayment.
The primary justification the commenters gave for requesting that the minimum amount be set lower was that many support orders involve rather low weekly payments of $10 to $20 and the time it takes to build up a $2,000 unpaid debt in these cases is excessive. Early in the period in which the arrearage is being built up, the IV-D agency may have attempted unsuccessfully to collect through its own collection mechanism. lf so, it is possible that no further collection action may be taken for months or even years if the arrearage has to be at least $2,000 before seeking the services of IRS. In addition to posing a hardship for the family involved, commenters believed this delay to be counterproductive. The longer the debt goes uncollected, the more difficult it becomes to collect and the less likely it is that a successful outcome will result.
For the above reasons set forth by the commenters, we have revised the regulations to provide for a $750 minimum debt that may be referred to the IRS for collection. We believe that this amount satisfied the concerns expressed by the majority of the commenters. Even if the weekly support obligation is $10, the $750 amount would be reached in less than a year and a half. According to one commenter this time frame is only slightly longer than the time it takes for a State to attempt collection through all of the collection mechanisms it has available. Because we have lowered the minimum debt substantially from the amount in the NPRM, we consider it unnecessary to include exceptions for cases terminated with arrearages still owed and cases in which additional indebtedness arises after the State's mechanisms have led to only partial repayment.
Verification of Child Support Debtor's Address and Last Place of Employment
The IRS has expressed concern that the child support debtor's last known address and place of employment be as current as possible.
The IRS begins its investigation by referring a case to a local IRS service center based on these addresses. Out of date information can result in a loss of several weeks time while addresses are verified in an attempt to locate an individual. To assure as current an address as possible, we are requiring that requests for IRS collection contain the source of this information and the date it was last verified. The proposed regulations at 45 CFR 303.71(e)(1) also required the IV-D agency to obtain a recent address from the Federal Parent Locator Service, if necessary, before sending forward a request for IRS collection. Two commenters said that the term "if necessary" was unclear and that States are capable of evaluating the acceptability of the last known address without this requirement. We agree with the commenters and have removed the letter provision from the regulations.
One commenter also suggested that we consider a waiver for reporting an individual’s last known place of employment if assets or income not from employment are sufficient to warrant IRS action. We have not provided for this waiver, since place of employment information is used by the IRS in the location of the absent parent, as well as in the collection process.
Social Security Number Requirement
Previous regulations at 45 CFR 302.71(a)(6)(i) required that requests for IRS collection contain the debtor's social security number if known. As noted in the NPRM, since these regulations were published, we have learned from IRS that it is extremely difficult for them to locate an individual's records in their master files unless the social security number is available. Not only does this result in slow processing and inefficient use of IRS resources, it also creates problems with accurate case identification for persons with similar or the same names. Therefore, in 45 CFR 303.71(e)(l)(ii), we require that all requests for IRS collection contain the debtor's social security number. In cases in which the social security number is not known, it may be possible to obtain it from the Federal Parent Locator Service.
The two commenters who mentioned this provision were in agreement with the requirement.
Intrastate Requests for IRS Collection
In the preamble to the NPRM, we noted that a State's collection mechanisms should be effective in collecting child support within the State. We said that only unusual circumstances. such as a very large court backlog or an absent parent having assets in States other than the State of residence, should prevent collection within the State through its own mechanisms. In 45 CFR 303.71(e)(4)(iii), we proposed that, in these rare cases in which an intrastate collection is requested, the request must contain a description of the circumstances that prevented effective use of the State's own collection mechanisms.
Two commenters objected to the proposed requirement. One objected because, in the commenter's State, State law prohibits garnishment and sets liberal exemptions from legal attachments, so the commenter considered the IRS mechanism to be a valuable tool in intrastate cases. The second commenter asked that we liberalize the requirement on intrastate collections since, in a locally administered program, counties may have limited power to influence collections by other counties within a State. In order to accommodate the needs expressed by these commenters, we have deleted this proposed requirement from these final regulations. We agree that States and localities that experience the conditions raised by these commenters should not have special requirements imposed on them in making requests for IRS collections. It should be noted, however, that paragraph (e)(4)(ii) of these final regulations requires a description of the actions taken, why they failed, and why further State action would be unproductive. This applies in both intrastate and interstate cases.
Interstate Cases Involving IRS Collection
We have added a provision to these regulations at § 303.71(c)(5) which provided that, in order for a case to be eligible for certification to the Secretary of the Treasury for collection, the State that has taken the assignment in an AFDC case or the application for child support services in a non-AFDC case must make the request for IRS collection. This provision was not proposed in the NPRM, but was raised with State IV-D agencies in a series of meetings held in July, 1981. The purpose of this provision is to ensure that only one State requests IRS collection services with regard to a particular debt. This protects the State. the individual, and the IRS from becoming involved with duplicate requests necessitating special procedures for resolution. Because this is a technical change arising out of discussions in connection with the NPRM, we find good cause under 5 U.S.C. 553(b)(B) for dispensing with proposed rule making as unnecessary with respect to this provision.
Fees for IRS Collection
One commenter noted that the fee that IRS charges for its collection service provides a disincentive to use the service, since, in non-AFDC cases, States would not get a percentage of the collection or an incentive payment for making the collection. Because section 452(b) of the Act requires that States reimburse the United States for any costs involved in making a collection through the IRS, we cannot free States from having to pay a fee for IRS collection. However, the Federal share of the fee may be advanced to States through the quarterly grant award process, thereby reducing the State outlay by 75 percent.
Obligations Set by Administrative Process
One commenter asked that we permit referral to IRS of obligations set by administrative process, in addition to those set by court order. We have implemented this suggestion, based on the authority of section 2332(b)(2)(B) of Pub. L. 97-35 which revised section 452(b) of the Act to authorize referral to the IRS of obligations set by administrative process, effective on October 1, 1981. Because this statutorily required change is technical in nature and does not involve any Secretarial discretion, we believe that under 5 U.S.C. 553(b)(B) good cause exists for a waiver of NPRM in that the issuance of proposed rules is unnecessary.
Prior Client Action
One commenter wanted us to specify enforcement actions that clients must take before coming to the IV-D agency for IRS certification, such as making their own efforts to collect through the legal remedies peculiar to their State. Because the statute contains no requirement for an individual to take enforcement action on his own before requesting IRS collection services, we are unable to restrict IRS collection services to persons who have done so.
State Showing of Effort/Offset of Federal Tax Refunds Refund
A few commenters said that it is cumbersome to write out the details of the State's collection activity as part of the request for IRS collection as required by paragraph (e) of the regulations. One commenter suggested that the request merely contain a statement attesting that the appropriate State action has been taken as backed up by the case file documentation. Another suggested that "reasonable collection efforts" should be the only criterion specified in the regulations. One commenter noted that a number of States report lists of delinquencies to their State revenue departments so that tax refunds may be intercepted to pay the delinquencies. The commenter suggested that we adopt a similar procedure for offsets of Federal tax refunds.
Because section 452(b) of the Act requires "a showing by the State that such State has made diligent and reasonable efforts to collect * * * amounts using its own collection mechanisms", we are unable to relieve States of the requirement to write out the details of their collection activity as part of their requests for IRS full collection services.
After the NPRM on full collection services was published in the Federal Register. Congress enacted Pub. L. 97-35, the Omnibus Budget Reconciliation Act of 1981.
Section 2331 of this Act requires State IV-D agencies to request collection of past-due support by Federal tax refund offset in the manner described by the commenter. Regulations implementing this Federal tax refund offset process have been published in the Federal Register both by the IRS and by OCSE (see 47 FR 7425 for OCSE regulations, published on February 19, 1982 and 47 FR 5712 and 5728 for IRS regulations, published on February 8, 1982). Under this new tax refund offset process, States are not required to submit a written "showing" of their prior collection activity.
Collection of Spousal Support
Effective October 1, 1981, section 2332(b) of Pub. L 97-35 extends IRS collection services to include collection of support for the spouse or former spouse with whom the absent parent's child is living. Under section 2332, spousal support provisions will need to be added to several regulations. We plan to publish a regulation as soon as possible to proceed with implementation of all of the new statutory provisions on collection of spousal support and therefore have not included the provision in this document. In the meantime, we have issued an action transmittal (OCSE-AT-81-25, dated October 19, 1981) containing procedures for States to use if they wish to refer the appropriate spousal support to IRS for full collection services before final regulations are published.
Removal of State Plan Requirement
In addition to the above modifications to the regulations, we are removing the State plan requirement pertaining to requests for collection by the Secretary of the Treasury. We are doing this as part of an overall strategy to remove unnecessary State plan requirements from our regulations. Under the revised regulations, failure to comply with the IRS collection requirements will result in denial of the request for IRS collection, rather than affect the IV-D agency's compliance with its State plan.
We received only one comment on this issue and the commenter favored our approach.
The reporting and recordkeeping requirements in these regulations have been approved by the Office of Management and Budget under OMB number 0960-0281.
List of Subjects in 45 CFR Parts 302 and 303
Child welfare, Grant programs-social programs.
PART 302-STATE PLAN REQUIREMENTS
PART 303-STANDARDS FOR PROGRAM OPERATIONS
§ 302.71 [Removed]
45 CFR 302.71 is removed and a new 45 CFR 303.71 is added to read as follows:
§ 303.71 Requests for full collection services by the Secretary of the Treasury.
(a) Definition. "State collection mechanisms" means a comprehensive set of written procedures developed and used to maximize effective collection action within the State.
(b) Families eligible. Subject to the criteria and procedures in this section, the IV-D agency may request the Secretary to certify the amount of a child support obligation to the Secretary of the Treasury for collection under section 6305 of the Internal Revenue Code of 1954. Requests may be made on behalf of families receiving AFDC who make assignments under 45 CFR 232.11, and on behalf of families not receiving AFDC who apply under õ 302.33.
(c) Cases eligible. For a case to be eligible for certification to the Secretary of the Treasury:
(1) There shall be a court or administrative order for support;
(2) The amount to be collected under the support order shall be at least $750 in arrears;
(3) At least six months shall have elapsed since the last request for referral of the case to the Secretary of the Treasury;
(4) The IV-D agency, the client, or the client's representative shall have made reasonable efforts to collect the support through the State's own collection mechanisms. The agency need not repeat actions taken by the client or client's representative that the agency determines to be comparable to the State's collection mechanisms.
(5) Only the State that has taken an assignment under 45 CFR 232.11 or an application under 45 CFR 302.33 may request IRS collection services on behalf of a given case.
(d) Procedures for submitting requests. (1) The IV-D agency shall submit requests for certification to the regional office in the manner and form prescribed by the Office.
(2) The Director of the State IV-D agency (or designee) shall sign requests for collection by the Secretary of the Treasury.
(e) Criteria for acceptable requests. The IV-D agency shall ensure that each request contains:
(1) Sufficient information to identify the debtor, including:
(i) The individual's name;
(ii) The individual's social security number,
(iii) The individual's address and place of employment, including the source of this information and the date it was last verified.
(2) A copy of all court or administrative orders for support;
(i) The amount owed under the support orders;
(ii) A statement of whether the amount is in lieu of, or in addition to, amounts previously referred to IRS for collection;
(4)(i) A statement that the agency, the client or the client's representative has made reasonable efforts to collect the amount owed using the State's own collection mechanisms or mechanisms that are comparable;
(ii) A description of the actions taken, why they failed and why further State action would be unproductive;
(5) The dates of any previous requests for referral of the case to the Secretary of the Treasury;
(6) A statement that the agency agrees to reimburse the Secretary of the Treasury for the costs of collection; and
(7)(i) A statement that the agency has reason to believe that the debtor has assets that the Secretary of the Treasury might levy to collect the support; and
(ii) A statement of the nature and location of the assets, if known.
(f) Review of request by the Office. (1) The Regional Representative will review each request to determine whether it meets the requirements of this section.
(2) lf a request meets all requirements, the Regional Representative will promptly certify and transmit the request with a copy of all supporting documentation to the Secretary of the Treasury. At the same time, the Regional Representative will notify the IV-D agency in writing of the transmittal.
(3)(i) If a request does not meet all requirements, the Regional Representative will attempt to correct the request in consultation with the IV-D agency.
(ii) If the request cannot be corrected through consultation, the Regional Representative will return it to the agency with an explanation of why the request was not certified. (g) Notification of changes in case status. (1) The IV-D agency shall immediately notify the Regional Representative of the following changes in case status:
(i) A change in the amount due;
(ii) A change in the nature or location of assets; (iii) A change in the address of the debtor.
(2) The Regional Representative will transmit the revised information to the Secretary of the Treasury.
Note.-The Secretary has determined that this document is not a major rule as described by Executive Order 12291, because it does not meet any of the criteria set forth in Section 1 of the Executive Order. The Secretary certifies that because these regulations apply to States and will not have 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.
(Sec. 1102. Social Security Act (42 U.S.C. 1302); Sec. 452(b), Social Security Act (42 U.S.C. 652(b); sec. 2332(b)(2)(B), Pub. L. 97-35)).
(Catalog Of Federal Domestic Assistance Program No. 13.679. Child Support Enforcement Program.
Dated: November 18, 1981.
John A. Svahn,
Director, Office of Child Support Enforcement.
Approved: March 30, 1982
Richard S. Schweiker,