Financial Institution Data Match Legislative Authority Overview
Public Law 104-193
Public Law 104-193, the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA), provided new enforcement remedies to collect child support. Among these are Section 466(a)(17) of the Social Security Act (the Act) which requires states to establish procedures under which the state child support enforcement (IV-D) agency enters into agreements with financial institutions doing business in their state to obtain information that results in collecting past-due child support. The statute requires states to develop and operate, in coordination with financial institutions, a data match system that provides the name, record address, social security number or other taxpayer identification number for each non-custodial parent who maintains an account at such institution and who owes past-due support. These procedures must use automated data exchanges to the maximum extent feasible.
The state child support agency establishes procedures to identify cases subject to the data match and to any subsequent lien/levy action. Financial institutions subject to the matching provision are required to encumber or surrender the delinquent obligor's assets held by the institution in response to the lien/levy notice from the state agency. The lien/levy action is subject to the laws of the state where the asset is located.
The data matches are conducted quarterly by either of the following two methods using the standard data match specifications.
- Method 1 (all accounts method) --the financial institution submits a file to the state child support agency containing information about all open accounts. The state compares the information with individuals who owe past-due support.
- Method 2 (matched accounts method)--the financial institution receives a file from state child support agencies containing the names and SSNs or other taxpayer identifiers of individuals who owe past-due support. The financial institution matches the file from the state agency against its accounts and returns matched records to the state. Data specifications for Method 2 files and record layouts were approved by the U.S. Office of Management and Budget (OMB Control No: 0970-0196) on March 5, 1999. The same data specifications have been universally adopted for Method 1.
Section 466(a)(17)(B) of the Act establishes that the state child support agency may pay a reasonable fee to institutions conducting the data match, not to exceed the actual costs incurred by the institution.
Pursuant to Section 466(a)(17)(C) of the Act, a financial institution will not be liable under any Federal or State law to any person for (1) any disclosure of data match information to the State IV-D agency or its designated representative, (2) encumbering or surrendering any assets held by a financial institution in response to a notice of lien or levy issued by the State IV-D agency or (3) any other action taken in good faith to comply with the requirements of Section 466(a)(17) of the Act.
Public Law 105-200
Public Law 105-200, the Child Support Performance and Incentive Act of 1998, amended PRWORA to better facilitate the data match for multistate financial institutions (MSFIs); i.e., those operating in two or more States. Public Law 105-200 authorizes the Federal Office of Child Support Enforcement to act as the conduit between States and territories and the MSFIs in the development and implementation of a centralized, quarterly data match program. MSFIs may opt to match through the Federal OCSE or with the individual States in which they do business. Beginning in July 1999, OCSE began distributing the national file of delinquent obligors to the MSFIs for matching using Method 2. OCSE began distributing match information to State IV-D agencies in August 1999.
Public Law 106-102
The Financial Services Modernization Act of 1999 (Banking Reform) lifts restrictions on the banking industry, thus allowing banks, securities firms and insurance companies to affiliate. This change may increase the likelihood that an insurance company will hold financial institution accounts that are reportable for data match under Public Law 104-193. Traditional insurance products, such as annuities and whole life policies, are not specifically included in the definition of account under Public Law 104-193 though they may be reportable to a particular State under its own statute. The banking reform bill leaves the regulation of the business of the insurance industry under the laws and regulations of the States.
PRWORA required States to establish procedures under which their child support enforcement agencies would enter into agreements with financial institutions for the purpose of securing information leading to the enforcement of child support orders. All States have passed the necessary statutes to comply with this requirement. These statutes are similar to the Federal statute in defining the financial institutions, and accounts subject to the match and providing other pertinent information relevant to conducting the data match.
In addition, States have laws, policies and procedures that govern the execution of liens and levies. These usually establish parameters, define terms and establish procedures. Items addressed usually include lien threshold, lien duration and due process.