Q & A: Work Penalty Amounts

Work Penalty Amounts

Q1: For the work penalties, how does forgiveness of a penalty through reasonable cause or corrective compliance affect the base penalty amount? How do they affect the penalty reduction? I.e., is the original penalty considered a year of failure?

A1: If a State receives a reasonable cause exception to the work penalty, we will treat it as though no penalty were ever incurred for that fiscal year. Thus, if the State fails a participation rate in the following year: (1) we would not consider the State to have failed for two successive years; (2) the State would start with the base penalty amount specified at §261.50(b)(1) (or the amount specified at §261.51(a)(1) if it failed only the two-parent rate); and (3) it would be eligible for greater penalty reduction pursuant to §261.52(c).

In contrast, under corrective compliance, the State obtains forgiveness of an incurred penalty based on after-the-fact behavior. Thus, if a State enters into a corrective compliance plan for a fiscal year, we still consider that year to be a year in which it failed the participation rates. In this case, the State has failed the rate(s), but is working to correct the problem or problems that arose. We think that the initial failure is relevant to our assessment of the degree of noncompliance for any State that fails to meet the participation rates again the following year.