[Federal Register: December 9, 2008 (Volume 73, Number 237)]
[Rules and Regulations]
[Page 74897-74921]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr09de08-9]
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Part IV
Department of Health and Human Services
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Administration for Children and Families
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45 CFR Parts 301, 302, 303 and 304
Child Support Enforcement Program; Final Rule
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Administration for Children and Families
45 CFR Parts 301, 302, 303 and 304
RIN 0970-AC24
Child Support Enforcement Program
AGENCY: Office of Child Support Enforcement (OCSE), Administration for
Children and Families (ACF), Department of Health and Human Services
ACTION: Final rules.
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SUMMARY: These rules implement provisions of title IV-D of the Social
Security Act (the Act) as amended by the Deficit Reduction Act of 2005,
Public Law 109-171 (DRA). The rules address use of the Federal tax
refund offset program to collect past-due child support on behalf of
children who are not minors, mandatory review and adjustment of child
support orders for families receiving Temporary Assistance for Needy
Families (TANF), reduction of the Federal matching rate for laboratory
costs incurred in determining paternity, States' option to pay more
child support collections to former-assistance families, and the
mandatory annual $25 fee in certain child support enforcement (IV-D)
cases in which the State has collected and disbursed at least $500 of
support to the family. The rules also make other conforming changes
necessary to implement changes to the distribution and disbursement
requirements.
DATES: Effective Dates: These rules are effective February 9, 2009.
FOR FURTHER INFORMATION CONTACT: Paige Hausburg, Policy Specialist,
OCSE, 202-401-5635, e-mail: paige.hausburg@acf.hhs.gov. Deaf and
hearing-impaired individuals may call the Federal Dual Party Relay
Service at 1-800-877-8339 between 8 a.m. and 7 p.m. eastern time.
SUPPLEMENTARY INFORMATION:
I. Statutory Authority
These final rules are published under the authority granted to the
Secretary of the U.S. Department of Health and Human Services (the
Secretary) by section 1102 of the Act, 42 U.S.C. 1302. Section 1102
authorizes the Secretary to publish rules that may be necessary for the
efficient administration of the functions for which he is responsible
under the Act. The Deficit Reduction Act of 2005 (DRA), Title VII,
Subtitle C--Child Support, sections 7301-7311 amends title IV-D of the
Act.
Section 7301(b) of the DRA amends section 457 of the Act and the
requirements for distribution of support payments to allow States to
opt to increase child support payments to families and simplify child
support distribution rules. We made minor conforming changes to the
distribution requirements in these rules.
Section 7301(f) of the DRA amends section 464 of the Act to
eliminate the restriction of access to the Federal tax refund offset
program to disabled adult children and to allow States to collect past-
due child support certified for offset to the Secretary of the Treasury
on behalf of all children in the IV-D program who are not minors.
Section 7302 of the DRA amends section 466(a)(10) of the Act to
require States to review and, if appropriate, adjust child support
orders in cases receiving TANF at least once every three years.
Previously, States needed only to review orders and adjust them, if
appropriate, upon the request of either parent or, if there is an
assignment of rights, upon the request of the State agency.
Section 7308 of the DRA amends section 455(a)(1)(C) of the Act to
reduce the Federal reimbursement for the costs of genetic testing
incurred in determining paternity from 90 percent to 66 percent of
State IV-D program expenditures, effective October 1, 2006.
Section 7310 of the DRA amends section 454(6)(B) of the Act to
require States to impose an annual fee of $25 in the case of an
individual who has never received assistance under a State program
funded under title IV-A of the Act and for whom the State has collected
at least $500 of support. These rules also excludes from the fee those
individuals who are receiving or have received Tribal IV-A assistance.
This will have a minor impact on the program and it is consistent with
the intent of the $25 fee that it not be imposed on the families who
are the most at risk, i.e., those who have received assistance under
title IV-A of the Act. As discussed later in this preamble, Tribal IV-A
assistance is not explicitly mentioned in the statute but is authorized
under title IV-A of the Act. In addition, we amended these rules to
prohibit collection of the $25 annual fee from individuals who are
required to cooperate with the IV-D program as a condition of Food
Stamp eligibility as defined at 7 CFR 273.11(o) and (p). In these
cases, the fee would need to be collected from the non-Food Stamp
eligible parent or to be paid by the State.
II. Summary Description of Regulatory Provisions and Changes Made in
Response to Comments
The following is a summary of the regulatory provisions included in
this final rule. The Notice of Proposed Rulemaking (NPRM) was published
in the Federal Register on January 24, 2007 (72 FR 3093). The comment
period ended March 26, 2007.
Changes made in response to comments are discussed in more detail
under the Response to Comments section of this preamble.
PART 301--STATE PLAN APPROVAL AND GRANT PROCEDURES
Section 301.1--General Definitions
Under Sec. 301.1, the definition of past-due support and qualified
child were amended. The changes in the definitions implement revised
section 464(c) of the Act to eliminate the restriction of access to the
Federal tax refund offset program to disabled adult children and to
allow States to collect past-due child support certified for offset to
the Secretary of the Treasury on behalf of all children in the IV-D
program who are not minors. The definition of past-due support now
reads: ``Past-due support means the amount of support determined under
a court order or an order of an administrative process established
under State law for support and maintenance of a child, or of a child
and the parent with whom the child is living, which has not been paid.
Through September 30, 2007, for purposes of referral for Federal tax
refund offset of support due an individual who is receiving services
under Sec. 302.33 of this chapter, past-due support means support owed
to or on behalf of a qualified child, or a qualified child and the
parent with whom the child is living if the same support order includes
support for the child and the parent.''
The definition of qualified child now reads: ``Qualified child,
through September 30, 2007, means a child who is a minor or who, while
a minor, was determined to be disabled under title II or XVI of the
Act, and for whom a support order is in effect.''
PART 302--STATE PLAN APPROVAL REQUIREMENTS
Section 302.32--Collection and Disbursement of Support Payments by the
IV-D Agency
These rules make conforming changes to language in Sec. 302.32 for
consistency with certain changes made to sections 454 and 457 of the
Act. Under new
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section 454(34) of the Act, effective October 1, 2009, or up to a year
earlier at State option, States have a choice to distribute collections
first to satisfy support owed to families in IV-D cases. The rules make
technical changes in Sec. Sec. 302.32(b)(2)(iv) and (3)(ii) to delete
reference to a specific statutory requirement for payments to families
to simplify the language.
Section 302.33--Services to Individuals Not Receiving IV-A Assistance
Section 7310 of the DRA adds a new requirement in section
454(6)(B)(iii) of the Act to require States to impose an annual fee of
$25 in the case of an individual who has never received assistance
under a State program funded under title IV-A of the Act and for whom
the State has collected at least $500 of support.
Under the proposed rule, Sec. 302.33(e)(1) required that in the
case of an individual who has never received assistance under a State
or Tribal program funded under title IV-A of the Act and for whom the
State has collected at least $500 of support in any given Federal
fiscal year, an annual fee of $25 for each case in which services are
furnished be imposed by the State. The structure of paragraph (e)(1)
has been changed for clarity and a number of changes were made to
(e)(1) in response to comments. We clarified in paragraph (e)(1)(i)
that the first condition for the fee requirement is that the State has
``collected and'' disbursed at least $500 of support to the family. The
proposed rule at Sec. 302.33(e) did not specify that the State
``collected'' the money prior to disbursement to the family. In
response to comments, we clarified in Sec. 302.33(e)(1)(ii) that
``assistance'' includes former AFDC program assistance, assistance
under a State TANF program as defined in the TANF rules at 45 CFR
260.31, and assistance under a Tribal TANF program is defined in the
TANF rules at 45 CFR 286.10.
We also amended these rules at Sec. 302.33(e)(3)(i) to prohibit
collection of the $25 annual fee from a foreign obligee in an
international case receiving IV-D services under section 454(32)(C) of
the Act and individuals who are required to cooperate with the IV-D
program as a condition of Food Stamp eligibility as defined at 7 CFR
273.11(o) and (p). In response to comments that the Federal statute
allows a fee, charged to the noncustodial parent, to be retained from
the collection, we revised paragraph (e)(3)(i) to cross-reference Sec.
302.51(a)(5) which specifies the conditions under which the
noncustodial parent may be charged the fee and the fee retained from a
child support collection. Therefore, with respect to the collection of
the $25 fee, a noncustodial parent need not have designated a portion
of the support payment as the fee. We also amended Sec.
302.33(e)(3)(ii) and (iii) to prohibit collection of the fee from
individuals who are required to cooperate with the IV-D program as a
condition of Food Stamp eligibility as defined at 7 CFR 273.11(o) and
(p).
Section 302.51--Distribution of Support Collections
Section 7301(b) of the DRA amended section 457(a)(3) of the Act to
require a State to pay to a family that has never received assistance
under a title IV-A or IV-E program the portion of the amount collected
that remains after withholding any $25 annual fee. This statutory
requirement is addressed in this final rule by an amendment to Sec.
302.51(a)(1) and by adding paragraph (a)(5).
The State plan requirement in section 454(34) of the Act concerning
collection and distribution of support payments by the IV-D agency that
requires a State to certify which option for distribution it chooses
for collections in former-assistance cases is in the final rule at
Sec. 302.51(a)(3)(i) and (ii). In response to comments concerning an
exemption from the fee for certain individuals required to cooperate
with the IV-D program as a condition of Food Stamp eligibility, and the
change to the rules at Sec. 302.33(e)(3) to allow an annual $25 fee to
be charged to the noncustodial parent and retained from a support
collection under certain circumstances, we also revised the language in
proposed Sec. 302.51(a)(5) for consistency.
Section 302.70--Required State Laws
Section 7302 of the DRA amended section 466(a)(10) of the Act to
require States to enact laws requiring the use of procedures to review
and, if appropriate, adjust at least once every three years, child
support orders for families receiving TANF in which there is an
assignment of support under title IV-A of the Act. For consistency with
section 466(a)(10) of the Act, these rules revise Sec. 302.70(a)(10),
under which the State must have in effect laws providing for the review
and adjustment of child support orders. The requirements in current
Sec. Sec. 302.70(a)(10)(i) and (ii) are rendered obsolete by this
final rule.
PART 303--STANDARDS FOR PROGRAM OPERATIONS
Section 303.7--Provision of Services in Interstate Title IV-D Cases
Section 454(6) of the Act as amended by section 7201 of the DRA
does not specifically address which State is to impose and collect the
$25 annual fee in accordance with the new requirement at Sec.
302.33(e) in an interstate title IV-D case. Using the Secretary's
rulemaking authority in section 1102 of the Act, this final rule amends
Sec. 303.7(e) to require that the title IV-D agency in the initiating
State impose the annual $25 fee in accordance with the new requirement
in Sec. 302.33(e). The change is necessary to ensure consistency in
the collection of the mandatory annual $25 fee in interstate cases.
Section 303.8--Review and adjustment of child support orders
Section 7302 of the DRA revised section 466(a)(10) of the Act to
require States to review and, if appropriate, adjust orders in State
title IV-A cases at least once every three years. In response to
comments we amended these rules at Sec. 303.8(b)(1) to clearly
indicate that the time frame for the review of the order begins with
the establishment of the order or the most recent review of the order,
whichever is later.
Section 303.72--Request for Collection of Past-Due Support by Federal
Tax Refund Offset
Section 7301(f) of the DRA amended the definition of ``past-due
support'' at section 464(c) of the Act to allow, effective October 1,
2007, arrearages owed to adult children to be submitted for Federal tax
refund offset. We amended the regulatory language at Sec.
303.72(a)(3)(i), with respect to past-due support owed in cases in
which the IV-D agency is providing services under Sec. 302.33, to
allow support owed to or on behalf of a child, or a child and a parent
with whom the child is living if the same support order includes
support for the child and the parent, to be submitted for Federal tax
refund offset effective October 1, 2007. Therefore, the prior
restriction from submitting past-due support owed to adult children is
no longer in effect.
Section 7301(b)(2)(C) of the DRA amended section 454(34) of the
Act, with respect to distribution options, to allow a State to choose
either to apply amounts collected, including amounts offset from
Federal tax refunds, to satisfy any support owed to the family first or
to continue to distribute Federal tax refund offset amounts, as under
current section 457(a)(2)(B)(iv), to
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satisfy any past-due support assigned to the State first. This final
rule revises Sec. 303.72(h)(1) to refer simply to distribution in
accordance with section 457 of the Act, and effective October 1, 2009,
or up to a year earlier at State option, in accordance with section
454(34) of the Act, under which States elect which distribution
priority in former-assistance cases to use under their IV-D programs.
In response to comments, proposed Sec. 303.72(h)(3)(i) is revised
to continue the requirement that a IV-D agency, except as provided in
paragraph (ii), must inform individuals receiving services under Sec.
302.33 in advance that amounts offset will be applied to satisfy any
past-due support which has been assigned to the State and submitted for
Federal tax refund offset. States may opt to continue to distribute in
this manner with respect to collections made as a result of Federal tax
refund offset. However, a State may opt, under section 454(34) of the
Act, to apply amounts offset first to satisfy any current and past-due
support which is owed to the family. Therefore, the regulatory language
at Sec. 303.72(h)(3)(ii), was changed to make clear that States are
not required to send such notices if the State chooses the distribution
option allowed under 454(34) of the Act.
PART 304--FEDERAL FINANCIAL PARTICIPATION
Section 304.20--Availability and Rate of Federal Financial
Participation
Section 7308 of the DRA amends section 455(a)(1)(C) of the Act by
reducing the previously enhanced Federal matching rate for laboratory
costs to determine paternity from 90 percent to 66 percent, effective
October 1, 2006. Accordingly, we revised Sec. 304.20(d) to reflect the
reduction in the matching rate for genetic testing costs for the
determination of paternity.
Response to Comments
We received 28 letters from States, Tribes, advocacy groups, and
other interested individuals. Below is a summary of the comments and
our responses.
General Comments
1. Comment: One commenter said that the proposed rules are
detrimental to the children and families that are being served by the
IV-D program and that they are contradictory to the public policy of
improving the lives of children and families.
Response: These rules reflect the statutory requirements of the
DRA. We believe that the mandates and authorities in the DRA will have
positive effects for families receiving child support enforcement
services in that the changes in the law build on the successes of the
1996 welfare reform law, the Personal Responsibility and Work
Opportunity Reconciliation Act (PRWORA), in strengthening families and
promoting responsibility. The DRA provisions reflect the need for
responsible deficit reduction while still retaining generous Federal
funding of the child support enforcement program.
2. Comment: One commenter requested that an updated version of
Action Transmittal 06-01, Child Support Provision in the Deficit
Reduction Act of 2005 (DRA), dated May 7, 2006, be provided with
Federal guidance on all of the DRA provisions. For example, section
7302 of the DRA which addresses assignment and distribution, has many
aspects on which States need Federal guidance. Another commenter urged
OCSE to provide guidance on distribution changes.
Response: We do not believe updating AT-06-01 is appropriate. We
have worked diligently since March of 2006 to provide guidance to
States in an effort to assist them in implementing the mandates of the
DRA.
3. Comment: Two commenters asked how long States will have after
the publication of these final rules to align IV-D computer data system
designs to comply with the final Federal rules.
Response: The requirements of these final rules are effective 60
days from the date of publication.
There is no specific mandate that these statutory provisions be
automated. With respect to the DRA requirements, States must meet the
statutory effective date for each provision, subject to the authorized
delay date: If the State requires legislation to meet the requirements
imposed by the mandates of the DRA, the effective date of the
amendments shall be 3 months after the first day of the first calendar
quarter beginning after the close of the first regular session of the
State legislature that began after the date of the enactment of the DRA
(February 8, 2006). In the case of a State that has a 2-year
legislative session, each year of the session shall be considered to be
a separate regular session of the State legislature. We recommend that
should a State need to make changes to its automated system, those
changes be made as soon as possible.
4. Comment: One commenter asked if OCSE will impose specific
automated systems programming requirements on States that choose to pay
the annual $25 fee themselves.
Response: OCSE is not imposing specific programming requirements on
States that choose to pay the fee themselves. When these rules are
published in final, States will already be imposing the $25 annual fee.
Any changes to the way the State is imposing the fee that are required
as a result of publication of the final rules should be made consistent
with the effective date of the rules. States will not be penalized for
systems changes for fee procedures they implement prior to issuance of
these final rules that are reasonable and consistent with the statutory
fee language. However, the effective date of these rules is 60 days
from the date of publication in the Federal Register .
5. Comment: One commenter asked if the Secretary's rulemaking
authority permits the Secretary to convert a mandatory fee assessed on
the custodial parent, noncustodial parent, applicant, or State to a
mandatory fee on the State in light of the fact that the State must pay
the Federal portion of the fee to the Federal government if it is not
collected through other means. The commenter said that Executive Order
12612, section three limits Federal action to instances where
Constitutional authority for the action is clear and certain. The final
rules should include the bases on which the Administration claims the
Congressional intent behind the mandatory assessment of a fee
translates to a requirement for a State to pay a program fee to the
Federal government that was otherwise not collected.
Response: The Federal responsibility is to ensure that
Congressional intent is met. Requiring a State to charge the fee, but
allowing a State to assert that collection efforts were unsuccessful
would contravene the intent of the mandate.
6. Comment: One commenter stated that the Federal funding cuts
imposed by the DRA are likely to tax the State IV-D agencies to such an
extent that services and outreach to employers will suffer.
Response: The Federal funding of the IV-D program is generous and
we expect that services to families and outreach to employers will not
suffer. The Federal OCSE has an office that specifically works to
provide outreach to employers. To access the internet site with
information relevant to employers, please go to: http://
www.acf.hhs.gov/programs/cse/newhire/employer/home.htm.
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PART 301--STATE PLAN APPROVAL AND GRANT PROCEDURES
Section 301.1--General Definitions
1. Comment: One commenter said that in the discussion of Sec.
301.1 of the proposed rule, the preamble says: ``this amendment will
allow collection of past-due child support * * * on behalf of
individuals who were owed child support as children but then aged out
of the system without having collected the full amount of support owed
to them'' and implies that the now emancipated child has the right to
collect past-due support through the Federal tax refund offset program,
not the custodial parent to whom the support was ordered to be paid.
Response: The provision allows IV-D cases with arrearages owed to
emancipated minors to benefit from the highly successful Federal tax
refund offset program. It does not impact the payee under the support
order.
2. Comment: The wording of the definition of ``past-due support''
suggests the law change applies to cases where the children are minors
as of October 1, 2007, and the authority for States to intercept
arrearages for emancipated children only applies to children that reach
majority after October 1, 2007. If this isn't the case, we suggest:
``Effective October 1, 2007, past-due support accrued under a valid
order for a qualified child can be submitted for FITRO [Federal Income
Tax Refund Offset] until the past-dues support is paid in full.''
Response: We have not changed the definition as suggested by the
commenter. As drafted, the only limitation was with respect to past-due
support submitted for offset until September 30, 2007. Subsequent to
that date the definition of past-due support is no longer limited to
support owed to a ``qualified child'' in a non-assistance case. A
``qualified child'' was, through September 30, 2007, a child who is a
minor or who, while a minor, was determined to be disabled under title
II or XVI of the Act, and for whom a support order is in effect.
3. Comment: One commenter asked that OCSE confirm that there is no
requirement to distinguish between cases referred for tax refund offset
under rules effective until September 30, 2007, and those referred for
offset after October 1, 2007, because of the change to the definition
of ``past-due support.'' Two commenters questioned whether the
definition could be interpreted to mean that persons owed child support
for non-minor children may apply for IV-D services to gain access to
the Federal tax refund offset program without having received IV-D
services when the child was a qualified child.
Response: There is no requirement to distinguish between cases
referred for tax refund offset under rules effective until September
30, 2007, and those referred for offset after October 1, 2007, because
of the change to the definition of ``past-due support.''
As of October 1, 2007, States may submit past-due support for any
case that meets submittal requirements regardless of whether the past-
due support is owed on behalf of a minor. The statute defines ``past-
due support'' as the amount of a delinquency, determined under a court
order, or an order of administrative process established under State
law, for support and maintenance of a child (whether or not a minor),
or of a child (whether or not a minor) and the parent with whom the
child is living. The statute does not limit referral for Federal tax
refund offset to past-due support owed in pre-existing IV-D cases or to
cases in which IV-D services were provided while the obligee was a
minor. Past-due support in a IV-D case may be submitted for Federal tax
refund offset if it otherwise meets existing criteria in Sec.
303.72(a).
4. Comment: One commenter asked if allocation, distribution, and
disbursement could be defined in Sec. 301.1, rather than in the
preamble to Sec. 302.32.
Response: We have not adopted the commenter's suggestion. We do not
believe it is appropriate to add definitions of these terms in this
final rule without allowing the public an opportunity to first comment
on proposed definitions. However, as discussed in the preamble to the
NPRM, the term ``distribution'' refers to how a support collection is
allocated between families and the State and Federal government in
accordance with Federal requirements. The term ``disbursement'' refers
to the act of paying, by check or electronic transfer, support
collections to families. The term ``allocation'' was never defined in
the preamble to the NPRM, but was used in describing distribution. In
that context, ``allocated'' refers to the apportionment of collections
between or among different IV-D cases, or among various obligations
within a support order (for example, withheld income between two income
withholding orders for the same employee, or within the same case,
child support and medical support, or child support and spousal
support.)
5. Comment: One commenter stated that depending on how the Internal
Revenue Service (IRS) will amend its rule of the definition of
qualified child at 31 CFR 285.3, OCSE should delete the qualified child
definition and restructure the past-due support definition to read:
Past-due support means the amount of the support determined under a
court order or an order of an administrative process established under
State law for support and maintenance of a child, or of a child and the
parent with whom the child is living, that has not been paid. For
purposes of cases referred prior to October 1, 2007, for Federal income
tax refund offset of support due an individual who is receiving
services under Sec. 302.33 of this chapter, past-due support means
support owed to or on behalf of a child who is a minor or who, while a
minor was determined to be disabled under title II or XVI of the Act,
and for whom a support order is in effect.
Response: We believe it is appropriate to include the definition of
qualified child in IV-D program rules because States and families are
familiar with that term.
The Department of Treasury's Financial Management Service amended
rules at 31 CFR 285.3 in accordance with section 7301(f) of the DRA by
removing the definition of ``qualified child''. The rules were
published in the Federal Register on October 22, 2007 (72 FR 59480),
http://a257.g.akamaitech.net/7/257/2422/01jan20071800/
edocket.access.gpo.gov/2007/pdf/07-5175.pdf.
6. Comment: One commenter supported the definition to allow use of
the Federal tax refund offset program to collect past-due child support
on behalf of children who are not minors. The commenter estimates that
in his State an additional 3,631 cases will be eligible for offset and
projects that this will generate over $2 million in collections in the
caseload with emancipated children. Other commenters supported the
changes that allow a State to continue to intercept Federal tax refunds
in cases where children are no longer minors and where there are still
arrearages owed to the custodial parent and/or the child.
Response: We agree that this change will garner much needed support
for families not able to use this enforcement technique in the past and
appreciate the support of the commenter. States have certified over
900,000 additional cases for Federal Tax Refund Offset, providing a
tremendous boost to support collections for families for years to come.
We expect to receive an additional $200 million in collections during
processing year 2008.
[[Page 74902]]
PART 302--STATE PLAN APPROVAL REQUIREMENTS
Section 302.32--Collection and Disbursement of Support Payments by the
IV-D Agency
1. Comment: Do States under proposed Sec. 303.72 have the option
to continue to keep the exception that allows Federal tax refund
offsets to be applied first to satisfy any past-due support which has
been assigned to the State or to choose to distribute the money in
accordance with the rules under section 457 of the Act as amended by
the DRA, which would allow the offset to be paid to the family first?
Response: Yes. Under current section 457(a)(2)(B)(iv) of the Act
governing distribution of offsets in former-assistance cases, Federal
tax refund offset collections must be distributed to arrearages only,
and must be applied first to any arrearages assigned to the State to
reimburse public assistance paid to the family. If a States chooses the
new distribution sequence for former-assistance cases under revised
section 457 of the Act, the State must distribute Federal tax refund
offset collections to satisfy any unpaid current support and arrearages
owed to families first before retaining offset amounts to satisfy
arrearages assigned to the State.
States will be required to update State Plan Pre-Print page 2.4,
Collection and Distribution of Support Payments, to indicate which
option for distribution in former-assistance cases the State has
adopted. The statute provides authority to States to make choices among
a number of options which impact the amount of collections families
receive. State choices may well vary.
Section 302.33--Services to Individuals Not Receiving Title IV-A
Assistance General
1. Comment: One commenter encouraged OCSE to ensure that the final
rule and the preamble to the final rule implementing the fee be as
simple and flexible as possible. The commenter is concerned that if the
rules for imposing and collecting the fee become too detailed or
complex, it will become more difficult for State governments to collect
the fees. OCSE should provide general guidance and leave States the
flexibility to determine how the rule applies in specific case
scenarios.
Response: OCSE has a longstanding partnership with States and the
approach to developing rules and working with the States supports
flexibility for State choices. We have responded to questions
concerning some specific case scenarios in this section of the
preamble.
2. Comment: One commenter is concerned with the fact that States
must implement the $25 annual fee prior to issuance of the final rules.
The cost could be significantly increased depending on the content of
the final rules and could result in additional systems programming
changes.
Response: As stated in DCL-06-16, section 7310 of the DRA amends
section 454(6) of the Act to provide that a State child support plan
must provide for the imposition of an annual fee of $25 in each case in
which an individual has never received assistance under a State program
funded under title IV-A of the Act and for whom the State has collected
at least $500 of support, effective October 1, 2006.
In order to certify compliance with this new requirement, States
are required to submit a State plan amendment certifying to the
Secretary that the State has implemented the $25 annual fee requirement
by the effective date in the particular State. States will not be
penalized for fee procedures they implement to meet the statutory
effective date that are reasonable and consistent with the statutory
fee language. Additional changes for compliance with the final rule may
be necessary and States must make any necessary changes required under
the final rules. The effective date of the rule is 60 days from the
date of publication.
Annual $25 Fee--Section 302.33(e)(1)
1. Comment: Four commenters asked for the definition of ``never-
assistance'' for purposes of assessing the fee. Another commenter said
that proposed Sec. 302.33(e)(1) states that receipt of any type of
TANF assistance exempts an individual from the $25 mandatory fee. The
commenter goes on to say that OCSE-AT-99-10 includes types of IV-A
benefits not included in the explanation of never-assistance in the
proposed rule, and therefore not exempt from the fee. If a case
receives assistance as defined in AT-99-10, but is not referred to the
IV-D agency, the IV-D agency may not know whether the fee is required.
One commenter opposed allowing an exemption from the fee for those
cases which do not meet the definition of ``assistance'' at 45 CFR
260.31.
Response: We have determined that a definition of the term ``never-
assistance'' is not appropriate because that term has different
connotations within the IV-D program depending on the context in which
it is used. OCSE-AT-99-10 transmitted the definition of ``assistance''
found in the TANF program rules. The term ``assistance'' is
appropriately defined in the rules governing the TANF program and
specifies what services are included in the definition of
``assistance'' as well as what benefits are not considered TANF
assistance. Assistance is defined in the TANF rules at 45 CFR 260.31
as:
``(a)(1) The term ``assistance'' includes cash, payments, vouchers,
and other forms of benefits designed to meet a family's ongoing basic
needs (i.e., for food, clothing, shelter, utilities, household goods,
personal care items, and general incidental expenses).
(2) It includes such benefits even when they are:
(i) Provided in the form of payments by a TANF agency, or other
agency on its behalf, to individual recipients; and
(ii) Conditioned on participation in work experience or community
service (or any other work activity under Sec. 261.30 of this chapter).
(3) Except where excluded under paragraph (b) of this section, it
also includes supportive services such as transportation and child care
provided to families who are not employed.
(b) It excludes:
(1) Nonrecurrent, short-term benefits that:
(i) Are designed to deal with a specific crisis situation or
episode of need;
(ii) Are not intended to meet recurrent or ongoing needs; and
(iii) Will not extend beyond four months.
(2) Work subsidies (i.e., payments to employers or third parties to
help cover the costs of employee wages, benefits, supervision, and
training);
(3) Supportive services such as child care and transportation
provided to families who are employed;
(4) Refundable earned income tax credits;
(5) Contributions to, and distributions from, Individual
Development Accounts;
(6) Services such as counseling, case management, peer support,
child care information and referral, transitional services, job
retention, job advancement, and other employment-related services that
do not provide basic income support; and
(7) Transportation benefits provided under a Job Access or Reverse
Commute project, pursuant to section 404(k) of the Act, to an
individual who is not otherwise receiving assistance.
(c) The definition of the term assistance specified in paragraphs
(a) and (b) of this section:
(1) Does not apply to the use of the term assistance at part 263,
subpart A, or at part 264, subpart B, of this chapter; and
[[Page 74903]]
(2) Does not preclude a State from providing other types of
benefits and services in support of the TANF goal at Sec. 260.20(a).''
In response to comments, the proposed rules at Sec. 302.33(e)(1)
have been amended to add reference to the receipt of assistance under
the former AFDC programs as well as to include a cross-reference to the
TANF rules definitions of assistance at 45 CFR 260.31. For consistency
with the inclusion of the cross-reference to the definition of TANF
assistance, we also included a cross-reference to the definition of
Tribal TANF assistance 45 CFR 286.10.
2. Comment: One commenter asked if the Federal rules could be
interpreted to indicate that the fee is not assessed any time there is
an assignment of support rights to the State as a condition of
receiving assistance under Title IV-A of the Act. The commenter also
asked if the final rules will allow individual States to determine the
definition of ``never IV-A assistance cases.''
Response: The answer to both questions is no. The Federal statute
at section 454(6) of the Act does not limit those who are exempt from
the fee to those who have assigned their support rights to the State
under a State TANF program. We believe that a cross-reference to a
definition of assistance in these rules is critical to ensure
consistency across State IV-D programs. Any individual who is required
to cooperate with the IV-D program as a condition of Food Stamp
eligibility as defined at 7 CFR 273.11(o) and (p) will not be charged
the fee (although, if all other conditions are met--an individual in
the case receiving IV-D services has never received State AFDC, State
or Tribal TANF assistance, and the State has collected and disbursed at
least $500 of support to the family-- the other parent or the State may
ultimately be responsible for paying the fee). This is discussed in
more detail later in the preamble. In addition, the TANF rules exclude
from the definition of ``assistance'' under the TANF program, anything
in 45 CFR 260.31(b)(1)-(7). If the only TANF benefits received by an
individual fall into the categories listed in 45 CFR 260.31(b)(1)-(7),
those individuals would not be considered to be receiving or to have
received assistance under title IV-A of the Act unless they received
assistance under the former AFDC program. Therefore, those individuals
are subject to the fee if all other conditions for collecting the fee
are met.
3. Comment: One commenter appreciated that OCSE has proposed a
broad definition of IV-A assistance in order to allow States to exempt
as many families as possible from the fee. However, this definition is
broader than the definition of ``IV-A assistance paid to the family''
set forth in OCSE AT 99-10. Some States will only be able to identify
families receiving assistance under this narrower definition, which
essentially covers those who have been paid cash assistance and had
their cases referred to the IV-D agency. We recommend that OCSE permit
State flexibility in this area, so that States must exempt from the fee
those cases in which IV-A assistance has been paid to the family, but
may exempt cases receiving the broader type of IV-A benefits, as
defined at 45 CFR 260.31(b), when a State can easily identify these
cases.
Response: As discussed earlier, the definition of assistance under
the State and Tribal TANF program rules is appropriate and a cross-
reference has been added to ensure consistency among State definitions
and similar treatment of families regardless of the State in which they
live. Individuals in TANF cases that only receive benefits excluded
from the TANF definition of assistance in 45 CFR 260.31 do not assign
rights to support and should not be referred to the IV-D agency. An
application for IV-D services would be required in such cases to be
considered a IV-D case. See PIQ-05-06, dated December 22, 2005 [http://
www.acf.hhs.gov/programs/cse/pol/PIQ/2005/piq-05-06.htm], for treatment
of inappropriately referred cases.
4. Comment: One commenter wanted to know whether to assess the fee
on a case that had received IV-A assistance, as defined by AT 99-10,
but was not referred by the IV-A agency to the IV-D agency.
Response: Referral by the IV-A agency is irrelevant to the
imposition of the $25 fee. If there is a IV-D case that otherwise meets
the conditions for the imposition of the fee, the case is subject to
the fee.
5. Comment: Two commenters stated that tracking whether someone
(for example, in an interstate case) is receiving Tribal IV-A
assistance will be problematic since many State IV-D agencies do not
electronically communicate with Tribes. The commenter asked for
suggestions for overcoming this barrier. One commenter proposed that
OCSE require States to establish procedures so all former or current
Tribal TANF clients can inform the State of their TANF status, so a
State does not inadvertently impose the fee.
Response: Although States may not electronically communicate with
Tribes operating Tribal TANF programs, ascertaining whether an
individual has received Tribal IV-A assistance is not an insurmountable
barrier. As the IV-D caseworker is soliciting information from the
custodial parent in an application case, questions specific to receipt
of IV-A assistance should be asked. States may want to develop specific
questions related to IV-A assistance and benefits to determine what
type of IV-A assistance, if any, a custodial parent or a child in the
family receives/received. IV-D agencies will have necessary case
records to identify current TANF cases referred to the IV-D agency and
former TANF cases that continue to receive IV-D services. If a
custodial parent tells the IV-D office that he or she or the child
received Tribal IV-A assistance, the State would need to contact the
Tribal IV-A office to confirm receipt of Tribal TANF. By the close of
FY 2006, 52 Tribal TANF plans were approved to operate on behalf of 236
Tribal and Alaskan Native Villages. If a State finds it necessary to
confirm receipt of Tribal TANF, the Tribal TANF contact list may be
accessed on the ACF Internet via: http://www.acf.dhhs.gov/programs/dts/
ttanfcont_1002.htm and, as appropriate, the exemption from the fee
noted in the IV-D case record.
This situation may not occur in many cases. The State would only be
required to verify whether an individual received this assistance in
instances in which an individual had asserted that he or she had
received or is receiving Tribal TANF. States should document in the
case record whether an exemption is appropriate.
6. Comment: Three commenters asked for clarification on how to
ascertain if an applicant for IV-D services formerly received or
currently receives TANF. Another commenter said that the NPRM does not
clarify the level of documentation a State IV-D program needs to exempt
a case from a fee if a custodial parent says he or she received AFDC or
TANF in another State or Tribal program. Such verification could
include documentation from another State agency or language in a court
order. The commenter suggested that if the IV-D agency receives a sworn
statement from the custodial parent stating the parent received IV-A
assistance in another State, that would be sufficient documentation for
the family and for the State and Federal government. This would be
comparable to requirements for signatures for the Federally approved
interstate form ``Affidavit in Support of Establishing Paternity'' and
a signature of a parent on a paternity acknowledgement under 42 U.S.C.
652(a)(7).
[[Page 74904]]
Response: In order for a State to determine that an individual
never received assistance under a State or Tribal IV-A plan, the State
should ask the individual applying for services. Current State TANF
recipients do not apply for IV-D services. The State may also confirm
with the State or Tribal IV-A program to ensure that assistance has not
been provided. However, States are not required to have a confirmation
from every State that the client has never received assistance;
contacting the State or Tribal program named by the applicant would be
sufficient.
Some States may determine it is in the best interest of the
individual and for documentation purposes to develop a procedure for
instances in which an individual claims receipt of TANF in another
State. A State may consider a sworn statement from the custodial parent
stating the parent received qualifying assistance under a former State
AFDC program or the current TANF program (with the exception of
emergency assistance as defined in 45 CFR 260.31(b)(1)-(7)) in another
State to be adequate documentation for exemption from the fee.
7. Comment: One commenter recommended providing instructions to
address situations such as when the individual custodial parent who has
never received assistance as defined under Sec. 302.33(e)(1) has a IV-
D case and moves from one State where the fee is paid by the State, and
applies for services in another State that collects the fee from the
noncustodial parent or retains the fee from the collection made for the
custodial parent, during the same fiscal year. The commenter asked for
clarification as to whether both States will be required to impose the
fee during the same fiscal year, regardless of which collection method
or methods are used.
Response: In such a situation, the second State may document in the
case record that the previous State collected the fee. The $25 annual
fee may be imposed and paid or collected only once per year in a case
in which the fee is assessed, regardless of where the individual lives.
A sworn statement from a custodial parent would not be adequate in this
instance because the State may have absorbed the fee or the
noncustodial parent may have paid the fee without the custodial
parent's knowledge. A IV-D agency should ask each applicant for
services if the fee has already been collected or paid for the year. If
an individual moves to a different State, the second State should
confirm with the first State that the fee was collected or paid by the
State and document that the fee was accounted for or paid to another
State.
8. Comment: One commenter believes that the Food Stamp Act
prohibits the collection of the annual $25 fee on Food Stamp-only cases
when the State has elected to require IV-D services for families who
receive food-stamps.
Response: The Food Stamp rule at 7 CFR 273.11(o)(1), Option to
disqualify custodial parent for failure to cooperate provides the State
Food Stamp agency the option to disqualify, or make ineligible for the
Food stamp program an individual who refuses to cooperate with a State
IV-D agency. This section further clarifies that if the State Food
Stamp agency chooses to implement the provision to disqualify an
individual for non-cooperation with the State child support agency, it
must refer all appropriate individuals to the IV-D agency to establish
paternity of the child and establish, modify, or enforce a support
order with respect to the child and the individual in accordance with
the cooperation provision in section 454(29) of the Act. If the
individual is receiving TANF or Medicaid, or assistance from the State
IV-D agency, and has already been determined to be cooperating, or has
been determined to have good cause for not cooperating, then the State
agency shall consider the individual to be cooperating for Food stamp
purposes. Section 273.11(o)(4) of Title 7 says that a State agency
electing to implement the provision to disqualify a custodial parent
for failure to cooperate shall not require the payment of a fee or
other costs for services provided under Part D of title IV-D of the
Social Security Act. The Food Stamp agency issued guidance on August
22, 2007, to States to explain the impact of the fee provision in the
DRA on the Food Stamp program. OCSE transmitted this through IM-07-09,
dated September 24, 2007. This may be viewed at http://
www.acf.dhhs.gov/programs/cse/pol/2007-im.html.
We are aware of five States that have opted to require cooperation
by the custodial parent with the IV-D program in order to be eligible
to receive Food Stamp services. Those States are Idaho, Wisconsin,
Michigan, Mississippi, and Florida. Of those five States, Mississippi
and Wisconsin also require cooperation by the noncustodial parent with
the IV-D program in order to receive Food Stamp services.
The commenter asks whether it is a correct interpretation of the
Food Stamp Act that in a ``Food Stamp-only'' case the IV-D agency will
not require the payment of a fee or other costs for services provided
under title IV-D of the Act. In a IV-D case in which the custodial
parent is required to cooperate with the IV-D agency in order to be
eligible for Food Stamps, even when the IV-D case otherwise meets the
criteria for the imposition of the fee, the fee may not be assessed
against the custodial parent. However, the statute provides four
options for payment of the fee. In this instance, the fee would be
required to be paid either by the State, by the noncustodial parent or
charged to the noncustodial parent and deducted from a collection after
current support and any payment on arrearages for the month under a
court or administrative order have been disbursed to the family.
In instances in which the noncustodial parent in a IV-D case is
receiving Food Stamps and is required to cooperate with the IV-D
agency, if the custodial parent in the same case is not receiving Food
Stamps, and the case otherwise meets the criteria for the fee
assessment (i.e., an individual in the case receiving IV-D services has
never received State AFDC, State or Tribal TANF assistance, and the
State has collected and disbursed at least $500 of support to the
family), the fee could be taken from the collection, charged to the
custodial parent or paid by the State.
In a IV-D case in a State in which the Food Stamp agency requires
cooperation with the IV-D agency and both the custodial and
noncustodial parent are recipients of Food Stamps, and the case in
which the noncustodial parent is involved otherwise meets the
conditions for the imposition of the fee (i.e., the individual in the
case has never received State AFDC, State or Tribal TANF assistance,
and the State has collected and disbursed at least $500 of support to
the family), the State would be required to pay the fee.
9. Comment: Seven commenters stated that the proposed rules are
unclear on whether current or former IV-E assistance cases are exempt
from the annual $25 fee assessment. These commenters believe that in
some places, the proposed rules for the annual $25 fee appear not to
exclude from the fee individuals who have received assistance under
title IV-E while elsewhere in the rules reference to IV-E cases appears
to exclude those cases from the fee. The commenters are seeking
clarification on whether or not the proposed rules require the State to
assess the annual fee in IV-E cases.
Response: In any current or former IV-E assistance case in which
the criteria for imposition of the fee are met, a fee is required. As
stated earlier, a fee is assessed for any case in which the individual
has never received assistance under a former State AFDC program, or
State or Tribal TANF and the State has
[[Page 74905]]
collected and disbursed at least $500 of support to the family. The
impact of the use of the ``disbursed to the family'' regulatory
language is that current IV-E cases will rarely, if ever, be subject to
the fee because the family may never receive $500 in support
collections in a Federal fiscal year. However, in instances in which an
individual formerly received title IV-E assistance, and all conditions
for imposition of the fee are met, including disbursement of $500 to
the former IV-E family, then an annual fee is required.
10. Comment: One commenter stated that the proposed rule at Sec.
302.33(e)(1) defines the cases charged the fee as those in which an
individual has never received assistance under a State or Tribal title
IV-A program, and for whom the State has disbursed to the family at
least $500 of support in the fiscal year. Since one requirement for
imposing the fee is that the payment is disbursed to the family and
foster care payments are disbursed to a State agency, are IV-E foster
care cases exempt from the fee?
Response: See preceding response. As explained in the preamble to
the NPRM, the $500 in support collection must have been disbursed to
the family in a title IV-D case before imposing the $25 fee because to
allow otherwise would result in imposition of a fee in cases in which
support is collected but not disbursed to the family. To allow the fee
to be collected prior to the collection being disbursed to the family
would be inconsistent with the statute's concept that a case subject to
the $25 fee would have benefited from receipt of the $500 in support
during the year before an annual $25 fee is imposed.
The impact of the use of the ``disbursed to the family'' regulatory
language is that current IV-E cases and possibly other categories of
cases, for example some former IV-E cases, will not be subject to the
fee if $500 has not been disbursed to the family. We believe that this
is reasonable since the family will not have received $500 in support
if the support is assigned to the State and retained in whole or in
part to reimburse the State and Federal government for the costs for
assistance programs under the title IV-E.
11. Comment: One commenter asked for clarification as to whether or
not cases in which an individual never received assistance under title
IV-A of the Act but has received services from other means-tested
programs like Food Stamps, IV-E foster care, and Medicaid are exempt
from the fee. The commenter also requested confirmation that
collections that are assigned and not disbursed to the family do not
count towards the $500 of support in a year.
Response: As mentioned earlier in the preamble, an individual who
has received assistance under a State AFDC program, assistance as
defined in Sec. 260.31 under a State TANF program, or assistance as
defined in Sec. 286.10 under a Tribal TANF program, is exempt from the
$25 annual fee. As discussed above, in situations in which an
individual in a IV-D case formerly received IV-E foster care services
and $500 of support has been disbursed to the family that case would be
subject to a fee. Similarly, Medicaid-only cases, in which child
support collected is paid to the family and assigned cash medical
support may be retained by the State may be subject to the fee if other
conditions are met; i.e., the individual in the case has never received
AFDC, State, or Tribal title IV-A assistance, is not required to
cooperate with the IV-D agency in Food Stamp cases, and the State has
collected and disbursed at least $500 of support to the family within
the Federal fiscal year.
While the statute at section 454(6) of the Act does not
specifically mention recipients of Food Stamps, individuals who are
cooperating with and receiving services from the IV-D program as a
condition of Food Stamp eligibility under 7 CFR 273.11(o) and (p) may
not be charged the $25 annual fee. As discussed earlier, in such cases
the collection of the $25 annual fee from the individual required to
cooperate is prohibited. However, the fee must be assessed and
accounted for if all conditions for assessing the fee are met. These
final rules reflect this change to the proposed rule at Sec.
302.33(e)(3)(i)(B), (ii) and (iii) to prohibit collecting the fee from
individuals required to cooperate with the IV-D program as a condition
of eligibility for Food Stamps.
12. Comment: One commenter stated that in the preamble, the terms
``family'' and ``caretaker relative'' are used rather than the term
``individual'' as stated in the proposed rule. The commenter asked if
the determination of ``never received assistance'' is applied to any
individual in the case.
Response: Yes, the determination that an individual never received
assistance is applied to any individual in the case. If any individual
in a IV-D case received assistance as defined in Sec. 302.33(e), that
case is exempt from the $25 annual fee.
13. Comment: One commenter is seeking clarification of the fee
provision for title XIX Medicaid-only cases which are only receiving
medical services under 45 CFR 302.33(a)(5). The proposed medical
support rules will result in more orders for cash medical support in
IV-D cases. Some of those IV-D cases will be Medicaid-only cases
receiving IV-D services under Sec. 302.33(a)(1)(ii). Some will already
have support orders which will include a requirement for the
noncustodial parent to pay both child support and cash medical support.
Many will be cases in which the custodial parent has never received IV-
A assistance. In some of the Medicaid-only cases, the custodial parents
will inform the IV-D agency they only want medical support services,
and not child support services. Because these are IV-D cases, though,
all support payments under the support orders may be made through the
State Disbursement Unit (SDU). However, the IV-D agency is not
providing child support enforcement services, but merely receiving and
disbursing child support payments through the SDU, so the custodial
parent is not an individual ``for whom the State has collected at least
$500 of support.''
Response: Because in these Medicaid-only cases IV-D child support
services have been refused, the IV-D agency is not providing child
support enforcement services to the family, but merely receiving and
disbursing the child support payments through the SDU. In these cases,
even when the custodial parent receives $500 of child support in the
Federal fiscal year, that support is not considered to have been
collected and disbursed to the family through IV-D program services and
thus no fee is charged.
14. Comment: One commenter asked whether to assess the fee for a
custodial parent who was on Medicaid one year, and the next year
Medicaid ended, and the custodial parent (who declined child support
enforcement services while receiving Medicaid) requests, in response to
the notice, all IV-D services be provided including child support and
medical support services. When the IV-D agency disburses at least $500
in the new year to the custodial parent, is a $25 annual fee due for
that case that year?
Response: In accordance with 45 CFR 302.33(a)(4), whenever a family
is no longer eligible for assistance under the State title IV-A, IV-E
foster care, and Medicaid programs, the IV-D agency must notify the
family, within 5 working days of the notification of ineligibility,
that IV-D services will be continued unless the IV-D agency is notified
by the family to the contrary. The notice must inform the family of the
consequences of continuing to receive IV-D services, including the
available services and the State's fees, cost recovery, and
distribution policies.
If the scenario described by the commenter occurs, the fee would be
[[Page 74906]]
imposed in the case if all of the other conditions for imposing the fee
are met; i.e., the individual in the case has never received AFDC,
State, or Tribal title IV-A assistance, and the State has collected and
disbursed at least $500 of support to the family within the Federal
fiscal year. If the custodial parent or non-custodial parent is
required to cooperate with the IV-D program as a condition of
eligibility for Food Stamps, the fee could not be collected from such
individual but could be collection from the other parent or be paid by
the State.
15. Comment: One commenter requested that OCSE redefine public
assistance in the rules to include recipients of means-tested programs
outside of TANF such as Medicaid, SCHIP, and Food Stamps as exempt from
the fee. Another commenter said that the proposed rules do not exempt
Medicaid-only/former Medicaid-only cases from the fee and believes it
is contrary to sound public policy because Medicaid-only recipients who
are referred to IV-D for services do not have a choice whether or not
to participate. They have limited income; Medicaid-only recipients are
allowed to opt out of child support services.
Response: The Federal statute at section 454(6) of the Act does not
provide for any additional categories of exempt individuals such as
those who may be receiving, or who may have received in the past, other
types of Federal, State or Tribal assistance. However, as discussed
earlier, the impact of the use of the ``disbursed to the family''
regulatory language is that current IV-E cases and possibly other
categories of cases, for example some former IV-E cases, will not be
subject to the fee if $500 has not been disbursed to the family. We
believe that this is reasonable since the family will not have received
$500 in support if the support is assigned to the State and retained in
whole or in part to reimburse the State and Federal government for the
costs for assistance programs under the title IV-E. In addition, under
specific circumstances, the fee would not be collected from individuals
receiving Food Stamps based on language in the Food Stamp Act. See
Comment and Response 8 in this section of the preamble.
16. Comment: One commenter supports the exemption of individuals
who have received Tribal IV-A assistance from the fee, but expressed
concern that referring to Tribal IV-A programs in the State rules could
lead to changes in the Tribal IV-D program. The commenter supports the
protection of all Tribal individuals and programs from the demands the
new rules would imply.
Response: The statute at section 454(6) of the Act and these rules
do not apply to the Tribal IV-D program cases.
17. Comment: One commenter agrees with OCSE's decision to exempt
current and former Tribal title IV-A assistance cases along with
current and former State title IV-A cases from the fee.
Response: We appreciate the support of the commenter. As stated in
the preamble to the NPRM, we believe that it is authorized and
consistent with the purpose and the scope of the statutory exemption to
exempt individuals who are receiving or have received Tribal title IV-A
assistance as a subset of the category of those who are exempt from the
fee.
18. Comment: One commenter asked if a case in which the only
collection made is a Federal tax refund offset that is applied to
satisfy an assigned arrearage, or a non-Federal tax refund offset that
is applied to a case in which the only dollar amount owed is assigned
to the Medicaid agency, is exempt from the $25 collection fee since a
disbursement was not sent to the family.
Response: Yes, in the instance described, no annual fee would be
due because the State had not disbursed at least $500 of support
collected to the family.
19. Comment: One commenter asked for clarification of whether a
case is eligible for the $25 annual fee if an individual in a current
IV-D case had received IV-A assistance in a prior IV-D case. For
example, if the noncustodial parent is currently in a case that does
not qualify for the fee but formerly received AFDC as part of an
entirely different family, is the current case eligible for the new $25
fee?
Response: If a noncustodial parent in a case who does not currently
receive IV-A assistance formerly received assistance as part of an
entirely different family, the current case is subject to the $25
annual fee if all conditions are met. The rules at Sec. 302.33(e)(1)
mandates the fee ``if there is an individual in the case to whom IV-D
services are provided and for whom the State has collected and
disbursed at least $500 of support in that year; who has never received
assistance under a former State AFDC program, assistance as defined in
Sec. 260.31 under a State TANF program, or assistance as defined in
Sec. 286.10 under a Tribal TANF program * * *'' The collections must
be disbursed to the individual receiving IV-D services. In the case of
a noncustodial parent, the collections are not being disbursed to the
noncustodial parent; a fee must be imposed if all of the other
conditions are met (i.e., the individual in the case has never received
AFDC, State or Tribal TANF assistance, or in certain Food Stamp cases,
and the State has collected and disbursed at least $500 of support to
the family within the Federal fiscal year).
20. Comment: One commenter asked whether the fee should be imposed
in a IV-D case in the following situations:
The child is the only individual in the household that has
received or currently receives IV-A assistance. The custodial parent
has never received assistance.
The custodial parent received IV-A assistance as a child.
The noncustodial parent received IV-A assistance as a
custodial parent or as a child.
The IV-A agency provides assistance or benefits to a
custodial parent but there is no assignment of support rights or
referral to IV-D agency.
Response: The fee requirements for the above scenarios, in the
order listed are as follows:
If the child is the only individual in the household that
has received or currently receives IV-A assistance, the fee may not be
imposed.
If the custodial parent received public assistance as a
child but has never received State or Tribal title IV-A assistance as
an adult, the case is subject to the fee if all other conditions for
imposing the fee are met (i.e., the State has collected and disbursed
at least $500 of support to the family in the Federal fiscal year).
The noncustodial parent is not an individual for whom $500
of support has been collected in the year in question. Therefore,
neither the case nor the noncustodial parent is exempt from the fee
even if he or she previously received IV-A assistance as a custodial
parent or as a child, and the fee must be imposed if all other
conditions are met.
If the IV-A agency provides assistance to a custodial
parent, a fee would not be required. If the custodial parent applies
for IV-D services, qualifies for the fee and the IV-D agency collects
and disburses $500 to the family in the Federal fiscal year, a fee
would be imposed in this case, as the custodial parent is receiving
title IV-A benefits excluded from the definition of TANF assistance at
45 CFR 260.31(b).
21. Comment: Four commenters supported the use of the calendar year
for imposing and collecting the annual fee. These commenters indicated
that charging a fee according to a calendar year is easier for the
general public to understand. One commenter said that if
[[Page 74907]]
the fee was charged in accordance with the Federal fiscal year, the
average child support order in a State is $250 per month, and the fee
is collected from the noncustodial parent, then a noncustodial parent
who pays current support in the first two months of the fiscal year
would be assessed the fee in early December. This could impact holiday
celebrations and take money from families just before Christmas. By
shifting the year to calendar year, it is less likely to impact
families at the December holidays. Six commenters supported the use of
the Federal fiscal year and one commenter said that using a Federal
fiscal year will assist States in computer re-programming because it
will be consistent with current reporting of collections,
disbursements, and undistributed collections on the Form OCSE-34A,
Quarterly Report of Collections; with program income and expenditures
reporting on the Form OCSE-396A, Child Support Enforcement Program
Financial Report; and with reporting caseload size, court order
percentage, and other performance measures data on the Form OCSE-157,
Child Support Enforcement Annual Data Report. One commenter indicated
that the definition of ``annual'' should be universal and not vary from
State to State. One commenter indicated that the Federal fiscal year
will best serve the State in the future, however, for the initial year
the State will incur extraordinary expenses because of advance payment
of the fee and the cost of technological improvement.
Response: The NPRM proposed that the annual fee be imposed and
reported for the Federal fiscal year. OCSE specifically solicited
comments on and a rationale for, an alternative 12-month period in
order to provide more State flexibility.
While we support State flexibility, we agree that the Federal
fiscal year will be more consistent with current reporting of
collections, disbursements, and undistributed collections on the Form
OCSE-34A, Quarterly Report of Collections; with program income and
expenditures reporting on the Form OCSE-396A, Child Support Enforcement
Program Financial Report; and with reporting caseload size, court-order
percentage, and other performance measures data on the Form OCSE-157,
Child Support Enforcement Annual Data Report. We agree with the
commenter that a universal definition of ``annual'' is needed;
therefore, the final rule retains the Federal fiscal year as the 12-
month period in which the $25 annual fee must be imposed and reported.
22. Comment: Two commenters asked for States that require
legislation to implement the fee, if in the first year of
implementation the fee applies to all cases in which the individuals
involved in the case never received title IV-A assistance and for which
$500 has been disbursed to the family or if it only applies to cases in
which $500 was disbursed to the family after the effective date of the
State law. The commenters believe that a requirement to look at any
period prior to the State's implementation date would be unreasonable
and inconsistent with Congressional recognition that some States need
time to obtain statutory authority for the new fee. Another commenter
asked if a State is responsible for fees and program income for the
entire year if the implementation date is later than the beginning of
the fiscal year.
Response: The statutory effective date for the annual fee mandated
in section 7310 of the DRA is October 1, 2006. If a State requires
legislation in order to implement this provision, the effective date of
the mandatory annual fee provision is three months after the first day
of the first calendar quarter beginning after the close of the first
regular session of the State legislature that began after February 8,
2006. In the case of a State that has a two-year legislative session,
each year of the session shall be considered to be a separate regular
session of the State legislature. The mandate for the collection of the
fee does not apply to any period prior to the effective date of the
State law in each State. For example, if in State A a law is needed and
the legislative session for State A begins January 1, 2007 (after the
February 8, 2006 enactment date of the DRA), and the close of the
regular session is April 30, 2007, the fee provision must be
implemented by October 1, 2007. If in State B a law is needed and the
legislative session for State B begins January 1, 2007 (after the
February 8, 2006 enactment date of the DRA), and the close of the
regular session is December 30, 2007, the effective date for fee
provision would be April 1, 2008. The State is not responsible for
program income for fees for the entire fiscal year if the State's need
for legislation requires that the implementation month for the $25 fee
is other than the beginning of the Federal fiscal year.
23. Comment: One commenter said that its State legislators asked if
the State could charge the annual fee to a former recipient of TANF
when it has been a year since the former recipient of TANF received
assistance. The commenter went on to ask if a State is limited to
charging the $25 annual fee only for cases in which the individual
involved never received assistance as defined under Sec. 302.33(e) or
if the State could choose to expand those cases subject to the fee.
Response: A State may not charge a former recipient of TANF the
annual fee after the individual has been off TANF assistance for a
year. The statute is clear that the fee is assessed in the case of an
individual who has never received title IV-A assistance. An individual
who has been off TANF assistance for a year is not an individual who
has never received assistance under title IV-A of the Act. The State
may not expand those cases which are subject to the $25 annual fee.
24. Comment: Seven commenters asked for clarification of whether or
not to impose the fee in a case in which the individual never received
State or Tribal title IV-A assistance prior to the disbursement of the
$500 of support to the family for whom the support is owed, but begins
to receive State or Tribal title IV-A assistance during the year after
the disbursement of the $500 to the family for whom the support is
owed. The commenters went on to ask for clarification in instances in
which the individual becomes IV-A-eligible during a year after the fee
has been collected and whether the State would be required to return
the fee.
Response: If a fee has already been assessed and collected, there
is no authority to reimburse the fee, because at the time the fee was
assessed, the conditions for imposing the fee were met.
When the $500 of Support Threshold Is Reached--Section 302.33(e)(1)(i)
1. Comment: Several commenters wanted to know how the $500 support
threshold will be calculated: When the money is collected or when it is
disbursed to the family. The commenters are in support of calculating
the threshold when the $500 is disbursed to the family. Allowing
otherwise may result in imposition of the $25 fee in cases in which
support is collected but not disbursed to the family, e.g. Federal tax
intercepts held pending appeal which may overturn their collection. If
this happens, and the State had already calculated that the $500
threshold is met from those intercepts, and collected the $25 fee
amounts over the $500, the reversal of those two processes would be
administratively challenging at best. In addition, the commenters
believe this would be inconsistent with the concept that a family has
benefited from
[[Page 74908]]
receiving $500 in support prior to the State receiving the annual $25
fee.
Response: We agree that the family must benefit from the receipt of
the $500 collection of support made by the State before the fee is
collected. It is clear in Sec. 302.33(e)(1) that at least $500 of
support must be collected and disbursed to the family prior to the
imposition of the fee.
2. Comment: One commenter noted that the proposed rules say: ``In
the case of an individual who has never received assistance under a
State or Tribal title IV-A program, and for whom the State has
disbursed to the family at least $500 of support * * *'' The statute
says: ``* * * in the case of an individual who has never received
assistance under a State program funded under Part A and for whom the
State has collected at least $500 * * *''
The commenter said that the proposed rule is more prescriptive than
Federal law. The final rule should use the word ``collected'' to mirror
the Federal law or be changed to provide a State option to impose the
annual fee either at the point of distribution or the point of
disbursement.
Response: We disagree that these rules should be changed. We
believe it is imperative that the family receive the $500 of support
collected prior to the imposition and collection of the $25 annual fee.
Collecting the annual fee prior to disbursing the child support
collection means the family has not yet benefited from the collection.
3. Comment: Two commenters asked that OCSE define ``disbursed.''
The commenters asked if a payment received in one Federal fiscal year
and held in escrow due to a pending legal matter and disbursed in the
subsequent Federal fiscal year counts toward the $500 threshold in the
Federal fiscal year in which the collection was made or the Federal
fiscal year in which the disbursement was made. If a disbursement is
held pending location of the custodial parent in one Federal fiscal
year and the collection is not sent to the family until a subsequent
Federal fiscal year, once the custodial parent is located, does the
disbursement count toward the $500 threshold in the Federal fiscal year
in which the support was collected or in the Federal fiscal year in
which the custodial parent was located and the collection was
disbursed? If a disbursement is returned as undeliverable in one
Federal fiscal year or is lost in the mail, and the payment is received
by the family due the payment in the subsequent Federal fiscal year,
can a State deduct the $25 fee paid in the original Federal fiscal year
from the total fee paid in the subsequent year? The commenter indicated
that he thinks that the fees taken from the collections should be
treated like disbursements and count toward the calculation of the $500
threshold.
Response: As stated earlier in the preamble, we did not define
``disbursement'' in Sec. 301.1 of these rules. As noted, disbursement
refers to the act of paying, by check or electronic transfer, support
collections to a family. The rule language makes clear that the
collection of the fee in a case in which the individual has never
received assistance must occur after the $500 collection is disbursed
to the family.
If a payment received in one Federal fiscal year is held in escrow
due to a pending legal matter and released in a subsequent Federal
fiscal year so that the disbursement of this payment also happens in
the subsequent Federal fiscal year, the disbursement counts toward the
$500 threshold in the Federal fiscal year in which the payment was
disbursed.
If more than $500 is collected and disbursed and the $25 fee
withheld in one Federal fiscal year but the disbursement to the family
is returned as undeliverable in the Federal fiscal year subsequent to
the year in which it was disbursed, a State may consider the $25 annual
fee paid in the original Federal fiscal year as the fee paid in the
subsequent year because the collection was disbursed to the family in
the subsequent year and the conditions in which the $25 fee were
imposed were met during the subsequent year.
We do not agree that fees taken from the collections should be
treated as disbursement and count towards the calculation of the $500
because the $500 has to have been disbursed to the family. Fees taken
from the $500 in collections reduce the amount disbursed to the family.
4. Comment: Several commenters requested clarification of the
following statement: ``If $500 in support is collected in one year but
not disbursed until the next year, the fee would be imposed in the year
in which the collection was actually disbursed to the family.'' It is
clear from this statement that if a single (and the only) $500
collection is received in one year but not disbursed until the
following year; the fee would apply in the following year, because $500
is disbursed in that year. However, the statement could be read to
require imposition of a fee in the following year when $500 total
support is collected in one year, but only $450 is disbursed in that
year, and $50 disbursed in the following year. It is clear to us that a
fee should not be imposed in these circumstances, but the language of
the referenced statement could imply to someone that a fee should be
imposed in such a case.
Response: We agree that if only $500 is collected in one year, but
the entire $500 is not disbursed to the family in the same year, there
will be no fee imposed in that case for the year the $500 was
collected. As stated earlier, the family must benefit from the entire
$500 collection prior to the imposition and collection of the fee.
5. Comment: One commenter stated that the difference in the amount
of fee collections would be negligible whether assessing the fee at the
point of distribution or the point of disbursement and that for some
States, levying the fee at the point of disbursement will be
considerably more costly than imposing at the point of distribution.
Response: We believe that it is paramount that families benefit
from the $500 collection prior to the imposition of the fee. Therefore,
the fee must not be assessed and collected until after the disbursement
of the $500 in collections to the family.
Collection of the Annual Fee: State Options To Retain, Charge, Recover
or Pay the Annual Fee--Section 302.33(e)(3)
1. Comment: One commenter stated that if a State opts to impose the
fee on the noncustodial parent, the conforming amendment made by
section 7310(b) of the DRA to 42 U.S.C. 657(a)(3) allows a State to
collect that fee by withholding it from collections and subsequently
collecting an additional $25 in support from the noncustodial parent.
The commenter stated that OCSE has a long-standing policy since 1989
precluding such withholding. The commenter believes that it is
appropriate to withhold the fee from collections based on the following
rationale: The DRA did amend the Federal statute on how money collected
as support is distributed. The DRA amendment to section 457(a)(3) of
the Act (which becomes section 457(a)(4) effective October 1, 2009, or
up to a year earlier at State option) \1\ allows States to take the fee
from support collected before paying the rest to the family that never
received assistance as defined under Sec. 302.33(e). This applies
regardless of whether the State chooses to have the custodial parent or
noncustodial parent pay the fee. The 1989 policy is superseded by the
new language which allows States to deduct the $25 fee
[[Page 74909]]
charged to the noncustodial parent before paying the remaining amount
collected to the family. Therefore, Congress has specifically provided
authority for taking the new fee from support collections and Congress
did not limit that authority to instances in which only the custodial
parent pays the fee.
---------------------------------------------------------------------------
\1\ Throughout the preamble, this provision will be referenced
as 457(a)(4) for ease of understanding.
---------------------------------------------------------------------------
Response: We believe that section 457(a)(3) of the Act (to become
paragraph (a)(4) as explained above) can be read to allow the fee to be
charged to the noncustodial parent and retained from a collection under
certain circumstances. If a State opts to charge the fee to a
noncustodial parent, the fee may be taken from a child support
collection provided that $500 has been disbursed to the family in the
Federal fiscal year, current support for the month in which the
collection is received has been satisfied, and any specified arrearage
payment for that month pursuant to an administrative or court order has
been satisfied. In this way the family receives its current monthly
support payment and an obligor who has been ordered to pay an
additional amount each month to satisfy an outstanding arrearage will
not fail to meet a court or administratively ordered payment. States
are reminded that if they elect to collect the fee in this manner, the
due process rights of the noncustodial parent must be protected.
Section 302.33(e)(3)(i) has been revised to read: ``Retained by the
State from support collected in cases subject to the fee in accordance
with the distribution requirements in Sec. 302.51(a)(5) of this part,
except that no cost will be assessed for such services against: (A) A
foreign obligee in an international case receiving IV-D services
pursuant to section 454(32)(C) of the Act; and (B) an individual who is
required to cooperate with the IV-D program as a condition of Food
Stamp eligibility as defined at Sec. 273.11(o) and (p) of title 7.
Section 302.51(a)(5) has been revised to allow the fee to be
collected prior to the support collection being distributed to a family
that has never received assistance as defined under Sec. 302.33(e) and
now reads: ``(i) Except as provided in paragraph (a)(5)(ii), a State
must pay to the family that has never received assistance under a
program funded or approved under title IV-A and to an individual who is
not required to cooperate with the IV-D program as a condition of Food
Stamp eligibility as defined at Sec. 273.11(o) and (p) of title 7 the
portion of the amount collected that remains after withholding any
annual $25 fee that the State imposes under Sec. 302.33(e) of this
part. (ii) If a State charges the noncustodial parent the annual $25
fee under Sec. 302.33(e) of this part, the State may retain the $25
fee from the support collected after current support and any payment on
arrearages for the month under a court or administrative order have
been disbursed to the family provided the non-custodial parent is not
required to cooperate with the IV-D agency as a condition of
eligibility for Food Stamps.''
2. Comment: One commenter noted that the preamble to the NPRM
states that the fee will reduce IV-D administrative costs. The
commenter does not agree and says this is only true for the Federal
government. The requirement that the State must pay the fee to the
Federal government even if the State has not collected the fee is
essentially a ``bill for services'' to the States from the Federal
government.
Response: The State is not required to absorb the fee by paying it
out of State funds. The statute provides for four options for
collecting or accounting for the fee. The fee may be retained by the
State from support collected on behalf of the custodial parent, paid by
the custodial parent applying for services, recovered from the
noncustodial parent or collected by the State out of its own funds.
Regardless of which method the State chooses, the fee is reported as
program income and is used to offset both the State and Federal shares
of the IV-D program expenses.
3. Comment: One commenter stated that the rules allow four options
to collect the fee and wants to know why a State must identify the
exact method of collecting the fee when there are four options. The
commenter suggests limiting the State plan preprint to indicate the
State will impose and collect the fee and not identify the method to be
used.
Response: State plan preprint pages indicate options chosen when
States have authority to choose among various options. We often get
requests for information on State choices with respect to the various
State plan options including fee and cost recovery policy. Having this
information available to us will allow us to track the information
without asking the States directly. A State is free to indicate it will
use more than one method to account for fees assessed.
4. Comment: One commenter noted the preamble to the NPRM indicates
that: ``If a State * * * collects less than $25 in excess of the first
$500 * * *, the State must collect the fee using one of the other
methods, and, if all else fails, pay the fee itself * * *'' The
commenter questions whether a State must make other attempts to collect
before paying the fee itself. The commenter also asked if a State would
have to develop and administer a secondary billing system to collect
small (under $25) unpaid amounts from custodial parents and
noncustodial parents. The commenter recommended that States have the
option to use other methods to collect unpaid amounts, or to pay the
fee itself.
Response: A State does not have to make other attempts to collect
the fee before paying the fee itself. The statute allows for four
options for collecting the fee. Nor is a State required to develop and
administer a secondary billing system, but should a State determine
that it is a viable option for collecting and tracking the fee, it may
do so.
5. Comment: A number of commenters proposed that the rule eliminate
the four payment options and require that the fee only be deducted from
collections and noted that the preamble states that ``* * * retaining
the annual fee from support collected * * * may be the least
administratively burdensome method * * *'' Payment of the fee can only
be guaranteed if it is deducted from collections or if it is paid by
the State.
Response: The statute allows four options for collecting the annual
fee. While retaining the annual fee from the support collected may be
the least administratively burdensome method for collection of the fee,
we have no discretion to eliminate any of the options authorized by the
statute.
6. Comment: One commenter stated that by allowing four payment
methods, there will not be uniformity among the States which will
result in less fees being collected. For example, if one State law
requires the fee to be collected from the noncustodial parent and it is
an interstate case, then the fee could not be collected by that State.
Further, if the noncustodial parent resides in a State that is only
permitted to deduct the fee from collections, then the noncustodial
parent is not paying the fee at all.
Response: The statute allows State discretion and we agree it will
result in different policies in different States. As discussed later in
the preamble, in an interstate case, the application fee is charged by
the State in which the individual applies for services. Only the
initiating State has all the information necessary to know whether the
$25 annual fee should be imposed in a particular case. Therefore, it is
appropriate for the initiating State to impose the annual $25 fee in
eligible cases after the $500 threshold is met, and to report the
amount of the fees imposed as required.
[[Page 74910]]
As discussed earlier in the preamble, if a State opts to charge the
fee to a noncustodial parent, the fee may be taken from a child support
collection provided that $500 has been disbursed to the family in the
Federal fiscal year, current support for the month in which the
collection is received has been satisfied and any specified arrearage
payment for the month pursuant to an administrative or court order has
been satisfied. Allowing collection of the fee in this manner will help
ensure the appropriate amount of fees are collected and reported.
7. Comment: One commenter asked that OCSE provide guidance
concerning potential conflicts of law between the initiating and
responding State. If the responding State's law requires the custodial
parent to pay the fee, but the initiating State's laws require the
noncustodial parent to pay, whose law governs? If the initiating
State's law governs, the responding State, by its law, cannot collect
the fee, because the noncustodial parent is not liable in that State.
Response: As stated in the preamble to the NPRM, we believe it is
appropriate for the initiating State to impose the annual $25 fee in
eligible cases after the $500 threshold is met, and to report the
amount of the fees imposed as required. The initiating State will
collect and impose the fee; therefore it is the initiating State law
which governs.
8. Comment: One commenter said that the preamble to the NPRM states
that the noncustodial parent must designate a portion of a subsequent
payment as the $25 annual fee before the State retains a portion of the
support collection as payment for the fee. The commenter asked for
clarification of whether a State may retain the fee from the
noncustodial parent's support payment.
Response: We believe that section 457(a)(4) of the Act can be read
to allow the fee to be charged to the noncustodial parent under certain
circumstances, as discussed earlier in the preamble. Therefore, with
respect to the $25 annual fee, the noncustodial parent does not have to
designate a portion of the payment as the $25 annual fee.
9. Comment: One commenter stated that should a State select one of
the first three options outlined in the statute, the language in the
U.S. Code does not appear to authorize the mandatory payment
interpretation of the State paying the fee in the rules. Several
commenters stated that section 7310 of the DRA does not require States
to pay the fee for services. It specifically allows States to collect
the fee from either the custodial or noncustodial parent. The recovery
of the fee is never certain and they believe Congress contemplated that
some fees would not be collected or paid. The preamble and rules make
States the guarantors for payment of the fee. There is no authority for
OCSE to use its regulatory powers to contravene the statutory
provisions. Congress allowed States to pay the fee or collect it from
the parents. The commenters asked that OCSE reconsider this issue and
amend the rules accordingly. Many commenters stated that billing the
custodial parent or the noncustodial parent for the fee will be
administratively impractical. If they do not pay, the State will have
to resort to retaining the fee from collected support or paying it from
its own funds.
Response: Section 454(6)(B)(ii) of the Act conveys a clear
expectation that the $25 fee will actually be imposed and retained,
collected, or paid in all eligible cases in which at least $500 of
support was collected in a year. Therefore, each State is responsible
for imposing, retaining, collecting or paying the fee, and reporting
the total amount of annual $25 fees imposed in all cases in which the
fee is required to be imposed during the Federal fiscal year.
10. Comment: Several commenters requested clarification if a IV-D
agency chooses to collect the annual fee from a custodial parent. If
the IV-D agency does not collect enough (only collects $510 in a fiscal
year) to cover the fee, the rules require the State to make up the
difference. In such cases, can the State seek to recoup that fee? May
the fee be deducted from subsequent payments that occur in the next
year, without specific authorization from the custodial parent? Another
commenter asked, if the custodial parent is assessed the fee and the
collections made on the case amounts to only $510 in the year the fee
is assessed, does the State have to wait until it collects in excess of
$525 in the next year before collecting the remaining $15 of the fee?
The commenters are seeking clarity on the status of the debt to the
State.
Response: If the State pays the fee for a qualifying case in the
preceding year, it may recoup the fee from the custodial parent
responsible for the fee under State procedures in the subsequent year
without the custodial parent's specific authorization. However, in
accordance with Sec. 303.2(a)(2), the State IV-D agency must notify
the applicant that the cost recovery will be made. The State does not
have to wait until it collects in excess of $525 in the next year to
recoup the $15 fee it paid in the previous year.
11. Comment: Many commenters asked for clarification of the
following situation: The $500 threshold is met and the collection is
disbursed at the end of Year A and the $25 fee to be deducted from the
next collection has not been collected. The State pays the $25 fee in
Year A. How is the $25 fee retained by the State in the subsequent year
(Year B) to reimburse the State for paying the fee the year before
(Year A) counted for the purposes of the threshold in Year B? Does the
State need to collect $525 in Year B before the next $25 is collected?
Response: Yes. If the State pays the fee for a qualifying case in
the preceding year, it may recoup the fee from the custodial parent
responsible for the fee under State procedures in the subsequent year.
The fee that is recouped by the State in the next year would not be
counted towards the $500 threshold because that fee is kept by the
State and not disbursed to the family. Collections must be disbursed to
the family in order for them to count towards the $500 threshold.
12. Comment: One commenter stated that the proposed rule authorizes
that the fee may be ``retained'' by the State and believes the use of
the term ``retained'' is incorrect. The correct terminology should be
``distributed'' as defined in the preamble, specifically in Sec.
302.32 where the term ``distribution'' is defined as how a support
collection is allocated between families and the State and the Federal
government in accordance with requirements. Once collections are
received on behalf of the individual receiving services, the money must
be ``distributed,'' ``disbursed,'' or accounted for as
``undistributed.'' Saying in Sec. 302.51(a)(5) that ``the State must
pay to a family that has never received assistance * * * after
withholding any $25 fee that the State imposes * * *'' understates the
``distribution'' impact of this option.
Response: The regulatory language in Sec. 302.51(a)(5) is
consistent with the statutory language at section 457(a)(4) of the Act,
which says: ``In the case of any other family, the State shall
distribute to the family the portion of the amount so collected that
remains after withholding any fee pursuant to section 454(6)(B)(ii).''
Distribution in cases in which the family has never received assistance
as defined under Sec. 302.33(e) is not complex because, other than the
authority to withhold the $25 annual fee, all collections go to the
family.
13. Comment: One commenter requested clarification on how IV-D
agencies can ``recover'' the $25 annual fee from a noncustodial parent,
if the noncustodial parent is to be responsible for the fee. The
commenter specifically asked if the State can employ typical IV-D
collection tools such as income
[[Page 74911]]
withholding, Financial Institution Data Match and Federal tax offset to
recover the fee from the noncustodial parent. If so, will the annual
fee be at the bottom of the distribution hierarchy after current
support and arrearages? In States that charge interest, this could
create a situation where interest could potentially accrue on the fee
in addition to the child support arrearages.
Response: Since section 457(a)(4) of the Act can be read to allow
the State to charge the noncustodial parent the fee and take the fee
from the child support collection, we have revised Sec.
302.33(e)(3)(i) to recognize that the fee may be retained by the State
from a collection in accordance with the distribution requirements in
Sec. 302.51(a)(5) which require that current support and any payment
on arrearages for the month under a court or administrative order have
been disbursed to the family before the fee is retained. Whether
assessing the fee against the noncustodial parent or the custodial
parent, the fee may be retained from the collection provided that the
requirements for assessing the fee are met, i.e., the individual has
never received assistance as defined in Sec. 302.33(e) and the State
has collected and disbursed $500 in the Federal fiscal year to the
family. However, States may also use IV-D enforcement techniques,
including income withholding, to collect the fee.
14. Comment: One commenter asked if, in instances in which a State
must use IV-D enforcement efforts to collect the $25 annual fee from
the noncustodial parent, the resources used to collect the fee are
eligible for IV-D Federal financial participation.
Response: Yes, the resources used to collect the annual fee are
allowable costs attributable to the program and eligible for IV-D
Federal financial participation.
15. Comment: One commenter asked if when using the standard Federal
income withholding form to collect the annual fee an employer must
follow the $25 annual fee rules of the State issuing the income
withholding order, or whether the employer must follow the $25 annual
fee rules of the State of the principal place of employment of the
noncustodial parent.
Response: Employers must continue to comply with the terms of
income withholding orders. If the order indicates that the employer
must retain a $25 fee from the employee's wages, in addition to the
amount of the collection, the employer must follow those instructions.
16. Comment: Several commenters stated that the preamble to the
NPRM indicates that a State's option to account for a fee, if not
collected through one of the other allowable methods, at the end of the
Federal fiscal year in which the threshold was met is limited to paying
the fee out of State funds. States would not be able to exercise
options to collect the fee by retaining the fee from collections in
situations in which they are unable to collect the fee by the end of
the Federal fiscal year. The State should not be held accountable for a
fee that it cannot collect using an allowable option under the DRA.
Response: The preamble indicates that if the $500 threshold is
reached toward the end of a Federal fiscal year, the methods available
to the State to collect the fee may be limited to retaining the fee
from a subsequent collection, if there is one made and disbursed before
the end of the year or paying the fee out of State funds. As indicated
earlier, if there is not a $25 collection in excess of the $500 and the
State pays the fee, the State can recoup that payment from the
individual responsible for making the payment in the following year.
17. Comment: One commenter asked if, in an instance in which the
State elects to recover the fee from one of the parties, the fee is not
collected from that party in the year in which it was due, and the
State has to pay the fee, cost recovery, as described under Sec.
302.33(d), could be used.
Response: Section 302.33(d) allows States to recover costs in
excess of any fees collected to cover administrative costs. If a State
elects to recover the annual $25 fee from one of the parties, and the
threshold for imposing the fee is met during the year, but the fee is
not paid by the party in that same year, the State is required to pay
the fee. The State may then recover the fee from a subsequent
collection to reimburse itself. As discussed earlier in this preamble,
we agree that the language in the DRA provides the State the ability to
retain the fee in accordance with Sec. 302.33(e)(3), from the
collection to the family that has never received assistance as defined
under Sec. 302.33(e) and section 457(a)(4) of the Act. If the State
opts to charge the fee to the noncustodial parent and retains the first
$25 of the collection in excess of $500 and in accordance with Sec.
302.51(a)(5), the amount of support paid to the family will be reduced.
18. Comment: One commenter asked if the Federal tax refund
intercept is the only collection a State gets in excess of $500 in the
Federal fiscal year, will both the $25 intercept fee and the $25 annual
fee be assessed on that case. In other words, would the State be
required to charge the custodial parent the $25 annual fee and then the
custodial parent would receive the IRS intercept amount minus $50?
Response: These rules at Sec. 303.72(i)(1) provide that the
Secretary of the Treasury may impose a fee with respect to non-IV-A tax
offset submittals which shall not exceed $25 per submittal. The rules
at Sec. 303.72(i)(2) allow the State IV-D agency to charge an
individual who is receiving services a fee not to exceed $25 for
submitting past-due support for Federal tax refund offset. These fees
are distinct from the $25 annual fee required in Sec. 302.33(e). It is
conceivable that a custodial parent who receives a Federal tax refund
offset could be charged three different fees of $25 each, totaling $75
for one case: A $25 fee each from the Secretary of Treasury and the
State IV-D agency, both for the tax refund offset, and the $25 annual
fee because the case meets the criteria for charging the fee.
One $25 Fee for Each Qualifying Case--Section 302.33(e)(1)
1. Comment: One commenter said that at Sec. 302.33(e)(1) the
proposed rules state ``* * * in the case of an individual who has never
received assistance * * *'' and asked how the concept of tying the
applicability of the fee to an individual reconciled with the concept
of tying the applicability of the fee to a case.
Response: The statute says ``* * * in the case of an individual who
has never received assistance under a State program funded under part A
and for whom the State has collected at least $500 of support, the
State shall impose an annual fee of $25 for each case in which services
are furnished, which shall be retained by the State from support
collected on behalf of the individual (but not from the first $500 so
collected), paid by the individual applying for the services, recovered
from the absent parent, or paid by the State out of its own funds (the
payment of which from State funds shall not be considered as an
administrative cost of the State for the operation of the plan, and the
fees shall be considered income to the program).'' It is our
interpretation that the determination of whether a fee should be
assessed in a IV-D case is dependent on whether any individual in that
IV-D case receives or has received AFDC, State, or Tribal TANF
assistance under title IV-A of the Act. The statutory language refers
to both an individual receiving IV-D services and a case in which IV-D
services are furnished.
2. Comment: One commenter opposes charging a $25 annual fee because
if the $25 annual fee is charged to the
[[Page 74912]]
custodial parent, the annual fee, and other fees required by a State
could deter a custodial parent from requesting needed services. The $25
annual fee, coupled with administrative fees charged to the
noncustodial parent in some States, will cause further financial
burdens to parents already struggling to meet child support
obligations. Whether the fee is charged to the custodial parent or
noncustodial parent, it is a burden.
Response: As discussed earlier, the imposition of the $25 annual
fee is limited to circumstances in which an individual has never
received assistance under a State AFDC program; State or Tribal TANF
program; and the State has successfully collected and disbursed $500 to
the family in a Federal fiscal year. Section 454(6) of the Act requires
some fees and authorizes States to charge other fees and recover costs.
This requirement implements the $25 annual fee required by the statute.
We believe that the language in the statute and rules appropriately
exempts categories of individuals who are low-income or who have not
benefited adequately from receipt of child support and offers
alternative methods of collection to allow States to determine who
should pay the fee.
3. Comment: One commenter stated that a $25 fee may be assessed on
cases submitted for Federal tax refund offset and that it would be
beneficial to allow States to refrain from assessing the fee on those
cases. At State option, the State may charge an individual who is
receiving IV-D services a fee not to exceed $25 for submitting past-due
support for Federal tax refund offset. The Department of Treasury
Federal tax refund offset program is already allowed to deduct a $25
fee from collections made on behalf of non-public assistance custodial
parents. The commenter does not feel it benefits families to add the
additional $25 annual fee. However, the commenter supports allowing
Federal tax refund offset dollars to be used in calculating the $500
threshold.
Response: We believe that the fees charged are reasonable and
commensurate with the receipt of successful child support services.
4. Comment: One commenter noted that the proposed rules at 45 CFR
Sec. 302.33(e) require that States impose the fee in international
cases, but that States are not able to retain the fee from collections.
The commenter does not believe a State should be responsible for
imposing a fee which it is not able to collect by using one of the
allowable fee collection options allowed under the section 7310 of the
DRA which amends section 454(6)(B) of the Act and that international
cases should be exempt from the fee.
Response: Under section 454(32) of the Act, any request for
services by a foreign reciprocating country or a foreign country with
which a State has an arrangement is treated like a request from a State
and foreign obligees may not be charged fees. However, as discussed
earlier in the preamble, we believe that the language in section 7310
of the DRA which amends section 457(a)(4) of the Act can be read to
allow the fee to be charged to the noncustodial parent and retained
from a collection under certain circumstances. Therefore, the fee
assessed in qualifying international cases may be retained from a
collection before the distribution of the collection to the family,
provided that $500 has been disbursed to the family in the Federal
fiscal year, current support for the month in which the collection is
received has been satisfied, and any specified arrearage payment
pursuant to an administrative or court order for that month has been
satisfied. A State also has the option to charge the noncustodial
parent or pay the fee itself in incoming international cases. Because
the statute and rules provide these alternative methods to collect and
account for the fee, imposition of the fee in appropriate cases is
fitting.
Who Imposes the Fee in Interstate, International and Intergovernmental
Tribal Title IV-D Cases?--Section 302.33(e)(2)
1. Comment: Three commenters agreed with the selection of the
initiating State as the one to impose and report the annual fee in
interstate IV-D cases, as proposed in Sec. 303.7(e). A commenter went
on to say that there must be a consistent Federal standard, and the
initiating State is in the best position to determine when it is
appropriate to impose the fee.
Response: We appreciate the comments. As stated in the preamble to
the proposed rule, only the initiating State has all the information
necessary to know whether the annual $25 fee should be imposed in a
particular case.
2. Comment: One commenter noted that the NPRM preamble language
says: ``A State may not impose a fee in a Tribal IV-D case that is
referred to the State IV-D program for assistance in securing support
from a Tribal IV-D program.'' The commenter questions why a Tribal IV-D
program would refer a case to the State to secure child support from
another Tribal IV-D program and asked if this was a typographical
error.
Response: There is a typographical error in the sentence. The
phrase ``from a Tribal IV-D program'' at the end of the phrase should
not have been included. The sentence should have read: ``A State may
not impose a fee in a Tribal IV-D case that is referred to the State
IV-D program for assistance in securing support.''
3. Comment: One commenter said that the preamble to the proposed
rule states that if the $25 annual fee is not addressed in a
cooperative agreement between a Tribal IV-D program and a State IV-D
program, the State IV-D program would be responsible for collecting the
fee in any case where the State is the jurisdiction receiving the
application or receiving a referral from a State TANF, Foster care, or
Medicaid program. However, there is an exemption from the fee for
current or former State TANF cases.
Response: The preamble language was misleading. We agree that there
is an exemption from the fee for individuals who are receiving or have
ever received AFDC or State or Tribal TANF, as defined in Sec.
302.33(3)(1). If a State were to receive a referral from a TANF agency,
the individual in the TANF case would clearly be receiving title IV-A
services and would not be assessed a fee.
4. Comment: One commenter said that if a State imposes the annual
fee and a Tribe is required to collect the fee, the fee becomes an
administrative burden for the Tribe, and may actually result in an
increase in program expenditures. Tribes do not have automated systems,
and imposing and tracking the fee will be labor intensive.
Response: Section 454(6)(B)(ii) of the Act is a State plan
requirement and as such is not applicable to Tribal IV-D programs. A
Tribe would only be required to impose and collect the annual fee if
the Tribe is not operating a Tribal IV-D program but has entered into a
cooperative agreement with a State IV-D agency under section 454(33) of
the Act and Sec. 302.34 to assist the State in delivering title IV-D
services. The fee is not applicable to the Tribal IV-D program.
5. Comment: One commenter opposes the requirement that forces a
Tribe to charge the fee when working cooperatively with a State to
provide IV-D services. The commenter noted that this may cause Tribal
IV-D programs not to work cooperatively with States.
Response: A Tribe that is under a cooperative agreement with the
State under section 454(33) of the Act is providing IV-D services under
a State program that is subject to State IV-D requirements and receives
reimbursement from the State IV-D
[[Page 74913]]
agency for providing services specified in the cooperative agreement.
The statute requires the annual fee where appropriate in State IV-D
cases. We have no discretion to allow an exception to the fee
requirement for State IV-D programs working with Tribes to provide IV-D
services under a cooperative agreement in accordance with section
454(33) of the Act because services provided by the Tribe are provided
in a State IV-D program and the $25 annual fee requirement is a State
plan requirement at section 454(6)(B)(ii) of the Act. The fee is not
applicable to Tribal IV-D programs operating under section 455(f) of
the Act.
6. Comment: One commenter noted that the preamble indicates that a
State may not impose the fee on an individual residing in a foreign
country in an international case and asked why the noncustodial parent
in a foreign country is exempt from the fee.
Response: The noncustodial parent in a foreign country is not
exempt from the fee. Section 454(32)(C) of the Act only prohibits
States from charging application fees or assessing costs against the
foreign reciprocating country or foreign obligee.
7. Comment: Two commenters noted that the proposed method of
handling the $25 annual fee for international cases causes an
additional burden to implement, track, report, and pay the fee, due to
further system programming to define and separate international cases
because fees in international cases would have to be paid differently,
that is, the State would either pay out of general funds or would have
to charge the noncustodial parent. This would be an additional burden
both for reporting and paying.
Response: There are three methods of accounting for fees in
appropriate international cases: Retaining the fee from the support
collection, paying the fee out of State funds, or charging the fee to
the noncustodial parent.
8. Comment: One commenter stated that the rules are unclear with
respect to ``responding'' international cases. The preamble says the
proposed rules at Sec. 302.33(e) would require the State that receives
the request from the Foreign Reciprocating Country to impose the fee.
Earlier, the preamble states that the State cannot impose the fee due
to section 454(32)(C) of the Act. Does this mean that the State must
pay the fee or require the noncustodial parent to pay the fee?
Response: Yes. However, as stated earlier in the preamble, we
believe that section 457(a)(4) of the Act can be read to allow the fee
to be charged to the noncustodial parent and retained from a collection
under certain circumstances. If the State opts to retain the fee in
accordance with Sec. 302.33(e)(3) and Sec. 302.51(a)(5) before
sending remaining amounts collected to the family, the noncustodial
parent does not have to designate a portion of the support payment as
the fee. Therefore, the issue of collecting a fee on an incoming
international case should be resolved by allowing the fee charged to
the noncustodial parent to be retained from the collections provided
that $500 has been disbursed to the family in the Federal fiscal year,
current support for the month in which the collection is received has
been satisfied, and any specified arrearage payment for that month
pursuant to an administrative or court order has been satisfied.
9. Comment: Several commenters said that international cases should
be excluded from the fee or the party in the other country should pay
the fee. The annual fee is a user fee to be paid after services are
received and custodial parents residing in foreign countries and
receiving child support services should also be subject to the fee.
There is disparity if a custodial parent cannot be charged the fee when
living in a foreign country.
Response: As stated in the preamble to the NPRM, section 454(32)(C)
of the Act provides that ``no applications will be required from, and
no costs will be assessed for such services against, the foreign
reciprocating country or foreign obligee (but costs may at State option
be assessed against the obligor).'' We have no discretion to allow
States to charge the custodial parent living in a foreign reciprocating
country the annual fee. However, as noted in the previous response,
allowing States to take the $25 fee from the collection may alleviate
problems in collecting the fee from the noncustodial parent. In
addition, the restriction under section 454(32)(C) of the Act does not
apply to applicants for services who live in foreign countries but
apply directly to a State for IV-D services, rather than through the
country in which they live. Custodial parents in these direct
application cases would be subject to the fee if all other conditions
for imposing the fee are met.
10. Comment: One commenter stated that if the State imposes a fee
in international cases, but cannot collect the fee from the custodial
parent because the custodial parent is living in a foreign country, the
States automated system would not ``know'' which custodial parents are
residing abroad and which are residing in the States.
Response: As stated earlier in the preamble, we have no discretion
to allow States to impose the fee on obligees exempt from the fee
pursuant to section 454(32)(C) of the Act. And, because of the
expanding IV-D program role in international cases, States are required
to distinguish international cases on the Form OCSE-157, Child Support
Enforcement Annual Data Report beginning October 1, 2009. Therefore,
States should be able to identify incoming and outgoing international
cases by 2009.
11. Comment: One commenter asked if the State could assess and
collect the fee from an individual living in Canada who applies for
services directly with a State.
Response: Yes. As stated earlier, in any instance in which the
applicant for services living in another country applies for IV-D
services directly with a State IV-D agency, if all conditions for
imposing the fee are met, the case is subject to the annual fee and the
State may assess and collect the fee from the applicant.
Reporting the $25 Annual Fee--Section 302.33(e)(4)
1. Comment: Several commenters stated that under Executive Order
13132, the annual fee appears to impose substantial direct compliance
costs on State and local governments and has federalism impacts as
defined in the Executive Order. The requirement that the State pay the
$25 mandatory fee in the absence of collecting it can be looked at as
nothing other than direct compliance costs on the State government.
OCSE should revise the preamble to acknowledge the burden these rules
are putting on the States and take other steps to comply with Executive
Order 13132.
Response: We disagree. Section 454(6)(B)(ii) of the Act provides
the State with four options to collect this mandatory fee. The fee may
be withheld from the amount collected, paid by the custodial parent,
paid by the noncustodial parent or paid by the State. We anticipate
that most States will select the first option. Nevertheless, even where
a State chooses to pay the fee itself, a portion of the fee will be
retained by the State as its share (currently 34 percent) of program
income. In addition, the State retains the option of reimbursing itself
by withholding the amount from a future collection.
Over the next 5 years, the Federal Government will provide $20
billion in Federal funds for child support program costs, including
more than $2 billion in Federal incentive payments to States. The
Federal Government continues to pay 66 percent of State costs to
operate
[[Page 74914]]
child support enforcement programs. This is a generous matching rate,
exceeding the administrative matching rate of other programs such as
Medicaid and Food Stamps. Therefore, we do not believe that the annual
fee amounts to direct compliance costs on States and local governments,
nor does it have a federalism impact.
2. Comment: Two commenters stated that the proposed rules require
that the total amount of the annual fees imposed be reported, whereas
other fees are reported at the Federal Financial Participation rate of
66 percent. The commenters asked why these fees are being reported
differently.
Response: All fees are reported as program income in an identical
manner. OCSE has always required that any mandatory or optional fees
collected by States or other program income in the operation of this
program be used to offset program expenses on a dollar-for-dollar
basis. Program expenditures are reduced by program income before
calculating the Federal and State share of expenditures. This new
annual fee is treated no differently and is reported on the quarterly
expenditure report both as the total amount collected ($25 in the case
of the new annual fee) and as the Federal share of the amount collected
(or $16.50 for every $25 fee reported, at the current 66-percent
Federal financial participation rate). The statutory language at
section 454(6)(B)(ii) of the Act is also clear that the payment of the
annual fee by a State shall not be considered as an administrative cost
of the State for the operation of the plan, and that the fee shall be
considered solely as program income.
3. Comment: Several commenters asked where the fee should be
recorded on the Form OCSE-34A, Quarterly Report of Collections, if the
custodial parent is assessed the fee; if the noncustodial parent is
assessed the fee; if the applicant is assessed the fee; or if the State
pays the fee. Others indicated that OCSE should provide directions or
instructions in the final rules about the appropriate way to fill out
the Form OCSE-34A, Quarterly Report of Collections, to record support
collections from the noncustodial parent that are not actually support
payments to the custodial parent. Another commenter stated that the
amount collected/receipted by the State Disbursement Unit must be
recorded in the top portion of the form (Form OCSE-34A, Quarterly
Report of Collections) and the noncustodial parent must get credit for
paying the support when the State is charging the custodial parent the
fee. All collections on the top portion (collection) of the 34A must be
accounted for in the lower portions (distributions) of the 34A, but
there is no place to record ``fees'' distribution.
Response: On November 27, 2007, OCSE issued Action Transmittal 07-
08, Implementation of Revised Financial Reporting Forms: Form OCSE-396A
and Form OCSE-34A. This AT may be viewed electronically at: http://
www.acf.hhs.gov/programs/cse/pol/AT/2007/at-07-08.htm. To accommodate
these comments concerning the reporting of fees, we revised Form OCSE-
34A, the Quarterly Report of Collections, to enable States to report
those fees withheld from child support collections in the
``distributions'' section of the report. This new data entry line, Line
7e, assures that each State accurately reports the amount of the
collection distributed in accordance with the requirements of section
457 of the Act and separately reports the portion withheld to comply
with the new fee requirements. However, this new data collection line
will only be for a fee retained from a child support collection; fees
collected separately from either parent or paid by the State will not
be reported on Form OCSE-34A, Quarterly Report of Collections. All
fees, including these, regardless of the method of collection, are
treated as program income and are reported on Line 2a of the quarterly
expenditure report, Form OCSE-396A, Child Support Enforcement Program
Financial Report.
4. Comment: One commenter noted that it would be most beneficial to
all parties if States reported the $525 as collected and disbursed on
the Form OCSE-34A, Quarterly Report of Collections, as if the State
were sending $525 to the custodial parent and the custodial parent was
remitting the $25 fee to State. This way the noncustodial parent will
receive credit for total payment of $525 and the State will get credit
for $525 towards the collection base. In addition the $25 fee would be
reported as required on the Form OCSE-396A, Child Support Enforcement
Program Financial Report.
Response: See the response to Comment 3. Although we
received comments suggesting different ways to report these fees, we
decided to include a separate reporting line for any fee withheld from
a collection. In this way, the State will be able to accurately report
the portion of the collection distributed and disbursed to the
custodial parent and the portion retained from the collection as the
fee paid by the custodial parent. Both the amount distributed to the
custodial parent and the $25 fee retained by the State will be
considered as ``distributed collections'' when computing the State's
collection base for purposes of calculating its annual incentive
payment; the noncustodial parent receives full credit for the amount
paid. In the example cited by the commenter, the State would report
$500 as distributed to the family and $25 as retained by the State as
the custodial parent's fee; the State also would report the $25 fee as
program income. The State would be credited with $525 in distributed
collections and the noncustodial parent would be credited with a $525
child support payment.
Alternately, if the State opts to charge the fee to the
noncustodial parent and collect it by retaining the $25 annual fee from
a collection before sending the remaining amount to the custodial
parent, the noncustodial parent would not get credit for the total
amount paid. For example, a State makes a collection of over $500, in
this instance it is $550, and $25 is retained from the collection as
the fee charged to the noncustodial parent. The State then sends the
remaining $525 to the custodial parent and the noncustodial parent is
credited as making a support payment of $525.
5. Comment: One commenter stated that the preamble discusses the
reporting of the fees as the total amount of $25 fees imposed during
the Federal fiscal year on line 2a of the Form OCSE-396A, Child Support
Enforcement Program Financial Report. That reporting requirement will
commingle the $25 fee amount with other amounts reported for other
fees, costs recovered, and interest and asks how that will be audited.
If States collect the fee from either party, how will the reporting of
the fee be reconciled with State reporting of collections on the Form
OCSE-34A, Quarterly Report of Collections? The commenter stated that
Federal guidance is necessary on how the fee should be accounted for
and reconciled with all relevant Federal reporting forms.
Response: The quarterly financial reports States are required to
submit are cumulative reports of the State's financial activities
related to this program during the fiscal quarter. Each State always is
expected to maintain full and complete accounting records and
documentation in accordance with Generally Accepted Accounting
Principles (GAAP) available for review. Such documentation would
include a record of each annual fee reported on the quarterly
collection report, the quarterly expenditure report, or both.
Specifically, if a State elects to collect the fee from either parent
or pay the fee itself, it is reported as program income
[[Page 74915]]
on the Form OCSE-396A, Child Support Enforcement Program Financial
Report. If a State elects to withhold the fee from a collection, it is
reported as a retained fee on the reporting line being added for that
purpose on Form OCSE-34A, Quarterly Report of Collections, and also
reported as program income on the Form OCSE-396A, Child Support
Enforcement Program Financial Report.
6. Comment: One commenter asked, if the State elects to recover the
fee from the custodial parent through retaining support collections,
will the fee be reported as distributed collections on Form OCSE-34A,
Quarterly Report of Collections, and the Form OCSE-157, Child Support
Enforcement Annual Data Report, and reported as program income on the
Form OCSE-396A, Child Support Enforcement Program Financial Report?
Response: Yes, if the State elects to recover the fee from the
custodial parent through retaining support collections, the fee will be
reported on Form OCSE-34A, Quarterly Report of Collections, and Form
OCSE-157, Child Support Enforcement Annual Data Report, and reported as
program income on the Form OCSE-396A, Child Support Enforcement Program
Financial Report.
7. Comment: One commenter said that to the extent that OCSE
determines that changes are needed to either Form OCSE-396A, Child
Support Enforcement Program Financial Report or Form OCSE-34A,
Quarterly Report of Collections, to accommodate the reporting of fee
collections, OCSE should refer such issues to an appropriate workgroup
with OCSE and State representatives, rather than addressing such form
issues in the final rules. The commenter also recommended against
requiring States to report on Form OCSE-34A, Quarterly Report of
Collections, when the State is paying the fee itself. Because both the
DRA and the rules provide States with flexibility about how to collect
the fee, OCSE should provide States with the flexibility to use the
reporting method that best supports the collection method that the
State selects. One commenter said if States must report program income
when assessed for this fee only, then a new field should be developed
on the Form OCSE-396A, Child Support Enforcement Program Financial
Report.
Response: OCSE revised both the Form OCSE-396A: Child Support
Enforcement Program Financial Report and OCSE-34A: Quarterly Report of
Collections. On December 4, 2006, the Proposed Information Collection
Activity with Comment Request was published in the Federal Register (71
FR 70407). The notice indicated that the DRA contains a number of
provisions that will impact the States' completion and submission of
the quarterly financial reports and opened a formal 60-day comment
period for the public. OCSE assembled a workgroup of Federal and State
staff to recommend any changes to improve and update these forms,
including revisions necessary to accommodate the DRA.
In response to the commenter's second suggestion, fees paid by the
State itself are not reported on Form OCSE-34A, Quarterly Report of
Collections, but will be reported as program income on Form OCSE-396A,
Child Support Enforcement Program Financial Report.
8. Comment: Two commenters asked for clarification of reporting for
interstate cases. In an interstate case, the responding State collects
all support from the noncustodial parent and sends it to the initiating
State. If the initiating State chooses to assess the fee against the
noncustodial parent, the initiating State cannot count that collection
as a support payment on the Form OCSE-34A, Quarterly Report of
Collections. The commenter asked how the responding State would know
that the collection went to the fee, and not to the support. If the
responding State does not change the collection from a support payment
to a fee collection, the responding State gets credit for the support
payment in the incentives collection base amount, whereas the
initiating State is penalized for having a fee in the collections base
amount.
Response: From the responding State's perspective, the entire
amount is a child support collection and the responding State properly
receives credit for the full amount collected and forwarded to the
initiating State. The responding State reports the full amount
collected and sent to the initiating State on the appropriate lines of
Form OCSE-34A, Quarterly Report of Collections (Lines 2 and 5,
respectively) in the quarter in which each transaction occurs. The
initiating State subsequently reports the full amount of the collection
received on Line 2f of Form OCSE-34A, Quarterly Report of Collections.
The amount disbursed to the custodial parent is reported by the
initiating State on Line 7d of its Form OCSE-34A, Quarterly Report of
Collections. The fee is reported as program income by the initiating
State on Line 2a of Form OCSE-396A, Child Support Enforcement Program
Financial Report, and, if the fee is withheld from the collection, also
reported on (proposed) Line 7e of Form OCSE-34A, Quarterly Report of
Collections.
9. Comment: One commenter asked if States can rely on the
definition of ``never-assistance'' for Federal reporting purposes to
determine whether a case is exempt from the fee.
Response: No. A State must identify cases subject to the fee in
accordance with Sec. 302.33(e). All conditions for charging the fee
under Sec. 302.33(e) must be met before imposing the $25 annual fee.
10. Comment: Two commenters said that it seems that with the new
annual fee, States will be required to commingle two different
accounting styles: Accrual-based and cash-based accounting. Another
commenter said that it is inappropriate to hold a State responsible for
the fee by requiring the State to report the fee as program income
before it is actually collected unless the State has elected to pay the
fee from State funds. The fee is not program income as defined in 45
CFR 92.25 unless and until the fee is collected.
Response: OCSE uses a cash-basis for accounting for financial
transactions. Transactions are reported in the quarter in which they
occur, i.e., when cash changes hands (when the check is dated or the
electronic transfer occurs). Fees are no different and are reported in
the quarter collected, not assessed. In most cases, fees will likely be
assessed and collected in the same quarter. Fees are reported as
collected when either paid by the custodial parent, paid by the
noncustodial parent, paid by the State (transferred from one State
account to another) or retained by the State from the collection.
11. Comment: One commenter asked if the Tribal IV-D agency or the
State IV-D agency was responsible for reporting and paying the annual
fee if there are both Tribal and State IV-D agencies in a State.
Response: Section 454(6)(B)(ii) of the Act is a State plan
requirement and as such is not applicable to Tribal IV-D programs. The
State IV-D agency is responsible for collecting the fee on State cases
that meet the criteria for collection of the fee.
12. Comment: One commenter asked if the intent is that States will
be reporting, as program income, the total amount of the fees imposed
for each Federal fiscal year on the 4th quarter expenditure report,
rather than reporting quarterly.
Response: Fees are reported on Line 2a of Form OCSE-34A, Quarterly
Report of Collections, in the quarter in which they are received, not
assessed. As stated earlier, the child support enforcement program is a
cash-based system: Expenditures are reported as paid when the check is
written or funds transferred to pay the invoice, not when
[[Page 74916]]
the service is provided. Some States that are electing to pay the fee
from State funds have requested that they be permitted to claim as
program income all mandatory fees for all cases on a ``lump sum'' basis
once a year. That is an acceptable reporting methodology in those
circumstances; States that elect to collect the fee from either parent
or withhold the fee from a collection must report the fees as collected
on a quarter-by-quarter basis.
13. Comment: One commenter said that the preamble specifies that
all fees imposed under the DRA need to be reported as program income
and treated in accordance with 45 CFR 302.15. The commenter asked if
that means that if the State decides to collect the fee from a
noncustodial parent and is not successful, it still needs to report the
full amount as program income, give the Federal government its share
and use the State share to offset administrative expenses. The
commenter went on to say that if that is the case, it means that if the
State is not able to collect the fee, it not only has to use its own
funds to provide program income to the Federal government, it also has
to use State funds to offset administrative expenses before seeking
reimbursement.
Response: This is a mandatory fee. If the State elects to collect
the fee directly from either parent and is unsuccessful, it is required
to pay the fee itself and report the full amount as program income.
Section 302.51--Distribution of Support Collections
The comments received concerning distribution of past-due support
collected via the Federal tax refund offset program are addressed in
the Response to Comments at Sec. 303.72, Federal tax refund offset.
1. Comment: One commenter requested confirmation that if the State
elects to increase its pass-through and disregard from $50 to $100 that
the Federal share of the entire $100 does not have to be paid.
Response: This is confirmation that if a State elects to increase
its pass-through and disregard from $50 to $100 that the Federal share
of the entire $100 does not have to be paid.
PART 303--STANDARDS FOR PROGRAM OPERATIONS
Section 303.7--Provision of Services in Interstate Title IV-D Cases
1. Comment: One commenter stated that the proposed rule would
require that it is the initiating State's responsibility to impose the
fee in an interstate case. The commenter stated that the initiating
State is not always aware of collections in a timely manner and should
only be held responsible for imposition of fees when aware of
qualifying collections in a timely manner.
Response: Under 45 CFR 303.7(c)(7)(iv), in an interstate case, the
responding State is responsible for collecting and monitoring any
support payments from the noncustodial parent and forwarding payments
to the location specified by the IV-D agency in the initiating State.
Under section 457 of the Act, effective October 1, 1998 (or October 1,
1999, in States in which courts were processing child support
collections on August 21, 1996), the responding SDU must, within 2 days
of receipt in the SDU, send the amount collected in an interstate IV-D
case to the SDU in the initiating State.
Section 303.8--Review and Adjustment of Child Support Orders
1. Comment: Five commenters asked for clarification on how to
identify the beginning of the three-year period for review and
adjustment of child support orders as required by revised section
466(a)(10) of the Act. Two commenters indicated support for the three-
year review period to begin with the date of the last review or
modified order, and asked that OCSE clarify the beginning of time
period for the review of an order.
Response: When this provision requiring review and adjustment of
child support orders was first mandated by the Family Support Act of
1988, it required that the State implement a process whereby orders
enforced under title IV-D were reviewed within 36 months after
establishment of the order or the most recent review of the order and
adjusted in accordance with the State's guidelines for support award
amounts. The requirement for three-year reviews in TANF cases was
removed with the passage of PRWORA.
The statutory change in the DRA to section 466(a)(10) of the Act on
review and adjustment of child support orders does not explicitly tie
the three-year timeframe to any starting point, as the 1988 legislation
did. However, the intent of the change was to revert back to the
previous policy. Therefore, the timeframe for the review and adjustment
of an order, if appropriate, would begin within 36 months after
establishment of the order or the most recent review of the order.
In response to comments, we have amended the rules at Sec.
303.8(b)(1) to read: ``(1) The State must have procedures under which,
within 36 months after establishment of the order or the most recent
review of the order (or such shorter cycle as the State may determine),
if there is an assignment under part A, or upon the request of either
parent, the State shall, with respect to a support order being enforced
under title IV-D of the Act, taking into account the best interests of
the child involved:
(i) Review and, if appropriate, adjust the order in accordance with
the State's guidelines established pursuant to section 467(a) of the
Act if the amount of the child support award under the order differs
from the amount that would be awarded in accordance with the
guidelines.''
2. Comments: One commenter said that the NPRM suggests that the
requirement to review orders in TANF cases every 3 years will cost the
states $10 million in FY 2008, but save them $40 million over the next
4 years. The commenter is in a State with a two-year time limit on TANF
benefits and is interested in learning more about the methodology OCSE
used in arriving at the cost savings due to increased orders among TANF
recipients.
Response: These costs reflect the upfront increased administrative
costs in reviewing these cases and, as appropriate, updating the orders
every 3 years and the savings that will result over time in the way of
increased revenues (Federal and State shares of the larger collection
amounts in TANF cases). This provision is also beneficial to families
in terms of ensuring that support orders remain fair and equitable over
time and reflect the noncustodial parent's current ability to pay.
Section 303.72--Requests for Collection of Past-Due Support by Federal
Tax Refund Offset
1. Comment: Several commenters said that the proposed rules require
the State to inform individuals in advance if the State chooses to
continue to apply offset collections to State-assigned arrearages and
asked if the intent of the requirement is to now proactively notify the
individuals of this option. A number of other commenters indicated
that, under current rules, States are required to advise persons
receiving services of the order of distribution of funds collected
through the Federal tax refund offset program. The proposed change to
require a notice that the State has opted to continue this distribution
priority is unnecessary.
Response: The current rules at Sec. 303.72(h)(3) require that the
IV-D agency must inform individuals receiving services under Sec.
302.33 in advance that amounts offset will be applied to satisfy any
past-due support which has been assigned to the State
[[Page 74917]]
and submitted for Federal tax refund offset. States that elect to
continue to apply section 457(a)(2)(B) of the Act as in effect until
October 1, 2009, for distribution of collections in former-assistance
cases in the future must continue to inform individuals that the State
chooses to apply amounts offset to satisfy any past-due support which
has been assigned to the State. The intent of the rule is not to
proactively notify individuals, but to continue to notify them, as
currently required, if the State does not choose to use Federal tax
refund offset first to satisfy current support due and past-due support
owed to a family in former-assistance cases effective October 1, 2009,
or up to a year earlier at State option.
We changed the regulatory language at Sec. 303.72(h)(3) for
clarity. It now reads:
``(3)(i) Except as provided in paragraph (ii), the IV-D agency must
inform individuals receiving services under Sec. 302.33 of this
chapter in advance that amounts offset will be applied to satisfy any
past-due support which has been assigned to the State and submitted for
Federal tax refund offset.
(ii) Effective October 1, 2009, or up to a year earlier at State
option, the IV-D agency need no longer meet the requirement for notice
under paragraph (i) if the State has opted, under section 454(34) of
the Act, to apply amounts submitted for Federal tax refund offset first
to satisfy any current support due and past-due support owed to the
family.''
2. Comment: Two commenters asked for verification regarding the
application of IRS tax intercepts towards current support if the State
chooses to change the distribution hierarchy in former-assistances
cases. The commenter asked if the intent of the distribution
requirements in Sec. 302.51 is to pay current support on collections
that have been intercepted because of their delinquency.
Response: The manner in which child support payments collected
through Federal tax refund intercepts are distributed depends on the
distribution options that a State chooses with respect to former-
assistance cases. Section 454(34) of the Act as amended by the DRA
allows States to determine whether to follow PRWORA distribution rules
or DRA distribution rules in former-assistance cases.
If a State elects to follow PRWORA distribution rules, then IRS tax
intercepts must be distributed in accordance with former section
457(a)(2)(B)(iv) of the Act. Under former section 457(a)(2)(B)(iv) of
the Act, Federal tax refund offset collections must be distributed to
arrearages only, and must be applied first to any arrearages owed to
the State to reimburse assistance paid to the former-assistance family.
Effective October 1, 2009, or up to a year earlier at State option,
if States choose the new distribution rules for former-assistance cases
under section 457(a)(2)(B) of the Act as amended by the DRA, States
must treat Federal tax refund offset collections the same as any other
collections for purposes of distribution in all IV-D cases. States
choosing to follow the DRA distribution rules will distribute Federal
tax refund offset collections first to current support, then to
arrearages owed to the family.
Please see Action Transmittal-07-05, Instructions for the
Assignment and Distribution of Child Support Under Sections 408(a)(3)
and 457 of the Social Security Act (the Act) dated July 11, 2007:
http://www.acf.dhhs.gov/programs/cse/pol/AT/2007/at-07-05.htm.
PART 304--FEDERAL FINANCIAL PARTICIPATION
Section 304.20--Availability and Rate of Federal Financial
Participation
1. Comment: One commenter opposes reducing the Federal financial
participation in IV-D program expenditures for paternity establishment
for States from 90 percent to 66 percent. The commenter states that
this further burdens the State budgets which could eventually trickle
down to the families and thereby reduce the Paternity Establishment
Performance for States. The commenter encouraged the repeal of the
proposed rules pursuant to section 654 of the Treasury and General
Government Appropriations Act of 1999 that requires Federal agencies to
determine whether a proposed policy or rule may negatively affect the
well-being of families.
Response: This is a statutory mandate. Section 7303 of the DRA
amended section 455 of the Act to reduce the previously enhanced
Federal matching rate for laboratory costs to determine paternity. The
enhanced matching rate was originally implemented in 1988 because of
the high costs of genetic testing for the determination of paternity.
However, the cost of genetic testing has significantly declined since
1988 and enhanced funding is no longer necessary.
III. Impact Analysis
Paperwork Reduction Act of 1995
This rule references information collection requirements that have
been submitted to the Office of Management and Budget (OMB) under the
Paperwork Reduction Act of 1995 (PRA). Under this Act, no persons are
required to respond to a collection of information unless it displays a
valid OMB control Number.
There is a reporting requirement for a State's IV-D plan in section
454(34) of the Act, with respect to distribution options, to allow a
State to choose either to apply amounts collected, including amounts
offset from Federal tax refunds, to satisfy any support owed to the
family first or to continue to distribute Federal tax offsets amounts,
to satisfy any past-due support assigned to the State first. A new
State plan preprint page was developed for States to indicate their
distribution choice under section 454(34) of the Act. This information
collection was set to expire on November 11, 2007. The notice to amend
the form was published on August 21, 2007. OMB approved this collection
tool on July 3, 2008 under OMB 0970-0017.
States must submit a State IV-D preprint plan page to indicate that
a State will impose a $25 annual fee in accordance with 454(6)(B)(ii)
and how the fee will be collected. Because of the October 1, 2006
effective date for the mandate that States implement and collect a $25
annual fee in specified cases, the second notice for the State plan
preprint page was published prior to the final rule. The notice was
published in the Federal Register on November 6, 2007. OMB approved
this collection tool on February 1, 2008 under OMB 0970-0017.
States also are required to keep track of the total amount of $25
fees that must be included as program income reported on Form OCSE-
396A, Child Support Enforcement Program Financial Report. In addition,
States are required to report the collection of the total amount of $25
fees that are retained for a child support collection on Form 34A,
Quarterly Report of Collections. The requirement to track fees is not a
new requirement; the $25 annual fee is tracked and reported the same
way other fees associated with the Child Support Enforcement Program
are tracked and reported. These two forms were approved as a package by
OMB under 0970-0181 on November 16, 2007.
If a State elects to recover a fee from the custodial parent
through retaining child support collections, it must be reported on the
OCSE-157. This form was approved by OMB under 0970-0177 on
September 8, 2008.
The burden associated with these collection tools has not changed
as a result of this regulation. The DRA made
[[Page 74918]]
changes to various sections of the Social Security Act and mandated
implementation of those various sections prior to promulgation of final
regulations. As a result, the respondents were required to comply with
the paperwork burden before the publication of this regulation. The
appropriate notice and comment period was provided and OMB approved
these collection tools. The burden described in the final rule for
these collections is the same as the currently approved ICR.
The respondents are State IV-D agencies.
The total estimated burden for the entire State Plan and Financial
Report Forms are:
----------------------------------------------------------------------------------------------------------------
Average burden
Requirement Number of Yearly hour per Total burden
respondents submittals response hours
----------------------------------------------------------------------------------------------------------------
State Plan (OCSE-100)........................... 54 1 .25 13.5
State Plan Transmittal (OCSE-21-U4)............. 54 1 .25 13.5
Financial Form 396A (tracking the $25 fee)...... 54 4 1 * 216
OCSE form 34A................................... 54 4 1 * 216
OCSE Form 157................................... 54 1 7 * 378
---------------------------------------------------------------
Total....................................... 54 11 9.50 837
----------------------------------------------------------------------------------------------------------------
* These hours represent the total burden associated with the reporting form. Incremental increases applicable to
the provisions of this regulation were not calculated but are estimated to be less than 1% of the total burden
shown.
Regulatory Flexibility Analysis
The Secretary certifies that, under 5 U.S.C. 605(b), as enacted by
the Regulatory Flexibility Act (Pub. L. 96-354), this rule will not
result in a significant impact on a substantial number of small
entities. The primary impact is on State governments. State governments
are not considered small entities under the Act.
Regulatory Impact Analysis
Executive Order 12866 requires that rules be reviewed to ensure
that they are consistent with the priorities and principles set forth
in the Executive Order. The Department has determined that these rules
are consistent with these priorities and principles and is an
economically significant rule as defined by the Executive Order because
it will have an estimated $500 million impact on the economy over a 5-
year period and, potentially, a $100 million impact on the economy in
any given year. The impacts discussed for provisions below have been
carried in the program's base since enactment of the DRA and are most
currently reflected in the FY 2009 President's Mid-Session Review
Budget baseline estimates.
Specifically, when the DRA was enacted we estimated that the
requirement for review and adjustment of child support orders in TANF
cases every 3 years will cost the Federal government approximately $15
million in FY 2008 but result in approximately $40 million in savings
over 4 years. Similarly, this provision was estimated to cost State
governments approximately $10 million in FY 2008 but save States almost
$40 million over 4 years with a net government impact of approximately
$25 million in costs in FY 2008 and approximately $80 million in
savings by FY 2011. These costs reflect the upfront increased
administrative costs involved in reviewing these cases and, as
appropriate, updating the orders every 3 years, and the savings that
will result over time in the way of increased revenues (Federal and
State shares of the larger collections amounts). This provision is also
beneficial to families in terms of ensuring that support orders remain
fair and equitable over time and reflect the noncustodial parent's
current ability to pay support.
The provision on imposition of a $25 annual collection fee for
never-IV-A cases with at least $500 in collections was estimated to
save the Federal government, when DRA was enacted, a little less than
$50 million in FY 2007 and result in approximately $270 million in
Federal savings over 5 years. The provision was estimated to save State
governments approximately $25 million in FY 2007 and approximately $140
million over 5 years. These fees will partially offset the government's
costs of providing services and are representative of Federal and State
cost sharing in the program (66 and 34 percent, respectively). The
clarification included in this regulation which exempts additional
Tribal Title IV-A populations from this provision has negligible
impacts on these estimates.
Finally, the provision eliminating enhanced Federal funding for the
cost of paternity testing was estimated to save the Federal government
almost $8 million in FY 2007 and approximately $40 million over 5
years, and will result in a dollar-for-dollar increase in State costs.
In other words, each dollar saved by the Federal government because of
the decrease in Federal financial participation will result in a dollar
in State costs. Enhanced Federal funding for paternity testing is no
longer necessary because the cost of these tests has decreased
significantly over time.
All together these provisions were estimated to save the Federal
and State governments approximately $66 million in FY 2007 and
approximately $495 million over 5 years. As each of these provisions
was mandated under the Deficit Reduction Act of 2005, alternatives to
this rulemaking are limited. We could have chosen not to update program
rules to reflect these statutory changes, but that would be confusing
to the public and would ultimately have no budgetary impact since these
provisions are effective without regard to the issuance of rules.
In the end, the rule remains consistent with the statute and the
underlying budget implications.
Unfunded Mandates Reform Act of 1995
Section 202 of the Unfunded Mandates Reform Act of 1995 requires
that a covered agency prepare a budgetary impact statement before
promulgating a rule that includes any Federal mandate that may result
in the expenditure by State, local, and Tribal governments, in the
aggregate, or by the private sector, of $120 million or more in any one
year.
If a covered agency must prepare a budgetary impact statement,
section 205 further requires that it select the most cost-effective and
least burdensome alternative that achieves the objectives of the rule
and is consistent with the statutory requirements. In addition, section
203 requires a plan for informing and advising any small governments
that may be significantly or uniquely impacted by the rule.
The Department has determined that this rule, in implementing the
new statutory requirements of the Deficit Reduction Act, would not
impose a
[[Page 74919]]
mandate that will result in the expenditure by State, local, and Tribal
governments, in the aggregate, or by the private sector, of more than
$100 million in any one year. Rather, we estimate that combined the
provisions will result in savings to States. Over 5 years, the Federal
government is estimated to save approximately $315 million as a result
of the review and adjustment and collection fee provisions of the rules
and States to save almost $180 million. States are estimated to receive
approximately $40 million less in Federal reimbursement for laboratory
costs associated with paternity establishment over 5 years. Thus, the
estimated net impact of the rules on States is a savings of almost $140
million over 5 years.
Congressional Review
The final rule being issued here is a major rule subject to the
Congressional Review Act provisions of the Small Business Regulatory
Enforcement Fairness Act of 1996 (5 U.S.C. 801 et seq.) and will be
transmitted to the Congress and the Comptroller General for review.
Assessment of Federal Regulations and Policies on Families
Section 654 of the Treasury and General Government Appropriations
Act of 1999 requires Federal agencies to determine whether a proposed
policy or regulation may negatively affect family well-being. If the
agency's determination is affirmative, then the agency must prepare an
impact assessment addressing seven criteria specified in the law. The
required review of the rules and policies to determine their effect on
family well-being has been completed, and these rules will have a
positive impact on family well-being as defined in the legislation
because expanded access to the Federal tax refund offset, mandatory
three-year reviews of support orders in TANF cases, and State options
to pay more collections to families will ensure more child support is
paid to families.
Executive Order 13132
Executive Order 13132 prohibits an agency from publishing any rule
that has federalism implications if the rule either imposes substantial
direct compliance costs on State and local governments or is not
required by statute, or the rule preempts State law, unless the agency
meets the consultation and funding requirements of section 6 of the
Executive Order. These rules do not have federalism implications for
State or local governments as defined in the Executive Order.
List of Subjects
45 CFR Part 301
Child support, Grants programs/social programs.
45 CFR Part 302
Child support, Grants programs/social programs.
45 CFR Part 303
Child support, Grant programs/social programs.
45 CFR Part 304
Child support, Grants programs/social programs.
(Catalog of Federal Domestic Assistance Programs No. 93.563, Child
Support Enforcement Program)
Dated: April 1, 2008.
Daniel C. Schneider,
Acting Assistant Secretary for Children and Families.
Approved: August 13, 2008.
Michael O. Leavitt,
Secretary of Health and Human Services.
0
For the reasons discussed above, title 45 chapter III of the Code of
Federal Regulations is amended as follows:
PART 301--STATE PLAN APPROVAL AND GRANT PROCEDURES
0
1. The authority citation for part 301 continues to read as follows:
Authority: 42 U.S.C. 651 through 658, 660, 664, 666, 667, 1301,
and 1302.
0
2. In Sec. 301.1, revise the definitions of ``Past-due support'' and
``Qualified child'' to read as follows:
Sec. 301.l General Definitions.
* * * * *
Past-due support means the amount of support determined under a
court order or an order of an administrative process established under
State law for support and maintenance of a child, or of a child and the
parent with whom the child is living, which has not been paid. Through
September 30, 2007, for purposes of referral for Federal tax refund
offset of support due an individual who is receiving services under
Sec. 302.33 of this chapter, past-due support means support owed to or
on behalf of a qualified child, or a qualified child and the parent
with whom the child is living if the same support order includes
support for the child and the parent.
* * * * *
Qualified child, through September 30, 2007, means a child who is a
minor or who, while a minor, was determined to be disabled under title
II or XVI of the Act, and for whom a support order is in effect.
* * * * *
PART 302--STATE PLAN APPROVAL REQUIREMENTS
0
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 1396k.
0
2. In Sec. 302.32, revise paragraphs (b) introductory text,
(b)(2)(iv), and (b)(3)(ii) to read as follows:
Sec. 302.32 Collection and disbursement of support payments by the
title IV-D Agency.
* * * * *
(b) Timeframes for disbursement of support payments by the State
disbursement unit (SDU) under section 454B of the Act.
* * * * *
(2) * * *
(iv) Collections as a result of Federal tax refund offset paid to
the family or distributed in title IV-E foster care cases under Sec.
302.52(b)(4) of this part, must be sent to the title IV-A family or
title IV-E agency, as appropriate, within 30 calendar days of the date
of initial receipt by the title IV-D agency, unless State law requires
a post-offset appeal process and an appeal is filed timely, in which
case the SDU must send any payment to the title IV-A family or title
IV-E agency within 15 calendar days of the date the appeal is resolved.
(3) * * *
(ii) Collections due the family as a result of Federal tax refund
offset must be sent to the family within 30 calendar days of the date
of initial receipt in the title IV-D agency, except:
(A) If State law requires a post-offset appeal process and an
appeal is timely filed, in which case the SDU must send any payment to
the family within 15 calendar days of the date the appeal is resolved;
or
(B) As provided in Sec. 303.72(h)(5) of this chapter.
0
3. In Sec. 302.33, revise the section heading and add new paragraph
(e) to read as follows:
Sec. 302.33 Services to individuals not receiving title IV-A
assistance.
* * * * *
(e) Annual $25 fee.
(1) A State must impose in, and report for, a Federal fiscal year
an annual fee of $25 for each case if there is an individual in the
case to whom IV-D services are provided and:
[[Page 74920]]
(i) for whom the State has collected and disbursed to the family at
least $500 of support in that year; and
(ii) no individual in the case has received assistance under a
former State AFDC program, assistance as defined in Sec. 260.31 under
a State TANF program, or assistance as defined in Sec. 286.10 under a
Tribal TANF program.
(2) The State must impose the annual $25 fee in international cases
under section 454(32) of the Act in which the criteria for imposition
of the annual $25 fee under paragraph (1) of this section are met.
(3) For each Federal fiscal year, after the first $500 of support
is collected and disbursed to the family, the fee must be collected by
one or more of the following methods:
(i) Retained by the State from support collected in cases subject
to the fee in accordance with distribution requirements in Sec.
302.51(a)(5) of this part, except that no cost will be assessed for
such services against:
(A) a foreign obligee in an international case receiving IV-D
services pursuant to section 454(32)(C) of the Act; and
(B) an individual who is required to cooperate with the IV-D
program as a condition of Food Stamp eligibility as defined at Sec.
273.11(o) and (p) of title 7;
(ii) Paid by the individual applying for services under section
454(4)(A)(ii) of the Act and implementing regulations in this section,
provided that the individual is not required to cooperate with the IV-D
program as a condition of Food Stamp eligibility as defined at Sec.
273.11(o) and (p) of title 7;
(iii) Recovered from the noncustodial parent, provided that the
noncustodial parent is not an individual required to cooperate with the
IV-D program as a condition of Food Stamp eligibility as defined at
Sec. 273.11(o) and (p) of title 7; or
(iv) Paid by the State out of its own funds.
(4) The State must report, in accordance with Sec. 302.15 of this
part and instructions issued by the Secretary, the total amount of
annual $25 fees imposed under this section for each Federal fiscal year
as program income, regardless of which method or methods are used under
paragraph (3) of this section.
(5) State funds used to pay the annual $25 fee shall not be
considered administrative costs of the State for the operation of the
title IV-D plan, and all annual $25 fees imposed during a Federal
fiscal year must be considered income to the program, in accordance
with Sec. 304.50 of this chapter.
0
4. In Sec. 302.51, revise paragraphs (a)(1) and (a)(3) and add
paragraph (a)(5) to read as follows:
Sec. 302.51 Distribution of support collections.
* * * * *
(a)(1) For purposes of distribution in a IV-D case, amounts
collected, except as provided under paragraphs (a)(3) and (5) of this
section, 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.
* * * * *
(3)(i) Except as provided in paragraph (a)(3)(ii), amounts
collected through Federal tax refund offset must be distributed as
arrearages in accordance with Sec. 303.72 of this chapter, and section
457 of the Act;
(ii) Effective October 1, 2009, or up to a year earlier at State
option, amounts collected through Federal tax refund offset shall be
distributed in accordance with Sec. 303.72 of this chapter and the
option selected under section 454(34) of the Act.
* * * * *
(5)(i) Except as provided in paragraph (a)(5)(ii), a State must pay
to a family that has never received assistance under a program funded
or approved under title IV-A or foster care under title IV-E of the Act
and to an individual who is not required to cooperate with the IV-D
program as a condition of Food Stamp eligibility as defined at Sec.
273.11(o) and (p) of title 7 the portion of the amount collected that
remains after withholding any annual $25 fee that the State imposes
under Sec. 302.33(e) of this part.
(ii) If a State charges the noncustodial parent the annual $25 fee
under Sec. 302.33(e) of this part, the State may retain the $25 fee
from the support collected after current support and any payment on
arrearages for the month under a court or administrative order have
been disbursed to the family provided the noncustodial parent is not
required to cooperate with the IV-D program as a condition of Food
Stamp eligibility as defined at Sec. 273.11(o) and (p) of title 7.
* * * * *
0
5. In Sec. 302.70, revise paragraph (a)(10) in its entirety to read as
follows:
Sec. 302.70 Required State laws.
(a) * * *
(10) Procedures for the review and adjustment of child support
orders in accordance with Sec. 303.8(b) of this chapter.
* * * * *
PART 303--STANDARDS FOR PROGRAM OPERATIONS
0
1. The authority citation for part 303 is revised to read as follows:
Authority: 42 U.S.C. 651 through 658, 659, 659A, 660, 663, 664,
666, 667, 1302, 1396a(a)(25), 1396b(d)(2), 1396b(o), 1396b(p), and
1396k.
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2. In Sec. 303.7, add new paragraph (e) to read as follows:
Sec. 303.7 Provision of services in interstate cases.
* * * * *
(e) Imposition and reporting of annual $25 fee in interstate cases.
The title IV-D agency in the initiating State must impose and report
the annual $25 fee in accordance with Sec. 302.33(e) of this chapter.
* * * * *
0
3. In Sec. 303.8, revise paragraphs (b) introductory text, (b)(1)
introductory text, and (b)(1)(i) to read as follows:
Sec. 303.8 Review and adjustment of child support orders.
* * * * *
(b) Required procedures. Pursuant to section 466(a)(10) of the Act,
when providing services under this chapter:
(1) The State must have procedures under which, within 36 months
after establishment of the order or the most recent review of the order
(or such shorter cycle as the State may determine), if there is an
assignment under part A, or upon the request of either parent, the
State shall, with respect to a support order being enforced under title
IV-D of the Act, taking into account the best interests of the child
involved:
(i) Review and, if appropriate, adjust the order in accordance with
the State's guidelines established pursuant to section 467(a) of the
Act if the amount of the child support award under the order differs
from the amount that would be awarded in accordance with the
guidelines;
* * * * *
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4. In Sec. 303.72 revise paragraphs (a)(3) introductory text,
(a)(3)(i), and (h)(1) and (h)(3) to read as follows:
Sec. 303.72 Requests for collection of past-due support by Federal
tax refund offset.
(a) * * *
(3) For support owed in cases where the title IV-D agency is
providing title IV-D services under Sec. 302.33 of this chapter:
[[Page 74921]]
(i) The support is owed to or on behalf of a child, or a child and
the parent with whom the child is living if the same support order
includes support for the child and the parent.
* * * * *
(h) * * *
(1) Collections received by the IV-D agency as a result of Federal
tax refund offset to satisfy title IV-A or non-IV-A past-due support
shall be distributed as required in accordance with section 457 and,
effective October 1, 2009, or up to a year earlier at State option, in
accordance with the option selected under section 454(34) of the Act.
* * * * *
(3)(i) Except as provided in paragraph (h)(3)(ii), the IV-D agency
must inform individuals receiving services under Sec. 302.33 of this
chapter in advance that amounts offset will be applied to satisfy any
past-due support which has been assigned to the State and submitted for
Federal tax refund offset.
(ii) Effective October 1, 2009, or up to a year earlier at State
option, the IV-D agency need no longer meet the requirement for notice
under paragraph (h)(3)(i) if the State has opted, under section 454(34)
of the Act, to apply amounts submitted to Federal tax refund offset
first to satisfy any current support due and past-due support owed to
the family.
* * * * *
PART 304--FEDERAL FINANCIAL PARTICIPATION
0
1. The authority citation for part 304 continues to read as follows:
Authority: 42 U.S.C. 651 through 655, 657, 1302, 1396a(a)(25),
1396b(d)(2), 1396b(o), 1396b(p), and 1396k.
Sec. 304.20 [Amended]
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2. In Sec. 304.20, revise paragraph (d) to read as follows:
Sec. 304.20 Availability and rate of Federal financial participation.
* * * * *
(d) Federal financial participation at the 90 percent rate is
available for laboratory costs incurred in determining paternity on or
after October 1, 1988, and until September 30, 2006, including the
costs of obtaining and transporting blood and other samples of genetic
material, repeated testing when necessary, analysis of test results,
and the costs for expert witnesses in a paternity determination
proceeding, but only if the expert witness costs are included as part
of the genetic testing contract.
[FR Doc. E8-28660 Filed 12-8-08; 8:45 am]
BILLING CODE 4184-01-P