Statement of American Payroll Association

On behalf of the American Payroll Association (APA), we ask you to consider the comments below, which are being provided in response to the request for public comment issued in the Federal Register on Jan. 24, 2007 [72 FR 3093].

About the American Payroll Association

The APA is a nonprofit professional association representing more than 22,000 individuals and their companies in the United States and Canada. The APA’s central mission is to educate its members about best practices associated with paying America’s workers, including compliance with all relevant federal, state, and local laws. As part of this mission, the APA works with legislative and executive branches of government to find ways for employers to meet their obligations under the law and support public policy initiatives, while minimizing administrative burden.

Approximately 70% of all child support is collected through wage withholding, amounting to more than $16 billion annually in the United States. Payroll professionals are intimately aware of the impact wage withholding has, through all levels of society, on the employees who pay this support and on the recipients of this support.

$25 Fee to Be Assessed

The proposed rule, in accordance with the Deficit Reduction Act of 2005 (DRA 2005), would require that states impose an annual $25 fee during each federal government fiscal year on every case in which a child support recipient receives at least $500 in support through the IV-D system and the recipient has never received assistance under Section IV-A (Temporary Aid to Needy Families). The fees would be reported by the state IV-D agencies as program income. DRA 2005 provides four options for the states in imposing the fee:

1. The state may retain the fee from the support it collects on behalf of the recipient.
2. The state may recover the fee from the individual applying for services.
3. The state may recover the fee from the absent parent.
4. The state may pay the fee out of its own funds.

While most states report that they will collect these fees without the assistance of employers, the APA is concerned that states seeking to recover the fees from certain custodial and noncustodial parents will do so through wage withholding not connected to a support order. If so, it raises a number of issues that we would like OCSE to clarify.

1. Child support orders are subject to higher withholding limits than creditor garnishments (up to 65% vs. 25% of disposable earnings). Various fees that are collected as part of a withholding order enjoy the same higher withholding limit. Would an order to collect only the fee be subject to this same limit? No doubt, employers receiving such orders will come to varying conclusions.

2. Will the standard Income Withholding Order (which is currently being revised) be amended to include a line for the fee?

3. What priority will the fee have against current support, medical support, and arrearages?

4. Many employers do business in more than one state, and some 30% of wage withholding orders cross state lines. To prevent employer confusion over whether it should follow the rules of the state issuing the order or those of the employee’s (noncustodial parent’s) primary work state with regard to this fee, we would like OCSE to clarify that the employer should follow the rules of the state issuing the order. This seems to follow the provision of the Uniform Interstate Family Support Act that says the employer must follow the rules as stated on the order that specify (among other items) the amount of periodic payment of fees and costs for a support enforcement agency.

APA Concern Over Lack of Outreach to Employers

In addition to the confusion that the fee will cause employers, the APA is concerned that the fee may actually be detrimental to employers’ relationships with state child support agencies. We understand that certain states will choose to pay the fees themselves because they believe that charging fees to support recipients is contrary to their mission. These fees cannot be considered operational expenses, which means they will be an additional burden on the states’ already burdened budgets. APA is concerned that employer outreach will suffer as a result.

Even the states that do pass on their fees to their residents appear to be facing great expenses to develop computer systems to account for the fees, and they will pass on the lion’s share of those fees to the federal government. In conversations APA has had with child support officials, accounting for this fee has been described as “a nightmare.”

The cuts imposed by the Deficit Reduction Act are likely to tax the state child support agencies to such an extent that services to employers cannot help but suffer, as states are forced to reduce staff yet continue to meet federally imposed levels of service (such as a 90% paternity identification). This fee appears to add to that burden rather than alleviate it.

APA and child support agencies at both the state and federal levels have spent years developing relationships that have proven mutually beneficial and beneficial to society. We are quite committed to maintaining this relationship but worry that states will find themselves unable to provide employers the level of service to which they have been accustomed.

We appreciate your consideration of the issues we raise and look forward to your response. If you have any questions or would like clarification on our comments, please contact William Dunn at the address below.