DCL-03-08, Federal Guidance on International Child Support Payments

DCL-03-08

DATE: April 16, 2003

TO: ALL STATE IV-D DIRECTORS

RE: Federal Guidance on International Child Support Payments

Dear Colleague:

Over the past year, we have received an increased number of inquiries regarding international child support enforcement. Pursuant to the authority of section 459A of the Social Security Act (Act), the Secretary of State, with the concurrence of the Secretary of Health and Human Services, has declared fifteen countries and Canadian Provinces to be foreign reciprocating countries. I shared the most recent list of foreign reciprocating countries with you in DCL-02-34 (Dec. 4, 2002).

As international enforcement grows in importance to the IV-D program, many questions will arise with respect to accommodating international cases within existing IV-D rules and procedures. We recognize that international enforcement is a new and relatively rare experience for many states and that such enforcement presents a variety of unique challenges. One such challenge concerns the collection and disbursement of collections received in foreign currencies. Most states appear to be able to take the steps necessary to convert foreign payments to U.S. currency. However, we have received a number of complaints that states are returning collections to foreign countries when the payments are not sent in U.S. dollars.

Together with this DCL, OCSE is releasing a PIQ that makes clear that the transaction costs of collecting and distributing child support collections do not excuse a state from providing complete and timely service to the families that it serves. Although we are sensitive to the complications presented by such payments, under no circumstances should a U.S. family be denied a child support payment submitted from abroad by having the state return the payment to the foreign country. This is poor customer service and entirely contrary to the objectives of the IV-D program.

We believe that this guidance will prove beneficial both to families and to states. Increased collections will help families get the support that they deserve as well as contribute to better state performance by improving collection rates and reducing arrearages. Any amount received, even if in a foreign denomination, is preferable to none at all, which is the practical result of a returned payment.

In addition, it is important to keep in mind that successful international enforcement requires reciprocal obligations on either side. We cannot reasonably demand that both outgoing and incoming payments to/from foreign countries be in U.S. dollars. In light of existing law and regulations, U.S. families are best served by states’ accepting and converting payments in hand rather than sending the payments back to the foreign country.

OCSE is committed to working with the states and our foreign reciprocating partners to extend the significant progress that we have made in interstate enforcement to the international arena. As part of our efforts to improve international child support enforcement, we plan to distribute best practices and provide other technical assistance to states regarding international enforcement, including the currency issues discussed in this PIQ. Because most states appear to be capable of handling foreign payments without difficulty, we believe that it would be useful to share various states’ approaches to processing payments in international cases.

In addition, OCSE is currently exploring opportunities with the Federal Reserve to extend our domestic efforts in electronic funds transfers and electronic data interchange (EFT/EDI) to make available to IV-D agencies and foreign reciprocating countries currency transfer and conversion procedures that will allow child support agencies to easily and economically transfer funds in their respective currencies. Such a system would ensure that the funds transferred in the local currency would be received securely and efficiently in the other nation’s currency using electronic means, such as an automated clearinghouse (ACH) gateway system. For example, a responding agency having made a collection in Canada would be able to electronically or otherwise transmit Canadian currency to the Canadian gateway for automatic currency conversion and transfer. The receiving U.S. gateway would forward the payments in U.S. dollars to the state disbursement unit. Payments from U.S. agencies could go to the U.S. gateway and be transmitted by the Canadian gateway to the Canadian Maintenance Enforcement Program in Canadian dollars.

The Federal Reserve currently offers its International ACH service to all U.S. depository institutions for EFT/EDI between the United States and Canada and is expected to expand this program on a pilot basis for other countries shortly. Further information about the Federal Reserve’s "International FedACH Service" may be found at http://www.frbservices.org/Retail/intfedach.html or by contacting the U.S. Central Authority for International Child Support at (202) 205-2742.

Sincerely,

Sherri Z. Heller, Ed.D.
Commissioner
Office of Child Support Enforcement

Attachments

cc: Federal Regional Administrators
Federal Regional CSE Program Managers