dcl9716.htm

Implementation of E.O. 13019, Debt Collection Act of 1996

MAR 18, 1997 DC-97-16

TO ALL IV-D DIRECTORS

Re: Implementation of Executive Order 13019, Debt Collection Act of 1996

Dear Colleague:

You may recall DC-97-05, dated January 23, 1997 which contained a copy of the Executive Order 13019 - Support Families: Collecting Delinquent Child Support Obligations. This letter is to follow up on our effort to implement the Executive Order. In the last few weeks OCSE and FMS has held various Regional and State conference calls as well as a National work group meeting in Alexandria, Virginia.

Enclosed is an information package consisting of implementation issues raised during the conference calls and work group meeting and proposed solutions. OCSE will continue to host conference calls in the upcoming weeks to ensure that all questions regarding implementation are answered and will work with FMS to resolve issues impeding implementation.

If you have any questions please call OCSE's Department of Treasury Liaison, Roy Nix at (202) 401-5685.

Sincerely,

David Gray Ross

Deputy Director

Office of Child Support Enforcement

Enclosures

cc: Regional Administrators

Program Managers

Federal Tax Refund Offset Coordinators

DEBT COLLECTION IMPROVEMENT ACT OF 1996/EXECUTIVE ORDER 13019

IMPLEMENTATION NATIONAL TASK FORCE

Holiday Inn Hotel & Suites

Historic District Alexandria

625 First Street

Ballroom C

Alexandria, VA 22314

(703) 548-6300

PURPOSE:

To discuss the implementation of the Debt Collection Improvement Act of 1966

PARTICIPANTS:

ACF/OCSE and FMS, Washington, D.C.,

State Representation from: VA, WA, MO, WA, GA, MD, FL,

NY, CO, WV, IL, SC, OR, CA, UT, VT

Regional Representation from: IV, V, VII and X

Tuesday, February 25, 1997

PURPOSE OF THE MEETING:

To identify issues which need to be addressed in order to implement the Administrative Offset Program; identify issues to ensure a smooth transition of Tax Refund Offset from IRS to FMS; propose potential solutions; determine action items and target dates; and to develop an Implementation Plan.

8:00 a.m. - 8:30 a.m. Registration

8:30 a.m. - 8:45 a.m. Opening Comments & Donna Bonar & Roy Nix, Introductions and OCSE

Housekeeping Items

8:45 a.m. - 10:15 a.m. Overview of Executive Roy Nix

Order/Passport Denial Donna Bonar

10:15 a.m. -10:30 a.m. Break

10:30 a.m. -12:00 a.m. Overview of Debt Vicki McDowell, FMS

Act

12:00 p.m. - 1:00 p.m. Lunch on your own

1:00 p.m. - 3:00 p.m. Policy and Program Betsy Matheson, OCSE

Issues - Distribution

3:00 p.m. - 3:15 p.m. Break

3:15 p.m. - 5:00 p.m. Policy and Program Donna Bonar

Issues cont'd

AGENDA

Wednesday, February 26, 1997

8:00 a.m. - 8:30 a.m. Coffee and Danish

8:30 a.m. - 8:45 a.m. Systems Issues Steve Lee, OCSE &

Don Rouse, FMS

10:30 a.m. - 10:45 a.m. Break

10:45 a.m. - 12:00 p.m. Implementation Issues Roy Nix

12:00 p.m. - 1:00 p.m Lunch on your own

1:00 p.m. - 2:30 p.m. Implementation Issues Donna Bonar

cont'd

2:30 p.m. - 2:45 p.m. Break

2:45 p.m. - 4:00 p.m. Where Do We Go From Roy Nix & Karen

Here - Next Steps Cavanaugh, FMS

David L. Aerts

ACF Program Specialist, Region VII

ACF

Bolling Federal Office Building,

Rm 276

601 E. 12 Street

Kansas City, MO 64106

(816) 426-5981 ext. 161 - phone

(816) 426-2888 - fax

Margie Alexander

ACF Program Specialist, Region IV

ACF

101 Marietta Street

Suite 821

Atlanta, GA 30323

(404) 331-2180 ext. 249 - phone

Michael Adrian

Program Development Specialist

Division of Child Support Enforcement

PO Box 1527

Jefferson City, MO 65102

(573) 526-5360 - phone

(573) 751-8450 - fax

Mike Blanchard

Management Analyst

Colorado Dept. of Human Services

Division of Child Support Enforcement

1575 Sherman Street, 2nd Floor

Denver, CO 80522

(303) 866-6071 - phone

(303) 866-2214 - fax

Donna Bonar

Director, Program Operations

OCSE

Dept. of Health & Human Services

ACF

370 L'Enfant Promenade, S.W.

Washington, D.C. 20447

(202) 401-9271 - phone

(202) 401-5553 - fax

Steven R. Burton

Information Analyst

515 E. 100 S.

Salt Lake City, UT 84120

(801) 536-8970 - phone

(801) 536-0300 - fax

Carol Callahan

OCSE

Dept. of Health & Human Services

ACF

370 L'Enfant Promenade, S.W.

Washington, D.C. 20447

(202) 401-6969 - phone

(202) 401-5553 - fax

Karen Cavanaugh

FMS Project Manager

401 14th Street, N.W.

Washington, D.C. 20227

(202) 874-7345 - phone

(202) 874-7494 - fax

D. Michelle Cobb

Tax Offset Coordinator

CSED

Capitol Complex

Bldg. Rm 817B

Charleston, WV 25305

(304) 558-4729 - phone

(304) 558-4759 - fax

Jim Cudzilo

Program Analyst-Team Leader, OCSE

Dept. of Health & Human Services

ACF

370 L'Enfant Promenade, S.W.

Washington, D.C. 20447

(202) 401-9389 - phone

(202) 401-5553 - fax

Mayo Harlow, III

Manager Intercept & Reconciliations

730 East Broad Street

Richmond, VA 23219-1840

(804) 692-1411 - phone

(804) 692-1405 - fax

Mike Hoder

Support Enforcement Officer

725 Quince

Box 9162 MS:45860

Olympia, WA 98504

(360) 586-3479 - phone

(360) 664-0729 - fax

Richard Karl

Program Specialist, Region X

ACF

2201 6th Avenue

Seattle, WA 98121

(206) 615-2551 ext 3096 -phone

Michelle Kutten

Supervisor, Enforcement

Support Enforcement Division

Enforcement Branch

1495 Edgewater St., N.W. Suite 290

Salem, OR 97304

(503) 986-6048 - phone

(503) 986-5996 - fax

Linda Lawrence

OCSE Program Specialist, Region V

ACF

105 W. Adams Street, 20th Floor

Chicago, IL 60603

(312) 353-7481 - phone

Stephen Lee

Computer Specialist

Dept. of Health & Human Services

ACF

370 L'Enfant Promenade, S.W.

Washington, D.C. 20447

(202) 401-9389 - phone

(202) 401-5553 - fax

Karen Mayer

Assistant Director,

Office of Intercepts

311 W. Saratoga Street, Rm 340

Baltimore, MD 21201

(410) 767-7426 - phone

(410) 333-38992 - fax

Jane Miscavich

Program Analyst

Dept. of Health & Human Services

OCSE

ACF

370 L'Enfant Promenade, S.W.

Washington, D.C. 20447

(202) 401-9390 - phone

(202) 401-5553 - fax

Ellen Neubauer

Office of General Counsel

U. S. Treasury, FMS

401 14th Street, N.W.

Washington, D.C. 20227

(202) 874-0778 - phone

(202) 874-7494 - fax

Roy Nix

Dept. of Treasury Liaison

Dept. of Health & Human Services

OCSE

ACF

370 L'Enfant Promenade, S.W.

Washington, D.C. 20447

(202) 401-5685

(202) 401-5553

Buster Pfaender

Operations Manager, Automated Services

Department of Revenue

Child Support Enforcement Program

P.O. Box 8030

Tallahassee, FL 32314-8030

(904) 922-6350 - phone

(904) 487-9403 - fax

Norma Rose

Child Support Project Manager

(MACSS)

MACSS Project Office

P.O. Box 2300

Jefferson City, MO 65102-2300

(573) 634-0208 - phone

(573) 634-0343 - fax

Tom Rotella

Office of Child Support Enforcement

103 South Main Street

Waterbury, VT 05671-1901

(802) 241-2938 - phone

(802) 244-1483 - fax

Tom Rush

Agency Management Analyst Senior

730 East Broad Street

Richmond, VA 23219-1849

(804) 692-1536 - phone

(804) 692-1405 - fax

Ann Russell

Program Specialist, Region IV

ACF

101 Marietta Tower, Suite 821

Atlanta, GA 30323

(404) 558-5770 - phone

(404) 331-2202

Carmen Sanchez

Public Inquiry Specialist/Region V

ACF

105 W. Adams

Chicago, IL 60603

(312) 353-4863 - phone

(312) 353-2204 - fax

JP Soden

ACF Program Specialist, Region IX

ACF/CSEB

50 U.N. Plaza, Room 334

San Francisco, CA 94102

(415) 437-8423 - phone

(415) 437-8436 - fax

William Stuart

Director, Systems Operations Unit

New York State Office of Child Support

1 Commerce Plaza

P.O. Box 14

Albany, NY 12260

(518) 474-9081 - phone

(518) 486-3127 - fax

Letitia G. Ward

Project Administrator

SC CSE

P.O. Box 1469

Columbia, SC 29202

(803) 737-5847 - phone

(803) 737-5896 - fax

OPENING REMARKS - Donna Bonar

The purpose of the meeting is to discuss the Debt Collection Improvement Act of 1996, Public Law 104-134 (110 Statute 1321-358 et seq.), which was enacted into law on April 26, 1996 and the implementation of Executive Order 13019. The primary purpose of the Debt Collection Improvement Act is to increase the collection of non-tax debts owed to the Federal Government. The Act also contains important provisions that can be used to assist States in collecting past-due child support. An overview of the Executive Order also follows.

Since 1981, the Office of Child Support Enforcement has worked closely with the states on the Federal Tax Refund Offset Program. This program involves the interaction of all State IV-D agencies and two Federal agencies (OCSE and IRS). During the life cycle of the Tax Offset Program, OCSE has worked with IRS to improve the system, and has had tremendous success intercepting Federal tax refunds and applying them to outstanding child support obligations. With the inception of the Debt Collection Improvement Act, IRS will be transferring the Tax Refund Offset Program to the Financial Management Service (FMS), Department of Treasury beginning January 1998. The Dept Collection Improvement Act will be an ongoing program. States will have more flexibility in submitting their cases. OCSE looks forward to working closely with States and FMS to ensure the effectiveness of the Debt Collection Improvement Act of 1996.

HIGHLIGHTS OF EXECUTIVE ORDER 13019 - Roy Nix

Executive Order 13019 was signed on September 28, 1996. The executive order directs the Secretary of Health and Human Services to develop and implement procedures with the Secretary of the Treasury to collect past due child support debt by administrative offset. See section (1)(b).

The Secretary of Health and Human Services shall, within 120 days of the date of this order, implement procedures necessary to report to the Treasury information on past due child support claims referred to by States (including enforced by States pursuant cooperative agreements with or by Indian tribal governments) to the Department of Health and Human Services.

Administrative offset is not mandatory. However, it is to the States advantage to use this method to collect outstanding child support debts. If a State submits a case for administrative offset, Treasury will share with HHS information contained in payment records whether an offset occurs or not. This could provide additional locate and/or enforcement information to the State(s). Also, while the administration offset program is not mandatory for child support agencies, cases submitted for Federal Tax Refund Offset will be subjected to administrative offset as well.

The Secretary of Treasury shall, to the extent permitted by law, share with the Secretary of Health and Human Services any information contained in payment certification records of persons who are delinquent in child support obligations that would assist in the collection of such debts, whether or not an administrative offset is conducted.

If a person is in the FMS database for delinquent child support, they will be denied loans. See Section (2)(b).

In conformance with section 2(e) of this order, the head of each executive department and agency shall, with respect to any individuals whose payments are subject to administrative offset because of a delinquent child support obligation, promptly implement procedures to deny Federal assistance to such individuals.

OCSE/FMS supplies Secretary Shalala and Secretary Ruben with a monthly status report pertaining to the Debt Collection Improvement Act and the implementation of Executive Order 13019.

PASSPORT DENIAL - Donna Bonar

Section 370 of PRWORA of 1996 calls for the denial of passports for nonpayment of child support. States are to certify to OCSE when an individual owes arrearages exceeding $5,000 and OCSE is to transmit this information to the State Department. This provision is effective October 1997. Current plans call for incorporating this certification into the Treasury Offset submittal process. There is also a requirement that the CSE agency notify each individual and provide the individual an opportunity to contest the determination. This notification could be handled through the pre-offset notice.

The process will work with OCSE submitting the name and date of birth for anyone with a child support debt of $5,000 or more to the State Department for passport denial. OCSE is working with SSA to obtain the DOB by providing the name and SSN of the individual. When anyone applies for a passport, State Department will check the child support submittals and will deny a passport to anyone submitted by OCSE. It is important that States maintain an accurate arrearage to ensure that a person is not mistakenly denied a passport.

OCSE is currently working with the State Department concerning implementation of this provision.

OVERVIEW OF THE DEBT COLLECTION ACT - Vicki McDowell, FMS; Ellen Neubauer (See Attachment A)

The Debt Collection Improvement Act was signed into law on April 26, 1996, by President Clinton. One of the purposes of the Act is to increase the collection of non-tax debts owed to the Federal government. It is estimated that the amount of outstanding non-debt owed to the Federal government is $51 billion. The Act also contains important provisions that can be used to assist families in collecting past due child support obligations.

The Debt Collection Improvement Act establishes a centralized administrative offset program and transfers the Federal Tax Refund Offset program from IRS to FMS. Federal agencies must notify the Department of the Treasury of all debts which are over 180 days delinquent. The debts are entered into a centralized data base known as NID3. As disbursing officials of the Federal government disburse payments, these payments will be matched against the debtor database. Where a match occurs, the payment will be offset, either in whole or in part, to satisfy the debt. State debts, including past-due support being enforced by a State, may also be included in the debtor database and matched against Federal payments for purposes of collection by administrative offset. Certain Federal payments are not subject to offset. For example, certain Social Security benefits, Black Lung benefits, and Railroad Retirement benefits may not be offset to collect debts owed to States. These payments may be offset to collect debts owed to the Federal government after a $9,000 threshold is met.

Debt Collection/Federal Tax Refund Offset

OCSE and FMS are encouraging as many States as possible to participate in the administrative offset program this year. To date, 20 States have expressed interest in participating this year. The work group developed a plan on how to merge cases submitted for administrative offset this year with new cases being submitted for offset for Processing Year '98.

Beginning in January 1998, FMS will take over the operation of the Federal Tax Refund Offset program. Cases submitted for tax offset will also be subject to administrative offset. Also, instead of resubmitting cases annually, cases will remain in the masterfile until the debt is satisfied or for 10 years. Much of the discussion centered around the merging of the Federal Tax Refund Offset program with the Administrative Offset program. For example, the criteria for submitting cases for administrative offset is different from the criteria for Federal tax refund offset. (See page --) In addition, States discussed the need to delete certain cases from administrative offset but still have them eligible for Federal tax refund offset. An example of this would occur when the Federal employee's wages are already beingwithheld through regulations.

DISTRIBUTION AS RELATED TO TAX - Betsy Matheson, Steve Cesar and Bob Keith

One of the issues raised by the States during the conference calls and at the meeting is how are they to distribute administrative offsets. Section 457 of the Social Security Act which governs the distribution of Child Support collections has been amended by the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, P.L. 104-193. As a result of the revisions to Federal law governing the distribution of child support collections, Federal tax refund offsets are distributed differently than all other collections, including collections resulting from administrative offset. Therefore, States will need to distinguish collections attributed to an administrative offset from those collected through Federal tax refund offset.

POLICY AND PROGRAM ISSUES - Donna Bonar

Pre-Offset Notices

The group suggested that OCSE and FMS explore the possibility of using one notice for this years program which could also apply to the '98 program. If possible, the States participating in the '97 phase for administrative offset would like to be able to send one notice to the debtor that would cover administrative offsets in '97 and administrative and Federal tax refund offsets in '98. HHS noted that the notice should also include wording to cover passport denial. OCSE, FMS, and the Legal Counsel for both are going to work on this issue. (See Attachment B)

Repayment Options

States expressed significant concern about the requirement to offer a repayment plan even though they have the option to select a repayment plan of their design. Many States are concerned about this provision and would like to have it excluded from the pre-offset notice. (Update: The notice drafted by FMS/OCSE does not contain a reference to a repayment plan. See Attachment B)

Fees

"Past Due Support" is submitted for tax refund offset. This amount does not include fees. There is, however, no provision that prevents a State from charging for administrative offset services. FMS believes that charging fees for administrative offsets may be at the State's discretion. FMS will look into the possibility of collecting the past due support in a way to cover the fee.

Criteria for Submittal

Arrearage:

A case can be submitted for collection, if the arrearage is not less than the following amounts:

Federal Tax Refund offset:

Assistance Cases (Formerly AFDC) $150.00 (in regulations; not a statutory requirement)

Non-Assistance Cases

(Formerly Non AFDC) $500.00 (in statute)

Administrative Offset $ 25.00 (in statute)

Minor Child/Age of Majority

Whenever a child reaches the age of majority, States can no longer receive Federal tax refund offset collections. The age of majority is different for every State. States should defer to their own State statutes to determine when a child reaches the age of majority. When a child reaches the age of majority, the case can no longer be submitted for Federal tax refund offset but the Administrative Offset program does not have the same restrictions. Therefore, in this instance, the case would be eligible for administrative offset but not Federal tax refund offset. There must be an indicator or mechanism for the State to distinguish the appropriate eligibility.

Prorating and Priority

Currently, in the Federal Tax Refund Offset program, cases are prioritized in the order that they are received at OCSE, i.e., "first-in, first-offset." All AFDC debt is collected first in the order in which the debt is received. Non-AFDC debt is then collected in the same manner. There was discussion as to whether or not this priority scheme should be changed. FMS currently offsets the largest debt certified first and then works down to the lowest debt certified.

An option discussed is prorating multiple submittals so that each State (or custodial parent in non-assistance cases) would receive some of the collections. Another issue then becomes the charge for the offset -- will each State be charged the full fee?

In other words, if the offset is not prorated and sent entirely to one state, FMS would charge only on offset fee. If, however, the same offset is allocated to three states, there (presumably) could be three offset fees.

With State input, OCSE and FMS will discuss resolutions.

Joint Returns

Unlike the current Federal Tax Refund Offset program, when IRS is processing a return, IRS knows if the individual has a child support debt. Once the program is transferred to FMS, IRS will not be aware of a child support delinquency.

It should not matter if the person is a primary or secondary filer. Both Social Security Numbers will be provided to FMS at the time of tax refund offset and eligible for offset. IRS will continue to identify the PY so that a State can adjust a case.