AT-9905 Policy Questions & Responses-Nat'l & State Directories of New Hires

U.S. Department of Health and Human Services
Administration for Children & Families
Office of Child Support Enforcement

AT-99-05

ISSUED: March 24, 1999
(This AT supersedes AT 97-04, 97-16, and 98-06)

TO: STATE AGENCIES ADMINISTERING CHILD SUPPORT ENFORCEMENT PLANS UNDER TITLE IV-D OF THE SOCIAL SECURITY ACT AND OTHER INTERESTED INDIVIDUALS

SUBJECT: Policy Questions and Responses regarding the National Directory of New Hires and the State Directory of New Hires under the provisions of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996

BACKGROUND: The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA) requires each State to develop a State Directory of New Hires that meets Federal requirements by either October 1, 1997, or October 1, 1998, depending upon whether a State had a new hire reporting law in effect before August 22, 1996. The law required the Department of Health and Human Services to develop a National Directory of New Hires by October 1, 1997.

The Office of Child Support Enforcement (OCSE) previously published OCSE-AT-97-04 on March 12, 1997, OCSE-AT-97-16 on October 7, 1997, and OCSE-AT-98-06 on March 2, 1998 to address State questions regarding the interpretation of PRWORA’s provisions for the State Directory of New Hires and the National Directory of New Hires. The purpose of this Action Transmittal (AT) is to consolidate those three earlier ATs, to group the previously given questions and answers by subject matter for ease of use, and to provide additional information that has become available. Added questions and answers are indicated by an asterisk before the question number. In addition, AT-97-16 gave an optional form for multistate employer reporting. That form is superseded by the form given here. The OMB expiration date for the form has changed to 11/30/00.

ATTACHMENT: Series of questions and answers regarding the New Hire provisions under the Personal Responsibility and Work Opportunity Reconciliation Act of 1996.

INQUIRIES: Office of Child Support Enforcement, Department of Health and Human Services, 370 L'Enfant Promenade, S.W., Washington, D.C. 20447, Attention: Director, Policy and Planning Division.

______________________
David Gray Ross
Commissioner
Office of Child Support Enforcement

TABLE OF CONTENTS

II. DEFINITIONS FOR NEW HIRE REPORTING............................................................................ p. 6

III. TIMEFRAMES FOR ENTERING AND PROCESSING NEW HIRE DATA................................ p. 10

IV. REPORTING REQUIREMENTS................................................................................................... p. 10

V. MULTISTATE EMPLOYERS........................................................................................................ p. 17

VI. PENALTIES................................................................................................................................... p. 20

VII. ACCESS TO DATA...................................................................................................................... p. 21

VIII FUNDING...................................................................................................................................... p. 26

APPENDIX I MULTISTATE EMPLOYER NOTIFICATION FORM.......................................... p. A-1

NEW HIRE REPORTING
QUESTIONS AND ANSWERS

I. GENERAL

Q 1: When must States meet the Federal requirements for State Directories of New Hires (SDNH)?

A 1: Section 453A(a)(1)(A) of the Social Security Act (the Act) specified that States which did not have a new hire reporting law in existence as of August 22, 1996, (date of enactment of Pub. L. No. 104-193), must establish an SDNH by October 1, 1997. The SDNH must meet the Federal requirements of Pub. L. No. 104-193.

Section 453A(a)(1)(B) allowed States which already had new hire reporting laws prior to the enactment of new Federal mandates under Pub. L. No. 104-193 additional time to conform to the requirements of section 453A and to continue to operate under those State laws until October 1, 1998. However, States were required to meet requirements to report new hire and quarterly wage data to the National Directory of New Hires (NDNH), as outlined at section 453A(g)(2), by October 1, 1997. Therefore, to the extent that pre-August 22, 1996 State laws may have differed from the Federally-mandated elements, States were permitted to continue to operate their directories under the prior plan, but were required to meet Federal requirements on and after October 1, 1998.

Q 2: If a State had a new hire law in place for another program, such as Unemployment Insurance, before August 22, 1996, did the State have until October 1, 1998 to meet the new Federal requirements?

A 2: Yes. The statute does not specify that a new hire reporting law in existence before August 22, 1996 must have been for child support purposes. Thus, a State with a new hire reporting law for another program (such as Unemployment Insurance) had until October 1, 1998 to meet the new Federal requirements under Pub. L. No. 104-193. However, all States must have met requirements to report new hire and quarterly wage data to the NDNH, as outlined at section 453A(g)(2), by October 1, 1997.

__________________
1 The provisions relating to State Directories of New Hires are contained primarily in section 313 of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA), Pub. L. No. 104-193. Section 313 added a new section 453A to the Social Security Act (the Act), 42 U.S.C . 653A. The provisions relating to the National Directory of New Hires are contained pirmarily in section 316 of PRWORA, which amended section 453 of the Act, 42 U.S.C. 653. Unless otherwise specified, references or citations are to the provisions of the Act.

Q 3: What data elements will States be required to send to the NDNH and when must States submit such data?

A 3: Section 453A(g)(2) requires that the SDNH shall furnish the information regarding a newly-hired employee to the NDNH within three business days of entering the data into the SDNH. The "information regarding a newly-hired employee" that must be submitted consists of the six Federally-mandated data elements which employers are required to report pursuant to section 453A(b)(1): name, address, and social security number of the employee, and the name, address, and Federal Employer Identification Number (EIN). The NDNH has the capability to accept two addresses for employers in the event the reported address is different than the payroll address needed for wage withholding purposes.

Additionally, State Directories of New Hires have the option to report four additional data elements to the NDNH: date of hire, State of hire, State EIN, and employee's date of birth. These optional data fields will improve States' fraud detection efforts and administration of programs. The NDNH has the capability to receive and transmit these four optional data elements.

Q 4: Is a master file of EINs available from the Internal Revenue Service (IRS) to the States for the purpose of facilitating accuracy in the new hire reporting data requirement?

A 4: No. An alternative option for State Directories of New Hires is to utilize the capability of State Employment Security Agencies to cross-reference State EINS with Federal EINs.

Q 5: Can a State choose where to locate the SDNH?

A 5: Yes. Section 453A does not specify that the SDNH must be located in a specific agency. States may determine where to house the SDNH, e.g., child support agency, State employment security administration, revenue department, private vendor under contract with the State, or local child support enforcement agency.

Q 6: Will the SDNH be required to keep new hire data for a specified time period? How long will the NDNH keep new hire data and quarterly wage and unemployment compensation data on file?

A 6: There are no Federal time requirements in section 453A or section 453 for maintaining new hire data in the SDNH. Some of the States that operate new hire programs maintain data for six to nine months. New hire data is retained on the NDNH for no more than 24 months.

Q 7: Must a State pass a law to implement a new hire program?

A 7: No. Section 454(28), as added by section 313(a)(3) of PRWORA, requires that the State plan provide for the operation of a new hire directory, but there is no specific State law requirement under section 466. The State would simply need to ensure that its procedures comply with the Federal mandate.

Each State must assess for itself whether a law is needed to implement a new hire program (for example, a law to specify the reporting frequency, establish the civil penalty, or designate the particular agency to conduct information comparisons). Under section 453A(b), employers are directly required to comply with the reporting requirements, so a State law requiring them to do so may not be necessary.

**Q 8: Must a State unemployment insurance (UI) agency accept direct income withholding requests to collect against UI benefits from other States' IV-D agencies?

**A 8: Yes. If the State UI agency is encompassed by the definition of "employer" within section 501 of the Uniform Interstate Family Support Act (UIFSA) as enacted by the receiving State, an income withholding order may be sent directly to the UI agency since it is "the person or entity defined as the obligor’s employer under [the income withholding laws of the State]...". Withholding for UI benefits is also governed by sections 303(e) and 454(a)(19) of the Act. Under these sections the IV-D agency must have a funding agreement in place to reimburse the UI agency for providing the service. Otherwise, the withholding may be sent through the IV-D agency in the same State as the UI agency. For further information please see PIQ 99-04.

Q 9: What is the effective date for States to conduct a match between their SDNH and their State Case Registry (SCR)?

A 9: For States that were required to meet the October 1, 1997 deadline for having an SDNH, the effective date of the requirement to match with the SCR was May 1, 1998, pursuant to section 453A(f)(1) of the Act. For States that had until October 1, 1998 to implement the SDNH provisions of PRWORA, the matches were required to take place as soon as their SDNH was operational, but in no case later than October 1, 1998.

Q 10: If a State has no new hire transmissions for a day, how should the State let the NDNH know? Should the State send notice of no data or should the absence of a transmission indicate no data? Would the lack of a transmission be interpreted by the NDNH as an error?

A 10: New hire data must be furnished to the NDNH within three (3) business days after the new hire data is entered into the SDNH, pursuant to section 453A(g)(2)(A) of the Act. States are not required under the Act to take action if they have no information to report.

II. DEFINITIONS FOR NEW HIRE REPORTING

Q 11: What is the "date of hire" considered to be?

A 11: The "date of hire" is considered to be the first day services are performed for wages by an individual.

Q 12: When is an individual considered a new hire?

A 12: An individual is considered a new hire on the first day in which an individual performs services for remuneration, i.e., first day of work. This is the first day in which an employer begins to withhold amounts for income tax purposes.

Q 13: What is the definition of "employee" for new hire reporting purposes?

A 13: Section 453A(a)(2)(A)(i) defines an "employee" as an individual who is an employee within the meaning of Chapter 24 of the Internal Revenue Code of 1986 (IRC). Thus, an individual who is an employee for purposes of federal income tax withholding from wages is also an employee for new hire reporting purposes.

Chapter 24 of the IRC and the regulations promulgated thereunder define an "employee" as every individual performing services if the relationship between the individual and the person for whom the services are performed is the legal relationship of employer and employee (see IRC section 3401(c) and 26 CFR 31.3401(c)-1). Generally, the legal relationship of employer and employee exists when the person for whom the services are performed has the right to control and direct the individual who performs the services not only as to the result to be accomplished but also as to the details and means by which that result is to be accomplished. It is not necessary that the employer actually direct or control the manner in which the services are performed; it is sufficient if he or she has the right to do so.

An individual’s status as an employee or an independent contractor may be determined by filing Form SS-8, Determination of Employee Work Status for Purposes of Federal Employment Taxes and Income Tax Withholding, with the local IRS office, or by reference to IRS Publication 15A--Employers Supplemental Tax Guide. IRS forms and publications may be obtained by calling 1-800-TAX-FORM (829-3676).

Q 14: What is the definition of "employer" for new hire reporting purposes?

A 14: Section 453A(a)(2)(B)(i) provides that the term "employer" has the same meaning as in section 3401(d) of the IRC and includes any governmental entity and any labor organization. At a minimum, in any case where an employer is required to give an employee a Form W-2 showing the amount of taxes withheld, the employer must meet the new hire reporting requirements.

Section 3401(d) defines "employer" as the person for whom an individual performs any service of whatever nature, as the employee of such person. Section 3401(d) goes on to provide in part that "if the person for whom the individual performs or performed the service does not have control of the payment of the wages for such services, the term 145employer’ . . . means the person having control of the payment of such wages." Thus, every entity (including governmental entities and labor organizations) is an employer if the entity exercises or has the right to exercise control and direction over an individual who performs or has performed any service for the entity unless the entity does not have control of the payment of the employee’s wages. In these cases, the entity having control of the payment of such wages is the "employer." All entities satisfying 3401(d) of the IRC must meet the new hire reporting requirements set forth in section 453A(b)(1) of the Act, as amended.

Q 15: Must an employer report an employee who is being recalled from a layoff or who is returning from a leave of absence?

A 15: If the employer/employee relationship has been severed and a returning individual is required to submit a W-4 form to the employer, the employer is required to furnish a new hire report to the SDNH.

Q 16: Do entities hiring independent contractors or subcontractors have to report new hires? Do independent contractors or subcontractors have to report new hires?

A 16: Entities do not have to report the hiring of independent contractors or subcontractors. However, entities must determine whether the individual is in fact an independent contractor/subcontractor or is really an employee. Entities must use the test and factors discussed in question 13 (concerning the definition of an employee) to determine if the individual is an employee whose hiring must be reported.

Although an independent contractor or subcontractor may not be an employee of the entity which hired him or her to perform a particular job or function, he or she may be his or her own "employer" and/or an "employer" of others and may be required to report new hires as an employer under section 453A. The contractor must determine whether the legal relationship of employer and employee exists to determine if he or she or others hired are employees; i.e., does the person for whom services are performed have the right to control and direct an individual who performs the services not only as to the result to be accomplished but also as to the details and means by which the result is to be accomplished? If further information is needed regarding the definitions of independent contractors/subcontractors and employees, the IRS publication referenced in question 13 may be helpful.

Q 17: Are placement agencies or temporary employment agencies that place individuals with third parties required to report the employees as "new hires?"

A 17: Placement agencies or temporary employment agencies must report newly-hired employees pursuant to section 453A(b)(1) if a legal relationship of employer and employee exists within the meaning of Chapter 24 of the IRC. See questions 13 and 14.

_____________________
2 EXAMPLE A: ABC Employment Service is engaged in the business of providing secretarial services to a number of different companies on a temporary basis. ABC Employment Service maintains a registry of secretaries interested in performing such services and companies contact ABC Employment Service when in need of temporary secretarial services. A secretary performs services at a company's place of business, under the direction and control of the company. The secretary may perform his or her services at a different company every day. An employment relationship exists between the secretary and each company within the meaning of 26 CFR 31.3401(c)-1. The company pays an hourly rate to ABC Employment Services, which retains a portion of the hourly rate as a fee for its services and then paysthe secretary's wages. Although an employment relationship exists between the secretary and each company, because ABC Employment Service is the employer within the meaning of IRC Section 3401(d)(1). Accordingly, ABC Employment Service is responsible for reporting the "new hire."

EXAMPLE B: A-1 Personnel is engaged in the business of placing secretaries with companies on a permanent basis. When a secretary is placed with a company, a one-time fee is paid to A-1 Personnel by either the secretary or the company. The secretary performs services at the company's place of business, under the direction and control of the company. An employment relationship exists between the secretary and the company within the meaning of 26 CFR 31.3401(c)-1. The secretary's wages are paid directly to the secretary by the company. In this case the company is the employer within the meaning of IRC section 3401(d) and, therefore, is responsible for reporting the "new hire."

Q 18: Are labor organizations required to report their members under the new hire reporting program?

A 18: A labor organization is not required to report members simply as a result of their status as members. It also need not report those who are referred for employment unless the labor organization meets the definition of "employer" under section 3401(d) of the IRC in relation to those individuals.

A labor organization is an employer under section 3401(d) of the IRC and must meet the reporting requirements of section 453A with respect to any individuals that perform any services for the organization for wages. The labor organization could also be brought within the definition of "employer" under section 3401(d)(1), which states that in cases in which the person or entity for whom services are performed does not have control over the payment of the wages for those services, the employer is the person or entity having control over the payment of those wages. Thus, if a labor organization actually pays the individuals whom it refers (as opposed to having them paid by the person or entity to whom they have been referred), the labor organization would be considered the "employer" and subject to the reporting requirements in section 453A.

Q 19: Why are hiring halls included in the list of organizations that must report new hire information?

A 19: Hiring halls were included in the definition of employer to ensure that the employees of the hiring hall are reported to the SDNH. Hiring halls which refer individuals for jobs with employers, or other similar entities, are required to report for purposes of section 453A if they satisfy the definition of "employer" at section 3401(d) of the IRC. See prior question.

III. TIMEFRAMES FOR ENTERING AND PROCESSING NEW HIRE DATA

Q 20: What are the exact timeframes which the SDNH must meet for entering and processing new hire data?

A 20: Section 453A(e)-(g) lays out specific processing requirements for data in the SDNH.

Within five business days of receiving reports from employers, the SDNH must enter new hire reports from employers into its database.

Within two business days after the new hire data is entered into the SDNH: (1) the State must conduct a match between the social security numbers in new hire reports and in its State child support case registry; (2) the State must notify the Child Support Agency if a match occurs; and (3) if a matched employee's income is subject to wage withholding pursuant to section 466(b)(3), the Child Support Agency must generate and transmit a notice of wage withholding to the employer.

Within three business days after the new hire data is entered into the SDNH, new hire data must be furnished to the NDNH.

IV. REPORTING REQUIREMENTS

Q 21: What data elements are employers required to report to the SDNH?

A 21: Section 453A(b)(1) specifies that each employer (other than Federal government employers) shall furnish a report for each newly-hired employee which includes the following information: name, address, and social security number of the employee, and the name, address, and FEIN of the employer. The report must be sent to the SDNH in the State in which the newly-hired employee works, except in multistate employer situations. (See section V of the AT for provisions regarding multistate employers.) In the case of Federal government employers, the report must be sent directly to the NDNH.

Q 22: May States require employers to report more extensive information about newly-hired employees than the data specified under Federal requirements?

A 22: Yes. However, any requirement that employers report information beyond the six Federally-mandated data elements must be made under authority of State law. If States choose to require additional information, it may necessitate the filing of a separate report by employers since employers are given the option of complying with the Federally-mandated requirements by submitting a W-4 form. See also question 23.

Q 23: May States require employers to report new hires in less than twenty days after the date of hire?

A 23: Yes. Section 453A(b)(2) governs the timing for submittal of required reports. It states that "[e]ach State may provide the time within which the report required shall be made with respect to an employee, but such report shall be made (A) not later than 20 days after the date the employer hires the employee[.]"

Because Federal law allows each State to set the reporting period for employers, subject to Federal statutory limits, States have flexibility and may impose requirements more stringent than "within 20 days of hire," such as "within 5 days of hire." Allowing employers no more than 20 days after hiring to report the required information establishes a maximum allowable amount of time for employers to comply. If a State elects to allow 20 days, employers must transmit the information about a newly-hired employee at some point between the date of hire and 20 days thereafter. Certainly, an employer could report immediately or within a few days and not utilize the full range of 20 days.

Q 24: May States require employers to submit the Federally-mandated information on a form developed by the State?

A 24: No. The reporting format for employers to use in submitting information to SDNH is specified under Federal law. Section 453A(c) requires that reporting must "be made on a W-4 form or, at the option of the employer, an equivalent form" (emphasis added). Employers are given the choice to define an "equivalent form." Congressional intent was to provide employers maximum flexibility regarding the mechanism for submitting the new hire information. States are permitted to develop forms for employers to report Federally-mandated new hire data as long as it is clear that the use of such forms is optional.

Q 25: Where and how do employers send the information?

A 25: New hire reports should be sent to the SDNH in the State where the employee works or, in the case of a multistate employer, to the State which the employer has designated. Federal law identifies three methods for submitting new hire information: first class mail, magnetic tapes, or electronically. For employer convenience, States may offer additional options such as fax and Internet transmissions. Employers should receive information from their State with instructions on where and how to send the new hire information. (Federal employers must report new hire data directly to the NDNH.)

Q 26: If an employee has a foreign address, but the employer does not keep this information in its database, is it acceptable not to provide this information?

A 26: No. Section 453A(b)(1)(A) identifies the data elements that must be supplied in a new hire report as employee’s name, address and social security number, and employer’s name, address and FEIN. Employers must provide all required information. If the minimum information to enter the record onto the FPLS is not received, the record will be rejected.

Q 27: An employer has two (2) payroll offices, one in Oklahoma City and a smaller one in New York City, both of which have the same FEIN. Can both submit new hire reports? Should they both submit?

A 27: Federal law gives multistate employers two options for reporting new hire data. The information may be reported to the State in which the employee works or the employer may opt to report all newly hired employees to a single State in which the employer has employees. Whether both offices should submit is a decision for the employer to make.

Q 28: Is there a list of the job classes that should be excluded from reporting under Federal law?

A 28: The definitions of "employer" and "employee" are contained in section 453A(a)(2) of the Act. Under these definitions, Federal law does not require employers to report the hiring of independent contractors or subcontractors. However, some States may require independent contractors to report new hires. States will contact employers about specific reporting requirements. Similarly, if no legal relationship of employer and employee exists within the meaning of Chapter 24 of the IRC, Federal law does not require placement agencies or temporary agencies to report. Labor organizations are not required to report members simply as a result of membership status. Pursuant to section 453A(a)(2)(A)(ii), Federal or State agency employees performing intelligence or counterintelligence functions do not have to be reported if the agency head has determined that reporting could endanger the safety of the employee or compromise an ongoing investigation or intelligence mission. See question and answer 41 for additional information.

Q 29: What are acceptable means by which an employer can report magnetically or electronically, as allowed by section 453A of the Act?

A 29: There are several acceptable means by which an employer can report magnetically or electronically. Employers should check with each State to which they report to determine what the State is capable of accepting. The following are among the options:

1. The SDNH establishes and disseminates an Internet E-mail address that allows an employer to submit data either by creating and sending E-mail or by scanning and sending a W-4 or equivalent form.

2. The SDNH creates an interactive World Wide Web site that prompts an employer to key in W-4 data and then submit the data.

3. An employer sends the SDNH a floppy disk that contains the data.

4. An employer sends the SDNH a magnetic tape that contains the data.

5. An employer sends the SDNH a cartridge cassette tape that contains the data.

More information on magnetic or electronic reporting can be found in the NDNH Guide for Data Submission. You may obtain a copy of the guide by contacting the FPLS information line at (202) 401-9267.

Q 30: Should the employee’s W-2 State EIN be reported?

A 30: The Federal EIN is required under section 453A(b)(1)(A). However, the NDNH data specifications include an optional field on the W-4 input record for a State EIN. If a State reports the State EIN, this information will be stored in the NDNH.

Q 31: If an employer is reorganizing and merges under a new FEIN, will it be required to file new hire information on the employees acquired as a result of the merger under the new FEIN?

A 31: No. It is not necessary for the employer to file new hire reports on all employees acquired through a merger. The new FEIN information will be picked up by the FPLS when the employer makes its next quarterly wage report.

Q 32: The law refers to Chapter 24 of the IRC. Withholding for income tax purposes is not required for domestic and agricultural workers until a certain monetary threshold is met. Does this mean that a new hire report is not required until the monetary threshold is met?

A 32: No. The employee/employer relationship is the determining factor in the requirement to report an individual for new hire purposes, not whether the threshold for income tax withholding has been met. Section 453A(a)(2)(A)(i) of the Act defines an "employee" as an individual who is an employee within the meaning of Chapter 24 of the IRC. See question 13 for the definition of an employee for new hire purposes.

Q 33: Do Federal agencies and instrumentalities still need to report new hires to the States as well?

A 33: No. Section 453A(b)(1)(C) of the Act states that Federal government employers SHALL comply with the reporting requirements by reporting directly to the NDNH.

Q 34: Must an employer report an individual who is an alien working in the U.S.?

A 34: Yes, if the alien meets the definition of an "employee." (See Q13 above.)

Q 35: Must an employer report a newly hired individual who is a foreign national if the employee is working in the foreign nation for an employer based in the U.S.? If so, where should such an employee be reported?

A 35: Section 453A(b)(1)(A) requires an employer to report new hire information on an employee to the SDNH of the State in which the employee is working. If the employee is a foreign national working in a foreign nation, or if the employee was hired and is working in the foreign nation, the employee does not need to be reported. However, a newly hired employee who is merely on temporary assignment to a post or office outside of the U.S. would need to be reported to the State in which he or she will be working upon return from the temporary assignment. For cases involving other circumstances, the employer should look to the State law of the State in which the employee was hired or to which the employer reports as a multistate employer to determine whether the employee must be reported and, if so, the appropriate location for reporting.

Q 36: Are employers on Native American reservations and lands subject to the new hire reporting requirements?

A 36: No, unless the tribe has accepted the jurisdiction of the State for this purpose. There are several ways this can be accomplished. For example, a tribe can enter into an agreement with the State for the cooperative delivery of child support enforcement services, including reporting new hires to the SDNH. Under PRWORA, a tribe can operate its own IV-D system pursuant to section 455(f) of the Act. (However, to date no regulations for direct funding of tribes have been promulgated, and no tribes operate independent systems.)

Q 37: Federal law does not require entities to report the hiring of independent contractors. If a State has nevertheless enacted a law requiring employers to report not only newly hired employees but also independent contractors, must a multistate employer that has employees and independent contractors in that State report the independent contractors to the State even if the employer has designated another State to which it will report its newly hired employees?

A 37: No. For purposes of new hire reporting for child support, a multistate employer that designates one State in which the employer has one or more employees to which the employer will transmit new hire reports is bound by the new hire reporting requirements of the State to which the employer chooses to report. Thus, if an employer has employees in State A and State B and chooses to designate State A as the State to which the employer will transmit the reports, the employer is bound by the requirements of State A. The employer is not required to report independent contractors to State B if State A does not require such reporting, even if State B has gone beyond the Federal law to require the reporting of independent contractors.

Q 38: Can a State require a multistate employer to report to it even though that employer has chosen to do its reporting to another State?

A 38: Once an employer has designated itself as a multistate employer and notified the Secretary of DHHS of the State to which it chooses to report pursuant to section 453A(b) of the Act, other States can not require the employer to report to them for child support enforcement purposes. However, Federal law does not prohibit a State from passing a law requiring employers to report new hires for a purpose other than child support, i.e., unemployment compensation.

Q 39: Are college or university employers required to report students who may be on a work/study program at the university? What about international students on the same program?

A 39: Employers must report anyone who meets the definition of an employee within the meaning of Chapter 24 of the IRC.

Q 40: Should new hire information be reported on a person who has just been hired, but who is going through training or in their probationary period? If an employee returns to work following a break in service, is he or she considered a newly hired employee?

A 40: If a person has been hired or rehired and a legal employee/employer relationship exists (see Q13), a report must be filed. The probationary nature of the employment, or the fact that the employee was previously employed by the same company and rehired, does not negate the need to report.

Q 41: What is the intent of the new hire reporting exemption for employees of Federal or State agencies performing intelligence or counterintelligence functions?

A 41: Section 453A(a)(2)(A)(ii) provides an exemption to new hire reporting for an employee of a Federal or State agency performing intelligence or counterintelligence functions "if the head of such agency has determined that reporting [new hires] ... could endanger the safety of the employee or compromise an ongoing investigation or intelligence mission." The intent is to provide a discretionary test for the heads of Federal or State agencies engaged in intelligence or counterintelligence activities to determine if the reporting of a newly hired employee is appropriate given the criteria stated in section 453A(a)(2)(A)(ii). This exemption applies only to Federal or State employees and is not applicable to local or county employees.

**Q 42: Do work experience participants under the Job Training Partnership Act (JTPA) need to be reported as new hires?

**A 42: Section 453A(a)(2)(A)(i) of the Act defines an "employee" as an individual who is an employee within the meaning of Chapter 24 of the IRC. Based on consultation with the Internal Revenue Service, it is our understanding that JTPA participants meet the common law standard of "employee" and would need to be reported for new hire reporting purposes. Please consult with the IRS for further information.

**Q 43: Some States require an additional data element such as a UI ID number or a State EIN for their new hire reporting. When a new business opens and must submit all its employees for new hire, the business does not have this required data element yet. Waiting to get the number will make the reports later than 20 days after the date of hire. What should the employer do?

**A 43: The employer should submit all other data elements and the State should forward required data elements to the NDNH. While it is acceptable to require additional data elements for State use, the required data must be submitted to the NDNH within the statutory timeframes.

V. MULTISTATE EMPLOYERS

Q 44: What are the requirements for multistate employers to report new hires?

A 44: Section 453A(b)(1)(B) provides multistate employers with an exception from reporting that is intended to simplify the reporting of new hires (specified in section 453A(b)(1)(A)). A multistate employer is defined as an employer who has employees in two or more States and who transmits reports magnetically or electronically. Multistate employers have the option to report all new hires to a single State, chosen by the employer, in which the employer has employees. To exercise this option, Federal law requires that multistate employers notify the Secretary of Health and Human Services in writing as to the employer's chosen State.

Q 45: The law states that a multistate employer can designate one State in which the employer has employees to which the employer will transmit the report. Can a multistate employer designate more than one State in which to report? Can a company opt to report most new hires to one central location but continue to have some local offices report to individual States?

A 45: No. Section 453A(b)(1)(B) allows multistate employers the option to "designat[e] one State" for submitting new hire reports. Multistate employers may exercise the option of reporting all new hires to one designated State, or under section 453A(b)(1)(A) report new hires to the respective States in which employees are working.

Q 46: How will States know where a multistate employer has chosen to report?

A 46: Section 453(i)(4) requires the Secretary of Health and Human Services to maintain within the NDNH a list of multistate employers that are exercising the option to report to one State and the State to which the employer is reporting. OCSE sends that list to each SDNH on a monthly basis.

Q 47: What are the criteria for a multistate employer to choose one State for reporting new hires?

A 47: Section 453A (b) (1) (B) of the Act allows an employer that has employees in two or more States and that transmits reports magnetically or electronically to comply with the new hire reporting requirements by designating one State in which the employer has employees and transmitting all new hire reports to such State. The multistate employer must notify the Secretary of Health and Human Services of its selected State. This can be accomplished by mailing notification to:

Department of Health and Human Services
Multistate Employer Registration
Office of Child Support Enforcement
Box 509
Randallstown, MD 21133

The notification should include the employer’s name, address, FEIN, and phone number, as well as the States in which the employer has employees and a corporate point of contact.

If your company will be reporting new hires on behalf of your subsidiaries who operate under different names and FEINs, please also list the names, FEINs, and States where they have employees working.

OCSE has received approval from the Office of Management and Budget, under the Paperwork Reduction Act, to publish and distribute an optional form which may be used by multistate employers to make their reports to the Secretary. The form is attached as Appendix I. Also, the form can be downloaded from OCSE's website at: /program/cse.

Q 48: If an employer chooses to transmit reports magnetically or electronically, what are the time frames within which the employer must transmit the reports to the SDNH?

A 48: Section 453A provides that:

"[e]ach state may provide the time within which the report required...shall be made with respect to an employee, but such report shall be made not later than 20 days after the date the employer hires the employee; or in the case of an employer transmitting reports magnetically or electronically, by 2 monthly transmissions (if necessary) not less than 12 days nor more than 16 days apart."

For magnetic or electronic reports, the report must be submitted by two (2) monthly transmissions (if necessary) not less than twelve nor more than sixteen days apart. The outside date wherein magnetic or electronic reports can be received for a new hire is no later than the next semimonthly period. It is our understanding that Congressional intent was to encourage electronic and magnetic reporting by tying new hire reporting to the normal payroll cycle. Our interpretation thus requires the employer to transmit new hire reports as soon as possible after the date of hire, but no later than the next semimonthly period following the date of hire.

Q 49: May the parent company of four subsidiary companies in various States report to one designated State for all subsidiary companies under one report?

A 49: If the parent company and the employees meet the legal definition of employer/employee, then the parent company, as a multistate employer, may choose to report the subsidiaries’ employees for purposes of new hire reporting to one designated State, after notifying the Secretary of DHHS.

Employers electing to report their subsidiaries under one report should be aware that the address submitted in the report is the address to which income withholding notices will be sent. There is an optional data element allowing a second address to be reported for income withholding purposes. If the employer does not provide this second address, all income withholdings will be sent to the employer address (the W-4 address).

Q 50: What constitutes separate employer status for designation of a multistate employer? Can a company that "belongs" to another company with which they share an FEIN choose to report as a multistate employer even if the rest of the "family" of companies does not?

A 50: No, a single decision should be made as to whether companies within the same "family" of companies which share an FEIN will report individually or together. Regardless of whether the company chooses to report all together or separately, the company must ensure that all new employees are reported, and avoid duplication. In addition, the report made on any employee must be specific enough for the child support agency to identify the employee’s work location, in order to facilitate locating the individual.

Q 51: When may multistate employers begin reporting to one State?

A 51: Multistate employers had the option to begin reporting to one State as of October 1, 1997 (the effective date for new hire reporting under section 453A(a)), except where the State the employer wished to designate was not able to accept multistate reports. In such a case, multistate reporting would begin on the date that the State they wish to designate becomes able to accept multistate reports. As of the date of issuance of this AT, all States must accept multistate reports. Prior to beginning to report to only one State, a multistate employer must notify the Secretary of Health and Human Services of its choice. (See Q44)

Q 52: Can a State require a multistate employer to notify the State as to which State the employer has chosen to report to?

A 52: No. Section 453A(b)(1)(B) only requires the employer to notify the Secretary. However, OCSE sends a monthly list to the SDNH of multistate employers and where they report.

**Q 53: If a multistate employer chooses to report all of its employees to State A, which requires the reporting of all independent contractors, then must the multistate employer report all independent contractors it hires, even the independent contractors hired in States B, C, D, & E (where the new hire laws do not require reporting of independent contractors)?

**A 53: Yes, the employer must follow the rules of the State to which it reports for child support purposes for all the individuals it reports, wherever they were hired, even if it means additional reporting requirements.

If a State requires the reporting of independent contractors for some purpose other than child support, then they can still require employers to report to them for that purpose, even if they report elsewhere for child support purposes.

VI. PENALTIES

Q 54: Are there penalties for employers who do not report New Hires?

A 54: States have the option of imposing civil monetary penalties for noncompliance. Section 453A(d) of the Act provides that if a State chooses to impose a penalty on employers for failure to report, the fine may not exceed $25 per newly hired employee. If there is a conspiracy between the employer and employee not to report, the penalty may not exceed $500 per newly hired employee. States may also impose non-monetary civil penalties under State law for noncompliance.

Q 55: May States choose to impose penalties on employers for noncompliance which exceed the amounts provided in the statute?

A 55: No. Section 453A(d) gives States the option to choose to impose or not impose a penalty for noncompliance. It then sets the limits on the monetary penalties that the State may impose. Therefore, although the State has the option to have a penalty, if it chooses to do so, maximum amounts may not exceed those in section 453A.

Q 56: May States also provide for non-monetary civil penalties against an employer who fails to comply with the reporting requirements?

A 56: Yes. Although the statute provides maximum amounts for States electing to use the civil monetary penalties, it does not specifically preclude any other legal remedies available under State law for noncompliance. Thus, a State could impose a fine (civil monetary penalty), but also provide for another sanction so long as the maximum financial penalty imposed for the failure to report does not exceed $25.00 (or $500.00 in the case of a conspiracy).

Q 57: How is the penalty to be applied 151 per employer, per employee, per report, per reporting period?

A 57: The penalty is to be imposed for each new employee that the employer fails to report. See section 453A(d).

Q 58: What are the penalties for unauthorized use of State new hire data?

A 58: The penalties against individuals for unauthorized use of new hire data are dependent upon State law and policy. Section 454(26) of the Act requires that the State IV-D plan have safeguards for confidential information. Section 454A(d) provides that the State must have an information integrity and security plan in place for its automated system, which must lay out penalties up to and including dismissal for improper handling of information. If the State does not have these in place, it risks disapproval of its State plan and loss of all Federal IV-D funding.

VII. ACCESS TO DATA

Q 59: Are State Employment Security Agencies (SESAs) authorized under the legislation to have access to the Federal employer data in the NDNH?

A 59: No. Access to data in the NDNH is limited to those entities, and subject to the safeguards, listed in section 453(i) and (j).

Section 453(i)(3) provides the Secretary of the Treasury with access to information in the NDNH for the purpose of administering section 32 of the IRC or the advance payment of the earned income tax credit under section 3507 of the IRC and verifying a claim with respect to employment in a tax return.

Section 453(j)(4) provides the Commissioner of Social Security with access to all information in the NDNH.

Section 453(j)(5) gives the Secretary of Health and Human Services the discretion to provide researchers with access to the new hire data (reported by employers pursuant to section 453A(b)) for research efforts that would contribute to the IV-A (Temporary Assistance for Needy Families) or IV-D (Child Support Enforcement) programs. Any new hire data provided to researchers will not include personal identifiers.

Section 453(j)(3) directs the Secretary, to the extent and with the frequency that she determines necessary, to conduct data comparisons among different components of the FPLS to facilitate the administration of the Title IV-A and IV-D programs and to disclose information to IV-A and IV-D State agencies.

Q 60: Can a SESA have access to SDNH information in its own and other States?

A 60: Yes. Section 453A(h)(3) provides that "State agencies operating employment security...programs shall have access to information reported by employers pursuant to subsection (b) [employer information] for the purposes of administering such programs."

Q 61: The law specifies that new hire information in the SDNH can be shared with SESAs and State agencies administering Income and Eligibility Verification System programs. Can new hire data be shared with other State agencies to assist fraud detection efforts?

A 61: Section 453A(h) specifies that the new hire reports submitted to the SDNH by employers required under section 453A(b) shall be made available to: (1) State agencies responsible for administering Income and Eligibility Verification System programs specified in section 1137(b) of the Act for the purpose of verifying program eligibility; and (2) State agencies operating employment security and workers' compensation programs for the purposes of administering the programs.

Whether or not the State may share new hire reports with other State agencies depends on the location of the SDNH and whether the operation of the SDNH is part of the statewide automated data processing and information retrieval system required pursuant to section 454(16) of the Act. Where the SDNH is located within the State Child Support Agency, any disclosure of information will have to be in accordance with the safeguards established under section 454(26). If the SDNH is established or operated as part of the statewide automated data processing and information retrieval system, any disclosure of information would have to be in accordance with the safeguards established under section 454A(d). If the SDNH is not located within the State Child Support Agency and is not established or operated as part of the statewide automated data processing and information retrieval system, Federal law would not restrict States from passing laws to expand access to SDNH reports to other State agencies.

Q 62: Will a specific State agency be required to provide the quarterly wage and unemployment compensation data to the NDNH, and which agency will be held accountable if the data is not provided?

A 62: The regulations in 45 CFR 303.108 do not specify a specific State agency that must furnish the quarterly wage and unemployment compensation claim information to the NDNH, but only that it must be furnished by the State.

Section 313 of PRWORA also added a new IV-D State plan requirement, section 454(28), which mandates that States operate a SDNH in accordance with section 453A of the Act. Therefore, the State child support enforcement agency must ensure that the SDNH, regardless of where the SDNH is located, meets all Federal requirements, including quarterly wage and unemployment compensation data reporting requirements.

Section 453A(g)(2)(B) specifies that the SDNH is required to furnish certain quarterly wage and unemployment compensation claim information to the NDNH. The SDNH must furnish the data at such time, in such format, and with the information, specified by the Secretary of Health and Human Services in regulations.

The required data elements for quarterly wage are: employee name, SSN, and aggregate wages for the quarter and employer name, address and FEIN. The required data elements for unemployment compensation reporting are: whether the individual is receiving, has received or has applied for unemployment compensation, the individual’s name, SSN, address, and the aggregate gross amount of compensation received in the quarter. The timeframes for reporting are as follows: for quarterly wage, reports must be made by the end of the fourth month following the reporting period, and for unemployment compensation, reports must be made by the end of the first month following the reporting period. Accordingly, the State IV-D agency will be held accountable if the data is not submitted as required.

In addition, section 316(g) of PRWORA contained two other amendments relating to wage and unemployment compensation reporting. The first amended section 3304(a)(16) of the IRC (26 U.S.C. 3304(a)(16)) to add a new subparagraph (B) which requires the agency administering the State unemployment compensation law to provide wage and unemployment compensation information from the agency's records to the Secretary of HHS as specified in regulations. The second amended section 303(h) of the Act to require the agency administering the State unemployment compensation law to disclose quarterly to the Secretary of HHS wage and claim information from the agency's records as required by section 453(i)(1). Furthermore, pursuant to section 303(h)(3) whenever the Secretary of Labor, after reasonable notice and opportunity for hearing, finds that there is a failure to comply substantially with the requirements of quarterly wage and claim disclosure under section 303(h)(1), the Secretary of Labor shall notify the State agency that further payments will not be made to the State until the Secretary of Labor is satisfied that there is no longer any such failure. Until the Secretary of Labor is so satisfied, the Secretary of Labor shall make no future certification to the Secretary of Treasury with respect to the State.

Q 63: Can the State grant on-line access to the SDNH to the clerks of court?

A 63: States may establish policies and procedures for utilizing SDNH data for IV-D cases. Clerks of court under cooperative agreement with the IV-D agency to provide services to IV-D cases could be permitted access to SDNH data for IV-D program purposes only.

Q 64: Can non-custodial parents get locate information from the FPLS for purposes of enforcing custody or visitation orders? If so, what is the procedure?

A 64: No. Although FPLS information is available under section 463 of the Act for the purposes of enforcing custody or visitation orders, the only parties authorized to receive this information for these purposes are agents or attorneys of a State with the authority or duty to enforce such orders, or a court with the authority to issue such an order. Non-custodial parents have no direct access to FPLS information for these purposes. However, the IV-D agency should advise noncustodial parents about the proper steps for submitting such requests for FPLS information.

Q 65: Will the IV-D agency be required to send out a disclosure notice to employers to let them know the uses of the information they are providing?

A 65: There is no Federal requirement to this effect, although there may be State laws that require it.

Q 66: May new hire information be used by the workers’ compensation program?

A 66: Section 453A(h)(3) of the Act provides that "State agencies operating employment security and workers’ compensation programs shall have access to information reported by employers pursuant to subsection (b) for the purposes of administering such programs."

Thus, the statute clearly provides for workers’ compensation State agencies to use the State new hire information. Workers’ compensation agencies would obtain access to the employer-reported information from the SDNH.

Q 67: May a State IV-D agency provide its SESA with access to data derived from matches conducted by the NDNH?

A 67: No. There is no authority for the State IV-D agency to redisclose this information for any non-IV-D purpose.

Q 68: Section 453(b) of the Act states that there shall be no disclosure "if disclosure of such information would contravene the national policy or security interest of the United States." Can this provision be interpreted to mean even if a Federal agency sends data on an employee to the NDNH, it is possible data would not be disclosed if the disclosure of the information could be harmful to the employee?

A 68: Information will not be disclosed which would contravene the national policy or security interest of the United States. The only other reason that disclosure would be prohibited is if the State has notified the Secretary that there is evidence of domestic violence or child abuse and disclosure would have been harmful to the custodial parent or the child of such parent. (See section 453(b)(2) of the Act and AT 98-27)

**Q 69: Many States have privatized parts of their child support enforcement programs. Is it allowable to disclose information contained in the SDNH to contractors operating a privatized portion of the State’s child support program?

**A 69: Section 453A(h)(1) of the Act, which deals with uses of new hire information, specifies that "the agency administering the State plan approved under this part shall use information received pursuant to subsection (f)(2) to locate individuals for purposes of establishing paternity and establishing, modifying, and enforcing child support obligations, and may disclose such information to any agent of the agency that is under contract with the agency to carry out such purposes." [emphasis added] Subsection (f)(2) states that:

when an information comparison conducted under paragraph (1) [a match conducted between the SDNH and the state case registry] reveals a match with respect to the social security number of an individual required to provide support under a support order, the [SDNH] shall provide the agency administering the State plan approved under this part of the appropriate State with the name, address, and social security number of the employee to whom the social security number is assigned, and the name and address of, and identifying number assigned under section 6109 of the Internal Revenue Code of 1986 to, the employer.

If a State contracts with an outside entity to perform certain functions or operate a portion of its child support program, the contract may create an agency relationship between the State and the particular outside entity. Where such an agency relationship is created, the cited statutory provisions make it clear that the contractor staff would be "authorized persons" and would have access to information obtained through the SDNH for child support enforcement program-related purposes. The State, however, remains responsible for ensuring that the required Federal and State privacy safeguards and disclosure limits are followed by the contractor. The State's contract must provide safeguards, both substantive and procedural, which ensure that the applicable safeguarding and disclosure requirements will be met and make clear that State retains ultimate authority over, and responsibility for, the work done by the contractor.

**Q 70: May employers have access to data in the SDNH and the NDNH to locate individuals with debts to private businesses?

**A 70: Information in or from the NDNH may not be released to employers to locate individuals. Section 453(l) of the Act states that "information in the Federal Parent Locator Service, and information resulting from comparisons using such information, shall not be used or disclosed except as expressly provided in [section 453]133" The NDNH is part of the Federal Parent Locator Service. There are no provisions in section 453 which would permit a State IV-D agency to re-disclose information received from the NDNH (including information resulting from automated data comparisons using data in the NDNH) to employers.

Section 454(26) requires a State IV-D agency to have in effect safeguards applicable to all confidential information handled by the State agency, that are designed to protect the privacy rights of persons involved in child support cases. Information contained in the SDNH would be considered confidential information handled by the State agency. Release to employers would constitute an unwarranted invasion of the privacy of such persons. In addition, if the SDNH is part of the statewide automated child support system, access to data in the SDNH would also be subject to the safeguarding provisions in section 454A(d) and the implementing regulations at 45 CFR 307.13. These provisions limit disclosure of information to purposes necessary to carry out the IV-D program and other specified purposes. Disclosures to employers would not constitute a disclosure necessary for carrying out the IV-D program and are not within the other purposes specified by the statute.

VIII. FUNDING

Q 71: Is enhanced FFP available for the development and operation of a SDNH?

A 71: Enhanced FFP is available for the development of a SDNH under certain circumstances. It is not available for the operation of the Directory.

Section 455(a)(3)(B), as added by section 344(b) of PRWORA, provides that Federal reimbursement at the 80% FFP rate is available for costs incurred by States for changes to their Statewide automated Child Support Enforcement (CSE) systems. If a State chooses to locate its SDNH within the Child Support Agency as part of its automated child support enforcement system, then the State may seek reimbursement for 80% of the system development costs to establish that Directory.

Section 453A of the Act requires States to implement a SDNH. However, Congress gave the States flexibility in where they locate the SDNH. There is no requirement that the SDNH be developed as an integrated part of the automated child support enforcement system. Therefore, the SDNH may be a separate unit that interfaces with a State's automated child support enforcement system. When the SDNH is developed under contract with an outside agency or organization, Federal funding at the 80% FFP rate is only available for costs associated with developing the necessary interface between the automated CSE system and the SDNH.

States should be aware that, pursuant to section 344(b)(2)(A) of PRWORA, there is a maximum aggregate amount of $400,000,000 available for enhanced funding for fiscal years 1996 through 2001.

Note: For more information, please see OCSE Action Transmittal 98-25 and 45 CFR 307.30 and 307.31.

Q 72: If the State legislature chooses to locate the SDNH in a SESA or another entity, will SESAs or other State agencies be reimbursed for their costs of operating the SDNH?

A 72: Section 455(a) authorizes the Secretary of the Department of Health and Human Services to pay Federal funds only to State Child Support Agencies for expenditures associated with the child support enforcement programs, including the SDNH.

If a State opts to establish and operate the SDNH outside of the statewide automated child support enforcement system, either at a SESA, other State agency, or with a private entity, then the Child Support Agency is eligible for reimbursement at the 66% rate for the costs it incurs in the development and ongoing costs for the SDNH.

In such cases, State Child Support Agencies must establish negotiated agreements with SESAs, other State agencies, or other organizations to provide reimbursement for only the child support-related costs associated with the SDNH. For example, where a State uses or also plans to use new hire data for detecting unemployment insurance fraud, it will be necessary to allocate costs in the negotiated agreement.

Q 73: How will States be reimbursed for the costs of transmitting new hire and quarterly wage and claim data to the NDNH?

A 73: Section 453(k)(2) authorizes the Secretary of the Department of Health and Human Services to reimburse costs incurred by the SDNH in furnishing new hire and quarterly wage and claim information to the NDNH.

Section 453(k)(2) authorizes the Secretary to provide reimbursement for transmission costs which "the Secretary determines to be reasonable (which rates shall not include payment for the costs of obtaining, verifying, maintaining, and comparing the information.)" The Office of Child Support Enforcement will work directly with each SDNH to determine the appropriate costs for furnishing the data to the NDNH.

In addition, section 453(g) authorizes the Secretary to provide reimbursement for data transmission costs incurred by Federal and State agencies in furnishing information requested by the Secretary. Section 453(g) ensures that transmission costs incurred by State Employment Security Agencies in reporting requested quarterly wage and unemployment compensation claim data to the Secretary will be reimbursed. Similar in language to section 453(k)(2), section 453(g) authorizes the Secretary to provide reimbursement for transmission costs which "the Secretary determines to be reasonable payment for the information exchange (which amount shall not include payment for the costs of obtaining, compiling, or maintaining the information)."

Q 74: If a multistate employer with a large number of employees chooses to designate one State to which the employer will report and that State anticipates that its SDNH will incur considerable expenses to accommodate a substantial number of new hire reports, will an enhanced rate of FFP be available to the State?

A 74: No. Enhanced FFP is not available to a State that anticipates that its SDNH will incur considerable expenses to accommodate a substantial volume of new hire reports from multistate employers.

In accordance with OCSE-AT-96-10, the availability of an enhanced rate of FFP for new hire reporting purposes is limited to the following: costs incurred by States for changes to their Statewide automated systems when the State chooses to make its SDNH an integrated part of its automated system; and costs associated with the development of a necessary interface between the automated system and an outside organization in which the State may decide to locate its SDNH.

For more information, please see OCSE-AT-96-10, issued December 23, 1996.

Q 75: May a State assess a charge against multistate employers in other States who choose to report all their new hires to the State’s SDNH?

A 75: No. There is no legal authority for a State to charge multistate employers for complying with their reporting obligations.

Q 76: Is FFP available to a State for expenditures incurred in making payments to employers for submitting new hire reports to the SDNH?

A 76: No, as specified under section 453(k)(2) of the Act, the Secretary may reimburse SDNHs for costs in furnishing required new hire information to the Secretary in an amount which the Secretary determines to be reasonable payment. However, the statute explicitly provides that the "...rates shall not include payment for the costs of obtaining, compiling, or maintaining the information." Therefore, FFP is not available for costs incurred by States for paying employers to submit new hire reports, based on our interpretation that such payments would be for obtaining the information.

APPENDIX I

OMB Control No. 0970-0166
Expiration date: 11/30/00

MULTISTATE EMPLOYER NOTIFICATION FORM
FOR NEW HIRE REPORTING
(OPTIONAL FORM)

Federal law requires employers to furnish to the State Directory of New Hires of the State in which a newly hired employee works, a report that contains the name, address, and social security number of the employee, and the name, address and Federal Employer Identification Number (FEIN) of the employer (42 USC 653A(b)(1)(A)).

If you are an employer who has employees in two or more States AND you will transmit the required reports magnetically or electronically, Federal law allows you to comply with the new hire reporting requirement by exercising one of the following options (42 USC 653A(b)(1)(B)):

Option #1: Furnish the new hire report to the State Directory of New Hires of the State in which your
newly hired employee works; or

Option #2: Designate one State in which any of your employees works and transmit ALL new hire
reports to the State Directory of New Hires of that State.

                             If you select Option #2, you must notify the Secretary of the U.S. Department of Health
                             and Human Services in writing of your choice to report to only one State and identify the
                             chosen State (42 USC 653A(b)(1)(B)). The purpose of this optional form is to provide
                             a convenient means for such notification. Multistate employers may also notify the
                             Secretary by letter, fax machine, or Internet. (see the last page for further instructions).

1. Federal Employer 2. Date: ___/___/_____
Identification Number(FEIN): _______________________

3. (FEIN)Employer Name: _____________________________________________________

4. (FEIN)Employer Address: ___________________________________________________

___________________________________________________

City: _____________________ State:___ Zip: ____________

5. (FEIN)Phone Number: ( )

6. SUBSIDIARY INFORMATION:

FEIN: __________________ FEIN: ____________________

Name: __________________ Name: ____________________

State/ZIP ______________ State/Zip: _______________

OMB Control No. 0970-0166
Expiration date: 11/30/00

7. Please enter the two-character abbreviation for the State, U.S. territory, or U.S.
possession to which you will be submitting W-4 New Hire Data. The State that you
designate must be a State in which you have one or more employees. (See State List below).

7a. Effective Date: ___/___/___

8. Please CIRCLE the two-character abbreviation for any other States, U.S. territories, or U.S. possessions that corresponds to your employees’ principal place of employment. Do not include the entry in Item 7 above.

AK=Alaska	GA=Georgia	MA=Massachusetts	ND=N. Dakota	PA=Pennsylvania	VT=Vermont
AL=Alabama	GU=Guam	MD=Maryland	NE=Nebraska	PR=Puerto Rico	WA=Washington
AR=Arkansas	HI=Hawaii	ME=Maine	NH=New Hampshire	RI=Rhode Island	WI=Wisconsin
AZ=Arizona	IA=Iowa	MI=Michigan	NJ=New Jersey	SC=S. Carolina	WV=W. Virginia
CA=California	ID=Idaho	MN=Minnesota	NM=N. Mexico	SD=S. Dakota	WY=Wyoming
CO=Colorado	IL=Illinois	MO=Missouri	NV=Nevada	TN=Tennessee
CT=Connecticut	IN=Indiana	MP=Marianas	NY=New York	TX=Texas
DC=Dist. Of Col.	KS=Kansas	MS=Mississippi	OH=Ohio	UT=Utah
DE=Delaware	KY=Kentucky	MT=Montana	OK=Oklahoma	VA=Virginia
FL=Florida	LA=Louisiana	NC=N. Carolina	OR=Oregon	VI=Virgin Islanda

9. Contact Name: ______________________________

Title: ______________________________

Phone: ______________________________

Email: ______________________________

Fax: ______________________________

Signature of Person
Completing this form:_______________________________________________________

______________________________________________________________________________________
THE PAPERWORK REDUCTION ACT OF 1995

Public reporting burden for this collection of information is estimated to average 3 minutes per response, including the time for reviewing instructions, gathering and maintaining the data needed, and reviewing the collection of information.

An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number.

OMB Control No. 0970-0166
Expiration date: 11/30/00

NOTE: COMPLETE THIS FORM ONLY IF YOUR COMPANY HAS EMPLOYEES IN MORE THAN ONE STATE AND YOU CHOOSE TO REPORT ELECTRONICALLY OR MAGNETICALLY TO ONLY ONE STATE.

INSTRUCTIONS FOR COMPLETING THIS FORM:

Item 1. Enter your company’s Federal Employer Identification Number. This is the number used
by the IRS to identify your company.

Item 2. Enter today’s date in MM/DD/YYYY format, e.g., 09/23/1997.

Item 3. PRINT your company’s name. This is the name associated with the FEIN in Item 1.

Item 4.     PRINT your company’s address, including city, State, and zip code. This is the address
                associated with the FEIN in Item 1. If your company’s FEIN address is a foreign address,
                PRINT the two-character Country Code, the Country Name, and the Country Zip Code.

Item 5. Enter your company’s phone number, including area code. This is the phone number
associated with the FEIN in item 1.

Item 6.     Enter the FEIN the name, state, and zip code of any subsidiaries, divisions, autonomous
                operating units, etc. of your company that have their own FEIN and for whom you will be
                reporting New Hire W-4 information. If there are more than two entries, please list the
                others on a separate piece of paper.

Item 7.     PRINT the two-character abbreviation for the State, U.S. territory, or U.S. possession to
                which your company has chosen to report New Hire W-4 information. . Note: The State
                that you designate must be a State in which you have one or more employees. Refer to the
                State listing shown on the form.

Item 7a. Enter the effective date (MM/DD/YYYY) on which your company will begin sending
New Hire W-4 information to the entry shown in Item 7.

Item 8.     If your company has employees in States, U.S. territories, or U.S. possessions other than
                the entry shown in Item 7, CIRCLE the applicable two-character State abbreviations
                shown in the State list

Item 9.     PRINT your name, title, work phone number (if different from the Company phone
                number entered in Item 5), work Email address, and work fax address. BE SURE TO
                SIGN THE FORM. The information in this Item is used to acknowledge receipt of
                your notification and to contact you if any clarification is needed.

Send the completed form to: OR Fax the completed form to:

Department of Health and Human Services              Department of Health and Human Services
Administration for Children and Families                  Administration for Children and Families
Office of Child Support Enforcement                         Office of Child Support Enforcement
Multistate Employer Notification                               Multistate Employer Notification
P.O. Box 509                                                                1-410-277-9325
Randallstown, MD 21133

If you need assistance in completing this form, call 1-410-277-9470 (9:00 a.m. 150 5:00 p.m. EST); for general information, call 1-202-401-9267.