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COMMENT DUE DATE:  

July 6, 2010

DATE: 

June 17, 2010

Tammy Hall  OCSS  (405) 522-0022

Dena Thayer  PMU Programs Administrator  (405) 521-4326

Nancy Kelly  PMU  (405) 522-6703

RE:  

APA WF 10-10

It is very important that you provide your comments regarding the DRAFT COPY of policy by the comment due date. Comments are directed to *STO.LegalServices.Policy@okdhs.org

The proposed policy is  Emergency .  This proposal will go to the Commission meeting on

CHAPTER 25. Oklahoma Child Support Services

Subchapter 5. Operational Policies

Part 25. Federal Offset Programs

340:25-5-215 [INSTRUCTIONS TO STAFF ONLY AMENDED]

Part 39. Accounting and Distribution

340:25-5-351 [AMENDED]

(Reference APA WF 10-10)

 

SUMMARY:The proposed revision to Subchapter 5 of Chapter 25 amends the rule to help offset budget shortfall by retaining interest collections assigned to the State of Oklahoma which are currently being passed through or paid to custodial parents.

Substantive changes.

OAC 340:25-5-215 Instructions to Staff are revised to: (1) remove obsolete Instructions to Staff (ITS) on how federal income tax intercepts are applied and distributed; and (2) removes ITS language that required all interest debt be referred to the Internal Revenue Service intercept program as custodial parent debt and not state debt.

OAC 340:25-5-351 is revised to allow that interest on assigned child support be retained by the state of Oklahoma. This change provides additional funding which will help alleviate budget shortfalls.

EMERGENCY APPROVAL:Emergency approval is requested as OKDHS finds compelling public interest to offset the budget shortfall by increasing state-retained interest collections as soon as possible, including those collections made from federal tax refund offset.

LEGAL AUTHORITY:Commission for Human Services, Article XXV, Section 2 and 4 of the Oklahoma Constitution; Section 6402(c) of Title 26 of the United States Code; Section 285.3 of Title 31 of the Code of Federal Regulations; Sections 654, 657, and 664 of Title 42 of the United States Code; Sections 302.33, 302.60, and 303.72 of Title 45 of the Code of Federal Regulations; Section 302.60 of Title 45 of the Code of Federal Regulations; Section 114 of Title 43 of the Oklahoma Statutes; and Section 237 of Title 56 of the Oklahoma Statutes.

Rule Impact Statement

To:Dena Thayer, Programs Administrator

Policy Management Unit

From:Gary W. Dart

                  OCSS Director

Date:May 17, 2010

Re:CHAPTER 25. Oklahoma Child Support Services

Subchapter 5. Operational Policies

Part 39. Accounting and Distribution

340:25-5-351 [AMENDED]

(Reference APA WF 10-10)

Contact: Tammy Hall, Telephone:522-0022

A.Brief description of the purpose of the proposed rule:

Purpose.The proposed revision to Subchapter 5 of Chapter 25 amends the rule to help offset budget shortfall by retaining interest collections assigned to the State of Oklahoma which are currently being passed through or paid to custodial parents.

Strategic Plan impact. The proposed rule revision achieves OKDHS goals by retaining available financial resources that allow Oklahoma Child Support Services (OCSS) opportunities to continue improving outcomes for children which ultimately assist clients to become independent, employed, productive citizens.This additional revenue allows continued collection services which strengthen families and promote health care accessibility.

Substantive changes.

OAC 340:25-5-351 is revised to allow that interest on assigned child support be retained by the state of Oklahoma. This change provides additional funding which will help alleviate budget shortfalls.

Reasons. The proposed revision aligns OCSS rules with federal law that allows certain interest collections.

Repercussions.Failure to adopt these amended rules could result in a deficit shortfall for OCSS and the need to discontinue collection processes that will be cost prohibitive if the state continues to pass through these assigned interest collections.


Legal authority. Commission for Human Services, Article XXV, Section 2 and 4 of the Oklahoma Constitution; Section 6402(c) of Title 26 of the United States Code; Section 285.3 of Title 31 of the Code of Federal Regulations; Sections 654, 657, and 664 of Title 42 of the United States Code; Sections 302.33, 302.60, and 303.72 of Title 45 of the Code of Federal Regulations; Section 302.60 of Title 45 of the Code of Federal Regulations; Section 114 of Title 43 of the Oklahoma Statutes; and Section 237 of Title 56 of the Oklahoma Statutes.

Emergency approval.Emergency approval is requested as OKDHS finds compelling public interest to offset the budget shortfall by increasing state-retained interest collections as soon as possible, including those collections made from federal tax refund offset.

B.A description of the classes of persons who most likely will be affected by the proposed rule, including classes that will bear the costs of the proposed rule, and any information on cost impacts received by the Agency from any private or public entities: The classes of persons most likely to be affected by the proposed rules are former Aid to Families with Dependent Children (AFDC) or Temporary Assistance for Needy Families (TANF) recipients who assigned their child support to OCSS.The affected classes of persons will bear no costs associated with implementation of the rules.

C.A description of the classes of persons who will benefit from the proposed rule: The classes of persons who will benefit are families who receive OCSS services. The proposed amendment helps avoid the need for eliminating OCSS services which promote a reliable source of support for the families we serve.

D.A description of the probable economic impact of the proposed rule upon the affected classes of persons or political subdivisions, including a listing of all fee changes and, whenever possible, a separate justification for each:This revision will affect custodial parents who were on AFDC or TANF and have assigned child support for the time period they received assistance.Currently all interest on child support, including the assigned child support, is distributed to the former AFDC or TANF recipient.The revision allows the state to retain the interest collected on assigned support.The majority of child support cases are non-public assistance cases, and this change does not affect them.

The probable costs and benefits to the Agency and to any other agency of the implementation and enforcement of the proposed rule, the source of revenue to be used for implementation and enforcement of the proposed rule and any anticipated effect on state revenues, including a projected net loss or gain in such revenues if it can be projected by the Agency:The probable benefit to OKDHS is an estimated increase in collections of $820,200. which will increase state retained collections revenue by an estimated $140,338.The cost of printing and distribution is estimated to be under $100. and is within the current budget and requires no additional funding.This proposal does not increase any agency duties or need for additional FTE.

F.A determination whether implementation of the proposed rule will have an impact on any political subdivisions or require their cooperation in implementing or enforcing the rule: The proposed rule does not have an economic impact on any political subdivision, nor will the cooperation of any political subdivisions be required in implementation or enforcement of the rules.

G.A determination whether implementation of the proposed rule will have an adverse economic effect on small business as provided by the Oklahoma Small Business Regulatory Flexibility Act: There are no anticipated adverse effects on small business as provided by the Oklahoma Small Business Regulatory Flexibility Act.

H. An explanation of the measures the Agency has taken to minimize compliance costs and a determination whether there are less costly or non-regulatory methods or less intrusive methods for achieving the purpose of the proposed rule:This rule revision is intended to minimize compliance costs and intrusive regulations while fully complying with state and federal mandates.There are no less intrusive or less costly methods of achieving full compliance.

I.A determination of the effect of the proposed rule on the public health, safety, and environment and, if the proposed rule is designed to reduce significant risks to the public health, safety, and environment, an explanation of the nature of the risk and to what extent the proposed rule will reduce the risk: Implementation of the proposed rule will bring the rule into compliance with state and federal child support enforcement mandates which will have a positive impact on the health, safety, and well-being of children entitled to support.

J.A determination of any detrimental effect on the public health, safety, and environment if the proposed rule is not implemented: Failure to implement the proposed rule could cause child support to not be collected by eliminating services that would otherwise benefit the welfare of children and be a reliable source of income to custodial persons.

K.The date the rule impact statement was prepared and, if modified, the date modified: Prepared May 17, 2010, Modified June 15, 2010.

SUBCHAPTER 5. OPERATIONAL POLICIES

 

PART 25. FEDERAL OFFSET PROGRAMS

340:25-5-215. Collection of past-due support from federal tax offset

(a) The Oklahoma Department of Human Services, through its Child Support Enforcement Division (CSED), requests collection of child support debts from federal income tax refunds.¢ 1This program is governed by:

(1) Section 664 of Title 42 of the United States Code; and

(2) Section 285.3 of Title 31, and Sections 302.60 and 303.72 of Title 45 of the Code of Federal Regulations.

(b) A custodial person receiving a payment under this program must return the payment if the Internal Revenue Service (IRS) makes an adjustment within six years following the end of the tax year for which the refund was paid.Any adjusted amount not returned by the custodial person is an overpayment and subject to recovery under Part 37 of this Subchapter.

(c) If an offset is made to satisfy non-TANF past-due support from a refund based on a joint return, CSED delays issuance of the funds for a period of time not to exceed six months from the notice of deposit.

(d) Collections received by a IV-D agency as a result of a federal income tax refund interceptmust be distributed as past-due support as required by Section 657 of Title 42 of the United States Code.¢ 2 through 4

 

INSTRUCTIONS TO STAFF 340:25-5-215

Revised

1.Collection from federal income tax refunds.

(1) Tax return information obtained through the federal Office of Child Support Enforcement (OCSE) must be safeguarded from unlawful use or disclosure in accordance with Internal Revenue Service (IRS) Publication 1075, Tax Information Security Guidelines for Federal, State, and Local Agencies, available from the IRS Web site at http://www.irs.gov/pub/irs‑pdf/p1075.pdf.

(2) See OCSE Policy Interpretation Question, PIQ-01-06, available from the OCSE Web site at http://www.acf.hhs.gov/programs/cse/pol/PIQ/2001/piq-01-06.htm, which clarifies the threshold amounts for federal income tax refund offset.

2.Collections from federal income tax refund intercepts must be distributed in accordance with the way the obligation type was referred to the Internal Revenue Service (IRS) for offset.

3.All interest debt is referred and distributed for IRS offset as arrears owed to the custodial person and not as a state debt.Child support staff must not apply interest collections from an IRS offset to state debt unless staff have been unable to locate the custodial person after reasonable efforts.

4.A case where all children are in active foster care does not have interest balances referred for an IRS offset.

PART 39. ACCOUNTING AND DISTRIBUTION

340:25-5-351. Allocation and distribution of collections

Revised 7-1-10

(a) Basis for allocation and distribution of collections.The Oklahoma Department of Human Services (OKDHS) distributes support collections received by the Centralized Support Registry for IV-D and non-IV-D cases.The collections are allocated and distributed according to Part A of Subchapter IV of Chapter 7 of Title 42 of the United States Code, and associated federal regulations and Oklahoma Statutes.This Section establishes allocation of collections across support orders involving multiple families and different types of support obligations.It also establishes high-level distribution policies.Actual distribution of money occurs under Section 657 of Title 42 of the United States Code after collections are allocated according to this Section.Oklahoma Child Support Services (OCSS) is also governed by Section 654 of Title 42 of the United States Code, Section 302.33 of Title 45 of the Code of Federal Regulations, and Section 237 of Title 56 of the Oklahoma Statutes in the collection of the annual fee.

(b) Annual fee.OCSS automatically collects an annual $25.00 fee once $500.00 support has been collected and issued to the custodial person.A case is exempt from this annual fee when the family is currently receiving or formerly received assistance under state or tribal Temporary Assistance for Needy Families (TANF) or Aid to Families with Dependent Children program.When there is more than one IV-D child support program involved, OCSS collects the annual fee on cases when Oklahoma is the initiating state.

(c) Overall priority of allocation and distribution.This subsection has priority over (d) through (i) of this Section.

(1) Oklahoma Child Support (OCSS) allocates payments from a collection action to satisfy amounts due under obligations included in the action.Income assignment orders, liens, administrative offsets, contempt actions, and license revocations are examples of collection actions.If OCSS receives a voluntary payment, OCSS honors designated payments from noncustodial parents who have multiple family obligations if payments are reasonably consistent with this Section.Otherwise, OCSS allocates voluntary payments to cases with court‑ordered obligations before cases without court-ordered obligations.

(2) In a non-IV-D case, OCSS allocates and distributes payments through the Centralized Support Registry directly to the obligee, without otherwise allocating or distributing payments under this Section, unless money was previously assigned to the State of Oklahoma.

(3) Except as provided for in (f) of this Section, OCSS applies arrearage collections owed to the custodial parent before paying conditionally or permanently assigned arrears owed to a state.

(4) OCSS applies payments to interest owed to a particular custodial person after current child support and the principal arrears balance is paid in full.All interest debt is referred and distributed for Internal Revenue Service (IRS) offset as arrears owed to the custodial person and not as a state debt or as assigned cash medical support.When OCSS has been unable to locate the custodial person after reasonable efforts; OCSS applies interest collections from an IRS offset to state debt.

(d) Initial allocation to monthly current support obligations.Except as provided in (f) of this Section, OCSS initially allocates collections to current support obligations due each month.

(1) If collections are less than the amount of all current support due, OCSS allocates collections between the current child support and the cash medical support specified in the order in proportionate shares.

(2) After the current child support and cash medical support obligation is met, OCSS allocates collections to current spousal support due.

(e) Allocation to monthly past-due support obligations under payment plans.Except as provided in (f) of this Section, after all current support obligations are met, OCSS allocates collections under payment plans to fixed monthly past-due support obligations.Payment plans are defined in Section 237.7 of Title 56 of the Oklahoma Statutes.

(1) If collections are less than the amount due under the payment plan, OCSS first allocates collections to past-due current child support.

(2) After the past-due monthly child support obligation is met, OCSS allocates collections to monthly past-due spousal support.

(3) OCSS allocates collections to the total amount in arrears after fixed monthly past‑due support obligations in the payment plan are met.

(f) Allocation and distribution to total amount in arrears.

(1) OCSS allocates federal income tax refund offset collections to the total amount in arrears and first applies these collections to any assigned arrearages, up to the total amount of unreimbursed assistance.Any remainder is then paid to the custodial person(s).

(2) Except for collections under a payment plan, OCSS allocates collections above the current support obligation to total arrears.

(3) After all child support arrearages are satisfied, OCSS allocates remaining collections to spousal support arrearages.

(g) Allocation and distribution of arrears to assigned cash medical support.After the past-due current child support, cash medical support, and spousal support are met, OCSS allocates collections to assigned cash medical support.

(h) Multiple family support orders.This subsection explains the allocation of collections when a noncustodial parent has multiple family obligations.For purposes of this Section, a family is a mother and a father and the child(ren) of that relationship, and any custodial person(s) of the child(ren) who is not the mother or the father.

(1) Current support.OCSS prorates and applies support collections to each family based on the current child support obligation due each family.The collections are allocated within each family obligation under subsection (d) of this Section.

(2) Past-due support under a payment plan.OCSS prorates and allocates collections to payment plans for multiple families based on each family's fixed monthly payment plan obligations due.

(3) Total arrears, including principal and interest balances.OCSS prorates and allocates collections to arrears, including principal and interest balances, for multiple families based on each family's total arrears due.

(i) Past-due support in interstate cases.In cases where OCSS is collecting support for a custodial person who is receiving services from another state’s child support agency, OCSS allocates arrearage payments based on information provided by the initiating state.After all current support obligations are met, OCSS allocates collections to past-due support for payment plans, total arrears, and interest as follows:

(1) Non-public assistance balance.If any portion of the past-due balance is owed to the custodial person or will be passed through to the custodial person under federal distribution regulations, OCSS allocates collections to that portion of the past-due balance and pays that amount to the other state’s State Disbursement Unit.

(2) Public assistance balances.If no portion of the past-due balance is owed to the custodial person, OCSS allocates collections first to balances owed to Oklahoma and then pro rates between balances owed to the other state(s).

(j) Interest.OCSS distributes interest last in single family, multiple family, and interstate cases.

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