INCOME WITHHOLDING

CS 720 General Information

11/85 Revised 04/19/16 Training Completed 08/14/12

15 U.S.C. 1673(b), 42 U.S.C. 653a(g)(1) and 654a(g)(A)(i); 45 CFR 303.100; U.C.A. 62A-11-401 to 414 and 502; R527-300; AT-16-04

 

This section of policy contains information on the following items:

 

·         General Information

·         Federal Performance Standards

·         Income Withholding Categories

·         Income Subject to Withholding

·         Arrears Payment Included in Notice to Withhold

·         Questions and Answers

 

 

General Information

 

Each state must have procedures for withholding income as a means for collecting support from a non-custodial parent (NCP) against whom a support order is or has been issued, adjusted, or modified in the state.  Withholding must occur without the need for any amendment to the support order or any other action by the court or entity that issued the order, provided the case meets the criteria for income withholding.

 

You may not proceed with income withholding unless you have an administrative or judicial support order.  Proceed with income withholding after a Presiding Officer signs an administrative order or a judge signs a judicial order.

 

Federal Performance Standards – Audit Criteria

 

Federal law found at 42 U.S.C. 653a(g)(1) and 654a(g)(A)(i) requires states to transmit a Notice to Withhold to an employer within 2 business days of receipt of employment information from any source (e.g., State Directory of New Hire, National Directory of New Hire, Quarterly Wage, Unemployment Compensation, or other source) reported to CSS.

 

In addition, federal regulations found at 45 CFR 308.2(c)(3)(iv) state:

“(A) Two business days after the date information regarding a newly hired employee is entered into the State Directory of New Hires and in which an information comparison conducted under section 453A(f) of the Act reveals a match;

(B) Two business days after receipt of notice of, and the income source subject to withholding from a court, another State, an employer, the FPLS or another source recognized by the State.”

 

Information from another source would include information received from the NCP, custodial parent (CP), former employer, NCP’s relatives, another state agency, or any other employment source.  Employment information must be verified. 

 

CSS considers the 2-day time period to begin as of the date the employer information is verified and added to ORSIS, either automatically (State Directory of New Hire update) or manually.

 

Income Withholding Categories

 

U.C.A. 62A-11-403. Provision for income withholding in child support order — Immediate income withholding:

“(1) Whenever a child support order is issued or modified in this state the obligor's income is subject to immediate income withholding for the child support described in the order in accordance with the provisions of this chapter, unless:

(a) the court or administrative body which entered the order finds that one of the parties has demonstrated good cause so as not to require immediate income withholding; or

(b) a written agreement which provides an alternative payment arrangement is executed by the obligor and obligee, and reviewed and entered in the record by the court or administrative body.

(2) In every child support order issued or modified on or after January 1, 1994, the court or administrative body shall include a provision that the income of an obligor is subject to immediate income withholding in accordance with this chapter. If for any reason other than the provisions of Subsection (1) that provision is not included in the child support order the obligor's income is nevertheless subject to immediate income withholding.”

            

U.C.A. 62A-11-404. Office procedures for income withholding for orders issued or modified on or after October 13, 1990:

“(1) With regard to obligees or obligors who are receiving IV-D services, each child support order issued or modified on or after October 13, 1990, subjects the income of an obligor to immediate income withholding as of the effective date of the order, regardless of whether a delinquency occurs unless:

(a) the court or administrative body that entered the order finds that one of the parties has demonstrated good cause not to require immediate income withholding; or

(b) a written agreement that provides an alternative arrangement is executed by the obligor and obligee, and by the office, if there is an assignment under Section 35A-3-108, and reviewed and entered in the record by the court or administrative body.

(2) For purposes of this section:

(a) "good cause" shall be based on, at a minimum:

(i) a determination and explanation on the record by the court or administrative body that implementation of income withholding would not be in the best interest of the child; and

(ii) proof of timely payment of any previously ordered support;

(b) in determining "good cause," the court or administrative body may, in addition to any other requirement that it determines appropriate, consider whether the obligor has:

(i) obtained a bond, deposited money in trust for the benefit of the dependent children, or otherwise made arrangements sufficient to guarantee child support payments for at least two months; and

(ii) arranged to deposit all child support payments into a checking account belonging to the obligee or made arrangements insuring that a reliable and independent record of the date and place of child support payments will be maintained.

(3) An exception from immediate income withholding shall be:

(a) included in the court or administrative agency's child support order; and

(b) negated without further administrative or judicial action:

(i) upon a delinquency;

(ii) upon the obligor's request; or

(iii) if the office, based on internal procedures and standards, or a party requests immediate income withholding for a case in which the parties have entered into an alternative arrangement to immediate income withholding pursuant to Subsection (1)(b).

(4) If an exception to immediate income withholding has been ordered on the basis of good cause under Subsection (1)(a), the office may commence income withholding under this part:

(a) in accordance with Subsection (3)(b); or

(b) if the administrative or judicial body that found good cause determines that circumstances no longer support that finding.

(5) (a) A party may contest income withholding due to a mistake of fact by filing a written objection with the office within 15 days of the commencement of income withholding under Subsection (4).

(b) If a party contests income withholding under Subsection (5)(a), the office shall proceed with the objection as it would an objection filed under Section 62A-11-405.

(6) Income withholding implemented under this section is subject to termination under Section 62A-11-408.

(7) (a) Income withholding under the order may be effective until the obligor no longer owes child support to the obligee.

(b) Appropriate income withholding procedures apply to existing and future payors and all withheld income shall be submitted to the office.”

 

U.C.A. 62A-11-405.  Office procedures for income withholding for orders issued or modified before October 13, 1990:

“(1) With regard to child support orders issued prior to October 13, 1990, and not otherwise modified after that date, and for which an obligor or obligee is receiving IV-D services, the office shall proceed to withhold income as a means of collecting child support if a delinquency occurs under the order, regardless of whether the relevant child support order includes authorization for income withholding.

(2) Upon receipt of a verified statement or affidavit alleging that a delinquency has occurred, the office shall:

(a) send notice to the payor for income withholding in accordance with Section 62A-11-406; and

(b) send notice to the obligor under Section 62A-11-304.4 that includes:

(i) a copy of the notice sent to the payor; and

(ii) information regarding:

(A) the commencement of income withholding; and

(B) the opportunity to contest the withholding or the amount withheld due to mistake of fact by filing a written request for review under this section with the office within 15 days.

(3) If the obligor contests the withholding, the office shall:

(a) provide an opportunity for the obligor to provide documentation and, if necessary, to present evidence supporting the obligor's claim of mistake of fact;

(b) decide whether income withholding shall continue;

(c) notify the obligor of its decision and the obligor's right to appeal under Subsection (4); and

(d) at the obligor's option, return, if in the office's possession, or credit toward the most current and future support obligations of the obligor any amount mistakenly withheld and, if the mistake is attributable to the office, interest at the legal rate.

(4) (a) An obligor may appeal the office's decision to withhold income under Subsection (3) by filing an appeal with the district court within 30 days after service of the notice under Subsection (3) and immediately notifying the office in writing of the obligor's decision to appeal.

(b) The office shall proceed with income withholding under this part during the appeal, but shall hold all funds it receives, except current child support, in a reserve account pending the court's decision on appeal. The funds, plus interest at the legal rate, shall be paid to the party determined by the court.

(c) If an obligor appeals a decision of the office to a district court under Subsection (4)(a), the obligor shall provide to the obligee:

(i) notice of the obligor's appeal; and

(ii) a copy of any documents filed by the obligor upon the office in connection with the appeal.

(5) An obligor's payment of overdue child support may not be the sole basis for not implementing income withholding in accordance with this part.”

 

Income withholding is divided into two categories based on when the order was issued or modified.

 

1.                   Immediate Income Withholding - All orders enforced through IV-D Child Support Services, current or arrears, which were issued or modified on or after October 13, 1990 are subject to immediate income withholding. UCA 62A-11-403 extended the immediate income withholding provisions contained in 62A-11-404 to all support orders issued or modified on or after January 1, 1994, regardless of whether they are being enforced through IV-D child support services or through private action by the parties.  EXCEPTION:  Immediate income withholding is not applicable if the order includes an exception through a good cause finding or written agreement that prevents immediate income withholding. An exception may be negated without a modification of the order. 

 

2.                   Delinquency Based Income Withholding - All orders enforced through IV-D Child Support Services which were issued or modified before October 13, 1990 are subject to delinquency based income withholding, as per UCA 62A-11-405.  Initiate income withholding when the NCP has a delinquency equal to at least one month’s current support.  

 

NOTE: Advance notice procedures were eliminated from state law effective July 1, 1997. 

 

Income withholding policies and procedures also apply to arrears only cases. 

 

 

Income Subject to Withholding

 

The payor of income may be an employer or another source of income to a NCP. 

 

The maximum amount that may be withheld is set forth by the Consumer Credit Protection Act (CCPA) (Pub. L. § 303, 15 USC § 1673(b)), which allows for varying deductions depending on the NCP's circumstances and the amount of arrears due.  Current Support and Medical Support must be collected before an arrears payment.  Generally, income withholding for enforcement of child and medical support is limited to 50% of disposable income. However, if 50% of the NCP's disposable earnings do not meet the child and medical support obligation, you may withhold up to 65% of the NCP's disposable earnings if the NCP meets the criteria listed below.

 

1.            Criteria for 55% withholding:

a.                   the NCP is supporting a spouse or dependent child other than the child or spouse in this case;

b.                  the NCP has an arrears in an amount equal to at least 3 months current support; and

c.                   50% of the NCP's disposable earnings do not meet the current support and medical support obligation.

 

2.            Criteria for 60% withholding:

a.                   the NCP is not supporting a spouse or dependent child other than the child or spouse in this case; and

b.                  50% of the NCP's disposable earnings do not meet the current support and medical support obligation.

 

3.            Criteria for 65% withholding:

a.                   the NCP is not supporting a spouse or dependent child other than the child or spouse in this case;

b.                  the NCP has an arrears in an amount equal to at least 3 months current support; and

c.                   50% of the NCP's disposable earnings do not meet the current support and medical support obligation.

 

Verify the NCP's circumstances and obtain your manager's approval prior to issuing a “Notice to Withhold Income for Child Support” for more than 50% of the NCP's disposable income. 

 

If you issue a “Notice to Withhold” and are also enforcing the health insurance obligation, the total amount of the current support obligation and the NCP’s costs for the monthly insurance premium may not exceed the limits set by the CCPA.  Refer to the scenarios below.

 

EXAMPLE #1: You send a Notice to Withhold (NTW) for current support and an arrears payment of 50% of current and a National Medical Support Notice (NMSN).  The case facts are:

a.                   Medical insurance:  The NCP’s monthly expense for insurance for himself and the child is $180.  The child’s portion is $90, of which the NCP receives 50% credit = $45

b.                  Current support = $329 ($374 child support less $45 insurance credit)

c.                   Arrears payment = $187  ($374 x .50 = $187)

 

The NCP’s monthly gross income is $1,440.  After mandatory deductions (see #5 under “Definitions” above) there are disposable earnings of $1,051.20 (.73%).

NOTE:  use the NCP’s actual deductions if available.   This amount x .50 (CCPA limitation) = $525.60 available income for withholding.  Of this amount, CSS receives $345.60 (since $180 deducted for insurance premium).  $329 is applied to current support/insurance credit and $16.60 is applied to arrears ( = $345.60).

 

This case meets the requirements to pay current support and the insurance premium; therefore, do not determine if the case meets the criteria to increase the withholding to 55%, 60%, or 65%.  CSS will not receive the full arrears amount.

 

EXAMPLE #2: You send a Notice to Withhold (NTW) and include an arrears payment of 50% of current and a National Medical Support Notice  (NMSN).  The case facts are:

a.                   Medical insurance:  The NCP’s monthly expense for insurance for himself and the child is $100.  The child’s portion is $50, of which the NCP receives 50% credit = $25

b.                  Current support = $349 ($374 child support less $25 insurance credit)

c.                   Arrears payment = $187  ($374 x .50 = $187)

 

The NCP’s monthly gross income is $940.00.  After mandatory deductions there are disposable earnings of $686.20, x .50 (CCPA limitation) = $343.10 available income for withholding. Of this amount, CSS receives $243.10 (since $100.00 deducted for the insurance premium).  All of this must be applied to current.

 

This case does not currently meet the requirements to pay all of current support and the NCP’s cost for the insurance premium; therefore, determine if the case will meet the CCPA criteria to increase the withholding to 55%, 60%, or 65% in order to meet current support and the insurance premium.  Do not exceed the 65% cap.

 

NOTE:  CSS limits withholding of a NCP's SSA benefits to 25% if the SSA is the sole source of income and there is no current support due. 

 

If an employer receives multiple NTWs on the same NCP, the employer must comply with the law of the NCP’s work state in regard to how that state prioritizes income withholding and distribution. 

 

 

Arrears Payment Included in the Notice to Withhold

 

Federal regulations at 45 CFR 303.100 require that in addition to the amount to be withheld to pay the current month's obligation, the amount to be withheld must include an amount to be applied toward liquidation of arrears.  However, before you include an arrears payment in the Notice to Withhold, you must ensure that the NCP has had an opportunity to contest his/her arrears debt by checking that an “Annual Notice of Past-due Child Support” has generated on the case and at least 35 days have passed.  “Annual Notices” are generated each week on new cases and on existing cases that have become delinquent for the first time, if the qualifying criteria have been met.

 

EXCEPTION:  You may collect arrears by income withholding before the “Annual Notice” has been sent if the arrears have been reduced to a sum-certain judgment.  The “Annual Notice” is not a legal prerequisite when enforcing on arrears that have been included in a sum-certain judgment.  This is covered in state law within 62A-11-304.1.  Even if there is a sum-certain judgment, you may choose to send the “Annual Notice” if you are unsure as to whether the balance of the judgment is still owed.  For example, the case is new and the judgment is several years old.

 

If the NCP owes arrears that are not high enough to meet the automated “Annual Notice” criteria, and you want to collect these arrears by income withholding, you must contact the NCP by phone or letter and inform him/her of the arrearage amount.  If the NCP does not dispute the amount, you may collect the arrears by income withholding.  If the NCP disputes the amount, attempt to resolve the amount that is in dispute. You may also manually generate an “Annual Notice” to the NCP to notify him/her of the alleged arrears.  (You will need to create a self-alert for follow-up.) However, a manual “Annual Notice” will not result in coding ORSIS for automatic enforcement, nor will other automated enforcement actions take place on the case until such time the case qualifies for an automated “Annual Notice.”

 

 

Current Support Only Cases

 

If the NCP is current and is paid on a 26 or 52 pay period schedule, DO NOT send the withholding order for more than his/her ordered monthly child support pursuant to 45 CFR 303.100(a)(2 & 3) and AT-16-04 Correctly Withholding Child Support from Weekly and Biweekly Pay Cycles. 

 

For example, if the NCP is ordered to pay $400.00 per month for child support and he is paid on a 26 pay period schedule, the NTW may only be sent for $400.00 per month.  This means that ORS will not receive the full $400.00 current support amount most months and will create a small arrears balance. 

 

EXAMPLE: 

The total annual amount due and owing on this case would be 4,800.00 ($400.00 X 12 = $4,800.00).  The bi-weekly amount that should be withhold is $184.62 ($4,800.00 ÷ 26 pay periods = $184.62).  With bi-weekly withholding, ORS typically receives two payments each month which will total $369.24.  This will leave a current support balance due and owing of $30.76 each month.  The arrears balance will continue to accrue each month until the NCP is paid three times during the month.

 

NOTE:  Withholding an amount that is not based on the underlying child support order is inconsistent with federal law and regulations.  It is not acceptable to send the withholding order for more money each month than what the current monthly support obligation allows and the monthly amount required to satisfy arrears.