INCOME WITHHOLDING

CS 748P Payor Fails to Withhold or Remit  

03/92 Revised 12/06/04 Training Completed 12/30/04

45 CFR 303.100; UCA 62A-11-406 and 407

 

Statutory Authority

 

Utah law located at Utah Code Annotated (UCA) 62A-11-407 states:
    “(1) (a) A payor is subject to the requirements, penalties, and effects of a notice served on the payor under Section 62A-11-406.
     (b) A payment of withheld income mailed to the office in an envelope postmarked within seven business days of the date the amount would have been paid or credited to the obligor but for this section satisfies Subsection 62A-11-406 (3).
     (2) (a) If a payor fails to comply with a notice served upon him under Section 62A-11-406, the office, the obligee, if an assignment has not been made under Section 35A-7-108, or the obligor may proceed with a civil action against the payor to enforce a provision of the notice.
     (b) In addition to a civil action under Subsection (2)(a), the office may bring an administrative action pursuant to Title 63, Chapter 46b, Administrative Procedures Act, to enforce a provision of the notice.
     (c) If an obligee or obligor brings a civil action under Subsection (2)(a) to enforce a provision of the notice, the obligee or obligor may recover any penalty related to that provision under Section 62A-11-406 in place of the office.
     (3) If the obligor's child support is owed monthly and the payor's pay periods are at more frequent intervals, the payor, with the consent of the office may withhold an equal amount at each pay period cumulatively sufficient to pay the monthly child support obligation.
     (4) A payor may combine amounts which he has withheld from the incomes of multiple obligors into a single payment to the office. If such a combined payment is made, the payor shall specify the amount attributable to each individual obligor by name and Social Security number.
     (5) In addition to any other remedy provided in this section, a payor is liable to the office, obligee, or obligor for costs and reasonable attorneys' fees incurred in enforcing a provision in the notice mailed or delivered under Section 62A-11-406.
     (6) Notwithstanding this section or Section 62A-11-406, if a payor receives an income withholding order or notice issued by another state, the payor shall apply the income withholding law of the state of the obligor's principal place of employment in determining:
     (a) the payor's fee for processing income withholding;
     (b) the maximum amount permitted to be withheld from the obligor's income;
     (c) the time periods within which the payor must implement income withholding and forward child support payments;
     (d) the priorities for withholding and allocating withheld income for multiple child support obligees; and
     (e) any term or condition for withholding not specified in the notice.”

Introduction

 

After a manual or automated “Notice to Withhold Income for Child Support” has been sent to the payor of income, the payor of income must send the withheld income to the Office of Recovery Services/Child Support Services (ORS/CSS) within seven business days of the date the non-custodial parent (NCP) is paid.  A payment mailed by the payor to CSS in an envelope postmarked within seven business days of the date the NCP is paid complies with this requirement.

 

CSS is authorized to proceed with an administrative and/or civil action against a payor to enforce a provision of the “Notice to Withhold” and obtain an administrative judgment against the payor for failure to honor the “Notice to Withhold” in accordance with the law.  CSS uses administrative procedures (described below) under the Utah Administrative Procedures Act (UAPA) when an instate payor of income fails to comply with the terms of a “Notice to Withhold.”  The objective is to collect unremitted funds due CSS from the payor by the most cost-effective method.

 

NOTE:  If you do not pursue the payor of income for the unremitted withheld funds, or you have attempted all legal remedies available (consult with your manager and the Attorney General Office on a case-by-case basis) to CSS with no success, the NCP (or the custodial parent {CP) on a Non-IV-A debt where the assignment of support rights has not been made) has the option of taking action against the payor for the withheld funds on his/her own by retaining a private attorney (see UCA 62A-11-407{2}{a}, quoted above).

 

Forms Overview

 

Reasons Not to Collect by Income Withholding

 

1.                  Payor fails to remit in a timely manner - A payor who remits withheld funds but does not remit in a regular and timely manner is a possible cause for terminating the “Notice to Withhold.”  Consult with your manager if you think there is good cause to terminate the notice and notify the NCP to pay CSS directly. 

 

2.                  Insufficient funds - If the payor submits more than one bad check and CSS has been unsuccessful in collecting on the bad check, you may terminate the “Notice to Withhold” and notify the NCP to pay the support directly to CSS.

 

3.                  Bankruptcy - If you receive notice that the payor of income has filed for bankruptcy, terminate the “Notice to Withhold” immediately and notify the NCP to pay the support directly to CSS.  If the payor withheld money from the NCP's income and failed to remit the funds to CSS, consult with the Attorney General’s Office (AGO). You may also attempt to negotiate a settlement with the NCP on all arrears, including the arrears for time periods the payor withheld and failed to remit.

 

If income withholding is not appropriate for one of the reasons listed above, code ORSIS to ensure no automated income withholding will take place on the case.  Remove the code when it is again appropriate to implement income withholding. Inform the NCP that s/he will be responsible for making timely payments to CSS. The NCP may set up automatic debt or credit card payments by contacting the ORS Employer/ Agency Customer Service Unit (EACSU) at 536-8333. 

 

Procedures for Employer Contact for Failure to Withhold or Remit

 

Prior to proceeding with administrative enforcement against the payor of income for failure to withhold or remit, complete the steps listed below.  You must document each step you take in the case narratives, including who you spoke with, details of the conversation, and what letter(s) was sent.  Maintain a copy of any letter(s) sent in the case file. 

 

1.                  Contact the Payroll Office.  Start with the payroll clerk.  Explain the law and payor penalties, and request compliance. Your initial contact may be a phone call or you may send one of the letters listed below.

a.                   Send the “Employer Letter for Failure to Withhold” if the employer is not withholding.

b.                  Send the “Withholding Letter to the Employer” if the employer is not remitting or is remitting after the 7 day timeframe.

 

2.                  Contact the Supervisor, Owner, or CEO.  If the payroll clerk is unresponsive, contact the payroll clerk’s supervisor, the owner of the company, or the company CEO, etc.  Thoroughly document in the case narratives the conversation and the name and title of the person with whom you spoke.  Set a self alert to monitor if the employer complies.

 

3.                  Serve the Notice to Withhold.  Manually generate a “Notice to Withhold” and have it served on the payor of income by certified mail.    Once service is complete, file the signed certified mail card with the “Notice to Withhold” in the case file or obtain proof of service from the United States Postal Service web site. 

Consider enforcement action.  If the payor still does not honor the “Notice to Withhold.”  Consult with your manager to determine if taking a sum-certain judgment and subsequent enforcement action would be cost effective.  The payor should have identifiable assets that might be attached, if necessary, to recover the judgment.  If you take a sum-certain judgment against the payor, it must be paid off in one lump-sum payment.  Do not accept payments for this type of debt.

NOTE:  If the payor threatens to dismiss the employee rather than comply, even if the payor says s/he will claim another reason for dismissal, document the precise conversation as much as possible in the case narrative.  If the employee is dismissed, refer the case, citing your documented conversation, to the AGO.

 

Procedures for Administrative Enforcement

 

If you have determined that attempting administrative enforcement action is appropriate, take the steps listed below.  NOTE:  If the payor of income is in another state and there is no registered agent in Utah, send an interstate referral to the payor’s state and ask the payor’s state to enforce the “Notice to Withhold.”

 

1.                  Verify the documentation of previous contacts with the employer.

 

2.                  Calculate the amount due from the employer, including penalties.

a.                   Failure to withhold.  If the payor willfully fails to withhold the requested amount of support, the payor is liable to CSS for $1,000 or the accumulated amount the payor should have withheld, whichever is greater.  To determine the amount that should have been withheld, calculate the amount the payor should have withheld from the NCP’s income as of the date the payor was served with the “Notice to Withhold.”

b.                  Failure to remit - If the payor fails to comply with the law by taking longer than seven business days to remit withheld income, the payor is liable to CSS for the accumulated amount the payor should have withheld and remitted, plus a late fee of $50.00 or 10% of the withheld income, whichever is greater, for each payment that is late, per the NCP.  To determine the amount that should have been remitted, calculate the amount the payor withheld but did not send based upon the best available information, e.g., pay stubs provided by the NCP that indicate support deductions that were not sent to CSS.

 

3.                  Prepare the “Notice of Agency Action: Failure to Withhold and/or Remit.”  Prepare a notice for the amount due from the employer, including penalties.  Have the notice signed by a Presiding Officer.  Prepare copies for the payor and the NCP, and keep the original in the case file.
 

4.                  Serve the “Notice of Agency Action.”  Serve the notice packet upon the registered agent or officer of the business.  If the business is incorporated, check with the Department of Commerce, Corporate Information Division, to obtain a list of corporate officers.  Serve the packet by certified mail.   Once service is complete, file the signed certified mail card with the “Notice to Withhold” in the case file.

5.                  Monitor employer’s response to “Notice of Agency Action.”  Upon service of the notice, the payor may do one of the following within 30 days or within an extension you authorize in writing:

a.                   pay in full according to the terms of the notice, as partial payments will not be accepted for this type of debt.  Do not issue an administrative order if the payor pays in full;

b.                  attend a conference with a Presiding Officer;

c.                   complete a telephone conference with a Presiding Officer;

d.                  mail or deliver relevant information to the Presiding Officer;

e.                   request an administrative hearing in writing; or,

f.                    do nothing.

 

NOTE: If the payor requests a hearing for failure to withhold, the Office of Administrative Hearings (OAH) will conduct the hearing.  A preliminary conference is not required.  Send the request directly to the OAH using the “Hearing:  Checklist.”  If the payor requests a hearing for failure to remit, dismiss the agency action using the “Dismissal of:  Notice of Agency Action” and refer the case to the AGO for a judicial hearing.

 

6.                  Prepare an administrative order.  If the payor has been served with the “Notice of Agency Action” and does not request a hearing, the Presiding Officer will prepare one of the following administrative orders:

a.                   “Stipulation and Order:  Failure to Withhold and/or Remit” if the payor participates by providing information in an adjudicative proceeding and agrees to the outcome.

b.                  “Order:  Participation, Failure to Withhold and/or Remit” if:

i.                     the payor participates;

ii.                   you cannot come to an agreement;

iii.                  the payor will not stipulate; and,

iv.                 the payor does not request a hearing within 30 days.

c.                   “Order:  Default, Failure to Withhold and/or Remit” if the payor does not participate or request a hearing within 30 days of service.

 

7.                  Abstract of administrative order.  Do not abstract the administrative sum-certain judgment with the court unless you take judicial enforcement action against the payor.  Maintain the original “Abstract of Award:  Failure to Withhold and/or Remit” that generates with the administrative order in the file in case judicial enforcement is needed at a later date. 

 

8.                  Load the order on ORSIS.   

 

9.                  Create posting instructions. 

 

10.              Monitor for employer compliance.  Set a self alert for 30 days to monitor if employer complies by paying the debt in full.

a.                   Payor pays in full.  Prepare a “Satisfaction of Judgment” if the payor has paid the judgment in full, particularly if the judgment has been abstracted in the district court.  Note in the case narrative if and when the sum-certain judgment is paid in full. 

b.                  Payor does not pay in full.  Review the case with the AGO for possible judicial enforcement actions against the payor.  If you can take judicial enforcement action against the payor, manually abstract the judgment with the district court in the county where the payor is located.  You may also abstract the judgment with the district court in the county where the payor’s real or personal property is located, if you have located property belonging to the payor. 

                                                                                                                          Procedures if Failure-to-Remit Actions are Unsuccessful

 

NCPs receive credit for support payments when the support payments are actually posted to the case, not simply because money is withheld from wages.  However, if failure-to-remit actions against the employer are ultimately unsuccessful, including all appropriate administrative and judicial remedies against the employer, CSS will attempt to resolve the problem with the parties on the case in the following ways.  

 

1.                  Determine if it is appropriate to terminate the NTW and have the NCP make automatic monthly credit card payments. 

 

2.                  IV-A Case:  Adjust the “AFDC" debt balances for the amount that was withheld from the NCP’s wages, but not remitted to CSS.  CSS will consider the pay stubs and/or other documentation provided by the NCP to be evidence that the NCP acted in good faith with the income withholding action. 

a.                   Obtain your manager’s approval prior to the adjustment.  Review the case and the actions taken with your manager to ensure that all appropriate remedies against the employer have been taken.

b.                  Complete the adjustment on ORSIS.

c.                   Create a detailed case-level narrative to document the reason for the adjustment.

d.                  Notify the NCP of the adjustment made.

 

3.                  Non-IV-A case:  Any money owed directly to the CP cannot be “forgiven” or settled without the CP’s consent. 

a.                   Contact the CP.  Discuss the non-remittance situation, explaining that CSS has documentation to prove that the NCP had the child support withheld from wages, but that the employer has failed to turn the payments over to CSS.  Explain the steps that CSS has taken to obtain the money from the employer.

b.                  Recommend possible solutions to the CP.  The CP may choose to forgive the unremitted payments, may agree to include them as part of a discounted settlement offer on all past-due balances, or may request CSS to collect all of the support due.  CSS may only recommend solutions; the decision must be made by the CP.

c.                   Document the results of your contact with the CP in the case narratives.

d.                  If the CP agrees to forgive the unremitted payments:

i.                     obtain that permission in writing and maintain it in the case file;

ii.                   complete the adjustment on ORSIS; 

iii.                  create a case-level narrative to document the reason for the adjustment; and,

iv.                 notify the NCP of the adjustment made.

e.                   If the CP agrees to a settlement, follow the CSS settlement procedures.

f.                    If the CP requests that CSS continue to collect the full amount of child support due, take the following steps:

i.                     Notify the NCP that CSS does not have the authority to “forgive” debts that are owed directly to the CP.  Inform the NCP of the actions already taken to resolve the issue in his/her behalf and remind the NCP that either parent still has the option of taking action against the payor for the withheld funds by retaining a private attorney.

ii.                   Continue with normal enforcement and collection activity.

 

4.                  Mixed IV-A and Non-IV-A cases:  If there are IV-A arrears on the case, adjust the “AFDC" debt balances for the amount that was withheld from the NCP’s wages, but not remitted to CSS.  If you are unable to adjust the “AFDC” debt for the full amount of the unremitted payments, follow the Non-IV-A procedures above for the remaining amounts.

 

Dismissal of Notice of Agency Action:  Failure to Withhold/Remit

 

The Presiding Officer may dismiss a “Notice of Agency Action” if the registered agent or officer of the business or their legal representative requests a dismissal due to:

 

1.                  a registered agent or officer of the business who was named and served the “Notice of Agency Action” provides information that the amount is not due or pays the amount before judgment is entered;

 

2.                  the order based on the “Notice of Agency Action” is set aside; or,

 

3.                  the respondent requested an administrative hearing and you decide to proceed judicially rather than continue with the administrative process.

 

The Presiding Officer dismisses the notice by completing a “Dismissal of Notice of Agency Action.”  Send a copy to either the registered agent or officer of the business and their legal representatives if one or both were represented by legal counsel.  Keep the original in the case file.