Just Whose Money is it Anyway?

November 1, 2000

Author: Susan C. Antos

A Guide to the Distribution of Child Support Arrears to former Public Assistance Recipients(1)

Mary Jones was just able to scrape by on her minimum wage job and child support payments of $100 per week. When her ex-husband stopped paying child support, she was able to make ends meet by working overtime. After two years of not receiving child support, Mary's boss cut her hours to 25 per week, and she was no longer able to support her family without help. She applied for welfare, and as a condition of receiving cash benefits, Mary had to assign her rights to child support to the county department of social services. She received welfare for one year and then was able to find a job that enabled her to close her public assistance case. After she closed her case, her ex-husband, a man not known for his truthfulness, insisted that he had made some support payments to the Child Support Enforcement Unit in the year that she was on assistance, but was only able to do so sporadically.

Was Mary entitled to the support collected while she was on assistance?

Rule one:

Support collected while Mary is on public assistance is retained by the state and local social services districts(2) so that they can reimburse themselves for assistance paid (and 50% of that is passed on to the federal government). However, if any "current" support is paid, the first $50 dollars paid in any month goes to Mary. This is called the $50 pass-through in most of the state, but is known as the "$50 bonus" in New York City. Current support is support paid in the month when it is due.

If Mary's ex paid no support while she was on assistance, she was not entitled to the pass through. If he did pay support during the year that she was on assistance, she would be entitled up to $50 of any current support paid in the month when due.

Rule two:

When in doubt, request a desk review. If Mary has any reason to suspect that her ex-husband is telling the truth, she should request a "desk review" by writing to the Office of Administrative Hearings, New York State Office of Temporary and Disability Assistance, Desk Review Pass-Through, P.O. Box 1930, Albany, New York 12201 or call 1-800-342-3009 and press # or zero for operator(3). The state is required to review all support collections and pass-through payments made during the year of the request and the preceding year. If an error has been made, Mary will get a corrective payment. Be sure to include any relevant documentation.

After Mary's public assistance case is closed, she learns that the child support collection unit has intercepted a bank account belonging to her ex-husband. Mary is looking forward to finally getting all the back support that she is owed. Just how much money will Mary receive?

Rule three:

With the exception of the federal tax intercept (more on that later), all collections are first treated as the collection of current support. Thus, if no other support payments have come in that month, the first $430 of the bank account ($100/week support order x. 4.3 = $430, the total of the current payments for the month) will go to Mary. The rest is considered "arrears," and how that is distributed depends on when Mary signed her child support assignment and when the arrears were collected.

Rule four:

After October 1, 1998, all collections (except the federal tax intercept) made after a family leaves assistance, must first be treated as current support (Rule 3). Anything left over must be used to pay any arrears owed to the family which accrued after they left public assistance.

Rule five:

If the assignment was made on or before September 30, 1998, the pre-assistance and during- assistance arrearages are "permanently assigned" to the state, up to the amount of unreimbursed assistance provided to the family.

Rule six:

If the assignment was made after September 30, 1998, only the arrears that accrued while the family was on assistance are "permanently assigned" to the state, and the arrears that accrued before the family began to receive assistance, are only "temporarily assigned" to the state, except if there is a collection by federal tax intercept.

Rule seven:

The right to "temporarily assigned arrears" goes back to the family when the family leaves assistance, except if there is a collection by federal tax intercept.

So does Mary get the bank account?

Scenario A:

If Mary's assignment was signed before October 1, 1998, the proceeds of the bank account will be distributed as follows: Mary will be paid current support and the arrears that accrued after she went off of public assistance. Then, the proceeds from the bank account will be used to pay the state its permanently assigned pre-and during assistance arrears. (Remember, however, that the state can not keep more than it has paid out in assistance.) If there is any money left, Mary will be paid for any remaining pre-assistance arrears. The unjust result of this scenario is that Mary's ex-husband could conceivably pay off all the pre-assistance arrears owed to Mary, and she would never see a cent of it because the state gets to keep pre-assistance arrears up to the amount of unreimbursed public assistance paid to Mary and her children.

Scenario B:

If Mary's assignment was signed after September 30, 1998, the intercepted bank account will pay her current support, any arrears that accrued after she went off of public assistance, and then the arrears that accrued before she went on assistance. If there is any money left, it will be kept by the state for the during assistance arrears that have been permanently assigned. (Again remember, that this is limited to the amount of assistance paid to the family. Once this is paid off, the excess must go to Mary.) Note: this rule only applies to former recipients. If the bank account had been intercepted while Mary was on assistance, the county could keep the pre-assistance arrears to reimburse themselves for public assistance paid even if Mary had signed the assignment after September 30, 1998.

Mary has now learned that the child support collection unit has intercepted her ex-husband's federal and state tax refunds. Can Mary finally get all that support that she is owed?

Rule eight:

The state gets first dibs on federal, but not state, tax intercepts. For both families on assistance and families no longer on assistance, federal tax intercepts go to the state to pay it back for public assistance paid to the family.(4) The distribution of the state tax refund, however, follows the same rules as the seized bank account.

Thus, Mary will not get any of the federal return unless the intercepted bank account paid off all of the public assistance she and her children received when they were on assistance. Whether or not she receives any of the state return depends on how rules 4-7 are applied to Mary.(5)

For More Information
1. 12/29/98 letter from Richard Spiers (Director of the New York State OTDA Systems Operations, Office of Child Support Enforcement) to "All CSEU coordinators."
2. "Child Support Distribution and Disbursement," by Paula Roberts, Center on Law and Social Policy (10/1/00). Available on their web site at http://www.clasp.org/.
3. HHS Action Transmittal 98-24.
4. HHS Action Transmittal 97-17.

End Notes

(1) The author gratefully acknowledges the invaluable assistance of Paula Roberts of CLASP for her patient and repeated explanation of these rules, and her editorial suggestions.
(2) Hereinafter, this article will refer to the state retaining support, but collected support is in fact shared with local social services district.
(3) The state will soon be issuing regulations changing the desk review process to a two-step process, allowing a county level review before the state review.
(4) H.R. 4678, which was passed by the United States House of Representatives on September 7, 2000 and is pending in the Senate as S.3189, would require that federal tax intercepts be treated as other support collected.
(5) Federal tax intercepts can only be used to collect arrears that have been certified for collection. This certification is done annually in the fall. If the bank account was seized after the arrears were certified and the proceeds of the bank account were applied to the arrears owed to the state, the refund would be returned to the respondent, unless the arrears owed to Mary were also certified.