Child Support Requires Employer, Federal, State Teamwork

Child support programs involve federal forms, state administration, and employer responsiveness, so collaboration is necessary, two child support experts said.

The federal Office of Child Support Enforcement creates several forms, such as the Verification of Employment form, which is used to collect information from an employer regarding an employee’s employment, income, and health insurance, said Sherri Grisgby, a deputy director for the office. Although it is a federal form, it was developed in collaboration with the employer community and state child support directors and has been voluntarily accepted by every state, she added.

Universal acceptance of the VOE form has made it easier for employers to comply with information requests, but many states have their own state-specific versions, such as New York’s Wage and Health Benefits Report, explained Eileen Stack, Esq., deputy commissioner for New York’s Division of Child Support Services. Acceptance of both forms has caused unique administrative hiccups for the state.

“It does present some challenges because our Wage and Health Benefits Report has a QR code. We have very sophisticated processing that involves data entry into a case so that county workers can use it,” Stack said. “So, if the VOE comes and it doesn’t have a case ID, it can be difficult. I think our current procedure is that if we get a VOE but it comes with a Wage and Health Benefits Report or the income withholding order, we accept that.”

Responses to these forms must be sent by employers, not third-party agencies, Grigsby and Stack said. Not only is it the employer’s responsibility, but some third-party agencies are trying to charge states to receive employee information, Grigsby said. In New York, employers that refer the state to a third-party agency will receive a noncompliance letter, Stack added.

Grigsby and Stack spoke in separate sessions at PayrollOrg’s Capital Summit conference in Arlington, Virginia.

While the VOE form is accepted across the United States, states have particular rules when it comes to other child support issues, including lump-sum reporting, said Stack. Lump-sum payments like bonuses and severance pay should be reported to state child support agencies, but states differ on whether reporting is mandated, the amount to withhold, and even when the remaining lump-sum payment can be actually paid to employees, she said.

On the federal level, the Consumer Credit Protection Act establishes baseline withholding limits, although states may set lower ones, Grigsby said. Even though these limits exist, employers occasionally receive income withholding orders from state child support agencies that require 100% withholding on a lump-sum payment, she said. Employers that receive these orders should contact the child support agency for clarification, she advised.

Lump-sum payments can create additional challenges for employers, since they often cannot disburse a lump sum to an employee until the child support agency informs them on the amount to withhold. Reporting lump sums vary by state, but New York offers four methods for employers: calling the state’s child support hotline, sending a fax, submitting inquiries through the state’s lump-sum email inbox, and reporting through the federal OCSE’s Child Support Portal, Stack said.

“We really like when you report through the federal government because that is the easiest, simplest way for us,” Stack said. “They go ahead and match with our debtor files, so we get just those matches with our caseload, which is really helpful.”

While state response times vary, New York responds within three days, Stack said. Some states allow half of lump-sum payment amounts to be paid immediately to employees, but New York is not one of them, she added.

Like lump-sum payments, withholding child support from independent contractors is another issue being addressed in various ways at the state level. Over 20 states require independent contractor reporting for child support purposes, although some state laws only apply to government agencies, Stack said. In New York, businesses must report independent contractors if they will be receiving at least $2,500 for providing services, she added. Different states apply different thresholds, Stack said, noting “There is no standardization across the country.”

At the federal level, the OCSE currently is working on a new version of the Income Withholding Order for Support form that would include checkboxes for identifying an individual as either an independent contractor or employee, Grigsby said. And at the state level, the National Council of Child Support Directors’ has created model legislation that would help standardize state rules for independent contractors and lump-sum payments, Stack said. Both of these efforts would make child support compliance easier for employers.

“Without the employer community, child support would not reach the families,” Grigsby said.