PAYMENT
PROCESSING
CS 535P Distribution of Collections
9/89 Revised 06/18/24 Training
Completed 07/01/24 Last Reviewed 07/10/25
42 U.S.C 654b and 657; R527-330
Statutory
Authority
The Office
of Recovery Services/Child Support Services (ORS/CSS) must process and distribute
all payments in accordance with Federal law found at 42 U.S.C. 657.
Sec.
657. – Distribution of collected
support:
Subject
to subsections (d) and (e), the amounts collected on behalf of a family as
support by a State pursuant to a plan approved under this part shall be
distributed as follows:
(1) Families
receiving assistance
In
the case of a family receiving assistance from the State, the State shall—
(A)
pay to the Federal Government the Federal share of the amount collected,
subject to paragraph (3)(A);
(B)
retain, or pay to the family, the State share of the amount collected, subject
to paragraph (3)(B); and
(C)
pay to the family any remaining amount.
(2) Families
that formerly received assistance
In
the case of a family that formerly received assistance from the State:
To
the extent that the amount collected does not exceed the current support
amount, the State shall pay the amount to the family.
Except
as otherwise provided in an election made under section 654 (34) of this title, to the
extent that the amount collected exceeds the current support amount, the State—
(i) shall first
pay to the family the excess amount, to the extent necessary to satisfy support
arrearages not assigned pursuant to section 608
(a)(3) of this title;
(ii) if the amount collected exceeds the amount required to be paid to
the family under clause (i), shall—
(I) pay to the Federal Government the Federal share of the excess
amount described in this clause, subject to paragraph (3)(A); and
(II) retain, or pay to the family, the State share of the excess
amount described in this clause, subject to paragraph (3)(B); and
(iii) shall pay to the family any remaining amount.
The
total of the amounts paid by the State to the Federal Government under
paragraphs (1) and (2) of this subsection with respect to a family shall not
exceed the Federal share of the amount assigned with respect to the family
pursuant to section 608
(a)(3) of this title.
The
total of the amounts retained by the State under paragraphs (1) and (2) of this
subsection with respect to a family shall not exceed the State share of the
amount assigned with respect to the family pursuant to section 608
(a)(3) of this title.
(4) Families
that never received assistance
In
the case of any other family, the State shall distribute to the family the
portion of the amount so collected that remains after withholding any fee
pursuant to section 654 (6)(B)(ii) of this
title.
(5) Families
under certain agreements
Notwithstanding
paragraphs (1) through (3), in the case of an amount collected for a family in
accordance with a cooperative agreement under section 654 (33) of this title, the
State shall distribute the amount collected pursuant to the terms of the
agreement.
(6) State
option to pass through additional support with Federal financial participation
(A) Families
that formerly received assistance
Notwithstanding
paragraph (2), a State shall not be required to pay to the Federal Government
the Federal share of an amount collected on behalf of a family that formerly
received assistance from the State to the extent that the State pays the amount
to the family.
(B) Families
that currently receive assistance
(i) In general
Notwithstanding paragraph (1), in the case of a family that receives assistance
from the State, a State shall not be required to pay to the Federal Government
the Federal share of the excepted portion (as defined in clause (ii)) of any
amount collected on behalf of such family during a month to the extent that—
(I) the State pays the excepted portion to the family; and
(II) the excepted portion is disregarded in determining the amount and
type of assistance provided to the family under such program.
(ii) Excepted portion defined For purposes of this subparagraph, the
term “excepted portion” means that portion of the amount collected on behalf of
a family during a month that does not exceed $100 per month, or in the case of
a family that includes 2 or more children, that does not exceed an amount
established by the State that is not more than $200 per month.
(b) Continuation
of assignments
(1) State
option to discontinue pre-1997 support assignments
Any
rights to support obligations assigned to a State as a condition of receiving
assistance from the State under part A and in effect on September 30, 1997 (or
such earlier date on or after August 22, 1996, as the State may choose), may
remain assigned after such date.
(B) Distribution
of amounts after assignment discontinuation
If
a State chooses to discontinue the assignment of a support obligation described
in subparagraph (A), the State may treat amounts collected pursuant to the
assignment as if the amounts had never been assigned and may distribute the
amounts to the family in accordance with subsection (a)(4).
(2) State
option to discontinue post-1997 assignments
Any
rights to support obligations accruing before the date on which a family first
receives assistance under part A that are assigned to a State under that part and
in effect before the implementation date of this section may remain assigned
after such date.
(B) Distribution
of amounts after assignment discontinuation
If
a State chooses to discontinue the assignment of a support obligation described
in subparagraph (A), the State may treat amounts collected pursuant to the
assignment as if the amounts had never been assigned and may distribute the
amounts to the family in accordance with subsection (a)(4).
As
used in subsection (a) of this section:
The
term “assistance from the State” means—
(A)
assistance under the State program funded under part A of this subchapter or
under the State plan approved under part A of this subchapter (as in effect on
the day before August 22, 1996); and
(B)
foster care maintenance payments under the State plan approved under part E of
this subchapter.
The
term “Federal share” means that portion of the amount collected resulting from
the application of the Federal medical assistance percentage in effect for the
fiscal year in which the amount is distributed.
(3) Federal
medical assistance percentage
The
term “Federal medical assistance percentage” means—
(A)
75 percent, in the case of Puerto Rico, the Virgin Islands, Guam, and American
Samoa; or
(B)
the Federal medical assistance percentage (as defined in section 1396d (b) of this title, as such
section was in effect on September 30, 1995) in the case of any other State.
The
term “State share” means 100 percent minus the Federal share.
The
term “current support amount” means, with respect to amounts collected as
support on behalf of a family, the amount designated as the monthly support
obligation of the noncustodial parent in the order requiring the support or
calculated by the State based on the order.
(d) Gap
payments not subject to distribution under this section
At
State option, this section shall not apply to any amount collected on behalf of
a family as support by the State (and paid to the family in addition to the
amount of assistance otherwise payable to the family) pursuant to a plan
approved under this part if such amount would have been paid to the family by
the State under section 602
(a)(28) of this title,
as in effect and applied on the day before August 22, 1996.
(e) Amounts
collected for child for whom foster care maintenance payments are made
Notwithstanding
the preceding provisions of this section, amounts collected by a State as child
support for months in any period on behalf of a child for whom a public agency
is making foster care maintenance payments under part E of this subchapter—
(1)
shall be retained by the State to the extent necessary to reimburse it for the
foster care maintenance payments made with respect to the child during such
period (with appropriate reimbursement of the Federal Government to the extent
of its participation in the financing);
(2)
shall be paid to the public agency responsible for supervising the placement of
the child to the extent that the amounts collected exceed the foster care
maintenance payments made with respect to the child during such period but not
the amounts required by a court or administrative order to be paid as support
on behalf of the child during such period; and the responsible agency may use
the payments in the manner it determines will serve the best interests of the
child, including setting such payments aside for the child’s future needs or
making all or a part thereof available to the person responsible for meeting
the child’s day-to-day needs; and
(3)
shall be retained by the State, if any portion of the amounts collected remains
after making the payments required under paragraphs (1) and (2), to the extent
that such portion is necessary to reimburse the State (with appropriate
reimbursement to the Federal Government to the extent of its participation in
the financing) for any past foster care maintenance payments (or payments of
assistance under the State program funded under part A of this subchapter)
which were made with respect to the child (and with respect to which past
collections have not previously been retained);
and
any balance shall be paid to the State agency responsible for supervising the
placement of the child, for use by such agency in accordance with paragraph (2).“
NOTE: Non-IV-A arrears includes Non-IV-E arrears
(Children in Care, Foster Care/Youth Corrections).
For more information on how ORSIS distributes
payments, refer to the Volume 2 sections listed below:
1.
CS 537P
Distribution of all Payments Other than Discounted Settlements and Federal Tax
Intercept Payments;
2.
CS 540P
Distribution of Discounted Settlements;
3.
CS 541P
Distribution of Collections - State Tax Intercept Payments; and,
4. CS 543P Distribution of Federal Tax
Intercept Payments.
Payments are distributed and
disbursed according to Federal law 42 U.S.C. 654b.
Sec.
654b. – Collection and disbursement of support payments
“(a) State
disbursement unit
(1) In general
In order for a State to meet the requirements of this section,
the State agency must establish and operate a unit (which shall be known as the
“State disbursement unit”) for the collection and disbursement of payments
under support orders—
(A) in all cases being
enforced by the State pursuant to section 654 (4) of this title; and
(B) in all cases not being
enforced by the State under this part in which the support order is initially
issued in the State on or after January 1, 1994, and in which the income of the
noncustodial parent is subject to withholding pursuant to section 666 (a)(8)(B) of this title.
(2) Operation
The State disbursement unit shall be operated—
(A) directly by the
State agency (or 2 or more State agencies under a regional cooperative
agreement), or (to the extent appropriate) by a contractor responsible directly
to the State agency; and
(B) except in cases
described in paragraph (1)(B), in coordination with the automated system
established by the State pursuant to section 654a of this title.
(3) Linking of local
disbursement units
The State disbursement unit may be established by
linking local disbursement units through an automated information network,
subject to this section, if the Secretary agrees that the system will not cost
more nor take more time to establish or operate than a centralized system. In
addition, employers shall be given 1 location to which income withholding is
sent.
(b) Required
procedures
The State disbursement unit shall use automated
procedures, electronic processes, and computer-driven technology to the maximum
extent feasible, efficient, and economical, for the collection and disbursement
of support payments, including procedures—
(1) for receipt of
payments from parents, employers, and other States, and for disbursements to
custodial parents and other obligees, the State
agency, and the agencies of other States;
(2) for accurate
identification of payments;
(3) to ensure prompt disbursement of the custodial
parent’s share of any payment; and
(4) to furnish to any parent, upon request, timely
information on the current status of support payments under an order requiring
payments to be made by or to the parent, except that in cases described in
subsection (a)(1)(B) of this section, the State disbursement unit shall not be
required to convert and maintain in automated form records of payments kept
pursuant to section 666 (a)(8)(B)(iii) of this title before
the effective date of this section.
(c) Timing of
disbursements
(1) In general
Except as provided in paragraph (2), the State
disbursement unit shall distribute all amounts payable under section 657 (a) of this title within
2 business days after receipt from the employer or other source of periodic
income, if sufficient information identifying the payee is provided. The date
of collection for amounts collected and distributed under this part is the date
of receipt by the State disbursement unit, except that if current support is
withheld by an employer in the month when due and is received by the State
disbursement unit in a month other than the month when due, the date of
withholding may be deemed to be the date of collection.
(2) Permissive retention
of arrearages
The State disbursement unit may delay the distribution
of collections toward arrearages until the resolution of any timely appeal with
respect to such arrearages.
(d) “Business day”
defined
As used in this section, the term “business day” means
a day on which State offices are open for regular business.”
The date the payment is
received/receipted in the State Disbursement Unit (SDU) located in the ORS
Financial Services Unit is the date used as the date of collection (for
distribution purposes). Payments
credited to Non-IV-A debts are sent to the custodial parent (CP) within two (2)
business days of the date they are received in the SDU (see 42 U.S.C. 654b(c))
except when:
1.
Foreign
currency is received as a payment for child support for a United States (U.S.)
family. The two day time frame does not
begin until the date the money is converted and received by SDU.
2.
Payments are
received from either Federal/State tax intercept programs and are held for 30 days
to 6 months before they are disbursed to the CP.
In order to meet this timeframe,
payments should be mailed to the SDU for processing. Therefore, when you are
talking to noncustodial parents (NCPs), employers, other states, and other
payors, instruct them to mail all CSS payments to:
Child Support Services
Salt Lake City, Utah 84145-0011
Do NOT give NCPs or employers
envelopes with an address that is different than the address listed above. Also, remember to include the correct payment
mailing address on the interstate transmittal when you initiate a two-state
action.
There are separate distribution
programs for IV-D child support payments and non-child support payments. When payments are received/receipted in the
SDU, the SDU determines which distribution program to post the payment to by
looking at the address (P.O. Box) listed on envelope.