PAYMENT PROCESSING

CS 537P Distribution of all Payments other than Discounted Settlements and Federal Tax Intercept Payments

06/99 Revised 12/15/22 Training Completed 12/29/22 Last Reviewed 07/10/25

Federal law (42 U.S.C. 654b and 657) and state rules (R527-330) dictate how the Office of Recovery Services/Child Support Services (ORS/CSS) must distribute and disburse payments. For more information on distribution, refer to CS 535P Distribution of Collections.

Levels of Distribution

To meet these requirements, the Office of Recovery Services Information System (ORSIS) has been programmed to automatically distribute and disburse, if appropriate, all payments. There are four levels of distribution within ORSIS, which is used for all payments except discounted settlements and Federal tax intercept payments. The four levels of distribution are as follows:

1. Level 1 - Current Support Debts. When a payment is received it is applied to the support due for the month the payment was received/ receipted in the State Disbursement Unit (SDU). If a payment is received/receipted in a prior month and posted in another month, ORSIS applies the payment to the month the payment was received; e.g., the payment was received on July 26, 2003 and posted on August 3, 2003, the payment will be applied to the support due for the month of July 2003.

ORSIS determines the amount of unpaid current support due for the month, pro-rates the payment, and applies it to the appropriate current support debt(s), which includes the following debt types:

a. CRS (current child support);

b. CSS (current spousal support);

c. CRF (current noncustodial parent {NCP} applicant payment processing fee); and,

d. CRW (current income withholding fee).

This process continues with each payment received until all unpaid current support due has been paid for the month. If the payment is posted with an override to the case number, it is distributed to the unpaid current support due for that case.

EXAMPLE: This example illustrates how ORSIS pro-rates payments to current support debt(s) (after the payment is posted to the HLCI level).

· NCP has two cases:

o Case #1: AFDC CRS01 - $200.00;

o Case #2:

§ NADC CRS01 - $125.00; and,

§ NADC CSS01 - $75.00.

· NCP pays $200.00 each week.

Payments:		Distributed to:
		Case #1		Case #2
		AFDC CRS01 Amt Due $200.00		NADC CRS01 Amt Due $125.00		NADC CSS01 Amt Due $75.00
Pmt Amt	Received	Amount applied	Debt Balance	Amount applied	Debt Balance	Amount applied	Debt Balance
September 2009			$200.00		$125.00		$75.00
$200.00	09/05/09	$100.00	$100.00	$62.50	$62.50	$37.50	$37.50
$200.00	09/12/09	$100.00	$0.00	$62.50	$0.00	$37.50	$0.00
October 2009			$200.00		$125.00		$75.00
$200.00	10/05/09	$100.00	$100.00	$62.50	$62.50	$37.50	$37.50
$200.00	10/12/09	$100.00	$0.00	$62.50	$0.00	$37.50	$0.00

· ORSIS prorates and distributes the payment to the current support debts as follows (see illustration above):

o $100.00 to the AFDC CRS01;

o $62.50 to the NADC CRS01; and,

o $37.50 to the NADC CSS01.

2. Level 2 - Arrears Debts with Monthly Amounts Due at the Debt Level): After current support has been paid, ORSIS looks for and identifies all debt(s) that are coded for an arrears payment. The payment is then pro-rated among all qualifying debts until the AMT DUE is met.

3. Level 3 – Arrears Debts for Pay Off: After the current support debts and arrears debts with monthly amounts due at the debt level have been paid, ORSIS will determine if the case the payment is intended for is a IV-A current support case. If the case assistance type is:

a. “A” (Aid to Families with Dependent Children) – The payment will be applied to the arrears debts on that case from the oldest to newest based on the debt accrual start date.

b. “N” (No assistance) or “M” (Medicaid Only Assistance) – The payment is applied to the arrears debts on the case from oldest to newest arrears debt(s), based on the debt accrual start date found on ORSIS. For example, when payments are applied to NADC debts, if spousal support debts were loaded in July 2012 and child support debts were loaded in March 2013, the payments will be applied to the spousal support debt until it is paid in full. Payments are applied to arrears debts within the following debt group order:

i. NADC (Non-IV-A);

ii. DCNS (Day-Care Non-State paid);

iii. MNMC (Non-IV-A medical);

iv. COND (Non-IV-A conditionally assigned);

v. FSCN (Non-IV-A foster care);

vi. YCOR (Youth Corrections);

vii. FDHS (DHS Custody);

viii. CSUP (Child Support – Child in Care);

ix. PARM (Parent Responsibility Medical – State Hospital);

x. PARS (Parental Responsibility – State);

xi. TEMP (Temporarily Assigned Arrears);

xii. AFDC (IV-A);

xiii. MDMC (IV-A Medical Support);

xiv. DCST (Day-Care State paid);

xv. FSCA (IV-E Foster Care);

xvi. YCOA (IV-E Youth Corrections);

xvii. UDAA (Non-IV-A Unassigned During Assistance);

xviii. FEES;

xix. FSMN (Non-IV-E Foster Care Medical);

xx. YCMN (Youth Corrections Medical); and,

xxi. FSMA (IV-E Foster Care Medical).

When the pro-rated amount exceed the balance owing on the case, the remaining amount is pro-rated equally among the other cases (except NIVD cases – see Level 4) until the payment is fully applied or all debts are paid.

EXAMPLE 1: Assignment during October 1, 1997 through September 30, 2009.

· Family applies for and receives TANF beginning September 1, 2009;

· Current support is $300.00; and,

· NCP owes $600.00 in arrears (TEMP debt).

Payments:		Distributed to:
		Case 01 – AFDC 09/01/2009
		AFDC CRS01 $300.00		TEMP AUO $600.00		AFDC AUO01
Pmt Amt	Date Rcvd	Amt Applied	Debt Bal	Amt Applied	Debt Bal	Amt Applied	Debt Bal
No pmt in September					$600.00		$300.00
October 2009
$400.00	10/05/09	$300.00	$0.00	$100.00	$500.00
$400.00	10/15/09			$400.00	$100.00
$400.00	10/25/09			$100.00	$0.00	$300.00	$0.00

· September 2009 – NCP does not make a payment. The $300.00 CRS balance rolls to the AFDC AUO01 debt.

· October 5, 2009 – NCP pays $400.00. $300.00 distributes to the AFDC CRS01 debt and $100.00 distributes to the TEMP AUO01 debt.

· October 15, 2009 – NCP pays $400.00. $400.00 distributes to the TEMP AUO01 debt.

· October 25, 2009 – NCP pays $400.00. $100.00 distributes to the TEMP AUO01 debt and $300.00 distributes to the AFDC AUO01 debt.

NOTE: If the payment is RWD (Receipt Income Withholding), RBP (Receipt Bill Pay), or RMA (Receipt Military Allotment), it can only distribute to arrears debts that have been included in the income withholding order. For more information on income withholding payments, refer to “Distribution of Income Withholding Payments” below.

EXAMPLE 2: Assignment after September 30, 2009.

· Family applies for and begins receiving TANF October 1, 2009;

· Current support is $300.00; and,

· NCP owes $600.00 in NADC arrears.

Payments:		Distributed to:
		Case 01 – AFDC 09/01/2009
		AFDC CRS01 $300.00		AFDC AUO		NADC AUO01 $600.00
Pmt Amt	Date Rcvd	Amt Applied	Debt Bal	Amt Applied	Debt Bal	Amt Applied	Debt Bal
No pmt in October					$300.00		$600.00
November 2009
$400.00	11/05/09	$300.00	$0.00	$100.00	$200.00		$600.00
$400.00	11/15/09			$200.00	$0.00	$200.00	$400.00
$400.00	11/25/09					$400.00	$0.00

· October 2009 – NCP does not make a payment. The $300.00 CRS balance rolls to the AFDC AUO01 debt.

· November 5, 2009- NCP pays $400.00. $300.00 distributes to the AFDC CRS01 debt and $100.00 distributes to the AFDC AUO01 debt.

· November 15, 2009 – NCP pays $400.00. $200.00 distributes to the AFDC AUO01 debt and $200.00 distributes to the NADC AUO01 debt.

· November 25, 2009 – NCP pays $400.00. $400.00 distributes to the NADC AUO01 debt.

4. Level 4 - Arrears Debts on NIVD (Team 59) Cases for Pay-Off: After the current support debts, arrears debts with monthly amounts due at the debt level, and arrears have been paid, ORSIS applies any remaining money/payments to NIVD (Non-IV-D Team 59) cases as long as the case is coded with the correct payment source.

If there is not a NIVD case or the arrears have been paid in full, the payment appears on the funds remaining report (may be a future support payment). The worker must refund the payment to the NCP.

Distribution of Income Withholding Payments

ORSIS distributes income withholding payments and military allotments to the appropriate case(s) included in the Notice to Withhold Income for Child Support: Earned Income Withholding Packet or the appropriate cases included in the APW (Automatic Payment Withdrawal) agreement. ORSIS verifies which cases were included in the notice and distributes the money according to 42 U.S.C. 657(a).

Distribution of Fees

1. Annual Fee For Child Support Services – ORS will collect an annual user collection fee on each IVDS case where the custodial parent has never received cash assistance (i.e., TANF or AFDC). Effective October 1, 2019, the annual user collection fee is $35.00 as per 42 U.S.C. 654(6)(B)(ii). The fee is paid by the custodial parent and is retained from child support collected on behalf of the custodial parent after $550.00 has been disbursed within a one-year period. The one-year period is measured from October 1 through September 30 each year, beginning October 1, 2006 (federal fiscal year).

2. Payment-processing Fees:

a. Custodial parents (CP) applicant – 6% of the payment amount is withheld from each payment disbursed (up to $12.00 per month) to the family, when the applicant code in ORSIS is “C” (Custodial Parent) and the family is NOT receiving financial assistance or MEDICAID. The fee is not charged on any payment amounts that distribute to a State owed debt group. The fee is automatically deducted from the disbursement check before it is sent or electronically transferred to the CP.

NOTE: If the case is Non-IV-A and the NCP is paying an income withholding fee, the CP may be reimbursed for part ($3.50) of the payment-processing fee. The income withholding fee will not be disbursed to the CP when the payment amount applies to a State owed debt group.

b. NCP applicant – 6% of each payment amount that is allocated to a case is charged to the NCP (up to $12.00 per month), when the applicant code in ORSIS is “N” (Noncustodial Parent) and the family is NOT receiving financial assistance or MEDICAID. The payment processing fee amount is deducted before the payment is applied to the balance due by using a CRF (Check Fee) debt. A payment processing fee amount is not deducted for payment amounts that distribute to a State owed debt group.

3. Convenience Fees – When an NCP makes an online payment, utilizes a payment kiosk or makes a payment over the phone, the following convenience fees are assessed:

a. Payments made online through the ORS or TouchPay website or the mobile app:

i. Credit/Debit Cards: The fee is 2.9% of the payment amount; or,

ii. E-check: The fee is 2.9% of the payment amount

b. Payments made at a payment kiosk:

i. Cash: The fee is $3.00 for the first $100.00, and then $1.00 for each additional $100.00, up to $15.00.

ii. E-check: The fee is $3.00 for the first $100, and then $1.00 for each additional $100.00, up to $15.00.

iii. Credit/Debit cards: The fee is 2.9% of the payment amount.

c. Payments made by Credit/Debit cards through the IVR payment system. The fee is 2.9% of the payment amount.

These fees are added to the NCP’s payment as a FEES transaction.

4. Income Withholding Fees – If the NCP is paying by income withholding AND is subject to an income-withholding fee, AND the CP is NOT receiving TANF or Medicaid, you must manually add income withholding fees debts to the obligation. The income withholding fee will not be disbursed to the CP when the payment applies to a State owed debt group.

Funds Remaining

When a payment is not able to distribute and/or disburse, it appears on the Funds Remaining Report. Because payments must be disbursed to the CP within two business days, in accordance with 42 U.S.C. 654b (see above), you must work the Funds Remaining Report daily.