Nearly $33 billion was collected for child support in fiscal 2016, and 75 percent of that was collected through income withholding, an official with the federal Office of Child Support Enforcement said March 13. Employers also reported 65.6 million new hires.
Running counter to the adage that if it isn’t broke, do not fix it, the OCSE recently shared guidance with members of the payroll community on improvements the agency was making or that it was pursuing with payroll professionals and businesses.
Here are some of the highlights:
"For several years we have heard that there are some concerns reported by the child support agencies about the third-party processors that are responding to these on behalf of the employers, and the issue is that third party processors are charging the child support agencies a fee,” said Sherri Grigsby, employer services team manager at the Office of Child Support Enforcement.
The OCSE is working with child-support agencies, the payroll community, and third-party processors to see if a solution may be found that works for everybody, but “I do think that states are getting to the point where they are going to start issuing notices,” reminding employers that responding to the requests is their responsibility and advising them to not send the notices to a third party because “we are not going to pay for it,” Grigsby said at the American Payroll Association’s Capital Summit in Washington.
Verification of employment requests, which are issued by child-support agencies, seek information such as wages, withholdings, and health insurance availability for use in establishing and modifying child support orders.
Even the directors of child-support programs want to know what the verification of employment requests are used for and are planning to survey their staff on how they are used, why they are sent, and how many are sent, Grigsby said, noting that “we are still in the information-gathering stage.”
Under federal and state laws, employers generally must report newly hired and rehired employees within 20 days, depending on the state.
However, sometimes employers report a newly hired or rehired employee using one federal employer identification number and then using a different employer identification number for that worker when doing quarterly wage reports, which “makes it challenging for states to identify those not complying with new-hire reporting” and creates additional, duplicate information in the National Directory of New Hires, Grigsby said.
When completing a new hire’s quarterly wage report, use the same EIN for that employee, Grigsby said.
Multistate employers that have employees in at least two states may report all new hires to one of the states where it has employees; however, the OCSE recently made a change to its new-hire reporting process. Now, those employers “have to register with our agency to let us know that you are going to report to one state, and you need to identify that state and also identify the states where you have employees.”
To do so, the employers need to use the Multistate Employer Registry on the OCSE’s Child-Support Portal, Grigsby said.
Several changes were made to the standard Office of Management and Budget-approved Income Withholding for Support Order/Notice when it was updated in 2017, Grigsby said, noting that child-support agencies are given one year to make changes.
The changes include an optional field for the employee’s date of birth, clarified instructions that indicate that an order for a one-time lump-sum bonus is not a standing order, a renamed locator code, and a link to the OCSE child-support portal.
Additionally, the form and instructions were revised to make clear that one Consumer Credit Protection Act withholding limit should go in the specified field.
The OCSE heard a lot from employers about CCPA limits with regard to the form, Grigsby said. “There were several states that instead of selecting one limit, they were putting the range,” she said. “They were saying to withhold between 50 and 65 percent and leaving it up to the employer to determine what that percentage should be.”
When the child-support agency or court obligates these individuals to pay child support, all of that is taken into consideration, and it is the agency or court’s responsibility to indicate what withholding limit should go in that field, Grigsby said.
The federal CCPA withholding limit is 50 percent if the employee is supporting a second family and does not owe overdue amounts; 55 percent if the employee is supporting a second family and owes amounts that are at least 12 weeks late, 60 percent if the employee is not supporting another family and amounts does not owe overdue amounts; and 65 percent if the employee is not supporting another family and owes amounts that are at least 12 weeks late.
State withholding limits may be lower, Grigsby said, noting that in Alaska it is 40 percent across the board and that several states, including Texas, adopted 50 percent across the board.
This standard income withholding form is effect to Aug. 31, 2020.
By Christine Pulfrey
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