14.4 Distribution


Chapter Federal Authority
Collection and Distribution Social Security Act
§408(a)(3) Prohibitions; Requirements
§454(5), (11), (18), (27) and (34) State plan for child and spousal support
§454B Collection and disbursement of support payments
§456(a) Support obligations
§457 Distribution of collected support
45 CFR 301.1 General definitions
45 CFR 302.32 Collection and disbursement of support payments by the IV-D Agency
45 CFR 302.38 Payments to the family
45 CFR 302.50 Assignment of rights to support
45 CFR 302.51 Distribution of support collections
45 CFR 302.52 Distribution of support collected in Title IV-E foster care maintenance cases
45 CFR 302.54 Notice of collection of assigned support
45 CFR 302.60 Collection of past-due support from Federal tax refunds

Subject State Authority
Distribution Wyo. Stat. § 20-6-105 Eligibility for services; fees for services
Wyo. Stat. § 20-6-106 Child support enforcement generally
Wyo. Stat. § 20-6-107 Payment of support money collected to department
Wyoming Child Support Enforcement Rules
Chapter 14 Distribution of Support Collections
Chapter 15 Recovery of Retained Support
Policy Number Effective Date
14.4 October 1, 2010

Overview

Distribution of collections within the IV-D child support program is governed by a set of complex rules defined by federal law.  The manner in which a payment is distributed depends on the following:

  • The distribution options chosen by the state;
  • Whether or not child support has been assigned to the state for current or past periods;
  • The type of collection (e.g. income withholding, state tax offset, federal tax offset, voluntary payment, etc.);
  • Whether or not the obligor has more than one support order;
  • The nature of the debt owed (e.g. current, past due support or fees, penalties, costs, etc.); or
  • The date of collection.

Policy

Assignment

In order to receive Personal Opportunity with Employment Responsibility (POWER) grants, an applicant shall sign a statement allowing Wyoming to keep the child or medical support and/or spousal support received on his/her behalf or on behalf of the child(ren) for whom the applicant is requesting monthly POWER grants.  Since the distribution rules discussed below are dependent upon the assistance status, it is imperative that members of the Wyoming CSE Program understand basic and complex assignment situations as described in Appendix 14.A – Assignment Scenarios.

The Deficit Reduction Act of 2005 (DRA) established a number of new options and requirements for the assignment of support rights and the distribution of child support collections.  

Prior to October 1, 2009 when a custodial parent applied for POWER, the custodial parent assigned all child and spousal support arrears that were past-due at that time to the State of Wyoming.  This included any judgments in favor of the custodial parent.

Effective October 1, 2009, assignment of support rights is limited to the period of time the family receives POWER benefits.  The assignment is limited to the amount of child support accruing during the family’s assistance period only, not to exceed the unreimbursed public assistance (URPA) amount. Any child support arrearages that accrue prior to the period the family receives POWER benefits will no longer be assigned.  


Assignment of Support Rights

Assignments executed on or after October 1, 2009 will be limited to the amount of support that accrues during the assistance period, not to exceed the cumulative amount of URPA.

Distribution Sequence in Former-Assistance Cases

The DRA required states to choose between distributing arrears in Former-Assistance cases using Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) distribution rules or using the new DRA distribution rules contained under the amended section 457(a)(2)(B) of the Act.  Wyoming chose to continue with the existing PROWRA distribution rules.

Discontinuation of Assignments

As noted above, the DRA provides that States may not take any assignments of Pre-Assistance Arrearages in any new POWER cases starting October 1, 2009.  However, pre-assistance arrearages assigned prior to October 1, 2009 will remain in effect. 


Note:  
The date of assignment is determined by the effective date of the custodial parent’s POWER grant.

Under certain circumstances as discussed in Appendix 14.A – Assignment Scenarios, child support should not be assigned to Wyoming.  If the case worker believes the “Never Assign Arrears” box should be marked, the case worker will discuss with the District CSE Office Manager.  If the District CSE Office Manager agrees, the District CSE Office Manager will e-mail the appropriate person at the State Disbursement Unit (SDU) with the request to mark the “Never Assign Arrears” box.

Distribution Rules

Distribution priorities are based upon federal law and are programmed into a table in POSSE.  Distribution rules changed dramatically on October 1, 1997, and the most recent change to the distribution rules occurred on October 1, 2009.  Appendix 14.B – Distribution Matrix provides in detail the distribution priorities utilized in Wyoming.

Basically, support payments, except those collected through the federal Tax Offset Program (TOP), will be distributed as follows and in the order listed with non-judgment categories paid before those amounts reduced to judgment.

Priority 1:  Current Support

  • Child support;
  • Medical support; and
  • Spousal support.

Priority 2:  Arrears

  • Child support;
  • Medical support;
  • Spousal support; and
  • TXIX.

Priority 3: Costs, Fees, Interest and Penalties

  • Genetic testing; 
  • Attorney fees; 
  • GAL fees; 
  • Indigent counsel fees;
  • Administrative costs; 
  • Other costs/fees;
  • Interest; and 
  • Penalties.

Federal Tax Offset

Any collection received through the federal TOP as described in 9.2 Enforcement – Administrative Enforcement Remedies will be applied to the certified arrearage and cannot be applied to any arrears that were certified after the offset occurred.

Federal tax refunds are collected and distributed in the following manner:

  • Single Return – Upon receipt of a single return, the SDU will distribute the payment to the custodial parent within 30 days from the file received date. The federal tax refund will be applied to the certified arrears amount.  Anything in excess of the certified arrears amount will be refunded to the non-custodial parent unless the non-custodial parent grants the Wyoming CSE Program permission to apply the overage to an uncertified debt.  
  • Joint Returns – Upon receipt of a joint federal tax refund, the SDU will apply  the payment to the arrears owed to the custodial parent within 30 days  and will refund any amount in excess of the certified amount to the non-custodial parent/current spouse within 60 days from the file received date pending an injured spouse filing and subsequent IRS adjustment. 

Note:  
The 60-day timeframe is the Wyoming CSE Program’s definition of within a “reasonable time.”

Unless a non-custodial parent’s spouse files an Injured Spouse Allocation Form with the tax return, the Internal Revenue Service (IRS) will intercept a joint tax refund to offset the past-due support obligation if either spouse is certified through the federal TOP.  If an Injured Spouse Allocation Form is submitted, the IRS will process both the tax return and injured spouse claim at the same time and any resulting offset will be less the injured spouse claim.  

Unless the IRS processed an Injured Spouse Allocation Form in conjunction with a tax return or the non-custodial parent and current spouse have signed an affidavit authorizing the release of the federal tax refund, the SDU will hold a joint refund for 6 months before disbursing it. 

Any possible fraudulent returns, joint or single, are held for 60 days pending review results from the IRS.

Manual Distribution - Exceptions to Distribution Rules

Once the SDU receives a collection and enters it in POSSE, POSSE will utilize the distribution rules as detailed in Appendix 14.B – Federal Distribution Matrix to distribute the payment within 2 days except under the following limited circumstances:

Cross Reference

Version Number Last Revised Date
2 July 1, 2014