Relates to modifying child support orders, employer reporting of new hires and quarterly earnings, work experience programs and noncustodial earned income tax

Summary of provisions

Section 1 of the bill would give the bill the title of the "Low Income Support Obligation and Performance Improvement Act."

Sections 2 and 5 of the bill would amend Tax Law 606 and 697, respec- tively, to permit the Department of Taxation and Finance to share infor- mation needed to evaluate the impact of the Noncustodial Parent Earned Income Tax Credit.

Sections 3 and 4 of the bill would amend Tax Law §§ 171-a and 171-h, respectively, to require employers to report the availability of employ- er-sponsored family health insurance as part of the quarterly wage report and the new hires report.

Section 6 of the bill would amend Family Court Act (FCA) § 451 to conform the language of the FCA provision governing the modification of child support orders to the Domestic Relations Law (DRL) so that both provisions provide for a "substantial change in circumstances" as a basis for modification of an order of child support.

This section would further provide two new bases for modification of an order of child support: (1) the passage of three years since the order was entered, last modified, or adjusted; or (2) a 15 percent change in either party's income since the order was entered, last modified or adjusted provided that any reduction in income was involuntary and the party has made diligent attempts to secure employment commensurate with his or her education, ability and experience. The parties may specif- ically opt out of the two new bases for modification in a validly executed agreement or stipulation. This section would provide that incarceration is not a bar to finding a substantial change in circum- stances under certain conditions and also would clarify that retroactive support is paid and enforceable as provided under FCA § 440.

Section 7 of the bill would amend DRL § 236B(9)(b) by separating out the "substantial change of circumstances" basis for modification of child support orders into its own section for clarity and would provide two new bases for the modification of an order of child support: (1) the passage of three years since the order was entered, last modified, or adjusted; or (2) a 15 percent change in either party's income since the order was entered, last modified or adjusted provided that any reduction in income was involuntary and the party has made diligent attempts to secure employment commensurate with his or her education, ability and experience. The parties may specifically opt out of the two new bases for modification in a validly executed agreement or stipulation. This section would provide that incarceration is not a bar to finding a substantial change in circumstances under certain conditions.

Sections 8 and 9 of the bill would amend FCA § 440 and DRL § 236B(7), respectively, to require that all orders establishing a child support obligation contain a notice regarding the right to apply for a modifica- tion of the order if there has been a substantial change in circum- stances or the occurrence of the additional enumerated bases for modifi- cation.

Section 10 of the bill would add a new FCA § 437-a to authorize the Family Court to require the non-custodial parent of a child to seek employment, or to participate in job training, employment counseling or other programs designed to lead to employment, where such programs are available, if he or she is unemployed at the time the court is estab- lishing the support order unless he or she is in receipt of supplemental security income (SSI) or social security disability (SSD) benefits.

Section 11 of the bill would amend Social Services Law (SSL) § 111-h to state that if the respondent is required to participate in work programs or activities, and if the order of support is made payable on behalf of persons in receipt of public assistance, the support collection unit may not file a petition to increase the support obligation for twelve months from the date of entry of the order if the respondent's income is derived from the work activity or program.

Section 12 of the bill would amend FCA § 461 to re fleet the two new bases for modification of an order of child support.

Section 13 of the bill would provide that the bill is effective 90 days after it becomes law, except that: (1) sections 6 and 7 would only apply to child support orders which incorporate but do not merge stipulations or settlement agreements if the stipulation or agreement was executed on Or after the effective date of the bill; and (2) sections 3 and 4 take effect 365 days after the bill becomes law.

Existing law

FCA § 451 and DRL § 236B(9) set out the procedure to modify a child support order.

Tax Law § 606(d-1) establishes the Noncustodial Parent Earned Income Tax Credit.

Tax Law § 697 sets limitations on the disclosure of lax return informa- tion.

FCA § 440 and DRL § 236B(7) set out the required provisions of a child support order.

Tax Law § 171-a. contains the requirement that employers report wages on a quarterly basis. Tax Law § 171-h contains the requirement that employ- ers report new hires.

SSL § 111-h sets out the general duties and powers of the child support collection unit of the local department of social services.

Justification

The child support program in New York State has made steady improvements since its inception. Child support collections have increased in record amounts. In 1999, the State collected over $1 billion in child support for the first time ever, and has continued to collect over $1 billion in child support in each subsequent year. In 2008, the State collected $1,727 billion in child support. Despite these improvements, there is still much more work to be done. This child support bill would help build upon New York's achievements in this vital area. The bill contains provisions that would improve child support collect on and enforcement in New York. Other provisions of this bill would make conforming changes and provide additional legal bases for modifying a child support order.

Currently, there is no uniform statutory standard for modifying child support awards. While the DRL specifies that a child support order may be modified following a showing of a substantial change in circum- stances, the FCA is silent on the issue. The courts have not applied this standard to all orders, instead creating two higher th:esholds if the order incorporates but does not merge a separation agreement or stipulation of the parties. The complexity of the legal issues and vary- ing standards creates confusion and makes it difficult for low income parents to keep their obligation consistent with their ability to pay support. Parties in support proceedings deserve to know that they have a right to seek modification of the support amount and when that right accrues. This bill would make conforming changes and would provide two additional bases for modification that would help minimize confusion.

The proposed amendments would clearly state in the FCA that a child support order may be modified upon a substantial change in circumstances and thereby harmonize the FCA with the DRL. This conforming change of including substantial change in circumstances as a basis for modifica- tion in the FCA is not intended to alter existing case law regarding the standard for modifications for orders incorporating but not merging separation agreements. In addition, the amendments would provide for two additional base, for obtaining a review of an order of child support - the passage of three years or a 15 percent change in a party's income since the order was entered, last modified or adjusted. In introducing the two additional bases for modification of child support, the intent of this measure is not to have these bases - change in income of 15

percent or passage of three years, to limit or define substantial change in circumstances, nor is the intent to supersede case law interpreting substantial change of circumstances as a standard for modification. Furthermore, the additional bases are not intended to be considered as necessary threshold requirements for modification of child sup port on the basis of a substantial change of circumstances. The amendment would continue to allow evidence of a substantial change in circumstances as permitted under existing case law for modification. The bill also adopts and conforms the rule found in the existing body of case law in order to clarify that a reduction in income may not be considered even under the new 15 percent change in income basis unless it was involuntary and the party has made diligent attempts to secure employment commensurate with his or her education, ability and experience.

The substantial change in circumstances threshold would apply prospec- tively to all orders of child support. If the order incorporates but does not merge a stipulation or settlement agreement, the amendment would be effective only if the stipulation or agreement was executed on or after the effective date of the amendment. Parties who have consented or will consent to deviations from the basic child support order calcu- lated under The Child Support Standards Act would be protected. The amendments would apply only to orders, stipulations or settlement agree- ments entered after the legislation becomes effective. The Amendments would not affect vested rights under existing valid separation agree- ments or stipulations The bill is not anticipated to result in an imme- diate or long-term increase in the number of modification petitions filed.

Current law provides no notice in the order of support of a parent's right to modify their support order. As a result, parents are unclear when it is appropriate to file a modification petition to adjust the support obligation. Parties are not uniformly made aware of their rights to modify the order at the time obligations are established by the court. The proposed legislation would require notice of the right to apply for a modification of a support order and the requirements for modification in all support orders, so that parents :know their rights and are encouraged to seek timely relief from the courts when it is appropriate.

The bill would provide that incarceration is not a ban to a finding of a substantial change in circumstances and is intended to address the impact of the New York State Court of Appeals decision in Knights v. Knights, 71 N.Y.2d 865 (198:3) and thereby clarify that a court may modify an order of child support where a party has been incarcerated considering the circumstances of the case; provided, however, that the incarceration is not the result of nonpayment of child support or an offense against the custodial parent or child who is the subject of the order or judgment of child support.

The bill would also permit the Family Court to require an unemployed non-custodial parent to seek employment, participate in job training, employment counseling or other programs designed to lead to employment

at the time an order is established. For the purposes of this section, noncustodial parents in receipt of SSI or SSD may not be required to participate in such employment programs. This provision would not limit the non-custodial parent's obligation to support his or her child. Nor would it curtail the court's obligation to set a fair and reasonable child support obligation in accordance with the Child Support Standards Act. No modification of the order would be sought for 12 months from the date of entry of the order if a non-custodial parent is or was enrolled in work programs or activities and the order of support is payable to a local department of social services pursuant to an assignment.

As part of the Governor's effort to provide universal health care cover- age for New York children, the bill will aid the child support program in securing employer sponsored insurance for some of the State's needi- est children. As of 2008, 139,376 children in the child support program were covered by employer-sponsored insurance through the program's efforts. When the child support program receives new employer informa- tion in a quarterly wage report or a new hires report, a medical execution, and the accompanying paperwork, must be mailed to the employ- er. The proposed legislation would require employers to identify the availability of employer-sponsored family health insurance when they report new hires and quarterly wages. If such insurance is not available from an employer, we can relieve the employer of handling unnecessary medical execution papers.

Legislative history

In the 2007 legislative session, S.4848 contained similar provisions to section 10 of this bill, but S.4848 was not reported from the Senate Judiciary Committee. In the 2008 legislative session, A.11684/S.7598-A contained the provisions of this bill. A.11684/S.7598-A was passed by the Assembly, but it was not reported from the Senate Investigations and Government Operations Committee.

Fiscal implications for state and local governments

The bill is not expected to substantially impact the mount of child support collections. The provisions related to the Tax Law, permitting the Department of Taxation and Finance to share information needed to evaluate the Non- custodial Parent Earned Income Tax Credit, are not expected to have a substantial fiscal impact.

Effective date

This bill would take effect 90 days after it becomes a law, except that: (1) sections 6 and 7 would only apply to child support orders which incorporate but do not merge stipulations or settlement agreements if the stipulation or agreement was executed on or after the effective date of the bill; and (2) sections 3 and 4 take effect 365 days after the bill becomes law.