Relates to income withholding for child support

This bill promotes government efficiencies for the child support program in New York. It aligns the payment processing of non-Title IV-D and Title IV-D income withholding orders.

Summary of Provisions:

Section 1 would amend Civil Practice Law and Rules (CPLR) § 5241(a) to provide a definition for who can be an "issuer" of an income execution.

Section 2 would amend CPLR § 5241(b)(1) to replace the term "creditor" with issuer.

Section 3 would amend CPLR § 5241(c)(1) to specify that the income execution shall be on a form promulgated by OTDA.

Section 4 would amend CPLR § 5241(d) to replace the term "creditor" with "issuer".

Section 5 would amend CPLR § 5241(f) to replace the term "creditor" with "issuer".

Section 6 would amend CPLR § 5241(g) to direct the employer or income payor to follow the directions provided in the income execution with regard to information to be included with each payment remitted.

Section 7 would amend CPLR § 5242 (c), (d), (e), (f) and (g). Subdivision (c) is amended to change "wages" to "income" so that the terminology aligns with that used in CPLR § 5241(a) which subdivision is applicable to both CPLR § 5241 and CPLR § 5242. This section directs the courts, in non-Title IV-D cases, to use the form for income withholding promulgated by OTDA for such purpose. In tandem with the amendments to CPLR § 5241, this section requires the form promulgated by OTDA to comply with the requirements contained in 42 U.S.C. § 666(b) so that it can be characterized as an income withholding order/notice under that statute. Where the income deduction order is for child support or combined child and spousal support orders, the court must serve a copy of the income deduction order on the employer/income payor, the parties, and the state disbursement unit. This section requires employers and income payors to follow the instructions provided on the income deduction order which requires remittances to be paid to and through the state disbursement unit in a child support or combined child and spousal support order and to the creditor in a spousal support only order.

Section 8 would amend Social Services Law § 111-b to authorize OTDA or its fiscal agent to act as the federally-mandated "state disbursement unit" for the purpose of collecting and disbursing support received from employers and income payors in non-Title IV-D cases. It would

further amend the law to align the disbursement timeframe from five to two business days of receipt as required by federal law.

Section 9 provides that the state disbursement unit shall, during the 30 days prior to the effective date of the bill, provide notice to the employer or income payor and to the creditor that any income execution or income deduction order issued prior to such effective date which requires payments to be remitted through the state disbursement unit shall be made payable to the state disbursement unit instead of the creditor on and after such effective date.

Section 10 provides that it will take effect two hundred seventy days following enactment, except that any rule or regulation necessary for the timely implementation of this act on its effective date may be promulgated on or before such date.

Existing Law:

Section 5241 of the CPLR sets forth the procedure and notice requirements pertaining to income withholding for purposes of the enforcement of support obligations. It authorizes the support collection unit (SCU), sheriff, the clerk of court, or an attorney for the creditor to issue an execution for support enforcement, commonly called the "income execution."

Section 5242 of the CPLR authorizes the court to enter an income deduction order for support enforcement.

Subdivision 14 of section 111-b of the Social Services Law provides the authority for OTDA to "receive" and "transmit" support paid pursuant to any order of child support or combined order for child and spousal support which the court has ordered to be paid pursuant to an income deduction order. The department is required to maintain a record of its receipt and transmission of the support which record is to be supplied to a party upon request, but shall not furnish any additional services to enforce the support obligation unless the party seeking enforcement applies for child support services pursuant to Social Services Law § 111-g.

Prior Legislative History:

This is a new bill.

Statement in Support:

Effective May 31, 2012, a new federally-mandated income withholding form (known as an "IWO") must be used for income withholding in Title IV-D cases as well as non-Title IV-D cases initially issued on or after January 1, 1994. This form requires all income withholding in both IV-D and non-IV-D cases to be paid through the state disbursement unit. The form provides only very limited opportunity to add state-specific information relevant to the income withholding process.

In New York, CPLR § 5241 provides for income withholding by SCUs, private attorneys, sheriffs and clerks of court through issuance of an income execution. CPLR § 5242 provides authority for the court to issue an income deduction order to withhold income for the enforcement

of support obligations. Where these mechanisms involve income withholding for the purpose of enforcing a child or combined child and spousal support obligation, they fall under the federal "IWO" mandates set forth in 42 U.S.C. §§ 654b(a)(1)(B); 666(a)(1), (a)(8), and (b).

Provisions in state law for non-IV-D income withholding are different from the IV-D provisions CPLR § 5242(c)(2) requires employers to remit payments to OTDA pursuant to the agency's authority to receive and transmit such funds for non-IV-D child support or combined child and spousal support cases under Social Services Law § 111-b(14). However, CPLR § 5242(c)(2) also specifies that each remittance shall be made payable to the creditor named in the order. In addition, this section provides that such remittances are to be made within ten (10) days of the date that the debtor is paid; however 42 U.S.C. § 666(b)(6) -- which applies to non-IV-D cases because of 42 U.S.C. 666(a)(8)(B)(iii) - sets forth a seven (7) business day requirement.

Directing employers and income payors to follow the instructions on the form promulgated by OTDA will simplify and streamline procedures by making the requirement for non-IV-D cases align with the IV-D case requirements. Similarly, reducing the timeframe for remittances across the board to seven (7) business days will assist in simplifying the process for employers and income payors. More importantly, once statutory authorization is provided to allow remittances to be made payable to the state disbursement unit, employers and income payers will be able to send non-IV-D remittances with IV-D remittances, thus allowing for electronic transmission of funds.

Social Services Law § 111-b(14) is the authorizing statute for the "unit" designated by OTDA referenced in CPLR § 5242(c)(1) to receive non-IV-D income withholding. Amendments are necessary to the section to align with the federal mandate requiring the "state disbursement unit" to collect and disburse the support received pursuant to federal distribution rules, i.e., requiring a change from five to two business days.

Budget Implications:

These amendments will ensure compliance with all federal requirements related to income withholding, thereby avoiding any potential federal fiscal penalties. The amendments address a technical yet important issue by aligning the payment processing of non-Title IV-D income withholding orders with Title IV-D income withholding orders. Although it is anticipated that this will involve a very small number of cases, there will be some costs associated with this proposal, particularly related to systems changes needed to process the withholding. These costs can be accommodated within existing appropriations.

Effective Date:

The bill takes effect two hundred seventy days following enactment, except that any rule or regulation necessary for the timely implementation on its effective date may be promulgated on or before such date.