Child Support Enforcement Program, 74898-74921 [E8-28660]

Agencies

• DEPARTMENT OF HEALTH AND HUMAN SERVICES
• Administration for Children and Families
• Children and Families Administration

[Federal Register Volume 73, Number 237 (Tuesday, December 9, 2008)]
[Rules and Regulations]
[Pages 74898-74921]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-28660]



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Part IV





Department of Health and Human Services





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Administration for Children and Families



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45 CFR Parts 301, 302, 303 and 304



Child Support Enforcement Program; Final Rule

Federal Register / Vol. 73 , No. 237 / Tuesday, December 9, 2008 / 
Rules and Regulations

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Administration for Children and Families

45 CFR Parts 301, 302, 303 and 304

RIN 0970-AC24


Child Support Enforcement Program

AGENCY: Office of Child Support Enforcement (OCSE), Administration for 
Children and Families (ACF), Department of Health and Human Services

ACTION: Final rules.

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SUMMARY: These rules implement provisions of title IV-D of the Social 
Security Act (the Act) as amended by the Deficit Reduction Act of 2005, 
Public Law 109-171 (DRA). The rules address use of the Federal tax 
refund offset program to collect past-due child support on behalf of 
children who are not minors, mandatory review and adjustment of child 
support orders for families receiving Temporary Assistance for Needy 
Families (TANF), reduction of the Federal matching rate for laboratory 
costs incurred in determining paternity, States' option to pay more 
child support collections to former-assistance families, and the 
mandatory annual $25 fee in certain child support enforcement (IV-D) 
cases in which the State has collected and disbursed at least $500 of 
support to the family. The rules also make other conforming changes 
necessary to implement changes to the distribution and disbursement 
requirements.

DATES: Effective Dates: These rules are effective February 9, 2009.

FOR FURTHER INFORMATION CONTACT: Paige Hausburg, Policy Specialist, 
OCSE, 202-401-5635, e-mail: paige.hausburg@acf.hhs.gov. Deaf and 
hearing-impaired individuals may call the Federal Dual Party Relay 
Service at 1-800-877-8339 between 8 a.m. and 7 p.m. eastern time.

SUPPLEMENTARY INFORMATION:

I. Statutory Authority

    These final rules are published under the authority granted to the 
Secretary of the U.S. Department of Health and Human Services (the 
Secretary) by section 1102 of the Act, 42 U.S.C. 1302. Section 1102 
authorizes the Secretary to publish rules that may be necessary for the 
efficient administration of the functions for which he is responsible 
under the Act. The Deficit Reduction Act of 2005 (DRA), Title VII, 
Subtitle C--Child Support, sections 7301-7311 amends title IV-D of the 
Act.
    Section 7301(b) of the DRA amends section 457 of the Act and the 
requirements for distribution of support payments to allow States to 
opt to increase child support payments to families and simplify child 
support distribution rules. We made minor conforming changes to the 
distribution requirements in these rules.
    Section 7301(f) of the DRA amends section 464 of the Act to 
eliminate the restriction of access to the Federal tax refund offset 
program to disabled adult children and to allow States to collect past-
due child support certified for offset to the Secretary of the Treasury 
on behalf of all children in the IV-D program who are not minors.
    Section 7302 of the DRA amends section 466(a)(10) of the Act to 
require States to review and, if appropriate, adjust child support 
orders in cases receiving TANF at least once every three years. 
Previously, States needed only to review orders and adjust them, if 
appropriate, upon the request of either parent or, if there is an 
assignment of rights, upon the request of the State agency.
    Section 7308 of the DRA amends section 455(a)(1)(C) of the Act to 
reduce the Federal reimbursement for the costs of genetic testing 
incurred in determining paternity from 90 percent to 66 percent of 
State IV-D program expenditures, effective October 1, 2006.
    Section 7310 of the DRA amends section 454(6)(B) of the Act to 
require States to impose an annual fee of $25 in the case of an 
individual who has never received assistance under a State program 
funded under title IV-A of the Act and for whom the State has collected 
at least $500 of support. These rules also excludes from the fee those 
individuals who are receiving or have received Tribal IV-A assistance. 
This will have a minor impact on the program and it is consistent with 
the intent of the $25 fee that it not be imposed on the families who 
are the most at risk, i.e., those who have received assistance under 
title IV-A of the Act. As discussed later in this preamble, Tribal IV-A 
assistance is not explicitly mentioned in the statute but is authorized 
under title IV-A of the Act. In addition, we amended these rules to 
prohibit collection of the $25 annual fee from individuals who are 
required to cooperate with the IV-D program as a condition of Food 
Stamp eligibility as defined at 7 CFR 273.11(o) and (p). In these 
cases, the fee would need to be collected from the non-Food Stamp 
eligible parent or to be paid by the State.

II. Summary Description of Regulatory Provisions and Changes Made in 
Response to Comments

    The following is a summary of the regulatory provisions included in 
this final rule. The Notice of Proposed Rulemaking (NPRM) was published 
in the Federal Register on January 24, 2007 (72 FR 3093). The comment 
period ended March 26, 2007.
    Changes made in response to comments are discussed in more detail 
under the Response to Comments section of this preamble.

PART 301--STATE PLAN APPROVAL AND GRANT PROCEDURES

Section 301.1--General Definitions

    Under Sec.  301.1, the definition of past-due support and qualified 
child were amended. The changes in the definitions implement revised 
section 464(c) of the Act to eliminate the restriction of access to the 
Federal tax refund offset program to disabled adult children and to 
allow States to collect past-due child support certified for offset to 
the Secretary of the Treasury on behalf of all children in the IV-D 
program who are not minors. The definition of past-due support now 
reads: ``Past-due support means the amount of support determined under 
a court order or an order of an administrative process established 
under State law for support and maintenance of a child, or of a child 
and the parent with whom the child is living, which has not been paid. 
Through September 30, 2007, for purposes of referral for Federal tax 
refund offset of support due an individual who is receiving services 
under Sec.  302.33 of this chapter, past-due support means support owed 
to or on behalf of a qualified child, or a qualified child and the 
parent with whom the child is living if the same support order includes 
support for the child and the parent.''
    The definition of qualified child now reads: ``Qualified child, 
through September 30, 2007, means a child who is a minor or who, while 
a minor, was determined to be disabled under title II or XVI of the 
Act, and for whom a support order is in effect.''

PART 302--STATE PLAN APPROVAL REQUIREMENTS

Section 302.32--Collection and Disbursement of Support Payments by the 
IV-D Agency

    These rules make conforming changes to language in Sec.  302.32 for 
consistency with certain changes made to sections 454 and 457 of the 
Act. Under new

[[Page 74899]]

section 454(34) of the Act, effective October 1, 2009, or up to a year 
earlier at State option, States have a choice to distribute collections 
first to satisfy support owed to families in IV-D cases. The rules make 
technical changes in Sec. Sec.  302.32(b)(2)(iv) and (3)(ii) to delete 
reference to a specific statutory requirement for payments to families 
to simplify the language.

Section 302.33--Services to Individuals Not Receiving IV-A Assistance

    Section 7310 of the DRA adds a new requirement in section 
454(6)(B)(iii) of the Act to require States to impose an annual fee of 
$25 in the case of an individual who has never received assistance 
under a State program funded under title IV-A of the Act and for whom 
the State has collected at least $500 of support.
    Under the proposed rule, Sec.  302.33(e)(1) required that in the 
case of an individual who has never received assistance under a State 
or Tribal program funded under title IV-A of the Act and for whom the 
State has collected at least $500 of support in any given Federal 
fiscal year, an annual fee of $25 for each case in which services are 
furnished be imposed by the State. The structure of paragraph (e)(1) 
has been changed for clarity and a number of changes were made to 
(e)(1) in response to comments. We clarified in paragraph (e)(1)(i) 
that the first condition for the fee requirement is that the State has 
``collected and'' disbursed at least $500 of support to the family. The 
proposed rule at Sec.  302.33(e) did not specify that the State 
``collected'' the money prior to disbursement to the family. In 
response to comments, we clarified in Sec.  302.33(e)(1)(ii) that 
``assistance'' includes former AFDC program assistance, assistance 
under a State TANF program as defined in the TANF rules at 45 CFR 
260.31, and assistance under a Tribal TANF program is defined in the 
TANF rules at 45 CFR 286.10.
    We also amended these rules at Sec.  302.33(e)(3)(i) to prohibit 
collection of the $25 annual fee from a foreign obligee in an 
international case receiving IV-D services under section 454(32)(C) of 
the Act and individuals who are required to cooperate with the IV-D 
program as a condition of Food Stamp eligibility as defined at 7 CFR 
273.11(o) and (p). In response to comments that the Federal statute 
allows a fee, charged to the noncustodial parent, to be retained from 
the collection, we revised paragraph (e)(3)(i) to cross-reference Sec.  
302.51(a)(5) which specifies the conditions under which the 
noncustodial parent may be charged the fee and the fee retained from a 
child support collection. Therefore, with respect to the collection of 
the $25 fee, a noncustodial parent need not have designated a portion 
of the support payment as the fee. We also amended Sec.  
302.33(e)(3)(ii) and (iii) to prohibit collection of the fee from 
individuals who are required to cooperate with the IV-D program as a 
condition of Food Stamp eligibility as defined at 7 CFR 273.11(o) and 
(p).

Section 302.51--Distribution of Support Collections

    Section 7301(b) of the DRA amended section 457(a)(3) of the Act to 
require a State to pay to a family that has never received assistance 
under a title IV-A or IV-E program the portion of the amount collected 
that remains after withholding any $25 annual fee. This statutory 
requirement is addressed in this final rule by an amendment to Sec.  
302.51(a)(1) and by adding paragraph (a)(5).
    The State plan requirement in section 454(34) of the Act concerning 
collection and distribution of support payments by the IV-D agency that 
requires a State to certify which option for distribution it chooses 
for collections in former-assistance cases is in the final rule at 
Sec.  302.51(a)(3)(i) and (ii). In response to comments concerning an 
exemption from the fee for certain individuals required to cooperate 
with the IV-D program as a condition of Food Stamp eligibility, and the 
change to the rules at Sec.  302.33(e)(3) to allow an annual $25 fee to 
be charged to the noncustodial parent and retained from a support 
collection under certain circumstances, we also revised the language in 
proposed Sec.  302.51(a)(5) for consistency.

Section 302.70--Required State Laws

    Section 7302 of the DRA amended section 466(a)(10) of the Act to 
require States to enact laws requiring the use of procedures to review 
and, if appropriate, adjust at least once every three years, child 
support orders for families receiving TANF in which there is an 
assignment of support under title IV-A of the Act. For consistency with 
section 466(a)(10) of the Act, these rules revise Sec.  302.70(a)(10), 
under which the State must have in effect laws providing for the review 
and adjustment of child support orders. The requirements in current 
Sec. Sec.  302.70(a)(10)(i) and (ii) are rendered obsolete by this 
final rule.

PART 303--STANDARDS FOR PROGRAM OPERATIONS

Section 303.7--Provision of Services in Interstate Title IV-D Cases

    Section 454(6) of the Act as amended by section 7201 of the DRA 
does not specifically address which State is to impose and collect the 
$25 annual fee in accordance with the new requirement at Sec.  
302.33(e) in an interstate title IV-D case. Using the Secretary's 
rulemaking authority in section 1102 of the Act, this final rule amends 
Sec.  303.7(e) to require that the title IV-D agency in the initiating 
State impose the annual $25 fee in accordance with the new requirement 
in Sec.  302.33(e). The change is necessary to ensure consistency in 
the collection of the mandatory annual $25 fee in interstate cases.

Section 303.8--Review and adjustment of child support orders

    Section 7302 of the DRA revised section 466(a)(10) of the Act to 
require States to review and, if appropriate, adjust orders in State 
title IV-A cases at least once every three years. In response to 
comments we amended these rules at Sec.  303.8(b)(1) to clearly 
indicate that the time frame for the review of the order begins with 
the establishment of the order or the most recent review of the order, 
whichever is later.

Section 303.72--Request for Collection of Past-Due Support by Federal 
Tax Refund Offset

    Section 7301(f) of the DRA amended the definition of ``past-due 
support'' at section 464(c) of the Act to allow, effective October 1, 
2007, arrearages owed to adult children to be submitted for Federal tax 
refund offset. We amended the regulatory language at Sec.  
303.72(a)(3)(i), with respect to past-due support owed in cases in 
which the IV-D agency is providing services under Sec.  302.33, to 
allow support owed to or on behalf of a child, or a child and a parent 
with whom the child is living if the same support order includes 
support for the child and the parent, to be submitted for Federal tax 
refund offset effective October 1, 2007. Therefore, the prior 
restriction from submitting past-due support owed to adult children is 
no longer in effect.
    Section 7301(b)(2)(C) of the DRA amended section 454(34) of the 
Act, with respect to distribution options, to allow a State to choose 
either to apply amounts collected, including amounts offset from 
Federal tax refunds, to satisfy any support owed to the family first or 
to continue to distribute Federal tax refund offset amounts, as under 
current section 457(a)(2)(B)(iv), to

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satisfy any past-due support assigned to the State first. This final 
rule revises Sec.  303.72(h)(1) to refer simply to distribution in 
accordance with section 457 of the Act, and effective October 1, 2009, 
or up to a year earlier at State option, in accordance with section 
454(34) of the Act, under which States elect which distribution 
priority in former-assistance cases to use under their IV-D programs.
    In response to comments, proposed Sec.  303.72(h)(3)(i) is revised 
to continue the requirement that a IV-D agency, except as provided in 
paragraph (ii), must inform individuals receiving services under Sec.  
302.33 in advance that amounts offset will be applied to satisfy any 
past-due support which has been assigned to the State and submitted for 
Federal tax refund offset. States may opt to continue to distribute in 
this manner with respect to collections made as a result of Federal tax 
refund offset. However, a State may opt, under section 454(34) of the 
Act, to apply amounts offset first to satisfy any current and past-due 
support which is owed to the family. Therefore, the regulatory language 
at Sec.  303.72(h)(3)(ii), was changed to make clear that States are 
not required to send such notices if the State chooses the distribution 
option allowed under 454(34) of the Act.

PART 304--FEDERAL FINANCIAL PARTICIPATION

Section 304.20--Availability and Rate of Federal Financial 
Participation

    Section 7308 of the DRA amends section 455(a)(1)(C) of the Act by 
reducing the previously enhanced Federal matching rate for laboratory 
costs to determine paternity from 90 percent to 66 percent, effective 
October 1, 2006. Accordingly, we revised Sec.  304.20(d) to reflect the 
reduction in the matching rate for genetic testing costs for the 
determination of paternity.
Response to Comments
    We received 28 letters from States, Tribes, advocacy groups, and 
other interested individuals. Below is a summary of the comments and 
our responses.
General Comments
    1. Comment: One commenter said that the proposed rules are 
detrimental to the children and families that are being served by the 
IV-D program and that they are contradictory to the public policy of 
improving the lives of children and families.
    Response: These rules reflect the statutory requirements of the 
DRA. We believe that the mandates and authorities in the DRA will have 
positive effects for families receiving child support enforcement 
services in that the changes in the law build on the successes of the 
1996 welfare reform law, the Personal Responsibility and Work 
Opportunity Reconciliation Act (PRWORA), in strengthening families and 
promoting responsibility. The DRA provisions reflect the need for 
responsible deficit reduction while still retaining generous Federal 
funding of the child support enforcement program.
    2. Comment: One commenter requested that an updated version of 
Action Transmittal 06-01, Child Support Provision in the Deficit 
Reduction Act of 2005 (DRA), dated May 7, 2006, be provided with 
Federal guidance on all of the DRA provisions. For example, section 
7302 of the DRA which addresses assignment and distribution, has many 
aspects on which States need Federal guidance. Another commenter urged 
OCSE to provide guidance on distribution changes.
    Response: We do not believe updating AT-06-01 is appropriate. We 
have worked diligently since March of 2006 to provide guidance to 
States in an effort to assist them in implementing the mandates of the 
DRA.
    3. Comment: Two commenters asked how long States will have after 
the publication of these final rules to align IV-D computer data system 
designs to comply with the final Federal rules.
    Response: The requirements of these final rules are effective 60 
days from the date of publication.
    There is no specific mandate that these statutory provisions be 
automated. With respect to the DRA requirements, States must meet the 
statutory effective date for each provision, subject to the authorized 
delay date: If the State requires legislation to meet the requirements 
imposed by the mandates of the DRA, the effective date of the 
amendments shall be 3 months after the first day of the first calendar 
quarter beginning after the close of the first regular session of the 
State legislature that began after the date of the enactment of the DRA 
(February 8, 2006). In the case of a State that has a 2-year 
legislative session, each year of the session shall be considered to be 
a separate regular session of the State legislature. We recommend that 
should a State need to make changes to its automated system, those 
changes be made as soon as possible.
    4. Comment: One commenter asked if OCSE will impose specific 
automated systems programming requirements on States that choose to pay 
the annual $25 fee themselves.
    Response: OCSE is not imposing specific programming requirements on 
States that choose to pay the fee themselves. When these rules are 
published in final, States will already be imposing the $25 annual fee. 
Any changes to the way the State is imposing the fee that are required 
as a result of publication of the final rules should be made consistent 
with the effective date of the rules. States will not be penalized for 
systems changes for fee procedures they implement prior to issuance of 
these final rules that are reasonable and consistent with the statutory 
fee language. However, the effective date of these rules is 60 days 
from the date of publication in the Federal Register .
    5. Comment: One commenter asked if the Secretary's rulemaking 
authority permits the Secretary to convert a mandatory fee assessed on 
the custodial parent, noncustodial parent, applicant, or State to a 
mandatory fee on the State in light of the fact that the State must pay 
the Federal portion of the fee to the Federal government if it is not 
collected through other means. The commenter said that Executive Order 
12612, section three limits Federal action to instances where 
Constitutional authority for the action is clear and certain. The final 
rules should include the bases on which the Administration claims the 
Congressional intent behind the mandatory assessment of a fee 
translates to a requirement for a State to pay a program fee to the 
Federal government that was otherwise not collected.
    Response: The Federal responsibility is to ensure that 
Congressional intent is met. Requiring a State to charge the fee, but 
allowing a State to assert that collection efforts were unsuccessful 
would contravene the intent of the mandate.
    6. Comment: One commenter stated that the Federal funding cuts 
imposed by the DRA are likely to tax the State IV-D agencies to such an 
extent that services and outreach to employers will suffer.
    Response: The Federal funding of the IV-D program is generous and 
we expect that services to families and outreach to employers will not 
suffer. The Federal OCSE has an office that specifically works to 
provide outreach to employers. To access the internet site with 
information relevant to employers, please go to: https://
www.acf.hhs.gov/programs/cse/newhire/employer/home.htm.

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PART 301--STATE PLAN APPROVAL AND GRANT PROCEDURES

Section 301.1--General Definitions

    1. Comment: One commenter said that in the discussion of Sec.  
301.1 of the proposed rule, the preamble says: ``this amendment will 
allow collection of past-due child support * * * on behalf of 
individuals who were owed child support as children but then aged out 
of the system without having collected the full amount of support owed 
to them'' and implies that the now emancipated child has the right to 
collect past-due support through the Federal tax refund offset program, 
not the custodial parent to whom the support was ordered to be paid.
    Response: The provision allows IV-D cases with arrearages owed to 
emancipated minors to benefit from the highly successful Federal tax 
refund offset program. It does not impact the payee under the support 
order.
    2. Comment: The wording of the definition of ``past-due support'' 
suggests the law change applies to cases where the children are minors 
as of October 1, 2007, and the authority for States to intercept 
arrearages for emancipated children only applies to children that reach 
majority after October 1, 2007. If this isn't the case, we suggest: 
``Effective October 1, 2007, past-due support accrued under a valid 
order for a qualified child can be submitted for FITRO [Federal Income 
Tax Refund Offset] until the past-dues support is paid in full.''
    Response: We have not changed the definition as suggested by the 
commenter. As drafted, the only limitation was with respect to past-due 
support submitted for offset until September 30, 2007. Subsequent to 
that date the definition of past-due support is no longer limited to 
support owed to a ``qualified child'' in a non-assistance case. A 
``qualified child'' was, through September 30, 2007, a child who is a 
minor or who, while a minor, was determined to be disabled under title 
II or XVI of the Act, and for whom a support order is in effect.
    3. Comment: One commenter asked that OCSE confirm that there is no 
requirement to distinguish between cases referred for tax refund offset 
under rules effective until September 30, 2007, and those referred for 
offset after October 1, 2007, because of the change to the definition 
of ``past-due support.'' Two commenters questioned whether the 
definition could be interpreted to mean that persons owed child support 
for non-minor children may apply for IV-D services to gain access to 
the Federal tax refund offset program without having received IV-D 
services when the child was a qualified child.
    Response: There is no requirement to distinguish between cases 
referred for tax refund offset under rules effective until September 
30, 2007, and those referred for offset after October 1, 2007, because 
of the change to the definition of ``past-due support.''
    As of October 1, 2007, States may submit past-due support for any 
case that meets submittal requirements regardless of whether the past-
due support is owed on behalf of a minor. The statute defines ``past-
due support'' as the amount of a delinquency, determined under a court 
order, or an order of administrative process established under State 
law, for support and maintenance of a child (whether or not a minor), 
or of a child (whether or not a minor) and the parent with whom the 
child is living. The statute does not limit referral for Federal tax 
refund offset to past-due support owed in pre-existing IV-D cases or to 
cases in which IV-D services were provided while the obligee was a 
minor. Past-due support in a IV-D case may be submitted for Federal tax 
refund offset if it otherwise meets existing criteria in Sec.  
303.72(a).
    4. Comment: One commenter asked if allocation, distribution, and 
disbursement could be defined in Sec.  301.1, rather than in the 
preamble to Sec.  302.32.
    Response: We have not adopted the commenter's suggestion. We do not 
believe it is appropriate to add definitions of these terms in this 
final rule without allowing the public an opportunity to first comment 
on proposed definitions. However, as discussed in the preamble to the 
NPRM, the term ``distribution'' refers to how a support collection is 
allocated between families and the State and Federal government in 
accordance with Federal requirements. The term ``disbursement'' refers 
to the act of paying, by check or electronic transfer, support 
collections to families. The term ``allocation'' was never defined in 
the preamble to the NPRM, but was used in describing distribution. In 
that context, ``allocated'' refers to the apportionment of collections 
between or among different IV-D cases, or among various obligations 
within a support order (for example, withheld income between two income 
withholding orders for the same employee, or within the same case, 
child support and medical support, or child support and spousal 
support.)
    5. Comment: One commenter stated that depending on how the Internal 
Revenue Service (IRS) will amend its rule of the definition of 
qualified child at 31 CFR 285.3, OCSE should delete the qualified child 
definition and restructure the past-due support definition to read: 
Past-due support means the amount of the support determined under a 
court order or an order of an administrative process established under 
State law for support and maintenance of a child, or of a child and the 
parent with whom the child is living, that has not been paid. For 
purposes of cases referred prior to October 1, 2007, for Federal income 
tax refund offset of support due an individual who is receiving 
services under Sec.  302.33 of this chapter, past-due support means 
support owed to or on behalf of a child who is a minor or who, while a 
minor was determined to be disabled under title II or XVI of the Act, 
and for whom a support order is in effect.
    Response: We believe it is appropriate to include the definition of 
qualified child in IV-D program rules because States and families are 
familiar with that term.
    The Department of Treasury's Financial Management Service amended 
rules at 31 CFR 285.3 in accordance with section 7301(f) of the DRA by 
removing the definition of ``qualified child''. The rules were 
published in the Federal Register on October 22, 2007 (72 FR 59480), 
https://a257.g.akamaitech.net/7/257/2422/01jan20071800/
edocket.access.gpo.gov/2007/pdf/07-5175.pdf.
    6. Comment: One commenter supported the definition to allow use of 
the Federal tax refund offset program to collect past-due child support 
on behalf of children who are not minors. The commenter estimates that 
in his State an additional 3,631 cases will be eligible for offset and 
projects that this will generate over $2 million in collections in the 
caseload with emancipated children. Other commenters supported the 
changes that allow a State to continue to intercept Federal tax refunds 
in cases where children are no longer minors and where there are still 
arrearages owed to the custodial parent and/or the child.
    Response: We agree that this change will garner much needed support 
for families not able to use this enforcement technique in the past and 
appreciate the support of the commenter. States have certified over 
900,000 additional cases for Federal Tax Refund Offset, providing a 
tremendous boost to support collections for families for years to come. 
We expect to receive an additional $200 million in collections during 
processing year 2008.

[[Page 74902]]

PART 302--STATE PLAN APPROVAL REQUIREMENTS

Section 302.32--Collection and Disbursement of Support Payments by the 
IV-D Agency

    1. Comment: Do States under proposed Sec.  303.72 have the option 
to continue to keep the exception that allows Federal tax refund 
offsets to be applied first to satisfy any past-due support which has 
been assigned to the State or to choose to distribute the money in 
accordance with the rules under section 457 of the Act as amended by 
the DRA, which would allow the offset to be paid to the family first?
    Response: Yes. Under current section 457(a)(2)(B)(iv) of the Act 
governing distribution of offsets in former-assistance cases, Federal 
tax refund offset collections must be distributed to arrearages only, 
and must be applied first to any arrearages assigned to the State to 
reimburse public assistance paid to the family. If a States chooses the 
new distribution sequence for former-assistance cases under revised 
section 457 of the Act, the State must distribute Federal tax refund 
offset collections to satisfy any unpaid current support and arrearages 
owed to families first before retaining offset amounts to satisfy 
arrearages assigned to the State.
    States will be required to update State Plan Pre-Print page 2.4, 
Collection and Distribution of Support Payments, to indicate which 
option for distribution in former-assistance cases the State has 
adopted. The statute provides authority to States to make choices among 
a number of options which impact the amount of collections families 
receive. State choices may well vary.

Section 302.33--Services to Individuals Not Receiving Title IV-A 
Assistance General

    1. Comment: One commenter encouraged OCSE to ensure that the final 
rule and the preamble to the final rule implementing the fee be as 
simple and flexible as possible. The commenter is concerned that if the 
rules for imposing and collecting the fee become too detailed or 
complex, it will become more difficult for State governments to collect 
the fees. OCSE should provide general guidance and leave States the 
flexibility to determine how the rule applies in specific case 
scenarios.
    Response: OCSE has a longstanding partnership with States and the 
approach to developing rules and working with the States supports 
flexibility for State choices. We have responded to questions 
concerning some specific case scenarios in this section of the 
preamble.
    2. Comment: One commenter is concerned with the fact that States 
must implement the $25 annual fee prior to issuance of the final rules. 
The cost could be significantly increased depending on the content of 
the final rules and could result in additional systems programming 
changes.
    Response: As stated in DCL-06-16, section 7310 of the DRA amends 
section 454(6) of the Act to provide that a State child support plan 
must provide for the imposition of an annual fee of $25 in each case in 
which an individual has never received assistance under a State program 
funded under title IV-A of the Act and for whom the State has collected 
at least $500 of support, effective October 1, 2006.
    In order to certify compliance with this new requirement, States 
are required to submit a State plan amendment certifying to the 
Secretary that the State has implemented the $25 annual fee requirement 
by the effective date in the particular State. States will not be 
penalized for fee procedures they implement to meet the statutory 
effective date that are reasonable and consistent with the statutory 
fee language. Additional changes for compliance with the final rule may 
be necessary and States must make any necessary changes required under 
the final rules. The effective date of the rule is 60 days from the 
date of publication.

Annual $25 Fee--Section 302.33(e)(1)

    1. Comment: Four commenters asked for the definition of ``never-
assistance'' for purposes of assessing the fee. Another commenter said 
that proposed Sec.  302.33(e)(1) states that receipt of any type of 
TANF assistance exempts an individual from the $25 mandatory fee. The 
commenter goes on to say that OCSE-AT-99-10 includes types of IV-A 
benefits not included in the explanation of never-assistance in the 
proposed rule, and therefore not exempt from the fee. If a case 
receives assistance as defined in AT-99-10, but is not referred to the 
IV-D agency, the IV-D agency may not know whether the fee is required. 
One commenter opposed allowing an exemption from the fee for those 
cases which do not meet the definition of ``assistance'' at 45 CFR 
260.31.
    Response: We have determined that a definition of the term ``never-
assistance'' is not appropriate because that term has different 
connotations within the IV-D program depending on the context in which 
it is used. OCSE-AT-99-10 transmitted the definition of ``assistance'' 
found in the TANF program rules. The term ``assistance'' is 
appropriately defined in the rules governing the TANF program and 
specifies what services are included in the definition of 
``assistance'' as well as what benefits are not considered TANF 
assistance. Assistance is defined in the TANF rules at 45 CFR 260.31 
as:
    ``(a)(1) The term ``assistance'' includes cash, payments, vouchers, 
and other forms of benefits designed to meet a family's ongoing basic 
needs (i.e., for food, clothing, shelter, utilities, household goods, 
personal care items, and general incidental expenses).
    (2) It includes such benefits even when they are:
    (i) Provided in the form of payments by a TANF agency, or other 
agency on its behalf, to individual recipients; and
    (ii) Conditioned on participation in work experience or community 
service (or any other work activity under Sec. 261.30 of this chapter).
    (3) Except where excluded under paragraph (b) of this section, it 
also includes supportive services such as transportation and child care 
provided to families who are not employed.
    (b) It excludes:
    (1) Nonrecurrent, short-term benefits that:
    (i) Are designed to deal with a specific crisis situation or 
episode of need;
    (ii) Are not intended to meet recurrent or ongoing needs; and
    (iii) Will not extend beyond four months.
    (2) Work subsidies (i.e., payments to employers or third parties to 
help cover the costs of employee wages, benefits, supervision, and 
training);
    (3) Supportive services such as child care and transportation 
provided to families who are employed;
    (4) Refundable earned income tax credits;
    (5) Contributions to, and distributions from, Individual 
Development Accounts;
    (6) Services such as counseling, case management, peer support, 
child care information and referral, transitional services, job 
retention, job advancement, and other employment-related services that 
do not provide basic income support; and
    (7) Transportation benefits provided under a Job Access or Reverse 
Commute project, pursuant to section 404(k) of the Act, to an 
individual who is not otherwise receiving assistance.
    (c) The definition of the term assistance specified in paragraphs 
(a) and (b) of this section:
    (1) Does not apply to the use of the term assistance at part 263, 
subpart A, or at part 264, subpart B, of this chapter; and

[[Page 74903]]

    (2) Does not preclude a State from providing other types of 
benefits and services in support of the TANF goal at Sec. 260.20(a).''
    In response to comments, the proposed rules at Sec.  302.33(e)(1) 
have been amended to add reference to the receipt of assistance under 
the former AFDC programs as well as to include a cross-reference to the 
TANF rules definitions of assistance at 45 CFR 260.31. For consistency 
with the inclusion of the cross-reference to the definition of TANF 
assistance, we also included a cross-reference to the definition of 
Tribal TANF assistance 45 CFR 286.10.
    2. Comment: One commenter asked if the Federal rules could be 
interpreted to indicate that the fee is not assessed any time there is 
an assignment of support rights to the State as a condition of 
receiving assistance under Title IV-A of the Act. The commenter also 
asked if the final rules will allow individual States to determine the 
definition of ``never IV-A assistance cases.''
    Response: The answer to both questions is no. The Federal statute 
at section 454(6) of the Act does not limit those who are exempt from 
the fee to those who have assigned their support rights to the State 
under a State TANF program. We believe that a cross-reference to a 
definition of assistance in these rules is critical to ensure 
consistency across State IV-D programs. Any individual who is required 
to cooperate with the IV-D program as a condition of Food Stamp 
eligibility as defined at 7 CFR 273.11(o) and (p) will not be charged 
the fee (although, if all other conditions are met--an individual in 
the case receiving IV-D services has never received State AFDC, State 
or Tribal TANF assistance, and the State has collected and disbursed at 
least $500 of support to the family-- the other parent or the State may 
ultimately be responsible for paying the fee). This is discussed in 
more detail later in the preamble. In addition, the TANF rules exclude 
from the definition of ``assistance'' under the TANF program, anything 
in 45 CFR 260.31(b)(1)-(7). If the only TANF benefits received by an 
individual fall into the categories listed in 45 CFR 260.31(b)(1)-(7), 
those individuals would not be considered to be receiving or to have 
received assistance under title IV-A of the Act unless they received 
assistance under the former AFDC program. Therefore, those individuals 
are subject to the fee if all other conditions for collecting the fee 
are met.
    3. Comment: One commenter appreciated that OCSE has proposed a 
broad definition of IV-A assistance in order to allow States to exempt 
as many families as possible from the fee. However, this definition is 
broader than the definition of ``IV-A assistance paid to the family'' 
set forth in OCSE AT 99-10. Some States will only be able to identify 
families receiving assistance under this narrower definition, which 
essentially covers those who have been paid cash assistance and had 
their cases referred to the IV-D agency. We recommend that OCSE permit 
State flexibility in this area, so that States must exempt from the fee 
those cases in which IV-A assistance has been paid to the family, but 
may exempt cases receiving the broader type of IV-A benefits, as 
defined at 45 CFR 260.31(b), when a State can easily identify these 
cases.
    Response: As discussed earlier, the definition of assistance under 
the State and Tribal TANF program rules is appropriate and a cross-
reference has been added to ensure consistency among State definitions 
and similar treatment of families regardless of the State in which they 
live. Individuals in TANF cases that only receive benefits excluded 
from the TANF definition of assistance in 45 CFR 260.31 do not assign 
rights to support and should not be referred to the IV-D agency. An 
application for IV-D services would be required in such cases to be 
considered a IV-D case. See PIQ-05-06, dated December 22, 2005 [https://
www.acf.hhs.gov/programs/cse/pol/PIQ/2005/piq-05-06.htm], for treatment 
of inappropriately referred cases.
    4. Comment: One commenter wanted to know whether to assess the fee 
on a case that had received IV-A assistance, as defined by AT 99-10, 
but was not referred by the IV-A agency to the IV-D agency.
    Response: Referral by the IV-A agency is irrelevant to the 
imposition of the $25 fee. If there is a IV-D case that otherwise meets 
the conditions for the imposition of the fee, the case is subject to 
the fee.
    5. Comment: Two commenters stated that tracking whether someone 
(for example, in an interstate case) is receiving Tribal IV-A 
assistance will be problematic since many State IV-D agencies do not 
electronically communicate with Tribes. The commenter asked for 
suggestions for overcoming this barrier. One commenter proposed that 
OCSE require States to establish procedures so all former or current 
Tribal TANF clients can inform the State of their TANF status, so a 
State does not inadvertently impose the fee.
    Response: Although States may not electronically communicate with 
Tribes operating Tribal TANF programs, ascertaining whether an 
individual has received Tribal IV-A assistance is not an insurmountable 
barrier. As the IV-D caseworker is soliciting information from the 
custodial parent in an application case, questions specific to receipt 
of IV-A assistance should be asked. States may want to develop specific 
questions related to IV-A assistance and benefits to determine what 
type of IV-A assistance, if any, a custodial parent or a child in the 
family receives/received. IV-D agencies will have necessary case 
records to identify current TANF cases referred to the IV-D agency and 
former TANF cases that continue to receive IV-D services. If a 
custodial parent tells the IV-D office that he or she or the child 
received Tribal IV-A assistance, the State would need to contact the 
Tribal IV-A office to confirm receipt of Tribal TANF. By the close of 
FY 2006, 52 Tribal TANF plans were approved to operate on behalf of 236 
Tribal and Alaskan Native Villages. If a State finds it necessary to 
confirm receipt of Tribal TANF, the Tribal TANF contact list may be 
accessed on the ACF Internet via: https://www.acf.dhhs.gov/programs/dts/
ttanfcont_1002.htm and, as appropriate, the exemption from the fee 
noted in the IV-D case record.
    This situation may not occur in many cases. The State would only be 
required to verify whether an individual received this assistance in 
instances in which an individual had asserted that he or she had 
received or is receiving Tribal TANF. States should document in the 
case record whether an exemption is appropriate.
    6. Comment: Three commenters asked for clarification on how to 
ascertain if an applicant for IV-D services formerly received or 
currently receives TANF. Another commenter said that the NPRM does not 
clarify the level of documentation a State IV-D program needs to exempt 
a case from a fee if a custodial parent says he or she received AFDC or 
TANF in another State or Tribal program. Such verification could 
include documentation from another State agency or language in a court 
order. The commenter suggested that if the IV-D agency receives a sworn 
statement from the custodial parent stating the parent received IV-A 
assistance in another State, that would be sufficient documentation for 
the family and for the State and Federal government. This would be 
comparable to requirements for signatures for the Federally approved 
interstate form ``Affidavit in Support of Establishing Paternity'' and 
a signature of a parent on a paternity acknowledgement under 42 U.S.C. 
652(a)(7).

[[Page 74904]]

    Response: In order for a State to determine that an individual 
never received assistance under a State or Tribal IV-A plan, the State 
should ask the individual applying for services. Current State TANF 
recipients do not apply for IV-D services. The State may also confirm 
with the State or Tribal IV-A program to ensure that assistance has not 
been provided. However, States are not required to have a confirmation 
from every State that the client has never received assistance; 
contacting the State or Tribal program named by the applicant would be 
sufficient.
    Some States may determine it is in the best interest of the 
individual and for documentation purposes to develop a procedure for 
instances in which an individual claims receipt of TANF in another 
State. A State may consider a sworn statement from the custodial parent 
stating the parent received qualifying assistance under a former State 
AFDC program or the current TANF program (with the exception of 
emergency assistance as defined in 45 CFR 260.31(b)(1)-(7)) in another 
State to be adequate documentation for exemption from the fee.
    7. Comment: One commenter recommended providing instructions to 
address situations such as when the individual custodial parent who has 
never received assistance as defined under Sec.  302.33(e)(1) has a IV-
D case and moves from one State where the fee is paid by the State, and 
applies for services in another State that collects the fee from the 
noncustodial parent or retains the fee from the collection made for the 
custodial parent, during the same fiscal year. The commenter asked for 
clarification as to whether both States will be required to impose the 
fee during the same fiscal year, regardless of which collection method 
or methods are used.
    Response: In such a situation, the second State may document in the 
case record that the previous State collected the fee. The $25 annual 
fee may be imposed and paid or collected only once per year in a case 
in which the fee is assessed, regardless of where the individual lives. 
A sworn statement from a custodial parent would not be adequate in this 
instance because the State may have absorbed the fee or the 
noncustodial parent may have paid the fee without the custodial 
parent's knowledge. A IV-D agency should ask each applicant for 
services if the fee has already been collected or paid for the year. If 
an individual moves to a different State, the second State should 
confirm with the first State that the fee was collected or paid by the 
State and document that the fee was accounted for or paid to another 
State.
    8. Comment: One commenter believes that the Food Stamp Act 
prohibits the collection of the annual $25 fee on Food Stamp-only cases 
when the State has elected to require IV-D services for families who 
receive food-stamps.
    Response: The Food Stamp rule at 7 CFR 273.11(o)(1), Option to 
disqualify custodial parent for failure to cooperate provides the State 
Food Stamp agency the option to disqualify, or make ineligible for the 
Food stamp program an individual who refuses to cooperate with a State 
IV-D agency. This section further clarifies that if the State Food 
Stamp agency chooses to implement the provision to disqualify an 
individual for non-cooperation with the State child support agency, it 
must refer all appropriate individuals to the IV-D agency to establish 
paternity of the child and establish, modify, or enforce a support 
order with respect to the child and the individual in accordance with 
the cooperation provision in section 454(29) of the Act. If the 
individual is receiving TANF or Medicaid, or assistance from the State 
IV-D agency, and has already been determined to be cooperating, or has 
been determined to have good cause for not cooperating, then the State 
agency shall consider the individual to be cooperating for Food stamp 
purposes. Section 273.11(o)(4) of Title 7 says that a State agency 
electing to implement the provision to disqualify a custodial parent 
for failure to cooperate shall not require the payment of a fee or 
other costs for services provided under Part D of title IV-D of the 
Social Security Act. The Food Stamp agency issued guidance on August 
22, 2007, to States to explain the impact of the fee provision in the 
DRA on the Food Stamp program. OCSE transmitted this through IM-07-09, 
dated September 24, 2007. This may be viewed at https://
www.acf.dhhs.gov/programs/cse/pol/2007-im.html.
    We are aware of five States that have opted to require cooperation 
by the custodial parent with the IV-D program in order to be eligible 
to receive Food Stamp services. Those States are Idaho, Wisconsin, 
Michigan, Mississippi, and Florida. Of those five States, Mississippi 
and Wisconsin also require cooperation by the noncustodial parent with 
the IV-D program in order to receive Food Stamp services.
    The commenter asks whether it is a correct interpretation of the 
Food Stamp Act that in a ``Food Stamp-only'' case the IV-D agency will 
not require the payment of a fee or other costs for services provided 
under title IV-D of the Act. In a IV-D case in which the custodial 
parent is required to cooperate with the IV-D agency in order to be 
eligible for Food Stamps, even when the IV-D case otherwise meets the 
criteria for the imposition of the fee, the fee may not be assessed 
against the custodial parent. However, the statute provides four 
options for payment of the fee. In this instance, the fee would be 
required to be paid either by the State, by the noncustodial parent or 
charged to the noncustodial parent and deducted from a collection after 
current support and any payment on arrearages for the month under a 
court or administrative order have been disbursed to the family.
    In instances in which the noncustodial parent in a IV-D case is 
receiving Food Stamps and is required to cooperate with the IV-D 
agency, if the custodial parent in the same case is not receiving Food 
Stamps, and the case otherwise meets the criteria for the fee 
assessment (i.e., an individual in the case receiving IV-D services has 
never received State AFDC, State or Tribal TANF assistance, and the 
State has collected and disbursed at least $500 of support to the 
family), the fee could be taken from the collection, charged to the 
custodial parent or paid by the State.
    In a IV-D case in a State in which the Food Stamp agency requires 
cooperation with the IV-D agency and both the custodial and 
noncustodial parent are recipients of Food Stamps, and the case in 
which the noncustodial parent is involved otherwise meets the 
conditions for the imposition of the fee (i.e., the individual in the 
case has never received State AFDC, State or Tribal TANF assistance, 
and the State has collected and disbursed at least $500 of support to 
the family), the State would be required to pay the fee.
    9. Comment: Seven commenters stated that the proposed rules are 
unclear on whether current or former IV-E assistance cases are exempt 
from the annual $25 fee assessment. These commenters believe that in 
some places, the proposed rules for the annual $25 fee appear not to 
exclude from the fee individuals who have received assistance under 
title IV-E while elsewhere in the rules reference to IV-E cases appears 
to exclude those cases from the fee. The commenters are seeking 
clarification on whether or not the proposed rules require the State to 
assess the annual fee in IV-E cases.
    Response: In any current or former IV-E assistance case in which 
the criteria for imposition of the fee are met, a fee is required. As 
stated earlier, a fee is assessed for any case in which the individual 
has never received assistance under a former State AFDC program, or 
State or Tribal TANF and the State has

[[Page 74905]]

collected and disbursed at least $500 of support to the family. The 
impact of the use of the ``disbursed to the family'' regulatory 
language is that current IV-E cases will rarely, if ever, be subject to 
the fee because the family may never receive $500 in support 
collections in a Federal fiscal year. However, in instances in which an 
individual formerly received title IV-E assistance, and all conditions 
for imposition of the fee are met, including disbursement of $500 to 
the former IV-E family, then an annual fee is required.
    10. Comment: One commenter stated that the proposed rule at Sec.  
302.33(e)(1) defines the cases charged the fee as those in which an 
individual has never received assistance under a State or Tribal title 
IV-A program, and for whom the State has disbursed to the family at 
least $500 of support in the fiscal year. Since one requirement for 
imposing the fee is that the payment is disbursed to the family and 
foster care payments are disbursed to a State agency, are IV-E foster 
care cases exempt from the fee?
    Response: See preceding response. As explained in the preamble to 
the NPRM, the $500 in support collection must have been disbursed to 
the family in a title IV-D case before imposing the $25 fee because to 
allow otherwise would result in imposition of a fee in cases in which 
support is collected but not disbursed to the family. To allow the fee 
to be collected prior to the collection being disbursed to the family 
would be inconsistent with the statute's concept that a case subject to 
the $25 fee would have benefited from receipt of the $500 in support 
during the year before an annual $25 fee is imposed.
    The impact of the use of the ``disbursed to the family'' regulatory 
language is that current IV-E cases and possibly other categories of 
cases, for example some former IV-E cases, will not be subject to the 
fee if $500 has not been disbursed to the family. We believe that this 
is reasonable since the family will not have received $500 in support 
if the support is assigned to the State and retained in whole or in 
part to reimburse the State and Federal government for the costs for 
assistance programs under the title IV-E.
    11. Comment: One commenter asked for clarification as to whether or 
not cases in which an individual never received assistance under title 
IV-A of the Act but has received services from other means-tested 
programs like Food Stamps, IV-E foster care, and Medicaid are exempt 
from the fee. The commenter also requested confirmation that 
collections that are assigned and not disbursed to the family do not 
count towards the $500 of support in a year.
    Response: As mentioned earlier in the preamble, an individual who 
has received assistance under a State AFDC program, assistance as 
defined in Sec.  260.31 under a State TANF program, or assistance as 
defined in Sec.  286.10 under a Tribal TANF program, is exempt from the 
$25 annual fee. As discussed above, in situations in which an 
individual in a IV-D case formerly received IV-E foster care services 
and $500 of support has been disbursed to the family that case would be 
subject to a fee. Similarly, Medicaid-only cases, in which child 
support collected is paid to the family and assigned cash medical 
support may be retained by the State may be subject to the fee if other 
conditions are met; i.e., the individual in the case has never received 
AFDC, State, or Tribal title IV-A assistance, is not required to 
cooperate with the IV-D agency in Food Stamp cases, and the State has 
collected and disbursed at least $500 of support to the family within 
the Federal fiscal year.
    While the statute at section 454(6) of the Act does not 
specifically mention recipients of Food Stamps, individuals who are 
cooperating with and receiving services from the IV-D program as a 
condition of Food Stamp eligibility under 7 CFR 273.11(o) and (p) may 
not be charged the $25 annual fee. As discussed earlier, in such cases 
the collection of the $25 annual fee from the individual required to 
cooperate is prohibited. However, the fee must be assessed and 
accounted for if all conditions for assessing the fee are met. These 
final rules reflect this change to the proposed rule at Sec.  
302.33(e)(3)(i)(B), (ii) and (iii) to prohibit collecting the fee from 
individuals required to cooperate with the IV-D program as a condition 
of eligibility for Food Stamps.
    12. Comment: One commenter stated that in the preamble, the terms 
``family'' and ``caretaker relative'' are used rather than the term 
``individual'' as stated in the proposed rule. The commenter asked if 
the determination of ``never received assistance'' is applied to any 
individual in the case.
    Response: Yes, the determination that an individual never received 
assistance is applied to any individual in the case. If any individual 
in a IV-D case received assistance as defined in Sec.  302.33(e), that 
case is exempt from the $25 annual fee.
    13. Comment: One commenter is seeking clarification of the fee 
provision for title XIX Medicaid-only cases which are only receiving 
medical services under 45 CFR 302.33(a)(5). The proposed medical 
support rules will result in more orders for cash medical support in 
IV-D cases. Some of those IV-D cases will be Medicaid-only cases 
receiving IV-D services under Sec.  302.33(a)(1)(ii). Some will already 
have support orders which will include a requirement for the 
noncustodial parent to pay both child support and cash medical support. 
Many will be cases in which the custodial parent has never received IV-
A assistance. In some of the Medicaid-only cases, the custodial parents 
will inform the IV-D agency they only want medical support services, 
and not child support services. Because these are IV-D cases, though, 
all support payments under the support orders may be made through the 
State Disbursement Unit (SDU). However, the IV-D agency is not 
providing child support enforcement services, but merely receiving and 
disbursing child support payments through the SDU, so the custodial 
parent is not an individual ``for whom the State has collected at least 
$500 of support.''
    Response: Because in these Medicaid-only cases IV-D child support 
services have been refused, the IV-D agency is not providing child 
support enforcement services to the family, but merely receiving and 
disbursing the child support payments through the SDU. In these cases, 
even when the custodial parent receives $500 of child support in the 
Federal fiscal year, that support is not considered to have been 
collected and disbursed to the family through IV-D program services and 
thus no fee is charged.
    14. Comment: One commenter asked whether to assess the fee for a 
custodial parent who was on Medicaid one year, and the next year 
Medicaid ended, and the custodial parent (who declined child support 
enforcement services while receiving Medicaid) requests, in response to 
the notice, all IV-D services be provided including child support and 
medical support services. When the IV-D agency disburses at least $500 
in the new year to the custodial parent, is a $25 annual fee due for 
that case that year?
    Response: In accordance with 45 CFR 302.33(a)(4), whenever a family 
is no longer eligible for assistance under the State title IV-A, IV-E 
foster care, and Medicaid programs, the IV-D agency must notify the 
family, within 5 working days of the notification of ineligibility, 
that IV-D services will be continued unless the IV-D agency is notified 
by the family to the contrary. The notice must inform the family of the 
consequences of continuing to receive IV-D services, including the 
available services and the State's fees, cost recovery, and 
distribution policies.
    If the scenario described by the commenter occurs, the fee would be

[[Page 74906]]

imposed in the case if all of the other conditions for imposing the fee 
are met; i.e., the individual in the case has never received AFDC, 
State, or Tribal title IV-A assistance, and the State has collected and 
disbursed at least $500 of support to the family within the Federal 
fiscal year. If the custodial parent or non-custodial parent is 
required to cooperate with the IV-D program as a condition of 
eligibility for Food Stamps, the fee could not be collected from such 
individual but could be collection from the other parent or be paid by 
the State.
    15. Comment: One commenter requested that OCSE redefine public 
assistance in the rules to include recipients of means-tested programs 
outside of TANF such as Medicaid, SCHIP, and Food Stamps as exempt from 
the fee. Another commenter said that the proposed rules do not exempt 
Medicaid-only/former Medicaid-only cases from the fee and believes it 
is contrary to sound public policy because Medicaid-only recipients who 
are referred to IV-D for services do not have a choice whether or not 
to participate. They have limited income; Medicaid-only recipients are 
allowed to opt out of child support services.
    Response: The Federal statute at section 454(6) of the Act does not 
provide for any additional categories of exempt individuals such as 
those who may be receiving, or who may have received in the past, other 
types of Federal, State or Tribal assistance. However, as discussed 
earlier, the impact of the use of the ``disbursed to the family'' 
regulatory language is that current IV-E cases and possibly other 
categories of cases, for example some former IV-E cases, will not be 
subject to the fee if $500 has not been disbursed to the family. We 
believe that this is reasonable since the family will not have received 
$500 in support if the support is assigned to the State and retained in 
whole or in part to reimburse the State and Federal government for the 
costs for assistance programs under the title IV-E. In addition, under 
specific circumstances, the fee would not be collected from individuals 
receiving Food Stamps based on language in the Food Stamp Act. See 
Comment and Response 8 in this section of the preamble.
    16. Comment: One commenter supports the exemption of individuals 
who have received Tribal IV-A assistance from the fee, but expressed 
concern that referring to Tribal IV-A programs in the State rules could 
lead to changes in the Tribal IV-D program. The commenter supports the 
protection of all Tribal individuals and programs from the demands the 
new rules would imply.
    Response: The statute at section 454(6) of the Act and these rules 
do not apply to the Tribal IV-D program cases.
    17. Comment: One commenter agrees with OCSE's decision to exempt 
current and former Tribal title IV-A assistance cases along with 
current and former State title IV-A cases from the fee.
    Response: We appreciate the support of the commenter. As stated in 
the preamble to the NPRM, we believe that it is authorized and 
consistent with the purpose and the scope of the statutory exemption to 
exempt individuals who are receiving or have received Tribal title IV-A 
assistance as a subset of the category of those who are exempt from the 
fee.
    18. Comment: One commenter asked if a case in which the only 
collection made is a Federal tax refund offset that is applied to 
satisfy an assigned arrearage, or a non-Federal tax refund offset that 
is applied to a case in which the only dollar amount owed is assigned 
to the Medicaid agency, is exempt from the $25 collection fee since a 
disbursement was not sent to the family.
    Response: Yes, in the instance described, no annual fee would be 
due because the State had not disbursed at least $500 of support 
collected to the family.
    19. Comment: One commenter asked for clarification of whether a 
case is eligible for the $25 annual fee if an individual in a current 
IV-D case had received IV-A assistance in a prior IV-D case. For 
example, if the noncustodial parent is cur