© 2022 American Payroll Institute, Inc. APA Identifies Payroll Issues in Letter to OCSE Commissioner Gray In April, APA sent a letter to the federal Office of Child Support Enforcement’s (OCSE) Commissioner Tanguler Gray to highlight critical issues for the payroll professional community. The letter outlines some key areas of focus that the APA encourages OCSE to support for process improvements. Risk management in new hire reporting The APA requested that OCSE remain vigilant in protecting employee data and emphasized the need to limit access to new hire reporting data. Employers are required to comply with federal and state laws regarding employee privacy, which often subjects employers to significant liability for data and privacy leaks. In the past two years, the APA tracked more than 30 states’ proposed legislative measures on data privacy. The APA said it stands ready to work with OCSE to prevent further encroachment by other agencies and entities into the National Directory of New Hires and agrees that access should only be granted to those agencies with current authority. Lump-sum payment processing The APA thanked OCSE for the many improvements made to its child support portal related to reporting lump- sum payments, including changes to the match/no match process and creation of the Communication Center. However, the management of lump-sum payments for child support continues to be difficult for employers and states. The APA asked OCSE to consider these challenges and solutions: Employer education. Education and awareness initiatives for payroll professionals and their employers are key to distributing lump-sum amounts to children and families. This will take coordination among APA, state agencies, and OCSE to accomplish. Communication Center. Employers prefer one system to communicate as opposed to 50 different state systems, APA said. The OCSE Communication Center is a valuable investment to improve electronic communication between states and employers. However, too few states use the system and third parties cannot access the center. These third parties include payroll service providers managing child support for their employer clients. Withholding requests vary by state. Employers and their payroll departments continue to find that state requirements for the processing of lump-sum payments are too labor intensive and time consuming. State requirements have different thresholds, timeframes, and instructions. The APA described some concerns for payroll professionals: Use of the IWO form. Employers receive a variety of withholding request documents or lists from states on lump- sum payments. The child support program was designed to use the OMB-approved income withholding for support order (IWO) form based on federal guidelines under 42 USC §666, Requirement of Statutorily Prescribed Procedures to Improve Effectiveness of Child Support Enforcement. The APA went through the lengthy process of requesting that the U.S. Department of Labor issue an opinion letter to clearly define which lump-sum payments are subject to the child support limits under the Consumer Credit Protection Act. This effort was of significant importance to OCSE and former OCSE Commissioner Vicki Turetsky. Even with this clarification and added space on the IWO specifically for lump-sum reporting, states are still not using the IWO. The APA asked OCSE to require states to issue orders for lump-sum payments on the IWO form, in particular, via the e-IWO process. This will likely take some programming at the state level. No “contact state” messaging. States should not be permitted to instruct employers to “contact state” in the OCSE portal in the match/no match report. This approach inappropriately shifts the burden of program development and enforcement on employers. If a state wants to communicate with an employer regarding lump-sum payments following an employer’s report to the portal, the burden should be on the state to contact the employer, APA said. Payout date versus reporting date. Currently, five states (California, Kentucky, Minnesota, Mississippi, and Ohio) have a requirement that advises employers to hold payment of a lump sum from the “payout date” not the “reporting date.” While child support requirements override wage and hour laws about holding onto employees’ wages, the length of time for holding creates a fairness issue for employees that could be eliminated. The APA requested OCSE’s support in pushing states to alter their processes to use the reporting date. Timeframe for state agency response. Seven states (Arkansas, Illinois, Massachusetts, Minnesota, Nevada, Pennsylvania, and West Virginia) do not have any specified timeframe to respond to employers that report lump-sum payments. Without a set response time, employers are left in limbo regarding liability, not knowing when to hold, withhold, and release payments to employees. The APA believes OCSE May 2022 A Supplement to Payroll Currently, Issue 5, Volume 30
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