On this 4th day of April 2002 the National Council of Child Support Directors in its continuing mission to strengthen and improve the nation’s child support enforcement program resolves that:
1. Congress amend Section 6103 of 26 U.S.C. and sections 653, 663, and 664 42 U.S.C. to expand the definition of which agents of the Child Support Enforcement Agency are entitled to receive IRS information for purposes related to child support enforcement, as authorized under Title IV, Part D, of the Social Security Act and to allow such information to be redisclosed to authorized agents for limited purposes necessary for the administration of the Title IV-D program.
Congress define these entities as those described in adopted State Plans of Operation for the Child Support Enforcement Agency. The agents of the Child Support Enforcement Agency may be defined as: local child support enforcement agencies, courts, Friends of the Court, clerks of the court, district attorneys, Indian tribes or tribal organizations under cooperative agreement with the state, and entities under contract with state or local IV-D agencies to provide services related to child support enforcement. The entities entitled to view the information should also include the State Management Information Services agency and its agents providing computer support and development services to the Child Support Enforcement Agency or its agents, as such services are required to administer the automated data. The role of these agents of the State Child Support Enforcement Agency are clearly defined in the State Plan of Operation and/or in cooperative agreements or contracts between the State and its agents.
2. Congress amend Section 6103 of 26 U.S.C. to clarify that income tax refund offset payments posted to a child support case by a State Child Support Enforcement Agency or a state disbursement unit operating under the provisions of Title IV-D of the Social Security Act, or IRS income, return or refund information associated with a child support case or contained in a case file is not considered IRS information subject to the confidentiality provisions of the Internal Revenue Code, but rather is child support information subject to the confidentiality provisions of Title IV, Part D, of the Social Security Act, 42 USC § 654(26); and 654A(d) and (f).
3. Congress amend the Social Security Act, 42 USC § 651, et seq, to require that all agents of the State child support enforcement agency be subject to the same confidentiality and privacy protection safeguards as required of the State agency.
Agents and their employees under contract to a State Child Support Enforcement Agency who receive and use IRS tax information from the State Child Support Enforcement Agency must, as a condition of receipt of the information, be made subject to the same safeguarding requirements and penalty provisions under § 6103 as the State Child Support Enforcement Agency. The State Child Support Enforcement Agency shall be responsible for monitoring compliance by their agents with the safeguarding requirements of § 6103, and shall be held accountable for compliance with those safeguards.
Some of the most powerful tools granted to State Child Support Enforcement Agencies involve access to IRS information for obtaining collections through the IRS tax refund offset program and for locating obligors and their assets. Authority to use IRS information for these purposes is extended by Internal Revenue Code Section 6103, which allows disclosure of IRS information to Federal, State, and local Child Support Enforcement Agencies for the purposes of establishing and collecting child support.
The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 permits disclosure of certain items of IRS information to state and local Child Support Enforcement Agencies and their “agents” under contract with the agency. These items of information are:
The IRS is charged with protecting the very sensitive wage and tax information entrusted to its care. Accordingly, the IRS code is written to prohibit access to IRS data to any entity not specifically authorized. The IRS does not support disclosure to or utilization of this information by any entity other than the State agency since Section 6103 does not specifically cite private contractors, tribal organizations or any other “agents of the State” as a “Child Support Enforcement Agency” providing IV-D services as delineated in their State Plan of Operations. The IRS interprets “federal, state, or local” agency as a traditional governmental IV-D agency. HHS and States maintain that Title IV-D permits States to continue operating through other agents of the State such as local Friends of the Court, clerks of the court, district attorneys, tribes or tribal organizations, and contractors with the state or local IV-D agencies. Accordingly, since the inception of the program, States have used a wide variety of governmental and non-governmental entities to provide child support enforcement services and consistently construed the definition of Child Support Enforcement Agency broadly.
State IV-D agencies are required under the Social Security Act to have safeguards to ensure the integrity of the use of personal data, to ensure access to, and use of, the data only to the extent necessary to carry out the purposes of the child support enforcement program, including specifying the data that may be used for the particular program purposes and the personnel permitted access to the data (42 USC § 654A(d)). Systems controls to ensure strict adherence to these rules, routine monitoring of access to and use of automated data systems, and training of IV-D personnel and its contractors is also required, as well as penalties and other appropriate safeguards.
In addition, State Child Support Enforcement Agencies operating under Title IV-D must accurately record all payments, including payments resulting from IRS income tax refund offsets, that are applied to the support obligations of noncustodial parents in order to maintain an accurate balance owed to determine enforcement actions required to be initiated under Title IV-D. Additionally, the Personal Responsibility and Work Opportunity Act of 1996 requires States to operate a State Disbursement Unit for the collection and distribution of child support payments. The State IV-D agency, or the SDU, maintains the only official child support payment record on cases required to make payments through the Title IV-D agency and/or the SDU. IRS safeguard security reviews have cited that State Child Support Enforcement Agencies may not release income tax refund offset payment information to third parties, including custodial parents, prosecutors, courts, hearing officers, TANF or other eligibility determination agencies, or any other parties. The IRS contends that the income tax refund offset payment information posted to a child support payment record still maintains its identity as “IRS information”. This interpretation severely affects State Child Support Enforcement Agencies’ ability to efficiently and effectively operate Title IV-D programs.
These IRS policies significantly impair the IV-D program’s ability to effectively carry out major functions including location, collection and distribution of support, and promoting family self-sufficiency. In limiting the ways in which Child Support Enforcement Agencies can use IRS data, the IRS may be, in effect, rendering the data less effective than it could be to serve the agreed purpose. For example, an obligor’s reported taxable income can be of enormous benefit to a court in establishing or enforcing a child support obligation, especially in situations in which the obligor does not appear in court or refuses to cooperate with discovery. Although courts are permitted to attribute income to an obligor in setting a child support obligation, this must be based on some information about the individual’s earning capacity. Where this information is readily available to the courts, through the IV-D agency, the judicial process can be streamlined and the court’s authority to set and enforce obligations is greatly enhanced.
The IRS is apparently aware of the benefit of tax data to the IV-D program, and of the need to make the data more accessible. A new temporary regulation (26 CFR 301.6103(p)(2)(B)-1T Disclosure of Returns and Return Information by Other Agencies) permits entities authorized to receive data from the IRS, such as IV-D agencies, to obtain the data through other entities authorized to receive the data, rather than from the IRS directly. For example, a state IV-D agency may access federal tax information through the state tax agency, which already receives IRS data for tax purposes, rather than be required to access the information directly from the IRS. This is a bold move forward that indicates the IRS’ willingness to make tax data more accessible for child support purposes. The proposed NCCSD resolution will provide state Child Support Enforcement Agencies the means to use the IRS data more effectively.