By Joe Morey
LCO Child Support Director Sue Smith and Marley Corbine, deputy clerk of the LCO Tribal Court and mother of LCO tribal children, both testified before a joint hearing of the United States House Ways and Means subcommittees for Work and Welfare and Oversight.
The joint hearing was held to address a change in the tax offset program. The Internal Revenue Service (IRS) has proposed suspending the program and not intercepting taxes of parents who are delinquent in paying their taxes.
Smith and Corbine testified that a legislative fix is needed to ensure that states and tribes continue to have the enforcement tools necessary to collect child support on behalf of children and families.
Starting in October 2024, states that utilize contractors to administer child support enforcement programs will be unable to provide child support payments to families from federal tax refunds, unless they implement expensive mitigation plans. Work & Welfare Subcommittee Chairman Darin LaHood (IL-16) said many families in these states could be forced to use other government programs to provide for their children.
“The purpose of today’s hearing is to ensure states and tribes have the tools necessary for effective administration of the Child Support Enforcement Program – a successful and vital support system for millions of families across the country,” LaHood said.
For many families receiving child support, the federal tax refund program is the only child support they receive to help feed, clothe, and house their children. This is especially true from tribal child support enforcement programs. The IRS policy change prohibiting private contractors from collecting back-due child support from federal tax refunds would hurt tribal families as Tribes have a higher share of families whose only child support payments come from the federal tax refund program.
Sue Smith said LCO’s child support program had a wonderful relationship with their state partners.
“Because of the offset program, from February 2019 to 2022, we were able to collect $800,000 and distribute to our families. We are left trying to explain to our families that can’t get these funds while those on state child support can collect it,” Smith explained.
LaHood said 12.7 million families and 18 percent of all children in the United States receive child support from non-custodial parents through the program. Among all families eligible for child support, 24 percent have income below the federal poverty line.
“Child Support Enforcement is one of the most cost-effective federal programs we have. In 2022, the program collected more than $27 billion in payments from non-custodial parents. For every $1 spent on enforcement, nearly $5 was collected for families,” LaHood stated. “Today, we are here to better understand how a recent IRS policy change could significantly disrupt state operation of this program and how we can provide tribes with the same Child Support Enforcement tools currently available to states. Currently, the Social Security Act allows states to use contractors to perform different child support enforcement functions—and 42 states take advantage of this flexibility. The Social Security Act also requires states to use the Federal Tax Refund Offset Program, run by the IRS, as a tool to intercept past due child support from non-custodial parents.”
LaHood went on to say the Internal Revenue Code generally limits contractors’ access to the tax offset program to protect the privacy of federal taxpayer information. He said these two statutes – the Social Security Act, authorizing the child support enforcement program; and Internal Revenue Code, governing access to the offset program, are therefore in conflict with each other. For decades the IRS dealt with this issue by holding in “abeyance” findings that states used contractors to collect past due child support. In effect, looking the other way.
“In February, the IRS issued a communication to all states that, beginning October 1, 2024, the IRS will no longer permit state child support enforcement agencies to use contractors to access the Tax Refund Offset Program,” LaHood said.
Marley Corbine, the deputy clerk of the LCO Tribal Court, also testified before the hearing. Corbine explained how her children’s father is an inconsistent payer of child support over employment issues. Raising her children is expensive and the tax intercept payments are important, she noted.
“My child’s father was never angry about having his taxes intercepted. He knew it was going to happen,” Corbine stated. She explained he expected it and it helped him because it wasn’t money that actually came out of his pocket.
Corbine told the committee that if she wasn’t able to collect from the tax intercept it would be difficult to keep her daughter in activities like dance class.
“Please understand how important these payments are to my family and families like mine across the Tribes and all of America,” Corbine stated.
Corbine said she would be directly affected if the program is suspended and that the father of her children wouldn’t be able to make his child support payments.
James Fleming, North Dakota child support program director, explained to the committee, “Tax offset collections are a significant source of collections. They’re about a little over eight percent of the annual total. More than eight percent of the total annual collections come from offset. The state figures vary, but many of those do get their exclusive collection from tax offset. Our experience running the tribal consortium, interestingly, is that the percentage of tribal parents for whom offset is the only annual collection is actually greater than the state average.”
“Both the IRS and HHS have asked Congress for legislation to harmonize the two laws – and provide the formal legislative authority the IRS needs,” LaHood said. “Absent a legislative change, states and the federal government face hundreds of millions in new costs and millions of families could lose their child support payments.”
LaHood talked about the tribal impact. Sixty federally-recognized tribes administer their own child support programs, he explained. Currently, these tribes must sign contractual agreements with states to access the Tax Refund Offset Program.
“As a result, the same IRS policy that will prohibit use of state contractors will simultaneously cut off tribal access. A legislative solution should also provide parity for tribes to directly access the Federal Tax Refund Offset program necessary for effective child support enforcement. This deserves our immediate attention. Congressional action is needed to provide a permanent solution that recognizes states use of contractors to collect child support for families, without compromising the privacy of federal taxpayer information.”
Sue Smith said, “Confidentiality is number one in our trainings. We follow…all the security measures. We have a required training every year that is put out by the IRS. Our IT, anyone from the legal counsel, the government employees that are involved with child support, they go through that training.”