Extending the EITC to Noncustodial Parents: Potential Impacts and Design Considerations. A. Eligibility of Non-IV-D Noncustodial Parents

05/23/2009

As noted earlier, New York and Washington, D.C., require that noncustodial parents pay child support on behalf of a IV-D case to be eligible for the NCP EITC.[20] The IV-D program is operated by state and local governments with oversight from the federal government. The program provides child support enforcement services to current and former welfare families free of charge, and to other families for a small fee. In fiscal year 2006, the IV-D program collected about $24 billion in child support for IV-D cases (Office of Child Support Enforcement [OCSE] 2009).

Because New York and Washington, D.C., limit eligibility for the NCP EITC to noncustodial parents with a IV-D case, the IV-D programs in these jurisdictions can certify which noncustodial parents meet the child support eligibility criteria for the NCP EITC. All state IV-D programs track amounts paid and owed as part of their child support enforcement functions, and data regarding IV-D orders and payments are subject to federal audit. The New York and Washington, D.C., IV-D programs inform their respective tax departments regarding which noncustodial parents meet the child support eligibility criteria for the NCP EITC. The tax departments then restrict the NCP EITC to noncustodial parents who are certified by the IV-D program as child support eligible for the credit. In this way, the child support eligibility criteria for the NCP EITC are “pre-audited,” reducing the potential for erroneous claims for the NCP EITC by noncustodial parents who, in fact, do not meet the child support eligibility criteria.

Most noncustodial parents who would be income and child support eligible for an NCP EITC already participate in the IV-D program. Precise numbers are not available, but an estimated 84 percent of custodial families who receive child support and have incomes below 200 percent of the poverty level participate in the IV-D program.[21] Noncustodial parents who do not currently participate in the IV-D program might request IV-D services in order to become eligible for an NCP EITC requiring IV-D participation.

In contrast to the New York and D.C. policies, S. 1626 states that noncustodial parents must pay support through a “State agency responsible for administering the State plan under part D of title IV of the Social Security Act.” This could be interpreted to mean that noncustodial parents do not necessarily have to pay on behalf of a IV-D case; they simply have to make payments through a state IV-D agency. In addition to enforcing child support for IV-D cases, state IV-D programs operate state disbursement units (SDUs) that disburse IV-D child support collections as well as private (non-IV-D) child support collections made through automatic wage withholding (Roberts 2000). In fiscal year 2006, the IV-D program disbursed $3.6 billion in private child support collections through SDUs (OCSE 2009). States may vary in the amount and reliability of data regarding non-IV-D child support orders. Such issues should be taken into consideration when considering whether to extend an NCP EITC to private cases making payments through an SDU.

View full report

Preview
Download

"report.pdf" (pdf, 143.26Kb)

Note: Documents in PDF format require the Adobe Acrobat Reader®. If you experience problems with PDF documents, please download the latest version of the Reader®