TURNING INNOVATIVE COMPENSATION INTO INCREASED CHILD SUPPORT COLLECTIONS: LUMP SUMS

Transcription

1 Tuesday: Breakout Session 4 Workshop D Time: 1:00 p.m. - 2:15 p.m. Location: Atlantic 8 TURNING INNOVATIVE COMPENSATION INTO INCREASED CHILD SUPPORT COLLECTIONS: LUMP SUMS Employers are finding new ways to compensate their employees. Bonuses and commissions are being used more often and in different ways. Join us at this session as our panel of federal, state, and employer representatives inform you about efficient ways to tap into this rich source of child support collections. Presenters: Barry J. Brooks Assistant Attorney General Child Support Division Office of the Attorney General of Texas Austin, TX Jim Owen Senior Director of Administration American Payroll Association Grand Rapids, MI Moderator: Sherri Grigsby Manager of Employer Services and External Interfaces Federal Office of Child Support Enforcement (OCSE) Washington, DC ERICSA 46th Annual Training Conference & Exposition Myrtle Beach, South Carolina 09

2 Turning Innovative Compensation into Increased Child Support Collections: Lump sums Moderator: Sherri Grigsby, Program Manager, OCSE Speaker: Jim Owen, Senior Director of Administration, American Payroll Association Speaker: Barry Brooks, Assistant Attorney General, TX Office of the Attorney General

3 How is Compensation Changing? Types of Compensation Payroll Issues Potential to Increase Collections Notifying State CSE Agencies of Lump Sums Employer issues State CSE agency issues

4 Lump Sums Employer s Confusion with definitions: Lump sum bonuses Severance payments Advance vacation payouts Sick payouts Tips Premiums Other

5 Lump Sums: The Texas Model Texas Family Code Sec WITHHOLDING FROM LUMP-SUM PAYMENTS. (a) In this section, "lump-sum payment" means income in the form of a bonus or commission or an amount paid in lieu of vacation or other leave time. The term does not include an employee's usual earnings or an amount paid as severance pay on termination of employment. 4

6 Lump Sums TEXAS - Employer Reporting Criteria Order Requires WH for Arrears Receives WH Order in Title IV-D Case Lump Sum in Excess of $ 500 Agency has 10 Days to Reply 5

7 Lump Sums Employer challenges How to report before we know amounts Ease of reporting information back to Agency / e-iwo methods Contact person in the States

8 Lump Sums TEXAS - Employer Reporting Options (4/17/8-1/13/9) FAX to PC = 44% WEB - Unregistered Employer = 48% = 5% WEB - Registered Employer = 4%

9 Lump Sums TEXAS LESSONS LEARNED Employer Reporting Criteria - Order Requires WH for Arrears - Receives WH Order in Title IV-D Case - Lump Sum in Excess of $500 Agency has 10 Days to Reply Match Rate = 30% 8

10 Lump Sums Maximum Withholding Issue Consumer Credit Protection Act, 15 U.S.C. 1672(a) The term earnings means compensation paid or payable for personal services, whether denominated as wages, salary, commission, bonus, or otherwise, and includes periodic payments pursuant to a pension or retirement program.

11 Lump Sums Employer Challenges with limits Some states treat limits differently Some exclude different deductions Consistency would be helpful Setting an amount for lump sum reporting would benefit employers (i.e. Texas, Ohio)

12 NEW IDEA/PROCESS e-iwo What is it and how can it help both employers and child support agencies?

13 What is e-iwo? States, tribes and territories send Income Withholding Orders (IWOs) electronically Employers accept and process them electronically States put IWOs into an electronic file no paper sent to the employer Federal Employer Identification Number (FEIN) is the KEY identifier Electronic acknowledgement from employer advises State of e-iwo status Also handles terminations, lump sums and bonuses

14 e-iwo and Lump Sums Amount of Lump Sum Payment Date Lump Sum is expected to be paid Description of Lump Sum or Bonus payment For more information on e-iwo, go to ewhire/employer/eiwo/eiwo.htm

15 e-iwo Employer Participation Employers/Payroll Processors may not have IT resources to program for e-iwo Fillable PDF or Spreadsheet option reduces IT resources required to implement e-iwo more manual review by payroll department Acknowledgement information provided to States Ability to send Termination and Lump Sum information

16 Costs/Benefits: e-iwo State Development Cost (# Hrs x $150 x # States) Collection Increase (# e-iwos x.47 x $137.69) Administrative Savings (# e-iwos x $1) Net Increase 14 States in production (through 12/31/2008) $840,000 Calculation: 400 hours X $ Per Hour X 14 States $3,919,551 Calculation: 60,567 IWO s X.47 (Success Rate) X $ (One Time Collection Increase First Payment Arrives 2 ½ weeks earlier than if the IWO was sent via paper) $60,567 Calculation: 60,567 (e- IWO s Issued) X $1.00 $3,140,118 Calculation $3,919,551 PLUS $60,567 MINUS $840,000 *

17 e-iwo Resources Software Interface Specification Document (SIS) oyer/publication/eiwo/sis/eiwo_sis_qc.htm e-iwo Workgroup 31 States and 50+ employers - monthly calls e-iwo Workplace Contains minutes of previous meetings, business rules, etc. Contact Bill Stuart to register and access the Workplace at william.k.stuart@lmco.com

18 CONTACTS Sherri Grigsby, OCSE (202) Jim Owen, APA - JOwen@americanpayroll.org, Barry Brooks, TX OAG - Barry.Brooks@cs.oag.state.tx.us,