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Administrative Enforcement:
A New Tool to Collect Support Arrears

Financial institutions must cooperate with the DWD

After the payer is on the lien docket, the department will run a financial records match. Financial institutions must cooperate with the department in cross-referencing the names of their account holders to determine whether any are on the lien docket.²⁷ Once a match has been made, the department can decide whether to proceed with the administrative action to seize that particular account if the payer's lien amount meets the threshold. If the department proceeds with seizure of a financial account, it must again give notice.²⁸ The proposed rule provides, however, that the department may not seize an account unless the payer's total balances in all financial institutions, minus the $5 levy fee and any early withdrawal penalty, exceed $500 at the time of levy.²⁹ The department may seize only the funds that exceed $500.

Under the proposed rule a joint account holder with the payer may request a hearing, and the department may not seize that portion of the account in excess of $500 that the court determines is attributable to the contributions of the joint account holder.³⁰The proposed rule requires the department to assume that the payer's interest in property other than financial accounts, if jointly held, is 50 percent of the property's fair market value.³¹

The department cannot seize the payer's personal property unless the lien amount exceeds $500 and the equity value in the property exceeds $500.³² The department cannot seize the payer's real property unless the equity in the property minus expected levy fees exceeds 20 percent of the property's fair market value and the lien exceeds $5,000.³³The statute details how the department may execute against and sell the personal or real property.³⁴ If the other requirements are met, then the department may proceed with its administrative enforcement action against any assets that meet these seizure threshold requirements.

Beginning administrative seizure actions

The procedure for beginning the administrative enforcement action is similar to that for placing the payer on the lien docket. Notice will be sent by regular mail to the payer's last known address.³⁵ The payer will have 20 days to object to the enforcement action by requesting a hearing. In the case of financial accounts, however, the department will send a notice to the institution with instructions to prohibit closing the account or withdrawals until further notice.³⁶No later than the next business day, notice will be sent to the payer and others with an ownership of record for the account.³⁷ The entire account will be frozen during the period necessary for the payer or others to request, and receive the result in, a hearing. The hearing must be held within 45 days of the request for hearing.³⁸ If the payer or another account holder does not request a hearing, the funds will be disbursed to the department on the 21st day. Obviously, this puts a burden on the payer to request the hearing within the 20 days or lose the funds, which will be frozen until a hearing is held. It also may cause serious cash flow problems for any small business in which the payer has an interest if the business's financial accounts are frozen for 45 days or more.

Although it may take longer for the department to actually obtain possession of real estate or personal property, the payer has the same 20 days to request a hearing. At the hearing for each of these enforcement proceedings the statute limits the court's review to whether the amount the department claims the payer owes is correct and to whether the alternative payment plan the department proposes is reasonable.

Alternative payment plans

The proposed rule provides that the payer may negotiate an alternative payment plan with the child support agency to stay the administrative enforcement action.³⁹ The payer may submit a request within 10 business days of the date of certain notices to the child support agency to negotiate that plan.⁴⁰ The payer may request a court hearing on the reasonableness of any alternative payment plan within 20 business days after the date of certain notices.⁴¹ If a hearing is requested, the administrative enforcement action is stayed until either a plan has been entered or a court has determined the reasonableness of the plan.⁴²

If the child support agency and the payer are unable to reach an alternative payment plan, the court has the discretion to set a payment plan.⁴³ If the court does not set such a plan, the child support agency may continue with the administrative enforcement action.⁴⁴

Such an alternative payment plan may incorporate a lump sum payment, a periodic payment on arrearage, or both.⁴⁵ Any such payment plan, however, cannot cause the payer's gross income to go below the poverty line. When establishing the alternative payment plan the child support agency is to consider the factors used by a court under Chapter 767 in determining whether the use of percentage standards is unfair to the child or any of the parties.⁴⁶ If the child support agency determines that the alternative payment plan would be unfair to a child or any of the parties, the administrative enforcement action must be suspended.⁴⁷ Such an alternative payment plan can be renegotiated at the written request of the payer or child support agency if the requesting party can show a substantial change of circumstances. A substantial change of circumstances includes, but is not limited to: a change in the payer's income or assets, a change in the payer's earning capacity, or any other factor the child support agency determines is relevant.⁴⁸

Financial record review requests

The statute provides that the payer is entitled to a record review process to determine whether the amount of the arrears as stated by the department is accurate.⁴⁹ This record review, however, is in addition to and not in lieu of the hearing procedure. Under the proposed administrative rule, the payer may request a financial record review and court order review within 10 business days of the date of the notice of lien.⁵⁰The purpose of that review, which is to be at no cost to the payer, is to determine whether the record is correct. The review will cover only the period of time since the last judicial review or order by the child support agency. Upon request of such a review, the child support agency must provide the relevant payment records to the payer. The payer then has 20 days after receiving those records to provide a written statement of any alleged error to the child support agency.⁵¹ If the payer provides such a statement of error, the child support agency has 60 days after the date of the payer's request for the financial record review to determine whether the lien against the payer is in the correct amount.⁵² If the payer disagrees with the record review conclusion, he or she has only five business days to request a hearing before a commissioner or judge, which hearing must occur within 15 days.⁵³ If an error is found, the department must remove the lien from the docket or adjust the amount of the delinquent obligation.

There is no provision to stay the request for a hearing based upon either notice of placement on the lien docket or notice of administrative enforcement action while the financial records review is being conducted. Therefore, attorneys should request both the financial record review and a hearing to review the correctness of the applicable notice, whether it is to place the payer on a lien docket or certification list, or proceed with administrative enforcement.

Notices, liability, and limited protections

There are multiple instances under the statute and the rule that require the department to send notices to the payer or others. These include, but are not limited to: when the payer's name is to be added to the lien docket or the certification list, when the payer's name actually has been placed upon the lien docket or certification list, when the department intends to proceed with a levy or a lien against the payer's property, and when such a levy or lien actually has been taken. In each of these instances, the notice requirements are different. A payer's attorney should review the particular notice requirements to determine that they have been met. The administrative procedure can fail for lack of proper notice. In addition, the time requirements are not the same in every instance. Therefore, the timeliness of the notices or the request for a hearing under a notice should be reviewed carefully in the statute or rule.

The financial institution incurs no liability for information disclosed as required by the statute, either in response to a request under section 49.22(2m)(a) or an administrative subpoena under section 49.22(2m)(b) and (bc).⁵⁴ Failure of the financial institution to respond to that subpoena or request for information, however, can result in a forfeiture by the person or institution to whom the request is directed.⁵⁵ Under the administrative rule, the penalty for failure to comply with a request for information or administrative subpoena will not exceed $25, unless the failure to comply is a result of the payer's intentional conduct to hide information, falsify information, or provide incomplete information, in which case the forfeiture may be as much as $500.⁵⁶ In addition to providing the department with the authority to issue such subpoenas and request such financial information, the proposed rule would require the payer to agree to provide the child support agency with a full financial disclosure statement of income and assets when negotiating any payment plan.⁵⁷

The only real protection for nonpayers, who claim that their property has been wrongfully levied or liened against, aside from requesting a hearing, is to bring an action against the state in the Dane County circuit court.⁵⁸ If in such an action it is determined before the sale of the property that it has been improperly levied upon, the court can enjoin enforcement of the levy and return the property.⁵⁹ The court also may order other relief to protect the interests of the other owners, such as partition of the property.⁶⁰ If the property has been sold, the court may grant a money judgment for the amount of money obtained by levy.⁶¹

The department rule also provides some protection for abused spouses. It provides that if the agency is aware that the payer is subject to a protective order, such as a domestic violence injunction with respect to the payee or a child, or the agency has reason to believe that the payee or child in any of the payer's court cases may be physically or emotionally harmed by the payer, then the department shall provide written notice to the payee in all of the payer's court cases when administrative enforcement is initiated against the payer.⁶² The notice must be sent to the payee within five business days of the notice being sent to the payer.⁶³ This does not, however, stay any such enforcement action. The burden is on the payee to inform the department or child support agency that the payee is likely to be physically or emotionally harmed by the payer in cases where there is no injunction or where the department or agency has no knowledge of such an injunction.

PRWORA, as implemented by 1997 Act 191 , includes many other changes to the law that are not dealt with here. These include an obligation for employers to report all new hires, numerous requirements that Social Security numbers be provided by payers and others who deal with payers, and additional information that must be provided by employers concerning a payer's earnings.

Conclusion

While the use of administrative enforcement techniques such as those described above may well lead to the collection of significantly more child support, the protections for payers are limited. As practicing family lawyers know, the last known mailing address in the court file frequently may be inaccurate. Serious due

In addition, the KIDS system upon which the record for support arrears will be based, often is inaccurate. Therefore, payers and their counsel will need to be particularly vigilant upon receiving the initial notice. A hearing should be requested if the notice appears to be inaccurate either in substance or in procedure. As part of this process, the payer also should request a record review, including review of the court orders, to determine whether they were accurately entered in the KIDS system. The record review is one of the few opportunities where payers may be able to correct errors in the record without undue legal cost.

Public hearings on the final administrative rules have been held, and the Department of Workforce Development expects to implement the final rules soon. In the meantime, the DWD has implemented the emergency rules as of October 1998. The statutory changes described here already are in force. Collecting support in 1999 and beyond will be completely different from any procedures previously known.