Sunday, January 19, 2014

The Laws of Unintended and Unforeseen Consequences

I have previously mentioned that the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA), also known as "Welfare Reform", has spawned a vast government based system for collecting child support payments that has expanded far beyond the law's original purpose. See: Child Support - Garnishment or Payroll Deduction?  PRWORA was a cornerstone of the Republican Contract with America  and it was signed into law by President Bill Clinton on August 22, 1996, fulfilling his 1992 campaign promise to "end welfare as we have come to know it".

One of the major components of PRWORA was an emphasis on enhancing the enforcement of child support collections, to put financial responsibility on absent fathers for their children with welfare recipient mothers. Thus, State agencies tasked with administratively assessing, imposing and collecting child support for dependent children who were receiving public assistance were born. During the years since PRWORA, those State agencies have expanded their child support collection activities to include virtually any child support obligation, imposed for any reason. These would include child support obligations resulting from a judicial divorce proceeding or a paternity suit, whether the dependent child is a participant in public welfare or not.

Another part of this enhanced efforts to collect child support in PRORA was a mandate that each State implement a quarterly matching of delinquent non-custodial parents to the accounts maintained at financial institutions.For this purpose, the U.S. Department of Health and Human Services, Office of Child Support Enforcement has developed a comprehensive Financial Data Match Specifications Handbook. The idea is that bank accounts of delinquent non-custodial parents can thus be more easily located and garnished to satisfy their child support obligations.

This, too, has expanded over the years into areas other than that intended or foreseen by the Congress and the President of 1996.

The Kentucky Department of Revenue has been tasked with assessing and collecting a wide variety of taxes to benefit the Commonwealth. That job also clearly requires levy, attachment or garnishment to collect delinquent taxes owed by uncooperative taxpayers. The Department's levy procedures are outlined in Kentucky Administrative Rules 103 KAR 1:150. Electronic data match and levy procedures.

The Kentucky Department of Revenue has also adopted a mechanism for matching of delinquent taxpayers to the accounts maintained at financial institutions. Indeed, 103 KAR 1:150 mandates use of the very same Financial Data Match Specifications Handbook created by the Federal Office of Child Support Enforcement.

The irony of this development is almost poetic. 

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