"I want to thank everyone for joining us for today’s joint Work and Welfare and Oversight hearing on Strengthening the Child Support Enforcement Program for States and Tribes.
"My name is Darin LaHood and I represent Illinois’ 16th District, covering much of the central and northwestern parts of the state.
"I am pleased to be joined today by Chairman Schweikert and our colleagues from the Oversight Subcommittee for this important discussion.
"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.
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.
"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.
"Conversely, the Internal Revenue Code generally limits contractors’ access to the tax offset program to protect the privacy of federal taxpayer information.
"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.
"Both the IRS and HHS have asked Congress for legislation to harmonize the two laws – and provide the formal legislative authority the IRS needs.
"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.
"Finally, I want to talk about the tribal impact. Sixty federally-recognized tribes administer their own child support programs. 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.
"Today we will hear from our witnesses about how they run their child support programs and how this could impact their operations. I’m also pleased to have representatives from the Lac Courte Oreilles, or LCO, Tribe in Wisconsin to share with us the tribal perspective.
"Thank you to our guests for being here today and I look forward to your testimony."