Child support: compromise of arrears program., the official text

An act to amend Section 17560 of, and to add Section 17560.5 to, the Family Code, relating to child support.

LEGISLATIVE COUNSEL'S DIGEST

Existing law establishes a statewide compromise of arrears program pursuant to which the Department of Child Support Services may accept offers in compromise of child support arrears and interest accrued thereon owed to the state for reimbursement of aid paid pursuant to the California Work Opportunity and Responsibility to Kids Act. Existing law provides that if an obligor owes current child support, the offer in compromise shall require the obligor to be in compliance with the current support order for a set period of time before any arrears and interest accrued thereon may be compromised. Existing law grants the administrator of a local child support agency the authority to compromise an amount of child support arrears of up to $5,000. Existing law makes a determination that it would not be in the best interest of the state to accept or rescind an offer in compromise in satisfaction of child support arrears final and not subject to specified complaint resolution processes or subject to judicial review.
This bill would instead provide that the offer in compromise may require the obligor to be in compliance with the current support order for a set period of time before any arrears and interest accrued thereon may be compromised. This bill would increase the existing authority to compromise an amount of child support arrears to $10,000. The bill would delete the above-described provision related to final determinations.
The bill would, beginning July 1, 2027, require the department, in consultation with stakeholders, to promulgate regulations to implement uniform forms, standards, procedures, and notice and reporting requirements to ensure the uniform operation of the compromise of arrears program, as specified. Among other things, the bill would prohibit the uniform application from requiring the applicant to make an offer of repayment and would require the application to notify the applicant of their right to use a complaint resolution and state hearing process, as specified. The bill would require each local child support agency to include information about the compromise of arrears program on its internet website, as specified, and require the department to include in its regulations timeframes for program notices and procedures that ensure that the total time in between when an applicant submits an application and receives a final determination is no more than 180 days. The bill would require uniform eligibility and repayment standards and would require the establishment of reporting requirements to allow the department to evaluate the uniformity and effective of the program. By increasing the duties of local child support agencies, this bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to the statutory provisions noted above.

The people of the State of California do enact as follows:

SECTION 1.
Section 17560 of the Family Code is amended to read:
17560.
(a) The department shall establish and operate a statewide compromise of arrears program pursuant to which the department may accept offers in compromise of child support arrears and interest accrued thereon owed to the state for reimbursement of aid paid pursuant to Chapter 2 (commencing with Section 11200) of Part 3 of Division 9 of the Welfare and Institutions Code. The program shall operate uniformly across California and shall take into consideration the needs of the children subject to the child support order, the impact of Section 17504.2, and the obligor’s ability to pay.
(b) If the obligor owes current child support, the offer in compromise may require the obligor to be in compliance with the current support order for a set period of time before any arrears and interest accrued thereon may be compromised.
(c) Absent a finding of good cause, or a determination by the director or their designee that it is in the best interest of the state to do otherwise, any offer in compromise entered into pursuant to this section shall be rescinded, all compromised liabilities shall be reestablished notwithstanding any statute of limitations that otherwise may be applicable, and no portion of the amount offered in compromise may be refunded, if either of the following occurs:
(1) The department or local child support agency determines that the obligor did any of the following acts regarding the offer in compromise:
(A) Concealed from the department or local child support agency any income, assets, or other property belonging to the obligor or any reasonably anticipated receipt of income, assets, or other property.
(B) Intentionally received, withheld, destroyed, mutilated, or falsified any information, document, or record, or intentionally made any false statement, relating to the financial conditions of the obligor.
(2) The obligor fails to comply with any of the terms and conditions of the offer in compromise.
(d) Pursuant to subdivision (k) of Section 17406, in no event may the administrator, director, or director’s designee within the department, accept an offer in compromise of any child support arrears owed directly to the custodial party unless that party consents to the offer in compromise in writing and participates in the agreement. Prior to giving consent, the custodial party shall be provided with a clear written explanation of the rights with respect to child support arrears owed to the custodial party and the compromise thereof.
(e) Subject to the requirements of this section, the director shall delegate to the administrator of a local child support agency the authority to compromise an amount of child support arrears up to ten thousand dollars ($10,000), and may delegate additional authority to compromise up to an amount determined by the director to support the effective administration of the offers in compromise program.
(f) For an amount to be compromised under this section, the following conditions shall exist:
(1) (A) The administrator, director or director’s designee within the department determines that acceptance of an offer in compromise is in the best interest of the state and that the compromise amount equals or exceeds what the state can expect to collect for reimbursement of aid paid pursuant to Chapter 2 (commencing with Section 11200) of Part 3 of Division 9 of the Welfare and Institutions Code in the absence of the compromise, based on the obligor’s ability to pay.
(B) Acceptance of an offer in compromise shall be deemed to be in the best interest of the state, absent a finding of good cause to the contrary, with regard to arrears that accrued as a result of a decrease in income when an obligor was a reservist or member of the National Guard, was activated to United States military service, and failed to modify the support order to reflect the reduction in income. Good cause to find that the compromise is not in the best interest of the state shall include circumstances in which the service member’s failure to seek, or delay in seeking, the modification were not reasonable under the circumstances faced by the service member. The director, no later than 90 days after the effective date of the act adding this subparagraph, shall establish rules that compromise, at a minimum, the amount of support that would not have accrued had the order been modified to reflect the reduced income earned during the period of active military service.
(2) Any other terms and conditions that the director establishes that may include, but may not be limited to, paying current support in a timely manner, making lump-sum payments, and paying arrears in exchange for compromise of interest owed.
(3) The obligor shall provide evidence of income and assets, including, but not limited to, wage stubs, tax returns, and bank statements as necessary to establish all of the following:
(A) That the amount set forth in the offer in compromise of arrears owed is the most that can be expected to be paid or collected from the obligor’s present assets or income.
(B) That the obligor does not have reasonable prospects of acquiring increased income or assets that would enable the obligor to satisfy a greater amount of the child support arrears than the amount offered, within a reasonable period of time.
(C) That the obligor has not withheld payment of child support in anticipation of the offers in compromise program.
(g) Any offer in compromise entered into pursuant to this section shall be filed with the appropriate court. The local child support agency shall notify the court if the compromise is rescinded pursuant to subdivision (c).
(h) Any compromise of child support arrears pursuant to this section shall maximize to the greatest extent possible the state’s share of the federal performance incentives paid pursuant to the Child Support Performance and Incentive Act of 1998 and shall comply with federal law.
(i) The department shall ensure uniform application of this section across the state.

SEC. 2.
Section 17560.5 is added to the Family Code, to read:
17560.5.
(a) To ensure that the compromise of arrears program authorized by Section 17560 operates uniformly throughout the state, any program established and operated by the department or delegated to the administrator of a local child support agency shall be subject to the requirements described in this section.
(b) No later than January 1, 2028, the department, in consultation with stakeholders, shall promulgate regulations to implement the requirements of this section. Program regulations, policies and procedures, and forms adopted pursuant to this section shall be made available on the department’s internet website. Notwithstanding the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code), the department may, in consultation with stakeholders, implement and administer this section through a child support services letter or similar instruction until regulations are adopted.
(c) The department shall create uniform application forms, subject to the following:
(1) The application shall not require the applicant to make an offer of repayment.
(2) The application shall inform the applicant of their right to use the complaint resolution and state hearing process pursuant to Chapter 5 (commencing with Section 17800) of Division 17 for any action or inaction on their application and shall indicate where applicants can find the forms and procedures for these processes.
(d) The regulations shall include the following:
(1) Uniform notice requirements and procedures, including, but not limited to, timeframes for the notices and procedures that ensure applications are processed in a timely manner and that the total time in between when an applicant submits an application and receives a final determination is no more than 180 days.
(2) Requirements for providing public information about the program, including, but not limited to, both of the following:
(A) The department shall include information about the program on its internet website, including, but not limited to, the text of all applicable regulations, program forms, procedures used in the program, and a designated telephone number or email address for individuals to contact about the compromise of arrears program. Each local child support agency shall also make, at a minimum, that same program information available on its internet website.
(B) The department or its delegee shall provide written notice once annually to all obligors whose administrative files meet standards set by the department indicating they may be eligible for debt reduction pursuant to this section and Section 17560.
(e) The department shall establish uniform eligibility and repayment standards, including factors to be considering when deviating from those standards.
(f) The department shall create a uniform, mandatory repayment agreement, subject to the following:
(1) The applicant shall receive a full and complete copy of the repayment agreement to review before signing.
(2) The department shall establish uniform standards for modification and rescission of repayment agreements.
(g) The department shall establish reporting requirements regarding their implementation of this section and Section 17560 to allow the department to evaluate the uniformity and effectiveness of the program.
(h) This section shall be operative on July 1, 2027.

SEC. 3.
If the Commission on State Mandates determines that this act contains costs mandated by the state, reimbursement to local agencies and school districts for those costs shall be made pursuant to Part 7 (commencing with Section 17500) of Division 4 of Title 2 of the Government Code.