Administrative Enforcement: A New Tool to Collect Support
Arrears
By Margaret Wrenn Hickey
Editor's Note: To view Wisconsin
statutory materials referenced in this article you must have and/or
install Adobe
Acrobat Reader on your computer.
Payers who fall behind in their child support or maintenance
obligations may be subject to new administrative actions to force them
to pay up, like restrictions on or loss of their professional,
recreational, or operator's licenses and levies or liens against their
personal or real property.
As of May 1, 1998, the State of Wisconsin has many more tools
available to collect support arrears. These new tools include the right
to suspend, revoke, limit, or refuse to renew many licenses and the
right to levy or take a lien against property held by the payer,
including personal property, bank accounts, real estate, lump sum
pension payments, settlements or judgments, and other property. This
article provides an overview of the new mechanisms available, how they
will work, and what the family lawyer needs to know to protect the
client against whom these actions may be taken.
This legislation was introduced originally as Assembly Bill 651 to
effectuate the requirements of a federal law known as PRWORA - the Personal
Responsibility and Work Opportunity Reconciliation Act of
1996.1 PRWORA also made changes to the
law concerning establishment of paternity, which is not discussed in
this article. The bill as passed is 1997
Wisconsin Act 191 (the Act).
Effect on professional and recreational licenses
The Act amends the Wisconsin laws to permit a
licensing board or agency to refuse to issue, revoke, deny the renewal
of, limit, or suspend almost all types of licenses including
professional licenses and recreational licenses.2The licenses include, but are not limited to
driver's licenses, almost all professional and occupational licenses,
fishing and hunting licenses, and many others. The license holder or
applicant will be subject to the law if he or she is delinquent in
making court ordered payments of child support, family support,
maintenance, birth, medical or other expenses related to child or
spousal support, or fails to comply, after appropriate notice, with a
subpoena or warrant relating to paternity or child support
proceedings.
This new system requires the Department of Workforce
Development (the department or DWD), which is in charge of
collecting child support including arrears, to enter into a memorandum
of understanding with the licensing agencies, with the Wisconsin Supreme
Court for law licenses, and with the Lac du Flambeau Band, to determine
the circumstances and procedures under which a license may be revoked,
suspended, denied, or limited.3 The
suspension or limitation may not exceed five years for a delinquency in
paying support or six months for failure to comply with a subpoena or
warrant.4
Certainly, the practice of suspending, revoking, or refusing to renew
a driver's license or a professional license, such as a license to cut
hair or practice law, would seem counter-productive to the desire to
collect child support. As the accompanying article indicates, the State
Bar of Wisconsin Family Law Section Board of Directors made
many efforts to modify this law, with some success. The DWD has
issued a proposed administrative rule, DWD 43, to define when a license
may be suspended, denied, or limited. Under the proposed rule, the
threshold for such action occurs when 300 percent of the monthly support
amount is overdue.5
Before the DWD can certify to a licensing agency or board that a
payer is delinquent, the department or child support agency must notify
the payer, by regular mail at his or her last known address, that this
certification will occur.6 The notice must
contain information that: the certification will occur and when it will
occur; upon certification and for up to five years, the license or
credential may be revoked or limited, etc.; any license the individual
holds may be affected; an occupational license may be available; the
certification will not be made if the individual pays the delinquency in
full or makes alternative payment arrangements; and the payer may make a
written request to the court that made the original support order or
judgment, with a copy to the child support agency, for a hearing within
20 business days of the notice.7
If the payer requests a hearing, it must be scheduled within 10
business days after receiving the request.8
The only issues that may be considered at the hearing are whether the
child support arrearage is owed and whether the alternative payment plan
proposed by the department or agency is reasonable.9If the court determines that the proposed repayment
plan is not reasonable, it may impose its own alternative payment
plan.10 If such an order is made, the
payer's name may not be placed on the certification list. If no hearing
is requested, the result of the hearing is adverse to the payer, or the
payer does not comply with the court's payment plan, then the payer's
name must be placed on the list.11 A second
similar notice then must be sent to the payer stating among other things
that the individual's name has been placed on the list, at which time
the payer again has 20 business days to request a hearing.12 If no hearing is requested or the hearing result
is adverse to the payer, then the license sanctions will apply.
Clearly, the payer must take heed of the initial notices to avoid
what may become a snowball effect of administrative enforcement
procedures. If the administrative procedure to revoke, suspend, limit,
or refuse a license is enforced, the payer may not be able to engage in
the livelihood from which he or she derives the income to pay support,
including arrears.
Administrative procedures to seize property
To proceed with the administrative procedures to seize property, the
DWD must notify the delinquent payer that he or she will be placed on a
list known as a lien docket. Those individuals whose names appear on the
lien docket will be subject to the new enforcement procedures, including
levies against financial accounts and liens against personal and real
property. A person will be listed on the lien docket under the proposed
DWD rule when the "lien eligible amount" in one or more of the payer's
court cases equals or exceeds the "lien threshold."13 An individual will receive notice by regular
mail that he or she will be listed on the lien docket. That payer will
have the right to make a written request for a hearing within 20
business days of receiving that notice.14
If a hearing is not requested, the person's name will be placed on the
lien docket.
The "lien eligible amount" is defined as "the amount in a court case
that is eligible to be placed on the lien docket."15 In most cases the lien eligible amount is the
arrearage amount less the current monthly support charge, if any.16 The "lien threshold" will vary depending upon
whether the department chooses to seize a bank account, put a lien on
property, or take another action. In most cases the lien threshold will
be met, and the payer's name will be placed on the lien docket, if the
arrearage owed equals or exceeds the monthly amount due or $500,
whichever is greater.17
If a payer receives notice that his or her name will be placed on the
lien docket, the payer should immediately request a hearing - especially
if the payer disputes the arrearage amount. Once on the lien docket, the
state has a myriad of mechanisms available to it to seize the payer's
property. In some instances, such as for financial accounts, the
department is permitted to seize first and notify the payer later.
Notices to be sent by mail. The
notices may be mailed to the payer's last known "verified" mailing
address as provided by the payer pursuant to section 767.263(2)
of the Wisconsin Statutes. The rule requires that the department use due
diligence to obtain the payer's address if the mailed notice is
returned.18 If the last known mailing
address is "unverified," which term is not defined in the rule, or a
written notice sent to a payer's last known verified mailing address is
returned, then the department must contact the postmaster to attempt to
verify the mailing address.19 If the
postmaster cannot verify the last known mailing address or provide a new
address, the department is permitted to send notice to the payer's
current employer as provided by the payer.20 If the notice sent to the last known employer is
returned, then the department "shall use diligent effort to obtain a
mailing address for the payer."21
The proposed administrative rule defines diligent effort for each of
the administrative enforcement actions. The department must contact the
relevant financial institution or agency, if there is one, or the state
licensing agency or board in a case involving a license action, to
attempt to verify the payer's address. In addition, under some
circumstances the department or agency must use the automated federal,
state, and local locate resources to obtain the payer's current mailing
address.22
Threshholds for administrative action
After the payer is on the lien docket, if the department chooses to
use an action to seize property, it may proceed administratively to
seize the payer's bank accounts, personal property or real property, or
intercept lump sum settlement, judgment, or pension payments.23 An arrears threshold applies to begin each type
of administrative enforcement action. For financial accounts, the
threshold for an action to levy is 300 percent of the monthly amount due
or $1,000, whichever is greater.24 For real
and personal property, the threshold amount is an arrearage (lien
amount) that equals or exceeds 600 percent of the monthly amount
due.25 In each of these cases, the amount
due for percentage or combined percentage and fixed amount support
orders is the amount that is expected each month under the order or
judgment. It will be very important for attorneys to establish the
expected monthly amount of a percentage or combined percentage and fixed
amount order at the time of the initial order or judgment. For lump sum
payments the threshold is met when the payer is placed on the lien
docket.26
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. 30 The 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 $5,000.33 The 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. 36 No 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. 50 The
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 by1997 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 process concerns are raised by
this type of notice. In order to meet due process requirements, the
notice must be meaningful. PRWORA, however, permits notice by regular
mail.
![Hickey](/SiteCollectionImages/WisconsinLawyer/1998/12/hickey.jpg)
Margaret W. Hickey, U.W. 1986 cum laude, practices
primarily family law at the Milwaukee law firm of Becker & Hickey
S.C. She serves on the State Bar Family Law Section Board of
Directors.
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.
Endnotes
1Public Law
104-193.
2Wis. Stat.
§ 49.857 (1997-98); e.g. § 49.48.
3Wis. Stat.
§ 49.857(2)(b).
4Wis. Stat.
§ 49.857(2)(d).
5Proposed DWD § 43.10(2).
6Wis. Stat.
§ 49.857(3).
7Wis. Stat.
§ 49.857(3)(a).
8Wis. Stat.
§ 49.857(3)(ar).
9Id.
10Wis. Stat.
§ 49.857(3)(ar)(3).
11Id.; Wis. Stat.
§ 49.857(3)(am).
12Id.
13DWD § 43.06(4).
14Wis. Stat.
§ 49.856(3).
15DWD § 43.03(15).
16DWD § 43.06(2).
17DWD § 43.06(3).
18DWD §§ 43.04(2) &
(3).
19DWD § 43.04(2).
20Id.
21DWD § 43.04(3).
22DWD § 43.04(4).
23Wis. Stat.
§§ 49.854(5), (6), (7) and 49.852.
24DWD § 43.10(3).
25DWD § 43.10(4).
26Wis. Stat. § 43.10(5).
27Wis. Stat. § 49.853.
28Wis. Stat.
§ 49.854(5)(d).
29DWD § 43.08(1).
30DWD § 43.08(5).
31DWD § 43.08(3).
32DWD § 43.08(2).
33DWD § 43.08(4).
34Wis. Stat.
§§ 43.854(6) and (7).
35DWD §§ 43.04(1) and
(2).
36Wis. Stat.
§ 43.854(5)(b).
37Wis. Stat.
§ 43.854(5)(d).
38Id.; Wis. Stat.
§ 43.854(5)(f).
39DWD § 43.11(1).
40DWD § 43.11(2).
41DWD § 43.11(2)(a).
42DWD § 43.11(2)(b).
43DWD § 43.11(2)(c).
44Id.
45DWD § 43.11(5).
46DWD § 43.11(5)(a).
47DWD § 43.11(5)(c).
48DWD § 43.11(7).
49Wis. Stat.
§ 49.854(3)(ag).
50Id.; DWD §
43.07(1).
51DWD § 43.07(3).
52Id.; Wis. Stat.
§ 49.854(3)(ag).
53Wis. Stat.
§ 49.854(3).
54Wis. Stat.
§ 49.22(2m)(c).
55Wis. Stat.
§ 49.22(2m)(d).
56DWD § 43.05.
57DWD § 43.11(3).
58Wis. Stat.
§ 49.854(15).
59Wis. Stat.
§ 49.854(15)(b).
60Id.
61Id.
62DWD § 43.09.
63Id.
Wisconsin
Lawyer