(a) Establishment.--The department shall establish and operate a State disbursement unit for collection and disbursement of payments on child support orders consistent with Federal law. The State disbursement unit shall also monitor support orders for enforcement action consistent with Federal law. At the option of the department, the domestic relations sections may be linked into the State disbursement unit and perform some or all of the functions thereof.

(b) Collections and disbursements.--The department may require that such collections and disbursements of support as the department may specify, including those related to persons not receiving public assistance, be processed through the State disbursement unit.

(1) The State disbursement unit shall use automated procedures, electronic processes and computer technology to the maximum extent feasible, efficient and economical for the collection and disbursement of support payments.

(2) If an employer is ordered to withhold income from more than one obligor to pay child support and employs 15 or more persons, the employer shall make payments to the State disbursement unit through electronic payment methods.

(3) If an employer has a history of two or more checks returned for nonsufficient funds, the employer shall make payments to the State disbursement unit through electronic funds transfer.

(4) An employer that is not required to make payments to the State disbursement unit in accordance with this subsection may voluntarily remit support payments through electronic funds transfer to the State disbursement unit.

(b.1) Penalty.--The department may impose a civil penalty of up to $1,000 per violation, following notice and hearing, upon an employer who willfully fails to comply with the electronic funds transfer payment provisions of this section.

(c) Allocation of collections.--Subject to subsections (d), (e), (f) and (f.1), support collected on behalf of a family shall be distributed as follows:

(1) In the case of a family receiving cash assistance from the Commonwealth:

(i) First, from the amount of current support collected, pass through to the assistance group the first $100 per month for one child or the first $200 per month for two or more children or the first $50 per month for spousal support, without decreasing the amount of cash assistance, provided, however, that in no event may any assistance group be paid more than one support pass-through payment per month.

(ii) Second, calculate the Federal Government's share of the remaining amount collected.

(iii) Third, pay the Federal Government's share and retain the remainder of the amount collected to reimburse the Commonwealth until the amount equals the amount of unreimbursed cash assistance paid to the assistance group.

(iv) Fourth, pay to the assistance group any amounts collected in excess of the amounts distributed or retained under subparagraphs (i), (ii) and (iii).

(2) In the case of a family that formerly received cash assistance from the Commonwealth:

(i) first, pay to the family the current support collected that does not exceed the court-ordered amount to be paid in the month; and

(ii) second, treat amounts collected in excess of the current support collected as arrearages and distribute as follows:

(A) In the case of arrearages that accrued after the family ceased to receive cash assistance from the Commonwealth and which are collected after October 1, 1998:

(I) first, pay the family up to the amount of arrearages that accrued after the family ceased to receive cash assistance from the Commonwealth;

(II) second, treat the balance as reimbursement of assistance in an amount not to exceed the total amount of unreimbursed cash assistance paid to the family and:

(a) pay an amount equal to the Federal share of the reimbursed amount to the Federal Government; and

(b) retain for the Commonwealth an amount equal to the non-Federal share of the reimbursed amount; and

(III) third, pay any remaining amount to the family.

(B) (Deleted by amendment).

(C) In the case of arrearages that accrued before the family received cash assistance from the Commonwealth and which are collected after October 1, 1998:

(I) first, pay to the family up to the amount of arrearages that accrued before the family began to receive cash assistance from the Commonwealth;

(II) second, treat the balance as reimbursement of assistance in an amount not to exceed the total amount of unreimbursed cash assistance paid to the family and:

(a) pay an amount equal to the Federal share of the reimbursed amount to the Federal Government; and

(b) retain for the Commonwealth an amount equal to the non-Federal share of the reimbursed amount; and

(III) third, pay any remaining amount to the family.

(D) In the case of arrearages that accrued while the family received cash assistance from the Commonwealth:

(I) first, treat the amount collected as reimbursement of assistance in an amount not to exceed the total amount of unreimbursed cash assistance paid to the family and:

(a) pay an amount equal to the Federal share of the reimbursed amount to the Federal Government; and

(b) retain for the Commonwealth an amount equal to the non-Federal share of the reimbursed amount; and

(II) second, pay any remaining amount to the family.

(E) Notwithstanding clauses (A) through (C), the right to any support obligation assigned to the Commonwealth as a condition of receiving cash assistance in effect on September 30, 1997, shall remain assigned after that date.

(F) Except for amounts assigned to the Commonwealth under subsection (d), beginning October 1, 1998, any support arrearages collected shall be credited as follows:

(I) first, to the period after the family ceased to receive assistance;

(II) second, to the period before the family received assistance; and

(III) third, to the period during which the family received assistance.

(3) In the case of a family that never received cash assistance from the Commonwealth, all support collections shall be paid to the family with the exception of the federally mandated $35 annual fee collected from the custodial parent as required under section 4351(a.1) (relating to costs and fees). This paragraph shall expire July 15, 2023.

(d) Retention by Commonwealth.--

(1) Arrearages collected through use of the Internal Revenue Service Tax Refund Offset Program for a family receiving cash assistance shall be retained by the Commonwealth to the extent past due support has been assigned to the department as a condition of receiving assistance. Arrearages collected through use of the Internal Revenue Service Tax Refund Offset Program for a family that formerly received cash assistance shall first be applied to the monthly support obligation, and the balance shall be applied to arrears owed the family, including assignments of arrearages that accrued before the family received assistance from the Commonwealth and that were executed between October 1, 1997, and September 30, 2009. Any remaining arrearages shall be paid to the department. The department shall pay to the Federal Government the Federal share of the amounts so retained. In no event shall the total of amounts paid to the Federal Government and retained by the department exceed the total of the amount of cash assistance paid to the family by the Commonwealth. To the extent that the amounts collected exceed the amount retained, the department shall pay the excess to the family.

(2) Notwithstanding any other provision of law, the federally mandated $35 annual fee collected from the custodial parent as required under section 4351(a.1) shall be retained by the department. This paragraph shall expire July 15, 2023.

(e) Child support, foster care children.--Notwithstanding the preceding provisions of this section, amounts collected by the department as child support for months in any period on behalf of a child for whom a public agency is making foster care maintenance payments under Part E of the Social Security Act (49 Stat. 620, 42 U.S.C. § 301 et seq.) shall:

(1) be retained by the department to the extent necessary to reimburse the Commonwealth for foster care maintenance payments made with respect to the child during such period, with appropriate reimbursement to the Federal Government to the extent of its financial participation;

(2) be paid to the public agency responsible for supervising the placement of the child to the extent that the amounts collected exceed the foster care maintenance payments made with respect to the child during such periods but not the amounts required by a court or administrative order to be paid as support on behalf of the child during such period, and the responsible agency may use the payment in the manner it determines will serve the best interests of the child, including setting such payments aside for the child's future needs or making all or part thereof available to the person responsible for meeting the child's day-to-day needs; and

(3) be retained by the department if any portion of the amounts collected remains after making the payments required under paragraphs (1) and (2), to the extent that such portion is necessary to reimburse the Commonwealth for any past foster care maintenance payments or payments of cash assistance which were made with respect to the child and with respect to which past collections have not previously been retained.

Any balance shall be paid to the Commonwealth agency responsible for supervising the placement of the child for use by such agency in accordance with paragraph (2).

(f) Modification of distribution rules.--Notwithstanding any other provision of law, the department may modify the foregoing distribution rules when necessary to comply with Federal law.

(f.1) Distribution.--Notwithstanding any other provision of law, all child support arrears collected prior to October 1, 1998, shall be distributed in accordance with department procedures applying all of the provisions except subsection (b)(1) of section 457 of the Social Security Act (49 Stat. 620, 42 U.S.C. § 657) as in effect on August 21, 1996.

(g) Definitions.--The following words and phrases when used in this section shall have the meanings given to them in this subsection unless the context clearly indicates otherwise:

"Assistance group." The term shall have the meaning given in section 402 of the act of June 13, 1967 (P.L.31, No.21), known as the Public Welfare Code.

"Family." The term shall include the child for whom support is received, the custodial parent living with the child and any other person in the same assistance group as the child.

(Dec. 15, 1998, P.L.963, No.127, eff. imd.; July 7, 2006, P.L.1055, No.109, eff. 60 days; May 13, 2008, P.L.144, No.16; July 2, 2019, P.L.336, No.47, eff. imd.)

2019 Amendment. Act 47 amended subsecs. (c)(3) and (d)(2).

2008 Amendment. Act 16 amended subsecs. (c) and (d), effective October 1, 2008, as to subsecs. (c)(1) and (d)(1) and immediately as to the remainder of subsecs. (c) and (d). Section 5 of Act 16 provided that the amendment of subsec. (c)(3) shall apply retroactively to March 31, 2008.

2006 Amendment. Act 109 amended subsec. (b) and added subsec. (b.1).

1998 Amendment. Act 127 amended subsec. (c) and added subsec. (f.1). Section 14 of Act 127 provided that the amendment of section 4374 shall apply to all child support arrears collected on or after October 1, 1998. Act 127 of 1998 was suspended by Pennsylvania Rule of Civil Procedure No. 1910.50(3), as amended May 31, 2000, insofar as it is inconsistent with Rule No. 1910.20 relating to the availability of remedies for collection of past due and overdue support.

References in Text. The short title of the act of June 13, 1967, P.L.31, No.21, known as the Public Welfare Code, referred to in subsection (g), was amended by the act of December 28, 2015, P.L.500, No.92. The amended short title is now the Human Services Code.

Cross References. Section 4374 is referred to in section 4302 of this title.