Texas Attorney General Ken Paxton has called on Texas Senators Ted Cruz and John Cornyn to support bipartisan legislation aimed at addressing an IRS policy that complicates state child support programs. The U.S. House of Representatives recently passed the Strengthening State and Tribal Child Support Act, with similar legislation now pending in the Senate.
In February 2023, the IRS Office of Safeguards issued a regulation reversing long-standing interpretations regarding contractors used by Title IV-D child support agencies. This new policy restricted contractor access to Federal Tax Information (FTI) and threatened to withhold essential data if states did not comply, potentially eliminating their ability to receive child support collections through the Tax Offset Program.
Attorney General Paxton sued the IRS in May 2023, leading to a delay in the policy's effective date until October 2024 and allowing states to submit mitigation plans. Despite this delay, Paxton warns that the threat remains as the policy could be reinstated at any time. Had it taken effect, state child support programs would have faced an additional $1 billion in operating costs.
Paxton stated: “While the threat to Texas families and the Texas child support program may be temporarily held at bay, the fact remains that the IRS has demonstrated time and again that Congress must take action to clarify in statute that IV-D programs are authorized to redisclose FTI—with rigorous safeguards—to contractors for the purpose of operating the program. Otherwise, the programs and the families who rely on them for vital economic support are subject to the interpretive whims of the IRS. Without a legislative solution, estimates exceed $1 billion annually in additional costs for child support programs nationwide.”
To read Paxton's letter, click here.