The Office of Child Support Enforcement published a guide for employers to begin sending child support payments electronically. According to the guide:
All states and territories accept child support payments at their State Disbursement Unit (SDU) by Electronic Funds Transfer (EFT)/Electronic Data Interchange (EDI), the primary method of sending payments electronically. The EDI portion of the transmission includes identifying information so the payment can be properly credited to the payor’s case(s). SDUs centralize the collection and disbursement of all child support payments withheld by employers as well as other types of payments. Using EFT/EDI is well worth the initial effort. Employers that switch from sending paper checks to electronic payments will enjoy lower costs, fewer errors, and faster processing.
Sending child support payments electronically will save an employer time and money
- Eliminates the cost of printing paper checks and supporting documents
- Eliminates the cost of postage and delays due to lost or misdirected mail
- Reduces check handling and processing costs
- Reduces data entry errors
- Gets child support payments to custodial parents faster
Getting Started with EFT/EDI
There are several ways to send a child support payment electronically:
- By using your own payroll software to send Automated Clearing House (ACH) credit payments (similar to direct deposit) through the Federal Reserve’s banking system with EFT/EDI, using the standard child support addendum segment
- Through a state’s web-based payment service—contact the state child support agency where you send payments for details
- By using a payroll service provider that is already sending child support payments electronically
- By using your bank’s online bill-paying serviceThree Steps to Implement
Step 1: Determine whether your payroll/accounting system supports electronic payments for child support. If it does not, you may want to explore these options:
- In-house information technology staff may be able to make programming changes so that you can produce electronic payments for child support, including the EDI DED (Deduction) child support addendum record that child support agencies need to identify the payments.
- Your payroll/accounting software developer may have an enhancement that supports electronic payments for child support. Contact your user’s group or software representative.
- Your bank may have a software package that will enable you to produce the file formats necessary for electronic payments. Contact your bank and ask for someone in Cash Management, Treasury Management, or Treasury Services.
Step 2: Contact the appropriate child support agency’s SDU.
- This is not always the child support agency or SDU where you are located. It is the agency or SDU in the state that issued the underlying child support order or where you currently send funds.
- Find out the EFT/EDI start-up procedures for the child support agency where you send funds. Do not attempt to transmit child support payments electronically without this information.
Step 3: Conduct the EFT/EDI start-up procedures for each of the child support agencies you contacted in Step 2. These procedures will typically include:
- An exchange of basic banking information (routing codes, account numbers), Federal Employer Identification Number (FEIN), and locator code information with the child support agency.
- A reconciliation between child support agency records and employer records of names, Social Security numbers, and case identification numbers so that each employee’s withholdings are properly credited.
- A transmission of an initial test file, or pre-note, to ensure that the ACH records are formatted and transmitted properly.
Where to go for more information
There are standard record specifications for child support payments. NACHA (National Automated Clearing House Association) publishes the User Guide for Electronic Child Support Payments (PDF)visit disclaimer page to provide SDUs, employers, and their financial institutions with current formats, definitions, and implementation recommendations to remit child support payments and payment information electronically through the ACH network using current conventions and standards.