The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (P.L. 111-312) was signed into law on December 17, 2010. The law includes provisions that disregard tax refunds received during calendar year 2010. The statute allows exclusion of tax refunds to be counted as income in the month received and as a resource for 12 months in any program that is funded in whole or in part by federal funds. This includes all major means-tested programs that consider income and may consider assets when determining eligibility. The legislation impacts several ACF programs’ income and may consider assets when determining eligibility, such as (but not limited to) Temporary Assistance to Needy Families Program (TANF), Tribal TANF, Supplemental Nutrition Assistance Program (SNAP), Medicaid, and programs funded under various block grants such as the Temporary Assistance for Needy Families Block Grant, the Social Services Block Grant, and the Child Care and Development Block Grant, Title IV-E foster care maintenance, adoption assistance and guardianship assistance.
1Section 728 of the Act states:
‘‘(a) IN GENERAL.—Notwithstanding any other provision of law, any refund (or advance payment with respect to a refundable credit) made to any individual under this title shall not be taken into account as income, and shall not be taken into account as resources for a period of 12 months from receipt, for purposes of determining the eligibility of such individual (or any other individual) for benefits or assistance (or the amount or extent of benefits or assistance) under any Federal program or under any State or local program financed in whole or in part with Federal funds.
‘‘(b) TERMINATION.—Subsection (a) shall not apply to any amount received after December 31, 2012.’’
Families will begin to file their 2010 tax returns very shortly and will, in turn, begin to receive federal tax refunds soon. Low-income families that had earnings in 2010 can receive sizable refunds on the basis of refundable tax credits such as the Earned Income Tax Credit (EITC).
On February 2, 2011, the Children’s Bureau released ACYF-CB-PI-11-02 outlining compliance guidance related to Title IV-E eligibility. To comply with the requirement that a Federal tax refund be disregarded as income in the month the refund is received, the program must ensure that the income information being sought and that individuals are providing, does not include a Federal tax refund that may have been received. The asset limit for title IV-E eligibility remains intact, but it must be implemented so as to comply with the disregard provision included in P.L. 111-312. An assistance unit may not be determined ineligible for title IV-E on the basis of having assets above the limit, if the assistance unit would have met the resource limit if the tax refund was disregarded.
While States have flexibility on how compliance with this provision is achieved, one method for implementing this provision that is consistent with title IV-E’s rules would be to subtract any Federal tax refund an individual, family, or household received in the last 12 months from the reported assets of the eligibility unit. If the difference between the unit’s reported assets and the amount received from the tax refund is less than the resource limit, the assistance unit would meet the resource-related eligibility criteria. This simplified approach will minimize administrative burdens on States and families alike.
The Office of Child Care released a policy announcement on January 28, 2011 providing specific information on implementation of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 as it relates to eligibility determination for the Child Care and Development Fund (CCDF) program.
To ensure compliance with the P.L. 111-312 provision, it is important that State applications and interview protocols are designed such that an application or assistance unit has the opportunity to provide information about a federal tax refund if receipt of such a refund may affect the unit’s eligibility for or level of benefits. States must find a mechanism to ensure that applicants or recipients are not denied or terminated for benefits in conflict with the provisions included in this new law. Note that this legislation only addresses treatment of federal tax refunds; federal law does not specify how State tax refunds should be treated, therefore it is up to the State to determine whether State refunds are considered in eligibility and benefit determinations.
Likewise, the Office of Family Assistance released TANF-ACF-PI-2011-01 outlining guidance for implementing the new legislation for recipients of TANF, Tribal TANF, Supplemental Nutrition Assistance Program (SNAP), Medicaid, and programs funded under various block grants such as the Temporary Assistance for Needy Families Block Grant, the Social Services Block Grant.
For Guam, Puerto Rico, and the Virgin Islands, it includes the Adult Programs (Aid to the Aged, Blind and Disabled).
To comply with the requirement that a federal tax refund be disregarded as income in the month the refund is received, the program must ensure that the income information being sought does not include a previously received federal tax refund.
Under TANF, Tribal TANF and Adult Programs, States, Tribes and Territories have flexibility to set asset policy, including whether to have an asset test at all. While that remains the case, if a State, Tribe, or Territory has an asset test, its policy must comply with the disregard provision included in P.L. 111-312; an individual, family, or household may not be determined ineligible for assistance on the basis of having assets above a limit, if the assistance unit would have met the resource limit if the tax refund were disregarded.
For additional information on TANF, SNAP, Medicaid and other assistance programs, check out: http://www.acf.hhs.gov/programs/ofa/policy/pi-ofa/2011/pi201101/pi201101.html.
For information on child care benefits impacted by P.L. 111-312, consult: http://www.acf.hhs.gov/programs/ccb/law/guidance/current/111_312/state_111_312.htm.
For Title IV-E eligibility requirements, refer to: http://www.acf.hhs.gov/programs/cb/laws_policies/policy/pi/2011/pi1102.htm.
About Kay Casey
Kay Casey has over 20 years of experience in federal and state child welfare policy and programs, having worked for the federal Administration for Children and Families (ACF) and the Florida Department of Children and Families prior to joining PCG. She is responsible for the review and assessment of fiscal processing systems that impact a state’s ability to identify, document, and report expenditures for federal reporting purposes accompanied with the programmatic impact on the state’s system of care.
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