AUGUSTA, Maine — When most individuals are hired by businesses in Maine, the state by law must be notified so a child support enforcement unit can check whether that person owes child support.
Under a new law, a loophole that has allowed independent contractors to avoid being reported is being closed.
“Collecting child support from those who are self-employed has been difficult,” Gov. John Baldacci said Tuesday as he ceremonially signed the measure in his office.
Sen. Deborah Simpson, D-Auburn, sponsored the legislation that will require businesses to tell the state when they hire independent contractors for $2,500 or more so the state can see whether they owe child support.
“We had testimony at the hearing where employers said they had people who refused to take a job if they were [hired as] employees because they did not want their income reported,” she said. If hired as independent contractors, the workers do not have to be reported to the Department of Health and Human Services, which oversees the child support enforcement unit. “This [has been] a loophole for people who do not want to pay the child support that they owe.”
Barbara Van Burgel, director of the Office of Integrated Access and Support at DHHS, agreed with Simpson that anecdotally there are reports of individuals trying to avoid paying child support by doing work as an independent contractor. But, she said it is hard to estimate the impact of the law.
“I certainly think it will be noticeable,” she said.
Van Burgel said the current law that has new hires reported to the agency has been a major part of the effort to collect child support.
“Sixty percent of the $118 million we collected last year was through wage withholding,” she said. “We would not know about a lot of those people without the new hire reporting.”
In 2008, the agency said more than 70,000 children were helped by child support efforts from the support enforcement unit.
The bill that closed the loophole had support from the business community. Jim McGregor of the Maine Merchants Association praised Simpson for working with businesses to come up with a method that will increase support payments without causing a lot of extra work for businesses.
“We have worked with the department in the past on making sure that people who can and should be making child support [payments] do,” he said. “We have no sympathy for those who don’t.”
Simpson said she had agreed to changes from the original bill, modeled on a New Hampshire law, to make it “workable” for Maine companies. For example, she said, the measure excludes direct sellers as defined in federal law.
“It did not make much sense to require the companies to report their Amway sellers or other door-to-door sellers,” she said, “so we did exclude them.”
Van Burgel said the importance of the new hire law is that it gets parents who owe child support into the system and paying regularly. She said the agency also uses computer matching with both the Internal Revenue Service and Maine Revenue Services to seize tax refunds going to parents that have obligations they owe.
“It is better for the children to have that support coming on a regular basis,” she said. “That’s what we try to set up.”
But, while the agency is using all the tools it has to collect child support, Van Burgel said, it is not getting every parent that owes support to pay it.
“What we do does not get to everyone that should be paying,” she said. “There is the underground economy and we know there are people earning a living who are not showing up on any list.”
Simpson said parents have a responsibility to pay for their children’s support. She said complaints from the parents who have custody of the children are among the most common calls she gets from constituents.
“I’m going to do whatever I can to make sure these children get the support they deserve, “ she said.