Code of Federal Regulations Title 45. Public Welfare § 45.264.31 What happens if a State does not comply with the IV–D sanction requirement?

(a)(1) If we find that, for a fiscal year, the State IV–A agency did not enforce the penalties against recipients required under § 264.30(c), we will reduce the SFAG payable for the next fiscal year by one percent of the adjusted SFAG.

(2) Upon a finding for a second fiscal year, we will reduce the SFAG by two percent of the adjusted SFAG for the following year.

(3) A third or subsequent finding will result in the maximum penalty of five percent.

(1) The State demonstrates to our satisfaction that it had reasonable cause pursuant to § 262.5 of this chapter;  or

(2) The State achieves compliance under a corrective compliance plan pursuant to § 262.6 of this chapter.