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CDHS Levies on Joint Accounts
By: John E. Burrus, Esq., Bieging Shapiro & Burrus LLP

At a meeting of the Board of the Colorado Department of Human Services held on May 7, 2004, a new rule (9CCR 2504-6.90.5) was adopted, which became effective July 1, 2004, and which pertains to the treatment of levies on joint accounts by the Division of Child Support Enforcement for past due child support obligations.

In general, the rule provides as follows:

• When a bank receives a levy of this type, it is required to immediately freeze 50% of the assets on deposit in the account. The bank must do this no matter how many joint account holders there are and no matter what knowledge the bank may have as to the source of deposits into the account.

• The other owner or owners of the account are given thirty (30) days within which to file an appeal with the Department contesting ownership of the funds which have been frozen. To prevail on this appeal, the other owner or owners must show “net contribution” of more than the 50% frozen by the levy. The rule does not address how these “net contributions” are computed, in terms of such things as how withdrawals or payments from the account are to be allocated between the child support obligor and the other owner or owners.

• If the appeal is granted, the Department will release its lien on the amount it determines to be appropriate and will require payment of the balance to the Department. If no appeal is taken or if the appeal is denied, the Department will collect the entire amount frozen by the levy. It is interesting to note that the rule does not address a situation where the child support obligor has contributed more than 50% to the account. Even in these instances, only 50% will be subject to levy and collection.

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