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6-I.I. PAYMENTS IN LIEU OF EARNINGS Payments in lieu of earnings, such as unemployment and disability compensation, worker's compensation, and severance pay, are counted as income [24 CFR 5.609(b)(5)] if they are received either in the form of periodic payments or in the form of alump-sum amount or prospective monthly amounts for the delayed start of a periodic payment. If they are received in a one-time lump sum (as a settlement, for instance), they are treated as lump-sum receipts [24 CFR 5.609(c)(3)]. (See also the discussion of periodic payments in section 6-I.H and the discussion oflump-sum receipts in section 6-I.G.) 6-I.J. WELFARE ASSISTANCE SANCTIONS Overview Welfare assistance is counted in annual income. Welfare assistance includes Temporary Assistance for Needy Families (TANF), called CaIWORKS in the state of California, and any payments to individuals or families based on need that are made under programs funded separately or j ointly by federal, state, or local governments [24 CFR 5.603 (b)] . Sanctions Resulting in the Reduction of Welfare Benefits [24 CFR 5.615] SARA must make a special calculation of annual income when the welfare agency imposes certain sanctions on certain families. The full text of the regulation at 24 CFR 5.615 is provided as Exhibit 6-5. The requirements are summarized below. This rule applies only if a family was receiving HCV assistance at the time the sanction was imposed. Covered Families The families covered by 24 CFR 5.615 are those "who receive welfare assistance or other public assistance benefits (`welfare benefits') from a State or other public agency ('welfare agency') under a program for which Federal, State or local law requires that a member of the family must participate in an economic self sufficiency program as a condition for such assistance" [24 CFR 5.615(b)] Imputed Income When a welfare agency imposes a sanction that reduces a family's welfare income because the family commits fraud or fails to comply with the agency's economic self sufficiency program or work activities requirement, SARA must include in annual income "imputed" welfare income. SARA must request that the welfare agency inform SARA when the benefits of an HCV participant family are reduced. The imputed income is the amount the family would have received if the family had not been sanctioned. This requirement does not apply to reductions in welfare benefits: (1) at the expiration of the lifetime or other time limit on the payment of welfare benefits, (2) if a family member is unable to find employment even though the family member has complied with the welfare agency economic self sufficiency or work activities requirements, or (3) because a family member has not complied with other welfare agency requirements [24 CFR 5.615(b)(2)]. Offsets 2/25/13 Page 6-18