97-17518. Collection of Past-Due Support by Administrative Offset  

  • [Federal Register Volume 62, Number 129 (Monday, July 7, 1997)]
    [Rules and Regulations]
    [Pages 36205-36212]
    From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
    [FR Doc No: 97-17518]
    
    
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    DEPARTMENT OF THE TREASURY
    
    Fiscal Service
    
    31 CFR Part 285
    
    RIN 1510-AA58
    
    
    Collection of Past-Due Support by Administrative Offset
    
    AGENCY: Financial Management Service, Fiscal Service, Treasury.
    
    ACTION: Interim rule with request for comments.
    
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    SUMMARY: The Debt Collection Improvement Act of 1996 (DCIA), enacted on 
    April 26, 1996, authorizes the Secretary of the Treasury (Secretary) to 
    collect past-due support by the administrative offset of Federal 
    payments. Executive Order 13019 of September 28, 1996 (Executive Order) 
    requires that the Secretary promptly develop and implement procedures 
    necessary for the collection of past-due support debts by 
    administrative offset. In addition, the Executive Order requires each 
    executive agency to review each class of payments certified by such 
    agencies to determine whether any class of payments should be exempt 
    from offset. With respect to any class of payments so identified, 
    agencies must submit a request for exemption from offset to the 
    Secretary within 30 days after the Secretary establishes standards for 
    determining exemptions. The Executive Order further requires that 
    Federal payment agencies and disbursing officials promptly implement 
    any rules, regulations, or procedures issued by the Secretary that are 
    necessary to implement offset for the collection of past-due support.
        The Financial Management Service (FMS), as the central disbursing 
    agency of the Federal Government, is
    
    [[Page 36206]]
    
    responsible for implementation of centralized administrative offset for 
    the collection of nontax delinquent debt owed to the Federal 
    Government, past-due support, and other debt owed to States. This 
    regulation implements administrative offset for the collection of past-
    due support pursuant to the DCIA and the Executive Order.
        As authorized by the DCIA, FMS intends to promulgate additional 
    rules for centralized administrative offset for the collection of 
    nontax debt owed to Federal and State Governments, other than child 
    support. FMS anticipates that Part 285 will eventually contain all of 
    the provisions relating to centralized administrative offset.
    
    DATES: This rule is effective on July 25, 1997. Comments will be 
    accepted until September 5, 1997.
    
    ADDRESSES: Comments or inquiries may be mailed to Gerry Isenberg, 
    Financial Program Specialist, Debt Management Services, Financial 
    Management Service, Department of the Treasury, 401 14th Street SW., 
    Room 151, Washington, DC 20227. A copy of this interim rule is being 
    made available for downloading from the Financial Management Service 
    web site at the following address: http://www.fms.treas.gov.
    
    FOR FURTHER INFORMATION CONTACT: Gerry Isenberg, Financial Program 
    Specialist, at (202) 874-6660; Pamela Dillon, Director, Treasury Offset 
    Program, at (202) 874-8700; Ellen Neubauer or Ronda Kent, Senior 
    Attorneys, at (202) 874-6680.
    
    SUPPLEMENTARY INFORMATION:
    
    Background
    
        The Debt Collection Improvement Act of 1996 (DCIA), Pub. L. 104-
    134, 110 Stat. 1321-358 (1996), requires that disbursing officials of 
    the Department of the Treasury and other Federal disbursing officials 
    offset Federal payments to collect nontax delinquent debts owed to the 
    United States. Subsection (h) of 31 U.S.C. 3716, as added by section 
    31001(f) of the DCIA, authorizes the Secretary of the Treasury 
    (Secretary) to collect State debts, including past-due support, by the 
    administrative offset of Federal payments. See also section 
    31001(z)(1)(B) of the DCIA, codified at 31 U.S.C. 3701(b)(2).
        FMS, as the Treasury disbursing office, is responsible for 
    implementation of centralized administrative offset for the collection 
    of nontax debt owed to the United States, past-due support, and other 
    State debt. On September 28, 1996, the President issued Executive Order 
    13019 entitled ``Supporting Families: Collecting Delinquent Child 
    Support Obligations'' (Executive Order) which requires that the 
    Secretary promptly develop and implement procedures necessary to 
    collect past-due support debts by administrative offset. The Executive 
    Order recognizes that the failure of some parents to meet their child 
    support obligations threatens the health, education, and well-being of 
    their children and requires the collection of delinquent child support 
    obligations from persons who may be entitled or eligible to receive 
    certain Federal payments. FMS is publishing this interim regulation to 
    establish and notify the public of the procedures necessary for the 
    collection of past-due support debts by administrative offset in 
    accordance with 31 U.S.C. 3716(h) and the Executive Order.
        Federal law prohibits the use of administrative offset to collect 
    State debts (including past-due support) for many types of Federal 
    payments, including payments due to an individual under (a) title IV of 
    the Higher Education Act of 1965; (b) the Social Security Act; (c) part 
    B of the Black Lung Benefits Act; (d) any law administered by the 
    Railroad Retirement Board; (e) the tariff laws of the United States; 
    and (f) any other law that expressly prohibits collection of past-due 
    support by administrative offset. Regulations promulgated by the 
    Internal Revenue Service and the Department of Health and Human 
    Services (HHS) govern the offsetting of Federal tax refund payments to 
    collect past due child support as authorized under 26 U.S.C. 6402 and 
    42 U.S.C. 664. See 26 CFR 301.6402-5 and 45 CFR 303.72. FMS will be 
    responsible for operation of the tax refund offset program effective 
    January 1, 1998, and will issue new regulations governing the offset of 
    tax refund payments to collect past-due support.
        To implement the Executive Order and 31 U.S.C. 3716(h), FMS is 
    working with HHS, Treasury and non-Treasury disbursing officials, and 
    other affected agencies, including Federal payment agencies. The 
    Executive Order requires that disbursing officials (officials 
    authorized to disburse Federal payments) and payment agencies (agencies 
    that certify Federal payments) promptly implement any rule, regulation, 
    or procedure necessary to conduct administrative offset to collect 
    delinquent child support payments.
        Subsection (c)(3)(B) of 31 U.S.C. 3716, as added by section 
    31001(d)(2)(D) of the DCIA, requires the Secretary to exempt payments 
    under means-tested programs from administrative offset when requested 
    by the head of the respective agency. In addition, this subsection 
    authorizes the Secretary to exempt other payments from administrative 
    offset upon the written request of the head of the payment certifying 
    agency. The written request for exemption must provide justification 
    for the exemption. Standards and instructions for making such requests 
    are available from FMS at the above address and at the FMS web site at 
    www.fms.treas.gov. The Executive Order requires that Federal payment 
    agencies determine the classes and types of payments that should be 
    considered for exemption from administrative offset by the Secretary 
    and submit requests for exemption to FMS within 30 days of the date the 
    Secretary prescribes standards. In acting on such requests, the 
    Secretary will give due consideration to whether administrative offset 
    would tend to interfere substantially with or defeat the purposes of 
    the payment agency's program. The DCIA requires that the Secretary 
    report to the Congress annually on exemptions granted under the DCIA.
        FMS is working closely with HHS to implement procedures necessary 
    to report to the Secretary information on past-due support claims 
    referred to HHS by States for tax refund offset purposes under 42 
    U.S.C. 664 and 26 U.S.C. 6402(c), including claims enforced by States 
    pursuant to cooperative agreements with or by Indian tribal 
    governments. Such procedures are appropriate to facilitate offset and 
    prevent duplicative efforts by the States. FMS is also working closely 
    with HHS to implement procedures necessary to report to the Secretary 
    information on past-due support claims referred to HHS by States under 
    this rule. It is anticipated that States will continue to refer debts 
    to HHS for offset from both Federal tax refunds and other Federal 
    payments and that HHS will report those debts to the Secretary. While 
    nothing in this rule is intended to require States to refer debts 
    directly to FMS for administrative offset, this rule provides States 
    with that option.
        ``Past-due support'' means the amount of support, determined under 
    a court order, or an order of an administrative procedure established 
    under State law, for support and maintenance of a child, or of a child 
    and the parent with whom the child is living, which has not been paid. 
    States will have the option of directly notifying FMS of past-due 
    support for administrative offset purposes or of notifying HHS, 
    whereupon HHS will report those debts to FMS.
    
    [[Page 36207]]
    
        Before notifying FMS or HHS that an individual owes past-due 
    support, the State or its agents will be required to send notice to 
    such individual that an offset may be taken from certain Federal 
    payments otherwise payable to such individual. The notice shall inform 
    the individual owing the past-due support of the type and amount of the 
    support owed, as well as such individual's right to a review of the 
    State's determination that past-due support is owed or of the amount 
    owed. The State will certify that the requirements of this regulation 
    and applicable State law have been met.
    
    Section by Section Analysis
    
    (a) Definitions
    
        Administrative Offset. Administrative offset has the same meaning 
    as found at 31 U.S.C. 3701(a)(1) except that as used in this rule the 
    term is limited to the offsetting of payments to collect past-due 
    support.
        Debt. As used in this rule, the term ``debt'' is limited to debt 
    based on past-due support. Debt based on past-due support is among the 
    many kinds of debts subject to collection by administrative offset and 
    encompassed by the statutory definition of debt found at 31 U.S.C. 
    3701(b) (1) and (2). The definition of debt contained in this rule does 
    not alter the statutory definition. It merely limits the scope of the 
    rule to debt based on past-due support.
        Disbursing Official. Disbursing official means an official who has 
    authority to disburse public money pursuant to 31 U.S.C. 3321 or 
    another law. It includes disbursing officials of the Department of the 
    Treasury, the Department of Defense, the United States Postal Service, 
    or any other Government corporation, any disbursing official of the 
    United States designated by the Secretary of the Treasury, or any 
    disbursing official of any other executive department or agency that 
    disburses Federal payments.
        Past-Due Support. Past-due support means the amount of support 
    determined under a court order or an order of an administrative 
    procedure established under State law for support and maintenance of a 
    child or of a child and the parent with whom the child is living, which 
    has not been paid. Unless so limited by court order or under State law 
    or procedure, the term ``child'' as used in this definition is not 
    intended to be limited to minor children.
        State. Treasury considered including legal subdivisions of States 
    within the definition of ``State'' to ensure that there were no 
    impediments to collecting past-due support being enforced at, for 
    example, the county level. Legal subdivisions of States were not 
    included in the definition of ``State'' because of concerns about the 
    potential impact on current relationships between States and their 
    legal subdivisions in the collection of past-due support. The public is 
    invited to comment on the impact of including or excluding legal 
    subdivisions of States in the definition of ``State'' as well as on any 
    other provision of this rule.
    
    (b) General Rule
    
        Paragraph (b) states the general rule that disbursing officials of 
    FMS and other disbursing officials of the Federal Government will 
    offset Federal payments to collect past-due support. States enforcing 
    past-due support may notify FMS of past-due support either by entering 
    into an agreement with FMS and requesting that the offset be conducted 
    or by notifying HHS. Amounts offset will be forwarded to the State less 
    any fee charged for the offset.
    
    (c) Agreements
    
        Paragraph (c) states that FMS may, within its discretion, enter 
    into an agreement with a State for disbursing officials of FMS and 
    other Federal disbursing officials to collect past-due support by 
    administrative offset. The agreement will contain requirements that FMS 
    considers appropriate to facilitate the offset such as the manner and 
    time frames for submitting debts to FMS; requirements for updating 
    debts; and other procedures to ensure offsets are properly made. The 
    agreement also will require that States have procedures in place for 
    collecting debt by administrative offset including procedures for 
    ensuring that individuals who owe past-due support are provided with 
    notice and an opportunity to be heard before the debt is referred to 
    FMS for offset. There is a strong Federal and State interest in 
    ensuring that parents meet their child support obligations. The failure 
    of some parents to meet their child support obligations weakens 
    families and increases State and Federal welfare expenditures. Thus, 
    agreements entered into between FMS and a State for the collection of 
    past-due support by administrative offset are of mutual benefit to both 
    the State and FMS and are therefore considered reciprocal. There is no 
    requirement that States offset their payments to collect debts owed to 
    the Federal Government and thus the request for offset from the State 
    may come from the appropriate official of the State responsible for 
    enforcing past-due support rather than a State disbursing official.
    
    (d) Notification to FMS of Past-Due Support
    
        Paragraph (d) describes the procedures which must be followed for 
    each debt when a State notifies FMS or HHS of past-due support for 
    purposes of collection by administrative offset. More specific 
    instructions regarding the formatting of information and the required 
    data elements will be provided to States.
        States which are enforcing a past-due support order issued by 
    another State or otherwise have knowledge that another State is 
    involved in enforcing a particular past-due support order, are required 
    to inform any other State involved in enforcing the order that it has 
    notified FMS of the past-due support. States must also notify any other 
    State involved in enforcing the order of any amounts received as a 
    result of an offset. The purpose of this notification is to avoid 
    referral of the same debt from more than one State and to ensure that 
    debt amounts are accurately maintained.
        Before a debt can be referred to FMS, States must sign a 
    certification for each debt or group of debts certifying that each debt 
    is past-due, legally enforceable, that the notice described in 
    paragraph (h) has been sent, and that the State has completed any 
    requirements imposed by its own laws or procedures for collection of 
    debts by administrative offset. The certifying official must have both 
    the knowledge and the authority to certify to FMS, on behalf of the 
    State, that these requirements have been met. One of the purposes of 
    the certification is to permit the Secretary of the Treasury, as 
    authorized by the DCIA, to waive certain requirements of the Computer 
    Matching and Privacy Protection Act of 1988, 5 U.S.C. 552a, when 
    applicable, upon certification by a State that the requirements of 31 
    U.S.C. 3716(a) have been met. Section 3716(a) of Title 31 sets forth 
    the due process requirements applicable to the collection of delinquent 
    debts owed to the Federal Government. The due process requirements 
    applicable to the determination and collection of past-due support are 
    established under State laws and procedures. Additionally, paragraph 
    (h) of this rule sets forth specific due process requirements States 
    must meet to collect past-due support under this rule. Thus, 
    certification of compliance with both the requirements of State laws 
    and procedures and the requirements of paragraph (h) of this rule will 
    be considered equivalent to certification of compliance with the 
    requirements of 31 U.S.C. 3716(a).
    
    [[Page 36208]]
    
        Any debts which are not properly certified or do not otherwise 
    comply with the requirement of this section will not be accepted by 
    FMS. States will be notified that a particular debt or group of debts 
    has been rejected and will be given the reason for the rejection. Such 
    debts may be submitted to FMS once any deficiencies noted have been 
    resolved.
    
    (e) Minimum Amount of Past-due Support
    
        Paragraph (e) states that FMS will not accept debts of less than 
    $25.00 for collection by administrative offset. If a debt is referred 
    to FMS which is over $25.00 at the time it is referred, the debt will 
    remain subject to collection by administrative offset until it is paid 
    in full even if it falls below the $25.00 minimum. The $25.00 minimum 
    is intended to ensure that FMS is not collecting debt by administrative 
    offset where the administrative cost of collection exceeds the amount 
    of the debt. The minimum amount may be adjusted either upward or 
    downward by FMS. States will be notified of any adjustments.
    
    (f) Limitations
    
        Paragraph (f) provides that a debt properly submitted to FMS for 
    administrative offset will remain subject to collection by offset until 
    it is paid in full as long as the debt remains past-due and legally 
    enforceable. A debt will be considered legally enforceable for purposes 
    of this paragraph (f) if, under applicable State law, it may lawfully 
    be collected by administrative offset.
    
    (g) Notification of Changes in Status of Debt
    
        To ensure that debts referred to FMS for collection by 
    administrative offset remain accurate as to their amount and that 
    amounts offset do not exceed the amount of the debt, paragraph (g) 
    requires States to notify FMS or HHS of any decreases in the amount of 
    a debt referred. States are also required to notify FMS or HHS if any 
    debt should be deleted from the debtor database either because it has 
    been paid in full or for any other reason. States are permitted to 
    notify FMS or HHS of any increases in the amount of a debt referred to 
    FMS as long as the State has provided proper notice to the debtor and 
    has complied with any other requirements of State law or procedure. 
    Where a debt represents an ongoing obligation and it is anticipated 
    that the debt will increase on a regular basis, States should ensure 
    that the notices sent pursuant to paragraph (h) of this regulation 
    include such amounts.
        Under paragraph (g), States will be required to report, at 
    established time intervals, the total net adjustment made to the amount 
    of the debt if the net adjustment results in a decrease in the debt 
    amount. If the total net adjustment made to the debt amount during the 
    established time interval results in an increase in the debt amount, 
    States are encouraged, but are not required, to report the total net 
    adjustment.
    
    (h) Advance Notification of Intent to Collect by Administrative Offset
    
        Paragraph (h) sets forth requirements concerning the notice and 
    opportunity to exercise certain rights that must be provided to 
    individuals who owe past-due support before the debt can be referred 
    for collection by administrative offset. States must have procedures in 
    place to afford individuals who owe past-due support the opportunity 
    for a review as provided for under this paragraph (h) and must comply 
    with those procedures prior to referring a debt for collection by 
    administrative offset. Where a State intends to refer a debt which it 
    is enforcing based upon an order issued by another State, the referring 
    State must ensure that the individual who owes the past-due support has 
    the opportunity for a review by either the referring State or the State 
    which issued the order.
    
    (i) Payments Subject to Offset
    
        All Federal payments are subject to offset to collect past-due 
    support except those payments described in paragraph (i). Those 
    payments listed in paragraph (i)(1) are specifically excluded from 
    offset to collect past-due support by the DCIA. Paragraph (i)(2) sets 
    forth the authority of the Secretary under the DCIA to exempt 
    additional payments from offset. Payments which may be exempted from 
    offset under this authority are described in paragraph (k). Paragraph 
    (i)(3) is intended to recognize that other laws may prohibit the offset 
    of certain payments to collect past-due support. This exception applies 
    only where another law specifically and expressly prohibits offset. For 
    example, 38 U.S.C. 5301(a) expressly prohibits the collection of most 
    debt by offset from certain Veterans' benefit payments. Paragraphs 
    (i)(4) and (i)(5) reflect the DCIA provisions which exclude payments 
    made under the Internal Revenue Code and the tariff laws of the United 
    States from administrative offset under 31 U.S.C. 3716. Authority to 
    offset tax refund payments to collect past-due support is found at 42 
    U.S.C. 664 and 26 U.S.C. 6402 and is governed by regulations at 45 CFR 
    303.72 and 26 CFR 301.6402-5. All other Federal payments are subject to 
    offset under this rule although restrictions may apply to limit the 
    amount of a particular payment which may be offset.
    
    (j) Special Provisions Applicable to Federal Salary Payments
    
        Federal salary payments are included in those payments subject to 
    offset to collect past-due support under 31 U.S.C. 3716. The special 
    rules contained in paragraph (j) are intended to ensure that the amount 
    of a Federal salary payment subject to offset does not exceed the 
    limitations applicable to the garnishment of Federal pay to collect 
    support under 15 U.S.C. 1673(b)(2) (A) and (B). The authority to offset 
    Federal salary payments to collect past-due support is not intended to 
    alter or supersede the authority to garnish the wages of a Federal 
    employee who owes past-due support. Thus, this rule provides that the 
    maximum allowable offset amount will be reduced by the amount of a 
    garnishment order for support. For example, if a Federal employee's pay 
    in a given pay period, after required deductions, is $1,000 and 50% of 
    that pay may be offset, the total amount subject to offset is $500. If, 
    however, there is a garnishment order for support of $300 against that 
    employee's pay, the amount subject to offset is reduced to $200. Where 
    there is a $500 garnishment order against that employee's pay, no 
    offset would be permitted. Because Federal salary pay is being offset 
    to collect past-due support under 31 U.S.C. 3716, the provisions 
    applicable to the offset of Federal salary payments to collect debt 
    owed to the Federal Government do not apply.
    
    (k) Payments Exempt From Administrative Offset to Collect Past-due 
    Support Being Enforced by a State
    
        Paragraph (k) describes the authority of the Secretary as contained 
    in the DCIA to exempt certain payments from administrative offset. 
    Examples of means-tested programs as defined in paragraph (k) include 
    food stamps and Supplemental Security Income (SSI). Such programs are 
    exempt from offset so long as a request for an exemption is properly 
    submitted to the Secretary and the Secretary determines that such 
    programs are, in fact, means-tested. Other payments may be exempted 
    from offset at the discretion of the Secretary upon receipt of a proper 
    request from the agency that issues the payment which justifies the 
    reason for the exemption. FMS has issued standards for payment agencies 
    to follow when for making such requests. These standards are available 
    from FMS at the above address and at the FMS web site. In
    
    [[Page 36209]]
    
    acting on such requests, the Secretary will give due consideration to 
    whether or not the offset would tend to substantially interfere with 
    the purpose of the program.
    
    (l) Fees
    
        FMS will charge a fee to cover the costs of the offset.
        The fee will be deducted from the amount offset before that amount 
    is forwarded to the States and will only be charged when an offset has 
    been made. States may add this fee to the amount of the debt if 
    permitted by law. The fee charged is intended to reimburse FMS for the 
    administrative costs of the offset and therefore may be adjusted to 
    reflect costs. Once a fee is established, however, it will not be 
    adjusted for a period of at least 12 months. States will be notified in 
    advance of any adjustments.
    
    (m) Conducting the Offset
    
        Paragraph (m) describes how the offset program works. Debts 
    referred to FMS are entered into a centralized debtor database. When 
    disbursing officials of the Federal Government issue payments, those 
    payments are compared with the debtor database to determine if the 
    person to whom the payment is to be issued (the payee) owes a debt. If 
    a match occurs (a match occurs when the taxpayer identification number 
    and name of the payee match the taxpayer identification number and name 
    of a debtor) and the payment is one which is subject to offset for the 
    collection of past-due support, the offset will take place. Amounts 
    offset will be forwarded to the State, less any fee. If the amount 
    offset is less than the amount of the payment, the remainder of the 
    payment will be forwarded to the payee. Certain payments may only be 
    partially offset, that is, only a certain percentage of the payment may 
    be offset to collect a debt. If the offset does not result in payment 
    of the debt in full, offsets from future payments to the payee will 
    continue until the debt is paid in full. Although only those debts 
    based on past-due support are the subject of this rule, other debts as 
    defined at 31 U.S.C. 3701(b) are also included in the database to be 
    collected by administrative offset. Separate rules govern the 
    collection of other debts (debts not based on past-due support) by 
    administrative offset.
    
    (n) Priorities
    
        Paragraph (n) is intended to establish a priority for offsets where 
    an individual owes more than one debt and a payment being issued to 
    that individual (or the amount of that payment which is available for 
    offset) is not sufficient to satisfy all debts. Debt based on past-due 
    support may be of more than one type depending on whether or not the 
    debt has been assigned to the State. Paragraph (n) provides that debt 
    which has been assigned to the State will be collected first and that 
    debt which has not been assigned to the State will be collected only 
    after other reductions allowed by law have been taken, such as offsets 
    to collect debt as defined at 31 U.S.C. 3701(b) which is owed to the 
    Federal Government.
    
    (o) Notification of Offset
    
        Paragraph (o) provides that once an offset has occurred, the 
    disbursing official who conducted the offset will provide notice to the 
    payee that the offset has occurred. A disbursing official, however, 
    cannot be held liable for failure to provide this notice.
    
    (p) Liability of Disbursing Officials and Payment Agencies
    
        Paragraph (p) restates the DCIA which provides that neither the 
    disbursing official nor the payment agency shall be liable for the 
    amount of the offset on the basis that the underlying obligation, 
    represented by the payment amount before the offset was taken, was not 
    satisfied. Thus, if a payee is due a payment and receives less than the 
    full amount of that payment because an offset has occurred, no cause of 
    action exists against the disbursing official or the payment agency on 
    the basis that the payment was not made in full. Paragraph (p) also 
    provides that the payment agency will receive notice that the offset 
    has occurred and will be provided with contact information at the State 
    which referred the debt for offset. The purpose of this notice is to 
    allow the payment agency to properly direct any inquiries it may 
    receive concerning the offset.
    
    Regulatory Analyses
    
        It has been determined that this rule is not a significant 
    regulatory action as defined in Executive Order 12866. Because no 
    notice of proposed rulemaking is required, the provisions of the 
    Regulatory Flexibility Act do not apply.
    
    Special Analyses
    
        FMS is promulgating this interim rule without opportunity for prior 
    public comment pursuant to the Administrative Procedure Act (APA), 5 
    U.S.C. 553, because FMS has determined, for the following reasons, that 
    a comment period would be impracticable and contrary to the public 
    interest. The DCIA was effective immediately upon its enactment on 
    April 26, 1996, and for the first time, authorized the collection of 
    past-due support by administrative offset from certain Federal 
    payments. Prior to the passage of the DCIA only debts owed to the 
    United States could be collected by administrative offset from these 
    Federal payments. Thus, States enforcing past-due support as well as 
    members of the public who either owe or are owed past-due support may 
    not be aware of the impact of the law.
        Executive Order 13019 dated September 28, 1996 requires the 
    Secretary to promptly develop and implement procedures necessary for 
    the Secretary to collect past-due support by administrative offset. The 
    Executive Order states that the failure of some parents to meet their 
    child support obligations threatens the health, education, and well-
    being of their children. It is the intent of the Executive Order to 
    facilitate the collection of delinquent child support obligations from 
    persons who may be entitled to receive certain Federal payments thereby 
    supporting our children and strengthening American families. Since this 
    interim rule provides critical guidance needed to facilitate the offset 
    of Federal payments to collect past-due support, FMS believes that it 
    is in the public interest to issue this interim rule without 
    opportunity for prior public comment.
        The public is invited to submit comments on the interim rule which 
    will be taken into account before a final rule is issued.
        FMS has determined that good cause exists to make this interim rule 
    effective upon publication without providing the 30 day period between 
    publication and the effective date contemplated by 5 U.S.C. 553(d). The 
    purpose of a delayed effective date is to afford persons affected by a 
    rule a reasonable time to prepare for compliance. However, in this 
    case, the authority to collect past-due support by administrative 
    offset from Federal payments became effective on April 26, 1996. 
    Inasmuch as this interim rule provides important guidance that is 
    expected to facilitate implementation of the authority contained in the 
    law, FMS believes that good cause exists to make the rule effective 
    upon publication.
        Since the interim rule is being issued without prior notice and 
    public procedure pursuant to the APA, the collections of information 
    contained in the interim rule has been reviewed under the requirements 
    of the Paperwork Reduction Act (44 U.S.C. 3507(j)) and, pending receipt 
    and evaluation of public comments,
    
    [[Page 36210]]
    
    approved by the Office of Management and Budget (OMB) under control 
    number 1510-0069. An agency may not conduct or sponsor, and a person is 
    not required to respond to, a collection of information unless it 
    displays a valid control number assigned by OMB.
        Comments concerning the collection of information should be 
    directed to OMB, Attention: Desk Officer for the Department of the 
    Treasury, Financial Management Service, Office of Information and 
    Regulatory Affairs, Washington, D.C. 20503, with copies to Jacqueline 
    Perry, Public Reports Clearance Officer, Financial Management Service, 
    3361 75th Avenue, Landover, Maryland 20785. Any such comments should be 
    submitted not later than September 5, 1997. Comments are specifically 
    requested concerning:
        Whether the proposed collection of information is necessary for the 
    proper performance of the functions of FMS, including whether the 
    information will have practical utility;
        The accuracy of the estimated burden associated with the proposed 
    collection of information (see below);
        How the quality, utility, and clarity of the information to be 
    collected may be enhanced; and
        How the burden of complying with the proposed collection of 
    information may be minimized, including through the application of 
    automated collection techniques and other forms of information 
    technology.
        The collections of information in this interim regulation are in 
    Sec. 285.1 (d)(1), (d)(2), (d)(3), (g), and (h). The information 
    collected under Sec. 285.1(d)(1) may include the name of the person 
    owing past-due support, the person's social security number, the 
    person's address, the amount of past-due support owed, and an identity 
    code for the State. This information is needed to determine if the 
    debtor and the payee of a Federal payment is the same person, to notify 
    the debtor/payee of the occurrence of an offset, and to forward the 
    money offset to the appropriate State.
        The information collected under Sec. 285.1(d)(2) shall include name 
    and social security number of the debtor. This information is necessary 
    to prevent duplication of reporting to FMS.
        The information collection under Sec. 285.1(d)(3) shall include a 
    signed statement that the debt is past-due and legally enforceable and 
    that the State has complied with all the requirements under 
    Sec. 285.1(h). This information is necessary to provide a waiver of 
    certain sections of the Computer Matching and Privacy Protection Act of 
    1988 where such a waiver is necessary to conduct administrative offset 
    under this rule.
        The information collected under Sec. 285.1(g) may include changes 
    to the name of the person owing past-due support, the person's social 
    security number, the person's address, the amount of past-due support 
    owed, or the identity code for the State collecting the debt. This 
    information is needed to assure that the information concerning the 
    debtor is accurate, which prevents erroneous offsets.
        The information collected under Sec. 285.1(h) shall include the 
    name and address of the debtor, information concerning the existence of 
    a past-due support debt and the intent to collect the debt by 
    administrative offset, and a listing of the debtor's rights. This 
    information is a prerequisite for conducting administrative offset 
    under 31 U.S.C. 3716(a).
        The collections of information under this rule is voluntary. Likely 
    respondents to all the collections of information listed above are 
    States, Territories, and Commonwealths of the Federal Government.
        The estimated total annual reporting burden is 5562 hours. The 
    estimated burden hours per respondent is 103 hours. The estimated 
    number of respondents is 54. These figures represent the burden imposed 
    by FMS. The reporting burden imposed by other agencies will be 
    addressed by those agencies.
    
    List of Subjects in 31 CFR Part 285
    
        Administrative practice and procedure, Child Support, Claims, 
    Debts, Privacy, Taxes.
    
    Authority and Issuance
    
        For the reasons set forth in the preamble, 31 CFR part 285 is 
    amended to read as follows:
    
    PART 285--DEBT COLLECTION AUTHORITIES UNDER THE DEBT COLLECTION 
    IMPROVEMENT ACT OF 1996
    
        1. The authority citation for part 285 is revised to read as 
    follows:
    
        Authority: 26 U.S.C. 6402; 31 U.S.C. 321, 3716, 3720A; E.O. 
    13019.
    
        2. Section 285.1 is added to part 285, subpart A, to read as 
    follows:
    
    
    Sec. 285.1  Collection of past-due support by administrative offset.
    
        (a) Definitions. For purposes of this section:
        Administrative offset means withholding funds payable by the United 
    States (including funds payable by the United States on behalf of a 
    State government) to, or held by the United States for, a person to 
    satisfy a debt.
        Debt as used in this section is synonymous with the term past-due 
    support.
        Disbursing official includes an official who has authority to 
    disburse public money pursuant to 31 U.S.C. 3321 or another Federal 
    law.
        FMS means the Financial Management Service, a bureau of the 
    Department of the Treasury. FMS is the designee of the Secretary of the 
    Treasury for all matters concerning this section, unless otherwise 
    specified.
        HHS means the Department of Health and Human Services, Office of 
    Child Support Enforcement.
        Past-due support means the amount of support determined under a 
    court order, or an order of an administrative procedure established 
    under State law, for support and maintenance of a child, or of a child 
    and the parent with whom the child is living, which has not been paid.
        Past-due support being enforced by the State means there has been 
    an assignment of the support rights to the State or the State making 
    the request for offset is providing services to individuals pursuant to 
    42 U.S.C. 654(5) (section 454(5) of the Social Security Act).
        State means the several States of the United States. The term State 
    also includes the District of Columbia, American Samoa, Guam, the 
    United States Virgin Islands, the Commonwealth of the Northern Mariana 
    Islands, and the Commonwealth of Puerto Rico.
        Secretary means the Secretary of the Treasury.
        (b) General Rule. FMS may enter into a reciprocal agreement with a 
    State for the collection of past-due support being enforced by the 
    State by administrative offset from certain Federal payments. Upon 
    notification of past-due support either directly from a State which has 
    entered into such an agreement or from HHS, disbursing officials of FMS 
    or any other disbursing official of the United States shall offset 
    Federal payments which are subject to offset under this section, to 
    collect past-due support. The amount offset, minus the offset fee, 
    shall be forwarded to the State to be distributed in accordance with 
    applicable laws and procedures.
        (c) Agreements. FMS may enter into reciprocal agreements with 
    States for disbursing officials of FMS and any other Federal disbursing 
    official to offset certain Federal payments to collect past-due support 
    being enforced by the State. The agreement shall contain any 
    requirements which FMS considers
    
    [[Page 36211]]
    
    appropriate to facilitate the offset and prevent duplicative efforts 
    and shall require States to prescribe procedures governing the 
    collection of past-due support by Federal administrative offset. For 
    purposes of this section, reciprocal means of mutual benefit. An 
    agreement between FMS and a State to collect past-due support by 
    offsetting Federal payments will be considered of mutual benefit and it 
    is not required that States conduct administrative offsets to collect 
    debts owed to the Federal Government. States which have entered into an 
    agreement with FMS pursuant to this section may thereafter request, in 
    the manner prescribed herein, that an offset be performed. Such 
    requests shall be made by the appropriate State disbursing official 
    which, for purposes of this section, means an appropriate official of 
    the State agency which administers or supervises the administration of 
    the State plan under Title IV-D of the Social Security Act.
        (d) Notification to FMS of past-due support. (1) States notifying 
    FMS of past-due support must do so in the manner and format prescribed 
    by FMS. States notifying HHS of past-due support must do so in the 
    manner and format prescribed by HHS. HHS shall notify FMS of all past-
    due support referred to HHS by States for collection by administrative 
    offset provided that the requirements of paragraphs (d)(3) and (h) of 
    this section have been met.
        (2) When a State has knowledge that past-due support is being 
    enforced by more than one State, the State notifying FMS or HHS of the 
    past-due support must inform any other State involved in enforcing the 
    past-due support when it refers the debt for offset and when it 
    receives the offset amount.
        (3) The notification of past-due support must be accompanied by a 
    certification that the debt is past-due, legally enforceable, and that 
    the State has complied with all the requirements as set forth in 
    paragraph (h) of this section and with any requirements imposed by 
    State law or procedure. For debts so certified, the Secretary may waive 
    sections 552a (o) and (p) of Title 5, United States Code, where 
    applicable, in accordance with the Secretary's authority under 31 
    U.S.C. 3716(f).
        (4) FMS may reject a notification of past-due support which does 
    not comply with the requirements of this section. The State will be 
    notified of the rejection along with the reason for the rejection.
        (e) Minimum amount of past-due support. FMS will reject a 
    notification of past-due support where the past-due support owed is 
    less than $25.00. This amount may be adjusted from time to time by FMS 
    to ensure that the cost of collection does not exceed the debt.
        (f) Limitations. Debts properly submitted to FMS for administrative 
    offset will remain subject to collection by administrative offset until 
    withdrawn by the State provided the debt remains past-due and legally 
    enforceable.
        (g) Notification of changes in status of debt. The State notifying 
    FMS or HHS of past-due support shall, in the manner and in the time 
    frames provided by FMS or HHS, notify FMS or HHS of any deletion or 
    decrease in the amount of a debt referred for collection by 
    administrative offset. The State may notify FMS or HHS of any increases 
    in the amount of a debt referred for collection by administrative 
    offset provided the State has complied with the requirements of 
    paragraph (h) of this section with regard to those amounts.
        (h) Advance notification of intent to collect by administrative 
    offset. (1) The State, or FMS or HHS on behalf of the State, if the 
    State requests and FMS or HHS agrees, shall send a written 
    notification, at least 30 days in advance of referral of the debt for 
    offset, to the individual owing past-due support, informing the 
    individual that the State intends to refer the debt for collection by 
    administrative offset against Federal payments. The notice must also 
    inform the individual of:
        (i) The nature and amount of the debt; and
        (ii) The right to an administrative review by the State referring 
    the debt or, upon the request of the individual, by the State with the 
    order upon which the referral was based, of the determination of the 
    State with respect to the debt and of the procedures and time frames 
    established by the State for such reviews.
        (2) Prior to referring a debt to FMS for collection by 
    administrative offset, States must provide individuals with a 
    reasonable opportunity to exercise the rights enumerated in paragraph 
    (h)(1) of this section in accordance with procedures prescribed by the 
    State.
        (i) Payments subject to offset. Federal payments subject to offset 
    under this section include all Federal payments except:
        (1) Payments due to an individual under
        (i) Title IV of the Higher Education Act of 1965;
        (ii) The Social Security Act;
        (iii) Part B of the Black Lung Benefits Act;
        (iv) Any law administered by the Railroad Retirement Board;
        (2) Payments which the Secretary determines are exempt from offset 
    in accordance with paragraph (k) of this section;
        (3) Payments from which collection of past-due support by 
    administrative offset is expressly prohibited by law;
        (4) Payments made under the Internal Revenue Code of 1986 (except 
    that tax refund payments are subject to offset under separate 
    authority); and
        (5) Payments made under the tariff laws of the United States.
        (j) Special provisions applicable to Federal salary payments. (1) 
    Unless a lower maximum offset limitation is provided by applicable 
    State law, the maximum part of a Federal salary payment per pay period 
    subject to offset to collect past-due support shall not exceed those 
    amounts set forth at section 1673(b)(2) (A) and (B) of Title 15, United 
    States Code, as follows:
        (i) Fifty (50%) percent of the debtor's aggregate disposable 
    earnings for any pay period, where the debtor asserts by affidavit, or 
    by other acceptable evidence, that he/she is supporting a spouse and/or 
    dependent child, other than the former spouse and/or child for whom 
    support is being collected, except that an additional five (5%) percent 
    will apply if it appears that such earnings are to enforce past-due 
    support for a period which is twelve (12) weeks or more prior to the 
    pay period to which the offset applies. A debtor shall be considered to 
    be supporting a spouse and/or dependent child only if the debtor 
    provides over half of the spouse's and/or dependent child's support.
        (ii) Sixty (60%) percent of the debtor's aggregate disposable 
    earnings for any pay period where the debtor fails to assert by 
    affidavit or establish by other acceptable evidence that he/she is 
    supporting a spouse and/or dependent child, other than a former spouse 
    and/or child for whom support is being collected, except that an 
    additional five (5%) percent will apply if it appears that such 
    earnings are to enforce past-due support for a period which is twelve 
    (12) weeks or more prior to the pay period to which the offset applies.
        (2) The maximum allowable offset amount shall be reduced by the 
    amount of any deductions in pay resulting from a garnishment order for 
    support. Nothing in this rule is intended to alter rules applicable to 
    processing garnishment orders for child support and/or alimony.
        (3) Federal salary payments subject to offset for the collection of 
    past-due support include current basic pay, special pay, incentive pay, 
    retainer pay, overtime, or in the case of an employee not entitled to 
    basic pay, other authorized pay. Aggregate disposable earnings for 
    purposes of determining the
    
    [[Page 36212]]
    
    maximum amounts which may be offset under paragraph (j)(1) of this 
    section is Federal salary pay remaining after the deduction of:
        (i) Any amount required by law to be withheld;
        (ii) Amounts properly withheld for Federal, State or local income 
    tax purposes;
        (iii) Amounts deducted as health insurance premiums;
        (iv) Amounts deducted as normal retirement contributions, not 
    including amounts deducted for supplementary coverage; and
        (v) Amounts deducted as normal life insurance premiums not 
    including amounts deducted for supplementary coverage.
        (4) At least 30 days in advance of offset, the disbursing official 
    shall send written notice to the debtor of the maximum offset 
    limitations described in paragraph (j)(1) of this section. The notice 
    shall include a request that the debtor submit supporting affidavits or 
    other documentation necessary to determine the applicable offset 
    percentage limitation. The notice shall also inform the debtor of the 
    percentage that will be deducted if he/she fails to submit the 
    requested documentation.
        (k) Payments exempt from administrative offset to collect past-due 
    support being enforced by a State. The Secretary will exempt from 
    administrative offset under this part payments made under means-tested 
    programs when requested by the head of the Federal agency which 
    administers the program. For purposes of this section, means-tested 
    programs are programs for which eligibility is based on a determination 
    that income and/or assets of the beneficiary are inadequate to provide 
    the beneficiary with an adequate standard of living without program 
    assistance. The Secretary may exempt from administrative offset under 
    this section any other class or type of payment upon the written 
    request of the head of the agency which authorizes the payments. In 
    determining whether or not to grant such exemptions, the Secretary 
    shall give due consideration to whether administrative offset would 
    tend to interfere substantially with or defeat the purposes of the 
    payment agency's program.
        (l) Fees. A fee which FMS has determined to be sufficient to 
    reimburse FMS for the full cost of the offset procedure, shall be 
    deducted from each offset amount. FMS will notify the States, annually 
    and in advance, of the amount of the fee to be charged for each offset.
        (m) Conducting the offset. Disbursing officials of the Department 
    of the Treasury, the Department of Defense, the United States Postal 
    Service, or any other Government corporation, any disbursing official 
    of the United States designated by the Secretary, or any disbursing 
    official of an executive department or agency that disburses Federal 
    payments shall offset payments subject to offset under this section to 
    satisfy, in whole or part, a debt owed by the payee. Disbursing 
    officials shall compare payment certification records with records of 
    debts submitted to FMS for collection by administrative offset. A match 
    will occur when the taxpayer identifying number and name control of a 
    payment record are the same as the taxpayer identifying number and name 
    control of a debt record. The taxpayer identifying number for an 
    individual is the individual's social security number. When a match 
    occurs and all other requirements for offset have been met, the 
    disbursing official shall offset the payment to satisfy, in whole or 
    part, the debt. Any amounts not offset shall be paid to the payee. The 
    amount that can be offset from a single payment is the lesser of the 
    amount of the debt (including interest, penalties, and administrative 
    costs); the amount of the payment; or the amount of the payment 
    available for offset if a statute or regulation prohibits offset of the 
    entire amount. Debts remain subject to collection by offset until paid 
    in full.
        (n) Priorities. When a payee owes more than one debt which has been 
    referred to FMS for collection by administrative offset, any offset 
    will be applied first to past-due support assigned to a State and will 
    be applied to any other past-due support after any other reductions 
    allowed by law.
        (o) Notification of offset. Disbursing officials of FMS or any 
    other disbursing official which conducts an offset will notify the 
    payee in writing of the occurrence of the offset to satisfy past-due 
    support. The notice shall inform the payee of the type and amount of 
    the payment that was offset; the identity of the State which requested 
    the offset; and a contact point within the State that will handle 
    concerns regarding the offset. Disbursing officials shall not be liable 
    for failure to provide this notice.
        (p) Liability of disbursing officials and payment agencies. Neither 
    the disbursing official nor the agency authorizing the payment shall be 
    liable for the amount of the administrative offset on the basis that 
    the underlying obligation, represented by the payment before the 
    administrative offset was taken, was not satisfied. Disbursing 
    officials will notify the agency authorizing the payment that the 
    offset has occurred so that the agency authorizing the payment may 
    direct any inquiries concerning the offset to the appropriate State.
    
        Dated: June 30, 1997.
    Russell D. Morris,
    Commissioner.
    [FR Doc. 97-17518 Filed 7-3-97; 8:45 am]
    BILLING CODE 4810-35-P
    
    
    

Document Information

Effective Date:
7/25/1997
Published:
07/07/1997
Department:
Fiscal Service
Entry Type:
Rule
Action:
Interim rule with request for comments.
Document Number:
97-17518
Dates:
This rule is effective on July 25, 1997. Comments will be accepted until September 5, 1997.
Pages:
36205-36212 (8 pages)
RINs:
1510-AA58: Collection of Past-Due Support by Administrative Offset
RIN Links:
https://www.federalregister.gov/regulations/1510-AA58/collection-of-past-due-support-by-administrative-offset
PDF File:
97-17518.pdf
CFR: (2)
31 CFR 285.1(h)
31 CFR 285.1