E9-13617. Debt Collection Authorities Under the Debt Collection Improvement Act of 1996

AGENCY:

Financial Management Service, Fiscal Service, Treasury.

ACTION:

Interim final rule.

SUMMARY:

The Department of the Treasury, Financial Management Service, is amending its regulation governing the centralized offset of federal payments to collect nontax debts owed to the United States. The amendment removes the time limitation on the collection of nontax debts by centralized offset, consistent with a change in the statute on which it is based. The statutory change, enacted as part of the Food, Conservation and Energy Act of 2008, allows for the use of centralized offset of federal payments, including federal salary payments, to collect nontax debts owed to the United States irrespective of the amount of time the debt has been outstanding.

DATES:

This interim final rule is effective June 11, 2009. Comments must be received by August 10, 2009.

ADDRESSES:

The Financial Management Service (FMS) participates in the U.S. government's eRulemaking Initiative by publishing rulemaking information on http://www.regulations.gov. Regulations.gov offers the public the ability to comment on, search, and view publicly available rulemaking materials, including comments received on rules.

Comments on this rule, identified by docket FISCAL-FMS-2008-0002, should only be submitted using the following methods:

Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions on the Web site for submitting comments.

Mail: Tom Dungan, Policy Analyst, Financial Management Service, 401 14th Street, SW., Washington, DC 20227.

The fax and e-mail methods of submitting comments on rules to FMS have been retired.

Instructions: All submissions received must include the agency name (“Financial Management Service”) and docket number FISCAL-FMS-2008-0002 for this rulemaking. In general, comments will be published on Regulations.gov without change, including any business or personal information provided. Comments received, including attachments and other supporting materials, are part of the public record and subject to public disclosure. Do not enclose any information in your comment or supporting materials that you consider confidential or inappropriate for public disclosure.

You may also inspect and copy this proposed rule at: Treasury Department Library, Freedom of Information Act (FOIA) Collection, Room 1428, Main Treasury Building, 1500 Pennsylvania Avenue, NW., Washington, DC 20220. Before visiting, you must call [phone] for an appointment.

FOR FURTHER INFORMATION CONTACT:

Thomas Dungan, Policy Analyst, at [phone], or Tricia Long, Senior Attorney, at [phone].

SUPPLEMENTARY INFORMATION:

I. Background

The Food, Conservation and Energy Act of 2008, Public Law 110-334, Section 14219, 22 Stat. 923 (2008) (“the Act”) amended the Debt Collection Act of 1982 (as amended by the Debt Collection Improvement Act of 1996) to remove a restriction on the collection of debt by administrative offset, i.e., offset of payments pursuant to 31 U.S.C. 3716. Prior to this change, administrative offset to collect debt was only available if the debt was delinquent for a period of less than ten years. The amendment to the law allows for the collection of debt by administrative offset without any time limitation and applies to any debt outstanding on or after the date of the enactment of the Act.

The changes to this rule conform to the statutory language by removing the ten-year time limitation on the collection of nontax debt by administrative offset, including centralized salary offset, by explicitly stating that no time limitation shall apply, and by explaining that by removing the time limitation, all debts, including debts that were ineligible for collection by offset prior to the removal of the time limitation, may now be collected by administrative offset and centralized salary offset. To avoid any undue hardship, we have added a requirement applicable to debts that were previously ineligible for collection by offset because they had been outstanding for more than ten years. For these debts, creditor agencies must certify to FMS that the notice of intent to offset was sent to the debtor after the debt became ten years delinquent. This is intended to alert the debtor that his debt may now be collected by offset and allows the debtor additional opportunities to dispute the debt, enter into a repayment agreement or otherwise avoid offset. This requirement applies even in a case where notice was sent prior to the debt becoming ten years delinquent. This requirement applies only with respect to debts that were previously ineligible for collection by offset because of the time limitation. This requirement does not apply to debts, such as Department of Education student loan debts, that could be collected by offset without regard to any time limitation prior to this statutory change.

II. Procedural Analyses

Administrative Procedures Act

This rule is being issued without prior public notice and comment because the changes to the rule are being made to conform to statutory requirements. Under 5 U.S.C. 553(b) and (d)(3), good cause exists to determine that notice and comment rulemaking is unnecessary and contrary to the public interest. The amendments made by this rule merely mirror amendments already enacted into law. Further delay in making these amendments would create an inconsistency between the law and the regulations and would cause confusion.

Request for Comment on Plain Language

Executive Order 12866 requires each agency in the Executive branch to write regulations that are simple and easy to understand. We invite comment on how to make the proposed rule clearer. For example, you may wish to discuss: (1) Whether we have organized the material to suit your needs; (2) whether the requirements of the rules are clear; or (3) whether there is something else we could do to make these rules easier to understand.

Regulatory Planning and Review

The final rule does not meet the criteria for a “significant regulatory action” as defined in Executive Order 12866. Therefore, the regulatory review procedures contained therein do not apply.

Regulatory Flexibility Act Analysis

Because no notice of rulemaking is required, the provisions of the Regulatory Flexibility Act (5 U.S.C. et seq.) do not apply.

List of Subjects in 31 CFR Part 285

• Administrative practice and procedure
• Child support
• Child welfare
• Claims
• Credits
• Debts
• Disability benefits
• Federal employees
• Garnishment of wages
• Hearing and appeal procedures
• Loan programs
• Privacy
• Railroad retirement
• Railroad unemployment insurance
• Salaries
• Social Security benefits
• Supplemental Security Income (SSI)
• Taxes
• Veteran's benefits
• Wages

For the reasons set forth in the preamble, we are amending 31 CFR part 285 as follows:

PART 285—DEBT COLLECTION AUTHORITIES UNDER THE DEBT COLLECTION IMPROVEMENT ACT OF 1996

1. The authority citation for part 285 continues to read as follows:

Authority: 5 U.S.C. 5514; 26 U.S.C. 6402; 31 U.S.C. 321, 3701, 3711, 3716, 3719, 3720A, 3720B, 3720D; 42 U.S.C. 664; E.O. 13019, 61 FR 51763, 3 CFR, 1996 Comp., p. 216.

2. In § 285.5:

a. Remove paragraph (d)(3)(i)(C);

b. Redesignate paragraphs (d)(3)(i)(D) and (d)(3)(i)(E) as paragraphs (d)(3)(i)(C) and (d)(3)(i)(D) respectively.

c. Redesignate paragraphs (d)(6)(iii), (d)(6)(iv) and (d)(6)(v) as paragraphs (d)(6)(iv), (d)(6)(v) and (d)(6)(vi) respectively.

d. Add paragraphs (d)(3)(v) and (d)(6)(iii) as follows:

§ 285.5

Centralized offset of Federal payments to collect nontax debt owed to the United States.

* * * * *

(d) * * *

(3) * * *

(v) Creditor agencies may submit nontax debts to FMS for collection by centralized offset irrespective of the amount of time the debt has been outstanding. Accordingly, all nontax debts, including debts that were outstanding for ten years or longer prior to June 11, 2009 may be collected by centralized offset.

* * * * *

(6) * * *

(iii) For debts outstanding more than ten years on or before June 11, 2009, the notice of intent to offset described in paragraph (d)(6)(ii)(A) of this section was sent to the debtor after the debt was outstanding for more than ten years, and that the debtor was afforded the rights described in paragraphs (d)(6)(ii)(B) through (E). This requirement will apply even in a case where notice was also sent prior to the debt being outstanding for ten years but does not apply to any debt that could be collected by offset without regard to any time limitation prior to June 11, 2009.

3. In § 285.7:

a. Remove paragraph (d)(3)(ii);

b. Redesignate paragraphs (d)(3)(iii) through (d)(3)(iv) as paragraphs (d)(3)(ii) through (d)(3)(iii) respectively .

c. In paragraph (d)(4), revise all references to “paragraph (d)(3)(iv)” to read “paragraph (d)(3)(iii)”.

d. Add paragraphs (d)(6) and (d)(7) as follows:

§ 285.7

Salary offset.

* * * * *

(d) * * *

(6) Creditor agencies may submit nontax debts to FMS for collection by centralized salary offset irrespective of the amount of time the debt has been outstanding. Accordingly, all nontax debts, including debts that were outstanding for ten years or longer prior to June 11, 2009, may be collected by centralized salary offset.

(7) For debts that were outstanding more than ten years on or before June 11, 2009, creditor agencies must certify to FMS that the notice described in paragraph (d)(3)(ii) of this section was sent to the debtor after the debt was outstanding for ten years. This requirement will apply even in a case where notice was also sent prior to the debt being outstanding for ten years but does not apply to any debt that could be collected by offset without regard to any time limitation prior to June 11, 2009.

* * * * *

Dated: May 29, 2009.

Gary Grippo,

Acting Fiscal Assistant Secretary.