[Federal Register Volume 61, Number 143 (Wednesday, July 24, 1996)]
[Rules and Regulations]
[Pages 38368-38374]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-18029]
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NATIONAL LABOR RELATIONS BOARD
29 CFR Part 102
Procedural Rules Governing Debt-Collection Procedures for
Administrative Offset and Federal Income Tax Refund Offset
AGENCY: National Labor Relations Board.
ACTION: Interim rules with request for comments.
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SUMMARY: The National Labor Relations Board (Board) is issuing interim
regulations to implement debt-collection procedures for administrative
offset and Federal income tax refund offset provided for under the Debt
Collection Act of 1982. The Debt Collection Act of 1982 (Pub. L. 97365)
amends the Federal Claims Collection Act of 1966 to authorize the
federal government to employ various debt collection techniques
commonly available to the private sector, including administrative
offset and Federal income tax refund offset. These interim regulations,
set forth as new Subparts U (administrative offset) and V (Federal
income tax refund offset) to Part 102 of the Board's Rules and
Regulations, Series 8, are required in order to enable the Board to
utilize these debt collection procedures that have proven to be cost
effective mechanisms for collection of delinquent debt.
The Debt Collection Act of 1982 (Pub. L. 97-365) authorizes the
federal government to collect debts owed it by means of administrative
offset from other payments due the debtor from the United States,
without the debtor's consent, provided that the debtor is properly
notified and given the opportunity to exercise certain administrative
rights. In Subpart V of the interim rules, the Board establishes Agency
procedures that will be followed to implement 31 U.S.C. 3716, so that
delinquent debts owed to the Board may be collected by means of
administrative offset.
In 1992, the Congress passed and the President signed into law the
Cash Management Improvement Act Amendments of 1992 which requires
federal agencies to participate in the Internal Revenue Service (IRS)
income tax refund offset program in which federal agencies refer
delinquent debt to the IRS for collection by offset from a federal
income tax refund that may be due the delinquent debtor. In Subpart W
of the interim rules, the Board establishes Agency procedures that will
be followed to implement 26 U.S.C. 6402(d) of the Internal Revenue Code
and 31 U.S.C. 3720A, so that delinquent debts owed to the Board may be
referred to the Internal Revenue Service (IRS) for collection by offset
against Federal income tax refunds.
DATES: Effective Date: These regulations are effective July 24, 1996.
Comments: Comments must be submitted on or before September 29,
1996.
ADDRESSES: Send or deliver written comments to John J. Toner, Executive
Secretary, National Labor Relations Board, 1099 14th Street, NW., Room
11602, Washington, DC 20570-0001.
FOR FURTHER INFORMATION CONTACT: John J. Toner, (202) 273-1940.
SUPPLEMENTARY INFORMATION: Effective debt collection by the Board is a
necessary tool for enforcement of the federal labor laws. Under the
Federal Claims Collection Standards (FCCS), 4 CFR 101.2(9), a debt
exists when an amount of money or property has been determined by an
appropriate Agency official to be owed to the United States. The
Board's General Counsel and Regional Office staffs are authorized to
assert and settle claims on behalf of the Board. 29 CFR 101.7-101.9.
As an agency of the United States Government, the Board is entitled
to utilize the offset provisions of Title 31, because debts owed
pursuant to Board orders are in fact debts owed to the United States.
This is because the Board is the public agent chosen by Congress to
enforce the National Labor Relations Act and its backpay orders seek
reparations designed to vindicate the public policy of the statute.
NLRB v. Nathanson, 344 U.S. 25, 27 (1952). In short, the Board acts
primarily in the public interest as the champion and enforcer of
federal labor laws and policies. NLRB v. Deena Artware, 361 U.S. 398,
412 (1960) (Frankfurter, J., concurring) (``[the Board's] primary
function . . . is to prevent the conduct defined as unfair labor
practices.''); National Licorice Co. v. NLRB, 309 U.S. 350, 362 (1940)
(``The Board acts in a public capacity to give effect to the declared
public policy of the [National labor Relations] Act.''). Thus,
judgments of the United States Circuit Courts of Appeals enforcing the
make-whole orders of the Board are rendered exclusively in favor of the
Board as the judgment creditor. Therefore, although the Board's debt
collection actions may ultimately benefit wronged employees, the debts
owed are in fact debts owed to the United States. NLRB v. E.D.P.
Medical Computer Systems, Inc., 6 F.3d 951, 954-55 (2d Cir. 1993).
Accord: General Accounting Office--Decision of
[[Page 38369]]
the General Counsel B-259532 (March 6, 1995) (holding that the Board is
entitled to use the judgment offset provisions of 31 U.S.C. 3728(a),
since the Board's backpay claims are debts owed to the Government and
the Board is the only creditor entitled to pursue collection).
The Agency recently has studied means by which to facilitate its
debt-collection programs. Section 10 of the Debt Collection Act of 1982
(Act) (Public Law 97365) makes several changes in the way Executive and
Legislative agencies collect debts owed the Government. The purpose of
the Act is to improve the ability of the Government to collect monies
owed it.
Under the Act, administrative offset may be initiated when the head
of an agency determines that an individual or entity is indebted to the
United States, or is notified by the head of another agency that a
person or entity is indebted to the United States and that the debtor
is owed monies by the United States. Under the Act, before the
Government may collect a debt by administrative offset, a debtor must
be provided with notice that a debt is owed, the opportunity to inspect
and copy Government records relating to the debt, the option to enter
into a written repayment agreement, and an opportunity for review of
the agency's determination concerning the existence or the amount of
the debt, or the repayment terms. The debtor must notify the agency of
his or her intent to exercise these rights within time periods
prescribed by agency regulations.
The Act permits the agency to initiate an administrative offset
prior to the completion of the due process requirements if failure to
do so would substantially jeopardize the agency's ability to collect
the debt and if the time remaining before payment is to be made does
not reasonably permit completion of the due process procedures. Such
prior offset must be followed by completion of the due process
procedures.
The Act requires agencies to issue regulations for administrative
offset. These interim rules establish the procedures the Board will
follow in making an administrative offset. They are consistent with the
Federal Claims Collection Standards on administrative offset issued
jointly by the Department of Justice and the General Accounting Office
as set forth in 4 CFR 102.3.
In 1992, the Congress passed and the President signed into law the
Cash Management Improvement Act Amendments of 1992, which requires
Federal agencies to participate in the IRS income tax refund offset
program. These interim rules are necessary for the Board's
participation in the IRS offset program. They specify the procedures
the Board will follow with regard to its referral of past-due legally
enforceable debts to IRS for collection by income tax refund offset.
The Board has determined that this document is interpretative
because it merely implements a definitive statutory scheme and the
requirements contained in regulations promulgated by the Department of
Justice, the General Accounting Office, the Internal Revenue Service,
and the Treasury Department. For this reason, and because these interim
rules relate to Agency procedure and practice, the Board has determined
that no notice of proposed rulemaking or a delayed effective date is
required under Sec. 553 of the Administrative Procedure Act (5 U.S.C.
553), and that the provisions of the Regulatory Flexibility Act (5
U.S.C. 601) and the Congressional review provisions of the Small
Business Regulatory Enforcement Fairness Act (5 U.S.C. 801) do not
apply.
The Board has also determined, pursuant to 5 U.S.C. 553(b)(B), that
good cause exists for waiving public comment prior to implementation of
these interim rules. This waiver is based upon the need to have the
regulations in place by December 31, 1996, in order for the Agency to
participate in the IRS income tax refund offset program for the 1997
offset year. The Board finds that the public interest will be served by
participation in the program, and accordingly, good cause exists for
waiving public comment. In addition, the Board finds that public
comment is unnecessary because, as noted above, these rules merely
implement a definite statutory scheme and its concomitant regulations,
and relate to Agency procedure and practice. The Board will, however,
consider any public comments before issuing any final rules.
In sum, to ensure that the Agency's debt collection procedures
provide for the use of reasonable and feasible methods of collection
available under law, and in order to ensure compliance with the
requirements of that law, as further described below, the Board
establishes the following interim regulations to facilitate collection
of delinquent debts by way of administrative offset and Federal income
tax refund offset.
The following is an outline of the contents of this notice.
I. Administrative Offset
A. Purpose
B. Legal Authority
II. Federal Income Tax Refund Offset
A. Purpose and Background
B. Legal Authority
III. Publication in Final
IV. Effective Date
V. Executive Order 12866
VI. Regulatory Flexibility Act
VII. Paperwork Reduction Act
VIII. Small Business Regulatory Enforcement Act
IX. List of Subjects in 29 CFR Part 102
I. Administrative Offset
A. Purpose
An administrative offset is a procedure that permits the
withholding of money payable by the United States to, or held by the
United States on behalf of, a person to satisfy a debt owed the United
States by that person.
B. Legal Authority
The Debt Collection Act of 1982 (P.L. 97-365), 31 U.S.C. 3711,
provides that the head of an executive or administrative agency shall
try to collect a claim of the United States Government for money or
property arising out of the activities of the agency. Section 31 U.S.C.
3716(a) provides that the head of the agency, after trying to collect a
claim under section 3711, may collect by administrative offset only
after affording the debtor notice and other procedural due process
protections. Specifically, the agency head must give the debtor:
(1) written notice of the type and amount of the claim, the
intention of the head of the agency to collect the claim by
administrative offset, and an explanation of the rights of the debtor
under this section;
(2) an opportunity to inspect and copy the records of the agency
related to the claim;
(3) an opportunity for a review within the agency of the decision
of the agency related to the claim; and
(4) an opportunity to make a written agreement with the head of the
agency to repay the amount of the claim.
Section 31 U.S.C. 3716(b) provides for the creation of regulations
to facilitate agency attempts to collect a claim by administrative
offset. This statutory provision further provides that the agency
regulations must be based on the best interests of the United States
Government, the likelihood of collecting a claim by administrative
offset, and, if the 6-year period for bringing a civil action on a
claim under 28 U.S.C. 2415 has expired, the cost effectiveness of
leaving the claim unresolved for more than 6 years. Pursuant to 31
U.S.C. 3716(c), no claim may be collected by administrative offset if
(1) It has been outstanding for more than 10 years after the agency's
right to collect the debt first accrued, or (2) when a statute
explicitly provides for or prohibits using
[[Page 38370]]
administrative offset to collect the claim or type of claim at issue.
II. Federal Income Tax Refund Offset
A. Purpose and Background
Tax refund offset is the means by which a Federal agency may recoup
a delinquent debt owed it by having the Internal Revenue Service (IRS)
withhold payment of a debtor's income tax refund, up to the amount of
the debt, and remit the amount offset to the agency. Authority for the
Federal Tax Refund Offset Program is granted under 26 U.S.C. 6402(d) of
the Internal Revenue Code, 31 U.S.C. 3720A, and section 301.6402-6 of
the Treasury Regulations on Procedure and Administration (26 CFR
301.604-6).
The Program was initially authorized for the collection of
delinquent state or court-ordered payments by absent parents for Aid to
Families with Dependent Children (AFDC), and, later, by the Omnibus
Budget Act of 1981 for non-AFDC child support. Money collected through
the offset of income tax refunds by the IRS is sent to the states by
the Office of Child Support Enforcement.
In 1984, the Deficit Reduction Act (P.L. 98-369) expanded the scope
of the program to include the use of offset to recover delinquent debts
owed by individuals to Federal agencies. The legislation granted the
Secretary of the Treasury authority to conduct a two year pilot
program, from January 1, 1986 through December 31, 1987, in order to
determine the program's feasibility.
The Omnibus Budget Reconciliation Act of 1987 (P.L. 100-203)
extended the Federal Tax Refund Offset Program for 6 months through
June 30, 1988. The Family Support Act of 1988 (P.L. 100-485), which
extended this period through January 10, 1994, provided the opportunity
to expand the program beyond the pilot stage, and authorized corporate
offset. The Emergency Unemployment Compensation Act of 1991 (P.L. 102-
164) gave the program permanent authority. The Cash Management
Improvement Act amendments of 1992 (P.L. 102-589) mandated that all
Federal agencies use tax refund offset to collect consumer debt by
January 1, 1994, and corporate debt by January 1, 1995.
Federal agency participation in the program is also mandated by the
Office of Management and Budget's (OMB) Circular A-129 (Revised),
``Policies for Federal Credit programs and Non-Tax Receivables,'' and
by the Financial Management Services' (FMS') Treasury Financial Manual
Supplement, ``Managing Government Credit.'' The IRS and FMS are jointly
responsible for the administration and operation of the program.
B. Legal Authority
Section 31 U.S.C. 3720A, and implementing regulations of the
Internal Revenue Service (IRS) set forth at 26 CFR 301.6402-6,
authorize the IRS to reduce a tax refund by the amount of a past-due
legally enforceable debt that is owed to the United States by
individuals and business entities.
Section 31 U.S.C. 3720A(a) provides that any Federal agency that is
owed a past-due legally enforceable debt by a named person (individual
or business entity) shall, in accordance with agency and Treasury
regulations, notify the Secretary of the Treasury at least once a year,
of the amount of all such debt. Section 31 U.S.C. 3120A(b) provides
that prior to taking such action, the Federal agency must: (1) notify
the debtor that the agency proposes to take such action; (2) give the
debtor at least 60 days to present evidence that all or part of such
debt is not pastdue or not legally enforceable; (3) consider any
evidence presented by the debtor and determine that an amount of such
debt is past due and legally enforceable; (4) satisfy such other
conditions as the Secretary of the Treasury may prescribe to ensure
that the agency's determination with respect to such debt is valid and
that the agency has made reasonable efforts (determined on a
government-wide basis) to obtain payment of such debt; and (5) certify
that reasonable efforts have been made by the agency (pursuant to
regulations) to obtain payment of such debt.
After receiving notice from a Federal agency that a named person
owes to such agency a past due, legally enforceable debt, the Secretary
of the Treasury determines whether any amounts, as refunds of Federal
taxes paid, are owed to such person. If so, the Secretary reduces such
refund by an amount equal to the amount of such debt, pays the amount
of such reduction to the Federal agency, and notifies such agency of
the person's home address. See 31 U.S.C. 3720A(c). The Secretary of the
Treasury issues regulations prescribing the time or times when agencies
must submit notices of past-due legally enforceable debts, the manner
in which such notices must be submitted, and the necessary information
that must be contained in or accompany such notices. These regulations
specify the minimum amount of the debt to which the foregoing offset
procedure is applicable and the fee that an agency must pay to
reimburse the Secretary of the Treasury for the full cost of applying
such procedure. See 31 U.S.C. 3720A(d).
Any Federal agency that receives notice from the Secretary that an
erroneous payment has been made to such agency shall promptly remit to
the Secretary, in accordance with regulations prescribed by the
Secretary, the amount of such erroneous payment. See 31 U.S.C.
3720A(e).
The statute applies to refunds of business associations only if
they are payable on or after January 1, 1995. The statute applies to
refunds of individuals who owe debts to Federal agencies that have not
participated in the Federal Tax Refund Offset Program prior to the
November 10, 1992, only if such refunds are payable on or after January
1, 1994. See 31 U.S.C. 3720A(g).
III. Publication In Final
As indicated above, the Board has determined, pursuant to 5 U.S.C.
553(b)(B), that good cause exists for waiving public comment prior to
implementation of these interim rules. This waiver is based, in part,
upon the need to have the regulations in place by December 31, 1996, in
order for the Board to participate in the IRS income tax refund offset
program for the 1997 offset year. The Board finds that the public
interest will be served by participation in the program, and
accordingly, good cause exists for waiving public comment. In addition,
the Board finds that public comment is unnecessary because these
interim rules merely implement a definite statutory scheme and the
requirements contained in the regulations promulgated by the Department
of Justice, the General Accounting Office, the Internal Revenue Service
and the Department of the Treasury, and relate to Agency procedure and
practice. As indicated above, however, the Board will consider any
public comments before issuing final rules.
IV. Effective Date
This document will become effective upon publication pursuant to 5
U.S.C. 553(d)(3). In order to participate in the IRS income tax refund
offset program for the 1997 offset year, the Board must promulgate
regulations that are effective by December 31, 1996. Therefore,
pursuant to 5 U.S.C. 553(d)(3), good cause is found for making these
interim rules effective immediately.
V. Executive Order 12866
These interim rules are not classified as ``significant rules''
under Executive Order 12866 on Federal regulations, because they will
not result in (1) an annual effect on the economy of $100
[[Page 38371]]
million or more; (2) a major increase in costs or prices for consumers,
individual industries, Federal, State, or local government agencies, or
geographic regions; or (3) significant adverse effects on competition,
employment, investment, productivity, innovation, or on the ability of
United States-based enterprises to compete with foreign-based
enterprises in domestic or foreign markets. Accordingly, no regulatory
impact assessment is required.
VI. Regulatory Flexibility Act
Because no notice of proposed rule-making is required for interim
rules, the requirements of the Regulatory Flexibility Act (5 U.S.C. 601
et seq.) pertaining to regulatory flexibility analysis do not apply to
these rules.
VII. Paperwork Reduction Act
These interim rules are not subject to Section 3504(h) of the
Paperwork Reduction Act (44 U.S.C. 3501) since they do not contain any
new information collection requirements.
VIII. Small Business Regulatory Enforcement Act
Because these interim rules relate to Agency procedure and practice
and merely implement a definitive statutory scheme and the requirements
contained in regulations promulgated by the Department of Justice, the
General Accounting Office, the Internal Revenue Service, and the
Treasury Department, the Board has determined that the Congressional
review provisions of the Small Business Regulatory Enforcement Fairness
Act (5 U.S.C. 801) do not apply.
IX. List of Subjects in 29 CFR Part 102
Administrative practice and procedure, labor management relations.
To enable the Agency to collect delinquent debts by way of
administrative offset and Federal income tax refund offset, the Board
amends 29 CFR Part 102 as follows:
PART 102--RULES AND REGULATIONS, SERIES 8
1. The authority citation for 29 CFR Part 102 continues to read as
follows:
Authority: Sec. 6, National Labor Relations Act, as amended (29
U.S.C. 151, 156). Section 102.117(c) also issued under Section
552(a)(4)(A) of the Freedom of Information Act, as amended (5 U.S.C.
552(a)(4)(A)). Sections 102.143 through 102.155 also issued under
Section 504(c)(1) of the Equal Access to Justice Act, as amended (5
U.S.C. 504(c)(1)).
2. Subpart U is added to Part 102 to read as follows:
Subpart U--Debt-Collection Procedures By Administrative Offset
Sec.
102.156 Administrative offset; purpose of scope.
102.157 Definitions.
102.158 Agency requests for administrative offsets and cooperation
with other Federal agencies.
102.159 Exclusions.
102.160 Agency responsibilities.
102.161 Notification.
102.162 Examination and copying of records related to the claim;
opportunity for full explanation of the claim.
102.163 Opportunity for repayment.
102.164 Review of the obligation.
102.165 Cost shifting.
102.166 Additional administrative collection action.
102.167 Prior provision of rights with respect to debt.
Sec. 102.156 Administrative offset; purpose and scope.
The regulations in this subpart specify the Agency procedures that
will be followed to implement the administrative offset procedures set
forth in the Debt Collection Act of 1982 (Public Law 97-365), 31 U.S.C.
3716.
Sec. 102.157 Definitions.
For purposes of this subpart--
(a) The term administrative offset means the withholding of money
payable by the United States to, or held by the United States on behalf
of, a person to satisfy a debt owed the United States by that person;
and
(b) The term debtor is any person against whom the Board has a
claim.
(c) The term person does not include any agency of the United
States, or any state or local government.
(d) The terms claim and debt are synonymous and interchangeable.
They refer to an amount of money or property which has been determined
by an appropriate Agency official to be owed to the United States from
any person, organization, or entity, except another federal agency.
(e) A debt is considered delinquent if it has not been paid by the
date specified in the Agency's initial demand letter (Sec. 102.161),
unless satisfactory payment arrangements have been made by that date,
or if, at any time thereafter, the debtor fails to satisfy his
obligations under a payment agreement with the Agency.
Sec. 102.158 Agency requests for administrative offsets and
cooperation with other Federal agencies.
Unless otherwise prohibited by law, the Agency may request that
monies due and payable to a debtor by another Federal agency be
administratively offset in order to collect debts owed the Agency by
the debtor. In requesting an administrative offset, the Agency will
provide the other Federal agency holding funds of the debtor with
written certification stating
(a) That the debtor owes the Board a debt (including the amount of
debt); and
(b) That the Agency has complied with the applicable Federal Claims
Collection Standards, including any hearing or review.
Sec. 102.159 Exclusions.
(a)(1) The Agency is not authorized by the Debt Collection Act of
1982 (31 U.S.C. 3716) to use administrative offset with respect to:
(i) Debts owed by any State or local government;
(ii) Debts arising under or payments made under the Social Security
Act, the Internal Revenue Code of 1954, or the tariff laws of the
United States; or
(iii) When a statute explicitly provides for or prohibits using
administrative offset to collect the claim or type of claim involved.
(2) No claim that has been outstanding for more than 10 years after
the Board's right to collect the debt first accrued may be collected by
means of administrative offset, unless facts material to the right to
collect the debt were not known and could not reasonably have been
known by the official of the Agency who was charged with the
responsibility to discover and collect such debts until within 10 years
of the initiation of the collection action. A determination of when the
debt first accrued should be made according to existing laws regarding
the accrual of debts, such as under 28 U.S.C. 2415. Unless otherwise
provided by contract or law, debts or payments owed the Board which are
not subject to administrative offset under 31 U.S.C. 3716 may be
collected by administrative offset under the common law or other
applicable statutory authority, pursuant to this paragraph or Board
regulations established pursuant to such other statutory authority.
(b) Collection by offset against a judgment obtained by a debtor
against the United States shall be accomplished in accordance with 31
U.S.C. 3728.
Sec. 102.160 Agency responsibilities.
(a) The Agency shall provide appropriate written or other guidance
to Agency officials in carrying out this subpart, including the
issuance of guidelines and instructions, which may be deemed
appropriate. The Agency shall also take such administrative steps as
may be appropriate to carry out the purposes and ensure the effective
implementation of this subpart.
[[Page 38372]]
(b) Before collecting a claim by means of administrative offset,
the Agency must ensure that administrative offset is feasible,
allowable and appropriate, and must notify the debtor of the Agency's
policies for collecting a claim by means of administrative offset.
(c) Whether collection by administrative offset is feasible is a
determination to be made by the Agency on a case-by-case basis, in the
exercise of sound discretion. The Agency shall consider not only
whether administrative offset can be accomplished, both practically and
legally, but also whether administrative offset will further and
protect the best interests of the United States Government. In
appropriate circumstances, the Agency may give due consideration to the
debtor's financial condition, and it is not expected that
administrative offset will be used in every available instance,
particularly where there is an available source of funds. The Agency
may also consider whether administrative offset would substantially
interfere with or defeat the purposes of the program authorizing the
payments against which offset is contemplated.
(d) Administrative offset shall be considered by the Agency only
after attempting to collect a claim under 31 U.S.C. 3711(a).
Sec. 102.161 Notification.
(a) The Agency shall send a written demand to the debtor in terms
which inform the debtor of the consequences of failure to cooperate. In
the demand letter, the Agency shall provide the name of an Agency
employee who can provide a full explanation of the claim. When the
Agency deems it appropriate to protect the Government's interests (for
example, to prevent the statute of limitations, 28 U.S.C. 2415, from
expiring), written demand may be preceded by other appropriate actions.
(b) In accordance with guidelines established by the Agency, the
Agency official responsible for collection of the debt shall send
written notice to the debtor, informing such debtor as appropriate:
(1) Of the nature and amount of the Board's claim;
(2) Of the date by which payment is to be made (which normally
should be not more than 30 days from the date that the initial
notification was mailed or hand delivered);
(3) Of the Agency's intention to collect by administrative offset
and of the debtor's rights in conjunction with such an offset;
(4) That the Agency intends to collect, as appropriate, interest,
penalties, administrative costs and attorneys fees;
(5) Of the rights of such debtor to a full explanation of the
claim, of the opportunity to inspect and copy Agency records with
respect to the claim and to dispute any information in the Agency's
records concerning the claim;
(6) Of the debtor's right to administrative appeal or review within
the Agency concerning the Agency's claim and how such review shall be
obtained;
(7) Of the debtor's opportunity to enter into a written agreement
with the Agency to repay the debt; and
(8) Of the date on which, or after which, an administrative offset
will begin.
Sec. 102.162 Examination and copying of records related to the claim;
opportunity for full explanation of the claim.
Following receipt of the demand letter specified in Sec. 102.161,
and in conformity with Agency guidelines governing such requests, the
debtor may request to examine and copy publicly available records
pertaining to the debt, and may request a full explanation of the
Agency's claim.
Sec. 102.163 Opportunity for repayment.
(a) The Agency shall afford the debtor the opportunity to repay the
debt or enter into a repayment plan which is agreeable to the Agency
and is in a written form signed by such debtor. The Agency may deem a
repayment plan to be abrogated if the debtor should, after the
repayment plan is signed, fail to comply with the terms of the plan.
(b) The Agency has discretion and should exercise sound judgment in
determining whether to accept a repayment agreement in lieu of
administrative offset.
Sec. 102.164 Review of the obligation.
(a) The debtor shall have the opportunity to obtain review by the
Agency of the determination concerning the existence or amount of the
debt as set forth in the notice. In cases where the amount of the debt
has been fully liquidated, the review is limited to ensuring that the
liquidated amount is correctly represented in the notice.
(b) The debtor seeking review shall make the request in writing to
the Agency, not more than 15 days from the date the demand letter was
received by the debtor. The request for review shall state the basis
for challenging the determination. If the debtor alleges that the
Agency's information relating to the debt is not accurate, timely,
relevant or complete, the debtor shall provide information or
documentation to support this allegation.
(c) The Agency may effect an administrative offset against a
payment to be made to a debtor prior to the completion of the due
process procedures required by this subpart, if failure to take the
offset would substantially prejudice the Agency's ability to collect
the debt; for example, if the time before the payment is to be made
would not reasonably permit the completion of due process procedures.
Administrative offset effected prior to completion of due process
procedures must be promptly followed by the completion of those
procedures. Amounts recovered by administrative offset, but later found
not owed to the Agency, will be promptly refunded.
(d) Upon completion of the review, the Agency's reviewing official
shall transmit to the debtor the Agency's decision. If appropriate,
this decision shall inform the debtor of the scheduled date on or after
which administrative offset will begin. The decision shall also, if
appropriate, indicate any changes in information to the extent such
information differs from that provided in the initial notification to
the debtor under Sec. 102.161.
(e) Nothing in this subpart shall preclude the Agency from sua
sponte reviewing the obligation of the debtor, including a
reconsideration of the Agency's determination concerning the debt, and
the accuracy, timeliness, relevance, and completeness of the
information on which the debt is based.
Sec. 102.165 Cost shifting.
Costs incurred by the Agency in connection with referral of debts
for administrative offset will be added to the debt and thus increase
the amount of the offset. Such costs may include administrative costs
and attorneys fees.
Sec. 102.166 Additional administrative collection action.
Nothing contained in this subpart is intended to preclude the
Agency from utilizing any other administrative or legal remedy which
may be available.
Sec. 102.167 Prior provision of rights with respect to debt.
To the extent that the rights of the debtor in relation to the same
debt have been previously provided for under some other statutory or
regulatory authority, the Agency is not required to duplicate those
efforts before effecting administrative offset.
[[Page 38373]]
Subpart V--Debt Collection Procedures By Federal Income Tax Refund
Offset
Sec.
102.168 Federal income tax refund offset; purpose and scope.
102.169 Definitions.
102.170 Agency referral to IRS for tax referral effect; Agency
responsibilities.
102.171 Cost shifting.
102.172 Minimum referral amount.
102.173 Relation to other collection efforts.
102.174 Debtor notification.
102.175 Agency review of the obligation.
102.176 Prior provision of rights with respect to debt.
Sec. 102.168 Federal income tax refund offset; purpose and scope.
The regulations in this subpart specify the Agency procedures that
will be followed in order to implement the federal income tax refund
offset procedures set forth in 26 U.S.C. 6402(d) of the Internal
Revenue Code (Code), 31 U.S.C. 3720A, and section 301.6402-6 of the
Treasury Regulations on Procedure and Administration (26 CFR 301.6402-
6). This statute and the implementing regulations of the Internal
Revenue Service (IRS) at 26 CFR 301.6402-6 authorize the IRS to reduce
a tax refund by the amount of a past-due legally enforceable debt owed
to the United States. The regulations apply to past-due legally
enforceable debts owed to the Agency by individuals and business
entities. The regulations are not intended to limit or restrict debtor
access to any judicial remedies to which he or she may otherwise be
entitled.
Sec. 102.169 Definitions.
For purposes of this subpart:
(a) Tax refund offset refers to the IRS income tax refund offset
program operated under authority of 31 U.S.C. 3720A.
(b) Past-due legally enforceable debt is a delinquent debt
administratively determined to be valid, whereon no more than 10 years
have lapsed since the date of delinquency (unless reduced to judgment),
and which is not discharged under a bankruptcy proceeding or subject to
an automatic stay under 11 U.S.C. 362.
(c) Individual refers to a taxpayer identified by a social security
number (SSN).
(d) Business entity refers to an entity identified by an employer
identification number (EIN).
(e) Taxpayer mailing address refers to the debtor's current mailing
address as obtained from IRS.
(f) Memorandum of understanding refers to the agreement between the
Agency and IRS outlining the duties and responsibilities of the
respective parties for participation in the tax refund offset program.
Sec. 102.170 Agency referral to IRS for tax referral effect; Agency
responsibilities.
(a) As authorized and required by law, the Agency may refer past-
due legally enforceable debts to the Internal Revenue Service (IRS) for
collection by offset from any overpayment of income tax that may
otherwise be due to be refunded to the taxpayer. By the date and in the
manner prescribed by the IRS, the Agency may refer for tax refund
offset past-due legally enforceable debts. Such referrals shall include
the following information:
(1) Whether the debtor is an individual or a business entity;
(2) The name and taxpayer identification number (SSN or EIN) of the
debtor who is responsible for the debt;
(3) The amount of the debt;
(4) A designation that the Agency is referring the debt and (as
appropriate) Agency account identifiers.
(b) The Agency will ensure the confidentiality of taxpayer
information as required by IRS in its Tax Information Security
Guidelines.
(c) As necessary, the Agency will submit updated information at the
times and in the manner prescribed by IRS to reflect changes in the
status of debts or debtors referred for tax refund offset.
(d) Amounts erroneously offset will be refunded by the Agency or
IRS in accordance with the Memorandum of Understanding.
Sec. 102.171 Cost shifting.
Costs incurred by the Agency in connection with referral of debts
for tax refund offset will be added to the debt and thus increase the
amount of the offset. Such costs may include administrative costs and
attorneys fees.
Sec. 102.172 Minimum referral amount.
The minimum amount of a debt otherwise eligible for Agency referral
to the IRS is $25 for individual debtors and $100 for business debtors.
The amount referred may include the principal portion of the debt, as
well as any accrued interest, penalties, administrative cost charges,
and attorney fees.
Sec. 102.173 Relation to other collection efforts.
(a) Tax refund offset is intended to be an administrative
collection remedy to be utilized consistent with IRS requirements for
participation in the program, and the costs and benefits of pursuing
alternative remedies when the tax refund offset program is readily
available. To the extent practical, the requirements of the program
will be met by merging IRS requirements into the Agency's overall
requirements for delinquent debt collection.
(b) As appropriate, debts of an individual debtor of $100 or more
will be reported to a consumer or commercial credit reporting agency
before referral for tax refund offset.
(c) Debts owed by individuals will be screened for administrative
offset potential using the most current information reasonably
available to the Agency, and will not be referred for tax refund offset
where administrative offset potential is found to exist.
Sec. 102.174 Debtor notification.
(a) The Agency shall send appropriate written demand to the debtor
in terms which inform the debtor of the consequences of failure to
repay debts or claims owed the Board.
(b) Before the Agency refers a debt to IRS for tax refund offset,
it will make a reasonable attempt to notify the debtor that:
(1) The debt is past-due;
(2) Unless the debt is repaid or a satisfactory repayment agreement
is established within 60 days thereafter, the debt will be referred to
IRS for offset from any overpayment of tax remaining after taxpayer
liabilities of greater priority have been satisfied; and
(3) The debtor will have a minimum of 60 days from the date of
notification to present evidence that all or part of the debt is not
past due or legally enforceable, and the Agency will consider this
evidence in a review of its determination that the debt is past due and
legally enforceable. The debtor will be advised where and to whom
evidence is to be submitted.
(c) The Agency will make a reasonable attempt to notify the debtor
by using the most recent address information available to the Agency or
obtained from the IRS, unless written notification to the Agency is
received from the debtor stating that notices from the Agency are to be
sent to a different address.
(d) The notification required by paragraph (b) of this section and
sent to the address specified in paragraph (c) of this section may, at
the option of the Agency, be incorporated into demand letters required
by paragraph (a) of this section.
Sec. 102.175 Agency review of the obligation.
(a) The Agency official responsible for collection of the debt will
consider any evidence submitted by the debtor as a result of the
notification required by Sec. 102.174 and notify the debtor of the
result. If appropriate, the debtor will also be advised where and to
whom to
[[Page 38374]]
request a review of any unresolved dispute.
(b) The debtor will be granted 30 days from the date of the
notification required by paragraph (a) of this section to request a
review of the determination of the Agency official responsible for
collection of the debt on any unresolved dispute. The debtor will be
advised of the result.
Sec. 102.176 Prior provision of rights with respect to debt.
To the extent that the rights of the debtor in relation to the same
debt have been previously provided under some other statutory or
regulatory authority, including administrative offset procedures set
forth in Subpart U, the Agency is not required to duplicate those
efforts before referring a debt for tax refund offset.
Dated, Washington, DC, July 9, 1996.
By Direction of the Board.
John J. Toner,
Executive Secretary, National Labor Relations Board.
[FR Doc. 96-18029 Filed 7-23-96; 8:45 am]
BILLING CODE 7545-01-P
