[Federal Register Volume 62, Number 183 (Monday, September 22, 1997)]
[Rules and Regulations]
[Pages 49437-49440]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-25023]
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SOCIAL SECURITY ADMINISTRATION
20 CFR Part 416
RIN 0960-AE67
Supplementary Security Income; Overpayment Recovery by Offset of
Federal Income Tax Refund
AGENCY: Social Security Administration
ACTION: Final rules.
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SUMMARY: These final regulations govern use of the Federal income tax
refund offset program established under section 2653 of the Deficit
Reduction Act of 1984, Pub. L. No. 98-369. They permit the recovery of
supplemental security income (SSI) overpayments through the withholding
of amounts due to former SSI recipients as Federal income tax refunds.
In these rules, we reflect the provisions of the statute and explain
the procedures that we will follow in referring SSI overpayments to the
Department of the Treasury for income tax refund offset (TRO).
EFFECTIVE DATE: These final rules are effective September 22, 1997.
FOR FURTHER INFORMATION CONTACT: Robert J. Augustine, Legal Assistant,
Division of Regulations and Rulings, Social Security Administration,
6401 Security Boulevard, Baltimore, MD 21235, (410) 966-5121. For
information on eligibility or claiming benefits, call our national
toll-free number, 1-800-772-1213.
SUPPLEMENTARY INFORMATION: Section 2653 of the Deficit Reduction Act of
1984, codified at 31 U.S.C. Sec. 3720A and 26 U.S.C. Sec. 6402(d),
authorized the Secretary of the Treasury, upon receiving notice from a
Federal agency that a named individual owes the agency a past-due,
legally enforceable debt, to withhold all or a part of any income tax
refund that is due to the debtor and pay the amount withheld to the
agency. Section 2653 specifically precluded the use of these procedures
to recover overpayments of Social Security benefits paid under title II
of the Social Security Act (the Act). Under 31 U.S.C. Sec. 3720A, a
Federal agency that is owed a past-due, legally enforceable debt by an
individual shall notify the Secretary of the Treasury of the debt in
accordance with regulations issued by the Department of the Treasury.
The applicable Treasury regulations are codified at 31 CFR Part 285 (62
FR 34175). Before an agency may refer a debt to Treasury, it must,
under 31 U.S.C. Sec. 3720A, take the following actions: (1) notify the
debtor that the agency proposes to refer the debt for tax refund
offset; (2) give the debtor at least 60 days to present evidence that
all or part of the debt is not past-due or not legally enforceable; (3)
consider all evidence the debtor presents in determining that all or a
part of the debt is past-due and legally enforceable; and (4) satisfy
any other conditions that the Secretary of the Treasury may prescribe
to ensure that the agency's findings are valid and that the agency has
made reasonable efforts to obtain the payment of the debt.
Although section 2653 gave us the authority to use the TRO
provisions to recover overpayments made to recipients of SSI payments
under title XVI of the Act, we elected not to do so at that time
because we did not think it appropriate to use a procedure we were
precluded from using to recover title II overpayments to recover
overpayments made under the needs-based title XVI program.
Section 5129 of the Omnibus Budget Reconciliation Act of 1990 (OBRA
90) removed the restriction on using the TRO provisions to recover
title II overpayments. Section 5129 added several additional conditions
to the referral of title II overpayments for offset. These included:
(1) the overpaid individual may not be currently entitled to Social
Security benefits under title II of the Act; (2) the notice that we
send to the overpaid individual concerning our intent to seek the
offset must describe the conditions under which we are required to
waive recovery of an overpayment under section 204(b) of the Act; and
(3) if the overpaid individual requests that we waive recovery of the
overpayment within the 60-day period allowed under the program for
presenting evidence that the debt is not past due or not legally
enforceable, we may not certify the overpayment to Treasury without
first issuing a determination on the waiver request. We issued final
regulations on October 21, 1991 (56 FR 52466) implementing these
statutory changes.
Since that time, we have been modifying our computer systems to
extend the TRO provisions to various subgroups of former title II
program beneficiaries. We now have the necessary systems modifications
in place to permit us to extend the TRO provisions to the title XVI
program, as well. These title XVI rules closely follow the existing
rules for the title II program, including the same conditions that the
OBRA 90 legislation required for the title II program. That is, these
rules provide that: (1) the overpaid individual may not currently be
eligible to receive SSI payments under title XVI of the Act; (2) the
notice we send to the overpaid individual concerning our
[[Page 49438]]
intent to seek offset must describe the conditions under which we are
required to waive recovery of an overpayment under section
1631(b)(1)(B) of the Act; and (3) if the overpaid individual requests
that we waive recovery of the overpayment within the 60-day period
allowed under the program for presenting evidence that the debt is not
past due or legally enforceable, we may not certify the overpayment to
Treasury without first issuing a determination on the waiver request.
On June 23, 1997, we published proposed rules in the Federal
Register at 62 FR 33778 and provided a 30-day period for interested
individuals to comment. We received no comments. We are, therefore,
publishing these rules essentially unchanged.
Explanation of Changes to Regulations
We are adding new Secs. 416.580 through 416.586 to our regulations
to explain our rules on recovery of title XVI overpayments through the
withholding of amounts due to former SSI recipients as Federal income
tax refunds. Section 416.580 provides general information about the tax
refund offset program and explains that we may pursue collection of an
overpayment through this program if the overpaid individual is not
eligible for benefits. This new regulatory section also explains that
we will not initiate the tax refund offset to collect an overpayment
more than 10 years after our right to collect the overpayment first
accrued, thereby making this section consistent with proposed TRO
regulations for title II (62 FR 42439) and the applicable Department of
the Treasury regulations (31 CFR Part 285).
Section 416.581 explains that, before we refer an overpayment to
the Treasury Department, we will notify the overpaid individual of our
intention to do so. This notice will advise the individual of the
amount of the overpayment and the conditions under which we will waive
recovery of an overpayment under section 1631(b)(1)(B) of the Act. The
notice will also explain that unless, within 60 days from the date of
our notice, the overpaid individual repays the overpayment, presents
evidence that the overpayment is not past due or not legally
enforceable, or requests a waiver of the overpayment, we will refer the
overpayment to the Department of the Treasury to offset any tax refund
payable to the overpaid individual. The notice additionally will advise
the individual of the right to inspect and copy our records related to
the overpayment.
Sections 416.582 and 416.583 explain our procedures for reviewing
and making findings when an overpaid individual submits evidence that
an overpayment is not past due or not legally enforceable.
Section 416.584 explains our procedures for the overpaid individual
who wishes to review our records related to the overpayment.
Section 416.585 explains that if, within 60 days after the date of
our notice of intent to seek an offset, an individual presents evidence
that the overpayment is not past due or not legally enforceable or asks
us to waive collection of the overpayment, we will suspend our referral
of the overpayment to the Department of the Treasury for offset until
we issue written findings that affirm that all or a part of the
overpayment is past due and legally enforceable and, where appropriate,
determine that waiver of the overpayment is unwarranted.
Section 416.586 sets out our intention, in cases where a tax refund
is insufficient in a tax year to satisfy the amount of the overpayment,
to continue to offset in succeeding years any amount of the overpayment
that remains, as long as the remainder of the overpayment continues to
meet the criteria for referral under the tax refund offset program in
succeeding years. This differs from our title II rules on TRO which
provide that, where a tax refund is insufficient to recover an
overpayment in a given year, we will recertify the remainder for offset
in the following year. This proposed section reflects the fact that the
Department of the Treasury now has the systems capability to retain the
overpaid amount in their records for offset against future tax refunds
the individual may be due. On August 7, 1997, we published separate
proposed rules dealing with title II overpayments that would make this
same change in the title II TRO rules (62 FR 42439).
We are also adding to Sec. 416.1403(a) a new paragraph (17) that
includes in the list of administrative actions that are not initial
determinations findings on whether we can collect an SSI overpayment by
using the Federal income tax refund offset procedure. Administrative
actions that are not initial determinations may be reviewed by us, but
they are not subject to the administrative review process provided by
subpart N of our regulations, and they are not subject to judicial
review.
Regulatory Procedures
Pursuant to section 702(a)(5) of the Act, 42 U.S.C. 902(a)(5), as
amended by section 102 of Pub. L. 103-296, the Social Security
Administration follows the Administrative Procedure Act (APA)
rulemaking procedures specified in 5 U.S.C. 553 in the development of
its regulations. The APA provides in 5 U.S.C. 553(d)(3) for an
exception to the requirement of publication of a substantive rule 30
days before its effective date for good cause. In order to use the TRO
provisions to recover title XVI overpayments from income tax refunds
payable in 1998, these final rules must be effective in early October
1997, so that we can begin notifying individuals that we propose to
refer their overpayments to the Department of the Treasury for offset.
Any delay in sending the notices and referring these debts to Treasury
will result in lost program savings of up to $6 million. These final
rules benefit the public by allowing for substantial program savings,
while adequately safeguarding the rights of former SSI recipients by
giving overpaid individuals the right to repay the amount, present
evidence that the overpayment is not past due or not legally
enforceable, or request us to waive collection of the overpayment,
before referral to the Department of the Treasury is made. We will
issue written findings affirming that all or part of the overpayment is
past due and legally enforceable and, where appropriate, determine that
waiver of the overpayment is unwarranted before making such a referral.
In light of these considerations, we find that it is in the public
interest to make these rules effective upon publication.
Executive Order 12866
We have consulted with the Office of Management and Budget (OMB)
and determined that these final rules do not meet the criteria for a
significant regulatory action under Executive Order 12866. Thus, they
were not subject to OMB review.
Regulatory Flexibility Act
We certify that these final regulations will not have a significant
economic impact on a substantial number of small entities because they
affect only individuals. Thus, a regulatory flexibility analysis as
provided in the Regulatory Flexibility Act, as amended, is not
required.
Paperwork Reduction Act
These final regulations will impose no additional reporting or
recordkeeping requirements requiring OMB clearance.
(Catalog of Federal Domestic Assistance Programs: No. 96.006
Supplemental Security Income)
List of Subjects in 20 CFR Part 416
Administrative practice and procedure, Aged, Blind, Disability
benefits, Public assistance programs,
[[Page 49439]]
Reporting and recordkeeping requirements, Supplemental Security Income
(SSI).
Dated: September 12, 1997.
John J. Callahan,
Acting Commissioner of Social Security.
For the reasons set out in the preamble, subparts E and N of part
416 of chapter III of title 20 of the Code of Federal Regulations are
amended to read as follows:
1. The authority citation for subpart E is revised to read as
follows:
Authority: Secs. 702(a)(5), 1601, 1602, 1611(c) and (e), and
1631(a)-(d) and (g) of the Social Security Act (42 U.S.C. 902(a)(5),
1381, 1381a, 1382 (c) and (e), and 1383(a)-(d) and (g)); 31 U.S.C.
3720A.
2. Sections 416.580, 416.581, 416.582, 416.583, 416.584, 416.585,
and 416.586 are added to subpart E to read as follows:
Sec. 416.580 Referral of overpayments to the Department of the
Treasury for tax refund offset--General.
(a) The standards we will apply and the procedures we will follow
before requesting the Department of the Treasury to offset income tax
refunds due taxpayers who have an outstanding overpayment are set forth
in Secs. 416.580 through 416.586 of this subpart. These standards and
procedures are authorized by the Deficit Reduction Act of 1984 [31
U.S.C. Sec. 3720A], as implemented through Department of the Treasury
regulations at 31 CFR 285.2.
(b) We will use the Department of the Treasury tax refund offset
procedure to collect overpayments that are certain in amount, past due
and legally enforceable, and eligible for tax refund offset under
regulations issued by the Secretary of the Treasury. We will use these
procedures to collect overpayments only from individuals who are not
currently entitled to monthly supplemental security income benefits
under title XVI of the Act. We will refer an overpayment to the
Secretary of the Treasury for offset against tax refunds no later than
10 years after our right to collect the overpayment first accrued.
Sec. 416.581 Notice to overpaid individual.
A request for reduction of a Federal income tax refund will be made
only after we determine that an amount is owed and past due and provide
the overpaid individual with 60 calendar days written notice. Our
notice of intent to collect an overpayment through Federal income tax
refund offset will state:
(a) The amount of the overpayment;
(b) That unless, within 60 calendar days from the date of our
notice, the overpaid individual repays the overpayment, sends evidence
to us at the address given in our notice that the overpayment is not
past due or not legally enforceable, or asks us to waive collection of
the overpayment under section 1631(b)(1)(B) of the Act, we intend to
seek collection of the overpayment by requesting that the Department of
the Treasury reduce any amounts payable to the overpaid individual as
refunds of Federal income taxes by an amount equal to the amount of the
overpayment;
(c) The conditions under which we will waive recovery of an
overpayment under section 1631(b)(1)(B) of the Act;
(d) That we will review any evidence presented that the overpayment
is not past due or not legally enforceable;
(e) That the overpaid individual has the right to inspect and copy
our records related to the overpayment as determined by us and will be
informed as to where and when the inspection and copying can be done
after we receive notice from the overpaid individual that inspection
and copying are requested.
Sec. 416.582 Review within SSA that an overpayment is past due and
legally enforceable.
(a) Notification by overpaid individual.--An overpaid individual
who receives a notice as described in Sec. 416.581 of this subpart has
the right to present evidence that all or part of the overpayment is
not past due or not legally enforceable. To exercise this right, the
individual must notify us and present evidence regarding the
overpayment within 60 calendar days from the date of our notice.
(b) Submission of evidence. The overpaid individual may submit
evidence showing that all or part of the debt is not past due or not
legally enforceable as provided in paragraph (a) of this section.
Failure to submit the notification and evidence within 60 calendar days
will result in referral of the overpayment to the Department of the
Treasury, unless the overpaid individual, within this 60-day time
period, has asked us to waive collection of the overpayment under
section 1631(b)(1)(B) of the Act and we have not yet determined whether
we can grant the waiver request. If the overpaid individual asks us to
waive collection of the overpayment, we may ask that evidence to
support the request be submitted to us.
(c) Review of the evidence. After a timely submission of evidence
by the overpaid individual, we will consider all available evidence
related to the overpayment. We will make findings based on a review of
the written record, unless we determine that the question of
indebtedness cannot be resolved by a review of the documentary
evidence.
Sec. 416.583 Findings by SSA.
(a) Following the review of the record, we will issue written
findings which include supporting rationale for the findings. Issuance
of these findings concerning whether the overpayment or part of the
overpayment is past due and legally enforceable is the final Agency
action with respect to the past-due status and enforceability of the
overpayment. If we make a determination that a waiver request cannot be
granted, we will issue a written notice of this determination in
accordance with the regulations in subpart E of this part. Our referral
of the overpayment to the Department of the Treasury will not be
suspended under Sec. 416.585 of this subpart pending any further
administrative review of the waiver request that the individual may
seek.
(b) Copies of the findings described in paragraph (a) of this
section will be distributed to the overpaid individual and the overpaid
individual's attorney or other representative, if any.
(c) If the findings referred to in paragraph (a) of this section
affirm that all or part of the overpayment is past due and legally
enforceable and, if waiver is requested and we determine that the
request cannot be granted, we will refer the overpayment to the
Department of the Treasury. However, no referral will be made if, based
on our review of the overpayment, we reverse our prior finding that the
overpayment is past due and legally enforceable or, upon consideration
of a waiver request, we determine that waiver of our collection of the
overpayment is appropriate.
Sec. 416.584 Review of our records related to the overpayment.
(a) Notification by the overpaid individual. An overpaid individual
who intends to inspect or copy our records related to the overpayment
as determined by us must notify us stating his or her intention to
inspect or copy.
(b) Our response. In response to a notification by the overpaid
individual as described in paragraph (a) of this section, we will
notify the overpaid individual of the location and time when the
overpaid individual may inspect or copy our records related to the
overpayment. We may also, at our discretion, mail copies of the
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overpayment-related records to the overpaid individual.
Sec. 416.585 Suspension of offset.
If, within 60 days of the date of the notice described in
Sec. 416.581 of this subpart, the overpaid individual notifies us that
he or she is exercising a right described in Sec. 416.582(a) of this
subpart and submits evidence pursuant to Sec. 416.582(b) of this
subpart or requests a waiver under Sec. 416.550 of this subpart, we
will suspend any notice to the Department of the Treasury until we have
issued written findings that affirm that an overpayment is past due and
legally enforceable and, if applicable, make a determination that a
waiver request cannot be granted.
Sec. 416.586 Tax refund insufficient to cover amount of overpayment.
If a tax refund is insufficient to recover an overpayment in a
given year, the case will remain with the Department of the Treasury
for succeeding years, assuming that all criteria for certification are
met at that time.
3. The authority citation for subpart N is revised to read as
follows:
Authority: Secs. 702(a)(5), 1631, and 1633 of the Social
Security Act (42 U.S.C. 902(a)(5), 1383, and 1383b); 31 U.S.C.
3720A.
4. Section 416.1403 is amended by deleting the word ``and'' at the
end of paragraph (a)(15), replacing the period at the end of paragraph
(a)(16) with ``; and'', and adding paragraph (a)(17) to read as
follows:
Sec. 416.1403 Administrative actions that are not initial
determinations.
(a) * * *
(17) Findings on whether we can collect an overpayment by using the
Federal income tax refund offset procedure. (See Sec. 416.583).
* * * * *
[FR Doc. 97-25023 Filed 9-19-97; 8:45 am]
BILLING CODE 4190-29-P
