[Federal Register Volume 64, Number 14 (Friday, January 22, 1999)]
[Proposed Rules]
[Pages 3454-3456]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-1240]
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Proposed Rules
Federal Register
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This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
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Federal Register / Vol. 64, No. 14 / Friday, January 22, 1999 /
Proposed Rules
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SMALL BUSINESS ADMINISTRATION
13 CFR Parts 134 and 140
Debt Collection Through Offset
AGENCY: U.S. Small Business Administration.
ACTION: Proposed rule.
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SUMMARY: The U.S. Small Business Administration (SBA) proposes to amend
its regulations on Debt Collection Through Offset. SBA proposes to
amend these regulations to conform with the Debt Collection Procedures
Act of 1996 and the Debt Collection Improvement Act of 1996. The
amendments will allow other Federal agencies to offset debts owed to
SBA and will allow SBA to participate in the Government-wide Treasury
Offset Program administered by the Department of the Treasury.
SBA is currently publishing the proposed language for its
regulations on General Rules and Debt Collection Through Offset. At a
later date, SBA will publish the proposed language for its regulations
on Debt Collection Through Administrative Wage Garnishment and proposed
amendments that define terms used in that future proposal.
DATES: Submit comments on or before February 22, 1999.
ADDRESSES: Address all comments concerning this proposed rule to Arnold
S. Rosenthal, Assistant Administrator, Office of Portfolio Management,
Small Business Administration, 409 Third Street, SW., Washington, DC
20416.
FOR FURTHER INFORMATION CONTACT: Arnold S. Rosenthal, Assistant
Administrator, Office of Portfolio Management (202) 205-6481.
SUPPLEMENTARY INFORMATION: 13 CFR Part 140 established procedures for
SBA to collect past-due debts through administrative or salary offset.
SBA now proposes to amend this rule, pursuant to the Debt Collection
Improvement Act of 1996, Pub. L. 104-134, authorizing the Agency to:
participate in the mandatory Government-wide payment offset system
known as the Treasury Offset Program administered by the Department of
Treasury.
To participate in the Treasury Offset Program, the administrative
or salary offset procedures must be available not only to SBA, but to
other agencies as well. This proposed rule would make the changes
necessary to allow SBA or another Federal agency to collect past-due
debts through administrative or salary offset. This proposed rule also
amends SBA's offset procedures, and contains plain language revisions
and clarifications.
The following is a section by section analysis of each provision of
SBA's regulations that would be affected by this proposed rule:
Section 140.1 would be amended to incorporate plain
language principles.
Section 140.2 would be deleted and replaced with a
definition section.
Section 140.3 would be deleted. The offset procedures
would now be located in Sec. 140.6.
Section 140.5 would be added to explain the purpose and
scope of the offset procedures.
Section 140.6 would be added to set forth the offset
procedures. The new procedures establish two steps for offset. The
first entails the verification of a debt. SBA will send a notice to the
debtor and review any response to determine whether the debt is past
due and enforceable. The SBA Office of Hearings and Appeals would no
longer review administrative offsets, and would only review salary
offsets. The second steps involves SBA's implementation of an
administrative or salary offset or referral of a debt to the Department
of the Treasury or another Federal agency for offset. In addition, SBA
would now be able to implement an offset action upon referral from
another Federal agency.
Section 134.202 paragraph (b) would also be amended to
refer only to salary offsets.
Compliance With Executive Orders 12612, 12778, and 12866, the
Regulatory Flexibility Act (5 U.S.C. 601 et seq.), and the
Paperwork Reduction Act (44 U.S.C. Ch. 35)
SBA certifies that this rule would not have a significant economic
impact on a substantial number of small entities within the meaning of
Executive Order 12866 or the Regulatory Flexibility Act, 5 U.S.C. 601
et seq. This proposed rule only applies to individuals who have
outstanding debts to the United States. It is not likely to have an
annual economic effect of $100 million or more, result in a major
increase in costs or prices, or have a significant adverse effect on
competition or the United States economy.
For purposes of the Paperwork Reduction Act, 44 U.S.C. Ch. 35, SBA
certifies that this rule contains no new reporting or record keeping
requirements.
For purposes of Executive Order 12612, SBA certifies that this rule
would not have any federalism implications warranting the preparation
of a Federalism Assessment.
For purposes of Executive Order 12778, SBA certifies that this rule
is drafted, to the extent practicable, under the standards set forth in
Section 2 of that Order.
List of Subjects
13 CFR Part 134
Administrative practice and procedure.
13 CFR Part 140
Claims, Government employees, Income taxes, Wages.
Accordingly, under the authority contained in section 5(b)(6) of
the Small Business Act (15 U.S.C. 634(b)(6)), SBA proposes to amend 13
CFR parts 134 and 140 as follows:
PART 134--[AMENDED]
1. The authority citation for part 134 continues to read as
follows:
Authority: 5 U.S.C. 504, 15 U.S.C. 632, 634(b)(6), and 637(a).
2. Revise Sec. 134.202(b) to read as follows:
Sec. 134.202 Commencement of cases.
* * * * *
(b) In debt collection proceedings under part 140, subpart B, of
this chapter, no later than 15 days after you receive of a notice of
indebtedness and plan to collect such debt by salary offset;
* * * * *
PART 140--[AMENDED]
3. Amend the heading for part 140 to read as follows:
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PART 140--DEBT COLLECTION
4. The authority citation for part 140 is revised to read as
follows:
Authority: 31 U.S.C. 3711, Collection and compromise; 31 U.S.C.
3720A, Reduction of tax refund by amount of debt; 5. U.S.C. 5514,
Installment deduction for indebtedness to the United States; 31
U.S.C. 3716, Administrative offset; 15 U.S.C. 634(b)(6), Small
Business Act; 31 U.S.C. 3720, the Debt Collection Improvement Act of
1996.
5-6. Add a subpart heading for Secs. 140.1 through 140.2, to read
as follows:
Subpart A--General Rules
7. Revise Sec. 140.1 to read as follows:
Sec. 140.1 What does this part cover?
This part establishes procedures we may use to collect past-due
debts owed to the Government. You cannot use our failure to follow
these regulations to defend against a suit to collect a debt.
8. Revise Sec. 140.2 to read as follows:
Sec. 140.2 Definitions.
Unless otherwise noted, the following definitions apply to subpart
B.
(a) Administrative offset. To satisfy a debt, we may withhold money
we owe you or another Federal agency owes you. This procedure is an
``administrative offset'' and is authorized by 31 U.S.C. 3716.
(b) Agency. Agency includes a department, agency, court, or court
administrative office, in the executive, judicial, or legislative
branch of the Federal Government, including Government corporations.
For purposes of this section, agency means either the agency
administering the program giving rise to the debt or the agency
attempting to recover the debt.
(c) Creditor agency. Creditor agency means any agency owed a debt
that seeks to collect that claim through administrative offset.
(d) Day. Day means calendar day. To count days, include the last
day of the period unless it is a Saturday, a Sunday, or a Federal legal
holiday.
(e) Debt. Debt means money owed to the United States for any
reason, including loans made or guaranteed by the United States, fees,
leases, rents, royalties, services, sales of real or personal property,
overpayments, fines, penalties, damages, interest, or forfeitures. A
debtor is someone who owes money to the United States from any source.
(f) Debtor/You/Your. Debtor/You/Your means a person, organization,
or entity, other than a Federal agency, that owes a debt.
(g) Disposable pay. As used in subpart B of this part (offset),
disposable pay means what remains of your pay after any amounts
required by law are deducted.
(h) Legally Enforceable. As used in subpart B of this part
(offset), a debt is legally enforceable if, on the date of offset,
SBA's claim would not be barred in even one forum, including a State or
Federal Court or administrative agency. Non-judgment debts are
enforceable for ten years; judgment debts are enforceable beyond 10
years.
(i) Non-tax. Non-tax means not related to an obligation under the
Internal Revenue Code of 1986, as amended.
(j) Past-Due. As used in subpart B of this part (offset), a debt is
past due if it has been reduced to judgment, accelerated, or due for at
least 90 days.
(k) Salary offset. If you are an active or retired Federal employee
(a civilian employee as defined by 5 U.S.C. 2105, an employee of the
U.S. Postal Service or Postal Rate Commission, or a member of the
Uniformed Services or Reserve of the Uniformed Services), we may deduct
payments owed to the United States from your paycheck. This procedure
is a ``salary offset'' and is authorized by 5 U.S.C. 5514 and 31 U.S.C.
3716.
(1) Any amount deducted from your salary in any one pay period will
not exceed 15 percent of your disposable pay, unless you agree in
writing to a greater percentage.
(2) A Federal agency also may collect against travel advances,
training expenses, disallowed payments, retirement benefits, or any
other amount due you, including lump sum payments. These collection
efforts are not salary offsets and are not subject to the 15-percent
limitation in paragraph (k)(1) of this section.
(l) Tax refund offset. We may request that the Department of the
Treasury (Treasury) reduce your tax refund by the amount of the debt as
authorized by 31 U.S.C. 3720A. A Federal agency, at the same time, may
take additional action against you to collect the debt. Even if SBA
refers your debt to other agencies (within 6 months of the initial
notice), it needs to review your debt only once under subpart B of this
part and its authorizing statutes.
(m) Treasury Offset Program. The Treasury Offset Program is a
centralized process which provides for the offset of Federal payments,
including Federal tax refunds, Federal salary payments, retirement
payments, and other types of payments, to collect debts you owe the
Federal Government. The Treasury operates the Treasury Offset Program
through the Financial Management Service.
(n) We/Our/Us. We/Our/Us refers to the SBA.
9. Remove Sec. 140.3 and add a subpart heading for Secs. 140.5
through 140.6 to read as follows:
Subpart B--Debt Collection Through Offset
10. Add Sec. 140.5 to read as follows:
Sec. 140.5 What does this subpart cover?
This subpart establishes procedures we may use to collect, through
offset, past-due debts you owe to the United States. An offset occurs
when we or another Federal agency withhold(s) money to which you may be
entitled to satisfy a debt that you owe to the United States. These
regulations set forth procedures for how we determine if a debt is past
due and legally enforceable, and thus appropriate for offset. These
regulations also set forth procedures we follow when implementing an
offset action or referring the debt to another agency for offset. You
cannot use our failure to follow these regulations to defend against a
suit to collect the debt
9. Add 9. Sec. 140.6 to read as follows:
Sec. 140.6 How does SBA verify whether I owe a debt, or collect a debt
from me through offset?
(a) Verifying a debt. (1) At least 30 days before starting an
offset action or referring a debt to another agency for offset, we must
send you a written notice .
(2) Our written notice must state the nature and amount of the
debt; that we or another Federal agency may attempt an offset; that you
may present evidence that the debt does not exist, is not past due, or
is not legally enforceable; that you may inspect and copy, at your
expense, Government records relating to the debt; that, to avoid the
offset, you may reach an agreement with us on a schedule for repayment;
and that, if you do not reach agreement on repayment or seek review of
the debt, we or another agency may offset without further notice. If we
propose a schedule for repayment of your debt, you may present evidence
that you cannot meet this schedule. If a written agreement establishes
this schedule, you cannot challenge the schedule.
(3) We also must tell you that, unless you respond to the notice as
provided in paragraph (a)(4) or (a)(5) of this section, we or the
agency to which we refer your debt may disclose to consumer reporting
agencies (also known as credit bureaus or credit agencies) that you are
responsible for the debt, and the specific information necessary to
establish your identity, including the amount, status, history of
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the debt, and agency program under which it arose. If you respond to us
within the 15-or 60-day periods set forth in paragraphs (a)(4) and
(a)(5) of this section, we will not disclose the information to
consumer reporting agencies and will not refer the debt to another
Federal agency until we consider your response and determine that you
owe a past-due, legally enforceable debt.
(4) If we notify you that we intend to start a salary offset to
satisfy your debt, you may request a hearing from SBA's Office of
Hearings and Appeals (OHA). Part 134 of this title governs OHA
proceedings. To have a hearing before OHA, you must request a hearing
within 15 days of receiving the notice. If you file your request in
time, we must stop collection proceedings until OHA's Administrative
Law Judge (ALJ) decides your case. You must state in your request for
an OHA hearing the date you received the notice and present the
evidence you believe shows the debt is not past due or legally
enforceable. You also must send a copy of your submission to the SBA
Associate General Counsel for Litigation, Office of General Counsel, at
the Small Business Administration, 409 Third Street, SW., Washington,
DC 20416. OHA's ALJ will issue a decision within 60 days after you
filed your request for a hearing with OHA.
(5) If we notify you that we intend to start an administrative
offset or to refer your debt to another Federal agency for possible
offset, you may request review from the SBA official identified in the
notice. To obtain review of the debt, you must submit to the designated
official, within 60 days of the notice, the evidence showing the debt
is not past due or legally enforceable. By failing to request review
within this period, you waive any objection to the offset action. If
you request review of the debt, the relevant SBA official will notify
you in writing of the final decision and whether we will continue with
the offset action or refer your debt to another agency for offset.
(6) We need not follow these procedures to verify that a debt is
past due and legally enforceable if another Federal agency already has
made this determination.
(b) Actions after SBA verifies a past-due, legally enforceable
debt. (1) After verifying a past-due, legally enforceable debt, we
may--
(i) Begin an offset action to recover the debt;
(ii) Refer the debt to another agency for offset;
(iii) Notify consumer reporting agencies of the debt; or
(iv) Begin other appropriate action to attempt collection of the
debt.
(2) If you are subject to an offset action, you may be required to
pay, in addition to your debt, interest, penalties, and administrative
costs, such as the costs of collection. We or another Federal agency
will provide notice of any such interest, penalties, and administrative
costs.
(3) If another Federal agency asks us to offset a debt, we may rely
on the creditor agency's determination that a debt is past due and
legally enforceable. We will not begin an offset until the creditor
agency has provided written notice that you owe a past-due, legally
enforceable debt, and of its amount, and that the agency has fully
complied with its regulations concerning administrative offsets. After
receiving such notice, we will provide you notice that we will begin an
offset. You are not entitled to further review from us that the debt is
valid or the offset proper.
(4) If we refer the debt to a consumer reporting agency and the
status or amount of your debt substantially changes, we will report
that change promptly to each consumer reporting agency we originally
contacted. We will obtain satisfactory assurances from each consumer
reporting agency that the consumer reporting agency has complied with
all Federal laws relating to provision of consumer credit information.
(5) If another agency is beginning an offset of your debt and you
make any additional payments to us, we will notify the other agency of
these payments and your new balance as soon as reasonably possible.
(c) We or another Federal agency may make an offset prior to
completing the procedures described in this part, if failure to make an
offset would substantially prejudice the Government's ability to
collect the debt; and the time before the Government otherwise would
make payment to you does not reasonably permit the completion of the
procedures. If we initiate the offset action, we then must provide you
with an opportunity to present evidence that the debt is not past due
or legally enforceable and take appropriate action in response to this
evidence.
(d) If you owe us a past-due, legally enforceable debt that is over
180 days delinquent, including non-tax debt administered by a third
party acting as an agent for the Federal Government, we must, as
required by 31 U.S.C. 3716(c)(6), notify the Treasury of all such non-
tax debts for purposes of administrative offset.
Dated: January 6, 1999.
Aida Alvarez,
Administrator.
[FR Doc. 99-1240 Filed 1-21-99; 8:45 am]
BILLING CODE 8025-01-P
