[Federal Register Volume 59, Number 178 (Thursday, September 15, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-22793]
[[Page Unknown]]
[Federal Register: September 15, 1994]
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DEPARTMENT OF LABOR
Office of the Secretary
29 CFR Part 20
Federal Claims Collection; Collection of Debts by Federal Income
Tax Refund Offset
AGENCY: Office of the Secretary, Labor.
ACTION: Interim rule with request for comments.
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SUMMARY: The Department of Labor is supplementing its regulations
implementing the Debt Collection Act of 1982 to reflect the requirement
of the Cash Management Improvement Act Amendments of 1992 that Federal
agencies refer delinquent debt to the Internal Revenue Service (IRS)
for collection by offset from a Federal income tax refund that may be
due to the delinquent debtor. These regulations are necessary for the
Department's participation in the IRS offset program. The IRS offset
program has proven to be a cost-effective mechanism for collection of
delinquent debt.
DATES: Effective Date: These regulations are effective September 15,
1994. Comments: Comments must be submitted on or before November 14,
1994.
ADDRESSES: Send comments to Robert Barnhard, Division of Planning and
Internal Control, Office of Financial Integrity, Office of the Chief
Financial Officer, Department of Labor, Room S-4502, 200 Constitution
Avenue NW., Washington, DC 20210.
FOR FURTHER INFORMATION CONTACT:
Robert Barnhard, (202) 219-8184.
SUPPLEMENTARY INFORMATION: The Department of Labor published in the
Federal Register on February 6, 1985 and February 5, 1987 final
regulations implementing the Debt Collection Act of 1982 (DCA). Subpart
A implements the credit reporting provisions of the DCA; Subpart B,
administrative offset; Subpart C, assessment of interest, penalties and
administrative costs; and Subpart D, salary offset. These regulations
were duly published in the Federal Register as proposed rules, with
comments considered and discussed during final rule-making.
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. This interim rule establishes a new Subpart E, and specifies
the procedures the Department of Labor will follow with regard to
referral by its constituent offices, administrations and bureaus of
past-due legally enforceable debts to IRS for collection by income tax
refund offset. This interim rule also establishes a new title for 29
CFR Part 20: Federal Claims Collection.
Publication in Final
The Department of Labor has determined, pursuant to 5 U.S.C.
553(b)(B), that good cause exists for waiving public comment prior to
implementation of this interim rule. This waiver is based upon the need
to have the regulations in place by January 5, 1995, in order for the
Department to participate in the IRS income tax refund offset program
for the 1995 offset year. The Department 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 Department
finds that public comment is unnecessary because this rule merely
implements a definite statutory scheme and the requirements contained
in the regulations promulgated by the IRS.
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 1995 offset year, the Department must promulgate
regulations that are effective by January 5, 1995. Therefore, pursuant
to 5 U.S.C. 553(d)(3), good cause is found for making this rule
effective immediately.
Executive Order 12866
This interim rule is not classified as a ``significant rule'' under
Executive Order 12866 on Federal regulations, because it will not
result in (1) an annual effect on the economy of $100 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.
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
this rule.
Paperwork Reduction Act
This interim rule is not subject to Section 3504(h) of the
Paperwork Reduction Act (44 U.S.C. 3501) since it does not contain any
new information collection requirements.
List of Subjects in 29 CFR Part 20
Government employees, Loan programs, Credit, Administrative
practice and procedure, Claims.
Accordingly, Part 20 of title 29 of the Code of Federal Regulations
is amended as set forth below.
PART 20--FEDERAL CLAIMS COLLECTION
1. The authority citation for Part 20 is revised to read as
follows:
Authority: 31 U.S.C. 3711 et seq.; Subpart D is also issued
under 5 U.S.C. 5514; Subpart E is also issued under 31 U.S.C. 3720A.
2. The heading for Part 20 is revised to read as follows:
PART 20--FEDERAL CLAIMS COLLECTION
3. Part 20 is amended by adding Subpart E to read as follows:
Subpart E--Federal Income Tax Refund Offset
Sec.
20.101 Purpose and scope.
20.102 Redelegation of authority.
20.103 Definitions.
20.104 Agency responsibilities.
20.105 Minimum referral amount.
20.106 Relation to other collection efforts.
20.107 Debtor notification.
20.108 Agency review of the obligation.
20.109 Prior provision of rights with respect to debt.
20.110 Referral to IRS for tax refund offset.
20.111 Administrative cost charges.
Subpart E--Federal Income Tax Refund Offset
Sec. 20.101 Purpose and scope.
The regulations in this subpart establish procedures to implement
31 U.S.C. 3720A. This statute together with implementing regulations of
the Internal Revenue Service (IRS) at 26 CFR 301.6402-6, authorizes 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 Department by
individuals and business entities. The regulations are not intended to
limit or restrict debtor access to any judicial remedies to which he/
she may otherwise be entitled.
Sec. 20.102 Redelegation of authority.
Authority delegated by statute or IRS regulation to the Secretary
or Department is redelegated to the heads of the Department's
constituent agencies. This authority may be further redelegated as
necessary to ensure the efficient implementation of these regulations.
Sec. 20.103 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, and which is not discharged
under a bankruptcy proceeding or subject to an automatic stay under 11
U.S.C. 362.
(c) Agency refers to the constituent offices, administrations and
bureaus of the Department of Labor.
(d) Individual refers to a taxpayer identified by a social security
number (SSN).
(e) Business entity refers to an entity identified by an employer
identification number (EIN).
(f) Taxpayer mailing address refers to the debtor's current mailing
address as obtained from IRS.
(g) Memorandum of understanding refers to the agreement between the
Department and IRS outlining the duties and responsibilities of the
respective parties for participation in the tax refund offset program.
Sec. 20.104 Agency responsibilities.
(a) As authorized and required by law, each Department of Labor
agency may refer past-due legally enforceable debts to IRS for
collection by offset from any overpayment of income tax that may
otherwise be due to be refunded to the taxpayer.
(b) Prior to actual referral of a past-due legally enforceable debt
for tax refund offset, the DOL agency heads (or their designees) must
take the actions specified in Sec. 20.107 and, as appropriate,
Sec. 20.106 and Sec. 20.108.
(c) DOL agency heads must ensure the confidentiality of taxpayer
information as required by IRS in its Tax Information Security
Guidelines.
Sec. 20.105 Minimum referral amount.
The minimum amount of a debt otherwise eligible for referral 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 and/or administrative cost charges.
Sec. 20.106 Relation to other collection efforts.
(a) Tax refund offset is intended to be an administrative
collection remedy of last resort, 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 Department's overall
requirements for delinquent debt collection.
(b) Debts of $100 or more will be reported to a consumer or
commercial credit reporting agency, as appropriate, before referral for
tax refund offset.
(c) Debts owed by individuals will be screened for salary and
administrative offset potential using the most current information
reasonably available to the Department, and will not be referred for
tax refund offset where such other offset potential is found to exist.
Sec. 20.107 Debtor notification.
(a) The agency head (or designee) of the creditor Labor Department
agency shall send appropriate written demands to the debtor in terms
which inform the debtor of the consequences of failure to repay claims.
In accordance with guidelines as may be established by the Department's
Chief Financial Officer, a total of three progressively stronger
written demands at not more than 30-day intervals will normally be made
unless a response to the first or second demand indicates that a
further demand would be futile and the debtor's response does not
require rebuttal. In determining the timing of demand letters, agencies
should give due regard to the need to act promptly so the ability to
refer a debt for tax refund offset will not be unduly delayed.
(b) Before the Department 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
established within 60 days thereafter, it 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 Department 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 Department will make a reasonable attempt to notify the
debtor by using the most recent address information obtained from the
IRS, unless written notification is received from the debtor that
notices from the Department 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 Department, be incorporated into demand letters
required by paragraph (a) of this section.
Sec. 20.108 Agency review of the obligation.
(a) The individual responsible for collection of the debt will
consider any evidence submitted by the debtor as a result of the
notification required by Sec. 20.107(b) and notify the debtor of the
result. If appropriate, the debtor will also be advised where and to
whom to request a review of any unresolved dispute.
(b) The debtor will be granted at least 30 days from the date of
the notification required by paragraph (a) of this section to request a
review of the determination of the individual responsible for
collection of the debt on any unresolved dispute. The debtor will be
advised of the result.
(c) The review required by paragraph (b) of this section will
ordinarily be based on written submissions and documentation provided
by the debtor. However, a reasonable opportunity for an oral hearing
will be provided the debtor when the reviewing official determines that
any remaining dispute cannot be resolved by review of the documentary
evidence alone. Unless otherwise required by law, an oral hearing under
this section is not required to be a formal evidentiary-type hearing,
although the reviewing official should carefully document all
significant matters discussed at the hearing.
Sec. 20.109 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, the Department is not required to duplicate those
efforts before referring a debt for tax refund offset.
Sec. 20.110 Referral to IRS for tax refund offset.
(a) By the date and in the manner prescribed by the IRS the
Department will refer for tax refund offset the following information
on past-due legally enforceable debts:
(1) Whether the debtor is an individual or a business entity;
(2) Name and taxpayer identification number (SSN or EIN) of the
debtor who is responsible for the debt;
(3) The amount of the debt;
(4) The date on which the debt became past-due;
(5) Department-level, sub-Department-level and (as appropriate)
account identifiers.
(b) As necessary to reflect changes in the status of debts/debtors
referred for tax refund offset, the Department will submit updated
information at the times and in the manner prescribed by IRS. The
original submission described in paragraph (a) of this section will not
be changed to increase the amount of the debt or to refer additional
debtors.
(c) Amounts erroneously offset will be refunded by the Department
or IRS in accordance with the Memorandum of Understanding.
Sec. 20.111 Administrative cost charges.
Costs incurred by the Department in connection with referral of
debts for tax refund offset will be added to the debt and thus increase
the amount of the offset.
Signed at Washington, D.C., this 9th day of September 1994.
Robert B. Reich,
Secretary of Labor.
[FR Doc. 94-22793 Filed 9-14-94; 8:45 am]
BILLING CODE 4510-23-M
