Collection of Debts by Federal Tax Refund Offset

EQUAL EMPLOYMENT OPPORTUNITY COMMISSION

29 CFR Part 1650

Collection of Debts by Federal Tax Refund Offset

AGENCY: Equal Employment Opportunity Commission.

ACTION: Interim final rule.

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SUMMARY: The Equal Employment Opportunity Commission (EEOC) is amending

its regulations, pursuant to the Deficit Reduction Act of 1984, to add

regulations on procedures for the collection of debts by Federal tax

refund offset. This rule outlines the procedures that EEOC will follow

for collection of a past-due, legally enforceable debt owed to EEOC by

referring such debt to the internal Revenue Service (IRS) for offset

against any overpayment of tax.

DATES: The interim final rule is effective on January 3, 1994. Comments

must be received by March 4, 1994.

ADDRESSES: Written comments should be addressed to Frances Hart,

Executive Officer, Office of Executive Secretariat, Equal Employment

Opportunity Commission, room 10402, 1801 L Street, NW., Washington, DC

20507.

FOR FURTHER INFORMATION CONTACT:

Nicholas M. Inzeo, Associate Legal Counsel, Thomas J. Schlageter,

Assistant Legal Counsel, or Daniel T. Riordan, Staff Attorney, at (202)

663-4669.

Copies of this interim final rule are available, upon request, in

the following alternate formats: Large print, braille, electronic file

on computer disk, and audio-tape. Copies may be obtained from the EEOC

Publications Center by calling (800) 669-3362 (voice) or (800) 800-3302

(TDD).

SUPPLEMENTARY INFORMATION: Section 2653 of the Deficit Reduction Act of

1984, 31 U.S.C. 3720A, was designed to make significant improvements in

a Federal agency's ability to collect a past-due, legally enforceable

debt owed by a taxpayer through offset by the IRS against an

overpayment of Federal tax. The Deficit Reduction Act also amended the

Internal Revenue Code of 1954 by adding subsection 6402(d) providing

that the Secretary of the Treasury shall: (1) Reduce the amount of any

overpayment due any person by the amount of a past-due, legally

enforceable debt owed to any Federal agency upon receiving notice from

the agency that such person owes the debt, (2) pay the reduction to the

agency, and (3) notify the person making the overpayment that the

overpayment has been reduced to satisfy such debt.

These regulations contain the procedures for collecting debts due

to the Commission. The individual owing the past-due, legally

enforceable debt will be notified of the debt and given the opportunity

to submit evidence concerning the existence or amount of the debt. Any

evidence received will be considered by Commission officials prior to

submitting any claim to the IRS for collection.

The Commission has determined that this rule does not constitute a

major rule for the purposes of Executive Order 12291. The Commission

also certifies under 5 U.S.C. 605(b), enacted by the Regulatory

Flexibility Act (Pub. L. 96-354), that the rule will not result in a

significant impact on a substantial number of small employers. For this

reason, a regulatory flexibility analysis is not required.

For the Commission.

Tony E. Gallegos,

Chairman.

For the reasons set forth in the preamble, title 29, chapter XIV of

the Code of Federal Regulations is amended by adding part 1650 to read

as follows:

PART 1650--DEBT COLLECTION

Subpart A--[Reserved]

Subpart B--Procedures for the Collection of Debts by Federal Tax Refund

Offset

Sec.

1650.201 Purpose.

1650.202 Past-due legally enforceable debt.

1650.203 Notification of intent to collect.

1650.204 Reasonable attempt to notify.

1650.205 Consideration of evidence submitted as a result of

notification of intent

1650.206 Notification to Internal Revenue Service.

1650.207 Administrative charges.

Authority: 31 U.S.C. 3720A

Subpart A--[Reserved]

Subpart B--Procedures for the Collection of Debts by Federal Tax Refund

Offset

Authority: 31 U.S.C. 3720A.

Sec. 1650.201 Purpose.

This subpart establishes procedures for EEOC to refer past-due

legally enforceable debts to the Internal Revenue Service (IRS) for

offset against the income tax refunds of persons owing debts to EEOC.

It specifies the agency procedures and the rights of the debtor

applicable to claims referred under the Federal Tax Refund Offset

Program for the collection of debts owned to EEOC.

Sec. 1650.202 Past-due legally enforceable debt.

A past-due legally enforceable debt for referral to the IRS is a

debt that resulted from any statute administered by EEOC and:

(a) Is an obligation of a debtor who is a natural person;

(b) Except in the case of a judgment debt, has been delinquent at

least 3 months but not more than 10 years at the time the offset is

made;

(c) Is at least $25.00;

(d) Cannot be currently collected pursuant to the salary offset

provisions of 5 U.S.C. 5514(a)(1);

(e) Is ineligible for administrative offset under 31 U.S.C. 3716(a)

by reason of 31 U.S.C. 3716(c)(2) or cannot be collected by

administrative offset under 31 U.S.C. 3716(a) by the EEOC against

amounts payable to or on behalf of the debtor by or on behalf of the

EEOC;

(f) With respect to which EEOC has given the debtor at least 60

days from the date of notification to present evidence that all or part

of the debt is not past-due or legally enforceable, has considered

evidence presented by such debtor, and has determined that an amount of

such debt is past-due and legally enforceable;

(g) Has been disclosed by EEOC to a consumer reporting agency is

authorized by 31 U.S.C. 3711(f), unless the consumer reporting agency

would be prohibited from reporting such information by 15 U.S.C. 1681c,

or unless the amount of the debt does not exceed $100.00;

(h) EEOC's records do not contain evidence that the person owing

that debt (or his or her spouse) has filed for bankruptcy under title

11 of the United States Code; and

(i) EEOC can clearly establish at the time of the referral that the

automatic stay under 11 U.S.C. 362 has been lifted or is no longer in

effect with respect to the person owing the debt or his or her spouse,

and the debt was not discharged in the bankruptcy proceeding.

Sec. 1650.203 Notification of intent to collect.

(a) Notification before submission to the IRS. A request for

reduction of an IRS income tax refund will be made only after EEOC

makes a determination that an amount is owed and past-due and gives or

makes a reasonable attempt to give the debtor 60 days written

notification of intent to collect by Federal tax refund offset.

(b) Contents of Notification. EEOC's notification of intent to

collect by Federal tax refund offset shall provide:

(1) The amount of the debt;

(2) That unless the debt is repaid within 60 days from the date of

EEOC's notification of intent, EEOC intends to collect the debt by

requesting the IRS to offset an amount equal to the amount of the debt

and all accumulating interest and other charges against any overpayment

of tax after liabilities subject to 26 U.S.C. 6402(a) and (c) have been

satisfied;

(3) A mailing address for forwarding any written correspondence and

a contact and a toll-free or collect telephone number for any

questions; and

(4) That the debtor may present evidence to EEOC that all or part

of the debt is not past due or legally enforceable by--

(i) Sending a written request for a review of the evidence to the

address provided in the notification;

(ii) Stating in the request for review the amount disputed and the

reasons why the debtor believes that the debt is not past-due or is not

legally enforceable; or

(iii) Including in the request for review any documents that the

debtor wishes to be considered to stating that the additional

information will be submitted within the remainder of the 60-day

period.

Sec. 1650.204 Reasonable attempt to notify.

In order to constitute a reasonable attempt to notify the debtor,

EEOC must have used a mailing address for the debtor obtained from the

IRS pursuant to 26 U.S.C. 6103(m)(2) within a period of 1 year

preceding the attempt to notify the debtor, unless EEOC receives clear

and concise notification from the debtor that notices from the agency

are to be sent to an address different from the address obtained from

IRS. Clear and concise notification means that the debtor has provided

the agency with written notification, including the debtor's name and

identifying number (as defined in 26 CFR 301.6109-1), the debtor's new

address, and the debtor's intent to have the agency notices sent to the

new address.

Sec. 1650.205 Consideration of evidence submitted as a result of

notification of intent. '

(a) Consideration of evidence. If, as a result of the notification

of intent, EEOC receives notice that the debtor will submit additional

evidence or receives additional evidence from the debtor within the

prescribed time period, any referral to the IRS will be stayed until

EEOC--

(1) Considers the evidence presented by the debtor;

(2) Determines whether or not all or a portion of the debt is still

past-due and legally enforceable; and

(3) Notifies the debtor of its determination.

Failure to submit the evidence within 60 days from the date of

notification will result in an automatic referral of the debt to IRS

without further action by EEOC.

(b) Notification to the debtor. Following its review of the

evidence, EEOC will issue a written decision notifying the debtor

whether EEOC has sustained, amended, or canceled its determination that

the debt is past-due and legally enforceable. The notice will advise

the debtor of any further action to be taken and explain the supporting

rationale for the decision.

(1) EEOC will notify the debtor of its intent to refer the debt to

the IRS for offset against the debtor's Federal income tax refund if it

sustains its decision that the debt is past-due and legally

enforceable. EEOC will also notify the debtor whether the amount of the

debt remains the same or is modified.

(2) EEOC will not refer the debt to the IRS for offset against the

debtor's Federal income tax refund if it reverses its decision that the

debt is past-due and legally enforceable.

Sec. 1650.206 Notification to Internal Revenue Service.

(a) Except as noted in paragraph (b) of this section, after EEOC's

initial notification and referral of a debt to IRS for offset against a

debtor's Federal income tax refund, EEOC will promptly notify IRS of

any changes in the notification, if EEOC--

(1) Determines that an error has been made with respect to the

information contained in the notification;

(2) Receives a payment or credits a payment to the account of the

debtor named in the notification that reduces the amount of the debt

referred to IRS for offset;

(3) Receives notification that the individual owing the debt has

filed for bankruptcy under title 11 of the United States Code or has

been adjudicated bankrupt and the debt has been discharged;

(4) Receives notification that an offset was made at a time when

the automatic stay provisions of 11 U.S.C. 362 were in effect; or

(5) Refunds all or part of the offset amount to the debtor.

(b) EEOC shall not request the IRS to increase the amount of a debt

owed by a debtor named in EEOC's original notification to IRS.

(c) If the amount of a debt is reduced after referral by EEOC and

offset by the IRS, EEOC will refund to the debtor any excess amount and

will promptly notify the IRS of any refund made by EEOC.

Sec. 1650.207 Administrative charges.

All administrative charges incurred in connection with the referral

of the debts to the IRS will be assessed on the debt and thus increase

the amount of the offset.

[FR Doc. 93-31710 Filed 12-30-93; 8:45 am]

BILLING CODE 6570-01-M