Collection of Past-Due Support by Administrative Offset

DEPARTMENT OF THE TREASURY

Fiscal Service

31 CFR Part 285

RIN 1510-AA58

Collection of Past-Due Support by Administrative Offset

AGENCY: Financial Management Service, Fiscal Service, Treasury.

ACTION: Interim rule with request for comments.

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SUMMARY: The Debt Collection Improvement Act of 1996 (DCIA), enacted on

April 26, 1996, authorizes the Secretary of the Treasury (Secretary) to

collect past-due support by the administrative offset of Federal

payments. Executive Order 13019 of September 28, 1996 (Executive Order)

requires that the Secretary promptly develop and implement procedures

necessary for the collection of past-due support debts by

administrative offset. In addition, the Executive Order requires each

executive agency to review each class of payments certified by such

agencies to determine whether any class of payments should be exempt

from offset. With respect to any class of payments so identified,

agencies must submit a request for exemption from offset to the

Secretary within 30 days after the Secretary establishes standards for

determining exemptions. The Executive Order further requires that

Federal payment agencies and disbursing officials promptly implement

any rules, regulations, or procedures issued by the Secretary that are

necessary to implement offset for the collection of past-due support.

The Financial Management Service (FMS), as the central disbursing

agency of the Federal Government, is

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responsible for implementation of centralized administrative offset for

the collection of nontax delinquent debt owed to the Federal

Government, past-due support, and other debt owed to States. This

regulation implements administrative offset for the collection of past-

due support pursuant to the DCIA and the Executive Order.

As authorized by the DCIA, FMS intends to promulgate additional

rules for centralized administrative offset for the collection of

nontax debt owed to Federal and State Governments, other than child

support. FMS anticipates that Part 285 will eventually contain all of

the provisions relating to centralized administrative offset.

DATES: This rule is effective on July 25, 1997. Comments will be

accepted until September 5, 1997.

ADDRESSES: Comments or inquiries may be mailed to Gerry Isenberg,

Financial Program Specialist, Debt Management Services, Financial

Management Service, Department of the Treasury, 401 14th Street SW.,

Room 151, Washington, DC 20227. A copy of this interim rule is being

made available for downloading from the Financial Management Service

web site at the following address: http://www.fms.treas.gov.

FOR FURTHER INFORMATION CONTACT: Gerry Isenberg, Financial Program

Specialist, at (202) 874-6660; Pamela Dillon, Director, Treasury Offset

Program, at (202) 874-8700; Ellen Neubauer or Ronda Kent, Senior

Attorneys, at (202) 874-6680.

SUPPLEMENTARY INFORMATION:

Background

The Debt Collection Improvement Act of 1996 (DCIA), Pub. L. 104-

134, 110 Stat. 1321-358 (1996), requires that disbursing officials of

the Department of the Treasury and other Federal disbursing officials

offset Federal payments to collect nontax delinquent debts owed to the

United States. Subsection (h) of 31 U.S.C. 3716, as added by section

31001(f) of the DCIA, authorizes the Secretary of the Treasury

(Secretary) to collect State debts, including past-due support, by the

administrative offset of Federal payments. See also section

31001(z)(1)(B) of the DCIA, codified at 31 U.S.C. 3701(b)(2).

FMS, as the Treasury disbursing office, is responsible for

implementation of centralized administrative offset for the collection

of nontax debt owed to the United States, past-due support, and other

State debt. On September 28, 1996, the President issued Executive Order

13019 entitled ``Supporting Families: Collecting Delinquent Child

Support Obligations'' (Executive Order) which requires that the

Secretary promptly develop and implement procedures necessary to

collect past-due support debts by administrative offset. The Executive

Order recognizes that the failure of some parents to meet their child

support obligations threatens the health, education, and well-being of

their children and requires the collection of delinquent child support

obligations from persons who may be entitled or eligible to receive

certain Federal payments. FMS is publishing this interim regulation to

establish and notify the public of the procedures necessary for the

collection of past-due support debts by administrative offset in

accordance with 31 U.S.C. 3716(h) and the Executive Order.

Federal law prohibits the use of administrative offset to collect

State debts (including past-due support) for many types of Federal

payments, including payments due to an individual under (a) title IV of

the Higher Education Act of 1965; (b) the Social Security Act; (c) part

B of the Black Lung Benefits Act; (d) any law administered by the

Railroad Retirement Board; (e) the tariff laws of the United States;

and (f) any other law that expressly prohibits collection of past-due

support by administrative offset. Regulations promulgated by the

Internal Revenue Service and the Department of Health and Human

Services (HHS) govern the offsetting of Federal tax refund payments to

collect past due child support as authorized under 26 U.S.C. 6402 and

42 U.S.C. 664. See 26 CFR 301.6402-5 and 45 CFR 303.72. FMS will be

responsible for operation of the tax refund offset program effective

January 1, 1998, and will issue new regulations governing the offset of

tax refund payments to collect past-due support.

To implement the Executive Order and 31 U.S.C. 3716(h), FMS is

working with HHS, Treasury and non-Treasury disbursing officials, and

other affected agencies, including Federal payment agencies. The

Executive Order requires that disbursing officials (officials

authorized to disburse Federal payments) and payment agencies (agencies

that certify Federal payments) promptly implement any rule, regulation,

or procedure necessary to conduct administrative offset to collect

delinquent child support payments.

Subsection (c)(3)(B) of 31 U.S.C. 3716, as added by section

31001(d)(2)(D) of the DCIA, requires the Secretary to exempt payments

under means-tested programs from administrative offset when requested

by the head of the respective agency. In addition, this subsection

authorizes the Secretary to exempt other payments from administrative

offset upon the written request of the head of the payment certifying

agency. The written request for exemption must provide justification

for the exemption. Standards and instructions for making such requests

are available from FMS at the above address and at the FMS web site at

www.fms.treas.gov. The Executive Order requires that Federal payment

agencies determine the classes and types of payments that should be

considered for exemption from administrative offset by the Secretary

and submit requests for exemption to FMS within 30 days of the date the

Secretary prescribes standards. In acting on such requests, the

Secretary will give due consideration to whether administrative offset

would tend to interfere substantially with or defeat the purposes of

the payment agency's program. The DCIA requires that the Secretary

report to the Congress annually on exemptions granted under the DCIA.

FMS is working closely with HHS to implement procedures necessary

to report to the Secretary information on past-due support claims

referred to HHS by States for tax refund offset purposes under 42

U.S.C. 664 and 26 U.S.C. 6402(c), including claims enforced by States

pursuant to cooperative agreements with or by Indian tribal

governments. Such procedures are appropriate to facilitate offset and

prevent duplicative efforts by the States. FMS is also working closely

with HHS to implement procedures necessary to report to the Secretary

information on past-due support claims referred to HHS by States under

this rule. It is anticipated that States will continue to refer debts

to HHS for offset from both Federal tax refunds and other Federal

payments and that HHS will report those debts to the Secretary. While

nothing in this rule is intended to require States to refer debts

directly to FMS for administrative offset, this rule provides States

with that option.

``Past-due support'' means the amount of support, determined under

a court order, or an order of an administrative procedure established

under State law, for support and maintenance of a child, or of a child

and the parent with whom the child is living, which has not been paid.

States will have the option of directly notifying FMS of past-due

support for administrative offset purposes or of notifying HHS,

whereupon HHS will report those debts to FMS.

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Before notifying FMS or HHS that an individual owes past-due

support, the State or its agents will be required to send notice to

such individual that an offset may be taken from certain Federal

payments otherwise payable to such individual. The notice shall inform

the individual owing the past-due support of the type and amount of the

support owed, as well as such individual's right to a review of the

State's determination that past-due support is owed or of the amount

owed. The State will certify that the requirements of this regulation

and applicable State law have been met.

Section by Section Analysis

(a) Definitions

Administrative Offset. Administrative offset has the same meaning

as found at 31 U.S.C. 3701(a)(1) except that as used in this rule the

term is limited to the offsetting of payments to collect past-due

support.

Debt. As used in this rule, the term ``debt'' is limited to debt

based on past-due support. Debt based on past-due support is among the

many kinds of debts subject to collection by administrative offset and

encompassed by the statutory definition of debt found at 31 U.S.C.

3701(b) (1) and (2). The definition of debt contained in this rule does

not alter the statutory definition. It merely limits the scope of the

rule to debt based on past-due support.

Disbursing Official. Disbursing official means an official who has

authority to disburse public money pursuant to 31 U.S.C. 3321 or

another law. It includes disbursing officials of the Department of the

Treasury, the Department of Defense, the United States Postal Service,

or any other Government corporation, any disbursing official of the

United States designated by the Secretary of the Treasury, or any

disbursing official of any other executive department or agency that

disburses Federal payments.

Past-Due Support. Past-due support means the amount of support

determined under a court order or an order of an administrative

procedure established under State law for support and maintenance of a

child or of a child and the parent with whom the child is living, which

has not been paid. Unless so limited by court order or under State law

or procedure, the term ``child'' as used in this definition is not

intended to be limited to minor children.

State. Treasury considered including legal subdivisions of States

within the definition of ``State'' to ensure that there were no

impediments to collecting past-due support being enforced at, for

example, the county level. Legal subdivisions of States were not

included in the definition of ``State'' because of concerns about the

potential impact on current relationships between States and their

legal subdivisions in the collection of past-due support. The public is

invited to comment on the impact of including or excluding legal

subdivisions of States in the definition of ``State'' as well as on any

other provision of this rule.

(b) General Rule

Paragraph (b) states the general rule that disbursing officials of

FMS and other disbursing officials of the Federal Government will

offset Federal payments to collect past-due support. States enforcing

past-due support may notify FMS of past-due support either by entering

into an agreement with FMS and requesting that the offset be conducted

or by notifying HHS. Amounts offset will be forwarded to the State less

any fee charged for the offset.

(c) Agreements

Paragraph (c) states that FMS may, within its discretion, enter

into an agreement with a State for disbursing officials of FMS and

other Federal disbursing officials to collect past-due support by

administrative offset. The agreement will contain requirements that FMS

considers appropriate to facilitate the offset such as the manner and

time frames for submitting debts to FMS; requirements for updating

debts; and other procedures to ensure offsets are properly made. The

agreement also will require that States have procedures in place for

collecting debt by administrative offset including procedures for

ensuring that individuals who owe past-due support are provided with

notice and an opportunity to be heard before the debt is referred to

FMS for offset. There is a strong Federal and State interest in

ensuring that parents meet their child support obligations. The failure

of some parents to meet their child support obligations weakens

families and increases State and Federal welfare expenditures. Thus,

agreements entered into between FMS and a State for the collection of

past-due support by administrative offset are of mutual benefit to both

the State and FMS and are therefore considered reciprocal. There is no

requirement that States offset their payments to collect debts owed to

the Federal Government and thus the request for offset from the State

may come from the appropriate official of the State responsible for

enforcing past-due support rather than a State disbursing official.

(d) Notification to FMS of Past-Due Support

Paragraph (d) describes the procedures which must be followed for

each debt when a State notifies FMS or HHS of past-due support for

purposes of collection by administrative offset. More specific

instructions regarding the formatting of information and the required

data elements will be provided to States.

States which are enforcing a past-due support order issued by

another State or otherwise have knowledge that another State is

involved in enforcing a particular past-due support order, are required

to inform any other State involved in enforcing the order that it has

notified FMS of the past-due support. States must also notify any other

State involved in enforcing the order of any amounts received as a

result of an offset. The purpose of this notification is to avoid

referral of the same debt from more than one State and to ensure that

debt amounts are accurately maintained.

Before a debt can be referred to FMS, States must sign a

certification for each debt or group of debts certifying that each debt

is past-due, legally enforceable, that the notice described in

paragraph (h) has been sent, and that the State has completed any

requirements imposed by its own laws or procedures for collection of

debts by administrative offset. The certifying official must have both

the knowledge and the authority to certify to FMS, on behalf of the

State, that these requirements have been met. One of the purposes of

the certification is to permit the Secretary of the Treasury, as

authorized by the DCIA, to waive certain requirements of the Computer

Matching and Privacy Protection Act of 1988, 5 U.S.C. 552a, when

applicable, upon certification by a State that the requirements of 31

U.S.C. 3716(a) have been met. Section 3716(a) of Title 31 sets forth

the due process requirements applicable to the collection of delinquent

debts owed to the Federal Government. The due process requirements

applicable to the determination and collection of past-due support are

established under State laws and procedures. Additionally, paragraph

(h) of this rule sets forth specific due process requirements States

must meet to collect past-due support under this rule. Thus,

certification of compliance with both the requirements of State laws

and procedures and the requirements of paragraph (h) of this rule will

be considered equivalent to certification of compliance with the

requirements of 31 U.S.C. 3716(a).

[[Page 36208]]

Any debts which are not properly certified or do not otherwise

comply with the requirement of this section will not be accepted by

FMS. States will be notified that a particular debt or group of debts

has been rejected and will be given the reason for the rejection. Such

debts may be submitted to FMS once any deficiencies noted have been

resolved.

(e) Minimum Amount of Past-due Support

Paragraph (e) states that FMS will not accept debts of less than

$25.00 for collection by administrative offset. If a debt is referred

to FMS which is over $25.00 at the time it is referred, the debt will

remain subject to collection by administrative offset until it is paid

in full even if it falls below the $25.00 minimum. The $25.00 minimum

is intended to ensure that FMS is not collecting debt by administrative

offset where the administrative cost of collection exceeds the amount

of the debt. The minimum amount may be adjusted either upward or

downward by FMS. States will be notified of any adjustments.

(f) Limitations

Paragraph (f) provides that a debt properly submitted to FMS for

administrative offset will remain subject to collection by offset until

it is paid in full as long as the debt remains past-due and legally

enforceable. A debt will be considered legally enforceable for purposes

of this paragraph (f) if, under applicable State law, it may lawfully

be collected by administrative offset.

(g) Notification of Changes in Status of Debt

To ensure that debts referred to FMS for collection by

administrative offset remain accurate as to their amount and that

amounts offset do not exceed the amount of the debt, paragraph (g)

requires States to notify FMS or HHS of any decreases in the amount of

a debt referred. States are also required to notify FMS or HHS if any

debt should be deleted from the debtor database either because it has

been paid in full or for any other reason. States are permitted to

notify FMS or HHS of any increases in the amount of a debt referred to

FMS as long as the State has provided proper notice to the debtor and

has complied with any other requirements of State law or procedure.

Where a debt represents an ongoing obligation and it is anticipated

that the debt will increase on a regular basis, States should ensure

that the notices sent pursuant to paragraph (h) of this regulation

include such amounts.

Under paragraph (g), States will be required to report, at

established time intervals, the total net adjustment made to the amount

of the debt if the net adjustment results in a decrease in the debt

amount. If the total net adjustment made to the debt amount during the

established time interval results in an increase in the debt amount,

States are encouraged, but are not required, to report the total net

adjustment.

(h) Advance Notification of Intent to Collect by Administrative Offset

Paragraph (h) sets forth requirements concerning the notice and

opportunity to exercise certain rights that must be provided to

individuals who owe past-due support before the debt can be referred

for collection by administrative offset. States must have procedures in

place to afford individuals who owe past-due support the opportunity

for a review as provided for under this paragraph (h) and must comply

with those procedures prior to referring a debt for collection by

administrative offset. Where a State intends to refer a debt which it

is enforcing based upon an order issued by another State, the referring

State must ensure that the individual who owes the past-due support has

the opportunity for a review by either the referring State or the State

which issued the order.

(i) Payments Subject to Offset

All Federal payments are subject to offset to collect past-due

support except those payments described in paragraph (i). Those

payments listed in paragraph (i)(1) are specifically excluded from

offset to collect past-due support by the DCIA. Paragraph (i)(2) sets

forth the authority of the Secretary under the DCIA to exempt

additional payments from offset. Payments which may be exempted from

offset under this authority are described in paragraph (k). Paragraph

(i)(3) is intended to recognize that other laws may prohibit the offset

of certain payments to collect past-due support. This exception applies

only where another law specifically and expressly prohibits offset. For

example, 38 U.S.C. 5301(a) expressly prohibits the collection of most

debt by offset from certain Veterans' benefit payments. Paragraphs

(i)(4) and (i)(5) reflect the DCIA provisions which exclude payments

made under the Internal Revenue Code and the tariff laws of the United

States from administrative offset under 31 U.S.C. 3716. Authority to

offset tax refund payments to collect past-due support is found at 42

U.S.C. 664 and 26 U.S.C. 6402 and is governed by regulations at 45 CFR

303.72 and 26 CFR 301.6402-5. All other Federal payments are subject to

offset under this rule although restrictions may apply to limit the

amount of a particular payment which may be offset.

(j) Special Provisions Applicable to Federal Salary Payments

Federal salary payments are included in those payments subject to

offset to collect past-due support under 31 U.S.C. 3716. The special

rules contained in paragraph (j) are intended to ensure that the amount

of a Federal salary payment subject to offset does not exceed the

limitations applicable to the garnishment of Federal pay to collect

support under 15 U.S.C. 1673(b)(2) (A) and (B). The authority to offset

Federal salary payments to collect past-due support is not intended to

alter or supersede the authority to garnish the wages of a Federal

employee who owes past-due support. Thus, this rule provides that the

maximum allowable offset amount will be reduced by the amount of a

garnishment order for support. For example, if a Federal employee's pay

in a given pay period, after required deductions, is $1,000 and 50% of

that pay may be offset, the total amount subject to offset is $500. If,

however, there is a garnishment order for support of $300 against that

employee's pay, the amount subject to offset is reduced to $200. Where

there is a $500 garnishment order against that employee's pay, no

offset would be permitted. Because Federal salary pay is being offset

to collect past-due support under 31 U.S.C. 3716, the provisions

applicable to the offset of Federal salary payments to collect debt

owed to the Federal Government do not apply.

(k) Payments Exempt From Administrative Offset to Collect Past-due

Support Being Enforced by a State

Paragraph (k) describes the authority of the Secretary as contained

in the DCIA to exempt certain payments from administrative offset.

Examples of means-tested programs as defined in paragraph (k) include

food stamps and Supplemental Security Income (SSI). Such programs are

exempt from offset so long as a request for an exemption is properly

submitted to the Secretary and the Secretary determines that such

programs are, in fact, means-tested. Other payments may be exempted

from offset at the discretion of the Secretary upon receipt of a proper

request from the agency that issues the payment which justifies the

reason for the exemption. FMS has issued standards for payment agencies

to follow when for making such requests. These standards are available

from FMS at the above address and at the FMS web site. In

[[Page 36209]]

acting on such requests, the Secretary will give due consideration to

whether or not the offset would tend to substantially interfere with

the purpose of the program.

(l) Fees

FMS will charge a fee to cover the costs of the offset.

The fee will be deducted from the amount offset before that amount

is forwarded to the States and will only be charged when an offset has

been made. States may add this fee to the amount of the debt if

permitted by law. The fee charged is intended to reimburse FMS for the

administrative costs of the offset and therefore may be adjusted to

reflect costs. Once a fee is established, however, it will not be

adjusted for a period of at least 12 months. States will be notified in

advance of any adjustments.

(m) Conducting the Offset

Paragraph (m) describes how the offset program works. Debts

referred to FMS are entered into a centralized debtor database. When

disbursing officials of the Federal Government issue payments, those

payments are compared with the debtor database to determine if the

person to whom the payment is to be issued (the payee) owes a debt. If

a match occurs (a match occurs when the taxpayer identification number

and name of the payee match the taxpayer identification number and name

of a debtor) and the payment is one which is subject to offset for the

collection of past-due support, the offset will take place. Amounts

offset will be forwarded to the State, less any fee. If the amount

offset is less than the amount of the payment, the remainder of the

payment will be forwarded to the payee. Certain payments may only be

partially offset, that is, only a certain percentage of the payment may

be offset to collect a debt. If the offset does not result in payment

of the debt in full, offsets from future payments to the payee will

continue until the debt is paid in full. Although only those debts

based on past-due support are the subject of this rule, other debts as

defined at 31 U.S.C. 3701(b) are also included in the database to be

collected by administrative offset. Separate rules govern the

collection of other debts (debts not based on past-due support) by

administrative offset.

(n) Priorities

Paragraph (n) is intended to establish a priority for offsets where

an individual owes more than one debt and a payment being issued to

that individual (or the amount of that payment which is available for

offset) is not sufficient to satisfy all debts. Debt based on past-due

support may be of more than one type depending on whether or not the

debt has been assigned to the State. Paragraph (n) provides that debt

which has been assigned to the State will be collected first and that

debt which has not been assigned to the State will be collected only

after other reductions allowed by law have been taken, such as offsets

to collect debt as defined at 31 U.S.C. 3701(b) which is owed to the

Federal Government.

(o) Notification of Offset

Paragraph (o) provides that once an offset has occurred, the

disbursing official who conducted the offset will provide notice to the

payee that the offset has occurred. A disbursing official, however,

cannot be held liable for failure to provide this notice.

(p) Liability of Disbursing Officials and Payment Agencies

Paragraph (p) restates the DCIA which provides that neither the

disbursing official nor the payment agency shall be liable for the

amount of the offset on the basis that the underlying obligation,

represented by the payment amount before the offset was taken, was not

satisfied. Thus, if a payee is due a payment and receives less than the

full amount of that payment because an offset has occurred, no cause of

action exists against the disbursing official or the payment agency on

the basis that the payment was not made in full. Paragraph (p) also

provides that the payment agency will receive notice that the offset

has occurred and will be provided with contact information at the State

which referred the debt for offset. The purpose of this notice is to

allow the payment agency to properly direct any inquiries it may

receive concerning the offset.

Regulatory Analyses

It has been determined that this rule is not a significant

regulatory action as defined in Executive Order 12866. Because no

notice of proposed rulemaking is required, the provisions of the

Regulatory Flexibility Act do not apply.

Special Analyses

FMS is promulgating this interim rule without opportunity for prior

public comment pursuant to the Administrative Procedure Act (APA), 5

U.S.C. 553, because FMS has determined, for the following reasons, that

a comment period would be impracticable and contrary to the public

interest. The DCIA was effective immediately upon its enactment on

April 26, 1996, and for the first time, authorized the collection of

past-due support by administrative offset from certain Federal

payments. Prior to the passage of the DCIA only debts owed to the

United States could be collected by administrative offset from these

Federal payments. Thus, States enforcing past-due support as well as

members of the public who either owe or are owed past-due support may

not be aware of the impact of the law.

Executive Order 13019 dated September 28, 1996 requires the

Secretary to promptly develop and implement procedures necessary for

the Secretary to collect past-due support by administrative offset. The

Executive Order states that the failure of some parents to meet their

child support obligations threatens the health, education, and well-

being of their children. It is the intent of the Executive Order to

facilitate the collection of delinquent child support obligations from

persons who may be entitled to receive certain Federal payments thereby

supporting our children and strengthening American families. Since this

interim rule provides critical guidance needed to facilitate the offset

of Federal payments to collect past-due support, FMS believes that it

is in the public interest to issue this interim rule without

opportunity for prior public comment.

The public is invited to submit comments on the interim rule which

will be taken into account before a final rule is issued.

FMS has determined that good cause exists to make this interim rule

effective upon publication without providing the 30 day period between

publication and the effective date contemplated by 5 U.S.C. 553(d). The

purpose of a delayed effective date is to afford persons affected by a

rule a reasonable time to prepare for compliance. However, in this

case, the authority to collect past-due support by administrative

offset from Federal payments became effective on April 26, 1996.

Inasmuch as this interim rule provides important guidance that is

expected to facilitate implementation of the authority contained in the

law, FMS believes that good cause exists to make the rule effective

upon publication.

Since the interim rule is being issued without prior notice and

public procedure pursuant to the APA, the collections of information

contained in the interim rule has been reviewed under the requirements

of the Paperwork Reduction Act (44 U.S.C. 3507(j)) and, pending receipt

and evaluation of public comments,

[[Page 36210]]

approved by the Office of Management and Budget (OMB) under control

number 1510-0069. An agency may not conduct or sponsor, and a person is

not required to respond to, a collection of information unless it

displays a valid control number assigned by OMB.

Comments concerning the collection of information should be

directed to OMB, Attention: Desk Officer for the Department of the

Treasury, Financial Management Service, Office of Information and

Regulatory Affairs, Washington, D.C. 20503, with copies to Jacqueline

Perry, Public Reports Clearance Officer, Financial Management Service,

3361 75th Avenue, Landover, Maryland 20785. Any such comments should be

submitted not later than September 5, 1997. Comments are specifically

requested concerning:

Whether the proposed collection of information is necessary for the

proper performance of the functions of FMS, including whether the

information will have practical utility;

The accuracy of the estimated burden associated with the proposed

collection of information (see below);

How the quality, utility, and clarity of the information to be

collected may be enhanced; and

How the burden of complying with the proposed collection of

information may be minimized, including through the application of

automated collection techniques and other forms of information

technology.

The collections of information in this interim regulation are in

Sec. 285.1 (d)(1), (d)(2), (d)(3), (g), and (h). The information

collected under Sec. 285.1(d)(1) may include the name of the person

owing past-due support, the person's social security number, the

person's address, the amount of past-due support owed, and an identity

code for the State. This information is needed to determine if the

debtor and the payee of a Federal payment is the same person, to notify

the debtor/payee of the occurrence of an offset, and to forward the

money offset to the appropriate State.

The information collected under Sec. 285.1(d)(2) shall include name

and social security number of the debtor. This information is necessary

to prevent duplication of reporting to FMS.

The information collection under Sec. 285.1(d)(3) shall include a

signed statement that the debt is past-due and legally enforceable and

that the State has complied with all the requirements under

Sec. 285.1(h). This information is necessary to provide a waiver of

certain sections of the Computer Matching and Privacy Protection Act of

1988 where such a waiver is necessary to conduct administrative offset

under this rule.

The information collected under Sec. 285.1(g) may include changes

to the name of the person owing past-due support, the person's social

security number, the person's address, the amount of past-due support

owed, or the identity code for the State collecting the debt. This

information is needed to assure that the information concerning the

debtor is accurate, which prevents erroneous offsets.

The information collected under Sec. 285.1(h) shall include the

name and address of the debtor, information concerning the existence of

a past-due support debt and the intent to collect the debt by

administrative offset, and a listing of the debtor's rights. This

information is a prerequisite for conducting administrative offset

under 31 U.S.C. 3716(a).

The collections of information under this rule is voluntary. Likely

respondents to all the collections of information listed above are

States, Territories, and Commonwealths of the Federal Government.

The estimated total annual reporting burden is 5562 hours. The

estimated burden hours per respondent is 103 hours. The estimated

number of respondents is 54. These figures represent the burden imposed

by FMS. The reporting burden imposed by other agencies will be

addressed by those agencies.

List of Subjects in 31 CFR Part 285

Administrative practice and procedure, Child Support, Claims,

Debts, Privacy, Taxes.

Authority and Issuance

For the reasons set forth in the preamble, 31 CFR part 285 is

amended to read as follows:

PART 285--DEBT COLLECTION AUTHORITIES UNDER THE DEBT COLLECTION

IMPROVEMENT ACT OF 1996

1. The authority citation for part 285 is revised to read as

follows:

Authority: 26 U.S.C. 6402; 31 U.S.C. 321, 3716, 3720A; E.O.

13019.

2. Section 285.1 is added to part 285, subpart A, to read as

follows:

Sec. 285.1 Collection of past-due support by administrative offset.

(a) Definitions. For purposes of this section:

Administrative offset means withholding funds payable by the United

States (including funds payable by the United States on behalf of a

State government) to, or held by the United States for, a person to

satisfy a debt.

Debt as used in this section is synonymous with the term past-due

support.

Disbursing official includes an official who has authority to

disburse public money pursuant to 31 U.S.C. 3321 or another Federal

law.

FMS means the Financial Management Service, a bureau of the

Department of the Treasury. FMS is the designee of the Secretary of the

Treasury for all matters concerning this section, unless otherwise

specified.

HHS means the Department of Health and Human Services, Office of

Child Support Enforcement.

Past-due support means the amount of support determined under a

court order, or an order of an administrative procedure established

under State law, for support and maintenance of a child, or of a child

and the parent with whom the child is living, which has not been paid.

Past-due support being enforced by the State means there has been

an assignment of the support rights to the State or the State making

the request for offset is providing services to individuals pursuant to

42 U.S.C. 654(5) (section 454(5) of the Social Security Act).

State means the several States of the United States. The term State

also includes the District of Columbia, American Samoa, Guam, the

United States Virgin Islands, the Commonwealth of the Northern Mariana

Islands, and the Commonwealth of Puerto Rico.

Secretary means the Secretary of the Treasury.

(b) General Rule. FMS may enter into a reciprocal agreement with a

State for the collection of past-due support being enforced by the

State by administrative offset from certain Federal payments. Upon

notification of past-due support either directly from a State which has

entered into such an agreement or from HHS, disbursing officials of FMS

or any other disbursing official of the United States shall offset

Federal payments which are subject to offset under this section, to

collect past-due support. The amount offset, minus the offset fee,

shall be forwarded to the State to be distributed in accordance with

applicable laws and procedures.

(c) Agreements. FMS may enter into reciprocal agreements with

States for disbursing officials of FMS and any other Federal disbursing

official to offset certain Federal payments to collect past-due support

being enforced by the State. The agreement shall contain any

requirements which FMS considers

[[Page 36211]]

appropriate to facilitate the offset and prevent duplicative efforts

and shall require States to prescribe procedures governing the

collection of past-due support by Federal administrative offset. For

purposes of this section, reciprocal means of mutual benefit. An

agreement between FMS and a State to collect past-due support by

offsetting Federal payments will be considered of mutual benefit and it

is not required that States conduct administrative offsets to collect

debts owed to the Federal Government. States which have entered into an

agreement with FMS pursuant to this section may thereafter request, in

the manner prescribed herein, that an offset be performed. Such

requests shall be made by the appropriate State disbursing official

which, for purposes of this section, means an appropriate official of

the State agency which administers or supervises the administration of

the State plan under Title IV-D of the Social Security Act.

(d) Notification to FMS of past-due support. (1) States notifying

FMS of past-due support must do so in the manner and format prescribed

by FMS. States notifying HHS of past-due support must do so in the

manner and format prescribed by HHS. HHS shall notify FMS of all past-

due support referred to HHS by States for collection by administrative

offset provided that the requirements of paragraphs (d)(3) and (h) of

this section have been met.

(2) When a State has knowledge that past-due support is being

enforced by more than one State, the State notifying FMS or HHS of the

past-due support must inform any other State involved in enforcing the

past-due support when it refers the debt for offset and when it

receives the offset amount.

(3) The notification of past-due support must be accompanied by a

certification that the debt is past-due, legally enforceable, and that

the State has complied with all the requirements as set forth in

paragraph (h) of this section and with any requirements imposed by

State law or procedure. For debts so certified, the Secretary may waive

sections 552a (o) and (p) of Title 5, United States Code, where

applicable, in accordance with the Secretary's authority under 31

U.S.C. 3716(f).

(4) FMS may reject a notification of past-due support which does

not comply with the requirements of this section. The State will be

notified of the rejection along with the reason for the rejection.

(e) Minimum amount of past-due support. FMS will reject a

notification of past-due support where the past-due support owed is

less than $25.00. This amount may be adjusted from time to time by FMS

to ensure that the cost of collection does not exceed the debt.

(f) Limitations. Debts properly submitted to FMS for administrative

offset will remain subject to collection by administrative offset until

withdrawn by the State provided the debt remains past-due and legally

enforceable.

(g) Notification of changes in status of debt. The State notifying

FMS or HHS of past-due support shall, in the manner and in the time

frames provided by FMS or HHS, notify FMS or HHS of any deletion or

decrease in the amount of a debt referred for collection by

administrative offset. The State may notify FMS or HHS of any increases

in the amount of a debt referred for collection by administrative

offset provided the State has complied with the requirements of

paragraph (h) of this section with regard to those amounts.

(h) Advance notification of intent to collect by administrative

offset. (1) The State, or FMS or HHS on behalf of the State, if the

State requests and FMS or HHS agrees, shall send a written

notification, at least 30 days in advance of referral of the debt for

offset, to the individual owing past-due support, informing the

individual that the State intends to refer the debt for collection by

administrative offset against Federal payments. The notice must also

inform the individual of:

(i) The nature and amount of the debt; and

(ii) The right to an administrative review by the State referring

the debt or, upon the request of the individual, by the State with the

order upon which the referral was based, of the determination of the

State with respect to the debt and of the procedures and time frames

established by the State for such reviews.

(2) Prior to referring a debt to FMS for collection by

administrative offset, States must provide individuals with a

reasonable opportunity to exercise the rights enumerated in paragraph

(h)(1) of this section in accordance with procedures prescribed by the

State.

(i) Payments subject to offset. Federal payments subject to offset

under this section include all Federal payments except:

(1) Payments due to an individual under

(i) Title IV of the Higher Education Act of 1965;

(ii) The Social Security Act;

(iii) Part B of the Black Lung Benefits Act;

(iv) Any law administered by the Railroad Retirement Board;

(2) Payments which the Secretary determines are exempt from offset

in accordance with paragraph (k) of this section;

(3) Payments from which collection of past-due support by

administrative offset is expressly prohibited by law;

(4) Payments made under the Internal Revenue Code of 1986 (except

that tax refund payments are subject to offset under separate

authority); and

(5) Payments made under the tariff laws of the United States.

(j) Special provisions applicable to Federal salary payments. (1)

Unless a lower maximum offset limitation is provided by applicable

State law, the maximum part of a Federal salary payment per pay period

subject to offset to collect past-due support shall not exceed those

amounts set forth at section 1673(b)(2) (A) and (B) of Title 15, United

States Code, as follows:

(i) Fifty (50%) percent of the debtor's aggregate disposable

earnings for any pay period, where the debtor asserts by affidavit, or

by other acceptable evidence, that he/she is supporting a spouse and/or

dependent child, other than the former spouse and/or child for whom

support is being collected, except that an additional five (5%) percent

will apply if it appears that such earnings are to enforce past-due

support for a period which is twelve (12) weeks or more prior to the

pay period to which the offset applies. A debtor shall be considered to

be supporting a spouse and/or dependent child only if the debtor

provides over half of the spouse's and/or dependent child's support.

(ii) Sixty (60%) percent of the debtor's aggregate disposable

earnings for any pay period where the debtor fails to assert by

affidavit or establish by other acceptable evidence that he/she is

supporting a spouse and/or dependent child, other than a former spouse

and/or child for whom support is being collected, except that an

additional five (5%) percent will apply if it appears that such

earnings are to enforce past-due support for a period which is twelve

(12) weeks or more prior to the pay period to which the offset applies.

(2) The maximum allowable offset amount shall be reduced by the

amount of any deductions in pay resulting from a garnishment order for

support. Nothing in this rule is intended to alter rules applicable to

processing garnishment orders for child support and/or alimony.

(3) Federal salary payments subject to offset for the collection of

past-due support include current basic pay, special pay, incentive pay,

retainer pay, overtime, or in the case of an employee not entitled to

basic pay, other authorized pay. Aggregate disposable earnings for

purposes of determining the

[[Page 36212]]

maximum amounts which may be offset under paragraph (j)(1) of this

section is Federal salary pay remaining after the deduction of:

(i) Any amount required by law to be withheld;

(ii) Amounts properly withheld for Federal, State or local income

tax purposes;

(iii) Amounts deducted as health insurance premiums;

(iv) Amounts deducted as normal retirement contributions, not

including amounts deducted for supplementary coverage; and

(v) Amounts deducted as normal life insurance premiums not

including amounts deducted for supplementary coverage.

(4) At least 30 days in advance of offset, the disbursing official

shall send written notice to the debtor of the maximum offset

limitations described in paragraph (j)(1) of this section. The notice

shall include a request that the debtor submit supporting affidavits or

other documentation necessary to determine the applicable offset

percentage limitation. The notice shall also inform the debtor of the

percentage that will be deducted if he/she fails to submit the

requested documentation.

(k) Payments exempt from administrative offset to collect past-due

support being enforced by a State. The Secretary will exempt from

administrative offset under this part payments made under means-tested

programs when requested by the head of the Federal agency which

administers the program. For purposes of this section, means-tested

programs are programs for which eligibility is based on a determination

that income and/or assets of the beneficiary are inadequate to provide

the beneficiary with an adequate standard of living without program

assistance. The Secretary may exempt from administrative offset under

this section any other class or type of payment upon the written

request of the head of the agency which authorizes the payments. In

determining whether or not to grant such exemptions, the Secretary

shall give due consideration to whether administrative offset would

tend to interfere substantially with or defeat the purposes of the

payment agency's program.

(l) Fees. A fee which FMS has determined to be sufficient to

reimburse FMS for the full cost of the offset procedure, shall be

deducted from each offset amount. FMS will notify the States, annually

and in advance, of the amount of the fee to be charged for each offset.

(m) Conducting the offset. Disbursing officials of the Department

of the Treasury, the Department of Defense, the United States Postal

Service, or any other Government corporation, any disbursing official

of the United States designated by the Secretary, or any disbursing

official of an executive department or agency that disburses Federal

payments shall offset payments subject to offset under this section to

satisfy, in whole or part, a debt owed by the payee. Disbursing

officials shall compare payment certification records with records of

debts submitted to FMS for collection by administrative offset. A match

will occur when the taxpayer identifying number and name control of a

payment record are the same as the taxpayer identifying number and name

control of a debt record. The taxpayer identifying number for an

individual is the individual's social security number. When a match

occurs and all other requirements for offset have been met, the

disbursing official shall offset the payment to satisfy, in whole or

part, the debt. Any amounts not offset shall be paid to the payee. The

amount that can be offset from a single payment is the lesser of the

amount of the debt (including interest, penalties, and administrative

costs); the amount of the payment; or the amount of the payment

available for offset if a statute or regulation prohibits offset of the

entire amount. Debts remain subject to collection by offset until paid

in full.

(n) Priorities. When a payee owes more than one debt which has been

referred to FMS for collection by administrative offset, any offset

will be applied first to past-due support assigned to a State and will

be applied to any other past-due support after any other reductions

allowed by law.

(o) Notification of offset. Disbursing officials of FMS or any

other disbursing official which conducts an offset will notify the

payee in writing of the occurrence of the offset to satisfy past-due

support. The notice shall inform the payee of the type and amount of

the payment that was offset; the identity of the State which requested

the offset; and a contact point within the State that will handle

concerns regarding the offset. Disbursing officials shall not be liable

for failure to provide this notice.

(p) Liability of disbursing officials and payment agencies. Neither

the disbursing official nor the agency authorizing the payment shall be

liable for the amount of the administrative offset on the basis that

the underlying obligation, represented by the payment before the

administrative offset was taken, was not satisfied. Disbursing

officials will notify the agency authorizing the payment that the

offset has occurred so that the agency authorizing the payment may

direct any inquiries concerning the offset to the appropriate State.

Dated: June 30, 1997.

Russell D. Morris,

Commissioner.

[FR Doc. 97-17518 Filed 7-3-97; 8:45 am]

BILLING CODE 4810-35-P