Federal Old-Age, Survivors, and Disability Insurance; Disclosure of Information to Consumer Reporting Agencies and Overpayment Recovery Through Administrative Offset Against Federal Payments

SOCIAL SECURITY ADMINISTRATION

20 CFR Parts 404 and 422

RIN 0960-AE09

Federal Old-Age, Survivors, and Disability Insurance; Disclosure

of Information to Consumer Reporting Agencies and Overpayment Recovery

Through Administrative Offset Against Federal Payments

AGENCY: Social Security Administration.

ACTION: Final rule.

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SUMMARY: In this final rule, we are making several revisions to our

regulations dealing with debt collection. First, we are modifying the

regulations dealing with the recovery of benefit overpayments under

title II of the Social Security Act (the Act) to reflect statutory

authority for the Social Security Administration (SSA) to selectively

refer information to consumer reporting agencies and to recover title

II overpayments through administrative offset by the Department of the

Treasury against other Federal payments to which the overpaid

individual may be entitled. These collection practices are limited to

overpayments made to a person after he or she attained age 18 that are

determined to be otherwise unrecoverable under section 204 of the Act

after the individual ceases to be a beneficiary under title II of the

Act. Second, as an independent agency in the executive branch of the

U.S. Government, we are establishing a new subpart D in part 422 of

title 20 of the Code of Federal Regulations which explains our rules on

debt collection procedures for both administrative debts and for title

II program overpayments determined to be otherwise unrecoverable under

section 204 of the Act. These rules for the new subpart D address the

reporting of delinquent debts to consumer and other credit reporting

agencies and the use of administrative offset through the Department of

the Treasury. Third, we are revising our rules on the recovery of title

II program overpayments through the use of the Federal income tax

refund offset (TRO) provisions to reflect that, beginning January 1,

1998, the Department of the Treasury, rather than the Internal Revenue

Service (IRS), will administer the TRO program, and to reflect other

changes in policies and procedures applied by the IRS and the

Department of the Treasury in the TRO program.

EFFECTIVE DATE: This final rule is effective January 5, 1998.

FOR FURTHER INFORMATION CONTACT: Robert J. Augustine, Legal Assistant,

Division of Regulations and Rulings, Social Security Administration,

6401 Security Boulevard, Baltimore, MD 21235, (410) 966-5121. For

information on eligibility or claiming benefits, call our national

toll-free number, 1-800-772-1213.

SUPPLEMENTARY INFORMATION: Section 204 of the Act prescribes the

methods SSA may use to recover Social Security benefits erroneously

paid under title II of the Act (title II program overpayments), as

distinguished from the methods SSA may use to collect other debts owed

the agency (administrative debts) that are recoverable under other

statutory authority. Until recently, SSA was authorized to recover

title II program overpayments only through adjustment of future

benefits payable to the overpaid individual or to others on the

earnings record on which the overpayment was made, by direct recovery

from the overpaid person (or the overpaid person's estate, if

deceased), or by offset against Federal income tax refunds due from the

Department of the Treasury. Amendments to section 204 of the Act by

section 5 of Pub. L. 103-387 (1994) and section 31001(z)(2) of Pub. L.

104-134 (1996) permit SSA to use several debt collection procedures

that have been available to Federal agencies (including SSA) by statute

since 1982, but that SSA had been precluded from using to recover title

II program overpayments. Among other things, these procedures include

reporting delinquent debts to consumer and other credit reporting

agencies and recovering debts by administrative offset against other

Federal payments to which the debtor is entitled. Under section 204(f)

of the Act (42 U.S.C. 404(f)), these additional debt collection

procedures may be used to recover title II program overpayments only if

the overpayment was made to a person after he or she attained age 18

and the overpayment has been determined to be otherwise unrecoverable

under section 204 of the Act after the overpaid person is no longer

entitled to benefits under title II of the Act.

Before we can refer information to consumer or other credit

reporting agencies or refer a debt to the Department of the Treasury

for administrative offset (either title II program overpayments or

administrative debts), we must (1) send the debtor written notice (or,

in the case of an individual for whom we do not have a current address,

take reasonable action to locate and send written notice) describing

the amount and nature of the debt, the action that we propose to take,

and the debtor's rights to an explanation of the debt, to request us to

review the debt, to dispute the accuracy of the information about the

debt, and to inspect or copy our records about the debt; and (2) give

the debtor at least 60

[[Page 64275]]

calendar days to present evidence that all or part of the debt is not

past-due or not legally enforceable, or enter into a written agreement

to pay the debt.

Prior to March 31, 1995, SSA was an operating division of the

Department of Health and Human Services (DHHS). SSA relied on the DHHS

rules at 45 CFR part 30 for debt collection (other than collection of

title II program overpayments). The Social Security Independence and

Program Improvements Act of 1994 (SSIPIA), Pub. L. 103-296, established

SSA as an independent agency in the executive branch of the Federal

government effective March 31, 1995, and vested general regulatory

authority in the Commissioner of Social Security (the Commissioner).

Under section 106(b) of the SSIPIA, DHHS regulations in effect

immediately before March 31, 1995, which relate to functions now vested

in the Commissioner by reason of SSA's independence, continue to apply

to SSA until such time as they are modified, suspended, terminated, or

repealed by the Commissioner. In this final rule, we are establishing a

new subpart D in part 422 of our regulations which sets forth the SSA

rules on debt collection for title II program overpayments that have

been determined to be otherwise unrecoverable under section 204 of the

Act and for administrative debts. At this time, we are setting forth in

subpart D our rules on referral to consumer and other credit reporting

agencies and referral to the Department of the Treasury for

administrative offset. In the future, as we make the necessary systems

changes and develop policies and procedures to enable us to use

additional debt collection tools for recovery of title II program

overpayments, we will modify subpart D of part 422. In the meantime, we

will continue to rely on the definitions and additional collection

methods contained in the DHHS regulations in 45 CFR part 30 to recover

administrative debts owed the Federal government.

We are also revising our rules on the recovery of title II program

overpayments through the withholding of amounts due to former

beneficiaries as Federal income tax refunds to reflect the fact that,

beginning January 1, 1998, the TRO program will be administered by the

Department of the Treasury, Financial Management Service (FMS), instead

of the IRS. The policy requiring agencies to delay referral of debts

for TRO for three months after the right to collect first accrued has

been rescinded. Also, the TRO program, as administered by FMS, will be

ongoing rather than cyclical so that it will no longer be necessary for

agencies to recertify amounts of a particular debt for collection by

TRO each year. Instead, if the entire debt is not recovered in a given

year, the case will remain with FMS for collection of the remainder by

offset in succeeding years.

Public Comments

On August 7, 1997, we published proposed rules in the Federal

Register at 62 FR 42439 and provided a 60-day period for interested

individuals to comment. We received a total of three letters on the

proposed rules: one from a private attorney, one from a disability law

center, and one from a member of Congress. After carefully considering

the comments received, we have decided to adopt the proposed rules with

only a few clarifying changes. The comments and our responses to them

are summarized below.

Comment: Two commenters objected to the proposed rules based on the

assumption that the debtors subject to these rules have no input into

the calculation of their debts and are without adequate protections.

Response: The debtors who will be selected for the new debt

collection techniques are those from whom SSA has attempted numerous

times to collect the debts, both by written notices and personal

contacts. In the initial overpayment notice, SSA advises the debtor of

the right to request reconsideration of the fact and amount of the

debt, and thereby challenge the calculation and existence of the debt.

In this same notice, SSA also advises the debtor about the right to

request waiver. In addition, SSA's separate notice to the debtor of the

Agency's intent to refer information about the debt to the Department

of the Treasury and to the consumer reporting agencies offers the

debtor the opportunity to request waiver, present evidence showing that

the debt is not past-due and/or legally enforceable, and dispute the

accuracy of information about the debt that we would refer. We believe

that our procedures adequately protect individuals by allowing ample

opportunity to the debtors to both dispute the amount of the

overpayment and/or to request waiver.

Comment: One commenter asked the Agency not to issue final

regulations until it: (1) runs a test program to assure that

overpayments preventable by SSA are not occurring; (2) tests a program

of appointing free advocates (who may be SSA employees) to counsel and

represent those accused of receiving overpayments; and (3) assures that

people accused of using overpayments understand that a report is made

to a consumer reporting agency immediately unless they appeal or reach

agreement with SSA.

Response: We are not adopting this comment. With regard to the

commenter's first concern above, SSA has had a longstanding and

comprehensive quality assurance program that reviews overpayments,

including those preventable by SSA. The program studies significant

samples of claims, identifying problem areas that need to be corrected.

We believe this quality assurance program corresponds to the test

program suggested by the commenter.

With regard to the commenter's second point, SSA already takes

several steps toward helping overpaid individuals obtain

representation. Information on the individual's right to seek and use

representation is included in SSA's initial overpayment notices. In

addition, SSA offers to provide information on advocacy groups that do

not charge people who qualify for their services.

Regarding the commenter's third point, SSA will not report

information to consumer reporting agencies immediately. SSA will wait

at least 60 days after the date of the notice to report the delinquency

to consumer reporting agencies. During the 60-day due process period,

SSA provides the debtor with the opportunity to request review of the

debt, dispute the accuracy of the information to be reported, request

waiver, or enter into an installment agreement. All of these rights are

clearly explained in the notice to the debtor.

Comment: One commenter objected to the practice of sending one pre-

offset notice to the debtor explaining that the debt is being referred

to the Department of the Treasury for TRO and that future tax refunds

will be offset to recover the overpayment. The commenter believes that

we should provide separate notices before subsequent offsets.

Response: This practice is consistent with the Department of the

Treasury's existing process whereby no additional notice is necessary

if there are multiple offsets in one year to recover an overpayment

debt. It is also consistent with the Department of the Treasury's

regulations and operating procedures which require notice at least 60

calendar days before the date of referral to the Department of the

Treasury.

Comment: SSA's notices described in Sec. 404.521 of the proposed

rules should contain language explaining that the debtor may enter into

a repayment agreement with SSA.

Response: Since the beginning of the TRO program, SSA's notices

have contained such language. The notices issued under these final

regulations also

[[Page 64276]]

contain the language which offers the opportunity to pay the debt by

installments. One of the principles that SSA uses in the offset program

is to extend to the debtor as many opportunities as possible to pay the

debt voluntarily, rather than by offset. As long as the debtor repays

by regular installments in accordance with his or her payment agreement

with SSA, offset will not be used to collect the debt.

Comment: No referral to the Department of the Treasury should occur

until all administrative reviews have been completed or until a

decision of the Agency becomes final, in the event that no appeal is

taken. In addition, recovery efforts by the SSA and the Department of

the Treasury should be stopped until a waiver request received after

referral to the Department of the Treasury has been given full

consideration.

Response: When an individual submits a timely request for

reconsideration of the initial overpayment decision and/or requests

waiver of collection of the overpayment, SSA is precluded from any

recovery action until SSA renders a decision affirming the initial

determination and/or denying the waiver request. See Califano v.

Yamasaki, 442 U.S. 682 (1979) and Sec. 404.506. SSA is not required to

refrain from taking collection action concerning a title II overpayment

debt after a decision on a request for reconsideration of the initial

overpayment determination is issued and after a determination on a

request for waiver of recovery of the overpayment is made after the

debtor had the opportunity for a prerecoupment personal conference.

However, under the process adopted to implement these final regulations

SSA would not select a title II overpayment debt for referral to the

Department of the Treasury while an administrative appeal regarding

that debt is pending.

Section 204(f) of the Act, as amended, authorizes SSA to collect

such debts through administrative offset by the Department of the

Treasury against Federal payments due the debtor when, among other

things, SSA determines, under regulations, that such debts are

otherwise unrecoverable under section 204 of the Act. In accordance

with Sec. 404.527(b) of these final regulations, SSA would not select a

debt as ``unrecoverable'' until a reconsideration determination

requested on the initial determination of overpayment, or an initial

determination (after opportunity for a personal conference) on a

request for waiver of collection, is issued and either the billing

system sequence is completed or further collection action is suspended

or terminated. The billing system sequence on a title II overpayment

debt would not be completed, and collection action on such a debt would

not be suspended or terminated, while an administrative appeal at any

level of adjudication is pending on the matter. Thus, under these final

regulations SSA would not select a title II overpayment debt for

collection by the Department of the Treasury through offset against

other Federal payments while an administrative appeal is pending at any

level of adjudication on the fact or amount of the overpayment or on

waiver.

Similarly, the changes in these regulations will not affect any

former beneficiary's ability to request waiver. If the debtor requests

waiver after a case has been referred, SSA will instruct the Department

of the Treasury to cease collection efforts until the waiver request is

adjudicated.

Comment: SSA should raise its monetary threshold for referral to

the Department of the Treasury from $25 to $500.

Response: The $25 debt threshold is consistent with the regulations

issued by Treasury and is used governmentwide. SSA has also determined

it to be cost-effective. SSA will continue to use the $25 threshold in

applying these rules.

Comment: The notice SSA will send to debtors informing them that

the Agency intends to report their debts to consumer reporting agencies

should include the right to request waiver of the overpayment.

Response: Unlike 31 U.S.C. 3720A(f) pertaining to the TRO notice to

debtors, the statute (31 U.S.C. 3711(e)(1)(C)) pertaining to the notice

to debtors about referral to consumer reporting agencies does not

require an explanation of waiver. However, SSA notifies debtors about

TRO, offset of other Federal payments and referral to consumer

reporting agencies concurrently, and these notices explain the debtors'

waiver rights. If the debtor requests waiver within the 60-calendar-day

period allowed by the notice, SSA will not report the debt to the

credit bureaus until the waiver request has been adjudicated.

Explanation of Changes to Regulations

We are revising our title II rules on TRO at Secs. 404.520-404.526

to reflect several changes in the TRO process promulgated by the

Department of the Treasury. Beginning January 1, 1998, we will be

referring title II program overpayments for TRO to the Department of

the Treasury, rather than to IRS. Section 404.520 is revised to delete

the requirement that a debt may not be referred for TRO before the

expiration of three months after our right to collect first accrued.

Section 404.526 is also revised by deleting reference to the need to

recertify an overpayment for TRO in cases where a tax refund is

insufficient to recover the entire amount of an overpayment in a given

year, reflecting the fact that the case will now remain with the

Department of the Treasury for offset in succeeding years without need

for recertification. In this final rule, we have inserted at the end of

Sec. 404.520(a) a reference to the current regulation of the Department

of the Treasury (31 CFR 285.2) which supersedes the IRS regulation (26

CFR 301.6402-6) that was cited in the notice of proposed rulemaking.

We are adding a new Sec. 404.527 to our regulations to explain that

we will use the additional debt collection methods authorized by

section 204(f) of the Act to recover title II program overpayments if

the overpayment occurred after the individual attained age 18, and the

overpayment has been determined to be otherwise unrecoverable under

section 204 of the Act after the individual is no longer entitled to

benefits under title II of the Act. Section 404.527 also contains the

criteria under which we determine that an overpayment is ``otherwise

unrecoverable under section 204 of the Act.'' An overpayment debt will

be determined to be unrecoverable when all of the following conditions

are met: we completed our billing sequence or collection activity has

been suspended or terminated in accordance with the Federal Claims

Collection Standards in 4 CFR 104.2 and 104.3; there is no installment

payment agreement or the overpaid person has failed to pay in

accordance with such an agreement for two consecutive months; the

overpaid individual has not requested waiver or, after appropriate

review of such a request, we have determined that we will not waive

collection of the overpayment; the overpaid person has not requested

reconsideration of the initial overpayment determination or, after our

review of such determination, we have affirmed such determination

wholly or partially; we cannot collect the overpayment by adjusting

benefits payable to individuals other than the overpaid person. For

purposes of Sec. 404.527, an overpayment will be deemed to be

unrecoverable from an individual who lived in a separate household from

the overpaid person when the overpayment occurred and who did not

receive the overpayment.

[[Page 64277]]

Adjustment of benefits is waived when waiver is requested under these

circumstances. See Sec. 404.509.

We are adding to Sec. 404.903 new paragraphs (t) and (u) to include

in the list of administrative actions that are not initial

determinations our determinations whether we will refer information

about an overpayment debt to consumer reporting agencies and whether we

will refer the debt to the Department of the Treasury for offset

against other Federal payments due the overpaid person. Administrative

actions that are not initial determinations may be reviewed by us, but

they are not subject to the administrative review process provided by

subpart J of our regulations at 20 CFR Part 404, and they are not

subject to judicial review.

We are also creating a new subpart D to part 422 of our regulations

to contain our rules on certain debt collection practices and

procedures. In Sec. 422.301, we specify that the debt collection tools

in subpart D may be used to recover both title II program overpayments

the Commissioner has determined to be unrecoverable under section 204

of the Act and overdue administrative debts owed the agency.

In Sec. 422.305, we explain that we will refer all overdue title II

program debts over $25, found to be otherwise unrecoverable under

section 204 of the Act, to consumer reporting agencies. We describe the

information we must include in the notice we send to the debtor before

we report the debt to a consumer reporting agency. We also explain in

this section that, in cases where an individual disputes the

information we propose to refer to a consumer reporting agency within

60 calendar days of our notice of our proposed referral, we will not

send the information until we determine the correct information.

In Sec. 422.306, we explain that we will refer all overdue

administrative debts over $25 to credit reporting agencies. We also

describe the information we must include in the notice we send to the

debtor before we report the debt to a credit reporting agency. Examples

of administrative debts are overpayments of employees' pay and

allowances, debts for civil money penalties imposed under section

1140(b) of the Act, debts for unpaid fees for reimbursable services by

SSA (e.g., disclosure of information), contractor debts, etc.

In Sec. 422.310, we explain our rules relating to referring debts

to the Department of the Treasury for administrative offset.

Specifically, we explain that we will refer overdue debts over $25 to

the Department of the Treasury for offset against any Federal payments

due the debtor. We also describe the information we must include in the

notice we send to the debtor before referring the debt to the

Department of the Treasury for administrative offset.

In this final rule, we are revising the language of

Secs. 422.305(b)(2), 422.306(b)(2) and 422.310(c)(2) as it appeared in

the proposed rules to clearly state that we will not refer information

on debts to consumer reporting agencies or to the Department of the

Treasury for administrative offset before the expiration of 60 calendar

days from the dates of the notices described in those regulations.

In Sec. 422.315, we explain that a debtor has the right to inspect

or copy our records related to a debt before we refer the debt to a

consumer or credit reporting agency or to the Department of the

Treasury for administrative offset, and the procedures for exercising

that right.

In Sec. 422.317, we explain that a debtor has the right to have us

review the debt. To exercise this right, the debtor must notify us

within 60 calendar days from the date of our notice of proposed

referral and give us evidence that he or she does not owe all or part

of the debt, or we do not have the right to collect it. After our

review of the evidence, we explain that we will issue written findings

of our review. If the debtor requests review and submits evidence

within the 60-day period, we will not refer the debt to consumer or

credit reporting agencies or to the Department of the Treasury unless

and until we have completed our review and sent our findings to the

debtor that all or part of the debt is overdue and legally enforceable.

Regulatory Procedures

Executive Order 12866

We have consulted with the Office of Management and Budget (OMB)

and determined that these proposed rules do not meet the criteria for a

significant regulatory action under Executive Order 12866. Thus, they

were not subject to OMB review.

Regulatory Flexibility Act

We certify that these proposed regulations will not have a

significant impact on a substantial number of small entities.

Therefore, a regulatory flexibility analysis, as provided in the

Regulatory Flexibility Act, as amended, is not required.

Paperwork Reduction Act

These proposed regulations will impose no new reporting or

recordkeeping requirements requiring OMB clearance.

(Catalog of Federal Domestic Assistance Programs No. 96.001, Social

Security--Disability Insurance; 96.002 Social Security--Retirement

Insurance; 96.003 Social Security--Special Benefits for Persons Aged

72 and Over; 96.004, Social Security--Survivors Insurance)

List of Subjects

20 CFR Part 404

Administrative practice and procedure, Death benefits, Blind,

Disability benefits, Old-Age, Survivors and Disability Insurance,

Reporting and recordkeeping requirements, Social Security.

20 CFR Part 422

Administrative practice and procedure, Organization and functions

(Government agencies), Social Security.

Dated: December 2, 1997.

Kenneth S. Apfel,

Commissioner of Social Security.

For the reasons set out in the preamble, subparts F and J of Part

404 of Chapter III of Title 20 of the Code of Federal Regulations are

amended and a new subpart D is added to Part 422 of Chapter III of

Title 20 of the Code of Federal Regulations as follows:

PART 404--[AMENDED]

1. The authority citation for subpart F of Part 404 is revised to

read as follows:

Authority: Secs. 204, 205(a), and 702(a)(5) of the Social

Security Act (42 U.S.C. 404, 405(a), and 902(a)); 31 U.S.C. 3720A.

2. Section 404.520 is revised to read as follows:

Sec. 404.520 Referral of overpayments to the Department of the

Treasury for tax refund offset--General.

(a) The standards we will apply and the procedures we will follow

before requesting the Department of the Treasury to offset income tax

refunds due taxpayers who have an outstanding overpayment are set forth

in Secs. 404.520 through 404.526. These standards and procedures are

authorized by 31 U.S.C. 3720A and are implemented through Department of

the Treasury regulations at 31 CFR 285.2.

(b) We will use the Department of the Treasury tax refund offset

procedure to collect overpayments that are certain in amount, past due

and legally enforceable, and eligible for tax refund offset under

regulations issued by the Department of the Treasury. We will use these

procedures to collect overpayments only from individuals who are not

currently entitled to

[[Page 64278]]

monthly Social Security benefits under title II of the Act. We will

refer an overpayment to the Department of the Treasury for offset

against tax refunds no later than 10 years after our right to collect

the overpayment first accrued.

3. Section 404.521 is amended by revising the introductory text to

read as follows:

Sec. 404.521 Notice to overpaid individual.

A request for reduction of a Federal income tax refund will be made

only after we determine that an amount is owed and past due and send

the overpaid individual written notice. Our notice of intent to collect

an overpayment through tax refund offset will state:

* * * * *

4. Section 404.526 is revised to read as follows:

Sec. 404.526 Tax refund insufficient to cover amount of overpayment.

If a tax refund for a given taxable year is insufficient to recover

an overpayment completely, the case will remain with the Department of

the Treasury for offset, assuming that all criteria for offset continue

to be met.

5. Section 404.527 is added to subpart F to read as follows:

Sec. 404.527 Additional methods for recovery of title II benefit

overpayments.

(a) General. In addition to the methods specified in Secs. 404.502

and 404.520, an overpayment under title II of the Act is also subject

to recovery under the rules in subpart D of part 422, provided:

(1) The overpayment occurred after the individual has attained age

18;

(2) The overpaid individual is no longer entitled to benefits under

title II of the Act; and

(3) Pursuant to paragraph (b) of this section, we have determined

that the overpayment is otherwise unrecoverable under section 204 of

the Act.

(b) When an overpayment is considered to be otherwise

unrecoverable. An overpayment under title II of the Act is considered

to be otherwise unrecoverable under section 204 of the Act if all of

the following conditions are met:

(1) Our billing system sequence has been completed (i.e., we have

sent the individual an initial notice of the overpayment, a reminder

notice, and a past-due notice) or collection activity has been

suspended or terminated in accordance with the Federal Claims

Collection Standards in 4 CFR 104.2 or 104.3.

(2) We have not entered into an installment payment arrangement

with the overpaid individual or, if we have entered into such an

arrangement, the overpaid individual has failed to make any payment for

two consecutive months.

(3) The overpaid individual has not requested waiver pursuant to

Sec. 404.506 or Sec. 404.522 or, after a review conducted pursuant to

those sections, we have determined that we will not waive collection of

the overpayment.

(4) The overpaid individual has not requested reconsideration of

the initial overpayment determination pursuant to Secs. 404.907 and

404.909 or, after a review conducted pursuant to Sec. 404.913, we have

affirmed, in whole or in part, the initial overpayment determination.

(5) The overpayment cannot be recovered pursuant to Sec. 404.502 by

adjustment of benefits payable to any individual other than the

overpaid individual. For purposes of this paragraph, an overpayment

will be deemed to be unrecoverable from any individual who was living

in a separate household from the overpaid person at the time of the

overpayment and did not receive the overpayment.

6. In addition to the amendments set forth above, remove the

acronym ``IRS'' and add, in its place, the words ``Department of the

Treasury'' in the following places:

(a) Section 404.521(b);

(b) Section 404.522(b);

(c) Section 404.523 (a) and (c) (both places); and

(d) Section 404.525.

7. The authority citation for subpart J of Part 404 is revised to

read as follows:

Authority: Secs. 201(j), 204(f), 205(a), (b), (d)-(h), and (j),

221, 225, and 702(a)(5) of the Social Security Act (42 U.S.C.

401(j), 404(f), 405(a), (b), (d)-(h), and (j), 421, 425, and

902(a)(5)); 31 U.S.C. 3720A; sec. 5, Pub. L. 97-455, 96 Stat. 2500

(42 U.S.C. 405 note); secs. 5, 6(c)-(e), and 15, Pub. L. 98-460, 98

Stat. 1802 (42 U.S.C. 421 note).

8. Section 404.903 is amended by deleting the word ``and'' at the

end of paragraph (r), replacing the period at the end of paragraph (s)

with a semicolon, and adding paragraphs (t) and (u) to read as follows:

Sec. 404.903 Administrative actions that are not initial

determinations.

* * * * *

(t) Determining whether we will refer information about your

overpayment to a consumer reporting agency (see Secs. 404.527 and

422.305 of this chapter); and

(u) Determining whether we will refer your overpayment to the

Department of the Treasury for collection by offset against Federal

payments due you (see Secs. 404.527 and 422.310 of this chapter).

PART 422--ORGANIZATION AND PROCEDURES

10. Subpart D is added to read as follows:

Subpart D--Claims Collection

Sec.

422.301 Material included in this subpart.

422.305 Report of overdue title II program overpayment debts to

consumer reporting agencies.

422.306 Report of overdue administrative debts to credit reporting

agencies.

422.310 Collection of overdue debts by administrative offset.

422.315 Review of our records related to the debt.

422.317 Review of the debt.

Subpart D--Claims Collection

Authority: Secs. 204(f), 205(a), and 702(a)(5) of the Social

Security Act (42 U.S.C. 404(f), 405(a), and 902(a)(5)); 31 U.S.C.

3711(e); 31 U.S.C. 3716.

Sec. 422.301 Material included in this subpart.

This subpart describes the procedures relating to collection of:

(a) Overdue administrative debts, and

(b) Overdue title II program overpayments described in Sec. 404.527

of this chapter.

Sec. 422.305 Report of overdue title II program overpayment debts to

consumer reporting agencies.

(a) Debts we will report. We will report to consumer reporting

agencies all overdue title II program overpayment debts over $25.

(b) Notice to debtor. Before we report any such debt to a consumer

reporting agency, we will send the debtor written notice of the

following:

(1) We have determined that payment of the debt is overdue;

(2) We will refer the debt to a consumer reporting agency at the

expiration of not less than 60 calendar days after the date of the

notice unless, within that 60-day period, the debtor pays the full

amount of the debt or takes either of the actions described in

paragraphs (b)(6) or (b)(7) of this section;

(3) The specific information we will provide to the consumer

reporting agency, including information that identifies the debtor

(e.g., name, address, and social security number) and the amount,

status, and history of the debt;

(4) The debtor has the right to a complete explanation of the debt;

(5) The debtor may dispute the accuracy of the information to be

provided to the consumer reporting agency;

(6) The debtor may request a review of the debt by giving us

evidence

[[Page 64279]]

showing that he or she does not owe all or part of the amount of the

debt or that we do not have the right to collect it; and

(7) The debtor may request an installment payment plan.

(c) Disputing the information that we would send to consumer

reporting agencies. If a debtor believes that the information we

propose to send to consumer reporting agencies is incorrect, the debtor

may ask us to correct such information. If, within 60 calendar days

from the date of our notice described in paragraph (b) of this section,

the debtor notifies us that any information to be sent to consumer

reporting agencies is incorrect, we will not send the information to

consumer reporting agencies until we determine the correct information.

Sec. 422.306 Report of overdue administrative debts to credit

reporting agencies.

(a) Debts we will report. We will report to credit reporting

agencies all overdue administrative debts over $25. Some examples of

administrative debts are as follows: overpayments of pay and allowances

paid to employees, debts for civil monetary penalties imposed under

section 1140(b) of the Act, debts for unpaid fees for reimbursable

services performed by SSA (e.g., disclosures of information), and

contractor debts.

(b) Notice to debtor. Before we report any administrative debt to a

credit reporting agency, we will send the debtor written notice of the

following:

(1) We have determined that payment of the debt is overdue;

(2) We will refer the debt to a credit reporting agency at the

expiration of not less than 60 calendar days after the date of the

notice unless, within that 60-day period, the debtor pays the full

amount of the debt or takes either of the actions described in

paragraphs (b)(6) or (b)(7) of this section;

(3) The specific information we will provide to the credit

reporting agency, including information that identifies the debtor

(e.g., name, address, social security number, and employer

identification number) and the amount, status, and history of the debt;

(4) The debtor has the right to a complete explanation of the debt;

(5) The debtor may dispute the accuracy of the information to be

provided to the credit reporting agency;

(6) The debtor may request a review of the debt by giving us

evidence showing that he or she does not owe all or part of the amount

of the debt or that we do not have the right to collect it; and

(7) The debtor may request an installment payment plan.

Sec. 422.310 Collection of overdue debts by administrative offset.

(a) Referral to the Department of the Treasury for offset. We will

recover overdue debts by offsetting Federal payments due the debtor

through the Treasury Offset Program (TOP). TOP is a Governmentwide

delinquent debt matching and payment offset process operated by the

Department of the Treasury, whereby debts owed to the Federal

Government are collected by offsetting them against Federal payments

owed the debtor.

(b) Debts we will refer. We will refer for administrative offset

all overdue debts over $25.

(c) Notice to debtor. Before we refer any debt for collection by

administrative offset, we will send the debtor written notice that:

(1) We have determined that payment of the debt is overdue;

(2) We will refer the debt for administrative offset at the

expiration of not less than 60 calendar days after the date of the

notice unless, within that 60-day period, the debtor pays the full

amount of the debt or takes either of the actions described in

paragraphs (c)(4) or (c)(5) of this section;

(3) The debtor may inspect or copy our records relating to the

debt;

(4) The debtor may request a review of the debt by giving us

evidence showing that the debtor does not owe all or part of the amount

of the debt or that we do not have the right to collect it; and

(5) The debtor may request an installment payment plan.

Sec. 422.315 Review of our records related to the debt.

(a) Notification by the debtor. The debtor may request to inspect

or copy our records related to the debt.

(b) Our response. In response to a request from the debtor

described in paragraph (a) of this section, we will notify the debtor

of the location and time at which the debtor may inspect or copy our

records related to the debt. We may also, at our discretion, mail to

the debtor copies of the records relating to the debt.

Sec. 422.317 Review of the debt.

(a) Notification and presentation of evidence by the debtor. A

debtor who receives a notice described in Sec. 422.305(b),

Sec. 422.306(b), or Sec. 422.310(c) has a right to have us review the

debt. To exercise this right, within 60 calendar days from the date of

our notice, the debtor must notify us and give us evidence that he or

she does not owe all or part of the debt or that we do not have the

right to collect it. If the debtor does not notify us and give us this

evidence within the 60 calendar-day period, we may take the action

described in our notice.

(b) Review of the evidence. If the debtor notifies us and presents

evidence within the 60 calendar-day period described in paragraph (a)

of this section, we will not take the action described in our notice

unless and until we consider all of the evidence and send the debtor

our findings that all or part of the debt is overdue and legally

enforceable.

(c) Findings by SSA. Following our review of all of the evidence

presented, we will issue written findings, including the supporting

rationale for the findings. Issuance of these findings will be the

final Agency action on the debtor's request for review. If we find that

the debt is not overdue or we do not have the right to collect it, we

will not send information about the debt to consumer or other credit

reporting agencies or refer the debt to the Department of the Treasury

for administrative offset.

[FR Doc. 97-32008 Filed 12-4-97; 8:45 am]

BILLING CODE 4190-29-P