Administrative OffsetCollection of Past-Due Support

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

April 26, 1996, authorized 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 directed the

Secretary to promptly develop and implement procedures necessary for

the collection of past-due support debts by administrative offset. The

Financial Management Service (FMS), a bureau of the Department of the

Treasury, published an interim rule on July 7, 1997. This final rule

adopts the interim rule with changes incorporating suggestions provided

in comments on the interim rule.

EFFECTIVE DATE: September 28, 1998.

ADDRESSES: Inquiries may be mailed to Gerry Isenberg, Financial Program

Specialist, Debt Management Services, Financial Management Service,

Department of the Treasury, 401 14th Street S.W., Room 151, Washington,

D.C. 20227. A copy of this final 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; J. Martin Mills, Director, Treasury

Offset Program, at (202) 874-8700; Randall S. Lewis, Attorney-Advisor,

at (202) 874-6680.

SUPPLEMENTARY INFORMATION:

Background

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

134, 110 Stat. 1321-358 et seq. (April 26, 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 Federal government. In addition,

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

debts owed to States, 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). To accomplish these goals,

Treasury has established a centralized offset program, known as the

Treasury Offset Program (TOP). Under TOP, Federal payments are matched

against a database of delinquent debtors maintained by FMS. When a

match occurs and all of the prerequisites for offset have been met, the

payment is offset to satisfy the debt. The TOP will include offsets of

all eligible Federal payments, including, as of January 1, 1999,

Federal tax refund payments.

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 published an interim regulation on July

7, 1997 (62 FR 36205) describing the procedures applicable to the

collection of past-due support debts by administrative offset of non-

tax Federal payments in accordance with 31 U.S.C. 3716(h) and the

Executive Order.

Currently, 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. Effective January 1, 1999, FMS will

operate the tax refund offset program as part of TOP. FMS will publish

a regulation governing the offsetting of tax refund payments to collect

past-due support beginning January 1, 1999. In addition, FMS has

promulgated or will promulgate other rules governing the offset of

Federal payments to collect debts other than child support owed to

Federal agencies and States. FMS anticipates that Part 285 of this

title ultimately will contain all of the provisions relating to

centralized offset for the collection of debts owed to the Federal

Government and to State governments, including past-due child support

being enforced by States.

FMS continues to work closely with HHS to implement procedures

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

debts referred to HHS by States under 31 U.S.C. 3716(h) and this rule.

HHS issued guidance to all States on August 8, 1997. In addition, FMS

is working closely with HHS to implement procedures necessary to report

to the Secretary information on past-due support debts referred to HHS

by States for tax refund offset purposes under 42 U.S.C. 664 and 26

U.S.C. 6402(c). It is anticipated that States will continue to refer

debts to HHS and that HHS will report those debts to the Secretary for

offset from both Federal tax refunds and other Federal payments.

Public Comments

FMS received comments from 11 states and one Federal agency on the

interim rule published on July 7, 1997. Many of the comments related to

technical questions such as specifications for the electronic

submission of past-due support information. Such questions are not

addressed in this final rule, but will be addressed by FMS or HHS in

separate procedural instructions. Following is a discussion of the

substantive issues raised in the comments.

Relationship among Treasury, HHS, and the States

States will continue to refer debts to HHS for the collection of

past-due support through the offset of both Federal tax payments under

the tax refund offset program (TROP) and other Federal payments under

administrative offset (AO). HHS will report these debts to Treasury for

offset purposes. Though this rule provides States with the flexibility

to refer past-due support debts directly to FMS, current HHS rules

governing programs under Chapter 7, Subchapter IV, Part D (IV-D) of the

Social Security Act require States to report past-due support debts to

HHS. This rule is not intended to supersede existing HHS rules; it

merely provides flexibility should HHS decide to amend its rules in the

future to allow States to refer past-due support debts directly to FMS.

Relationship between AO and TROP

The referral of past-due support to Treasury for collection by AO

is voluntary. Therefore, cases submitted for TROP will not

automatically be processed through AO. The TOP, which encompasses both

TROP and AO, when fully developed, will allow States to control which

debts may be collected by offset of tax refunds, other Federal

[[Page 46143]]

payments, or both. States also will be able to control whether a

particular type of payment, such as Federal salary payments, should be

offset with respect to an individual debtor.

Comments outside the scope of this rule

Several comments were outside the scope of this rule and have not

been addressed. For example, one commenter was concerned about the

reporting of past-due support balances exceeding $5,000 to the

Secretary of State for purposes of denying passports to the obligors

under 42 U.S.C. 652(k) and 654(31). Another commenter was concerned

that past-due support debts would be reported to consumer reporting

agencies by Treasury. Federal agencies are not authorized to report

such amounts to consumer reporting agencies. FMS also received several

comments regarding choice of law in situations involving more than one

State. Paragraph (d) of this final rule requires States to certify that

they have complied with all of the requirements of this rule, as well

as State law and procedure. Determination of applicable State law is

outside the scope of this rule, and must be determined under applicable

Federal and State law by the States involved in a particular situation.

Sec. 285.1(a)--Definition of past-due support

In response to several comments, the definition of ``past-due

support'' has been amended by adding the following at the end of the

definition included in the interim rule: ``The term child as used in

this definition is not limited to minor children.'' This amendment

clarifies that, unless prohibited by court order, or by State law or

procedure, past-due support may be collected by offsetting the

obligor's nontax Federal payments even after the child has reached the

age of majority. Compare Federal law governing tax refund offset which,

unlike administrative offset, prohibits collection of past-due support

(which has not been assigned to a State) for a child who has reached

the age of majority. See 42 U.S.C. 664(c)(2).

Sec. 285.1(a)--Definition of past-due support being enforced by the

State

The definition of ``past-due support being enforced by the State''

has been amended to clarify that AO may be used to collect past-due

support debts enforced by States pursuant to cooperative agreements

with or by Indian tribal governments. See Section 1(b) of the Executive

Order.

Sec. 285.1(a)--Definition of State

The public was specifically invited to comment on the impact of

including or excluding legal subdivisions of States in the definition

of State. Three States commented that FMS was correct in not including

subdivisions within the definition of State. A fourth State indicated

that it would prefer to certify cases on a statewide basis, but

believed that States which operate on a county basis should have the

discretion to certify cases at the county level. Based on the comments

received and discussions with HHS regarding current procedures for

county reporting, FMS determined that the existing definition does not

create an impediment to the collection of past-due support. Counties

seeking to participate may do so by reporting through the State's IV--D

program director. Therefore, the definition of ``State'' was not

changed to include legal subdivisions.

Sec. 285.1(c)--Agreements

One commenter expressed concern over the amount of time the States

will have to review and approve reciprocal agreements for the referral

of past-due child support. As stated previously, FMS anticipates that

States will continue to refer past-due support debts to HHS until such

time as HHS changes its rules and reciprocal agreements are in place.

Currently, there is no need for reciprocal agreements between FMS and

States for the purpose of referring past-due support debts. However,

should HHS change its rules to allow States the option of referring

past-due support debts directly to FMS, States will be provided the

time necessary to review and approve any reciprocal agreement that

would be the basis for such referrals.

Sec. 285.1(d)--Notification to FMS of past-due support

Several States commented that the interim rule should be revised to

define better which State should submit a debt for offset when a

particular past-due support debt involves more than one State. One

State commented that HHS guidance requires that, in non-assignment

cases, the case must be submitted by the State in which the child

resides. Another State suggested that, in assignment cases, the case

should be submitted by the State in which the custodial parent applied

for public assistance. Other States questioned whether the interim rule

is consistent with provisions of 28 U.S.C. 1738B, Full Faith and Credit

for Child Support Orders Act (FFCCSOA).

In response to these comments, FMS, after consulting with HHS,

determined that this provision of section 285.1(d) of the final rule

will be unchanged from the interim rule. Paragraph 285.1(d) covers all

situations that may arise as the residence and status of the parties

change, and is not inconsistent with the FFCCSOA.

Several States also were concerned as to whether the notification

requirements that apply when more than one State is involved create an

administrative burden. One State was particularly concerned that the

notice requirement would result in the creation of a separate, unique

notification system for these types of cases, and suggested that an

easier and less burdensome way to provide such notices be developed.

After consulting with HHS, FMS determined that the final rule should

remain unchanged. The provision requiring a State to notify other

States involved in enforcing the past-due support when it refers the

debt for offset is necessary to ensure that debts are not referred by

more than one State. Further, this requirement is consistent with

existing HHS regulations governing the offset of tax refund payments,

and, therefore, should not result in the creation of a new, separate

reporting system by the States. See 45 CFR 303.72(d).

One State requested that the rule include a specific listing of the

types of past-due support that may be submitted for offset against

Federal non-tax payments, including statutory citations for each type

of past-due support. Such a list is unnecessary. Unlike the statutory

authority for offsets against Federal tax refund payments, which

includes specific references to 42 U.S.C. 608(a)(3), 671(a)(17) and

654(4), the statutory authority for offset against other Federal

payments does not include specific references to the type of past-due

support debts that may be collected under AO. The only requirement is

that the debt be past-due support being enforced by the State. Although

FMS currently intends to accept only those types of past-due support

debts that are eligible for offset against Federal tax payments, FMS

will not apply the age and minimum debt amount restrictions applicable

to TROP to AO. FMS and/or HHS will provide additional guidance relating

to the referral of past-due support collection by AO under this rule.

Sec. 285.1(e)--Minimum amount of past-due support

Several States commented that the $25 threshold for reporting cases

for AO is too low. FMS has determined that the

[[Page 46144]]

administrative costs associated with the collection of past-due support

debts less than $25 exceed the amount of such debts. Therefore, it is

not cost-effective for FMS to process debts less than $25. States,

however, may determine that their costs to collect justify a higher

threshold amount for referring debts to FMS for offset purposes. Since

the referral of past-due support for collection by AO is voluntary,

States are not required to refer all debts over $25, but may establish

their own higher threshold based on their own cost-effectiveness

determination.

Sec. 285.1(g)--Notification of changes in status of debt

Eight States commented on the provisions concerning notification of

changes in the status of debt. Several comments related specifically to

the amount and/or timing of changes that must be reported. In the past,

it has not been necessary for States to report insignificant decreases

in the amounts of debt balances because States were not allowed to

report increases in debt balances. Insignificant decreases generally

were less than unreported increases, and, as a result, there generally

were no problems with offsets that were greater than the actual amount

of the debt balance. However, because States now may refer increases in

the amount of debts as well as decreases, to avoid situations where

offsets exceed the actual amount of the debt balance, it is imperative

that all decreases in debt balances be reported. There will, however,

be flexibility in the time and manner in which decreases may be

reported. To make the rule as flexible as possible with regard to the

timing and manner of reporting changes in the amounts of debts, the

word ``any'' was deleted from paragraph (g) in the final rule. FMS or

HHS will provide additional guidance relating to the timing and manner

in which the amounts of increases and decreases in debt balances must

be reported.

States also expressed concern that the regulation does not

specifically allow States to report changes in the status of debt by

providing updated balances. FMS and/or HHS will provide additional

guidance on how States will report changes in the amount of a debt

referred for administrative offset.

Sec. 285.1(h)--Advance notice of intent to collect by administrative

offset

Several States commented on the provisions governing advance

notices to debtors providing notice of the States' intent to submit

past-due support for administrative offset. Two States requested that

the language of the rule be revised to make clear that a one-time

notice to a debtor is sufficient. A third State expressed a concern

that the regulation could result in debtors being notified that

payments were to be offset to pay debts that had not yet accrued.

As stated in the preamble to the interim rule, before a State may

report increases to the amount of a past-due support debt referred for

AO, the State must meet the requirements of paragraph (h) as well as

State law and procedure; only then has a State met the due process

requirements of Federal law with respect to the offset of Federal

payments set forth in 31 U.S.C. 3716(a). A notice to an obligor that

includes a statement to the effect that future amounts, in addition to

the amount included in the notice, will be collected by means of AO

(i.e., a ``one-time'' notice), is sufficient for purposes of paragraph

(h) only if such a statement meets the notice requirements of

applicable State law as determined by the State. Thus, no changes to

the rule have been made.

One State requested that the provision regarding case reviews by

the States be revised to reflect provisions of the FFCCSOA relating to

exclusive jurisdiction. After consulting with HHS, FMS determined that

provisions in the rule regarding reviews are not inconsistent with the

provisions of the FFCCSOA. The rule provides the flexibility necessary

for a review to be held in any State as may be authorized in any given

situation under the FFCCSOA.

Sec. 285.1(i)--Payments subject to offset

One State requested that the final rule include a listing of the

payments subject to AO; another State asked whether a particular type

of payment would be subject to offset. Such a list is impractical.

Federal agencies make payments under hundreds of Federal programs.

Payments under all such programs are subject to offset unless the

payment type is exempted either by statute or by the Secretary of the

Treasury upon request by the head of an agency. A list of payment types

that are exempt from AO may be obtained from the FMS website.

Sec. 285.1(j)--Special provisions applicable to Federal salary payments

FMS received several comments concerning the special provisions

applicable to Federal salary payments. One State questioned whether FMS

would deduct up to 65% in a situation where a lower percentage had been

agreed to or had been determined by court order. In such situations,

States will be able to indicate the lower percentage to be applied, or

will be able to indicate that a particular debt is not to be collected

by administrative offset of a Federal salary payment. Paragraph (j) of

the final rule has been revised to state that, when a lower percentage

is to be applied, the State must inform FMS or HHS of the lower

percentage at the time the debt is referred for collection by AO. FMS

and/or HHS will provide additional guidance to States regarding this

process.

Another commenter questioned the allowable deductions from a

Federal salary payment when calculating the applicable withholding

percentage. FMS adopted the standards of the Consumer Credit Protection

Act, 15 U.S.C. 1671 et seq., as well as the standards of 42 U.S.C. 659

which apply to the enforcement of individual's legal obligations to

provide child support or make alimony payments by means of income

withholding, garnishment, and similar proceedings against amounts

payable to Federal employees. The exclusions included in this paragraph

are consistent with Office of Personnel Management regulations

governing Salary Offset (5 CFR 550.1101 et seq.) and Processing

Garnishment Orders for Child Support and/or Alimony (5 CFR Part 581).

Sec. 285.1(k)--Payments exempt from administrative offset

One State asked FMS to include in the regulation a list of payments

that are exempt from administrative offset. Because the list of exempt

payments changes as the Secretary of the Treasury approves requests

from Federal agencies and/or as Federal laws are promulgated or

amended, it is inappropriate for the regulation to include such a

listing. However, a listing of exemptions may be obtained from the FMS

website.

Sec. 285.1(l)--Fees

The preamble of the interim rule applicable to the fees provision

included the follow up statement, ``[s]tates may add [the] fee to the

amount of the debt if permitted by law.'' One commenter was concerned

that paragraph (l) of the interim rule may be inconsistent with HHS

rules which provide that ``past-due support may not include fees or

court costs or any other non-child support debts owed to the State or

to the family.''

There is no inconsistency. The guidance cited by the commenter

specifically applies to collections of past-due support through the tax

refund offset process and reflects statutory restrictions, codified at

42 U.S.C. 664, that require the full amounts offset from tax refund

payments to be paid to the

[[Page 46145]]

states for distribution. There are no similar restrictions applicable

to amounts collected by means of AO. The statement in the preamble

explains that States may add the fees charged under this rule to the

amount of the debt owed only if permitted by law. Statutes or

regulations prohibiting States from adding fees to the amount of the

debt are not superseded by this regulation.

In addition, several States commented on the amount of the fees

charged by FMS for collection of past-due support by AO. One State was

concerned that States could end up owing FMS where the amount of an

offset was less than the fee charged; other States believed that the

fee amount was too high and should either be limited to a maximum

amount per month or be less for subsequent offsets when the collection

is from an on-going stream of payments. One State requested that the

regulation include the fee schedule. Under 31 U.S.C. 3716(c)(4), the

Secretary may charge a fee sufficient to cover the full cost of

conducting AO. FMS will review the amount of the fee periodically to

ensure that the fees charged and collected meet, but do not exceed, the

costs of the program. With regard to concerns that States may owe FMS

in instances where the amount collected is less than the offset fee,

since AO is voluntary, States may withdraw debts from the program at

any time pursuant to the provisions of paragraph (g) when collection by

offset is no longer cost effective. States will be advised of any

changes in the fee schedule.

Sec. 285.1(m)--Conducting the offset

One State asked about FMS' authority to reverse an offset made in

error. In response, a provision concerning reversals was added to

paragraph (m) which provides that FMS will notify HHS or the

appropriate State when an erroneous offset payment has been made. FMS

will collect the amount of the erroneous payment from HHS or the State

either by deducting the amount from future payments by FMS or by

requesting a return of the erroneous offset payment by HHS or the

State. FMS will provide States with additional procedural guidance

concerning how and when reversals will be conducted.

One State asked what restrictions will apply to payment amounts

eligible for offset, and how they will be applied; another asked

whether each Federal payment agency will set the terms and conditions

for enforcing AO. With regard to the restrictions that apply to payment

amounts under AO, as noted previously, payments subject to AO are made

under hundreds of Federal programs and are governed by the laws

applicable to those programs. FMS will work with payment agencies in

determining the appropriate amount that should be offset against their

payments. Thus, there may be specific limitations on the amount which

can be offset from a particular payment type. The provisions of this

regulation apply to all disbursing officials who conduct offsets under

the AO program.

Sec. 285.1(n)--Priorities

Several States commented that the priorities included in the

interim rule are inconsistent with the distribution rules outlined in

42 U.S.C. 657 and HHS guidance. Other States commented that the

regulation should address other situations such as when more than one

State is attempting to offset the same payment; still others suggested

that amounts collected be prorated among States without regard to case

type.

The final rule retains the priorities specified in the interim

rule. Unlike the statute governing TROP, 26 U.S.C. 6402(c), 31 U.S.C.

3716 does not include provisions governing priority when debts are

being collected by administrative offset. Furthermore, the priorities

in this rule do not conflict with the distribution rules in 42 U.S.C.

657 and HHS guidance. The priorities applied by the States to amounts

collected for distribution under 42 U.S.C. 657 are distinct from the

priorities applied by FMS when collecting debts under 31 U.S.C. 3716.

In order to clarify this distinction, paragraph (n) has been revised.

As suggested, paragraph (n) of the final rule is labeled Administrative

Offset Priorities, and specifically refers to offsets by FMS and other

disbursing officials. FMS will include information relating to

priorities within debt categories in procedural guidance.

Sec. 285.1(o)--Notification of offset

Several States commented that they need information regarding the

source of collection, as well as information relating to cases for

which there is no offset. Executive Order No. 13109 requires FMS, to

the extent permitted by law, to provide to the Secretary of HHS certain

information from payment records of persons who are delinquent in child

support obligations. Under 42 U.S.C. 653, the Secretary of HHS may

request such information. The rule has been revised to state that FMS

and other disbursing agencies, upon the request of the Secretary of

HHS, will provide such information to HHS to the extent such

information is available from TOP activities. HHS will provide

information to the States to the extent authorized by law.

Regulatory Analyses

This rule is not a significant regulatory action as defined in

Executive Order 12866. It is hereby certified that this rule will not

have a significant economic impact on a substantial number of small

entities. Therefore, a regulatory flexibility analysis is not required.

This regulation only impacts individuals and States and will not impose

significant costs on small businesses.

The collections of information contained in this final regulation

have been reviewed and approved by the Office of Management and Budget

in accordance with the requirements of the Paperwork Reduction Act (44

U.S.C. 3507) under control number 1510-0069.

Authority and Issuance

Accordingly, the interim rule amending 31 CFR part 285 which was

published at 62 FR 36205 on July 7, 1997, is adopted as a final rule

with the following changes:

1. The authority citation for part 285 continues to read as

follows:

Authority: 26 U.S.C. 6402; 31 U.S.C. 321, 3701, 3711, 3716,

3720A, 3720D; E.O. 13019; 3 CFR, 1996 Comp., p. 216.

2. In Sec. 285.1, amend paragraph (a) by revising the definitions

for ``past-due support'' and ``past-due support being enforced by the

State''; revise paragraphs (g), (m), (n) and (o); and add paragraph

(j)(5) to read as follows:

Sec. 285.1 Collection of Past-Due Support By Administrative Offset.

(a) * * *

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.

The term child as used in this definition is not limited to minor

children.

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), or the

State is enforcing support pursuant to a cooperative agreement with or

by an Indian tribal government.

* * * * *

(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 deletions or

decreases in the amount of a debt

[[Page 46146]]

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.

* * * * *

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

(5) At the time the past-due support debt is submitted for offset,

the State shall advise FMS or HHS if the maximum amount of a Federal

salary payment that may be offset is less than the amount described

under this paragraph.

* * * * *

(m) Offsetting payments. (1) 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.

(2) Disposition of amounts collected. FMS will transmit amounts

collected for debts, less fees charged under paragraph (l) of this

section, to HHS or to the appropriate State. If FMS learns that an

erroneous offset payment has been made to HHS or any State, FMS will

notify HHS or the appropriate State that an erroneous offset payment

has been made. FMS may deduct the amount of the erroneous offset

payment from amounts payable to HHS or the State, as the case may be.

Alternatively, upon FMS' request, the State shall return promptly to

the affected payee or FMS an amount equal to the amount of the

erroneous payment (unless the State previously has paid such amounts,

or any portion of such amounts, to the affected payee). HHS and States

shall notify FMS any time HHS or a State returns an erroneous offset

payment to an affected payee. FMS and HHS, or the appropriate State,

will adjust their debtor records accordingly.

(n) Administrative offset priorities. When a payee/debtor owes more

than one debt which has been referred to FMS for collection by

administrative offset, any offset by a disbursing official 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. (1) 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.

(2) Disbursing officials of FMS or any other disbursing official

which conducts an offset under this section will share with HHS, upon

request by the Secretary of HHS, information contained in payment

certification records of persons who are delinquent in child support

obligations that would assist in the collection of such debts. When no

offset is conducted, disbursing officials of FMS or any other

disbursing official, will provide such information to HHS to the extent

such information is available from offset activities conducted by FMS

and other disbursing officials.

* * * * *

Dated: August 24, 1998.

Richard L. Gregg,

Commissioner.

[FR Doc. 98-23093 Filed 8-27-98; 8:45 am]

BILLING CODE 4810-35-P