Privacy Act of 1974; Notice of Matching Program: Matching Tenant Data in Assisted Housing Programs

SUMMARY: Pursuant to the Computer Matching and Privacy Protection Act

of 1988, as amended, and the Office of Management and Budget's Guidance

on the statute, HUD is updating its notice of a matching program

involving comparisons between income data provided by applicants or

participants in HUD's assisted housing programs and independent sources

of income information. The matching program will be carried out to

detect excessive housing assistance under the National Housing Act, the

United States Housing Act of 1937, section 101 of the Housing and

Community Development Act of 1965 and the Native American Housing

Assistance and Self-Determination Act of 1996. The program provides for

the verification of the matching results and the initiation of

appropriate administrative or legal actions, primarily through public

housing agencies, Indian Tribes and Tribally Designated Housing

Entities (these three types of entities subsequently are referenced as

housing agencies [HAs]), and private owners/management agents for

subsidized multifamily projects.

This notice provides an overview of computer matching for HUD's

assisted housing programs. Specifically, this notice describes HUD's

program for computer matching its tenant data to: (a) The Social

Security Administration's (SSA) earned income and the Internal Revenue

Service's (IRS) unearned income data, (b) SSA's wage and social

security and supplemental security income data, (c) State Wage

Information Collection Agencies' (SWICAs') wage and unemployment

benefit claim information, and (d) the Office of Personnel Management's

personnel data.

Changes to this notice recognize: (a) A recent statutory change

providing permanent authority for SSA and IRS disclosures of Federal

tax return information to HUD, (b) an additional HUD matching program

objective, i.e., to develop nationwide estimates of excessive housing

assistance to satisfy a financial reporting requirement, (c) the

assignment of certain income verification functions to Federal

employees in HUD's Chicago and Seattle Offices, and (d) HUD's current

and planned use of a secure electronic facility for transmitting social

security and supplemental security income data to entities that

administer HUD's rental assistance programs.

EFFECTIVE DATES: HUD considers this as a continuous matching program.

The computer matching described in this notice may begin after

compliance with the reporting requirements cited in section 4 of

Appendix I to OMB Circular No. A-130--Federal Agency Responsibilities

for Maintaining Records About Individuals (Transmittal Memorandum No.

3; February 8, 1996). That section requires that Federal agencies

provide the Chair of the House Committee on Government Reforms and

Oversight, the Chair of the Senate Committee on Governmental Affairs,

and the Office of Management and Budget with notice of the matching

program and computer matching agreements 40 days before operating the

program.

ADDRESSES: Interested persons are invited to submit comments regarding

this notice to the Rules Docket Clerk, Office of General Counsel, Room

10276, Department of Housing and Urban Development, 451 Seventh Street,

SW, Washington, DC 20410-0500. Communications should refer to the above

docket number and title. Facsimile (FAX) comments are not acceptable. A

copy of each communication submitted will be available for public

inspection and copying between 7:30 a.m. and 5:30 p.m. weekdays at the

above address.

FOR FURTHER INFORMATION CONTACT: For Privacy Act: Jeanette Smith,

Departmental Privacy Act Officer, Room 4178, Department of Housing and

Urban Development, 451 Seventh Street, SW, Washington, DC 20410,

telephone number (202) 708-2374. A telecommunications device for

hearing-and speech-impaired individuals (TTY) is available at 1-800-

877-8339 (Federal Information Relay Service). For further information

from recipient agency: David L. Decker, Director, Computer Matching

Activities, Office of the Public and Indian Housing Comptroller, Room

5156, Department of Housing and Urban Development, 451 Seventh Street,

SW, Washington, DC 20410, telephone number (202) 708-0099, TTY--(202)

708-0850.

Director, Asset Recovery Center, Room 2207, Department of Housing

and Urban Development, 77 West Jackson Boulevard, Chicago, Illinois

60604, telephone number (312) 353-6236, ext. 2007. Gordon L.

Brandhagan, Director Asset Recovery Center, Suite 200, Department of

Housing and Urban Development, 909 First Avenue, Seattle, Washington

98104, telephone number (206) 220-5313. (These telephone numbers are

not toll-free.)

SUPPLEMENTARY INFORMATION: This notice supersedes a similar notice

published in the Federal Register on May 2, 1995 (60 FR 21548).

The Computer Matching and Privacy Protection Act of 1988, as

amended (5 U.S.C. 552a) (the CMPP Act), the Office of Management and

Budget's (OMB's) guidance on this statute entitled ``Final Guidance

Interpreting the Provisions of Pub. L. 100-503, the Computer Matching

and Privacy Protection Act of 1988'' (OMB Guidance), and OMB Circular

No. A-130 require publication of notices of computer matching programs.

Appendix I to OMB's Revision of Circular No. A-130, ``Transmittal 2,

Management of Federal Information Resources,'' prescribes Federal

agency responsibilities for maintaining records about individuals. In

accordance with the CMPP Act and Appendix I to OMB Circular No. A-130,

copies of this notice are being provided to the Committee on Government

Reform and Operations of the House of Representatives, the Committee on

Governmental Affairs of the Senate, and OMB's Office of Information and

Regulatory Affairs.

During Fiscal Year 1998 Federal employees located in HUD's Chicago

Office have been assigned to: (1) Obtain copies from HAs, private

owners/management agents' records as needed to verify the incomes of

tenants who receive rental assistance, (2) compare those records with

computer matching results, (3) estimate excessive housing assistance

for the tenants, (4) send letters to tenants and notices to HAs,

private owners/management agents, and (5) to follow up as necessary on

the resolution of the income discrepancies.

I. Authority

This matching program is being conducted pursuant to sections 3003

and 13403 of the Omnibus Budget Reconciliation Act of 1993 (Pub. L.

103-66, approved August 10, 1993); section 542(b) of the 1998

Appropriations Act (Pub. L. 106-25); section 904 of the Stewart B.

McKinney Homeless Assistance Amendments Act of 1988 (42 U.S.C. 3544);

section 165 of the Housing and Community Development Act of 1987 (42

U.S.C. 3543); the National Housing Act (12 U.S.C. 1701-1750g); the

United States Housing Act of 1937

[[Page 68131]]

(42 U.S.C. 1437-1437o); section 101 of the Housing and Urban

Development Act of 1965 (12 U.S.C. 1701s); and the Native American

Housing Assistance and Self-Determination Act of 1996 (25 U.S.C. 4101

et seq.).

The Omnibus Budget Reconciliation Act of 1993 (Budget

Reconciliation Act) authorizes HUD to request from the SSA and the IRS

Federal tax return data as prescribed in section 6103(l)(7) of title 26

of the United States Code (Internal Revenue Code). The Federal tax

return data that HUD receives includes income data that individuals

receive from employers and financial institutions (e.g., income data

that would be shown on IRS Form W-2's and Form 1099's) for use in

preparing tax returns. The Budget Reconciliation Act limits HUD's

access to tax return data and prohibits HUD's redisclosure of tax

return data to HAs, and private owners/management agents for subsidized

multifamily projects. However, it allows HUD to disclose the fact that

discrepancies exist between information provided by tenants and other

sources, and to request that HAs, private owners and agents reverify

tenant incomes when income comparisons indicate uncertain eligibility

benefits or an excessive level of benefits.

Section 542(b) of HUD's 1998 Appropriation Act (Pub. L. 105-65;

October 27, 1997) eliminated a September 30, 1998 sunset provision to

26 U.S.C. 610(l)(7)(D)(ix) of the Internal Revenue Code effectively

making permanent the authority for SSA and IRS disclosures of Federal

tax return information to HUD.

Section 3003 of the Budget Reconciliation Act requires that

applicants and participants in assisted housing programs sign a consent

form authorizing the Secretary of HUD to request that the Commissioner

of Social Security and the Secretary of the Treasury release the

Federal tax return data. The final rule regarding participants' consent

to the release of information was published by HUD in the Federal

Register on March 20, 1995 (61 FR 11112).

The Stewart B. McKinney Homeless Assistance Amendments Act of 1988

authorizes HUD and HAs (but not private owners/management agents for

subsidized multifamily projects) to request wage and claim information

from State Wage Information Collection Agencies (SWICAs) responsible

for administering State unemployment laws in order to undertake

computer matching. This Act authorizes HUD to require applicants and

participants to sign a consent form authorizing HUD or the HA to

request wage and claim information from the SWICAs.

The Housing and Community Development Act of 1987 authorizes HUD to

require applicants and participants (as well as members of their

households six years of age and older) in HUD-administered programs

involving rental assistance to disclose to HUD their social security

numbers (SSNs) as a condition of initial or continuing eligibility for

participation in the programs.

II. Objectives To Be Met by the Matching Program

HUD's primary objective in implementing the computer matching

program is to increase the availability of housing assistance to

individuals who meet the requirements of the housing assistance

programs. Other objectives include determining the appropriate level of

housing assistance, identifying and recovering excessive housing

assistance received by tenants, and deterring future abuses of assisted

housing programs. Using Federal tax return data, HUD now conducts

computer matching and income verification program annually for a random

sample of households that received rental assistance. HUD also conducts

computer matching involving selected housing agencies, owners and

agents. HUD plans to start implementing larger-scale computer matching

in Fiscal Year 1999.

Based on the computer matching and subsequent HUD analysis of

tenant-provided information, HUD develops nationwide estimates of the

extent of excess rental assistance attributable to unreported income.

HUD uses the estimates for financial statement reporting purposes. In

addition, HUD sends letters to tenants and notices to HAs and private

owners/management agents so that these parties may resolve the income

discrepancies and appropriate administrative or legal actions may be

taken.

HUD's various assisted housing programs, available through HAs or

subsidized multifamily project owners/management agents, require that

applicants meet certain income and other criteria to be eligible for

housing assistance. In addition, tenants are required to report the

amounts and sources of their income on at least an annual basis. The

matching program identifies tenants receiving excessive housing

assistance resulting from unreported or underreported family income.

When the excessive housing assistance is identified, some tenants move

out of assisted housing units while others agree to repay excessive

housing assistance. Both these actions increase funds or units

available to serve other beneficiaries of HUD programs. When tenants

continue to be eligible for housing assistance, but at a reduced level,

the tenants will be required to increase their contributions toward

rent.

III. Program Description

In this computer matching program, tenant-provided information

included in HUD's automated files will be compared to data from the SSA

and the IRS, as well as from SWICAs and the Office of Personnel

Management (OPM). HUD intends the SSA and IRS matching to be a

continuing program for assisted housing programs nationwide. HUD will

normally request that the SSA conduct matching of earned income

information, and that the IRS conduct matching of unearned income

information, several times annually. HUD will request SSA matching of

social security and supplemental security income information monthly.

In the future, HUD may request this data more frequently for some

rental assistance programs.

HUD anticipates that it will conduct SWICA matching in selected

States. Furthermore, HUD anticipates that SWICA and OPM matching will

be used only occasionally to supplement SSA and IRS matching and income

verification. HAs may also request SWICA matching.

HUD will disclose to the SSA, IRS, and SWICAs only tenant personal

identifiers, i.e., SSNs, surnames, dates of birth, and sexes. The SSA,

IRS, and SWICAs will conduct the matching of the HUD-provided personal

identifiers to personal identifiers included in their automated files.

Those agencies will provide income data to HUD only for individuals

with matching personal identifiers.

The process of income matching between HUD and the OPM varies from

the above. The OPM will disclose its data to HUD, and HUD will conduct

the computer matching to OPM data.

HUD will then compare the SSA, IRS, OPM, and SWICA income data to

tenant-reported income data included in HUD's system of records known

as the Tenant Housing Assistance and Contract Verification Data (HUD H-

11), published at 62 FR 11909; March 13, 1997. This comparison will

identify, based on criteria established by HUD, tenants whose incomes

require further verification.

A. Income Verification

HUD will normally request that HAs or private owners/management

agents

[[Page 68132]]

verify matching results as described below. However, under certain

limited circumstances, HUD may verify tenant incomes with independent

income sources. For example, such circumstances may include: (a) When

HUD declares an HA in breach of an annual contributions contract; or

(b) when tenants fail to disclose SSA and IRS data, or the tenants

commit other serious violations, and HUD's analysis of the data could

support legal actions. HUD may send letters to employers to request

income data, but HUD will not disclose tax return data to HAs, private

owners/management agents, employers, or payers.

(1) Verification of SSA and IRS Data Referenced in Section

6103(l)(7) of the Internal Revenue Code

Since HUD cannot redisclose tax return data directly to HAs or

private owners/management agents, HUD plans to notify tenants of

discrepancies between the tenant-reported income and the SSA and IRS

data. HUD will supply the tenants with their income information taken

directly from SSA and IRS data and request that the tenants provide

this information to the HA or private owner/management agent.

Concurrently, HUD will notify the HA or the private owner/management

agent that a discrepancy exists between information provided by the

tenants and other sources and will request reverification of the

tenants' incomes. The notifications to the HAs and private owners/

management agents will not include any tax return information.

Income information that tenants disclose to the HA or private

owners/management agents will be verified directly with the income

source or with other tenant-provided information. Tenants who fail to

report to the HA or private owner/management agent after HUD's initial

notice will receive a second notice sent by the HA or private owner/

management agent. If the tenants still fail to provide the information

to the HA or private owner/management agent, the HA or private owner/

management agent may then terminate housing assistance, after providing

the tenants an opportunity to challenge any adverse action.

The SSA and the IRS have advised HUD that the process described in

the preceding paragraph is consistent with the intent of section

6103(l)(7) of the Internal Revenue Code, as the intent of the matching

is to create a dialogue between the benefit recipient and the benefit

provider.

(2) Verification of Social Security and Supplemental Security

Income Data

Unlike the income information supplied by the SSA and the IRS for

tax purposes, SSA's social security and supplemental security income

data may be disclosed to HAs and private owners/management agents.

Therefore, after receiving this data from the SSA and comparing it to

tenant-reported income, HUD will disclose the SSA social security and

supplemental security income data to HAs and private owners/management

agents. These disclosures will include information on monthly social

security and supplemental security income data and, where applicable,

income discrepancy information between previous tenant-reported data

and the income amounts provided by the SSA. HAs and private owners/

management agents will use this information in periodic verifications

of tenant incomes that are required to determine program eligibility

and rental assistance amounts.

HUD has implemented a secure electronic facility for transmitting

social security and supplemental security income data to all HAs. HUD

plans to expand this facility to provide the same type of data to

private owners/ management agents, who previously received the

information from the SSA.

(3) Verification of SWICA Data

HUD will disclose matching results for SWICA wage and unemployment

claim data directly to HAs, but not to private owners/management

agents. The comparison of SWICA wage information and the tenant-

reported data will reveal whether income verification is necessary. HAs

must then obtain wage information directly from the tenants' employers,

including information from prior years, when appropriate. The SWICA

unemployment claim data must be verified with the tenants. Verification

with the SWICA would only be required if tenants dispute the SWICA

claim data.

(4) Verification of OPM Data

HUD will disclose matching results for OPM data to HAs and private

owners/management agents. The OPM data, when compared to the tenant-

reported data, provides an indicator that income verification is

necessary. The HAs and private owners/management agents may then obtain

wage information directly from employers, including information from

prior years when appropriate.

B. Administrative or Legal Actions

Regarding all the matching described in this notice, HUD

anticipates that HAs and private owners/management agents will take

appropriate actions in consultation with tenants to: (1) Resolve prior

income disparities between tenant-reported and independent income

source data, and (2) use correct income amounts in determining rental

assistance.

After verifying that the tenants had access to income that the

tenants did not report, the HAs or private owners/management agents

will:

(1) Notify the tenants in writing of any findings;

(2) Calculate the unreported income and excessive housing

assistance received by the family;

(3) Offer the tenants an opportunity to contest any findings;

(4) Provide a grievance hearing or a right to contest to the

tenants, if requested; and

(5) Initiate, as appropriate, administrative or legal actions to

resolve the tenants' underpayments of rent, using guidelines in HUD

regulations and handbooks.

The HAs and private owners/management agents may not suspend,

terminate, reduce, or make a final denial of any housing assistance to

any individual as the result of information produced by this matching

program until: (a) The individual has received notice from the HA or

private owner/management agent of its findings and informing the

individual of the opportunity to contest such findings and (b) either

the notice period provided in applicable regulations of the program, or

30 days, whichever is later, has expired. In most cases, HAs and

private owners/management agents will resolve income discrepancies in

consultation with tenants.

In legal actions, HAs and private owners/management agents may

refer cases to local law enforcement entities or HUD's Office of

Inspector General (OIG) for possible investigation and prosecution,

either criminal or civil. Referrals to the OIG should involve only

egregious cases.

C. Public Reporting Burden on Computer Matching/Income Verification

Results

The information collection requirements contained in Secs. 5.609

and 5.617 have been submitted to the Office of Management and Budget

(OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).

In accordance with the Paperwork Reduction Act, HUD may not conduct or

sponsor, and a person is not required to respond to, a collection of

information unless the collection displays a currently valid OMB

control number.

HUD plans to use automated approaches for monitoring use of social

security and supplemental security income data. Further, HUD plans to

request feedback from HAs, and private owners/management agents

concerning

[[Page 68133]]

the use of Federal tax return data that tenants disclose to entities

that administer HUD's rental assistance programs. In developing the

methodology, HUD will avoid imposing any unnecessary burden on HAs and

private owners/management agents.

IV. Records To Be Matched

SSA and IRS will conduct the matching of tenant SSNs and additional

identifiers (such as surnames and dates of birth) to tenant data that

HUD supplies from its system of records known as the Tenant Housing

Assistance and Contract Verification Data (HUD H-11). Within HUD, this

system of records includes two automated systems known as the

Multifamily Tenant Characteristics System (a system for programs under

the Office of the Assistant Secretary for Public and Indian Housing)

and the Tenant Rental Assistance Certification System (a system for

programs under the Office of the Assistant Secretary for Housing--

Federal Housing Commissioner). HAs and private owners/management agents

for subsidized multifamily projects provide HUD with the tenant data

that is included in HUD H-11.

The SSA will match the HUD H-11 records to the SSA's Earnings

Recording and Self-Employment Income System (HHS/SSA/OSR, 09-60-0059)

(Earnings Record); Master Beneficiary Record (HHS/SSA/OSR, 09-60-0090)

(MBR); and Supplemental Security Income Record (HHS/SSA/OSR, 09-60-

0103) (SSR). The IRS will match the HUD H-11 records to its Wage and

Information Returns (IRP) Master File (Treas/IRS 22.061). The IRS also

refers to this file as the Information Return Master File (IRMF).

HUD will place matching data into its Tenant Eligibility

Verification Files (HUD/PIH-1), described at 60 FR 21545 (May 2, 1995.)

The HUD/PIH-1 files are specifically exempt from certain provisions of

the Privacy Act, as described in a notice published on February 28,

1994 (59 FR 9406) and a notice published on March 30, 1994 (59 FR

14869).

HUD may also coordinate SWICA income computer matches for its

rental assistance programs using tenants' SSNs and surnames. SWICAs

will match tenant records to machine-readable files of quarterly wage

data and unemployment insurance benefit data. Results from this

matching will be provided to HUD or HAs, which will then determine

whether tenants have unreported or underreported income. The matching

will be done in accordance with a written agreement between the SWICA

and HUD.

In addition, tenants' SSNs may be matched to the OPM's General

Personnel Records (OPM/GOVT-1), the Civil Service Retirement and

Insurance Records System (OPM/Central-1), and the Department of

Defense's Defense Manpower Data Center Data Base (S322.10.DMDC). Tenant

data may be matched to the SSA's Master Files of Social Security Number

Holders (HHS/SSA/OSR, 09-60-0058) and Death Master Files for the

purpose of validating SSNs contained in tenant records. These records

will also be used to validate SSNs for all applicants, tenants, and

household members who are six (6) years of age and over to identify

noncompliance with program eligibility requirements. HUD will compare

tenant SSNs provided by HAs or private owners/management agents to

reveal duplicate SSNs and potential duplicate housing assistance.

V. Period of the Match

The computer matching program will be conducted according to

agreements between HUD and the SSA, IRS, OPM, and SWICAs. The computer

matching agreements for the planned matches will terminate either when

the purpose of the computer matching program is accomplished, or 18

months from the date the agreement is signed, whichever comes first.

The agreements may be extended for one 12-month period, with the

mutual agreement of all involved parties, if the following conditions

are met:

(1) Within 3 months of the expiration date, all Data Integrity

Boards review the agreement, find that the program will be conducted

without change, and find a continued favorable examination of benefit/

cost results; and

(2) All parties certify that the program has been conducted in

compliance with the agreement.

The agreement may be terminated, prior to accomplishment of the

computer matching purpose or 18 months from the date the agreement is

signed (whichever comes first), by the mutual agreement of all involved

parties within 30 days of written notice.

Dated: November 25, 1998.

Joseph F. Smith,

Acting Assistant Secretary for Administration.

[FR Doc. 98-32560 Filed 12-8-98; 8:45 am]

BILLING CODE 4210-01-P