[Federal Register Volume 59, Number 3 (Wednesday, January 5, 1994)]
[Rules and Regulations]
[Pages 650-651]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-76]


[[Page Unknown]]

[Federal Register: January 5, 1994]


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Part II





Environmental Protection Agency





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40 CFR Part 13



Referral of Debts to Internal Revenue Service for Tax Refund Offset; 
Interim Final Rule
ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 13

[FRL-4818-2]

 

Referral of Debts to the Internal Revenue Service for Tax Refund 
Offset

AGENCY: Environmental Protection Agency.

ACTION: Interim rule with request for comments.

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SUMMARY: The Environmental Protection Agency (EPA), as a participant in 
the Federal Tax Refund Offset Program, is issuing interim regulations 
to govern the referral of delinquent debts to the Internal Revenue 
Service (IRS) for offset against the income tax refunds of persons 
owing money to EPA. These regulations allow EPA to collect debts by 
means of offset from the income tax refunds of persons owing money to 
EPA provided certain conditions are met. This rule establishes 
procedures to be followed by EPA in requesting the IRS to offset tax 
refunds due to taxpayers who have past-due legally enforceable debt 
obligations to the EPA.

DATES: Interim rule is effective on January 5, 1994. Written comments 
must be received on or before March 7, 1994.

ADDRESSES: Send comments to: Stephen B. Hess, Claims and Property Law 
Branch (2376), Office of General Counsel, Environmental Protection 
Agency, 401 M Street, SW., Washington, DC 20460.

FOR FURTHER INFORMATION CONTACT: Stephen B. Hess, Office of General 
Counsel. Telephone 202-260-7512.

SUPPLEMENTARY INFORMATION: This interim rule provides procedures for 
EPA to refer past-due legally enforceable debts to the IRS for offset 
against the income tax refunds of persons owing debts to EPA. This rule 
is authorized by 31 U.S.C. 3720A, the purpose of which is to improve 
the ability of the government to collect money owed it while adding 
certain notice requirements and other protections applicable to the 
government's relationship to the debtor.
    This rule implements 31 U.S.C. 3720A, which directs any Federal 
agency that is owed a past-due legally enforceable debt by a named 
person to notify the Secretary of the Treasury in accordance with 
regulations issued by the Department of the Treasury at 26 CFR 
301.6402-6. Before a Federal agency may give such notice, however, it 
must first:
    (1) Notify the debtor that the agency proposes to refer the debt 
for a tax refund deduction;
    (2) Give the debtor 60 days from the date of the notification to 
present evidence that all or part of the debt is not past-due or 
legally enforceable;
    (3) Consider any evidence presented by the debtor and determine 
whether any amount of such debt is past-due and legally enforceable; 
and
    (4) Satisfy such other conditions as the Secretary of the Treasury 
may prescribe to ensure that the agency's determination is valid and 
that the agency has made reasonable efforts to obtain payment of the 
debt.
    This rule, in accordance with IRS regulations, provides that before 
EPA refers a debt to Treasury (through IRS), a notice of intention 
(Notice of Intent) will be sent to the debtor. This Notice of Intent 
will inform the debtor of the amount of the debt and that unless the 
debt is repaid within 60 days from the date of EPA's Notice of Intent, 
EPA intends to collect the debt by requesting the IRS to offset any tax 
refund payable to the debtor. In addition, the Notice of Intent will 
state that the debtor has a right, during such period, to present 
evidence that all or part of the debt is not past-due or legally 
enforceable. This rule also establishes procedures for the debtor to 
present such evidence.

Executive Order 12866

    Under Executive Order 12866 (58 FR 51735, October 4, 1993) the 
Agency must determine whether the regulatory action is ``significant'' 
and therefore subject to Office of Management and Budget (OMB) review 
and the requirements of the Executive Order. The Order defines 
``significant regulatory action'' as one that is likely to result in a 
rule that may: (1) Have an annual effect on the economy of $100 million 
or more or adversely affect in a material way the economy, a sector of 
the economy, productivity, competition, jobs, the environment, public 
health or safety, or State, local, or tribal governments or 
communities; (2) create a serious inconsistency or otherwise interfere 
with an action taken or planned by another agency; (3) materially alter 
the budgetary impact of entitlements, grants, user fees, or loan 
programs or the rights and obligations of recipients thereof; or (4) 
raise novel legal or policy issues arising out of legal mandates, the 
President's priorities, or the principles set forth in the Executive 
Order.
    It has been determined that this rule is not a ``significant 
regulatory action'' under the terms of Executive Order 12866 and is 
therefore not subject to OMB review.

Regulatory Flexibility Act Certification

    This rule does not have a significant impact on a substantial 
number of small entities (5 U.S.C. 601 et seq.).

Paperwork Reduction Act

    No additional information and record keeping requirements are 
imposed by this rule.

National Environmental Policy Act

    Promulgation of this rule does not represent a major Federal action 
with significant environmental impact. Therefore, preparation of an 
environmental assessment or environmental impact statement under the 
National Environmental Policy Act of 1969, as amended (42 U.S.C. 4321 
et seq.) is not required.

Public Comments

    Pursuant to an agreement between the IRS, the Financial Management 
Service, and EPA regarding EPA's participation in the Tax Refund Offset 
Program for 1994, EPA is required to have promulgated regulations 
regarding referral of debts to IRS for tax refund offset prior to EPA's 
participation in the program. EPA is issuing interim final regulations 
to take effect today in order to fulfill that requirement. Although EPA 
will respond to written comments on today's notice, EPA is not holding 
a hearing, providing an opportunity for prior comments, or delaying the 
effective date because this regulation is mostly procedural and because 
there are no significant issues of law or fact or relevant substantial 
impacts on the Nation or large numbers of persons of which EPA could 
take account consistent with law. Moreover, issuance of immediately 
effective interim final regulations does not prejudice the due process 
rights of debtors and is essential in order for EPA to participate in 
the 1994 program. Written comments are solicited for 60 days after 
publication of this document in the Federal Register. A final document 
discussing any comments received and revisions required will be 
published in the Federal Register as soon as possible after the close 
of the comment period.

Other Matters

    These procedures are being codified in the Agency's regulations 
pursuant to statutory requirements regarding publication of rules of 
procedure in the Federal Register, 5 U.S.C. 552(a)(1)(C). However, the 
procedures described in the rule will be utilized before it becomes 
effective with respect to persons who are provided actual notice of the 
procedures through the notices required under the procedures. See 5 
U.S.C. 552(a)(1).

List of Subjects in 40 CFR Part 13

    Environmental protection, Administrative practice and procedure, 
Claims, Government employees, Income taxes, Wages.

    Dated: December 28, 1993.
Carol M. Browner,
Administrator.

    In consideration of the foregoing, the Environmental Protection 
Agency hereby amends part 13 of title 40 of the Code of Federal 
Regulations as set forth below.

PART 13--[AMENDED]

    1. The authority citation for part 13 is revised to read as 
follows:

    Authority:5 U.S.C. 552a, 5512, and 5514; 31 U.S.C. 3711 et seq. 
and 3720A; 4 CFR parts 101-10.


    2. Subpart H is added to part 13 to read as follows:

Subpart H--Referral of Debts to IRS for Tax Refund Offset

Sec.
13.34  Purpose.
13.35  Applicability and scope.
13.36  Administrative charges.
13.37  Notice requirement before offset.
13.38  Review within the Agency.
13.39  Agency determination.
13.40  Stay of offset.

Supbart H--Referral of Debts to IRS for Tax Refund Offset


Sec. 13.34  Purpose.

    This subpart establishes procedures for the Environmental 
Protection Agency (EPA) to refer past-due debts to the Internal Revenue 
Service (IRS) for offset against the income tax refunds of persons 
owing debts to EPA. It specifies the Agency procedures and the rights 
of the debtor applicable to claims for the payment of debts owed to 
EPA.


Sec. 13.35  Applicability and scope.

    (a) This subpart implements 31 U.S.C. 3720A, which authorizes the 
IRS to reduce a tax refund by the amount of a past-due legally 
enforceable debt owed to the United States.
    (b) For purposes of this section, a past-due legally enforceable 
debt referable to the IRS is a debt which is owed to the United States 
and:
    (1) Except in the case of a judgment debt, has been delinquent for 
at least three months but has not been delinquent for more than ten 
years at the time the offset is made;
    (2) Cannot be currently collected pursuant to the salary offset 
provisions of 5 U.S.C. 5514(a)(1);
    (3) Is ineligible for administrative offset under 31 U.S.C. 3716(a) 
by reason of 31 U.S.C. 3716(c)(2) or cannot be collected by 
administrative offset under 31 U.S.C. 3716(a) by the Agency against 
amounts payable to or on behalf of the debtor by or on behalf of the 
Agency;
    (4) With respect to which EPA has given the taxpayer at least 60 
days from the date of notification to present evidence that all or part 
of the debt is not past-due or not legally enforceable, has considered 
evidence presented by such taxpayer, if any, and has determined that an 
amount of such debt is past-due and legally enforceable;
    (5) Has been disclosed by EPA to a consumer reporting agency as 
authorized by 31 U.S.C. 3711(f), unless a consumer reporting agency 
would be prohibited from using such information by 15 U.S.C. 1681c, or 
unless the amount of the debt does not exceed $100.00;
    (6) With respect to which EPA has notified or has made a reasonable 
attempt to notify the taxpayer that the debt is past-due and, unless 
repaid within 60 days thereafter, the debt will be referred to the IRS 
for offset against any overpayment of tax;
    (7) Is at least $25.00; and
    (8) All other requirements of 31 U.S.C. 3720A and the Department of 
the Treasury regulations at 26 CFR 301.6402-6 relating to the 
eligibility of a debt for tax return offset have been satisfied.


Sec. 13.36  Administrative charges.

    In accordance with Sec. 13.11, all administrative charges incurred 
in connection with the referral of a debt to the IRS shall be assessed 
on the debt and thus increase the amount of the offset.


Sec. 13.37  Notice requirement before offset.

    A request for reduction of an IRS tax refund will be made only 
after EPA makes a determination that an amount is owed and past-due and 
provides the debtor with 60 days written notice. EPA's notice of 
intention to collect by IRS tax refund offset (Notice of Intent) will 
state:
    (a) The amount of the debt;
    (b) That unless the debt is repaid within 60 days from the date of 
EPA's Notice of Intent, EPA intends to collect the debt by requesting 
the IRS to reduce any amounts payable to the debtor as refunds of 
Federal taxes paid by an amount equal to the amount of the debt and all 
accumulated interest and other charges;
    (c) That the debtor has a right to present evidence that all or 
part of the debt is not past-due or not legally enforceable; and
    (d) A mailing address for forwarding any written correspondence and 
a contact name and phone number for any questions.


Sec. 13.38  Review within the Agency.

    (a) Notification by debtor. A debtor who receives a Notice of 
Intent has the right to present evidence that all or part of the debt 
is not past-due or not legally enforceable. To exercise this right, the 
debtor must:
    (1) Send a written request for a review of the evidence to the 
address provided in the notice;
    (2) State in the request the amount disputed and the reasons why 
the debtor believes that the debt is not past-due or is not legally 
enforceable; and
    (3) Include in the request any documents which the debtor wishes to 
be considered or state that additional information will be submitted 
within the remainder of the 60-day period.
    (b) Submission of evidence. The debtor may submit evidence showing 
that all or part of the debt is not past-due or not legally enforceable 
along with the notification required by paragraph (a) of this section. 
Failure to submit the notification and evidence within 60 days will 
result in an automatic referral of the debt to the IRS without further 
action by EPA.
    (c) Review of the evidence. EPA will consider all available 
evidence related to the debt. Within 30 days, if feasible, EPA will 
notify the debtor whether EPA has sustained, amended, or cancelled its 
determination that the debt is past-due and legally enforceable.


Sec. 13.39  Agency determination.

    (a) Following review of the evidence, EPA will issue a written 
decision.
    (b) If EPA either sustains or amends its determination, it shall 
notify the debtor of its intent to refer the debt to the IRS for offset 
against the debtor's Federal income tax refund. If EPA cancels its 
original determination, the debt will not be referred to IRS.


Sec. 13.40  Stay of offset.

    If the debtor timely notifies the EPA that he or she is exercising 
the right described in Sec. 13.38(a) and timely submits evidence in 
accordance with Sec. 13.38(b), any notice to the IRS will be stayed 
until the issuance of a written decision which sustains or amends its 
original determination.

[FR Doc. 94-76 Filed 1-4-94; 8:45 am]
BILLING CODE 6560-50-P