[Federal Register Volume 59, Number 166 (Monday, August 29, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-21186]


[[Page Unknown]]

[Federal Register: August 29, 1994]


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DEPARTMENT OF AGRICULTURE
Food and Nutrition Service

 

Food Stamp Program; Food Stamp Recipient Claims Collection; Test 
of Federal Salary Offset Procedures

AGENCY: Food and Nutrition Service, USDA.

ACTION: General Notice.

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SUMMARY: The Department hereby gives notice that it intends to test 
Federal salary offset (salary offset) procedures as a means of 
collecting debts which Federal and U.S. Postal Service (USPS) employees 
owe the Department for overissued food stamp benefits. This General 
Notice describes the types of debts to be collected and the salary 
offset procedures, including the method by which Federal and USPS 
employees who owe food stamp recipient claims will be identified, and 
how they will be notified about the collection action and about their 
rights and responsibilities with respect to that action.

DATES: This notice will be effective September 28, 1994. Comments will 
be accepted until November 28, 1994. Implementation of this test will 
begin September 28, 1994.

ADDRESSES: Comments should be addressed to James I. Porter, Supervisor, 
Issuance and Accountability Section, State Administration Branch, 
Program Accountability Division, Food Stamp Program, 3101 Park Center 
Drive, Room 905, Alexandria, Virginia 22302. Comments can be reviewed 
at that address during normal business hours.

FOR FURTHER INFORMATION CONTACT: James I. Porter, Supervisor, Issuance 
and Accountability Section, State Administration Branch, Program 
Accountability Division, Food Stamp Program, 3101 Park Center Drive, 
Room 905, Alexandria, Virginia 22302, telephone (703) 305-2385.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

    This General Notice is issued in conformance with Executive Order 
12886.

Executive Order 12372

    The FSP is listed in the Catalog of Federal Domestic Assistance 
under No. 10.551. For the reasons set forth in the final rule and 
related notice to 7 CFR 3015, Subpart V (48 FR 29115), this Program is 
excluded from the scope of Executive Order 12372 which requires 
intergovernmental consultation with State and local officials.

Regulatory Flexibility Act

    This action has been reviewed with regard to the requirements of 
the Regulatory Flexibility Act of 1980 (Pub. L. 96-354, 94 Stat. 1164, 
September 19, 1980). William E. Ludwig, Administrator of the Food and 
Nutrition Service, has certified that this notice does not have a 
significant economic impact on a substantial number of small entities. 
This notice will affect the State and local agencies which administer 
the Food Stamp Program and individuals who have received excess food 
stamp benefits.

Paperwork Reduction Act

    This notice does not contain reporting or recordkeeping 
requirements subject to approval by the Office of Management and Budget 
under the Paperwork Reduction Act of 1980.

Background

1. General

    a. The need for salary offset procedures for the FSP. Individuals 
currently owe the Department about $800 million for food stamp benefits 
which they have received in excess of the amounts to which they were 
entitled. A substantial portion of the $800 million is not being 
repaid. The Department is concerned about this situation and is 
augmenting its policies and procedures to improve collections of this 
debt.
    A major initiative in this effort is the Federal income tax refund 
offset program (FTROP). Through FTROP the Department is collecting 
debts for overissued food stamp benefits (recipient claims) from 
individual debtors' Federal income tax refunds. In brief, FTROP 
operates by matching information about recipient claims against 
Internal Revenue Service (IRS) data on taxpayers, and before any refund 
otherwise payable is made, by deducting the recipient claim from the 
refund. Only those recipient claims due to inadvertent household errors 
(IHE's) and intentional Program violations (IPV's) are collected 
through FTROP, and those types of claims are collected only when liable 
individuals are not participating in the FSP. Recipient claims due to 
errors by State agencies are not collected through FTROP. The FTROP 
procedures are contained in a General Notice published August 20, 1991 
at 56 FR 41325.
    The IRS requires that Federal agencies participating in FTROP use 
all reasonable collection efforts before referring a debt for 
collection from Federal income tax refunds. The IRS views salary offset 
as such an effort and therefore requires participation in salary offset 
or at a minimum, deletion of claims which are eligible for salary 
offset from lists of claims submitted to the IRS for collection through 
FTROP. (See 26 CFR 301.6402-6(b)(1)(iii) and (c)(2) of the IRS 
regulations.) As under FTROP, the salary offset procedures for the FSP 
will be used for IHE and IPV claims only and only when the individuals 
liable for the claims are not currently participating in the FSP.
    b. Authorities for Salary Offset. The Debt Collection Act of 1982, 
(Public Law 97-365), amended 5 U.S.C 5514 to authorize Federal agencies 
to offset the salaries of Federal employees who are delinquent on debts 
owed to the Federal government. The Office of Personnel Management 
(OPM) implemented 5 U.S.C 5514 by promulgating regulations at 5 CFR 
550.1101-1108 (Collection by Offset from Indebted Government 
Employees). Pursuant to 5 U.S.C 5514(b)(1), the Department promulgated 
regulations at 7 CFR 3.51 through 3.68 implementing salary offset. 
Departmental regulations at 7 CFR 3.68 delegate to individual USDA 
agencies the authority to act for the Secretary under those regulations 
and to issue regulations or policies not inconsistent with the 
Departmental regulations and with the OPM regulations. Section 13941 of 
the Omnibus Budget Reconciliation Act of 1993 (Public Law 103-66, 
signed August 10, 1993) authorizes disclosure of food stamp casefile 
information to Federal agencies for purposes of collecting recipient 
claims (except those caused by State agency errors) from Federal 
salaries. Finally, Section 17(b)(1) of the Food Stamp Act of 1977, as 
amended, (the Act) (7 U.S.C. 2026(b)(1)), authorizes the Secretary to 
conduct pilot projects to test program changes that might increase the 
efficiency of the FSP. This General Notice is being published under 
those authorities.
    Pursuant to Section 13 of the Act (7 U.S.C. 2022), and subject to 
the standards of FSP regulations at 7 CFR 273.18, the authority to 
settle claims against households has been delegated to State agencies 
at 7 CFR 271.4(b). Food stamp coupons issued pursuant to the Act are 
deemed to be obligations of the United States (7 U.S.C. 2024(d)). Under 
these statutes and regulations, State agencies, establish, collect and 
maintain records of FSP recipient claims. State agencies return amounts 
collected to the Federal government, less a statutory ``retention 
amount'' established to encourage collection of recipient claims (7 
U.S.C. 2025(a)).
    The provisions of this Notice incorporate Departmental regulations 
on salary offset (7 U.S.C. 3.51 et seq.), and supplement and modify 
these procedures to the extent necessary to accommodate the position of 
State agencies as primarily responsible for establishing, collecting 
and maintaining records on recipient claims. These additions and 
modifications are consistent with OPM regulations on salary offset.
    c. Overview of Salary Offset Procedures for the FSP. Salary offset 
has three phases and is operated on an annual cycle. In the first 
phase, FSP recipient claims are matched against records of all active 
Federal civilian and military employees, including USPS employees. The 
recipient claims used for the salary offset match are consolidated from 
lists of recipient claims provided by State agencies as part of FTROP 
procedures. The Federal employee records are maintained by the 
Department of Defense (DoD) and the USPS. The match identifies Federal 
employees (including USPS employees) and their employing agencies, and 
provides employee and employing agency addresses to FNS. This match 
will be conducted in accordance with the Computer Matching and Privacy 
Act of 1988. As required by that statute, the public has been advised 
of this matching program by the publication of three General Notices. A 
General Notice was published September 17, 1993 at 58 FR 48633 advising 
the public of the systems of records involved. A second General Notice 
was published March 1, 1994 at 59 FR 9733 advising the public of the 
match with DoD. A third General Notice was published August 17, 1994 at 
59 FR 42205 advising the public about the match with the USPS. 
Recipient claims which these matches identify as obligations of Federal 
employees are deleted from files of recipient claims to be referred to 
the IRS for collection through the FTROP.
    During the second phase of food stamp salary offset procedures, 
recipient claims identified in the match are referred to State 
agencies. After a review of their records to determine if the recipient 
claim is still owed and the accuracy of the amount of the claim, State 
agencies send Federal employees an advance notice of salary offset 
(advance notice). The advance notice provides these individuals 30 days 
to voluntarily repay the claim or provide documentation that all or 
part of the claim is not legally collectible. Claims for which 
responses are not received, or for which replies are late or do not 
provide adequate documentation, are referred to the FNS National Office 
for collection by salary offset.
    In the third phase of salary offset, by means of a notice of 
intent, FNS notifies Federal employees owing recipient claims referred 
by State agencies that FNS intends to collect the debt from the 
employee's salaries. This notice of intent includes information about 
appeal rights, pertinent time frames and other information which is 
required for that notice by Departmental regulations on salary offset. 
Subject to the responses to notices of intent, FNS proceeds with action 
to collect the debts. As mentioned above, FNS follows Departmental 
procedures on salary offset as modified in this Notice.
    The Department plans to conduct the initial cycle of salary offset 
procedures (matching/deletion, voluntary repayment and salary offset) 
during calendar year 1994.

2. Discussion of the General Notice

    a. Claims Subject to Salary Offset. All claims submitted by State 
agencies participating in FTROP are subject to the matching procedures 
specified in this General Notice. The General Notice also provides that 
recipient claims identified by the match will be subject to the salary 
offset procedures specified in this Notice.
    b. Identification of Recipient Claims Owed by Federal Employees. As 
already mentioned, one of the preliminary steps of salary offset is 
matching food stamp recipient claim files provided by State agencies 
participating in FTROP to certain records of Federal employment 
maintained by DoD and USPS. This match identifies recipient claims owed 
by Federal employees.
    The Department wants to ensure that State agencies protect 
information they receive from DoD and USPS from the time they receive 
it. Consequently, this Notice provides that when FNS receives Federal 
employment information for a particular State agency, it will first 
notify the State agency of that matter in writing accompanied by a data 
security and confidentiality agreement for the State agency to sign and 
return. When that agreement is returned, FNS will then provide the 
information to the State agency. Concurrently with publication of this 
General Notice, FNS is providing State agencies a sample notification 
letter with the language of the data security and confidentiality 
agreement.
    The matching of State agency recipient claims with DoD and USPS 
data files will be conducted under the terms of Memorandums of 
Agreement (Agreement) between USDA and DoD, and between USDA and the 
USPS. The Agreements require that if the records obtained from DoD and 
the USPS are disclosed to a State or local agency, those entities must 
agree in writing to abide by the data security and confidentiality 
protection measures specified in the Agreements. This Notice specifies 
those protection measures and requires that State agencies extend them 
to any contractors or other non-State agency entities to which the 
records may be disclosed. The requirements are typical data security 
and usage controls, and should require minimal additional resources 
from State agencies.
    This Notice requires that, prior to taking additional action to 
collect claims matched against Federal employment records, State 
agencies review those claims to verify the amount owed, and to remove 
any claims which have been paid, are being paid or which for other 
reasons are not collectible. The Notice requires this review so that no 
salary offset action will be taken unless that individual owes an FSP 
recipient claim.
    c. State Agency Advance Notice of Salary Offset. This Notice 
requires that, following the review just described, State agencies 
provide each Federal employee verified as owing a recipient claim 
(debtor) with an advance notice of salary offset (advance notice). This 
advance notice will provide the debtor certain information about the 
recipient claim and will offer the debtor an opportunity to repay the 
claim voluntarily. Although it is not required, the Department is 
providing a voluntary repayment opportunity for several reasons. It 
offers debtors a way to repay the recipient claim without involving 
their employing agency. It provides State agencies a way of collecting 
some recipient claims without the delay which salary offset entails. 
Furthermore, recipient claims collected by State agencies avoid the 
administrative cost to the Federal government involved with actual 
salary offset.
    The Department wants State agency collection efforts to proceed 
promptly but in such a way that they can be integrated into State 
agency operations without disrupting other operations. Consequently, 
this Notice requires that advance notices be mailed or otherwise 
provided to debtors at the addresses provided by FNS within 60 days of 
State agency receipt from FNS of the list discussed just above. The 
addresses will be those which DoD and USPS provided through the 
matching program.
    Recipient claims owed by Federal employees who do not voluntarily 
pay them directly to the State agency in response to the advance notice 
will be collected through salary offset. Consequently, FNS is requiring 
that within 90 days of the date of the advance notice, the State agency 
must refer to FNS all claims for which the State agency does not 
receive timely and adequate response as discussed below. The advance 
notice allows debtors 30 days to respond to State agencies. The 90-day 
period will give State agencies 60 days beyond that time frame to refer 
claims to FNS. This Notice specifies that such referral will consist of 
a copy of the advance notice and copies of records relating to the 
claim. This Notice specifies that records relating to the claim consist 
of copies of all written actions relating to the claim. Such records 
include copies of demand letters, results of fair hearings, advance 
notices of disqualification hearings, the results of such hearings, any 
legal actions, records of payments, and correspondence from the debtor 
subsequent to the advance notice.
    This Notice specifies the required content of the advance notice. 
(Concurrently with publication of this Notice, FNS is providing State 
agencies a sample format for the advance notice.) First, the advance 
notice must state that, according to State agency records, the debtor 
is liable for a recipient claim for a specified dollar amount due to 
receiving excess food stamp benefits. State agencies are encouraged to 
include as much other information about the claim as possible, 
including such things as whether the claim was caused by household 
error or intentional Program violation, the date of the initial demand 
letter, any hearings or court actions which relate to the claim, and 
what, if any, payments have reduced the amount of the original claim.
    The advance notice must also state that the debtor was found 
through a computer match to be employed by a Federal agency, and it 
must state the name and address of the employing agency. The advance 
notice must state that the computer match was conducted according to 
procedures required by the Privacy Act of 1974, as amended. This 
information is required so that debtors know the source of the 
information about their employment and that it was obtained under 
authority of law.
    The advance notice must further advise debtors that the authority 
to collect debts such as food stamp recipient claims from Federal 
salaries is the Debt Collection Act of 1982. The advance notice must 
also state that the subject claim will be referred to FNS for such 
collection action unless, within 30 days of the date of the advance 
notice, the State agency receives payment in full or an acceptable 
installment payment on the claim. With respect to payments, the advance 
notice must state several things. Claims of $50 or less must be paid in 
full within 30 days or they will be referred for collection from the 
debtor's Federal salary. Claims of more than $50, if not paid in full 
within 30 days, must be paid in installments of at least $50 a month. 
Debtors may pay more than $50 in any installment payment. The advance 
notice must state the monthly due date of installment payments for the 
claim and that if a monthly installment payment of at least $50 is not 
received by the monthly due date, the claim will be referred to FNS for 
salary offset with no further opportunity to enter a voluntary 
repayment agreement.
    The advance notice must also provide the name, address and phone 
number of a State agency contact (an individual or unit) for repayment 
and/or discussion of the claim. The advance notice must also advise 
that debtors may submit documentation to State agencies showing such 
things as payment of all or part of the claim, or that the claim is not 
legally collectible. Second, unless such documentation clearly shows 
that the claim has been paid or is not legally collectible, the State 
agency will refer the claim to FNS for collection from the debtor's 
salary. Third, State agencies will notify debtors in writing when 
claims will not be referred for collection from salaries. Fourth, 
debtors have the right to a formal appeal to FNS, and notice to debtors 
about how to make such an appeal is required before any collection 
action from salaries is taken.
    d. State agency retention and reporting of collections. For 
purposes of calculating amounts of collections which State agencies 
retain, all claims collected under the provisions of this Notice will 
be treated as if they were collected by the State agency. Specifically, 
this Notice provides that, for recipient claims paid voluntarily and 
through salary offsets, State agencies will retain collections at the 
rates specified at 7 CFR 273.18(h) for the appropriate reporting period 
for Form FNS-209, Status of Claims Against Households. From time to 
time as volume warrants, FNS will provide reports and transfer amounts 
collected from salaries to State agencies.
    State agencies will report all collections on the FNS-209. 
Annually, along with the referral to FNS of claims without the prompt 
and adequate response required in this Notice, State agencies are 
required to report to FNS the number and dollar amount of claims paid 
and being paid by installments and the dollar amount of collections in 
response to notices of intent. If a debtor fails to make an installment 
payment, within 90 days of that default State agencies are required to 
refer the claim to FNS, reporting the default, the dollar amount 
collected and the balance due.
    e. FNS Actions on Claims Referred by State Agencies. This Notice 
states that, subject to certain modifications described below, the 
procedures at 7 CFR 3.51-3.68 will apply to claims referred by State 
agencies to FNS for salary offset.
    Three additions will be made to the definitions set forth at 7 CFR 
3.52. The term ``debts'' is further defined to include recipient claims 
established according to 7 CFR 273.18, and the terms ``State agency'' 
and ``FNS'' are defined as set forth in 7 CFR 271.2.
    The Departmental rules require that, using the Notice of Intent to 
Offset Salary (notice of intent) set forth at 7 CFR 3.55, the 
Department provide notice to the debtor 30 days prior to offsetting the 
debtor's salary. This procedure and the notice of intent specified at 7 
CFR 3.55 will be used for FSP recipient claims as described below.
    The provisions of the notice of intent are largely self-
explanatory. The notice of intent sets forth the amount of the debt and 
the facts which gave rise to it, and describes how the actual offset 
will be conducted, including frequency and amount of the salary 
deductions. The notice of intent advises the debtor about the method 
and time period for requesting a hearing and that a timely hearing 
request will stay the collection proceedings. The notice of intent also 
advises how the hearing will be conducted, and the time frame for 
issuance of decisions. It also advises the debtor of the penalties for 
making or submitting any knowingly false or frivolous statements, 
representations or evidence.
    Three sections of the notice of intent require some additonal 
explanation as applied to FSP recipient claims. First, 7 CFR 3.55(d) 
requires that the notice of intent explain the Department's 
requirements regarding payments of interest, penalties and 
administrative costs, unless such payments are waived in accordance 
with 31 U.S.C. 3717 and 7 CFR 3.34. These charges are being waived as 
explained in detail below. Accordingly, the notice of intent for FSP 
recipient claims will not include an explanation of these charges. 
Second, 7 CFR 3.55(e) requires that the notice of intent explain the 
debtor's right to inspect and copy Department records relating to the 
debt. As explained below, for FSP recipient claims, the notice of 
intent will also include an explanation of the right to request and 
receive copies of the records from the Department, and a statement of 
the time for making such a request, which is established under 7 CFR 
3.60(a). Third, 7 CFR 3.55(f) requires that the Department's notice of 
intent advise the debtor of the procedures for proposing a repayment 
agreement in lieu of salary offset. As explained below, this 
explanation and procedure will not be included in the FSP notice of 
intent.
    Departmental regulations at 7 CFR 3.65 and 3.55(d) set forth the 
procedures for charging interest, penalties, and administrative costs 
for salary offset. Current FSP regulations do not authorize collection 
of interest, penalties or administrative costs for FSP recipient 
claims. Accordingly, there are no administrative mechanisms in place 
for the assessment and notice of such charges. The Department believes 
that it would not be administratively cost effective or feasible to 
establish such mechanisms for the purposes of this test of salary 
offset. Therefore, pursuant to 7 CFR 3.34(c)(4), the Secretary has 
determined that collection of such charges is not in the best interests 
of the United States and hereby waives collection of such charges. 
Accordingly, as noted above, the FSP notice of intent will not include 
an explanation of interest and related charges.
    Departmental regulations at 7 CFR 3.60 set forth procedures for the 
review of Departmental records relating to debts to be collected by 
salary offset, and provide that, upon a timely request, the Department 
will permit debtors to inspect and copy those records. For purposes of 
FSP salary offset, upon a debtor's request, the Department will also 
provide copies of the records. The Department believes that this offer 
is appropriate because the records will be located at the FNS National 
Office while debtors are located throughout the country. For their 
requests to be considered timely, as provided in 7 CFR 3.60(a), debtors 
must submit a letter requesting copies of the records (or requesting an 
opportunity to inspect or copy the records) within 30 calendar days of 
the date of the FSP notice of intent. As stated above, the notice of 
intent will advise debtors of these procedures and deadlines.
    Departmental salary offset regulations at 7 CFR 3.61 provide 
debtors the opportunity to propose a written repayment agreement in 
lieu of salary offset, subject to approval by the Secretary. OPM 
regulations at 5 CFR 550.1104(d)(6) provide that this opportunity is 
not required if the debtor was previously provided such an opportunity. 
Current FSP regulations at 7 CFR 273.18(g)(2) provide that opportunity 
at the time of the initial demand letter on the recipient claim. The 
State agency advance notice of salary offset offers a second such 
opportunity. Accordingly, the FSP notice of intent will not offer 
debtors an opportunity to enter into a written agreement to repay the 
debt.
    The remaining FSP salary offset procedures relate primarily to 
hearings which debtors may request and to the procedures for the actual 
offsets from salaries. These procedures shall operate as set forth in 
the Departmental regulations, and they are briefly described below.
    The Departmental regulation at 7 CFR 3.56 provides that debtors 
have 30 days to request a hearing on the existence or amount of the 
claim, or on the proposed offset schedule (rate and frequency of 
offset), advises what information the debtor should include in the 
request, and states the basis for accepting a late request. Section 
3.57 provides that a hearing will not be granted if the employee fails 
to request one as prescribed or fails to appear at the hearing. Section 
3.58 describes how hearings will be conducted, and Section 3.59 
specifies the format of written hearing decisions.
    The Departmental regulation at 7 CFR 3.62 provides that deductions 
will begin either: (1) as stated in the notice of intent; (2) after a 
hearing in favor of the Secretary; or (3) through administrative offset 
upon the employees retirement or resignation, as provided by 7 CFR 3.21 
through 3.36. Section 3.63 provides that collections will be made in a 
lump sum or installments, and will be by installments if the debtor 
cannot repay the debt in one payment or the debt exceeds 15 percent of 
disposable pay for a pay period. Section 3.64 provides that 
installments will be at established pay intervals, bear a reasonable 
relationship to the size of the debt, up to a maximum of 15 percent of 
disposable pay, and specifies the types of pay which can be offset. 
Section 3.66 provides that payment by salary offset will not be 
interpreted as a waiver of any right the debtor may have under 5 U.S.C. 
5514. Section 3.67 provides for the refund of amounts erroneously 
offset from salaries under certain conditions such as an administrative 
or judicial order.

General Notice

Recipient Claims Collection: Test of Federal Salary Offset Procedures

    a. Claims subject to salary offset. All recipient claims submitted 
by State agencies participating in the Federal income tax refund offset 
program (FTROP) shall be subject to the matching procedures specified 
in this Notice. Recipient claims identified by the match shall be 
subject to the salary offset procedures specified in this Notice.
    b. Identification of recipient claims owed by Federal employees. 
(1) The Food and Nutrition Service (FNS) will match all recipient 
claims submitted by State agencies participating in FTROP against 
Federal employment records maintained by the Department of Defense 
(DoD) and the U.S. Postal Service (USPS). FNS will remove recipient 
claims matched during this procedure from the list of recipient claims 
to be referred to the Internal Revenue Service (IRS) for collection 
through FTROP.
    (2) When FNS receives a list of Federal employees matched against 
recipient claims for a particular State agency, it will notify the 
State agency in writing accompanied by a data security and 
confidentiality agreement containing the requirements specified in 
paragraph b.(3) of this Notice for the State agency to sign and return. 
When that agreement is returned, signed by an appropriate official of 
the State agency, FNS will provide the list of matched Federal 
employees to the State agency.
    (3) State agencies which receive lists of matched Federal employees 
shall take the actions specified in this paragraph to ensure the 
security and confidentiality of information about those employees and 
their apparent debts, and shall ensure that any contractors or other 
non-State agency entities to which the records may be disclosed also 
take these actions:
    (i) By such means as card keys, identification badges and security 
personnel, limit access to computer facilities handling the data to 
persons who need to perform official duties related to the salary 
offset procedures. By means of a security package, limit access to the 
computer system itself to such persons;
    (ii) During off-duty hours, keep magnetic tapes and other hard copy 
records of data in locked cabinets in locked rooms. During on-duty 
hours, maintain those records under conditions that restrict access to 
persons who need them in connection with official duties related to 
salary offset procedures;
    (iii) Use the data solely for salary offset purposes as specified 
in this Notice, including not extracting, duplicating or disseminating 
the data except for salary offset purposes;
    (iv) Retain the data only as long as needed for salary offset 
purposes as specified in this Notice, or as otherwise required by FNS;
    (v) Destroy the data by shredding, burning or electronic erasure;
    (vi) Advise all personnel having access to the data about the 
confidential nature of the data and their responsibility to abide by 
the security and confidentiality provisions of this Notice.
    (4) Prior to taking any action to collect recipient claims as 
specified in this Notice, State agencies shall review the lists of 
matched Federal employees to verify the amount owed, and to remove 
recipient claims which have been paid, which are being paid according 
to an agreed to schedule, or which for other reasons are not 
collectible.
    c. State agency advance notice of salary offset. (1) Following the 
review specified in paragraph b.(4) of this Notice, State agencies 
shall provide each Federal employee verified as owing a recipient claim 
(debtor) with an advance notice of salary offset (advance notice). The 
advance notice shall be mailed to the debtor at the address provided by 
FNS, or shall be otherwise provided, within 60 days of State agency 
receipt of the list specified in paragraph b.(2) of this Notice.
    (2) Within 90 days of the date of the advance notice, the State 
agency shall refer to FNS all claims for which the State agency does 
not receive timely and adequate response as specified in the advance 
notice. Such referral to FNS shall consist of a copy of the advance 
notice sent to the debtor and copies of records relating to the 
recipient claim. The records relating to the recipient claim shall 
consist of all written records of actions relating to the claim. Such 
records shall include demand letters, results of fair hearings, advance 
notices of disqualification hearings, the results of such hearings, any 
legal actions, records of payments and correspondence subsequent to the 
advance notice.
    (3) The advance notice shall state that:
    (i) According to State agency records the debtor is liable for a 
claim for a specified dollar amount due to receiving excess food stamp 
benefits. State agencies are encouraged to include as much other 
information about the claim as possible, including such things as 
whether it was caused by household error or intentional Program 
violation, the date of the initial demand letter, any hearings or court 
actions which relate to the claim, and what if any payments have 
reduced the amount of the original claim;
    (ii) Through a computer match the debtor was found to be employed 
by [the name and address of the employing agency of the debtor]. The 
computer match was conducted under the authority of and according to 
procedures required by the Privacy Act of 1974, as amended;
    (iii) Collection from the wages of Federal and USPS employees for 
debts such as food stamp recipient claims is authorized by the Debt 
Collection Act of 1982. The claim will be referred to FNS for such 
collection action unless within 30 days of the date of the advance 
notice the State agency receives:
    (A) Payment of the claim in full. Claims of $50 or less shall be 
paid in full within 30 days or they will be referred for collection 
from the debtor's Federal salary; or
    (B) The first installment payment for the claim. Claims of more 
than $50, if not paid in full within 30 days, must be paid in 
installments of at least $50 a month. Debtors may pay more than $50 on 
any installment payment. The advance notice shall state the monthly due 
date of installment payments and that if any monthly installment 
payment of at least $50 is not received by the due date, the claim will 
be referred to FNS for offset from the individual's Federal salary with 
no further right to enter a voluntary repayment agreement;
    (iv) The name, address and phone number of a State agency contact 
(an individual or unit) for payment and/or discussion of the claim; and
    (v) Debtors may submit documentation to State agencies showing such 
things as payments of claims or legal bars to collection of claims. 
Unless such documentation clearly shows that the claim has been paid or 
is not legally collectible, the State agency shall refer the claim to 
FNS for collection from the debtor's salary. The State agencies shall 
notify debtors in writing when claims for which an advance notice will 
not be referred for collection from salaries. Debtors have the right to 
a formal appeal to FNS, and notice to debtors about how to make such 
appeals is required before any collection action from salaries is made.
    d. State agency retention and reporting of collections. (1) State 
agencies shall retain collections of recipient claims paid voluntarily 
to State agencies and collected by FNS through salary offset at the 
rates specified at 7 CFR 273.18(h) for the appropriate reporting period 
for Form FNS-209, Status of Claims Against Households. From time to 
time as volume warrants, FNS will provide reports and will transfer 
amounts collected from salaries to State agencies. State agencies shall 
report these collections on the FNS-209.
    (2) Annually, along with referral to FNS of claims without response 
as required in paragraph c.(2) of this Notice, State agencies shall 
report to FNS the number of claims paid and being paid by installments 
and the dollar amounts of collections in response to advance notices. 
If a debtor fails to make an installment payment, within 90 days of 
that default State agencies are required to refer the claim to FNS, 
reporting the default, the dollar amount collected and the balance due.
    e. FNS actions on claims referred by State agencies. Departmental 
procedures at 7 CFR 3.51-3.68 shall apply to claims referred by State 
agencies to FNS as required by paragraphs c.(2) and d.(2) of this 
Notice subject to the following modifications:
    (1) In addition to the definitions set forth at 7 CFR 3.52, the 
term ``debts'' shall further be defined to include recipient claims 
established according to 7 CFR 273.18; and the terms ``State agency'' 
and ``FNS'' shall be defined as set forth in 7 CFR 271.2;
    (2) Pursuant to 7 CFR 3.34(c)(4) and 7 CFR 3.55(d), the Secretary 
has determined that collection of interest, penalties and 
administrative costs provided at 7 CFR 3.65 is not in the best 
interests of the United States and hereby waives collection of such 
charges;
    (3) In addition to providing the right to inspect and copy 
Departmental records as specified at 7 CFR 3.60(a), the Secretary shall 
provide copies of records relating to the debt in response to timely 
requests. For a request to be timely, FNS must receive it within 30 
calendar days of the date of the notice of intent;
    (4) Pursuant to 5 CFR 550.1104(d)(6), an opportunity to establish a 
written repayment agreement as set forth at 7 CFR 3.61 will not be 
provided; and
    (5) The notice of intent for FSP salary offset shall comply with 
the requirements of the Departmental notice of intent which are set 
forth at 7 CFR 3.55, subject to the following modifications:
    (i) In addition to the statement that the debtor has the right to 
inspect and copy Departmental records relating to the debt, the notice 
of intent shall state that the Secretary shall, if timely requested by 
the debtor, provide copies of such records. It shall further advise, as 
required by 7 CFR 3.60(a), that to be timely such requests must be 
received within 30 days of the date of the notice of intent; and
    (ii) The statement of the right to enter a written repayment 
agreement provided by 7 CFR 3.55(f) shall not be included.

    Dated: August 21, 1994.
Ellen Haas,
Assistant Secretary for Food and Consumer Services.
[FR Doc. 94-21186 Filed 8-26-94; 8:45 am]
BILLING CODE 3410-30-P