[Federal Register Volume 63, Number 81 (Tuesday, April 28, 1998)]
[Rules and Regulations]
[Pages 23354-23359]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-11203]
[[Page 23353]]
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Part III
Department of the Treasury
_______________________________________________________________________
Fiscal Service
_______________________________________________________________________
31 CFR Part 285
Salary Offset; Interim Rule
Federal Register / Vol. 63, No. 81 / Tuesday, April 28, 1998 / Rules
and Regulations
[[Page 23354]]
DEPARTMENT OF THE TREASURY
Fiscal Service
31 CFR Part 285
RIN 1510-AA70
Salary Offset
AGENCY: Financial Management Service, Fiscal Service, Treasury.
ACTION: Interim rule with request for comments.
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SUMMARY: The Debt Collection Improvement Act of 1996 (DCIA) requires
the Federal Government to withhold or reduce certain Federal payments
to satisfy the delinquent nontax debts owed to the United States by the
payee. This process is known as ``administrative offset.'' In addition,
the DCIA requires Federal agencies, using a process known as
centralized salary offset computer matching, to identify Federal
employees who owe delinquent nontax debt to the United States. This
interim rule establishes centralized computer matching procedures for
comparing delinquent debt information with Federal salary payment
information for the purpose of offsetting the salary payments of those
employees who owe debt to the United States once they are identified.
This interim rule also establishes the rules governing the
administrative offset of Federal salary payments through a centralized
offset process operated by the Financial Management Service of the U.S.
Department of the Treasury.
DATES: This rule is effective April 28, 1998. Comments must be received
on or before May 28, 1998.
ADDRESSES: All comments should be addressed to Gerry Isenberg,
Financial Program Specialist, Debt Management Services, Financial
Management Service, 401 14th Street SW, Room 151, Washington, D.C.
20227. A copy of this interim 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) 874-6859; or Ellen Neubauer or Ronda Kent, Senior
Attorneys, at (202) 874-6680.
SUPPLEMENTARY INFORMATION:
Background
A major purpose of the Debt Collection Improvement Act of 1996
(DCIA), Pub. L. 104-134, 110 Stat. 1321-358 et seq. (April 26, 1996),
is to increase the collection of delinquent nontax debts owed to the
Federal Government. Among other things, the DCIA established a
centralized process for withholding or reducing eligible Federal
payments, including Federal salary payments, to pay the payee's
delinquent debt owed to the United States. This process is known as
``administrative offset.'' The DCIA also established a requirement that
Federal agencies match their delinquent debtor records with records of
Federal employees, at least annually, to identify Federal employees who
owe delinquent debt to the Federal Government. This rule establishes
centralized procedures for matching delinquent debt records with
Federal salary payment records for the purpose of offsetting a debtor's
Federal salary payments where a match occurs.
The Financial Management Service (FMS), a bureau of the Department
of the Treasury (Treasury), disburses more than 850 million Federal
payments annually, including Federal salary payments. As the Treasury
disbursing agency, FMS is responsible for the implementation of
centralized administrative offset of Federal payments for the
collection of delinquent nontax debt. To meet this responsibility, FMS
has established the Treasury Offset Program. By participating in the
Treasury Offset Program in accordance with the provisions of this rule,
Federal agencies will comply with the DCIA requirements regarding
Federal employees who owe delinquent nontax debts to the United States.
The Treasury Offset Program works as follows. FMS maintains a
delinquent debtor database. The database includes delinquent debtor
information submitted and updated by Federal agencies and States. Under
the DCIA, Federal agencies are required to notify FMS of all past-due,
legally enforceable nontax debts owed to the United States that are
over 180 days delinquent for inclusion in this delinquent debtor
database.
As part of the Federal payment process, FMS and other Federal
disbursing officials compare the payee information with debtor
information in the delinquent debtor database operated by FMS. If the
payee's name and taxpayer identifying number (TIN) match the name and
TIN of a debtor, the payment is offset, in whole or part, to satisfy
the debt, to the extent allowed by law. This rule establishes specific
procedures for the comparison of information contained in the
delinquent debtor database with payee information contained on Federal
salary payments and for the offset of those payments where a match
occurs.
Amounts collected are transmitted to the appropriate agencies owed
the delinquent debt after the disbursing official deducts a fee charged
to cover the cost of the offset program. The authority of disbursing
officials to charge fees is found at 31 U.S.C. 3716(c)(4).
Additionally, as authorized by 5 U.S.C. 5514, agencies that perform
centralized salary offset computer matching services may charge a fee
sufficient to cover the full cost for such services. Under 31 U.S.C.
3717(e) the agencies which are owed the delinquent debt may add the
fees to the debt as part of the administrative cost, if permitted by
law.
Information about a delinquent debt remains in the debtor database
and offsets of eligible Federal salary and other payments will continue
until debt collection activity for the debt is terminated because of
full payment, establishment of a repayment plan, compromise, write-off
or other reasons justifying termination. In centralizing offset through
the Treasury Offset Program, FMS will consolidate and simplify offset
procedures for the Federal Government.
Other rules and procedures reflect requirements for other types of
payments or debts, as well as the general rules applicable to
collection of debts by offset. FMS has promulgated or will promulgate
other rules governing the centralized offset of Federal payments (other
than Federal salary payments) for the collection of debts owed to
Federal agencies, for the collection of debts owed to States, and for
the collection of past-due child support. FMS anticipates that Part 285
of this title will contain all of the provisions relating to the
centralized offset of Federal payments for the collection of debts owed
to the Federal Government and to State governments, including past-due
child support.
Section Analysis
(a) Purpose and Scope. Paragraph (a) explains that this rule
establishes procedures for matching records of delinquent debtors with
Federal employee records as required under 5 U.S.C. 5514(a)(1) and,
where a match occurs, for offsetting Federal salary payments through
centralized administrative offset under 31 U.S.C. 3716. Nothing in this
rule precludes an agency from pursuing collection remedies in addition
to salary offset.
(b) Definitions. This rule includes the following definitions.
Administrative offset. The term ``administrative offset'' or
``offset'' as
[[Page 23355]]
defined in this rule has the same meaning as found in 31 U.S.C.
3701(a)(1).
Agency. The term ``agency'' as defined in this rule has the same
meaning as found in 31 U.S.C. 3701(a)(4) and includes all agencies
required by 5 U.S.C. 5514(a)(1) to participate in centralized salary
offset computer matching. The term refers to an agency in the
executive, judicial or legislative branches of the Government,
including government corporations, that administers the program that
gave rise to the debt.
Centralized salary offset computer matching. The phrase
``centralized salary offset computer matching'' describes the
computerized process used to match delinquent debt records with Federal
salary payment records when the purpose of the match is to identify
Federal employees who owe debt to the Federal Government.
Debt. For the purposes of this rule, the term ``debt'' has the same
meaning as found in 31 U.S.C. 3701(b)(1) and does not include tax debt.
Delinquent debt record. For purposes of this rule, the term
``delinquent debt record'' refers to the information about a debt that
an agency submits to FMS when the agency refers the debt for collection
by offset in accordance with the provisions of 31 U.S.C. 3716.
Disbursing official. ``Disbursing official'' means an official who
has authority to disburse Federal salary payments pursuant to 31 U.S.C.
3321 or another law. It includes 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 of the Treasury, or
any disbursing official of any other executive department or agency
that disburses Federal salary payments.
Disposable pay. ``Disposable pay'' has the same meaning as
prescribed by the Office of Personnel Management (OPM) in 5 CFR
550.1103. As defined by OPM, ``disposable pay'' means that part of
current basic pay, special pay, incentive pay, retired pay, retainer
pay, or in the case of an employee not entitled to basic pay, other
authorized pay remaining after the deduction of (a) any amount required
by law to be withheld; (b) amounts properly withheld for Federal, state
or local income tax purposes; (c) amounts deducted as health insurance
premiums; (d) amounts deducted as normal retirement contributions, not
including amounts deducted for supplementary coverage; and (e) amounts
deducted as normal life insurance premiums not including amounts
deducted for supplementary coverage.
Federal employee. The term ``Federal employee'' is intended to
cover any individual who is employed by any agency of the Federal
Government, including temporary and seasonal employees.
Federal employee records. ``Federal employee records'' are the
Federal salary payment records. To request salary payments for their
employees, Federal agencies prepare and certify payment vouchers.
Disbursing officials of the Federal Government issue salary payments
upon receipt of certified payment vouchers. To identify Federal
employees who owe debt to the United States, the Federal salary payment
records will be compared with the delinquent debt records submitted to
FMS.
Paying agency. The ``paying agency'' is the employing agency or the
payroll agency (e.g., the United States Department of Agriculture's
National Finance Center). The paying agency prepares and certifies
payment vouchers pursuant to which disbursing officials issue salary
payments.
Salary offset. ``Salary offset'' is a type of administrative
offset. As amended by section 31001(d)(2)(B) of the DCIA, 31 U.S.C.
3716 is applicable to the offset of all Federal payments even if
another statute provides for using offset to collect a particular type
of debt. See 31 U.S.C. 3716(e) (formerly 31 U.S.C. 3716(c)). Thus, the
provisions of 31 U.S.C. 3716 apply to salary offset even though
procedures governing the offset of a Federal employee's salary are
provided for in 5 U.S.C. 5514. The requirements to provide a Federal
employee with notice and an opportunity to dispute the debt are
contained in 5 U.S.C. 5514 and implementing regulations. Nothing in
this rule is intended to change the prerequisites to salary offset.
Taxpayer identifying number. For an individual the ``taxpayer
identifying number'' is the social security number. An offset of an
individual's salary payment will not occur unless the taxpayer
identifying number and name of the payee match the taxpayer identifying
number and name of the debtor.
(c) Establishment of the consortium. Paragraph (c) defines the
interagency consortium that the Secretary, by issuance of this rule,
establishes in accordance with the requirement contained in 5 U.S.C.
5514(a)(1). The purpose of the interagency consortium is to establish a
centralized salary offset computer matching process. Therefore,
paragraph (c) provides that the interagency consortium initially
consists of all agencies which disburse Federal salary payments and
which are required to offset Federal payments to collect debts. See 31
U.S.C. 3716(c)(1)(A). These agencies have the information necessary to
identify all Federal employees who are receiving Federal salary
payments. The membership of the consortium may be changed at the
discretion of the Secretary, and the Secretary will be responsible for
the ongoing coordination of the activities of the consortium.
(d) Creditor agency participation. The DCIA requires agencies to
notify FMS of all past-due, legally enforceable debt over 180 days
delinquent for purposes of administrative offset. See 31 U.S.C.
3716(c)(6). As explained in paragraph (d)(1), by complying with this
notification requirement, agencies simultaneously will comply with the
salary offset matching requirement under 5 U.S.C. 5514(a)(1). It is
anticipated that all Federal disbursing officials will match Federal
salary payment records against the debtor records contained in the
delinquent debtor database. Currently, however, full implementation of
the centralized salary offset computer matching process is not
complete. Therefore, until the procedures described in this rule are
fully implemented, it is important that agencies continue existing
salary matching processes to identify, and collect debt owed from the
salaries of, Federal employees who may not be identified through the
Treasury Offset Program process.
Debts referred to FMS for purposes of administrative offset will be
matched with all Federal payment records, including Federal salary
payments. After a match occurs, unless offset is legally prohibited,
the payee's payment will be offset to pay the payee's debt after proper
notice and opportunity to review and dispute the debt have been
provided to the payee (see paragraph (d)(3) of this section). Agencies
also may refer debts less than 180 days delinquent so long as the debt
is past-due and legally enforceable and all prerequisites to offset
have been met.
Paragraph (d)(2) provides that before submitting a debt to FMS for
purposes of administrative offset and salary offset matching, agencies
must have issued regulations governing the collection of debt by both
administrative offset and salary offset. Agency regulations governing
the collection of debt by administrative offset must comply with 31
U.S.C. 3716(b) and with the Federal Claims Collection Standards (4 CFR
Parts 101-105; see also, Notice of
[[Page 23356]]
Proposed Rulemaking concerning revisions to the Federal Claims
Collection Standards, 62 FR 68475, Dec. 31, 1997). Agency regulations
governing the collection of debt by salary offset must comply with 5
U.S.C. 5514 and with regulations issued by OPM (5 CFR 550.1101 through
550.1108; see also, Notice of Proposed Rulemaking concerning revisions
to the OPM regulations, 63 FR 18850, April 16, 1998). Although salary
offsets under this rule are being conducted through a centralized
process under 31 U.S.C. 3716, agencies must nevertheless comply with
the requirements for regulations contained in 5 U.S.C. 5514 and OPM
regulations. An agency that has already published offset regulations
need not publish new regulations except as may be necessary to conform
the regulations to DCIA requirements.
Paragraph (d)(3) describes agency certification requirements when
submitting a debt to FMS for offset, including salary offset. Nothing
in the DCIA modified the pre-offset due process notices and
opportunities afforded to debtors, in general, and Federal employees,
in particular. Therefore, a debt may not be submitted to FMS for offset
and salary offset matching unless the creditor agency certifies, in
writing, that the debtor has been afforded the legally required due
process. Paragraph (d)(3)(iv) explains that, with the approval of FMS,
the specific notices and opportunities required as a prerequisite to
salary offset may be provided to the debtor after the debt is submitted
to FMS, but must be provided prior to the offset of an employee's
salary.
Paragraph (d)(4) explains that the creditor agency is responsible
for notifying FMS of any changes to the debt amount (other than offset
collections) and any changes to the status of the legal enforceability
of the debt. For example, unless the creditor agency determines that
the automatic stay imposed at the time of a bankruptcy filing pursuant
to 11 U.S.C. 362 has been lifted or is no longer in effect, in most
cases collection activity against the debtor should stop immediately.
Therefore, it is imperative that the creditor agency notify FMS
immediately upon learning that a bankruptcy petition has been filed
with respect to a debtor.
(e) Centralized salary offset computer match. Paragraph (e)
explains that the delinquent debt records submitted by creditor
agencies will be compared with the Federal employee records (salary
payment records) maintained by the members of the consortium described
in paragraph (c). A match will occur when the taxpayer identifying
number and name of a payee match the taxpayer identifying number and
name of a debtor. For purposes of the computer matching process, the
``name'' will be a portion of the name, known as a ``name control,''
designed to ensure accurate matching. The purpose of the computer
matching process is to identify those Federal employees who owe
delinquent debt and, once identified, to offset the employee's salary
to pay the employee's delinquent debt. As noted above, salary offset is
a type of administrative offset.
Although generally such computer matches are subject to the
Computer Matching and Privacy Protection Act of 1988, Pub. L. No. 100-
503 (Computer Matching Act), the DCIA authorizes the Secretary to waive
certain provisions of the Computer Matching Act for administrative
offset. See 31 U.S.C. 3716(f). Specifically, the Secretary is
authorized to waive the Computer Matching Act requirements of
completing matching agreements (contained in 5 U.S.C. 552a(o)) and
post-match notification to the individual and verification of the
resulting data (contained in 5 U.S.C. 552a(p)). The waiver is
authorized upon the written certification by the head of the creditor
agency that the requirements of 31 U.S.C. 3716(a) have been met. The
waiver authority has been delegated by the Secretary to FMS. The
certification that agencies are required to submit when referring their
debts to FMS for offset, as described in paragraph (d)(3)(iii) of the
rule, meets the certification requirement for waiver. Section 3716(a)
requires that, prior to collecting a debt by administrative offset,
agencies shall provide the debtor with written notice of the nature and
amount of the debt and an opportunity to inspect and copy records, for
review of the debt determination, and to enter into a repayment
agreement. Agencies also must notify the debtor that the agency intends
to collect the debt by administrative offset. FMS will not accept any
debts into the debtor database (and therefore will not conduct any
computer matches for offset purposes) unless the debts are accompanied
by the written certification required by paragraph (d)(3)(iii) of this
rule. In addition to certifying that the agency has complied with the
requirements of 31 U.S.C. 3716 for offset, prior to offset of an
employee's salary, the creditor agency must certify that the
prerequisites to salary offset also have been met.
(f) Salary offset. Paragraph (f) states that when a match occurs,
and all other requirements for offset have been met, Federal disbursing
officials will offset the Federal employee's salary payment to satisfy,
in whole or in part, the debt. As discussed in paragraph (e)(1), a
match occurs when the taxpayer identifying number and name of a payee
match the taxpayer identifying number and name of a debtor.
Under 5 U.S.C. 5514 and as described in paragraph (g), the amount
that may be offset from a Federal employee's salary payment is limited
to 15% of the employee's disposable pay. Since disbursing officials may
not have the information necessary to calculate 15% of an employee's
disposable pay, disbursing officials may request that the paying agency
deduct the amount to be offset before payment is certified to a
disbursing official for payment.
(g) Offset amount. Under 5 U.S.C. 5514, the amount that may be
offset from an employee's salary payment is limited to 15% of the
employee's disposable pay. A disbursing official, after notifying the
creditor agency or at the request of a creditor agency, may offset less
than 15%. In addition, the debtor may agree to the offset of an amount
greater than 15%.
(h) Priorities. As required by 5 U.S.C. 5514(d), paragraph (h)(1)
of this section provides that tax levies imposed by the Internal
Revenue Service take precedence over deductions from an employee's
salary to pay a nontax debt owed to the United States.
Paragraph (h)(2) states that amounts offset from a Federal
employee's salary will be applied first to the employee's past-due
child support obligations which have been assigned to a State before
being applied to the nontax debts owed by the employee to the United
States. As currently set forth in this rule, only those child support
debts which have been assigned to a State as reimbursement for public
assistance paid to a family are given priority over debts owed to the
Federal government. Amounts offset from a Federal employee's salary
will be applied to child support obligations that have not been
assigned to a State (and are owed directly to the custodial family)
after payment of assigned child support debts and Federal debts owed by
the employee. The priorities set forth in this interim rule parallel
the statutory priorities that govern the offset of a debtor's tax
refund payment. See 26 U.S.C. 6402(c) and 6402(d)(2). The public is
invited to comment specifically on the priorities set forth in this
rule and whether, for salary offset purposes, child support debts
assigned to a State should have priority over debts owed to the Federal
government. In addition, the public is invited to comment specifically
on whether debts owed to the Federal government should
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have priority over child support debts which have not been assigned to
a State.
(i) Notice. Before offsetting a salary payment, the disbursing
official, or the paying agency on behalf of the disbursing official,
must notify the Federal employee in writing of the date deductions from
salary will begin and of the amount of such deductions. The amount of
the deductions may be stated as a percentage of pay. Additionally, once
an offset of a salary payment has occurred, the disbursing official, or
the paying agency on behalf of the disbursing official, must provide
written notice to the Federal employee that the offset has occurred.
This written notice may appear on a Leave and Earnings Statement (or
similar statement) provided to the Federal employee. The disbursing
official also will inform the creditor agency that an offset has
occurred but will not inform the creditor agency of the payment source
of the amounts collected. Since disbursing agencies will be conducting
offsets of various payment types, debt repayment may result from any
one of a number of payment sources.
(j) Fees. Agencies that perform salary offset matching services may
charge fees pursuant to 5 U.S.C. 5514(a)(1). FMS, or a paying agency
acting on behalf of FMS, may charge a fee sufficient to cover the full
cost of implementing the offset program pursuant to 31 U.S.C.
3716(c)(4). The creditor agency may add any fees to the debt as an
administrative cost pursuant to 31 U.S.C. 3717(e), if permitted by law.
Fees may be deducted from the amount offset before that amount is
transmitted to the creditor agency. The amount of the fee may be
adjusted annually to ensure that the fee adequately covers the
administrative costs of the offset program.
(k) Disposition of amounts collected. Paragraph (k) describes how
amounts collected from salary payments will be transmitted to creditor
agencies.
Regulatory Analysis
This interim rule is not a significant regulatory action as defined
in Executive Order 12866. Because no notice of proposed rulemaking is
required for this interim rule, the provisions of the Regulatory
Flexibility Act do not apply.
Special Analyses
FMS is promulgating this interim rule without opportunity for prior
public comment pursuant to the Administrative Procedure Act, 5 U.S.C.
553 (the ``APA''), because FMS has determined, for the following
reasons, that a comment period would be unnecessary, impracticable and
contrary to the public interest. A comment period is unnecessary
because this interim rule does not change how the Federal salary offset
process affects the Federal employee who owes delinquent nontax debt.
The interim rule reflects changes to the procedures as to how creditor
agencies will identify Federal employees who owe delinquent nontax debt
for purposes of offsetting the salary payments of the identified
Federal employees. Under this interim rule, creditor agencies are
required to provide to the debtor the same pre-offset notice,
opportunities, and rights to dispute the debt and seek waiver as
currently required under 5 U.S.C. 5514 and implementing regulations.
FMS has determined that good cause exists to make this interim rule
effective upon publication without providing the 30 day period between
publication and the effective date contemplated by 5 U.S.C. 553(d). The
purpose of a delayed effective date is to afford persons affected by a
rule a reasonable time to prepare for compliance. However, in this
case, as required by the DCIA which was effective on April 26, 1996,
agencies already participate in the Treasury Offset Program. Many
agencies have collected debts by salary offset over the last 15 years.
Procedures affecting debtors remain unchanged in this rule.
Centralized salary offset computer matching for offset purposes
will improve the efficiency of Treasury's government-wide collection of
nontax delinquent debts owed by Federal employees. This rule provides
critical guidance that will facilitate creditor agencies' participation
in centralized salary offset computer matching as required by the DCIA.
Therefore, FMS believes that good cause exists and that it is in the
public interest to issue the interim rule without opportunity for prior
public comment.
The public is invited to submit comments on the interim rule in
general and on the specific points mentioned above which will be taken
into account before a final rule is issued.
List of Subjects in 31 CFR Part 285
Administrative practice and procedure, Claims, Debt, Federal
employees, Salaries, Wages.
Authority and Issuance
For the reasons set forth in the preamble, part 285 of 31 CFR
chapter II, subchapter A, is amended as follows:
PART 285--DEBT COLLECTION AUTHORITIES UNDER THE DEBT COLLECTION
IMPROVEMENT ACT OF 1996
1. The authority citation for part 285 is revised to read as
follows:
Authority: 5 U.S.C. 5514; 26 U.S.C. 6402; 31 U.S.C. 321, 3701,
3711, 3716, 3720A; E.O. 13019; 3 CFR, 1996 Comp., p. 216.
2. Section 285.7 is added to Subpart A to read as follows:
Sec. 285.7 Salary offset.
(a) Purpose and scope. (1) This section establishes procedures for
the offset of Federal salary payments, through FMS' administrative
offset program, to collect delinquent debts owed to the Federal
Government. This process is known as salary offset. Rules issued by the
Office of Personnel Management contain the requirements Federal
agencies must follow prior to conducting salary offset and the
procedures for requesting offsets directly from a paying agency. See 5
CFR 550.1101 through 550.1108.
(2) This section implements the requirement under 5 U.S.C.
5514(a)(1) that all Federal agencies, using a process known as
centralized salary offset computer matching, identify Federal employees
who owe delinquent nontax debt to the United States. Centralized salary
offset computer matching is the computerized comparison of delinquent
debt records with records of Federal employees. The purpose of
centralized salary offset computer matching is to identify those
debtors whose Federal salaries should be offset to collect delinquent
debts owed to the Federal Government.
(3) This section specifies the delinquent debt records and Federal
employee records that must be included in the salary offset matching
process. For purposes of this section, delinquent debt records consist
of the debt information submitted to the Financial Management Service
for purposes of administrative offset as required under 31 U.S.C.
3716(c)(6). Agencies that submit their debt to FMS for purposes of
administrative offset are not required to submit duplicate information
for purposes of centralized salary offset computer matching under 5
U.S.C. 5514 and this section.
(4) This section establishes an interagency consortium to implement
centralized salary offset computer matching on a government-wide basis
as required under 5 U.S.C. 5514(a)(1). Federal employee records consist
of records of Federal salary payments disbursed by members of the
consortium.
[[Page 23358]]
(5) The receipt of collections from salary offsets does not
preclude a creditor agency from pursuing other debt collection
remedies, including the offset of other Federal payments to satisfy
delinquent nontax debt owed to the United States. A creditor agency
should pursue, when deemed appropriate by such agency, such debt
collection remedies separately or in conjunction with salary offset.
(b) Definitions. For purposes of this section:
Administrative offset means withholding funds payable by the United
States to, or held by the United States for, a person to satisfy a debt
owed by the payee.
Agency means a department, agency or subagency, court, court
administrative office, or instrumentality in the executive, judicial,
or legislative branch of the Federal government, including government
corporations.
Centralized salary offset computer matching means the computerized
comparison of Federal employee records with delinquent debt records to
identify Federal employees who owe such debts.
Creditor agency means any agency that is owed a debt.
Debt means any amount of money, funds, or property that has been
determined by an appropriate official of the Federal government to be
owed to the United States by a person, including debt administered by a
third party acting as an agent for the Federal Government. For purposes
of this section, the term ``debt'' does not include debts arising under
the Internal Revenue Code of 1986 (26 U.S.C.).
Delinquent debt record means information about a past-due, legally
enforceable debt, submitted by a creditor agency to FMS for purposes of
administrative offset (including salary offset) in accordance with the
provisions of 31 U.S.C. 3716 and applicable regulations. Debt
information includes the amount and type of debt and the debtor's name,
address, and taxpayer identifying number.
Disbursing official means an officer or employee designated to
disburse Federal salary payments. This section applies to all
disbursing officials of Federal salary payments, including but not
limited to, disbursing officials of the Department of the Treasury, the
Department of Defense, the United States Postal Service, any government
corporation, and any disbursing official of the United States
designated by the Secretary.
Disposable pay has the same meaning as that term is defined in 5
CFR 550.1103.
Federal employee means a current employee of an agency, including a
current member of the Armed Forces or a Reserve of the Armed Forces
(Reserves), employees of the United States Postal Service, and seasonal
and temporary employees.
Federal employee records means records of Federal salary payments
that a paying agency has certified to a disbursing official for
disbursement.
FMS means the Financial Management Service, a bureau of the
Department of the Treasury.
Paying agency means the agency that employs the Federal employee
who owes the debt and authorizes the payment of his or her current pay.
A paying agency also includes an agency that performs payroll services
on behalf of the employing agency.
Salary offset means administrative offset to collect a debt owed by
a Federal employee from the current pay account of the employee.
Secretary means the Secretary of the Treasury or his or her
delegate.
Taxpayer identifying number means the identifying number described
under section 6109 of the Internal Revenue Code of 1986 (26 U.S.C.
6109). For an individual, the taxpayer identifying number is the
individual's social security number.
(c) Establishment of the consortium. As required by the provisions
of 5 U.S.C. 5514(a)(1), by issuance of this section, the Secretary
establishes an interagency consortium to implement centralized salary
offset computer matching. The consortium initially includes all
agencies that disburse Federal salary payments, including but not
limited to, FMS, the Department of Defense, the United States Postal
Service, government corporations, and agencies with Treasury-designated
disbursing officials. The membership of the consortium may be changed
at the discretion of the Secretary, and the Secretary will be
responsible for the ongoing coordination of the activities of the
consortium.
(d) Creditor agency participation. (1) As required under 5 U.S.C.
5514(a)(1), creditor agencies shall participate at least annually in
centralized salary offset computer matching. To meet this requirement,
creditor agencies shall notify FMS of all past-due, legally enforceable
debts delinquent for more than 180 days for purposes of administrative
offset, as required under 31 U.S.C. 3716(c)(6). Additionally, creditor
agencies may notify FMS of past-due, legally enforceable debts
delinquent for less than 180 days for purposes of administrative
offset.
(2) Prior to submitting debts to FMS for purposes of administrative
offset (including salary offset) and centralized salary offset computer
matching, Federal agencies shall prescribe regulations in accordance
with the requirements of 31 U.S.C. 3716 (administrative offset) and 5
U.S.C. 5514 (salary offset).
(3) Prior to submitting a debt to FMS for purposes of collection by
administrative offset, including salary offset, creditor agencies shall
provide written certification to FMS that:
(i) The debt is past-due and legally enforceable in the amount
submitted to FMS and that the creditor agency will ensure that
collections (other than collections through offset) are properly
credited to the debt;
(ii) Except in the case of a judgment debt or as otherwise allowed
by law, the debt is referred for offset within ten years after the
agency's right of action accrues;
(iii) The creditor agency has complied with the provisions of 31
U.S.C. 3716 (administrative offset) and related regulations including,
but not limited to, the provisions requiring that the creditor agency
provide the debtor with applicable notices and opportunities for a
review of the debt; and
(iv) The creditor agency has complied with the provisions of 5
U.S.C. 5514 (salary offset) and related regulations including, but not
limited to, the provisions requiring that the creditor agency provide
the debtor with applicable notices and opportunities for a hearing.
(4) FMS may waive the certification requirement set forth in
paragraph (d)(3)(iv) of this section as a prerequisite to submitting
the debt to FMS. If FMS waives the certification requirement, before an
offset occurs, the creditor agency shall provide the Federal employee
with the notices and opportunities for a hearing as required by 5
U.S.C. 5514 and applicable regulations, and shall certify to FMS that
the requirements of 5 U.S.C. 5514 and applicable regulations have been
met.
(5) The creditor agency shall notify FMS immediately of any
payments credited by the creditor agency to the debtor's account, other
than credits for amounts collected by offset, after submission of the
debt to FMS. The creditor agency also shall notify FMS immediately of
any change in the status of the legal enforceability of the debt, for
example, if the creditor agency receives notice that the debtor has
filed for bankruptcy protection.
(e) Centralized salary offset computer match. (1) Delinquent debt
records will
[[Page 23359]]
be compared with Federal employee records maintained by members of the
consortium or paying agencies. The records will be compared to identify
Federal employees who owe delinquent debts for purposes of collecting
the debt by administrative offset. A match will occur when the taxpayer
identifying number and name of a Federal employee are the same as the
taxpayer identifying number and name of a debtor.
(2) As authorized by the provisions of 31 U.S.C. 3716(f), FMS,
under a delegation of authority from the Secretary, has waived certain
requirements of the Computer Matching and Privacy Protection Act of
1988, 5 U.S.C. 552a, as amended, for administrative offset, including
salary offset, upon written certification by the head of the creditor
agency that the requirements of 31 U.S.C. 3716(a) have been met.
Specifically, FMS has waived the requirements for a computer matching
agreement contained in 5 U.S.C. 552a(o) and for post-match notice and
verification contained in 5 U.S.C. 552a(p). The creditor agency will
provide certification in accordance with the provisions of paragraph
(d)(3)(iii) of this section.
(f) Salary offset. When a match occurs and all other requirements
for offset have been met, as required by the provisions of 31 U.S.C.
3716(c) the disbursing official shall offset the Federal employee's
salary payment to satisfy, in whole or part, the debt owed by the
employee. Alternatively, the paying agency, on behalf of the disbursing
official, may deduct the amount of the offset from an employee's
disposable pay before the employee's salary payment is certified to a
disbursing official for disbursement.
(g) Offset amount. (1) The amount offset from a salary payment
under this section shall be the lesser of:
(i) The amount of the debt, including any interest, penalties and
administrative costs; or
(ii) An amount up to 15% of the debtor's disposable pay.
(2) Alternatively, the amount offset may be an amount agreed upon,
in writing, by the debtor and the creditor agency.
(3) Offsets will continue until the debt, including any interest,
penalties, and costs, is paid in full or otherwise resolved to the
satisfaction of the creditor agency.
(h) Priorities. (1) A levy pursuant to the Internal Revenue Code of
1986 shall take precedence over other deductions under this section.
(2) When a salary payment may be reduced to collect more than one
debt, amounts offset under this section will be applied to a debt only
after amounts offset have been applied to satisfy past due child
support debts assigned to a State pursuant to 402(a)(26) or section
471(a)(17) of the Social Security Act.
(i) Notice. (1) Before offsetting a salary payment, the disbursing
official, or the paying agency on behalf of the disbursing official,
shall notify the Federal employee in writing of the date deductions
from salary will commence and of the amount of such deductions.
(2)(i) When an offset occurs under this section, the disbursing
official, or the paying agency on behalf of the disbursing official,
shall notify the Federal employee in writing that an offset has
occurred including:
(A) A description of the payment and the amount of offset taken;
(B) The identity of the creditor agency requesting the offset; and,
(C) A contact point within the creditor agency that will handle
concerns regarding the offset.
(ii) The information described in paragraphs (i)(2)(i)(B) and
(i)(2)(i)(C) of this section does not need to be provided to the
Federal employee when the offset occurs if such information was
included in a prior notice from the disbursing official or paying
agency.
(3) The disbursing official will advise each creditor agency of the
names, mailing addresses, and taxpayer identifying numbers of the
debtors from whom amounts of past-due, legally enforceable debt were
collected and of the amounts collected from each debtor for that
agency. The disbursing official will not advise the creditor agency of
the source of payment from which such amounts were collected.
(j) Fees. Agencies that perform centralized salary offset computer
matching services may charge a fee sufficient to cover the full cost
for such services. In addition, FMS, or a paying agency acting on
behalf of FMS, may charge a fee sufficient to cover the full cost of
implementing the administrative offset program. FMS may deduct the fees
from amounts collected by offset or may bill the creditor agencies.
Fees charged for offset shall be based on actual administrative offsets
completed.
(k) Disposition of amounts collected. The disbursing official
conducting the offset will transmit amounts collected for debts, less
fees charged under paragraph (j) of this section, to the appropriate
creditor agency. If an erroneous offset payment is made to a creditor
agency, the disbursing official will notify the creditor agency that an
erroneous offset payment has been made. The disbursing official may
deduct the amount of the erroneous offset payment from future amounts
payable to the creditor agency. Alternatively, upon the disbursing
official's request, the creditor agency shall return promptly to the
disbursing official or the affected payee an amount equal to the amount
of the erroneous payment (without regard to whether any other amounts
payable to such agency have been paid). The disbursing official and the
creditor agency shall adjust the debtor records appropriately.
Dated: April 22, 1998.
Richard L. Gregg,
Commissioner.
[FR Doc. 98-11203 Filed 4-27-98; 8:45 am]
BILLING CODE 4810-35-P