[Federal Register Volume 63, Number 167 (Friday, August 28, 1998)]
[Rules and Regulations]
[Pages 46142-46146]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-23093]



[[Page 46141]]

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Part VIII





Department of the Treasury





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Fiscal Service



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31 CFR Part 285



Administrative Offset--Collection of Past-Due Support; Final Rule

  Federal Register / Vol. 63, No. 167 / Friday, August 28, 1998 / Rules 
and Regulations  

[[Page 46142]]



DEPARTMENT OF THE TREASURY

Fiscal Service

31 CFR Part 285

RIN 1510-AA58


Administrative Offset--Collection of Past-Due Support

AGENCY: Financial Management Service, Fiscal Service, Treasury.

ACTION: Final rule; adoption of interim rule with changes.

-----------------------------------------------------------------------

SUMMARY: The Debt Collection Improvement Act of 1996 (DCIA), enacted on 
April 26, 1996, authorized the Secretary of the Treasury (Secretary) to 
collect past-due support by the administrative offset of Federal 
payments. Executive Order 13019 of September 28, 1996 directed the 
Secretary to promptly develop and implement procedures necessary for 
the collection of past-due support debts by administrative offset. The 
Financial Management Service (FMS), a bureau of the Department of the 
Treasury, published an interim rule on July 7, 1997. This final rule 
adopts the interim rule with changes incorporating suggestions provided 
in comments on the interim rule.

EFFECTIVE DATE: September 28, 1998.

ADDRESSES: Inquiries may be mailed to Gerry Isenberg, Financial Program 
Specialist, Debt Management Services, Financial Management Service, 
Department of the Treasury, 401 14th Street S.W., Room 151, Washington, 
D.C. 20227. A copy of this final rule is being made available for 
downloading from the Financial Management Service web site at the 
following address: http://www.fms.treas.gov.

FOR FURTHER INFORMATION CONTACT: Gerry Isenberg, Financial Program 
Specialist, at (202) 874-6660; J. Martin Mills, Director, Treasury 
Offset Program, at (202) 874-8700; Randall S. Lewis, Attorney-Advisor, 
at (202) 874-6680.

SUPPLEMENTARY INFORMATION:

Background

    The Debt Collection Improvement Act of 1996 (DCIA), Pub. L. 104-
134, 110 Stat. 1321-358 et seq. (April 26, 1996), requires that 
disbursing officials of the Department of the Treasury and other 
Federal disbursing officials offset Federal payments to collect nontax 
delinquent debts owed to the Federal government. In addition, 
subsection (h) of 31 U.S.C. 3716, as added by section 31001(f) of the 
DCIA, authorizes the Secretary of the Treasury (Secretary) to collect 
debts owed to States, including past-due support, by the administrative 
offset of Federal payments. See also section 31001(z)(1)(B) of the 
DCIA, codified at 31 U.S.C. 3701(b)(2). To accomplish these goals, 
Treasury has established a centralized offset program, known as the 
Treasury Offset Program (TOP). Under TOP, Federal payments are matched 
against a database of delinquent debtors maintained by FMS. When a 
match occurs and all of the prerequisites for offset have been met, the 
payment is offset to satisfy the debt. The TOP will include offsets of 
all eligible Federal payments, including, as of January 1, 1999, 
Federal tax refund payments.
    On September 28, 1996, the President issued Executive Order 13019 
entitled ``Supporting Families: Collecting Delinquent Child Support 
Obligations'' (Executive Order) which requires that the Secretary 
promptly develop and implement procedures necessary to collect past-due 
support debts by administrative offset. The Executive Order recognizes 
that the failure of some parents to meet their child support 
obligations threatens the health, education, and well-being of their 
children and requires the collection of delinquent child support 
obligations from persons who may be entitled or eligible to receive 
certain Federal payments. FMS published an interim regulation on July 
7, 1997 (62 FR 36205) describing the procedures applicable to the 
collection of past-due support debts by administrative offset of non-
tax Federal payments in accordance with 31 U.S.C. 3716(h) and the 
Executive Order.
    Currently, regulations promulgated by the Internal Revenue Service 
and the Department of Health and Human Services (HHS) govern the 
offsetting of federal tax refund payments to collect past due child 
support as authorized under 26 U.S.C. 6402 and 42 U.S.C. 664. See 26 
CFR 301.6402-5 and 45 CFR 303.72. Effective January 1, 1999, FMS will 
operate the tax refund offset program as part of TOP. FMS will publish 
a regulation governing the offsetting of tax refund payments to collect 
past-due support beginning January 1, 1999. In addition, FMS has 
promulgated or will promulgate other rules governing the offset of 
Federal payments to collect debts other than child support owed to 
Federal agencies and States. FMS anticipates that Part 285 of this 
title ultimately will contain all of the provisions relating to 
centralized offset for the collection of debts owed to the Federal 
Government and to State governments, including past-due child support 
being enforced by States.
    FMS continues to work closely with HHS to implement procedures 
necessary to report to the Secretary information on past-due support 
debts referred to HHS by States under 31 U.S.C. 3716(h) and this rule. 
HHS issued guidance to all States on August 8, 1997. In addition, FMS 
is working closely with HHS to implement procedures necessary to report 
to the Secretary information on past-due support debts referred to HHS 
by States for tax refund offset purposes under 42 U.S.C. 664 and 26 
U.S.C. 6402(c). It is anticipated that States will continue to refer 
debts to HHS and that HHS will report those debts to the Secretary for 
offset from both Federal tax refunds and other Federal payments.

Public Comments

    FMS received comments from 11 states and one Federal agency on the 
interim rule published on July 7, 1997. Many of the comments related to 
technical questions such as specifications for the electronic 
submission of past-due support information. Such questions are not 
addressed in this final rule, but will be addressed by FMS or HHS in 
separate procedural instructions. Following is a discussion of the 
substantive issues raised in the comments.

Relationship among Treasury, HHS, and the States

    States will continue to refer debts to HHS for the collection of 
past-due support through the offset of both Federal tax payments under 
the tax refund offset program (TROP) and other Federal payments under 
administrative offset (AO). HHS will report these debts to Treasury for 
offset purposes. Though this rule provides States with the flexibility 
to refer past-due support debts directly to FMS, current HHS rules 
governing programs under Chapter 7, Subchapter IV, Part D (IV-D) of the 
Social Security Act require States to report past-due support debts to 
HHS. This rule is not intended to supersede existing HHS rules; it 
merely provides flexibility should HHS decide to amend its rules in the 
future to allow States to refer past-due support debts directly to FMS.

Relationship between AO and TROP

    The referral of past-due support to Treasury for collection by AO 
is voluntary. Therefore, cases submitted for TROP will not 
automatically be processed through AO. The TOP, which encompasses both 
TROP and AO, when fully developed, will allow States to control which 
debts may be collected by offset of tax refunds, other Federal

[[Page 46143]]

payments, or both. States also will be able to control whether a 
particular type of payment, such as Federal salary payments, should be 
offset with respect to an individual debtor.

Comments outside the scope of this rule

    Several comments were outside the scope of this rule and have not 
been addressed. For example, one commenter was concerned about the 
reporting of past-due support balances exceeding $5,000 to the 
Secretary of State for purposes of denying passports to the obligors 
under 42 U.S.C. 652(k) and 654(31). Another commenter was concerned 
that past-due support debts would be reported to consumer reporting 
agencies by Treasury. Federal agencies are not authorized to report 
such amounts to consumer reporting agencies. FMS also received several 
comments regarding choice of law in situations involving more than one 
State. Paragraph (d) of this final rule requires States to certify that 
they have complied with all of the requirements of this rule, as well 
as State law and procedure. Determination of applicable State law is 
outside the scope of this rule, and must be determined under applicable 
Federal and State law by the States involved in a particular situation.

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

    In response to several comments, the definition of ``past-due 
support'' has been amended by adding the following at the end of the 
definition included in the interim rule: ``The term child as used in 
this definition is not limited to minor children.'' This amendment 
clarifies that, unless prohibited by court order, or by State law or 
procedure, past-due support may be collected by offsetting the 
obligor's nontax Federal payments even after the child has reached the 
age of majority. Compare Federal law governing tax refund offset which, 
unlike administrative offset, prohibits collection of past-due support 
(which has not been assigned to a State) for a child who has reached 
the age of majority. See 42 U.S.C. 664(c)(2).

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

    The definition of ``past-due support being enforced by the State'' 
has been amended to clarify that AO may be used to collect past-due 
support debts enforced by States pursuant to cooperative agreements 
with or by Indian tribal governments. See Section 1(b) of the Executive 
Order.

Sec. 285.1(a)--Definition of State

    The public was specifically invited to comment on the impact of 
including or excluding legal subdivisions of States in the definition 
of State. Three States commented that FMS was correct in not including 
subdivisions within the definition of State. A fourth State indicated 
that it would prefer to certify cases on a statewide basis, but 
believed that States which operate on a county basis should have the 
discretion to certify cases at the county level. Based on the comments 
received and discussions with HHS regarding current procedures for 
county reporting, FMS determined that the existing definition does not 
create an impediment to the collection of past-due support. Counties 
seeking to participate may do so by reporting through the State's IV--D 
program director. Therefore, the definition of ``State'' was not 
changed to include legal subdivisions.

Sec. 285.1(c)--Agreements

    One commenter expressed concern over the amount of time the States 
will have to review and approve reciprocal agreements for the referral 
of past-due child support. As stated previously, FMS anticipates that 
States will continue to refer past-due support debts to HHS until such 
time as HHS changes its rules and reciprocal agreements are in place. 
Currently, there is no need for reciprocal agreements between FMS and 
States for the purpose of referring past-due support debts. However, 
should HHS change its rules to allow States the option of referring 
past-due support debts directly to FMS, States will be provided the 
time necessary to review and approve any reciprocal agreement that 
would be the basis for such referrals.

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

    Several States commented that the interim rule should be revised to 
define better which State should submit a debt for offset when a 
particular past-due support debt involves more than one State. One 
State commented that HHS guidance requires that, in non-assignment 
cases, the case must be submitted by the State in which the child 
resides. Another State suggested that, in assignment cases, the case 
should be submitted by the State in which the custodial parent applied 
for public assistance. Other States questioned whether the interim rule 
is consistent with provisions of 28 U.S.C. 1738B, Full Faith and Credit 
for Child Support Orders Act (FFCCSOA).
    In response to these comments, FMS, after consulting with HHS, 
determined that this provision of section 285.1(d) of the final rule 
will be unchanged from the interim rule. Paragraph 285.1(d) covers all 
situations that may arise as the residence and status of the parties 
change, and is not inconsistent with the FFCCSOA.
    Several States also were concerned as to whether the notification 
requirements that apply when more than one State is involved create an 
administrative burden. One State was particularly concerned that the 
notice requirement would result in the creation of a separate, unique 
notification system for these types of cases, and suggested that an 
easier and less burdensome way to provide such notices be developed. 
After consulting with HHS, FMS determined that the final rule should 
remain unchanged. The provision requiring a State to notify other 
States involved in enforcing the past-due support when it refers the 
debt for offset is necessary to ensure that debts are not referred by 
more than one State. Further, this requirement is consistent with 
existing HHS regulations governing the offset of tax refund payments, 
and, therefore, should not result in the creation of a new, separate 
reporting system by the States. See 45 CFR 303.72(d).
    One State requested that the rule include a specific listing of the 
types of past-due support that may be submitted for offset against 
Federal non-tax payments, including statutory citations for each type 
of past-due support. Such a list is unnecessary. Unlike the statutory 
authority for offsets against Federal tax refund payments, which 
includes specific references to 42 U.S.C. 608(a)(3), 671(a)(17) and 
654(4), the statutory authority for offset against other Federal 
payments does not include specific references to the type of past-due 
support debts that may be collected under AO. The only requirement is 
that the debt be past-due support being enforced by the State. Although 
FMS currently intends to accept only those types of past-due support 
debts that are eligible for offset against Federal tax payments, FMS 
will not apply the age and minimum debt amount restrictions applicable 
to TROP to AO. FMS and/or HHS will provide additional guidance relating 
to the referral of past-due support collection by AO under this rule.

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

    Several States commented that the $25 threshold for reporting cases 
for AO is too low. FMS has determined that the

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administrative costs associated with the collection of past-due support 
debts less than $25 exceed the amount of such debts. Therefore, it is 
not cost-effective for FMS to process debts less than $25. States, 
however, may determine that their costs to collect justify a higher 
threshold amount for referring debts to FMS for offset purposes. Since 
the referral of past-due support for collection by AO is voluntary, 
States are not required to refer all debts over $25, but may establish 
their own higher threshold based on their own cost-effectiveness 
determination.

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

    Eight States commented on the provisions concerning notification of 
changes in the status of debt. Several comments related specifically to 
the amount and/or timing of changes that must be reported. In the past, 
it has not been necessary for States to report insignificant decreases 
in the amounts of debt balances because States were not allowed to 
report increases in debt balances. Insignificant decreases generally 
were less than unreported increases, and, as a result, there generally 
were no problems with offsets that were greater than the actual amount 
of the debt balance. However, because States now may refer increases in 
the amount of debts as well as decreases, to avoid situations where 
offsets exceed the actual amount of the debt balance, it is imperative 
that all decreases in debt balances be reported. There will, however, 
be flexibility in the time and manner in which decreases may be 
reported. To make the rule as flexible as possible with regard to the 
timing and manner of reporting changes in the amounts of debts, the 
word ``any'' was deleted from paragraph (g) in the final rule. FMS or 
HHS will provide additional guidance relating to the timing and manner 
in which the amounts of increases and decreases in debt balances must 
be reported.
    States also expressed concern that the regulation does not 
specifically allow States to report changes in the status of debt by 
providing updated balances. FMS and/or HHS will provide additional 
guidance on how States will report changes in the amount of a debt 
referred for administrative offset.

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

    Several States commented on the provisions governing advance 
notices to debtors providing notice of the States' intent to submit 
past-due support for administrative offset. Two States requested that 
the language of the rule be revised to make clear that a one-time 
notice to a debtor is sufficient. A third State expressed a concern 
that the regulation could result in debtors being notified that 
payments were to be offset to pay debts that had not yet accrued.
    As stated in the preamble to the interim rule, before a State may 
report increases to the amount of a past-due support debt referred for 
AO, the State must meet the requirements of paragraph (h) as well as 
State law and procedure; only then has a State met the due process 
requirements of Federal law with respect to the offset of Federal 
payments set forth in 31 U.S.C. 3716(a). A notice to an obligor that 
includes a statement to the effect that future amounts, in addition to 
the amount included in the notice, will be collected by means of AO 
(i.e., a ``one-time'' notice), is sufficient for purposes of paragraph 
(h) only if such a statement meets the notice requirements of 
applicable State law as determined by the State. Thus, no changes to 
the rule have been made.
    One State requested that the provision regarding case reviews by 
the States be revised to reflect provisions of the FFCCSOA relating to 
exclusive jurisdiction. After consulting with HHS, FMS determined that 
provisions in the rule regarding reviews are not inconsistent with the 
provisions of the FFCCSOA. The rule provides the flexibility necessary 
for a review to be held in any State as may be authorized in any given 
situation under the FFCCSOA.

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

    One State requested that the final rule include a listing of the 
payments subject to AO; another State asked whether a particular type 
of payment would be subject to offset. Such a list is impractical. 
Federal agencies make payments under hundreds of Federal programs. 
Payments under all such programs are subject to offset unless the 
payment type is exempted either by statute or by the Secretary of the 
Treasury upon request by the head of an agency. A list of payment types 
that are exempt from AO may be obtained from the FMS website.

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

    FMS received several comments concerning the special provisions 
applicable to Federal salary payments. One State questioned whether FMS 
would deduct up to 65% in a situation where a lower percentage had been 
agreed to or had been determined by court order. In such situations, 
States will be able to indicate the lower percentage to be applied, or 
will be able to indicate that a particular debt is not to be collected 
by administrative offset of a Federal salary payment. Paragraph (j) of 
the final rule has been revised to state that, when a lower percentage 
is to be applied, the State must inform FMS or HHS of the lower 
percentage at the time the debt is referred for collection by AO. FMS 
and/or HHS will provide additional guidance to States regarding this 
process.
    Another commenter questioned the allowable deductions from a 
Federal salary payment when calculating the applicable withholding 
percentage. FMS adopted the standards of the Consumer Credit Protection 
Act, 15 U.S.C. 1671 et seq., as well as the standards of 42 U.S.C. 659 
which apply to the enforcement of individual's legal obligations to 
provide child support or make alimony payments by means of income 
withholding, garnishment, and similar proceedings against amounts 
payable to Federal employees. The exclusions included in this paragraph 
are consistent with Office of Personnel Management regulations 
governing Salary Offset (5 CFR 550.1101 et seq.) and Processing 
Garnishment Orders for Child Support and/or Alimony (5 CFR Part 581).

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

    One State asked FMS to include in the regulation a list of payments 
that are exempt from administrative offset. Because the list of exempt 
payments changes as the Secretary of the Treasury approves requests 
from Federal agencies and/or as Federal laws are promulgated or 
amended, it is inappropriate for the regulation to include such a 
listing. However, a listing of exemptions may be obtained from the FMS 
website.

Sec. 285.1(l)--Fees

    The preamble of the interim rule applicable to the fees provision 
included the follow up statement, ``[s]tates may add [the] fee to the 
amount of the debt if permitted by law.'' One commenter was concerned 
that paragraph (l) of the interim rule may be inconsistent with HHS 
rules which provide that ``past-due support may not include fees or 
court costs or any other non-child support debts owed to the State or 
to the family.''
    There is no inconsistency. The guidance cited by the commenter 
specifically applies to collections of past-due support through the tax 
refund offset process and reflects statutory restrictions, codified at 
42 U.S.C. 664, that require the full amounts offset from tax refund 
payments to be paid to the

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states for distribution. There are no similar restrictions applicable 
to amounts collected by means of AO. The statement in the preamble 
explains that States may add the fees charged under this rule to the 
amount of the debt owed only if permitted by law. Statutes or 
regulations prohibiting States from adding fees to the amount of the 
debt are not superseded by this regulation.
    In addition, several States commented on the amount of the fees 
charged by FMS for collection of past-due support by AO. One State was 
concerned that States could end up owing FMS where the amount of an 
offset was less than the fee charged; other States believed that the 
fee amount was too high and should either be limited to a maximum 
amount per month or be less for subsequent offsets when the collection 
is from an on-going stream of payments. One State requested that the 
regulation include the fee schedule. Under 31 U.S.C. 3716(c)(4), the 
Secretary may charge a fee sufficient to cover the full cost of 
conducting AO. FMS will review the amount of the fee periodically to 
ensure that the fees charged and collected meet, but do not exceed, the 
costs of the program. With regard to concerns that States may owe FMS 
in instances where the amount collected is less than the offset fee, 
since AO is voluntary, States may withdraw debts from the program at 
any time pursuant to the provisions of paragraph (g) when collection by 
offset is no longer cost effective. States will be advised of any 
changes in the fee schedule.

Sec. 285.1(m)--Conducting the offset

    One State asked about FMS' authority to reverse an offset made in 
error. In response, a provision concerning reversals was added to 
paragraph (m) which provides that FMS will notify HHS or the 
appropriate State when an erroneous offset payment has been made. FMS 
will collect the amount of the erroneous payment from HHS or the State 
either by deducting the amount from future payments by FMS or by 
requesting a return of the erroneous offset payment by HHS or the 
State. FMS will provide States with additional procedural guidance 
concerning how and when reversals will be conducted.
    One State asked what restrictions will apply to payment amounts 
eligible for offset, and how they will be applied; another asked 
whether each Federal payment agency will set the terms and conditions 
for enforcing AO. With regard to the restrictions that apply to payment 
amounts under AO, as noted previously, payments subject to AO are made 
under hundreds of Federal programs and are governed by the laws 
applicable to those programs. FMS will work with payment agencies in 
determining the appropriate amount that should be offset against their 
payments. Thus, there may be specific limitations on the amount which 
can be offset from a particular payment type. The provisions of this 
regulation apply to all disbursing officials who conduct offsets under 
the AO program.

Sec. 285.1(n)--Priorities

    Several States commented that the priorities included in the 
interim rule are inconsistent with the distribution rules outlined in 
42 U.S.C. 657 and HHS guidance. Other States commented that the 
regulation should address other situations such as when more than one 
State is attempting to offset the same payment; still others suggested 
that amounts collected be prorated among States without regard to case 
type.
    The final rule retains the priorities specified in the interim 
rule. Unlike the statute governing TROP, 26 U.S.C. 6402(c), 31 U.S.C. 
3716 does not include provisions governing priority when debts are 
being collected by administrative offset. Furthermore, the priorities 
in this rule do not conflict with the distribution rules in 42 U.S.C. 
657 and HHS guidance. The priorities applied by the States to amounts 
collected for distribution under 42 U.S.C. 657 are distinct from the 
priorities applied by FMS when collecting debts under 31 U.S.C. 3716. 
In order to clarify this distinction, paragraph (n) has been revised. 
As suggested, paragraph (n) of the final rule is labeled Administrative 
Offset Priorities, and specifically refers to offsets by FMS and other 
disbursing officials. FMS will include information relating to 
priorities within debt categories in procedural guidance.

Sec. 285.1(o)--Notification of offset

    Several States commented that they need information regarding the 
source of collection, as well as information relating to cases for 
which there is no offset. Executive Order No. 13109 requires FMS, to 
the extent permitted by law, to provide to the Secretary of HHS certain 
information from payment records of persons who are delinquent in child 
support obligations. Under 42 U.S.C. 653, the Secretary of HHS may 
request such information. The rule has been revised to state that FMS 
and other disbursing agencies, upon the request of the Secretary of 
HHS, will provide such information to HHS to the extent such 
information is available from TOP activities. HHS will provide 
information to the States to the extent authorized by law.

Regulatory Analyses

    This rule is not a significant regulatory action as defined in 
Executive Order 12866. It is hereby certified that this rule will not 
have a significant economic impact on a substantial number of small 
entities. Therefore, a regulatory flexibility analysis is not required. 
This regulation only impacts individuals and States and will not impose 
significant costs on small businesses.
    The collections of information contained in this final regulation 
have been reviewed and approved by the Office of Management and Budget 
in accordance with the requirements of the Paperwork Reduction Act (44 
U.S.C. 3507) under control number 1510-0069.

Authority and Issuance

    Accordingly, the interim rule amending 31 CFR part 285 which was 
published at 62 FR 36205 on July 7, 1997, is adopted as a final rule 
with the following changes:
    1. The authority citation for part 285 continues to read as 
follows:

    Authority: 26 U.S.C. 6402; 31 U.S.C. 321, 3701, 3711, 3716, 
3720A, 3720D; E.O. 13019; 3 CFR, 1996 Comp., p. 216.

    2. In Sec. 285.1, amend paragraph (a) by revising the definitions 
for ``past-due support'' and ``past-due support being enforced by the 
State''; revise paragraphs (g), (m), (n) and (o); and add paragraph 
(j)(5) to read as follows:


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

    (a) * * *
    Past-due support means the amount of support determined under a 
court order, or an order of an administrative procedure established 
under State law, for support and maintenance of a child, or of a child 
and the parent with whom the child is living, which has not been paid. 
The term child as used in this definition is not limited to minor 
children.
    Past-due support being enforced by the State means there has been 
an assignment of the support rights to the State, or the State making 
the request for offset is providing services to individuals pursuant to 
42 U.S.C. 654(5) (section 454(5) of the Social Security Act), or the 
State is enforcing support pursuant to a cooperative agreement with or 
by an Indian tribal government.
* * * * *
    (g) Notification of changes in status of debt. The State notifying 
FMS or HHS of past-due support shall, in the manner and in the time 
frames provided by FMS or HHS, notify FMS or HHS of deletions or 
decreases in the amount of a debt

[[Page 46146]]

referred for collection by administrative offset. The State may notify 
FMS or HHS of any increases in the amount of a debt referred for 
collection by administrative offset provided the State has complied 
with the requirements of paragraph (h) of this section with regard to 
those amounts.
* * * * *
    (j) Special provisions applicable to Federal salary payments. * * *
    (5) At the time the past-due support debt is submitted for offset, 
the State shall advise FMS or HHS if the maximum amount of a Federal 
salary payment that may be offset is less than the amount described 
under this paragraph.
* * * * *
    (m) Offsetting payments. (1) Conducting the offset. Disbursing 
officials of the Department of the Treasury, the Department of Defense, 
the United States Postal Service, or any other Government corporation, 
any disbursing official of the United States designated by the 
Secretary, or any disbursing official of an executive department or 
agency that disburses Federal payments shall offset payments subject to 
offset under this section to satisfy, in whole or part, a debt owed by 
the payee. Disbursing officials shall compare payment certification 
records with records of debts submitted to FMS for collection by 
administrative offset. A match will occur when the taxpayer identifying 
number and name control of a payment record are the same as the 
taxpayer identifying number and name control of a debt record. The 
taxpayer identifying number for an individual is the individual's 
social security number. When a match occurs and all other requirements 
for offset have been met, the disbursing official shall offset the 
payment to satisfy, in whole or part, the debt. Any amounts not offset 
shall be paid to the payee. The amount that can be offset from a single 
payment is the lesser of the amount of the debt (including interest, 
penalties, and administrative costs); the amount of the payment; or the 
amount of the payment available for offset if a statute or regulation 
prohibits offset of the entire amount. Debts remain subject to 
collection by offset until paid in full.
    (2) Disposition of amounts collected. FMS will transmit amounts 
collected for debts, less fees charged under paragraph (l) of this 
section, to HHS or to the appropriate State. If FMS learns that an 
erroneous offset payment has been made to HHS or any State, FMS will 
notify HHS or the appropriate State that an erroneous offset payment 
has been made. FMS may deduct the amount of the erroneous offset 
payment from amounts payable to HHS or the State, as the case may be. 
Alternatively, upon FMS' request, the State shall return promptly to 
the affected payee or FMS an amount equal to the amount of the 
erroneous payment (unless the State previously has paid such amounts, 
or any portion of such amounts, to the affected payee). HHS and States 
shall notify FMS any time HHS or a State returns an erroneous offset 
payment to an affected payee. FMS and HHS, or the appropriate State, 
will adjust their debtor records accordingly.
    (n) Administrative offset priorities. When a payee/debtor owes more 
than one debt which has been referred to FMS for collection by 
administrative offset, any offset by a disbursing official will be 
applied first to past-due support assigned to a State and will be 
applied to any other past-due support after any other reductions 
allowed by law.
    (o) Notification of offset. (1) Disbursing officials of FMS or any 
other disbursing official which conducts an offset will notify the 
payee in writing of the occurrence of the offset to satisfy past-due 
support. The notice shall inform the payee of the type and amount of 
the payment that was offset; the identity of the State which requested 
the offset; and a contact point within the State that will handle 
concerns regarding the offset. Disbursing officials shall not be liable 
for failure to provide this notice.
    (2) Disbursing officials of FMS or any other disbursing official 
which conducts an offset under this section will share with HHS, upon 
request by the Secretary of HHS, information contained in payment 
certification records of persons who are delinquent in child support 
obligations that would assist in the collection of such debts. When no 
offset is conducted, disbursing officials of FMS or any other 
disbursing official, will provide such information to HHS to the extent 
such information is available from offset activities conducted by FMS 
and other disbursing officials.
* * * * *

    Dated: August 24, 1998.
Richard L. Gregg,
Commissioner.
[FR Doc. 98-23093 Filed 8-27-98; 8:45 am]
BILLING CODE 4810-35-P