[Federal Register Volume 64, Number 172 (Tuesday, September 7, 1999)]
[Rules and Regulations]
[Pages 48547-48548]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-23083]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 301

[TD 8837]
RIN 1545-AV50


Revision of the Tax Refund Offset Program

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final regulations.

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SUMMARY: This document contains final regulations relating to the 
administration of the Tax Refund Offset Program (TROP). This action is 
necessary because effective January 1, 1999, TROP, which had been 
administered by the IRS, was fully merged into the centralized 
administrative offset program known as the Treasury Offset Program 
(TOP), which is administered by the Financial Management Service (FMS). 
These regulations will affect State and Federal agencies that 
participate in TROP.

DATES: Effective Dates: These regulations are effective September 7, 
1999.
    Dates of Applicability: For dates of applicability of these 
regulations, see Secs. 301.6402-5(h) and 301.6402-6(n).

FOR FURTHER INFORMATION CONTACT: Beverly A. Baughman, (202) 622-4940 
(not a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

    This document contains final regulations on Procedure and 
Administration (26 CFR part 301) that revise the effective dates for 
regulations under section 6402(c) and (d). Those subsections provide 
rules relating to the offset of past-due support payments and debts 
owed to Federal agencies against Federal tax refunds, respectively.
    On August 31, 1998, a notice of proposed rulemaking (REG-104565-97) 
under section 6402(c) and (d) was published in the Federal Register (63 
FR 46205). Although written or electronic comments and requests for a 
public hearing were solicited, no comments were received and no public 
hearing was requested or held. The proposed regulations under section 
6402(c) and (d) are adopted by this Treasury decision without revision.

Explanation of Provisions

    Section 6402(c) provides, in general, that the amount of any 
overpayment to be refunded to the person making the overpayment must be 
reduced by the amount of any past-due support (as defined in section 
464(c) of the Social Security Act) owed by that person of which the 
Secretary has been notified by a State in accordance with section 464 
of the Social Security Act.
    Section 6402(d) provides, in general, that upon receiving notice 
from any Federal agency that a named person owes a past-due, legally 
enforceable debt to that agency, the Secretary must reduce the amount 
of any overpayment payable to that person by the amount of the debt, 
pay the amount by which the overpayment is reduced to the agency, and 
notify the person making the overpayment that the overpayment has been 
reduced.
    Prior to January 1, 1998, the IRS made offsets pursuant to section 
6402(d) according to regulations prescribed under Sec. 301.6402-6. 
Prior to January 1, 1999, the IRS made offsets pursuant to section 
6402(c) according to regulations prescribed under Sec. 301.6402-5.
    Section 31001(v)(2) and (w) of the Debt Collection Improvement Act 
of 1996 (110 Stat. 1321-375), amended 42 U.S.C. 664(a)(2)(A) and 31 
U.S.C. 3720A(h), respectively, to clarify that the disbursing agency of 
the Treasury Department may conduct tax refund offsets. The disbursing 
agency of the Treasury Department is the Financial Management Service 
(FMS).
    The IRS and FMS agreed to merge the Tax Refund Offset Program 
(TROP), which had been administered by the IRS, into the centralized 
administrative offset program known as the Treasury Offset Program 
(TOP), which is administered by the FMS. The merger of the two programs 
is intended to maximize and improve the Treasury Department's 
government-wide collection of nontax debts, including those subject to 
offset against the debtor's federal tax refund. The full merger of TROP 
with TOP occurred on January 1, 1999.

[[Page 48548]]

    Final rules concerning the manner in which the FMS will administer 
the collection of nontax Federal debts after the merger of TROP with 
TOP were published by the FMS in the Federal Register on August 28, 
1998 (63 FR 46140) (codified at 31 CFR Part 285.2) effective for 
refunds payable after January 1, 1998. The regulations in this document 
provide an ending effective date for Sec. 301.6402-6 to accommodate the 
beginning effective date of the FMS regulations. Accordingly, 
Sec. 301.6402-6 does not apply to refunds payable after January 1, 
1998.
    Final rules concerning the manner in which the FMS will administer 
the collection of past-due support payments were published by the FMS 
in the Federal Register on December 30, 1998 (63 FR 72092) (codified at 
31 CFR Part 285.3), effective for refunds payable after January 1, 
1999. The regulations in this document provide an ending effective date 
for Sec. 301.6402-5 to accommodate the beginning date for the full 
merger of TROP with TOP. Accordingly, Sec. 301.6402-5 does not apply to 
refunds payable after January 1, 1999.

Special Analyses

    It has been determined that this Treasury decision is not a 
significant regulatory action as defined in Executive Order 12866. 
Therefore, a regulatory assessment is not required. It also has been 
determined that section 553(b) of the Administrative Procedure Act (5 
U.S.C. chapter 5) does not apply to these regulations, and because 
these regulations do not impose a collection of information on small 
entities, the Regulatory Flexibility Act (5 U.S.C. chapter 6) does not 
apply. Pursuant to section 7805(f) of the Internal Revenue Code, the 
notice of proposed rulemaking that preceded these regulations was 
submitted to the Chief Counsel for Advocacy of the Small Business 
Administration for comment on its impact on small business.

Drafting Information

    The principal author of these regulations is Beverly A. Baughman of 
the Office of Assistant Chief Counsel (Income Tax and Accounting). 
However, other personnel from the IRS and the Treasury Department 
participated in the development of the regulations.

List of Subjects in 26 CFR Part 301

    Employment taxes, Estate taxes, Excise taxes, Gift taxes, Income 
taxes, Penalties, Reporting and recordkeeping requirements.

Adoption of Amendments to the Regulations

    Accordingly, 26 CFR part 301 is amended as follows:

PART 301--PROCEDURE AND ADMINISTRATION

    Paragraph 1. The authority citation for part 301 continues to read 
in part as follows:

    Authority: 26 U.S.C. 7805 * * *

    Par. 2. Section 301.6402-5 is amended by adding paragraph (h) to 
read as follows:


Sec. 301.6402-5  Offset of past-due support against overpayments.

* * * * *
    (h) Effective dates. This section applies to refunds payable on or 
before January 1, 1999. For the rules applicable after January 1, 1999, 
see 31 CFR part 285.
    Par. 3. Section 301.6402-6 is amended by revising paragraph (n) to 
read as follows:


Sec. 301.6402-6  Offset of past-due, legally enforceable debt against 
overpayment.

* * * * *
    (n) Effective dates. This section applies to refunds payable under 
section 6402 after April 15, 1992, and on or before January 1, 1998. 
For the rules applicable after January 1, 1998, see 31 CFR part 285.
Bob Wenzel,
Deputy Commissioner of Internal Revenue
    Approved: August 25, 1999.
Jonathan Talisman,
Deputy Assistant Secretary of Treasury.
[FR Doc. 99-23083 Filed 9-3-99; 8:45 am]
BILLING CODE 4830-01-U