[Federal Register Volume 67, Number 138 (Thursday, July 18, 2002)]
[Rules and Regulations]
[Pages 47434-47436]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-18052]



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Part III





Department of Housing and Urban Development





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24 CFR Part 17



Administrative Wage Garnishment; Final Rule

  Federal Register / Vol. 67, No. 138 / Thursday, July 18, 2002 / Rules 
and Regulations  

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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 17

[Docket No. FR-4711-F-02]
RIN 2501-AC85


Administrative Wage Garnishment

AGENCY: Office of the Secretary, HUD.

ACTION: Final rule.

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SUMMARY: This final rule implements the authority established under the 
Debt Collection Improvement Act of 1996 (DCIA) for HUD to collect the 
Department's past due indebtedness through administrative wage 
garnishment. The final rule adopts, without change, the hearing 
procedures issued by the Department of the Treasury implementing 
administrative wage garnishment under the DCIA. This final rule applies 
only to individuals who are not Federal employees. The final rule 
amends procedures for the collection of claims to conform to HUD 
regulations to applicable provisions of the DCIA. This final rule 
follows publication of a March 8, 2002, proposed rule. There were no 
comments on the proposed rule, and HUD is adopting the proposed 
regulatory amendments, with minor technical corrections, but no 
substantive change.

DATES: Effective Date: August 19, 2002.

FOR FURTHER INFORMATION CONTACT: Samuel B. Rothman, Senior Attorney, 
Office of General Counsel, Room 9253, Department of Housing and Urban 
Development, 451 Seventh Street, SW., Washington, DC 20410; telephone 
(202) 708-4184 (this is not a toll-free number). Hearing and speech-
impaired persons may access this number via TTY by calling the Federal 
Information Relay Service at 1-800-877-8339.

SUPPLEMENTARY INFORMATION:

I. Background

    Since 1984 HUD has had regulations (subpart C of 24 CFR part 17) 
that govern various types of administrative offset (i.e., offset 
conducted administratively rather than through a court of record). 
These regulations, issued pursuant to the Debt Collection Act of 1982 
(31 U.S.C. 3701 et seq.) and the Federal Claims Collection Standards, 
were promulgated jointly by the General Accounting Office and the 
Department of Justice (4 CFR parts 101-105).
    In 1996, Congress enacted the Debt Collection Improvement Act of 
1996 (Pub. L. 104-134, 110 Stat. 1321-1358, approved April 26, 1996) 
(DCIA), which amended the Debt Collection Act of 1982. Section 31001(o) 
of the DCIA authorizes collection of Federal agency debt by 
administrative wage garnishment (section 31001(o) is codified at 31 
U.S.C. 3720D). The DCIA authorizes Federal agencies to garnish up to 
15% of the disposable pay of a debtor to satisfy delinquent non-tax 
debt owed to the United States. Prior to the enactment of the DCIA, 
agencies were required to obtain a court judgment before garnishing the 
wages of non-Federal employees.
    The DCIA directed the Secretary of the Treasury to issue 
implementing regulations (see 31 U.S.C. 3720D(h)). On May 6, 1998 (63 
FR 25136), the Department of the Treasury published a final rule 
implementing the statutory administrative wage garnishment requirements 
at 31 CFR 285.11. Paragraph (f) of 31 CFR 285.11 provides that 
``[a]gencies shall prescribe regulations for the conduct of 
administrative wage garnishment hearings consistent with this section 
or shall adopt this section without change by reference.''
    On March 8, 2002, HUD published a proposed rule (67 FR 10818) to 
implement the authority established under the DCIA for HUD to collect 
the Department's past due indebtedness through administrative wage 
garnishment. The March 8, 2002, rule proposed to adopt, without change, 
the hearing procedures issued by the Department of the Treasury 
implementing administrative wage garnishment under the DCIA and to 
amend procedures for the collection of claims to conform to HUD 
regulations to applicable provisions of the DCIA. The March 8, 2002, 
rule also proposed to amend HUD's regulations at 24 CFR part 17, 
subpart C, to adopt 31 CFR 285.11 in its entirety and to establish a 
new Sec. 17.170 that would contain a cross-reference to 31 CFR 285.11 
and would provide that, to the extent situations arise that are not 
covered by 31 CFR 285.11, those situations would be governed by the HUD 
hearing procedures in 24 CFR part 26, subpart A.
    Additionally, the March 8, 2002, rule proposed to amend the 
existing regulations that govern income tax refund offset to include 
offset against other eligible Federal payments. Under the DCIA the 
Treasury Department serves as a coordinator for Federal debt collection 
through its Treasury Offset Program and HUD's rule proposed to 
recognize that status by adding the phrase ``and the Department of the 
Treasury'' immediately after references to the IRS in the existing 
regulations. The proposed rule advised that it would apply only to 
individuals who are not federal employees.

II. This Final Rule

    This final rule adopts the proposed change made to HUD's 
regulations at 24 CFR part 17, subpart C to adopt 31 CFR 285.11 in its 
entirety. The public comment period for the proposed rule closed on May 
7, 2002. HUD did not receive any public comments on the proposed rule. 
As a result, with the exception of making minor technical corrections, 
HUD is adopting the March 8, 2002, proposed rule without change.

Technical Corrections

    The Department is correcting references in the rule to better 
reflect the transition of the Tax Refund Offset Program (TRO) of the 
Internal Revenue Service (IRS) to the Treasury Offset Program (TOP) of 
the Department of Treasury. Accordingly, in the rule, HUD substitutes 
``Department of the Treasury'' for ``IRS'' since TOP replaced TRO and 
agencies no longer certify delinquent debts to the IRS nor provide any 
direct notice or certification to IRS regarding tax refund offsets.

III. Findings and Certifications

Impact on Small Entities

    The Secretary, in accordance with the Regulatory Flexibility Act (5 
U.S.C. 605(b)), has reviewed and approved this final rule, and in so 
doing certifies that this final rule does not have a significant 
economic impact on a substantial number of small entities. Although 
many small employers will be subject to the requirements of this final 
rule, the requirements will not have a significant economic impact on 
these entities. Employers of delinquent debtors must certify certain 
information about the debtor such as the debtor's employment status and 
earnings. This information is contained in the employer's payroll 
records. Therefore, it will not take a significant amount of time or 
result in a significant cost for an employer to complete the 
certification form. Even if an employer is served withholding orders on 
several employees over the course of a year, the cost imposed on the 
employer to complete the certifications would not have a significant 
economic impact on an entity. Employers are not required to vary their 
normal pay cycles in order to comply with a withholding order issued 
pursuant to this final rule.

Environmental Impact

    In accordance with 24 CFR 50.19(c)(1) of the Department's 
regulations, this final rule does not direct, provide for assistance or 
loan and mortgage

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insurance for, or otherwise govern or regulate, real property 
acquisition, disposition, leasing, rehabilitation, alteration, 
demolition, or new construction, or establish, revise, or provide for 
standards for construction or construction materials, manufactured 
housing, or occupancy. Therefore, this final rule is categorically 
excluded from the requirements of the National Environmental Policy Act 
(42 U.S.C. 4321 et seq.).

Executive Order 13132, Federalism

    Executive Order 13132 (entitled ``Federalism'') prohibits an agency 
from publishing any rule that has federalism implications if the rule 
either imposes substantial direct compliance costs on State and local 
governments and is not required by statute, or the rule preempts State 
law, unless the agency meets the consultation and funding requirements 
of section 6 of the Executive Order. This final rule does not have 
federalism implications and does not impose substantial direct 
compliance costs on State and local governments or preempt State law 
within the meaning of the Executive Order.

Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 establishes 
requirements for Federal agencies to assess the effects of their 
regulatory actions on State, local, and tribal governments and the 
private sector. This rule would not impose a Federal mandate on any 
State, local, or tribal government, or on the private sector, within 
the meaning of the Unfunded Mandates Reform Act of 1995.

List of Subjects in 24 CFR Part 17

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

    Accordingly, for the reasons described in the preamble, HUD amends 
24 CFR part 17 as follows:

PART 17--ADMINISTRATIVE CLAIMS

    1. The authority citation for 24 CFR part 17, subpart C is revised 
to read as follows:

    Authority: 5 U.S.C. 5514; 31 U.S.C. 3701, 3711, 3716-3720E; and 
42 U.S.C. 3535(d).

    2. The undesignated center heading immediately preceding 
Sec. 17.150 is revised to read as follows:

IRS Tax Refund and Federal Payment Offset Provisions and Administrative 
Wage Garnishment

    3. Revise Sec. 17.150 to read as follows:


Sec. 17.150  Scope.

    (a) The standards set forth in Secs. 17.150 through 17.161 are the 
Department's procedures for requesting the Department of the Treasury 
to offset Federal payments due debtors who have a past-due debt 
obligation to the Department. These procedures apply to the collection 
of debts under common law, 31 U.S.C. 3716 or other statutory authority.
    (b) The Secretary will use the Department of the Treasury's Federal 
payment offset to collect claims which are certain in amount, past due 
and legally enforceable, and which are eligible for tax refund or 
Federal payment offset under regulations issued by the Secretary of the 
Treasury.
    (c) The Secretary will report debts to the Department of the 
Treasury for the purpose of using the offset procedures described in 
Secs. 17.150 through 17.161. Debts of less than $100.00, exclusive of 
interest and other charges, will not be reported.
    (d) If not legally enforceable because of lapse of statute of 
limitations but otherwise valid, the debt will be reported to the IRS 
as a cancelled debt on Form 1099C. (Form 1099C is an information return 
which Government agencies file with the IRS and the Department of the 
Treasury to report forgiven debt, and the forgiven amount is considered 
income to the taxpayer.) (See Sec. 17.159.)

    4. Amend Sec. 17.151 by revising the introductory text and 
paragraph (b) to read as follows:


Sec. 17.151  Notice requirements before offset.

    A request for deduction from a Federal payment will be made only 
after the Secretary makes a determination that an amount is owed and 
past due and provides the debtor with 65 calendar days written notice. 
This Notice of Intent will state:
* * * * *
    (b) That unless the debt is repaid within 65 days from the date of 
the Notice, the Secretary intends to collect the debt by requesting the 
Department of Treasury to reduce any amounts payable to the debtor by 
an amount equal to the amount of the debt and all accumulated interest 
and other charges;
* * * * *

    5. Amend Sec. 17.153 by revising paragraph (c) to read as follows:


Sec. 17.153  Determination of the Administrative Judge.

* * * * *
    (c) If the Administrative Judge's decision affirms that all or part 
of the debt is past due and legally enforceable, the Secretary will 
notify the Department of the Treasury after the Administrative Judge's 
determination has been issued under paragraph (a) of this section and a 
copy of the determination is received by the Department's Chief 
Financial Officer. No referral will be made to the IRS or the 
Department of the Treasury if review of the debt by the Administrative 
Judge reverses the initial decision that the debt is past due and 
legally enforceable.

    6. Amend Sec. 17.154 by revising paragraph (a) to read as follows:


Sec. 17.154  Postponements, withdrawals and extensions of time.

    (a) Postponements and withdrawals. The Secretary may, for good 
cause, postpone or withdraw referral of the debt to the Department of 
Treasury. (For example, a delay in the mail between the debtor and the 
Secretary could normally warrant a postponement; a mathematical error 
or computer malfunction could be the reason for a withdrawal.)
* * * * *

    7. Revise Sec. 17.156 to read as follows:


Sec. 17.156  Stay of offset.

    If the debtor timely notifies the Secretary that he or she is 
exercising a right described in Sec. 17.152(a) and timely submits 
evidence in accordance with Sec. 17.152(b), any notice to the IRS or 
the Department of the Treasury will be stayed until the issuance of a 
written decision by the Administrative Judge which determines that a 
debt or part of a debt is past-due and legally enforceable.

    8. Revise Sec. 17.157 to read as follows:


Sec. 17.157  Application of offset funds: Single debt.

    If the debtor does not timely notify the Secretary that he or she 
is exercising a right described in Sec. 17.152, the Secretary will 
notify the Department of the Treasury of the debt no earlier than 65 
calendar days from the date of the Department's Notice of Intent, and 
will request that the amount of the debt be offset against any amount 
payable by the Department of the Treasury as a Federal payment. 
Normally, recovered funds will be applied first to costs of collection, 
then to any special charges provided for in HUD regulations or 
contracts, then to interest and finally, to the principal owed by the 
debtor.

    9. Revise Sec. 17.159, including the section heading, to read as 
follows:

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Sec. 17.159  Application of offset funds: Federal payment is 
insufficient to cover amount of debt.

    If an offset of a Federal payment is insufficient to satisfy a 
debt, the Secretary will continue the certification to the Department 
of the Treasury to collect further on the debt. If, in the following 
year, the debt has become legally unenforceable because of the lapse of 
the statute of limitations, the debt will be reported to the IRS as a 
cancelled debt in accordance with Sec. 17.150(d).

    10. Amend Sec. 17.160 by revising the section heading and paragraph 
(a) to read as follows:


Sec. 17.160  Time limitation for notifying the Department of the 
Treasury to request offset of Federal payments due.

    (a) The Secretary may not initiate offset of Federal payments due 
to collect a debt for which authority to collect arises under 31 U.S.C. 
3716 more than 10 years after the Secretary's right to collect the debt 
first accrued, unless facts material to the Secretary's right to 
collect the debt were not known and could not reasonably have been 
known by the officials of the Department who were responsible for 
discovering and collecting such debts.
* * * * *

    11. Amend Sec. 17.161 by revising paragraph (c) to read as follows:


Sec. 17.161  Correspondence with the Department.

* * * * *
    (c) All other correspondence shall be addressed to the Department 
Claims Officer, Office of the Chief Financial Officer, Department of 
Housing and Urban Development, 451 Seventh Street, SW, Washington, DC 
20410.

    12. Add new undesignated center heading following Sec. 17.161 and 
add new Sec. 17.170 to read as follows:

Administrative Wage Garnishment


Sec. 17.170  Administrative wage garnishment.

    (a) General. The Secretary may collect a debt by using 
administrative wage garnishment. Regulations in 31 CFR 285.11 governs 
collection through administrative wage garnishment. To the extent 
situations arise that are not covered by 31 CFR 285.11, those 
situations shall be governed by part 26, subpart A of this title.
    (b) Hearing official. Any hearing required to establish the 
Secretary's right to collect a debt through administrative wage 
garnishment shall be conducted by an Administrative Judge of the HUD 
Board of Contract Appeals.

    Dated: July 11, 2002.
Mel Martinez,
Secretary.
[FR Doc. 02-18052 Filed 7-17-02; 8:45 am]
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