[Federal Register Volume 67, Number 221 (Friday, November 15, 2002)]
[Proposed Rules]
[Pages 69164-69171]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-28856]


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SOCIAL SECURITY ADMINISTRATION

20 CFR Parts 404, 416 and 422

RIN 0960-AE92


Federal Old-Age, Survivors, and Disability Insurance and 
Supplemental Security Income; Collection of Overdue Program and 
Administrative Debts Using Administrative Wage Garnishment

AGENCY: Social Security Administration.

ACTION: Proposed rules.

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SUMMARY: We propose to modify our regulations dealing with the 
collection of program overpayment debts that arise under titles II and 
XVI of the Social Security Act (the Act) and administrative debts owed 
to us. Specifically, we propose to make some changes and establish new 
regulations that will establish our rules on the use of administrative 
wage garnishment (AWG) to collect such debts when they are past due. 
AWG is a process whereby we order the debtor's employer to withhold and 
pay to us up to 15 percent of the debtor's disposable pay every payday 
until the debt is repaid. The employer is required by law to comply 
with our AWG order.

DATES: To be sure your comments are considered, we must receive them no 
later than January 14, 2003.

ADDRESSES: You may give us your comments by using: our Internet site 
facility (i.e., Social Security Online) at http://www.ssa.gov/regulations/, e-mail to [email protected], by telefax to (410) 966-
2830 or by letter to the Commissioner of Social Security, P.O. Box 
17703, Baltimore, Maryland 21235-7703. You may also deliver them to the 
Office of Process and Innovation Management, Social Security 
Administration, 2109 West Low Rise Building, 6401 Security Boulevard, 
Baltimore, Maryland 21235-6401, between 8 a.m. and 4:30 p.m. on regular 
business days. Comments are posted to our Internet site for your 
review, or you may inspect them on regular business days by making 
arrangements with the contact person shown in this preamble.
    Electronic version: The electronic file of this document is 
available on the date of publication in the Federal Register at http://www.access.gpo.gov/su_docs/aces/aces140.html. It is also available on 
the Internet site for SSA (i.e., Social Security Online): http://www.ssa.gov/regulations.

FOR FURTHER INFORMATION CONTACT: Patricia Hora, Social Insurance 
Specialist, Office of Process and Innovation Management, Social 
Security Administration, 2109 West Low Rise Building, 6401 Security 
Boulevard, Baltimore, Maryland 21235-6401, (410) 965-7183 or TTY (410) 
966-5609. For information on eligibility or filing for benefits: Call 
our national toll-free number, 1-800-772-1213 or TTY 1-800-325-0778 or 
visit our Internet web site, Social Security Online, at http://www.ssa.gov/.

SUPPLEMENTARY INFORMATION: Section 31001(o)(1) of Public Law 104-134 
amended Chapter 37, subchapter II, of title 31, United States Code, by 
adding section 3720D to permit Federal agencies to use AWG to recover 
past due debts. We propose to pursue AWG to collect past due program 
overpayment debts incurred under title II and title XVI of the Act and 
past due administrative debts (see 20 CFR 422.306(a) for examples of 
administrative debts). The proposed regulations discussed below would 
implement 31 U.S.C. 3720D under the guidance provided by the Department 
of the Treasury at 31 CFR 285.11.

Explanation of Changes to Regulations

    We propose to create a new subpart E in part 422 of our regulations 
containing the rules we will use to collect both title II and title XVI 
program overpayments and administrative debts by AWG. Proposed subpart 
E would include sections that would explain the conditions for our use 
of AWG, the rights of the debtor and the responsibilities of the 
employer.
    In proposed Sec.  422.401, we describe the scope of this subpart--
our use of AWG under 31 U.S.C. 3720D to recover past due debts that you 
owe.
    Proposed Sec.  422.402 contains definitions of several terms used 
in the new subpart, including:
    [sbull] Paragraph (a), defining ``administrative wage garnishment'' 
as the process whereby we order your employer to withhold from your 
disposable pay and send the amount withheld to us;
    [sbull] Paragraph (b), defining the term ``debt'' to mean any 
amount of money or property that we determine is owed to the United 
States government and that arises from a program that we administer or 
an activity that we perform;
    [sbull] Paragraph (c), defining the term ``disposable pay'' to mean 
the amount equal to your total compensation from an employer 
(including, among other things, wages or salary, bonuses, commissions 
and vacation pay) after deduction of health insurance premiums and 
amounts withheld as required by law other than amounts withheld under 
court order.
    Proposed Sec.  422.403 would provide that, subject to certain 
exceptions and conditions, we would use AWG to collect any debt that is 
past due. We may use AWG concurrently with other practices, such as, 
tax refund offset and other administrative offset conducted by the 
Department of the Treasury and referral of information about the debt 
to consumer reporting agencies. See paragraph (a). We would not use AWG 
to collect a debt from salary or wages paid by the United States 
Government. If you have been separated involuntarily from employment, 
we will not use AWG against you until you have been re-employed 
continuously for at least 12 months. See paragraph (b).

[[Page 69165]]

    In paragraphs (c) and (d) of proposed Sec.  422.403, we describe 
the conditions under which we could apply AWG to recover title II and 
title XVI program overpayment debts, respectively. We could apply AWG 
if all of the following conditions are met.
    [sbull] You are not receiving benefits under the program under 
which the overpayment occurred.
    [sbull] For an overpayment under title XVI, we are not collecting 
the debt by reducing your title II benefits.
    [sbull] We have completed our billing sequence (i.e., we have sent 
an overpayment notice, reminder notice and past-due notice) or we have 
terminated or suspended collection activity.
    [sbull] We have no installment payment arrangement with you, or you 
failed to make payment under such an arrangement for two consecutive 
months.
    [sbull] You have not requested that we waive collection of the 
overpayment, or you requested waiver but we determined that we would 
not waive collection.
    [sbull] You have not requested reconsideration of the initial 
overpayment determination, or you requested reconsideration but we 
affirmed the initial determination in whole or in part.
    [sbull] We cannot recover the overpayment by adjustment of benefits 
payable to someone other than you.
    According to 31 U.S.C. 3720D(b), we must send you written notice at 
least 30 days prior to taking AWG action. We propose to send the notice 
at least 60 days before we would take AWG action. Proposed Sec.  
422.405 describes the information we would include in that notice:
    [sbull] The payment of your debt is past due;
    [sbull] The nature and amount of your debt;
    [sbull] Our intention to collect the debt by AWG;
    [sbull] The amount that could be withheld from your disposable pay 
(the payment schedule) under AWG;
    [sbull] You may inspect and copy our records about the debt;
    [sbull] You may ask us to review the debt (i.e., whether you owe 
the amount stated in the notice) or the payment schedule stated in the 
notice;
    [sbull] You may request an installment payment plan.
    The notice would also explain that at the expiration of 60 calendar 
days from the date of the notice we would order your employer to begin 
withholding from your disposable pay, unless within that 60-day period 
you pay us the full amount of the debt, request review of the debt or 
the payment schedule or request to establish a written agreement to pay 
us by installments. We would keep an electronic record of the notice, 
showing the date we mailed it and the amount of the debt.
    Proposed Sec.  422.410 explains the actions we would take after we 
send the notice. We would not send an AWG order to your employer before 
the expiration of 60 calendar days from the date of the notice. If 
within that 60-day period you would request that we review the debt 
(see proposed Sec.  422.425) or the payment schedule (see proposed 
Sec.  422.415) stated in the notice or request an installment payment 
arrangement, we would not take further action until we send you a 
written notice of our decision. If within that 60-day period you do not 
pay the full balance of the debt, request review, or request an 
installment payment arrangement, we may send the AWG order to your 
employer without further delay. If your request for review is late, we 
would still perform the review even though we would send the AWG order 
to your employer. However, if you had good cause for failing to request 
review of the debt or the payment schedule on time, we would treat your 
request as if we received it within the 60-day period and delay further 
action until we send you our decision. Paragraph (b) of proposed Sec.  
422.410 describes the circumstances that show good cause for your 
failure and gives examples. If we arrange an installment payment plan 
with you after we send you the AWG notice and you fail to make the 
installment payments for two consecutive months, we may send your 
employer an AWG order without further delay.
    Under 31 U.S.C. 3720D(b)(3) and (5) and (c), we must give you the 
opportunity to inspect and copy our records relating to the debt and 
the opportunity for a hearing on the existence and amount of the debt 
and the terms of the repayment schedule. We address these requirements 
in proposed Sec. Sec.  422.415, 422.420 and 422.425.
    Proposed Sec.  422.415 provides that, upon your request, we would 
review the amount that your employer would withhold from your 
disposable pay (the payment schedule) and, when we find that 
withholding a particular amount would cause financial hardship, we 
would reduce that amount. We would not reduce the amount to be withheld 
every payday below $ 10.00. We would find financial hardship when 
evidence submitted by you shows that withholding a particular amount 
from your disposable pay would deprive you of income necessary to meet 
ordinary and necessary living expenses. Such expenses would include, 
among other things, the cost of food, clothing, housing, medical care, 
insurance, and support of others for whom you are legally responsible. 
We would not reduce the amount the employer would withhold for 
financial hardship if the debt was caused by your intentional false 
statement or willful concealment of or failure to furnish material 
information.
    Proposed Sec.  422.420 explains that we would arrange to make our 
records relating to the debt available for your inspection and copying 
if you notify us of your intention to inspect and copy them.
    Proposed Sec.  422.425 describes the hearing process, the process 
by which we would review the debt at your request. Essentially, this 
would be the same process that we employ to review the debt upon your 
request before we would refer information to the Department of the 
Treasury for collection by administrative offset or refer information 
about the debt to consumer reporting agencies. See 20 CFR 422.317. To 
exercise your right to this review, you must request review and give us 
evidence that you do not owe all or part of the debt described in the 
notice or that we do not have the right to collect it. If you do not 
request review and give us the evidence before the expiration of 60 
calendar days from the date of the notice, we may issue the AWG order 
without further delay. If you would request review and give us the 
evidence within that 60-day period, or if you had good cause for 
failing to request review and give us the evidence on time, we would 
not take further AWG action unless and until we consider all of the 
evidence (including our own records) and send you our written findings 
that all or part of the debt is past due and we have the right to 
collect it. Our findings would include supporting rationale and would 
be our final decision on your request. If we would find that you do not 
owe the debt, or the debt is not overdue, or we do not have the right 
to collect it, we would not send your employer an AWG order.
    Proposed Sec.  422.430 states that, if we would determine that you 
do not owe the debt or we do not have the right to collect it, we would 
cancel any AWG order that we issued and refund promptly any amount 
withheld from your pay under that order. Refunds will not bear interest 
unless Federal law or contract requires interest.
    In proposed Sec.  422.435, we describe the AWG order, the factors 
that

[[Page 69166]]

determine the amount your employer must withhold and the information 
that your employer must send us. Paragraph (a) describes the 
information that would appear in the AWG order (your name, address and 
social security number; the amount of the debt; information about the 
amount that the employer must withhold; and where to send the withheld 
amount). We would maintain an electronic record of the order showing 
the date that we mailed the order. See paragraph (b). We would require 
the employer to certify within 20 days of receipt of the AWG order your 
employment status and the amount of disposable pay available for 
withholding. See paragraph (c).
    Paragraph (d) of proposed Sec.  422.435 explains how the employer 
would calculate the actual amount to withhold from your disposable pay 
on each payday and remit to us. This section would implement 31 U.S.C. 
3720D(b)(1) and 31 CFR 285.11(i). Usually, the amount to be withheld 
under the AWG order would be the lesser of the amount indicated in the 
order (up to 15% of disposable pay) or the amount by which disposable 
pay exceeds thirty times the minimum wage.
    Paragraph (e) of proposed Sec.  422.435 discusses our rules that 
would apply if your disposable pay is subject to more than one 
garnishment order. A withholding order for family support always would 
have priority over our AWG order. Our AWG order would have priority 
over other types of orders served after our AWG order unless Federal 
law provides otherwise. When your disposable pay is already subject to 
one or more withholding orders with higher or equal priority with our 
AWG order, the amount that your employer must withhold and remit to us 
would not be more than an amount calculated by subtracting the 
amount(s) withheld under the other withholding order(s) from 25% of 
your disposable pay. Under proposed paragraph (f), we would have your 
employer withhold more than the amount calculated under these rules if 
you would request in writing the higher rate of withholding. Moreover, 
as noted above, we would reduce the amount that your employer would 
withhold if we find under proposed Sec.  422.415(b) that withholding at 
that amount would cause you financial hardship.
    In paragraphs (a)-(e) of proposed Sec.  422.440, we discuss the 
responsibilities of your employer under the AWG order. The proposed 
rules would require your employer to begin withholding the appropriate 
amount on the first payday following receipt of the AWG order, or on 
the first or second payday after such receipt if the employer received 
the AWG order within 10 days before the first payday. The proposed 
rules would require your employer to continue to withhold and promptly 
pay the withheld amount to us every payday until we have recovered the 
debt and any interest, penalties and administrative costs that we may 
charge you under applicable law. Your employer need not alter its 
normal pay and disbursement cycles. However, your employer cannot honor 
any allotment or assignment of pay by you (other than arrangements made 
to satisfy a family support judgement or order) to the extent that such 
assignment or allotment would interfere with or prevent withholding 
under the AWG order.
    In paragraph (f) of proposed Sec.  422.440, we explain that Federal 
law prohibits your employer from using an AWG order as the basis for 
firing, refusing to employ or disciplining you. You may file a civil 
action in Federal or State court against an employer who violates the 
prohibition. See 31 U.S.C. 3720D(e).
    In proposed Sec.  422.445, we explain that we may file a civil 
action in Federal court against the employer for any amounts that it 
fails to withhold in compliance with our AWG order issued under 
proposed Sec.  422.435, and the employer may also be liable for our 
attorney fees and other associated costs and damages. See 31 U.S.C. 
3720D(f). We would not bring a civil action against your employer until 
we terminate collection action against you in accordance with 
applicable Federal standards, unless earlier filing is necessary to 
avoid the expiration of any applicable statute of limitations. We would 
deem collection to be terminated if we receive no payment on the debt 
for one year.

Other Changes

    We would amend 20 CFR 404.527 and 416.590 to mention that we may 
recover title II and title XVI overpayments, respectively, under the 
rules in subpart E of part 422.
    We propose to add to 20 CFR 404.903 a new paragraph (v) to include 
in the list of administrative actions that are not initial 
determinations our determination to use AWG to collect an overpayment 
made under title II of the Act. We propose to add to 20 CFR 416.1403(a) 
a new paragraph (20) to include in the list of administrative actions 
that are not initial determinations our determination to use AWG to 
collect an overpayment made under title XVI of the Act. As a result of 
these two revisions, the administrative review procedures in 20 CFR 
part 404, subpart J, and part 416, subpart N, would not apply to the 
determination to use AWG. Moreover, that determination would not be 
subject to judicial review under 42 U.S.C. 405(g) or 1383(c)(3).

Clarity of This Regulation

    Executive Order (E.O.) 12866, as amended by E.O. 13258, requires 
each agency to write all rules in plain language. In addition to your 
substantive comments on these proposed rules, we invite your comments 
on how to make these proposed rules easier to understand.
    For example:
    [sbull] Have we organized the material to suit your needs?
    [sbull] Are the requirements in the rules clearly stated?
    [sbull] Do the rules contain technical language or jargon that is 
unclear?
    [sbull] Would a different format (grouping and order of sections, 
use of headings, paragraphing) make the rules easier to understand?
    [sbull] Would more (but shorter) sections be better?
    [sbull] Could we improve clarity by adding tables, lists, or 
diagrams?
    [sbull] What else could we do to make the rules easier to 
understand?

Regulatory Procedures

Executive Order 12866

    The Office of Management and Budget (OMB) has reviewed these 
proposed rules in accordance with E.O. 12866, as amended by Executive 
Order 13258.

Regulatory Flexibility Act

    We certify that these proposed regulations would not have a 
significant impact on a substantial number of small entities. 
Therefore, a regulatory flexibility analysis, as provided in the 
Regulatory Flexibility Act, as amended, is not required.
    Some entities, as employers of some individuals who owe debts to 
us, would be subjected to these proposed regulations and to the 
certification requirement in proposed Sec.  422.435(c). However, any 
particular small employer is not likely to receive wage garnishment 
orders from us concerning a significant number of employees. Under 
proposed Sec.  422.435(c), employers of delinquent debtors must certify 
certain information about the debtor's status such as the debtor's 
employment status and earnings. This information is contained in the 
employer's payroll records. Therefore, it would 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 receives 
withholding orders from us on several employees

[[Page 69167]]

over the course of a year, the cost imposed on the employer to complete 
the certifications, withhold from disposable pay, and remit those 
amounts to us would not have a significant economic impact on that 
entity. Employers would not be required to vary their normal pay cycles 
to comply with a withholding order that would be issued under the 
proposed rules.

Federalism

    We have reviewed these proposed rules under the threshold criteria 
of E.O. 13132, ``Federalism,'' and determined that they would not have 
substantial direct effects on the States, on the relationship between 
the national government and the States, or the distribution of power 
and responsibilities among the various levels of government.
    Although States and local governments, as employers of some 
individuals who owe debts to us, would be subjected to these proposed 
regulations and to the certification requirement in Sec.  422.435(c), 
there will be a relatively small number of debtors who would meet the 
criteria for selection who are employed by the States and local 
governments. Any particular State or local government is not likely to 
receive AWG orders from us concerning a significant number of 
employees. Under proposed Sec.  422.435(c), States and local 
governments that employ delinquent debtors must certify certain 
information about the debtors' status such as the debtors' employment 
status and earnings. This information is contained in the States' or 
local governments' payroll records. Therefore, it would not take a 
significant amount of time or result in a significant cost for a State 
or local government to complete the certification form. Even if a State 
or local government receives AWG orders from us on several employees 
over the course of a year, the cost imposed on the State or local 
government to complete the certifications, withhold from disposable 
pay, and remit those amounts to us would not have a significant 
economic impact on that entity. States or local governments would not 
be required to vary their normal pay cycles to comply with AWG orders 
that would be issued under the proposed rules.

Paperwork Reduction Act

    The proposed rules in new subpart E of part 422 contain information 
collection activities at Sec. Sec.  422.415, 422.425 and 422.435. The 
activities are exempt as administrative actions under 44 U.S.C. 
3518(c)(1)(B)(ii) from the clearance requirements of 44 U.S.C. 3507 as 
amended by section 2 of Public Law 104-13 (May 22, 1995), the Paperwork 
Reduction Act of 1995.

(Catalog of Federal Domestic Assistance Program Nos. 96.001, Social 
Security--Disability Insurance; 96.002 Social Security--Retirement 
Insurance; 96.003 Social Security--Special Benefits for Persons Aged 
72 and Over; 96.004, Social Security--Survivors Insurance; 96.006, 
Supplemental Security Income)

List of Subjects

20 CFR Part 404

    Administrative practice and procedure; Death benefits; Blind, 
Disability benefits; Old-Age, Survivors and Disability Insurance; 
Reporting and recordkeeping requirements, Social Security.

20 CFR Part 416

    Administrative practice and procedure; Aged, Blind, Disability 
benefits; Public assistance programs, Reporting and recordkeeping 
requirements, Supplemental Security Income (SSI).

20 CFR Part 422

    Administrative practice and procedure, Organization and functions 
(Government agencies), Social Security.

    Dated: August 12, 2002.
Jo Anne B. Barnhart,
Commissioner of Social Security.

    For the reasons set out in the preamble, we propose to amend parts 
404, 416 and 422 of Title 20 of the Code of Federal Regulations as 
follows:

PART 404--[AMENDED]

    1. The authority citation for subpart F of part 404 continues to 
read as follows:

    Authority: Secs. 204, 205(a), and 702(a)(5) of the Social 
Security Act (42 U.S.C. 404, 405(a) and 902(a)); 31 U.S.C. 3720A.

    2. Paragraph (a), introductory text, of Sec.  404.527 is revised to 
read as follows:


Sec.  404.527  Additional methods for recovery of title II benefit 
overpayments.

    (a) General. In addition to the methods specified in Sec. Sec.  
404.502 and 404.520, an overpayment under title II of the Act is also 
subject to recovery under the rules in subparts D and E of part 422 of 
this chapter. Subpart D of part 422 of this chapter applies only under 
the following conditions:
* * * * *
    3. The authority citation for subpart J of part 404 is revised to 
read as follows:


    Authority: Secs. 201(j), 204(f), 205(a), (b), (d)-(h), and (j), 
221, 225, and 702(a)(5) of the Social Security Act (42 U.S.C. 
401(j), 404(f), 405(a), (b), (d)-(h), and (j), 421, 425, and 
902(a)(5)); sec. 5, Pub. L. 97-455, 96 Stat. 2500 (42 U.S.C. 405 
note); secs. 5, 6(c)-(e), and 15, Pub. L. 98-460, 98 Stat. 1802 (42 
U.S.C. 421 note).

    4. Section 404.903 is amended by removing the word ``and'' at the 
end of paragraph (t), replacing the period at the end of paragraph (u) 
with ``; and'', and adding paragraph (v) to read as follows:


Sec.  404.903  Administrative actions that are not initial 
determinations.

* * * * *
    (v) Determining whether we will order your employer to withhold 
from your disposable pay to collect an overpayment you received under 
title II of the Social Security Act (see part 422, subpart E, of this 
chapter).

PART 416--[AMENDED]

    5. The authority citation for subpart E of part 416 continues to 
read as follows:

    Authority: Secs. 702(a)(5), 1601, 1602, 1611(c) and (e), and 
1631(a)-(d) and (g) of the Social Security Act (42 U.S.C. 902(a)(5), 
1381, 1381a, 1382(c) and (e), and 1383(a)-(d) and (g)); 31 U.S.C. 
3720A

    .6. Paragraph (a), introductory text, of Sec.  416.590 is revised 
to read as follows:


Sec.  416.590  Are there additional methods for recovery of title XVI 
benefit overpayments?

    (a) General. In addition to the methods specified in Sec. Sec.  
416.560, 416.570, 416.572 and 404.580, we may recover an overpayment 
under title XVI of the Act from you under the rules in subparts D and E 
of part 422 of this chapter. Subpart D of part 422 of this chapter 
applies only under the following conditions:
* * * * *
    7. The authority citation for subpart N of part 416 continues to 
read as follows:

    Authority: Secs. 702(a)(5), 1631, and 1633 of the Social 
Security Act (42 U.S.C. 902(a)(5), 1383, and 1383b).

    8. Section 416.1403 is amended by removing the word ``and'' at the 
end of paragraph (a)(18), replacing the period at the end of paragraph 
(a)(19) with ``; and'', and adding paragraph (a)(20) to read as 
follows:


Sec.  416.1403  Administrative actions that are not initial 
determinations.

    (a) * * *
    (20) Determining whether we will order your employer to withhold 
from your disposable pay to collect an overpayment you received under 
title XVI of the Social Security Act (see part 422, subpart E, of this 
chapter).

[[Page 69168]]

PART 422--[AMENDED]

    9. Subpart E is added to read as follows:
Subpart E--Collection of Debts by Administrative Wage Garnishment
422.401 What is the scope of this subpart?
422.402 What special definitions apply to this subpart?
422.403 When may we use administrative wage garnishment?
422.405 What notice will we send you about administrative wage 
garnishment?
422.410 What actions will we take after we send you the notice?
422.415 Will we reduce the amount that your employer must withhold 
from your pay when withholding that amount causes financial 
hardship?
422.420 May you inspect and copy our records related to the debt?
422.425 How will we conduct our review of the debt?
422.430 When will we refund amounts of your pay withheld by 
administrative wage garnishment?
422.435 What happens when we decide to send an administrative wage 
garnishment order to your employer?
422.440 What are your employer's responsibilities under an 
administrative wage garnishment order?
422.445 May we bring a civil action against your employer for 
failure to comply with our administrative wage garnishment order?

Subpart E--Collection of Debts by Administrative Wage Garnishment

    Authority: Secs. 205(a), 702(a)(5) and 1631(d)(1) of the Social 
Security Act (42 U.S.C. 405(a), 905(a)(5) and 1383(d)(1)) and 31 
U.S.C. 3720D.


Sec.  422.401  What is the scope of this subpart?

    This subpart describes the procedures relating to our use of 
administrative wage garnishment under 31 U.S.C. 3720D to recover past 
due debts that you owe.


Sec.  422.402  What special definitions apply to this subpart?

    (a) Administrative wage garnishment is a process whereby we order 
your employer to withhold a certain amount from your disposable pay and 
send the withheld amount to us. The law requires your employer to 
comply with our garnishment order.
    (b) Debt means any amount of money or property that we determine is 
owed to the United States and that arises from a program that we 
administer or an activity that we perform. These debts include program 
overpayments made under title II or title XVI of the Social Security 
Act and any other debt that meets the definition of ``claim'' or 
``debt'' at 31 U.S.C. 3701(b).
    (c) Disposable pay means that part of your total compensation 
(including, but not limited to, salary or wages, bonuses, commissions, 
and vacation pay) from your employer after deduction of health 
insurance premiums and amounts withheld as required by law. Amounts 
withheld as required by law include such things as Federal, State and 
local taxes but do not include amounts withheld under court order.
    (d) We, our, or us means the Social Security Administration.
    (e) You means an individual who owes a debt to the United States 
within the scope of this subpart.


Sec.  422.403  When may we use administrative wage garnishment?

    (a) General. Subject to the exceptions described in paragraph (b) 
and the conditions described in paragraphs (c) and (d) of this section, 
we may use administrative wage garnishment to collect any debt that is 
past due. We may use administrative wage garnishment while we are 
taking other action regarding the debt, such as, using tax refund 
offset under Sec.  404.520-404.526 and 416.580-416.586 of this chapter 
and taking action under subpart D of this part.
    (b) Exceptions.
    (1) We will not use this subpart to collect a debt from salary or 
wages paid by the United States Government.
    (2) If you have been separated involuntarily from employment, we 
will not order your employer to withhold amounts from your disposable 
pay until you have been re-employed continuously for at least 12 
months. You have the burden of informing us about an involuntary 
separation from employment.
    (c) Overpayments under title II of the Social Security Act. This 
subpart applies to overpayments under title II of the Social Security 
Act if all of the following conditions are met:
    (1) You are not receiving title II benefits.
    (2) We have completed our billing system sequence (i.e., we have 
sent you an initial notice of the overpayment, a reminder notice, and a 
past-due notice) or we have suspended or terminated collection activity 
in accordance with applicable rules, such as, the Federal Claims 
Collection Standards in 31 CFR 903.2 or 31 CFR 903.3.
    (3) We have not made an installment payment arrangement with you 
or, if we have made such an arrangement, you have failed to make any 
payment for two consecutive months.
    (4) You have not requested waiver pursuant to Sec.  404.506 or 
Sec.  404.522 of this chapter or, after a review conducted pursuant to 
those sections, we have determined that we will not waive collection of 
the overpayment.
    (5) You have not requested reconsideration of the initial 
overpayment determination pursuant to Sec. Sec.  404.907 and 404.909 of 
this chapter or, after a review conducted pursuant to Sec.  404.913 of 
this chapter, we have affirmed, in whole or in part, the initial 
overpayment determination.
    (6) The overpayment cannot be recovered pursuant to Sec.  404.502 
of this chapter by adjustment of benefits payable to any individual 
other than you. For purposes of this paragraph, an overpayment will be 
deemed to be unrecoverable from any individual who was living in a 
separate household from yours at the time of the overpayment and who 
did not receive the overpayment.
    (d) Overpayments under title XVI of the Social Security Act. This 
subpart applies to overpayments under title XVI of the Social Security 
Act if all of the following conditions are met:
    (1) You are not receiving benefits under title XVI of the Social 
Security Act.
    (2) We are not collecting your title XVI overpayment by reducing 
title II benefits payable to you.
    (3) We have completed our billing system sequence (i.e., we have 
sent you an initial notice of the overpayment, a reminder notice, and a 
past-due notice) or we have suspended or terminated collection activity 
under applicable rules, such as, the Federal Claims Collection 
Standards in 31 CFR 903.2 or 31 CFR 903.3.
    (4) We have not made an installment payment arrangement with you 
or, if we have made such an arrangement, you have failed to make any 
payment for two consecutive months.
    (5) You have not requested waiver pursuant to Sec.  416.550 or 
Sec.  416.582 of this chapter or, after a review conducted pursuant to 
those sections, we have determined that we will not waive collection of 
the overpayment.
    (6) You have not requested reconsideration of the initial 
overpayment determination pursuant to Sec. Sec.  416.1407 and 416.1409 
of this chapter or, after a review conducted pursuant to Sec.  416.1413 
of this chapter, we have affirmed all or part of the initial 
overpayment determination.
    (7) We cannot recover your overpayment pursuant to Sec.  416.570 of 
this chapter by adjustment of benefits payable to any individual other 
than you. For purposes of this paragraph, if you are a member of an 
eligible couple that is legally separated and/or living apart, we will 
deem unrecoverable from

[[Page 69169]]

the other person that part of your overpayment which he or she did not 
receive.


Sec.  422.405  What notice will we send you about administrative wage 
garnishment?

    (a) General. Before we order your employer to collect a debt by 
deduction from your disposable pay, we will send you written notice of 
our intention to do so.
    (b) Contents of the notice. The notice will contain the following 
information:
    (1) we have determined that payment of the debt is past due;
    (2) the nature and amount of the debt;
    (3) information about the amount that your employer could withhold 
from your disposable pay each payday (the payment schedule);
    (4) no sooner than 60 calendar days after the date of the notice, 
we will order your employer to withhold the debt from your disposable 
pay unless, within that 60-day period, you pay the full amount of the 
debt or take either of the actions described in paragraphs (b)(6) or 
(7) of this section;
    (5) you may inspect and copy our records about the debt (see Sec.  
422.420);
    (6) you may request a review of the debt (see Sec.  422.425) or the 
payment schedule stated in the notice (see Sec.  422.415); and
    (7) you may request to pay the debt by monthly installment payments 
to us.
    (c) Mailing address. We will send the notice to the most current 
mailing address that we have for you in our records.
    (d) Electronic record of the notice. We will keep an electronic 
record of the notice that shows the date we mailed the notice to you 
and the amount of your debt.


Sec.  422.410  What actions will we take after we send you the notice?

    (a) General.
    (1) We will not send an administrative wage garnishment order to 
your employer before 60 calendar days elapse from the date of the 
notice described in Sec.  422.405.
    (2) If paragraph (b) of this section does not apply and you do not 
pay the debt in full or do not take either of the actions described in 
paragraphs (b)(6) or (7) of Sec.  422.405 within 60 calendar days from 
the date of the notice described in Sec.  422.405, we may order your 
employer to withhold and send us part of your disposable pay each 
payday until your debt is paid.
    (3) If you request review of the debt or the payment schedule after 
the 60 calendar day period ends and paragraph (b) of this section does 
not apply, we will conduct the review. However, we may send the 
administrative wage garnishment order to your employer without further 
delay.
    (4) We may send an administrative wage garnishment order to your 
employer without further delay if
    (i) You request an installment payment plan after receiving the 
notice described in Sec.  422.405, and
    (ii) We arrange such a plan with you, and
    (iii) You fail to make payments in accordance with that arrangement 
for two consecutive months.
    (b) Good cause for failing to request review on time. If we decide 
that you had good cause for failing to request review within the 60-day 
period mentioned in paragraph (a)(2) of this section, we will treat 
your request for review as if we received it within that 60-day period.
    (1) Determining good cause. In determining whether you had good 
cause, we will consider--
    (i) Any circumstances that kept you from making the request on 
time;
    (ii) Whether our action misled you;
    (iii) Whether you had any physical, mental, educational, or 
linguistic limitations (including any lack of facility with the English 
language) which prevented you from making a request on time or from 
understanding the need to make a request on time.
    (2) Examples of good cause. Examples of facts supporting good cause 
include, but are not limited to, the following.
    (i) Your serious illness prevented you from contacting us yourself 
or through another person.
    (ii) There was a death or serious illness in your family.
    (iii) Fire or other accidental cause destroyed important records.
    (iv) You did not receive the notice described in Sec.  422.405.
    (v) In good faith, you sent the request to another government 
agency within the 60-day period, and we received the request after the 
end of that period.
    (3) If we issued the administrative wage garnishment order. If we 
determine that you had good cause under paragraph (b) of this section 
and we already had sent an administrative wage garnishment order to 
your employer, we will tell your employer to stop withholding from your 
disposable pay until we make our decision.


Sec.  422.415  Will we reduce the amount that your employer must 
withhold from your pay when withholding that amount causes financial 
hardship?

    (a) General. Unless paragraph (d) of this section applies, we will 
reduce the amount that your employer must withhold from your pay when 
you request the reduction and we find financial hardship. In any event, 
we will not reduce the amount your employer must withhold each payday 
below $10. When we decide to reduce the amount that your employer 
withholds, we will give you and your employer written notice.
    (1) You may ask us at any time to reduce the amount due to 
financial hardship.
    (2) If you request review of the payment schedule stated in the 
notice described in Sec.  422.405 within the 60-day period stated in 
the notice, we will not issue a garnishment order to your employer 
until we notify you of our decision.
    (b) Financial hardship. We will find financial hardship when you 
show that withholding a particular amount from your pay would deprive 
you of income necessary to meet your ordinary and necessary living 
expenses. You must give us evidence of your financial resources and 
expenses.
    (c) Ordinary and necessary living expenses. Ordinary and necessary 
living expenses include:
    (1) Fixed expenses such as food, clothing, housing, utilities, 
maintenance, insurance, tax payments;
    (2) Medical, hospitalization and similar expenses;
    (3) Expenses for the support of others for whom you are legally 
responsible; and
    (4) Other reasonable and necessary miscellaneous expenses which are 
part of your standard of living.
    (d) Fraud and willful concealment or failure to furnish 
information. (1) We will not reduce the amount that your employer 
withholds from your disposable pay if your debt was caused by:
    (i) Your intentional false statement, or
    (ii) Your willful concealment of, or failure to furnish, material 
information.
    (2) ``Willful concealment'' means an intentional, knowing and 
purposeful delay in providing, or failure to reveal, material 
information.


Sec.  422.420  May you inspect and copy our records related to the 
debt?

    You may inspect and copy our records related to the debt. You must 
notify us of your intention to review our records. After you notify us, 
we will arrange with you the place and time the records will be 
available to you. At our discretion, we may send copies of the records 
to you.


Sec.  422.425  How will we conduct our review of the debt?

    (a) You must request review and present evidence. If you receive a 
notice

[[Page 69170]]

described in Sec.  422.405, you have the right to have us review the 
debt. To exercise this right, you must request review and give us 
evidence that you do not owe all or part of the debt or that we do not 
have the right to collect it. If you do not request review and give us 
this evidence within 60 calendar days from the date of our notice, we 
may issue the garnishment order to your employer without further delay. 
If you request review of the debt and present evidence within that 60 
calendar-day period, we will not send a garnishment order to your 
employer unless and until we consider all of the evidence and send you 
our findings that all or part of the debt is overdue and we have the 
right to collect it.
    (b) Review of the evidence. If you request review of the debt, we 
will review our records related to the debt and any evidence that you 
present.
    (c) Our findings. Following our review of all of the evidence, we 
will send you written findings, including the supporting rationale for 
the findings. Issuance of these findings will be our final action on 
your request for review. If we find that you do not owe the debt, or 
the debt is not overdue, or we do not have the right to collect it, we 
will not send a garnishment order to your employer.


Sec.  422.430  When will we refund amounts of your pay withheld by 
administrative wage garnishment?

    If we find that you do not owe the debt or that we have no right to 
collect it, we will promptly refund to you any amount withheld from 
your disposable pay under this subpart that we received and cancel any 
administrative wage garnishment order that we issued. Refunds under 
this section will not bear interest unless Federal law or contract 
requires interest.


Sec.  422.435  What happens when we decide to send an administrative 
wage garnishment order to your employer?

    (a) The wage garnishment order. The wage garnishment order that we 
send to your employer will contain only the information necessary for 
the employer to comply with the order. This information includes:
    (1) Your name, address, and social security number,
    (2) The amount of the debt,
    (3) Information about the amount to be withheld, and
    (4) Information about where to send the withheld amount.
    (b) Electronic record of the garnishment order. We will keep an 
electronic record of the garnishment order that shows the date we 
mailed the order to your employer.
    (c) Employer certification. Along with the garnishment order, we 
will send your employer a certification form to complete about your 
employment status and the amount of your disposable pay available for 
withholding. Your employer must complete the certification and return 
it to SSA within 20 days of receipt.
    (d) Amounts to be withheld from your disposable pay. After receipt 
of the garnishment order issued under this section, your employer must 
begin withholding from your disposable pay each payday the lesser of:
    (1) The amount indicated on the order (up to 15% of your disposable 
pay); or
    (2) The amount by which your disposable pay exceeds thirty times 
the minimum wage as provided in 15 U.S.C. 1673(a)(2).
    (e) Multiple withholding orders. If your disposable pay is subject 
to more than one withholding order, we apply the following rules to 
determine the amount that your employer will withhold from your 
disposable pay:
    (1) Unless otherwise provided by Federal law or paragraph (e)(2) of 
this section, a garnishment order issued under this section has 
priority over other withholding orders served later in time.
    (2) Withholding orders for family support have priority over 
garnishment orders issued under this section.
    (3) If at the time we issue a garnishment order to your employer 
amounts are already being withheld from your pay under another 
withholding order, or if a withholding order for family support is 
served on your employer at any time, the amounts to be withheld under 
this section will be the lesser of:
    (i) The amount calculated under paragraph (d) of this section; or
    (ii) The amount calculated by subtracting the amount(s) withheld 
under the withholding order(s) with priority from 25% of your 
disposable pay.
    (4) If you owe more than one debt to us, we may issue multiple 
garnishment orders. If we issue more than one garnishment order, the 
total amount to be withheld from your disposable pay under such orders 
will not exceed the amount set forth in paragraph (d) or (e)(3) of this 
section, as appropriate.
    (f) You may request that your employer withhold more. If you 
request in writing that your employer withhold more than the amount 
determined under paragraphs (d) or (e) of this section, we will order 
your employer to withhold the amount that you request.


Sec.  422.440  What are your employer's responsibilities under an 
administrative wage garnishment order?

    (a) When withholding must begin. Your employer must withhold the 
appropriate amount from your disposable pay on each payday beginning on 
the first payday after receiving the garnishment order issued under 
this section. If the first payday is within 10 days after your employer 
receives the order, then your employer must begin withholding on the 
first or second payday after your employer receives the order. 
Withholding must continue until we notify your employer to stop 
withholding.
    (b) Payment of amounts withheld. Your employer must promptly pay to 
the Social Security Administration all amounts withheld under this 
section.
    (c) Other assignments or allotments of pay. Your employer cannot 
honor an assignment or allotment of your pay to the extent that it 
would interfere with or prevent withholding under this section, unless 
the assignment or allotment is made under a family support judgment or 
order.
    (d) Effect of withholding on employer pay and disbursement cycles. 
Your employer will not be required to vary its normal pay and 
disbursement cycles in order to comply with the garnishment order.
    (e) When withholding ends. When we have fully recovered the amounts 
you owe, including interest, penalties, and administrative costs that 
we charge you as allowed by law, we will tell your employer to stop 
withholding from your disposable pay. As an added precaution, we will 
review our debtors' accounts at least annually to ensure that 
withholding has been terminated for accounts paid in full.
    (f) Certain actions by an employer against you are prohibited. 
Federal law prohibits an employer from using a garnishment order issued 
under this section as the basis for discharging you from employment, 
refusing to employ you, or taking disciplinary action against you. If 
your employer violates this prohibition, you may file a civil action 
against your employer in a Federal or State court of competent 
jurisdiction.


Sec.  422.445  May we bring a civil action against your employer for 
failure to comply with our administrative wage garnishment order?

    (a) We may bring a civil action against your employer for any 
amount that the employer fails to withhold from your disposable pay in 
accordance with paragraphs (d), (e) and (f) of Sec.  422.435. Your 
employer may also be liable for

[[Page 69171]]

attorney fees, costs of the lawsuit and (in the court's discretion) 
punitive damages.
    (b) We will not file a civil action against your employer before we 
terminate collection action against you, unless earlier filing is 
necessary to avoid expiration of any applicable statute of limitations 
period. For purposes of this section, ``terminate collection action'' 
means that we have terminated collection action in accordance with the 
Federal Claims Collection Standards (31 CFR 903.3) or other applicable 
standards. In any event, we will consider that collection action has 
been terminated if we have not received any payments to satisfy the 
debt for a period of one year.

[FR Doc. 02-28856 Filed 11-14-02; 8:45 am]
BILLING CODE 4191-02-P