[Federal Register Volume 69, Number 206 (Tuesday, October 26, 2004)]
[Rules and Regulations]
[Pages 62413-62415]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-23953]
[[Page 62413]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Administration for Children and Families
45 CFR Part 303
RIN 0970-AC09
Child Support Enforcement Program Federal Tax Refund Offset
AGENCY: Administration for Children and Families, Department of Health
and Human Services (HHS).
ACTION: Final rule.
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SUMMARY: This final rule responds to comments received on the interim
final rule with comment period, published on June 26, 2003, that
amended regulations on collecting child support arrears through the
Federal Tax Refund Offset process. The interim final rule reflected
changes in OCSE's data processing protocols with the Department of the
Treasury and incorporated current business practices and requests from
State Child Support Enforcement agencies.
DATES: These regulations are effective October 26, 2004.
FOR FURTHER INFORMATION CONTACT: Yvette Hilderson Riddick, Division of
Policy, OCSE, 202-401-4885, e-mail: [email protected]. Deaf and
hearing-impaired individuals may call the Federal Dual Party Relay
Service at 1-800-877-8339 between 8 a.m. and 7 p.m. eastern time.
SUPPLEMENTARY INFORMATION:
Statutory Authority
This regulation is issued under the authority granted to the
Secretary of Health and Human Services (the Secretary) by section 1102
of the Social Security Act (the Act), 42 U.S.C. 1302. Section 1102 of
the Act authorizes the Secretary to publish regulations that may be
necessary for the efficient administration of the functions for which
he is responsible under the Act.
Interim Final Regulatory Provisions
The interim final rule amending 45 CFR 303.72, Requests for
collection of past-due support by Federal tax refund offset, did not
impose new requirements or burdens on States, but rather removed
administrative requirements and burdens, principally the requirement
that the support be three months delinquent before the debt is referred
for Federal tax refund offset. The rule also removed the requirement
for States to submit written notices to OCSE; i.e., to transmit paper
responses or to submit referrals by magnetic tape. Under the new
procedures, notices and referrals are sent to OCSE electronically,
which is much simpler for the States. Finally, the rule incorporated
several policies that were already in effect in order to have all the
information pertaining to the submission of Federal tax refund offset
cases in one place.
Response to Comments and Changes to the Interim Final Rule
We received comments from four State IV-D agencies about the
changes proposed in the interim final rule. The comments and our
responses are discussed below.
1. Comment: One commenter said that, in the interim final rule,
OCSE's use of the term ``non-IV-A cases'' is misleading or inaccurate.
For example, a person may have been on assistance, but is currently not
on assistance, yet has assigned arrears. Is this a IV-A case or not?
The commenter suggested we use the terms ``cases with support assigned
to the State'' and ``cases with no support assigned to the State''.
Response: The term ``non-IV-A cases'' was not added or changed in
the interim final rule. The reference to ``non-IV-A cases'' covers any
cases that have unassigned past-due support which is being submitted
for offset. ``IV-A cases'' cover any cases that have assigned past-due
support which is being submitted for offset, such as the example in the
comment. The language that the commenter suggests changing is
longstanding language that was not added or changed by the interim
final regulation and thus, is not a proper subject for modification in
the final rule. The regulatory language at Sec. 303.72(a) lays out the
rules for how support is submitted for offset. It differentiates past-
due support qualifying for offset according to whether it is past-due
support assigned to the State or past-due support that is not assigned
to the State, but owed to the family. Assigned support and support owed
to the family must meet different criteria for submittal, as outlined
in paragraph (a). Thus, in a former assistance case with arrears
assigned to the State and arrears owed to the family, the State will
specify two separate amounts of past-due support for offset.
Additionally, this distinction is required under the Internal Revenue
Code, 26 U.S.C. 6402(c), the section of the Code pertaining to tax
refund offset for child support. Under this subsection, first priority
is given to ``any past-due support which has been assigned to the
State.'' Next priority is other Federal debts, followed by unassigned
past-due support.
2. Comment: One commenter asked: If Federal tax refund offset is a
mandatory tool, as stated in the preamble to the interim final rule,
are States required to certify all cases with assigned arrears of $150
or more and, if so, by when? The commenter expressed concern that
States may need to change laws, policies and procedures to meet this
``new'' requirement. One commenter agreed with the regulatory changes,
but pointed out that her State will need to make some programming
changes that will take a few months to complete.
Response: The requirement to certify all cases that meet the
criteria for submittal for Federal tax refund offset under 45 CFR
303.72 appears at Sec. 303.6(c)(3) and has not been changed. The
timeframe for that submittal is ``according to the timeframes and in
the manner specified by the Office in instructions'' (Sec.
303.72(b)(1)). These instructions will be forthcoming in new guidance
from the Federal Office of Child Support Enforcement. Currently, HHS
requires States to update on at least a monthly basis, and recommends
sending weekly updates if possible. OCSE will work closely with States
before considering any changes to the timeframes and issuing
instructions. OCSE does not contemplate instructions that will require
changes to State law. The State may also use discretion to exclude a
particular case as warranted, on a case-by-case basis.
3. Comment: One commenter noted that OCSE mentioned, in the
preamble to the interim final rule, that it amended Sec.
303.72(d)(2),(f)(3) and (g)(4) to recognize that the amount to be
offset may increase as well as decrease after the submittal, due to the
transition from annual updates to a continuous data processing schedule
or due to an administrative review. However, in the first two instances
cited, the regulation was not changed.
Response: We have corrected the regulation by replacing
``decrease'' with ``change'' in paragraphs (d)(2) and (f)(3).
4. Comment: Paragraph Sec. 303.72(g) sets forth procedures for
contesting an offset in interstate cases. The amended Sec.
303.72(g)(4) requires the State with the order to report changes
resulting from an administrative review to the submitting State and the
submitting State to notify OCSE. One commenter said that we should
define ``State with the order'', because the State with the order may
not be involved in the case if the order is not in the initiating or
responding State.
Response: The commenter is correct in noting that the State with
the order may be neither the initiating nor the responding State
involved in a IV-D
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case. The State with the order refers to the State with the order
``upon which the referral for offset is based''. We have added this
language to paragraph (g)(4) for clarification. The provision allowing
``the State with the order'' to conduct an administrative review is not
a change to the regulation.
5. Comment: Paragraph Sec. 303.72(h)(6) was amended to specify
that collections from offset may only be applied ``to cases'' that were
being enforced by the IV-D agency at the time the advance notice
described in paragraph (e)(1) of this section was sent. The prior
paragraph (h)(6) had provided that collections from offset could be
applied only against the ``past-due support amount'' that was specified
in the advance notice to the obligor. One commenter asked: If a
collection came in during a transitional period before an update was
processed by OCSE to make the case a non-IV-D case, could the money be
kept and applied to the arrears on that case?
Response: Regulations at 45 CFR 303.11 contain case closure
requirements. If the State closes a case before the date of offset,
consistent with case closure requirements, the offset amount would have
to be returned to the Treasury, since past-due support that qualifies
for offset must be past-due support owed in a IV-D case.
6. Comment: The change to paragraph (h)(6) narrows the past-due
support to which collections from Federal income tax refund offsets may
be applied. Under the regulations, the State, or OCSE at the State's
request, sends the obligor a pre-offset notice specifying the obligor's
right to contest that past-due support is owed and the right to an
administrative review. The notice specifies that further arrears may be
added to the obligor's debt without further notice. This past-due
support could have already included debt from more than one case
involving that obligor. States may also offer an opportunity for a due
process hearing at the point of offset. States that provide that
additional due process protection at offset, and not just at the pre-
offset stage, should have flexibility in applying collections to past-
due support owed by an obligor. If a State's due process has met State
constitutional and due process requirements, the Federal regulation
should continue to allow application of collections to all cases,
similar to the handling of income withholding collections.
Response: We have not changed this provision for the following
reasons. Section 464 of the Act authorizes the collection of past-due
support from Federal tax refunds only if certain conditions are met.
First, the individual due the tax refund must owe past-due support
which has been assigned to the State or which the State has agreed to
collect for a child on whose behalf an application for services has
been submitted. The statute defines ``past-due support'' as ``the
amount of a delinquency, determined under a court order, or an order of
an administrative process established under State law, for support and
maintenance of a child, or of a child and the parent with whom the
child is living.'' Second, the State must notify the Secretary of the
Treasury that the individual owes past-due support in accordance with
the procedures established by the Secretary of the Treasury. Third,
prior to notifying the Secretary of the Treasury that the individual
owes past-due support, the State must send a notice to the individual
informing him or her that amounts will be withheld from any refund
payable. The notice must also inform the individual of the steps that
may be taken to contest the State's determination that past-due support
is owed or the amount of such past-due support and must comply with the
regulations established by the Secretary of HHS. The regulation
governing the advance notice that must be provided appears at Sec.
303.72(e). Under this regulation, the required advance notice must
inform the individual of four things, including the right to a review
by the submitting State or the State with the order upon which the
referral is based and the procedures and timeframe for contacting the
IV-D agency of the submitting State to request a review.
The purpose of the advance notice provisions is to inform the
individual of the IV-D agency's determination that he or she owes an
amount of past-due support and to afford the individual an opportunity
to contest the IV-D agency's determination that such past-due support
is owed before the case is submitted for tax refund offset. In order to
accomplish the purpose of the advance notice provisions and to comply
with the statutory and regulatory provisions, an individual must be
provided sufficient information concerning the past-due support claimed
to be owed so as to enable a decision whether or not to request a
review. An individual cannot contest a determination of past-due
support about which he or she has not been notified.
7. Comment: The OCSE automated system for Federal tax refund offset
cannot send a second advance notice that would include a second
family's past-due support without first decertifying the first family's
past-due support, which creates a burden on families whose support has
already been submitted by the State.
Response: OCSE is programming a new transaction that will allow
States to generate new pre-offset notices on an ad hoe basis without
decertifying a case. It is expected to be available very soon.
8. Comment: The obligor's debt is offset at the amount that is
certified as of the date of offset. Define ``date of offset.''
Response: The ``date of offset'' is the date that Treasury's
Financial Management Services actually offsets the tax refund. This
date is sent to the State with the payment file.
9. Comment: One commenter mentioned a missing reference to
paragraph (f)(3) in the amendatory language in the interim final rule.
Response: We have corrected that omission in this final rule. In
addition, we have identified several other typographical and technical
errors in the text of the interim final rule that we have corrected in
this final document. These corrections appear in paragraph (b)(1),
where we corrected the placement of the parentheses; in paragraph
(b)(2), where we added the word ``delinquency'' which had been left out
in error; in paragraph (d)(1), where we changed ``of' to ``for'' in the
phrase ``referring past-due support of offset''; and in paragraph
(i)(1), where we added ``U.S.'' to the term ``Department of Treasury''
and we added the words ``of the'' between ``amount'' and ``offset''.
Paperwork Reduction Act of 1995
No new information collection requirements are imposed by these
regulations, nor are any existing requirements changed as a result of
their promulgation. Therefore, the requirements of the Paperwork
Reduction Act of 1995 (44 U.S.C. 3507(d)), regarding reporting and
record keeping, do not apply.
Regulatory Flexibility Analysis
The Secretary certifies, under 5 U.S.C. 605(b), as enacted by the
Regulatory Flexibility Act (Pub. L. 96-354), that this rule will not
result in a significant impact on a substantial number of small
entities. The primary impact is on State governments. State governments
are not considered small entities under the Act.
Regulatory Impact Analysis
This final rule responds to comments on amended regulations on
collecting child support arrears through the Federal Tax Refund Offset
process. The changes make it easier for States to determine which cases
are eligible for referral by eliminating certain
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requirements. Executive Order 12866 requires that regulations be
reviewed to ensure that they are consistent with the priorities and
principles set forth in the Executive Order. The Department has
determined that this rule is consistent with these priorities and
principles. This rule is considered a ``significant regulatory action''
under the Executive Order and therefore has been reviewed by the Office
of Management and Budget.
Unfunded Mandates Reform Act of 1995
Section 202 of the Unfunded Mandates Reform Act of 1995 requires
that a covered agency prepare a budgetary impact statement before
promulgating a rule that includes any Federal mandate that may result
in the expenditure by State, local, and Tribal governments, in the
aggregate, or by the private sector, of $100 million or more in any one
year.
The Department has determined that this rule would not impose a
mandate that will result in the expenditure by State, local, and Tribal
governments, in the aggregate, or by the private sector, of more than
$100 million in any one year.
Congressional Review
This regulation is not a major rule as defined in 5 U.S.C. chapter
8.
Assessment of Federal Regulations and Policies on Families
Section 654 of the Treasury and General Government Appropriations
Act of 1999 requires Federal agencies to determine whether a proposed
policy or regulation may affect family well-being. If the agency's
determination is affirmative, then the agency must prepare an impact
assessment addressing seven criteria specified in the law. These
regulations will not have an impact on family well-being as defined in
the legislation.
Executive Order 13132
Executive Order 13132 on federalism applies to policies that have
federalism implications, defined as ``regulations, legislative comments
or proposed legislation, and other policy statements or actions that
have substantial direct effects on the States, or on the distributions
of power and responsibilities among the various levels of government''.
This rule does not have federalism implications for State or local
governments as defined in the Executive Order.
List of Subjects in 45 CFR Part 303
Child support, Grant programs/social programs.
(Catalog of Federal Domestic Assistance Programs No. 93.563, Child
Support Enforcement Program)
Dated: June 28, 2004.
Wade F. Horn,
Assistant Secretary for Children and Families,
Date Approved: August 6, 2004.
Tommy G. Thompson,
Secretary of Health and Human Services.
0
For the reasons discussed above, title 45 CFR chapter III is amended as
follows:
PART 303--STANDARDS FOR PROGRAM OPERATIONS
0
1. The authority citation for part 303 continues to read as follows:
Authority: 42 U.S.C. 651 through 658, 660, 663, 664, 666, 667,
1302, 1396a(a)(25), 1396b(d)(2), 1396b(o), 1396b(p) and 1396(k).
0
2. Amend Sec. 303.72 by revising paragraphs (b)(1), (b)(2)
introductory text, (d)(1), (d)(2), (f)(3), (g)(4), and (i)(1) to read
as follows:
Sec. 303.72 Requests for collection of past-due support by Federal
tax refund offset.
* * * * *
(b) * * *
(1) A State IV-D agency shall submit a notification (or
notifications) of liability for past-due support to the Office
according to the timeframes and in the manner specified by the Office
in instructions.
(2) To the extent specified by the Office in instructions, the
notification of liability for past-due support shall contain with
respect to each delinquency:
* * * * *
(d) * * *
(1) The State referring past-due support for offset must, in
interstate situations, notify any other State involved in enforcing the
support order when it submits an interstate case for offset and when it
receives the offset amount from the Secretary of the U.S. Treasury.
(2) The State IV-D agency shall, within timeframes established by
the Office in instructions, notify the Deputy Director of any deletion
of, or any change in, the arrears balance, if the change is significant
according to the guidelines developed by the State. The notification
shall contain the information specified in paragraph (b) of this
section.
* * * * *
(f) * * *
(3) If the administrative review results in a deletion of, or
change in, the arrears balance, the IV-D agency must notify OCSE within
timeframes established by the Office and include the information
specified in paragraph (b) of this section.
* * * * *
(g) * * *
(4) If the administrative review results in a deletion of, or
change in, the arrears balance, the State with the order upon which the
referral for offset is based must notify the submitting State within
timeframes established by the Office and include the information
specified in paragraph (b) of this section. The submitting State must
then notify the Office within timeframes established by the Office and
include the information specified in paragraph (b) of this section.
* * * * *
(i) * * *
(1) A refund offset fee, in such amount as the Secretary of the
U.S. Treasury and the Secretary of Health and Human Services have
agreed to be sufficient to reimburse the U.S. Department of Treasury
for the full cost of the offset procedure, shall be deducted from the
offset amount and credited to the U.S. Department of Treasury
appropriations which bore all or part of the costs involved in making
the collection. The full amount of the offset must be credited against
the obligor's payment record. The fee which the Secretary of the U.S.
Treasury may impose with respect to non-IV-A submittals shall not
exceed $25 per submittal.
* * * * *
[FR Doc. 04-23953 Filed 10-25-04; 8:45 am]
BILLING CODE 4184-01-P