[Federal Register Volume 70, Number 84 (Tuesday, May 3, 2005)]
[Rules and Regulations]
[Pages 22797-22800]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-8640]


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DEPARTMENT OF THE TREASURY

Fiscal Service

31 CFR Part 285

RIN 1510-AA70


Salary Offset

AGENCY: Financial Management Service, Fiscal Service, Treasury.

ACTION: Final rule.

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SUMMARY: This final rule describes the rules and procedures applicable 
to the centralized offset of Federal salary payments to collect 
delinquent nontax debts owed by Federal employees to the United States. 
The Financial Management Service (FMS), a bureau of the U.S. Department 
of the Treasury, administers centralized salary offset through the 
Treasury Offset Program (TOP).

[[Page 22798]]


DATES: This rule is effective May 3, 2005.

FOR FURTHER INFORMATION CONTACT: Gerry Isenberg, Financial Program 
Specialist, at (202) 874-6660; or Tricia Long, Attorney, at (202) 874-
6680.

SUPPLEMENTARY INFORMATION:

Background

    A major purpose of the Debt Collection Improvement Act of 1996 
(DCIA), Pub. L. 104-134, 110 Stat. 1321-358 et seq. (April 26, 1996), 
is to increase the collection of delinquent nontax debts owed to the 
Federal Government. Among other things, the DCIA established a 
centralized process for withholding or reducing eligible Federal 
payments, including Federal salary payments, to pay the payees' 
delinquent debts owed to the United States. This process is known as 
``centralized administrative offset.'' The DCIA also established a 
requirement that Federal agencies match their delinquent debtor records 
with records of Federal employees, at least annually, to identify 
Federal employees who owe delinquent debt to the Federal Government. 
This rule establishes centralized procedures for matching information 
about delinquent debts with information about Federal salary payments 
for the purpose of offsetting a debtor's Federal salary payments to 
satisfy the debt.
    On April 28, 1998, FMS issued an interim rule with request for 
comments that established the centralized salary offset program 
operated by FMS through TOP. See 63 FR 23354. We did not receive 
comments from any individuals or entities outside the Federal 
government. However, we received comments from three Federal agencies, 
many of which were operational in nature and, therefore, not 
appropriate for a regulatory rulemaking. Since the time of the 
publication of the interim rule, FMS has worked with Federal agencies--
including the three commenters--to develop systems and procedures that 
addressed their operational concerns. Therefore, we have not addressed 
those operational comments in this rulemaking.

Discussion of Comments

General

    As indicated above, FMS received comments from three Federal 
agencies. The comments to the rule that were regulatory in nature are 
discussed in this final rule. In addition, FMS has corrected the list 
of authorities to include 31 U.S.C. 3720B and 42 U.S.C. 664, which were 
inadvertently deleted in previous amendments to this Part 285, and has 
made minor editorial changes for purposes of clarity and consistency.

Comment Analysis

Interim Rule Sec.  285.7(a), Purpose and Scope
    One commenter recommended that paragraph (a)(1) expressly state 
that this section applies only to the collection of nontax debts. FMS 
agrees that such clarification would be beneficial and has made this 
change to paragraph (a)(1).
    It was also brought to FMS's attention that the rule does not 
expressly state that the centralized offset of final salary payments 
and any final, lump-sum payment made to an employee after the employee 
leaves Federal service is governed by the provisions of 31 U.S.C. 3716 
and implementing regulations found at 31 CFR 285.5, rather than this 
rule. FMS has, therefore, added a new paragraph (a)(6) to clarify that 
this rule does not apply to the offset of final salary payments or 
final, lump-sum payments made to former employees. Among other things, 
this means that a disbursing official may offset up to 100% of a former 
employee's final payment, whereas for current employees, the offset 
amount is limited to 15% of disposable pay. This new provision is 
consistent with the salary offset provisions promulgated by the Office 
of Personnel Management in Subpart K of 5 CFR part 550. See 5 CFR 
550.1104(l), Liquidation from final check.
Interim Rule Sec.  285.7(b), Definitions
    One commenter suggested that FMS expand the definition of ``Federal 
employee records'' to include Federal payroll records and employment 
records in order to facilitate the matching process for salary offset. 
FMS has not amended the definition of ``Federal employee records'' in 
response to this comment, but it has deleted the reference to Federal 
employee records in paragraph (a)(4) and revised paragraph (f) to 
clarify that Federal employee records are only those records required 
for identifying Federal employees who owe delinquent Federal debts. For 
purposes of this rule, ``Federal employee records'' are records of 
Federal salary payments that a paying agency has certified to a 
disbursing official for disbursement. Such records are sufficient for 
the disbursing official to identify Federal employees who owe 
delinquent debts. Paying agencies, however, may require additional 
types of records to calculate the amount of disposable pay due to a 
Federal employee for purposes of paragraph (f) of this section. 
Paragraph (f) authorizes paying agencies to deduct the offset amount 
from disposable pay before certifying a salary payment to a disbursing 
official. Paying agencies may use such records as are necessary to 
calculate disposable pay in accordance with 5 CFR part 550, which 
governs the calculation of disposable pay.
Interim Rule Sec.  285.7(d), Creditor Agency Participation
    One commenter recommended that the rule specify that notifying 
Treasury of all past-due, legally enforceable debts for purposes of 
administrative offset relieves agencies of the need to enter into 
computer matching agreements with other Federal disbursing officials to 
satisfy the statutory salary offset requirement set forth in 5 U.S.C. 
5514. The commenter noted that the Supplementary Information portion of 
the interim rule indicated that compliance with this section would mean 
that the agency was also in compliance with the statutory requirement. 
In response to this comment, FMS has revised paragraph (d)(1) to state 
expressly that creditor agencies that notify FMS of all past-due 
legally enforceable debts for purposes of administrative offset have 
complied with the statutory requirement set forth in 5 U.S.C. 5514. 
Notwithstanding this change, FMS encourages agencies to maintain 
matching agreements with any salary paying agencies that have not yet 
participated in the interagency consortium established under 285.7(c) 
to implement centralized salary offset computer matching. Such matching 
helps maximize the Government's collection of delinquent nontax debt. 
FMS has therefore declined to put a provision in the rule that states 
that creditor agencies do not need to enter into computer matching 
agreements with other Federal agencies.
    Two commenters suggested that FMS eliminate the waiver requirement 
in paragraph (d)(4) of the interim rule. FMS has made the suggested 
change. Paragraph (d)(4) required a waiver from Treasury before a 
creditor agency could submit a debt to TOP without first certifying 
that the creditor agency has complied with the salary offset due 
process requirements of 5 U.S.C. 5514. See paragraph (d)(3)(iv) of this 
section. Such certification is referred to informally as a ``partial 
certification,'' because the creditor agency is not relieved from the 
requirement to certify its compliance with those due process pre-
requisites applicable to the offset of non-salary payments. See 31 CFR 
285.5(d)(6), Creditor agency

[[Page 22799]]

certification. With a partial certification, TOP compares debtor 
information with Federal salary payment information to determine if the 
debtor receives a Federal salary and informs the creditor agency if 
there is a match. Such matching affords the creditor agency time to 
perform the necessary due process prior to submitting the completed 
certification that all due process requirements of 5 U.S.C. 5514 have 
been met. An offset will only occur after the creditor agency submits 
the completed certification. The creditor agency may only submit a debt 
to TOP with a partial certification if it uses the match information 
for offset purposes--that is to complete due process and resubmit the 
debt to TOP with the completed certification.
    FMS agrees that it is appropriate to allow creditor agencies to 
submit debts with the partial certification without an express waiver 
from Treasury. FMS's experience since the publication of the interim 
rule is that the partial certification process works well to allow 
agencies time to complete due process, and that an express waiver is no 
longer necessary. Therefore, paragraph (d)(4) has been amended to 
remove the requirement for a waiver from Treasury prior to submitting a 
partial certification. Paragraph (d)(4) has also been amended to add a 
provision to make clear that such partial certification is only 
permitted when the creditor agency intends to use the Federal salary 
information to provide due process for offset under this section and 
fully certify the debt in the future.
Interim Rule Sec.  285.7(g)(1), Offset Amount
    One commenter suggested that paragraph (g)(1) be amended to clarify 
that when a debtor is receiving more than one Federal salary at the 
same time (e.g., when a person receives both civilian and military 
reserve pay), that the offset amount is 15% of each of those payments. 
FMS has not made a change to the rule in response to this comment, 
because the current language of (g)(1) refers to disposable pay, and 
disposable pay is defined as having the same meaning as that term is 
defined in 5 CFR 550.1103. Section 550.1103 makes clear that disposable 
pay includes any pay to a Federal employee. Paragraph (g)(1), 
therefore, allows the Government to offset up to 15% of all Federal 
salaries paid to the debtor.
Interim Rule Sec.  287.7(h), Priorities
    One commenter recommended that Treasury require that tax levies 
imposed by the Internal Revenue Service (IRS) be served directly on 
FMS, rather than on Federal agencies directly. FMS has not changed this 
rule in response to this comment. This rule applies only to the 
collection of nontax debts. Moreover, service of IRS levies is governed 
by the Internal Revenue Code, which is administered solely by the IRS. 
Service of levies to collect delinquent tax obligations is therefore 
outside the scope of this rule.

Regulatory Analysis

    This final rule is not a significant regulatory action as defined 
in Executive Order 12866. Because no notice of proposed rulemaking was 
required for this rule, the provisions of the Regulatory Flexibility 
Act (5 U.S.C. 601 et seq.) do not apply.

Special Analysis

    FMS has determined that good cause exists to make this final rule 
effective upon publication without providing the 30-day period between 
publication and the effective date contemplated by 5 U.S.C. 553(d). The 
purpose of a delayed effective date is to afford persons affected by a 
rule a reasonable time to prepare for compliance. However, the agencies 
affected by this rule have already been accomplishing centralized 
salary offset in accordance with the terms of this rule, and procedures 
affecting debtors remain unchanged in this rule. Moreover, this final 
rule makes only minor changes to the currently effective interim final 
rule and provides guidance that is expected to facilitate Federal 
agencies' participation in the centralized offset program. Therefore, 
FMS believes that good cause exists, and that it is in the public 
interest, to make this final rule effective upon publication.

List of Subjects in 31 CFR Part 285

    Administrative practice and procedure, Black lung benefits, Child 
support, Claims, Credit, Debts, Disability benefits, Federal employees, 
Garnishment of wages, Hearing and appeal procedures, Loan programs, 
Privacy, Railroad retirement, Railroad unemployment insurance, 
Salaries, Social Security benefits, Supplemental Security Income (SSI), 
Taxes, Veteran's benefits, Wages.

Authority and Issuance

0
For the reasons set forth in the preamble, 31 CFR part 285 is amended 
as follows:

PART 285--DEBT COLLECTION AUTHORITIES UNDER THE DEBT COLLECTION 
IMPROVEMENT ACT OF 1996

0
1. The authority citation for part 285 is revised to read as follows:

    Authority: 5 U.S.C. 5514; 26 U.S.C. 6402; 31 U.S.C. 321, 3701, 
3711, 3716, 3719, 3720A, 3720B, 3720D; 42 U.S.C. 664; E.O. 13019, 61 
FR 51763, 3 CFR, 1996 Comp., p. 216.


0
2. Amend Sec.  285.7 as follows:
0
a. Revise paragraph (a)(1);
0
b. Remove the last sentence of paragraph (a)(4);
0
c. Add a new paragraph (a)(6);
0
d. Revise paragraph (d)(1);
0
e. Revise paragraph (d)(4); and
0
f. Add a new sentence to the end of paragraph (f).
    The revisions and additions read as follows:


Sec.  285.7  Salary offset.

    (a) Purpose and scope. (1) This section establishes FMS's 
procedures for the centralized offset of Federal salary payments to 
collect delinquent nontax debts owed to the United States. This process 
is known as centralized salary offset. Rules issued by the Office of 
Personnel Management contain the requirements Federal agencies must 
follow prior to conducting centralized or non-centralized salary offset 
and the procedures for requesting offsets directly from a paying 
agency, rather than through TOP. See 5 CFR 550.1101 through 550.1108.
* * * * *
    (6) This section does not govern the centralized offset of final 
salary payments or lump-sum payments made to employees who have left an 
agency's employ. The centralized offset of such payments is governed by 
Sec.  285.5 of this part.
* * * * *
    (d) Creditor agency participation. (1) As required under 5 U.S.C. 
5514(a)(1), creditor agencies shall participate at least annually in 
centralized salary offset computer matching. By notifying FMS of all 
past-due, legally enforceable debts delinquent for more than 180 days 
for purposes of 31 U.S.C. 3716(c)(6), creditor agencies shall have met 
the requirement set forth in 5 U.S.C. 5514(a)(1). Additionally, 
creditor agencies may notify FMS of past-due, legally enforceable debts 
delinquent for less than 180 days for purposes of centralized offset.
* * * * *
    (4) The creditor agency is not required to submit the certification 
set forth in paragraph (d)(3)(iv) of this section prior

[[Page 22800]]

to submitting a debt to FMS. However, if the creditor agency does not 
provide such certification initially, the creditor agency shall provide 
the Federal employee with the notices and opportunity for a hearing, as 
required by 5 U.S.C. 5514 and applicable regulations, and shall make 
the necessary certification before the disbursing official offsets a 
salary payment pursuant to this section. A creditor agency may submit a 
debt without the requirement set forth in paragraph (d)(3)(iv) of this 
section, only if the creditor agency intends to complete the 
certification after complying with the provisions of 5 U.S.C. 5514 and 
applicable regulations.
* * * * *
    (f) Salary offset. * * * The salary paying agency shall use such 
records as it deems necessary to accurately calculate disposable pay in 
accordance with 5 CFR 550.1103.
* * * * *

    Dated: April 22, 2005.
Richard L. Gregg,
Commissioner.
[FR Doc. 05-8640 Filed 5-2-05; 8:45 am]
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