[Federal Register Volume 80, Number 180 (Thursday, September 17, 2015)]
[Rules and Regulations]
[Pages 55751-55752]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-23305]
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DEPARTMENT OF THE TREASURY
Fiscal Service
31 CFR Part 285
RIN 1530-AA02
Offset of Tax Refund Payments To Collect Certain Debts Owed to
States
AGENCY: Bureau of the Fiscal Service, Fiscal Service, Treasury.
ACTION: Final rule.
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SUMMARY: This final rule adopts the interim rule, published in the
Federal Register on January 28, 2011, concerning the collection of
delinquent State unemployment compensation debts through the offset of
overpayments of Federal taxes.
DATES: This rule is effective September 17, 2015.
ADDRESSES: In accordance with the U.S. government's eRulemaking
Initiative, the Bureau of the Fiscal Service publishes rulemaking
information on http://www.regulations.gov.
FOR FURTHER INFORMATION CONTACT: Thomas Kobielus, Manager, Treasury
Offset Program Debt Policy Branch, Treasury Offset Program Division,
Debt Collection Program Management Directorate, Debt Management
Services, Bureau of the Fiscal Service, at (202) 874-6810, or Michelle
M. Cordeiro, Attorney, Office of Chief Counsel, Bureau of the Fiscal
Service, at (202) 874-6680.
SUPPLEMENTARY INFORMATION:
I. Background
This rule implements the authority added by the SSI Extension for
Elderly and Disabled Refugees Act of 2008 (``2008 Act''), as amended by
the Claims Resolution Act of 2010 (``2010 Act''), to offset
overpayments of Federal taxes (referred to as ``tax refund offset'') to
collect delinquent state unemployment compensation debts. The
Department of the Treasury (``Treasury'') has incorporated the
procedures necessary to collect state unemployment compensation debts
as part of the Treasury Offset Program, a centralized offset program
operated by Treasury's Bureau of the Fiscal Service (``Fiscal
Service'').
On January 28, 2011, Fiscal Service (then, the Financial Management
Service) published an interim rule with request for comments at 76 FR
5070, implementing this new authority. Specifically, this rule amended
Fiscal Service regulations to include unemployment compensation debts
among the types of state debts that may be collected by tax refund
offset.
II. Summary of Comments Received and Treasury's Responses
Treasury sought comments on all aspects of the proposed rule.
Treasury received comments from one private company that provides
worldwide tax services. The following is a discussion of the
substantive issues raised in the comments.
1. Notice
The commenter suggested that the rule provide guidelines to the
states regarding how to notify debtor populations who may be affected
by this rule. While this comment is outside the scope of this rule,
Fiscal Service notes that this rule requires debtor-specific pre-offset
notification (see 31 CFR 285.8(c)(3)(i)). The commenter also suggested
that Fiscal Service mandate that states provide a pre-offset notice by
certified mail, return receipt requested. In the 2010 Act, Congress
explicitly removed this requirement in the case of unemployment
compensation debt. Fiscal Service is unaware of any evidence that
certified mail is more likely to reach the debtor than is regular first
class mail, and notes that the cost of sending a notice by certified
mail, return receipt requested, is high relative to sending a notice by
regular first class mail. Therefore, Fiscal Service has not adopted
this suggestion. As required by statute, however, notice must be sent
by certified mail, return receipt requested prior to pursuing Federal
tax refund offset to collect delinquent state income tax obligations.
The commenter also suggested that Fiscal Service mandate that the
notice to the debtor include certain details about the debt. Fiscal
Service notes that, prior to submitting a debt to the Treasury Offset
Program for tax refund offset purposes, a state is required to certify
to Fiscal Service that it has provided the debtor with sufficient due
process, including identification of the debt the state seeks to
collect by offset. The information that must be provided may differ
with the specific circumstances, and states may provide notice beyond
what is specifically required by statute and regulation. Because
identification of the debt is already required, Fiscal Service has not
incorporated this suggestion.
2. Reasonable Efforts
The commenter suggested that this rule provide specific actions
that states should take and state what documentation they should retain
to demonstrate that they have made reasonable efforts to collect a debt
prior to pursuing Federal tax refund offset. The rule provides detail
on what a reasonable effort includes--namely, making written demand on
the debtor for payment and following state law and procedure. In
addition, the rule was designed to provide flexibility because what
constitutes a reasonable effort may differ based on the specific
circumstances. Therefore, Fiscal Service believes that providing
specific actions that states should take is unnecessary and not
practicable and has not adopted this suggestion.
3. Central Repository for Information
The commenter suggested that debtors be able to obtain information
through a centralized location within the Treasury Offset Program Web
site and through an automated telephone system on why their payment was
offset and on state appeals processes. While this suggestion is outside
the scope of this rule, Fiscal Service notes that debtors currently may
access certain offset information through an automated telephone
system. Fiscal Service further notes that it is exploring other self-
service options that would permit debtors to obtain information about
their own debts.
4. Other Concerns
The commenter suggested that the description of the required appeal
process contain more detail. Fiscal Service is not aware of any
additional detail that needs to be included and, therefore, has not
made any changes to the rule based on this suggestion.
The commenter also suggested that Fiscal Service consider extending
the period of dispute to 90 days because debtors are unlikely to have
retained records for long periods of time. Fiscal Service notes that
several other delinquent debt collection tools provide a due process
period of 60 days or fewer, including the offset of Federal nontax
payments to collect Federal nontax debts (31 CFR 285.5(d)(6)(ii)(A));
the offset of Federal nontax payments to collect state debts (31 CFR
285.6(e)(2)); the offset of Federal tax payments to collect Federal
nontax debts (31 CFR 285.2(d)(1)(ii)(B)); and the
[[Page 55752]]
administrative garnishment of wages to collect Federal nontax debts (31
U.S.C. 3720D(b)(2)). Moreover, Fiscal Service believes that an
additional 30 days is not likely to help debtors locate and produce
such records, and is not aware of any evidence that 60 days is
insufficient. Given the time period for other debt collection tools,
Fiscal Service believes it would be best to leave the interim rule
unchanged.
The commenter also expressed concern that lifting the 10-year time
limitation will create burdens for Treasury's Internal Revenue Service,
due to an increase in injured spouse claims. Fiscal Service is unaware
of any evidence to support this concern. Fiscal Service further notes
that the 10-year limitation was removed by statute.
Procedural Matters
This 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.
Federalism
This rule has been reviewed under Executive Order 13132,
federalism. This rule will not have substantial direct effects on
states, on the relationship between the national government and the
states, or on distribution of power and responsibilities among the
various levels of government. Participation in the program governed by
this rule is voluntary for the states; this rule only sets forth the
general procedures for state participation. States already participate
in offset of tax refunds to collect delinquent state income tax
obligations pursuant to 31 CFR 285.8. This rule merely updates the
regulations to reflect the statutory change authorizing states to
submit additional debts to Treasury Offset Program for collection by
tax refund offset. Therefore, in accordance with Executive Order 13132,
it is determined that this rule does not have sufficient federalism
implications to warrant the preparation of a federalism summary impact
statement.
For the reasons stated above, the interim rule amending 31 CFR
285.8, published at 76 FR 5070, January 28, 2011, is adopted as final
without change.
David A. Lebryk,
Fiscal Assistant Secretary.
[FR Doc. 2015-23305 Filed 9-16-15; 8:45 am]
BILLING CODE 4810-AS-P