Federal Old-Age, Survivors, and Disability Insurance and Supplemental Security Income; Collection of Overdue Program and Administrative Debts Using Federal Salary Offset, 38066-38071 [E6-10435]

Agencies

• Social Security Administration

[Federal Register Volume 71, Number 128 (Wednesday, July 5, 2006)]
[Rules and Regulations]
[Pages 38066-38071]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-10435]


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SOCIAL SECURITY ADMINISTRATION

20 CFR Part 422

RIN 0960-AE89


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

AGENCY: Social Security Administration (SSA).

ACTION: Final rules.

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SUMMARY: The proposed rules published in the Federal Register on March 
13, 2006 at 71 FR 12648, are adopted as final with no changes. These 
regulations modify our regulations dealing with the recovery of benefit 
overpayments under titles II and XVI of the Social Security Act (the 
Act), as well as recovery of administrative debts owed to us. 
Specifically, we are modifying our regulations to implement statutory 
authority for the use of Federal Salary Offset (FSO). FSO is a process 
whereby the salary-paying agency withholds and pays to us up to 15 
percent of the debtor's disposable pay until the debt has been repaid. 
In the case of title II program overpayment debts, we would apply FSO 
to collect only overpayments made to a person after he or she attained 
age 18, and we would pursue FSO after that person ceases to be a 
beneficiary and we determine that the overpayment is otherwise 
unrecoverable under section 204 of the Act. In the case of title XVI 
program overpayment debts, these same restrictions apply, but we must 
determine the overpayment to be otherwise unrecoverable under section 
1631(b) of the Act, rather than section

[[Page 38067]]

204 of the Act. FSO is only applicable if the debtor is a Federal 
employee.

DATES: These regulations are effective August 4, 2006.

FOR FURTHER INFORMATION CONTACT: Suzanne DiMarino, Social Insurance 
Specialist, Office of Regulations, Social Security Administration, Room 
107 Altmeyer Building, 6401 Security Boulevard, Baltimore, MD 21235-
6401, (410) 965-1769, 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 https://www.socialsecurity.gov.

SUPPLEMENTARY INFORMATION:

Electronic Version

    The electronic file of this document is available on the date of 
publication in the Federal Register at https://www.gpoaccess.gov/fr/
index.html.

Background

    Section 204 of the Act prescribes many of the methods that we may 
use to recover Social Security benefits overpaid under title II of the 
Act (title II program overpayments), as distinguished from the methods 
that we may use to collect administrative debts owed the agency that 
are recoverable under other statutory authority. Until 1994, we were 
authorized to recover title II program overpayments only by adjusting 
future title II benefits payable to the overpaid individual or to 
others on the earnings record on which the overpayment was made, by 
direct recovery from the overpaid person (or the overpaid person's 
estate, if deceased), or by offset against Federal income tax refunds 
due from the Department of the Treasury. Amendments to section 204 of 
the Act and other statutes by section 5 of Public Law 103-387 (1994) 
and section 31001(z)(2) of Public Law 104-134 (1996) permit us to use 
several debt collection procedures that have been available to other 
Federal agencies by statute since 1982, but that we had been precluded 
from using to recover title II program overpayments. Among other 
things, these procedures include recovering debts by FSO under 5 U.S.C. 
5514 and by offset under 31 U.S.C. 3716 against other Federal payments 
to which the debtor is entitled. Under section 204(f) of the Act (42 
U.S.C. 404(f)), these additional debt collection procedures may be used 
to recover title II program overpayments only if the overpayment was 
made to a person after he or she attained age 18 and the overpayment 
has been determined to be otherwise unrecoverable under section 204 of 
the Act after the overpaid person ceases to be a beneficiary under 
title II of the Act.
    Section 1631(b) of the Act prescribes many of the methods we may 
use to recover supplemental security income (SSI) overpayments that 
occur under title XVI of the Act. Until enactment of Public Law 106-169 
on December 14, 1999, we were not authorized to use certain methods 
found in 31 U.S.C. Chapter 37 and 5 U.S.C. 5514 to recover SSI 
overpayments. Section 203 of Public Law 106-169 amended section 1631(b) 
of the Act to permit recovery of SSI overpayments using several of the 
debt management practices that have been available for the recovery of 
title II program overpayments. Among other things, these practices 
include using FSO to recover debts. Under section 1631(b)(4)(B) of the 
Act, these additional methods may be used only if the SSI overpayment 
was made to a person after he or she attained age 18 and the 
overpayment has been determined to be otherwise unrecoverable under 
section 1631(b) of the Act after the overpaid person ceases to be a 
beneficiary under title XVI of the Act.
    For both title II and title XVI program overpayments, FSO is only 
applicable if the debtor is a Federal employee.
    Before we can begin to use FSO to recover debts, we must issue 
regulations that comply with standards prescribed in the regulations of 
the Office of Personnel Management (OPM). See 5 U.S.C. 5514(b) and 5 
CFR 550.1104. The Department of the Treasury administers FSO as part of 
the Treasury Offset Program, the Government-wide process for offsetting 
Federal payments to collect delinquent debts owed by debtors to the 
Federal Government. (See 31 CFR 285.7) Our current regulations at 20 
CFR part 422, subpart D, address the procedures required for 
participation in the Treasury Offset Program. We are amending 
appropriate sections of those regulations to comply with the standards 
prescribed in the OPM regulations and make other changes.

Explanation of Changes

    Subject to certain exceptions, 5 U.S.C. 5514(a) requires us to do 
the following before initiating FSO to collect a debt that a Federal 
employee owes:
     Send written notice to the debtor at least 30 days before 
taking FSO action explaining the nature and amount of the debt, our 
intention to collect by deduction from Federal pay, and the debtor's 
rights described below;
     Give the debtor an opportunity to inspect and copy our 
records relating to the debt;
     Give the debtor an opportunity to enter into a written 
agreement with us establishing a repayment schedule; and
     Give the debtor the opportunity for a hearing on the 
existence and amount of the debt and any payment schedule mentioned in 
the notice. According to 5 U.S.C. 5514(a)(2), the hearing must be 
conducted by a person who is not under the supervision or control of 
the Commissioner of Social Security or by an administrative law judge.
    The OPM regulations on FSO impose these and several additional 
requirements. Our current regulations on administrative offset against 
Federal payments due the debtor already reflect many of the 
requirements of 5 U.S.C. 5514 and the OPM regulations. We are revising 
20 CFR 422.301, 422.310 and 422.317 so that our regulations permit the 
use of FSO and meet the requirements of the statute and OPM standards 
and to make other changes as set forth below. In addition, we are 
adding a new section 20 CFR 422.303 to meet OPM standards.

Clarifying the Scope of 20 CFR Part 422, Subpart D

    We are revising Sec.  422.301(a) and (b), adding a new paragraph 
(c) and deleting information from Sec.  422.306(b) to clarify that 
subpart D of part 422 does not apply to administrative debts incurred 
by our employees, including overpayments of pay and allowances. As 
authorized by section 106(b) of Public Law 103-296, we have applied the 
rules of the Department of Health and Human Services in 45 CFR part 30 
that were in effect immediately before March 31, 1995. The rules in 45 
CFR part 30 allow us to collect administrative debts owed by our 
employees by withholding money payable to our employees by the U.S. 
Government. Amounts available for such withholding include the Federal 
salaries of our employee/debtors. For this reason, the current 
provisions in subpart D of 20 CFR part 404 on Treasury offset and the 
FSO provisions described in these final rules do not apply to 
administrative debts owed by our employees.

Restrictions on the Use of FSO

    In Sec.  422.301(c), we explain that we will not use FSO to recover 
an employee's debt while:
     The employee's title II disability benefits are stopped 
during the reentitlement period, under 20 CFR 404.1592a(a)(2) of this 
chapter;
     The employee's Medicare entitlement is continued because 
the individual is deemed to be entitled to

[[Page 38068]]

title II disability benefits under section 226(b) of the Social 
Security Act; or
     The employee is participating in the Ticket to Work and 
Self-Sufficiency Program and the ticket is in use as described in 20 
CFR 411.170 through 411.225.

Charging Interest, Late Payment Penalties, and Administrative Costs 
When Authorized by SSA Regulations

    OPM regulations require that our regulations on FSO contain a 
provision about charging the debtor with interest, late payment 
penalties, and administrative costs of collection on the delinquent 
debt pursuant to 31 U.S.C. 3717. See 5 CFR 550.1104(n). We are 
authorized, but are not required, to impose these charges on a debtor. 
See 42 U.S.C. 404(f) and 1383(b)(4). In order to comply with 5 CFR 
550.1104(n), we are adding Sec.  422.303 to subpart D. This new section 
provides that we will impose these charges when authorized by specific 
regulations that we will issue in accordance with the Federal Claims 
Collection Standards (FCCS) at 31 CFR 901.9.

Notice and Procedures for Initiating FSO

    In Sec.  422.310, we describe generally the procedures we use to 
initiate recovery of debts under the Treasury Offset Program and the 
notice required before we initiate recovery. Paragraph (a)(1) states 
that, if the debtor is a Federal employee, we will recover overdue 
debts through this program by reducing the debtor's Federal 
``disposable pay,'' defined in 5 CFR 550.1103, and that such action is 
called ``Federal salary offset'' in part 422, subpart D. Paragraph 
(a)(2) states that we will use FSO to collect overdue program debts 
from our employees and overdue program and administrative debts from 
employees of other Federal agencies.
    We are deleting the specific dollar amount in current Sec.  422.310 
(b) to allow more flexibility in the regulation to accommodate changes 
in the dollar threshold amount as required by the Treasury. Currently, 
the minimum dollar threshold amount for FSO is $100.
    Paragraph (c) of Sec.  422.310 describes the written notice 
requirements for initiating recovery under the Treasury Offset Program. 
We are revising the paragraph to include provisions required for FSO. 
The notice explains the nature and amount of the debt, our 
determination that the debt is overdue, our intention to refer the debt 
for administrative offset (including FSO if the debtor is a Federal 
employee), and the frequency and amount of any FSO deduction. The 
notice also explains that the debtor has the following rights:
     To inspect and copy our records relating to the debt;
     To request review of the existence or amount of the debt 
or our right to collect it and any payment schedule for FSO stated in 
the notice; and
     To request an installment payment plan.
    The notice also informs the debtor that we will refer the debt to 
the Department of the Treasury for administrative offset at the 
expiration of 60 calendar days after the date of the notice unless, 
within that period, the debtor pays the full amount of the debt, 
requests review of the debt or the FSO payment schedule stated in the 
notice, or requests an installment payment plan. Finally, the notice 
advises that, if the debtor furnishes false or frivolous statements, 
representations, or evidence, the debtor may be subject to civil or 
criminal penalties and (if the debtor is a Federal employee) 
appropriate disciplinary actions.
    We are adding paragraph (c)(9), which explains that we will refer 
the debt for FSO at the expiration of not less than 30 calendar days 
after the date of the notice in accordance with 5 U.S.C. 5514(a), 
unless the debtor takes the action described above within that period.
    We are adding paragraph (d) to Sec.  422.310 to address the amount, 
frequency and duration of FSO deductions and hearing request 
timeframes. This new paragraph explains that deductions from a debtor's 
Federal salary will not exceed 15% of the debtor's disposable pay every 
payday. FSO will begin no sooner than the first payday following 30 
calendar days after the date of the notice to the debtor and will 
continue until we recover the full amount of the debt, the debt is 
otherwise resolved, or the debtor ceases to be a Federal employee, 
whichever occurs first.
    We are adding paragraph (e) to Sec.  422.310 regarding refunds. 
Paragraph (e) explains that we will promptly refund to the debtor any 
amounts collected that the debtor does not owe. Such refunds will not 
bear interest unless required or permitted by law or contract.

Procedures for Conducting the Review (Hearing) on the Validity and 
Amount of the Debt and the Repayment Schedule for FSO

    Section 422.317 addresses our procedures for reviewing the debt 
when requested by the debtor. Under new paragraph (a), a debtor who 
receives the notice under Sec. Sec.  422.305(b), 422.306(b), or 
422.310(c) has the right to have a review (a hearing) on the validity 
and amount of the debt described in the notice and the payment schedule 
for FSO stated in the notice. The debtor must notify us that he or she 
wants such review and give us evidence that he or she does not owe all 
or part of the debt, or that we do not have the right to collect it.
    We explain in new paragraph (a)(1) that, if the debtor requests 
review and gives us evidence within 60 calendar days from the date of 
our notice (except as provided in new paragraph (a)(3) for FSO), we 
will not take any action described in our notice until we consider all 
of the evidence and send the debtor our findings that all or part of 
the debt is overdue and legally enforceable. A similar explanation is 
deleted from current paragraph (b) of Sec.  422.317.
    Under new paragraph (a)(2), if the debtor does not notify us and 
give us evidence within 60 calendar days from the date of our notice 
(except as provided in new paragraph (a)(4) for FSO), we will conduct 
the review, but we may take the action described in the notice (refer 
information on the debt for offset against Federal payments or refer 
information about the debt to consumer reporting agencies or credit 
reporting agencies).
    New paragraph (a)(3) explains that, if the debtor is a Federal 
employee who requests review and gives us evidence within 30 calendar 
days from the date of our notice, we will not take any FSO action 
described in our notice until we consider all of the evidence and send 
the debtor our findings that all or part of the debt is overdue and 
legally enforceable and (when appropriate) our findings on the FSO 
payment schedule.
    Under new paragraph (a)(4), if the debtor does not notify us and 
give us evidence within 30 calendar days from the date of our notice 
regarding FSO, the review will occur, but we may take the FSO action 
described in the notice.
    We are revising paragraphs (a) and (b) of Sec.  422.317 to allow an 
exception when the debtor has good cause for failing to request review 
within the 60-day period described in paragraph (a)(1) or the 30-day 
period described in paragraph (a)(3). If the debtor has good cause for 
making the request late, we will treat the request as received within 
the prescribed period. Thus, if the debtor requests review late, but 
has good cause, we will not take any action (or we will stop any action 
we had initiated) while our decision on the request is pending. New 
paragraphs (a)(2) and (a)(4) provide that if the debtor does not notify 
us and give us evidence within the prescribed

[[Page 38069]]

period and does not have good cause for failing to request review on 
time, we will conduct the review, but we may initiate any action 
described in our notice without further delay.
    Under Sec.  422.317(b), we will determine good cause under the 
rules in Sec.  422.410(b)(1) and (2) of subpart E, part 422, the 
regulations on administrative wage garnishment. In determining whether 
the debtor had good cause, we will consider: any circumstances that 
kept the debtor from making the request on time; whether our action 
misled the debtor; whether the debtor had any physical, mental, 
educational, or linguistic limitations (including any lack of facility 
with the English language) that prevented the debtor from making a 
request on time or from understanding the need to make a request on 
time.
    As revised by these final rules, paragraph (c) of Sec.  422.317 
will generally describe our review (hearing) process. The review will 
cover our records pertaining to the debt and all of the evidence and 
statements presented by the debtor.
    We are adding a new paragraph (d) to Sec.  422.317 that provides 
special rules on the conduct of the review when we would use FSO. The 
review available to the debtor under revised Sec.  422.317 will satisfy 
the requirement in 5 U.S.C. 5514(a)(2) that, before we begin to collect 
a debt by FSO, we must provide the debtor with the opportunity for a 
hearing concerning the existence and amount of the debt and the terms 
of the repayment schedule stated in the notice. The following special 
rules apply to the conduct of the review:
     An official designated in accordance with 5 U.S.C. 
5514(a)(2) will conduct the review requested by a Federal employee who 
is subject to FSO.
     The Federal employee's request for review must be written 
and be signed by that employee, must explain with reasonable 
specificity the facts and evidence that support the employee's 
position, and must identify any witnesses.
     When reviewing the payment schedule for FSO, the reviewing 
official will apply the rules regarding financial hardship in Sec.  
422.415 (b), (c), and (d) of subpart E, part 422, the regulations on 
administrative wage garnishment.
     The reviewing official will review our records on the debt 
and any evidence and written statements submitted by the debtor and 
would issue the final decision.
     The reviewing official will complete the review within 60 
calendar days from the date on which we receive the request for review 
and the debtor's evidence. If the reviewing official does not make a 
decision on the request within that 60-day period and the debt was 
referred to the Department of the Treasury for FSO (e.g., when the 
request was received late), we will notify the Department of the 
Treasury to suspend FSO. Offset will not begin or resume before we send 
the debtor the findings that all or part of the debt is overdue and 
legally enforceable or (if appropriate) the findings on the payment 
schedule.
    The OPM regulations provide that the proper content and form of the 
hearing required by 5 U.S.C. 5514(a)(2) depend on the nature of the 
matter under which the debt arose and that we must consult the Federal 
Claims Collection Standards (FCCS) for guidance. 5 CFR 550.1104(g)(2). 
Our current regulations provide an administrative appeal process for 
the debtor on our original determination of indebtedness, including the 
opportunity for an oral hearing conducted by an administrative law 
judge. (See 20 CFR part 404, subpart J & part 416, subpart N). This 
appeal process will be available to the debtor before we initiate the 
process for using FSO, described in Sec.  422.310, or any other action 
described in 20 CFR part 422, subpart D. The appeal process for the 
determination of indebtedness is available to resolve any issue 
pertaining to that determination, including credibility or veracity, 
for which an oral hearing would be appropriate.
    The review process for FSO described in Sec.  422.317 affords the 
debtor a ``paper hearing'' on issues pertaining to the current status 
of the debt and the terms of repayment stated in the notice described 
in Sec.  422.310. We believe that review of written evidence and 
statements will be adequate and appropriate to resolve those issues. We 
have determined that the combination of the administrative appeal 
process available on the original determination of indebtedness and the 
hearing afforded by the review of documents and written statements 
described in our final regulations meet the requirements of the 
applicable provisions in the FCCS. (See 31 CFR 901.3(b)(4)(iv), (e)).
    The provisions regarding the review findings, currently in 
paragraph (c) of Sec.  422.317, appear in new paragraph (e). Issuing 
the review findings is our final action on the debtor's request for 
review. We are revising the current provisions to clarify the actions 
we take based on the findings, particularly where FSO is involved. If 
the debtor requested review of the payment schedule for FSO, the 
written findings will cover that matter. If the reviewing official 
finds that the payment schedule will cause financial hardship, we will 
notify the debtor and the Department of the Treasury of the revised 
payment schedule. If we already initiated FSO, but the reviewing 
official finds that the individual does not owe the debt, the debt is 
not overdue, or we do not have the right to collect it, we will cancel 
that action and refund any amounts collected that the debtor does not 
owe or that we do not have the right to collect.

Comments on the Notice of Proposed Rulemaking

    On March 13, 2006, we published the Notice of Proposed Rulemaking 
(NPRM) in the Federal Register at 71 FR 12648 and provided the public a 
60-day comment period that ended on May 12, 2006. We received no 
comments. Therefore, we are publishing these final rules unchanged.

Regulatory Procedures

Executive Order 12866

    We have consulted with the Office of Management and Budget (OMB) 
and determined that these final rules meet the criteria for a 
significant regulatory action under Executive Order 12866, as amended 
by Executive Order 13258. Thus, OMB reviewed them.

Regulatory Flexibility Act

    We certify that these final regulations will 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.

Paperwork Reduction Act

    These final rules contain information collection activities at 
Sec. Sec.  422.310 and 422.317. However, the activities are exempt from 
the Paperwork Reduction Act as administrative actions under 44 U.S.C. 
3518(c)(1)(B)(ii) and 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 Programs No. 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 in 20 CFR Part 422

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


[[Page 38070]]


    Dated: June 19, 2006.
Jo Anne B. Barnhart,
Commissioner of Social Security.

0
For the reasons set forth in the preamble, we are amending subpart D of 
part 422 of Chapter III of Title 20 of the Code of Federal Regulations 
as follows:

PART 422--[AMENDED]

0
1. The authority citation for subpart D of part 422 is revised to read 
as follows:

    Authority: Secs. 204(f), 205(a), 702(a)(5), and 1631(b) of the 
Social Security Act (42 U.S.C. 404(f), 405(a), 902(a)(5), and 
1383(b)); 5 U.S.C. 5514; 31 U.S.C. 3711(e); 31 U.S.C. 3716.


0
2. Section 422.301 is revised to read as follows:


Sec.  422.301  Scope of this subpart.

    (a) Except as provided in paragraphs (b) and (c) of this section, 
this subpart describes the procedures relating to collection of:
    (1) Overdue administrative debts, and
    (2) Overdue program overpayments described in Sec. Sec.  404.527 
and 416.590 of this chapter.
    (b) This subpart does not apply to administrative debts owed by 
employees of the Social Security Administration, including, but not 
limited to, overpayment of pay and allowances.
    (c) The following exceptions apply only to Federal salary offset as 
described in Sec.  422.310(a)(1).
    (1) We will not use this subpart to collect a debt while the 
debtor's disability benefits are stopped during the reentitlement 
period, under Sec.  404.1592a(a)(2) of this chapter, because the debtor 
is engaging in substantial gainful activity.
    (2) We will not use this subpart to collect a debt while the 
debtor's Medicare entitlement is continued because the debtor is deemed 
to be entitled to disability benefits under section 226(b) of the 
Social Security Act (42 U.S.C. 426(b)).
    (3) We will not use this subpart to collect a debt if the debtor 
has decided to participate in the Ticket to Work and Self-Sufficiency 
Program and the debtor's ticket is in use as described in Sec. Sec.  
411.170 through 411.225 of this chapter.

0
3. Section 422.303 is added to read as follows:


Sec.  422.303  Interest, late payment penalties, and administrative 
costs of collection.

    We may charge the debtor with interest, late payment penalties, and 
our costs of collection on delinquent debts covered by this subpart 
when authorized by our regulations issued in accordance with the 
Federal Claims Collection Standards (31 CFR 901.9).


Sec.  422.306  [Amended]

0
4. Paragraph (a) of Sec.  422.306 is amended by removing ``overpayments 
of pay and allowances paid to employees,'' from the second sentence.

0
5. Section 422.310 is revised to read as follows:


Sec.  422.310  Collection of overdue debts by administrative offset.

    (a) Referral to the Department of the Treasury for offset.
    (1) We will recover overdue debts by offsetting Federal payments 
due the debtor through the Treasury Offset Program (TOP). TOP is a 
Government-wide delinquent debt matching and payment offset process 
operated by the Department of the Treasury, whereby debts owed to the 
Federal Government are collected by offsetting them against Federal 
payments owed the debtor. Federal payments owed the debtor include 
current ``disposable pay,'' defined in 5 CFR 550.1103, owed by the 
Federal Government to a debtor who is an employee of the Federal 
Government. Deducting from such disposable pay to collect an overdue 
debt owed by the employee is called ``Federal salary offset'' in this 
subpart.
    (2) Except as provided in paragraphs (b) and (c) of Sec.  422.301, 
we will use Federal salary offset to collect overdue debts from Federal 
employees, including employees of the Social Security Administration. A 
Federal employee's involuntary payment of all or part of a debt 
collected by Federal salary offset does not amount to a waiver of any 
rights which the employee may have under any statute or contract, 
unless a statute or contract provides for waiver of such rights.
    (b) Debts we will refer. We will refer for administrative offset 
all qualifying debts that meet or exceed the threshold amounts used by 
the Department of the Treasury for collection from Federal payments, 
including Federal salaries.
    (c) Notice to debtor. Before we refer any debt for collection by 
administrative offset, we will send the debtor written notice that 
explains all of the following:
    (1) The nature and amount of the debt.
    (2) We have determined that payment of the debt is overdue.
    (3) We will refer the debt for administrative offset (except as 
provided in paragraph (c)(9) of this section) at the expiration of not 
less than 60 calendar days after the date of the notice unless, within 
that 60-day period:
    (i) The debtor pays the full amount of the debt, or
    (ii) The debtor takes any of the actions described in paragraphs 
(c)(6) or (c)(7) of this section.
    (4) The frequency and amount of any Federal salary offset deduction 
(the payment schedule) expressed as a fixed dollar amount or percentage 
of disposable pay.
    (5) The debtor may inspect or copy our records relating to the 
debt. If the debtor or his or her representative cannot personally 
inspect the records, the debtor may request and receive a copy of such 
records.
    (6) The debtor may request a review of the debt by giving us 
evidence showing that the debtor does not owe all or part of the amount 
of the debt or that we do not have the right to collect it. The debtor 
may also request review of any payment schedule for Federal salary 
offset stated in the notice. If the debtor is an employee of the 
Federal Government and Federal salary offset is proposed, an official 
designated in accordance with 5 U.S.C. 5514(a)(2) will conduct the 
review.
    (7) The debtor may request to repay the debt voluntarily through an 
installment payment plan.
    (8) If the debtor knowingly furnishes any false or frivolous 
statements, representations, or evidence, the debtor may be subject to:
    (i) Civil or criminal penalties under applicable statutes;
    (ii) Appropriate disciplinary procedures under applicable statutes 
or regulations, when the debtor is a Federal employee.
    (9) We will refer the debt for Federal salary offset at the 
expiration of not less than 30 calendar days after the date of the 
notice unless, within that 30 day period the debtor takes any actions 
described in paragraphs (c)(3)(i), (c)(6) or (c)(7) of this section.
    (d) Federal salary offset: amount, frequency and duration of 
deductions.
    (1) We may collect the overdue debt from an employee of the Federal 
Government through the deduction of an amount not to exceed 15% of the 
debtor's current disposable pay each payday.
    (2) Federal salary offset will begin no sooner than the first 
payday following 30 calendar days after the date of the notice to the 
debtor described in paragraph (c) of this section.
    (3) Once begun, Federal salary offset will continue until we 
recover the full amount of the debt, the debt is otherwise resolved, or 
the debtor's Federal employment ceases, whichever occurs first.

[[Page 38071]]

    (4) After Federal salary offset begins, the debtor may request a 
reduction in the amount deducted from disposable pay each payday. When 
we determine that the amount deducted causes financial harm under the 
rules in Sec.  422.415(b), (c), and (d) of this chapter, we will reduce 
that amount.
    (e) Refunds. We will promptly refund to the debtor any amounts 
collected that the debtor does not owe. Refunds do not bear interest 
unless required or permitted by law or contract.

0
5. Section 422.317 is revised to read as follows:


Sec.  422.317  Review of the debt.

    (a) Notification and presentation of evidence by the debtor. A 
debtor who receives a notice described in Sec.  422.305(b), Sec.  
422.306(b), or Sec.  422.310(c) has a right to have a review of the 
debt and the payment schedule for Federal salary offset stated in the 
notice. To exercise this right, the debtor must notify us and give us 
evidence that he or she does not owe all or part of the debt, or that 
we do not have the right to collect it, or that the payment schedule 
for Federal salary offset stated in the notice would cause financial 
hardship.
    (1) If the debtor notifies us and presents evidence within 60 
calendar days from the date of our notice (except as provided for 
Federal salary offset in paragraph (a)(3) of this section), we will not 
take the action described in our notice unless and until review of all 
of the evidence is complete and we send the debtor the findings that 
all or part of the debt is overdue and legally enforceable.
    (2) If the debtor notifies us and presents evidence after that 60 
calendar-day period expires (except as provided for Federal salary 
offset in paragraph (a)(4) of this section) and paragraph (b) of this 
section does not apply, the review will occur, but we may take the 
actions described in our notice without further delay.
    (3) If the debtor notifies us and presents evidence within 30 
calendar days from the date of our notice, we will not refer the debt 
for Federal salary offset unless and until review of all of the 
evidence is complete and we send the debtor the findings that all or 
part of the debt is overdue and legally enforceable and (if 
appropriate) the findings on the payment schedule for Federal salary 
offset.
    (4) If the debtor notifies us and presents evidence after that 30 
calendar-day period expires and paragraph (b) of this section does not 
apply, the review will occur, but we may refer the debt for Federal 
salary offset without further delay.
    (b) Good cause for failure to timely request review.
    (1) If we decide that the debtor has good cause for failing to 
request review within the applicable period mentioned in paragraphs 
(a)(1) and (a)(3) of this section, we will treat the request for review 
as if we received it within the applicable period.
    (2) We will determine good cause under the rules in Sec.  
422.410(b)(1) and (2) of this chapter.
    (c) Review of the evidence. The review will cover our records and 
any evidence and statements presented by the debtor.
    (d) Special rules regarding Federal salary offset.
    (1) When we use Federal salary offset to collect a debt owed by an 
employee of the Federal Government, an official designated in 
accordance with 5 U.S.C. 5514(a)(2) will conduct the review described 
in this section and will issue the findings.
    (2) In addition to the requirements in paragraphs (a) and (b) of 
this section, the Federal employee must submit the request for review 
in writing. The request must
    (i) Be signed by the employee,
    (ii) Explain with reasonable specificity the facts and evidence 
that support the employee's position, and
    (iii) Include the names of any witnesses.
    (3) In reviewing the payment schedule described in the notice to 
the Federal employee, the reviewing official must apply the rules in 
Sec.  422.415(b), (c), and (d) of this chapter regarding financial 
hardship.
    (4) The reviewing official will review our records and any 
documents, written statements, or other evidence submitted by the 
debtor and issue written findings.
    (5) The reviewing official will complete the review within 60 
calendar days from the date on which the request for review and the 
debtor's evidence are received. If the reviewing official does not 
complete the review within that 60-day period and the debt was referred 
to the Department of the Treasury for Federal salary offset, we will 
notify the Department of the Treasury to suspend Federal salary offset. 
Offset will not begin or resume before we send the debtor findings that 
all or part of the debt is overdue and legally enforceable or (if 
appropriate) findings on the payment schedule.
    (e) The findings.
    (1) Following the review described in paragraphs (c) or (d) of this 
section, we will send the written findings to the debtor. The findings 
will state the nature and origin of the debt, the analysis, findings 
and conclusions regarding the amount and validity of the debt, and, 
when appropriate, the repayment schedule for Federal salary offset. 
Issuance of these findings will be the final action on the debtor's 
request for review.
    (2) If the findings state that an individual does not owe the debt, 
or the debt is not overdue, or we do not have the right to collect it, 
we will not send information about the debt to consumer or other credit 
reporting agencies or refer the debt to the Department of the Treasury 
for administrative offset. If we had referred the debt to the 
Department of the Treasury for administrative offset, we will cancel 
that action. If we had informed consumer or credit reporting agencies 
about the debt, we will inform them of the findings.
    (3) If the findings state that the payment schedule for Federal 
salary offset would cause financial hardship, we will notify the debtor 
and the Department of the Treasury of the new payment schedule.

 [FR Doc. E6-10435 Filed 7-3-06; 8:45 am]
BILLING CODE 4191-02-P