Administrative Offset Under Reciprocal Agreements With States, 1283-1288 [E7-127]
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Federal Register / Vol. 72, No. 7 / Thursday, January 11, 2007 / Rules and Regulations
Rules of Practice and Investigations.
Currently, Rule 30–3(a)(59) contains a
cross-reference to paragraph (e)(6)(iii) of
Rule 19b–4 under the Securities
Exchange Act of 1934. In connection
with the adoption in the Original
Release of a new paragraph (e) to Rule
19b–4, the cross-reference to paragraph
(e)(6)(iii) of Rule 19b–4 appearing in
Rule 30–3(a)(59) should have been
redesignated as paragraph (f)(6)(iii) of
Rule 19b–4, to reflect the redesignation
of former paragraph (e) of Rule 19b–4 as
paragraph (f) of Rule 19b–4. This
document corrects that cross-reference.
List of Subjects in 17 CFR Part 200
Administrative practice and
procedure, Authority delegations
(Government agencies), Organization
and functions (Government agencies).
Accordingly, 17 CFR part 200 is
corrected by making the following
correcting amendment:
I
PART 200—ORGANIZATION;
CONDUCT AND ETHICS; AND
INFORMATION AND REQUESTS
1. The authority citation for Part 200
continues to read in part as follows:
I
Authority: 15 U.S.C. 77o, 77s, 77sss, 78d,
78d–1, 78d–2, 78w, 78ll(d), 78mm, 80a–37,
80b–11, and 7202, unless otherwise noted.
*
*
*
§ 200.30–3
*
*
[Amended]
2. Section 200.30–3(a)(59) is amended
by revising the cite ‘‘(e)(6)(iii)’’ to read
‘‘(f)(6)(iii)’’.
I
Dated: January 5, 2007.
Nancy M. Morris,
Secretary.
[FR Doc. E7–238 Filed 1–10–07; 8:45 am]
permit the Department of Homeland
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These participants will also be subject
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as amended. The Final Rule was
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FOR FURTHER INFORMATION CONTACT:
Karen Hawkins, (202) 203–5072.
Dated: December 28, 2006.
Stanley S. Colvin,
Director, Office of Exchange Coordination
and Designation, Department of State.
[FR Doc. E6–22631 Filed 1–10–07; 8:45 am]
BILLING CODE 4710–05–P
BILLING CODE 8011–01–P
DEPARTMENT OF THE TREASURY
Fiscal Service
DEPARTMENT OF STATE
31 CFR Part 285
22 CFR Part 62
RIN 1510–AB09
[Public Notice 5654]
Administrative Offset Under Reciprocal
Agreements With States
Exchange Visitor Program—
Professors and Research Scholars
Financial Management Service,
Fiscal Service, Treasury.
ACTION: Interim rule with request for
comments.
AGENCY:
Department of State.
Final Rule; Announcement of
Effective Date for Implementation of
Five-Year Professor and Research
Scholar Categories.
AGENCY:
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ACTION:
SUMMARY: By Notice published on
November 1, 2006, 71 FR 64330, the
Department of State identified
November 4, 2006 as the effective date
for its Final Rule published May 19,
2005, 70 FR 28815. The effective date of
the Final Rule had been in order to
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SUMMARY: This interim rule describes
the rules applicable to the offset of
Federal nontax payments to collect
delinquent debts owed to States
pursuant to reciprocal agreements
between the Secretary of the Treasury
and the States. In addition to providing
for the offset of Federal nontax
payments, the reciprocal agreements
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will provide for the offset of State
payments to collect delinquent, nontax
Federal debts. The offsets described in
this rule will be processed by the
Treasury Offset Program (TOP). The
Department of the Treasury’s Financial
Management Service (FMS) established
TOP in order to centralize the process
by which Federal payments are
withheld or reduced (in other words,
offset) to collect delinquent debts. This
interim rule specifically applies to the
centralized offset of Federal nontax
payments by Federal disbursing officials
to collect delinquent debts owed to
States pursuant to reciprocal
agreements. Therefore, this interim rule
affects persons who owe delinquent
debts to a State of the United States and
who receive Federal payments. It also
affects persons who owe delinquent,
nontax Federal debts and who receive
payments from States. This rule does
not apply to collection of past-due
support debts (see 31 CFR 285.1), the
offset of Federal tax refund payments,
the offset of Federal salary payments, or
the offset of other Federal payments
excluded from offset by law.
DATES: This rule is effective January 11,
2007. Comments must be received by
March 12, 2007.
ADDRESSES: All comments should be
addressed to Thomas Dungan, Senior
Policy Analyst, Debt Management
Services, Financial Management
Service, Department of the Treasury,
401 14th Street, SW., Room 435B,
Washington, DC 20227. Comments may
also be submitted via the internet as
directed on the FMS Web site at the
following address: https://
www.fms.treas.gov/debt. A copy of this
interim rule is being made available for
downloading from the Web site.
FOR FURTHER INFORMATION CONTACT:
Thomas Dungan, Senior Policy Analyst,
at (202) 874–6660, or Tricia Long,
Senior Counsel, at (202) 874–6680.
SUPPLEMENTARY INFORMATION:
Background
The Debt Collection Improvement Act
of 1996 (DCIA), Pub. L. 104–134, 110
Stat. 1321–358 et seq. (April 26, 1996),
authorized Federal disbursing officials
to withhold or reduce eligible Federal
payments to pay the payee’s delinquent
debt owed to the United States. See 31
U.S.C. 3716(c). This process is known as
‘‘administrative offset’’ or ‘‘offset.’’ The
DCIA also provided that Federal
payments may be offset to collect
delinquent debts owed to States
provided that the States enter into
reciprocal agreements with the
Secretary of the Treasury and meet
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certain other qualifications. See 31
U.S.C. 3716(h).
FMS, a bureau of the Department of
the Treasury (Treasury), is responsible
for the implementation of centralized
administrative offset of Federal
payments for the collection of
delinquent debt. FMS has established
TOP to meet this and other debt
collection responsibilities. By
centralizing offset through TOP, FMS
has consolidated and simplified debt
collection procedures for the Federal
Government. TOP works as follows:
Creditor agencies submit information
about delinquent debts to FMS, which
maintains the information in its
delinquent debtor database. Payment
agencies prepare and certify payment
vouchers to FMS and disbursing
officials at certain other Federal
agencies with disbursing authority (such
as the Department of Defense or the
United States Postal Service), who then
disburse payments. The payment
vouchers contain information about the
payment including the name and
taxpayer identifying number (TIN) of
the recipient.
Before an eligible Federal payment is
disbursed to a payee, FMS compares the
payment information (including
information from payments disbursed
by other Federal agencies) with debtor
information in FMS’s delinquent debtor
database. If the payee’s name and TIN
match the name and TIN of a debtor, the
disbursing official offsets the payment,
in whole or in part, to satisfy the debt,
to the extent legally allowed.
FMS transmits amounts collected
through offset to the appropriate
creditor agencies after deducting fees to
cover the costs of operating the offset
program, pursuant to 31 U.S.C.
3716(c)(4). If not otherwise prohibited
by law, creditor agencies may add the
fees to the debts as administrative costs,
pursuant to 31 U.S.C. 3717(e).
Section 3716(h) authorizes the
Secretary of the Treasury to allow States
to participate in administrative offset to
collect delinquent State debts so long as
the States meet the requirements of 31
U.S.C. 3716(h), including entering into
reciprocal agreements with the
Secretary of the Treasury. Such
reciprocal agreements shall contain any
requirements that the Secretary
considers appropriate to facilitate offset
and prevent duplicative efforts.
In order to determine if it is in the
best interests of the United States and
the States to fully implement reciprocal
offsets under this section, FMS invited
the States to participate in the
development of a pilot program. Three
States have chosen to work with FMS to
develop and participate in the pilot. The
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purpose of the pilot is to test systems
and procedures to facilitate offset and to
evaluate whether the benefits of the
program outweigh the costs. FMS will
consider information gained from the
operation of the pilot, in addition to
comments received on this interim rule,
before issuing a final rule.
Section Analysis
(a) Scope. Paragraph (a) describes the
scope of this rule, which governs the
administrative offset of Federal nontax
payments to collect delinquent debts
owed to States in accordance with the
requirements of 31 U.S.C. 3716(h). This
rule does not apply to the offset of
Federal tax refund payments, because
the authority for this section—31 U.S.C.
3716—does not authorize the offset of
Federal tax refunds to collect debts.
This rule also does not apply to the
offset of Federal salary payments. While
Federal salary payments may be offset
under 31 U.S.C. 3716, there are many
statutes and regulations that affect
Federal salary offsets. FMS has chosen
not to address those authorities in this
rule. Additionally, this rule does not
apply to the collection of past-due
support payments. (See 31 CFR 285.1
for rules applicable to administrative
offset to collect past-due support).
(b) Definitions. Paragraph (b) of this
rule sets forth definitions applicable to
this rule. Unless otherwise defined in
this rule, all terms have the meanings
set forth in section 285.5(b) of this part.
As defined in this rule, ‘‘administrative
offset’’ is used to describe the offset of
Federal payments to collect delinquent
State debts. The definition of ‘‘State
debt’’ expressly excludes debts owed by
other governments. FMS has determined
that TOP is not the appropriate tool for
resolving issues of indebtedness
between State, local and foreign
governments. Also, the term ‘‘debt’’ is
limited by statute to exclude debts owed
by agencies of the United States. See 31
U.S.C. 3701(c). The term ‘‘State payment
offset’’ means the offset of State
payments, pursuant to State law, to
collect delinquent Federal nontax debts.
The term ‘‘reciprocal agreement’’ is
defined to mean a written agreement
between FMS and a State, which will
govern administrative offset to collect
that State’s debts and the offset of that
State’s payments to collect Federal
debts.
(c) General rule. Paragraph (c) sets
forth the general rule that Federal
disbursing officials are authorized to
offset Federal payments to collect
delinquent State debts as long as the
requirements of 31 U.S.C. 3716(h) are
met. Among other things, States must
enter into reciprocal agreements with
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FMS that provide for the offset of State
payments to collect Federal nontax
debts.
(d) Reciprocal agreements. Paragraph
(d) sets forth the basic parameters for
the reciprocal agreements between FMS
and the States. As required by 31 U.S.C.
3716(h)(1)(B)(i), a State must enter into
a reciprocal agreement before it may
collect its debts through administrative
offset under this section. The reciprocal
agreement will contain more detailed
provisions consistent with this rule. A
reciprocal agreement will not
necessarily require that each party will
offset the exact same types of payments.
FMS and the State shall determine
which payments will be part of the
offset programs in order to make the
agreements mutually beneficial and,
thus, reciprocal.
(e) Requirements for administrative
offset. Paragraph (e) sets forth the
requirements for collecting State debts
by administrative offset of Federal
payments. State debts must meet the
same eligibility requirements for
administrative offset as Federal debts
are required to meet under 31 CFR
285.5(d)(3)(i). States must comply with
the same certification requirements as
Federal agencies under 31 CFR
285.5(d)(6) except for requirements that
are clearly inapplicable to
administrative offset under this section.
The specific exceptions are
establishment of Federal salary offset
procedures and the requirement to
assess interest on Federal debts.
Additionally, with respect to
paragraph (d)(6)(ii) of section 285.5 of
this part, States will only be required to
certify that they have complied with the
requirements of 31 U.S.C. 3716 and this
section; States are not required to certify
compliance with 31 U.S.C. 3720A or 26
U.S.C. 6402, both of which apply to
Federal tax refund offsets. States shall
also certify that they have complied
with any requirements imposed by State
law or procedure that may be applicable
to administrative offset under this
section.
(f) Debts previously submitted by
States for tax refund offset. Pursuant to
31 CFR 285.8, States have submitted
delinquent State income tax obligations
to FMS for collection by Federal tax
refund offset. At the time of submission,
States certified the debts in substantially
the same manner as required under this
rule, including that the State has given
the debtor notice of the State’s intention
to collect the debt through offset of
Federal tax refunds. State income tax
obligations may also be collected by
administrative offset under this rule.
FMS has determined that it is
unnecessary to require the States to
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certify those debts again as a condition
to eligibility for administrative offset
under this rule. However, with respect
to these debts, within 30 days of an
administrative offset under this section,
the State must notify the debtor in
writing that the debtor may exercise the
due process rights set forth in paragraph
(e) of this rule, if the State has not
previously notified the debtor that
Federal payments other than tax refunds
are subject to administrative offset, and
the debtor has not exercised his or her
due process rights prior to the
submission of the debt to FMS. This
paragraph also notes that nothing in this
rule requires the State to duplicate any
notice or any opportunity for a hearing
or review previously provided to the
debtor.
(g) Federal Payments subject to
administrative offset under this section.
Paragraph (g) states that the types of
Federal payments that will be offset to
collect a State’s debts shall be set forth
in the reciprocal agreement. A number
of payment types are expressly excluded
from administrative offset under this
rule. In accordance with the statutory
prohibitions contained in 31 U.S.C.
3716(h), disbursing officials may not
offset the following payments to collect
debts under this rule: (a) Any payments
exempted from offset as set forth in 31
CFR 285.5(e)(2); (b) payments due to an
individual under the Social Security
Act; (c) payments due an individual
pursuant to part B of the Black Lung
Benefits Act; and (d) payments due an
individual pursuant to any law
administered by the Railroad Retirement
Board. Additionally, as explained
above, offset of Federal tax refunds and
salary payments are not authorized by
this rule.
(h) Conducting the administrative
offset. Paragraph (h) instructs Federal
disbursing officials to conduct
administrative offset under this rule in
the same manner as under 31 CFR
285.5. This paragraph also specifies the
priority for applying offset funds when
a payment matches with multiple debts
in TOP. FMS uses TOP to collect many
types of delinquent debts under various
legal authorities. If a payment matches
with multiple debts, the disbursing
official shall apply offset amounts to all
other types of debts collected by offset
under subpart A of 31 CFR part 285 (i.e.,
debts owed to Federal agencies and past
due support debts) before applying any
available amounts to a debt under this
rule. Additionally, in accordance with
31 U.S.C. 3716(c)(8), a levy pursuant to
the Internal Revenue Code has
precedence over offsets under this
section. Disbursing officials, therefore,
will satisfy a levy to collect tax debts
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prior to offsetting funds under this
section.
(i) Liability of disbursing officials and
payment agencies. Paragraph (i) restates
the statutory provision that disbursing
officials and payment agencies shall not
be liable to the payee for nonpayment of
any amounts offset under this rule.
(j) Notification to a State of Federal
debt. Paragraph (j) addresses the
requirements for offsetting a State
payment to collect a Federal debt. State
payment offset is governed by the law
of the State conducting the offset. This
paragraph provides that all State law
requirements that Federal creditor
agencies must meet for State payment
offset shall be set forth in the reciprocal
agreement. Such requirements shall not
exceed the requirements for collecting
Federal debts by administrative offset
under 31 CFR 285.5(d). This paragraph
also provides that FMS will certify to
the State conducting the offset that the
Federal debts FMS submits to the State
have been certified as valid and legally
enforceable in accordance with 31
U.S.C. 3716(a).
(k) Conducting State payment offset.
Paragraph (k) provides that States shall
conduct State payment offset pursuant
to the State’s laws and regulations. The
paragraph sets forth two requirements
regarding State payment offset that
parallel requirements for conducting
administrative offset. First, in the case
of a State payment that is payable to two
or more joint payees, the entire payment
shall be subject to offset to collect the
debt of any one of the payees, unless
prohibited by State law. Such
prohibition must be set forth in the
reciprocal agreements. Because the
Treasury Offset Program only matches
one debtor at a time per payment, FMS
will generally not enter into reciprocal
agreements that prohibit offsetting a
payment to collect a debt owed by only
one of the joint payees. Second, if a
payment is made to a person solely in
that person’s capacity as a
representative payee for another person
having the beneficial interest in the
payment, the State disbursing official
shall only offset such payments for the
debts of the person having the beneficial
interest. For example, if a State makes
a payment to a minor child, and the
payment is made payable to that child’s
parent as the representative payee for
that child, the State shall not offset the
payment to collect a debt that the parent
owes to the United States.
Paragraph (k) also sets forth the
requirement that the State notify the
payee of any State payment offset.
While the reciprocal agreement may set
forth additional requirements, this rule
requires, at a minimum, that the notice
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inform the payee of the type and
amount of the payment that was offset,
the identity of the Federal agency that
requested the offset, and a contact point
within the Federal agency that will
handle concerns regarding the offset.
Operationally, FMS will provide this
information to the State at the time FMS
requests the State payment offset.
(l) Limitations. Paragraph (l) sets forth
limitations on the collectibility of both
Federal and State debts. Debts shall
remain eligible for State payment offset
or administrative offset, as applicable,
so long as the debts remain valid and
legally enforceable for purposes of
offset. Among other things, this means
that, unless otherwise provided by law,
the debt has not been outstanding for
more than 10 years. See 31 U.S.C.
3716(e). The 10-year limitation,
however, does not apply to collecting
debts reduced to judgment by
administrative offset. See the Federal
Claims Collection Standards at 31 CFR
901.3(a)(4). There are no time
limitations on collecting Federal
judgments. Many State judgments are
also not subject to time limitations.
Therefore, this rule states that a Federal
or State debt that has been reduced to
judgment shall remain enforceable for
purposes of administrative offset for as
long as the judgment remains
enforceable against the debtor under the
laws applicable to the judgment.
(m) Fees. Paragraph (m) states that
FMS will deduct a fee from amounts
offset pursuant to this rule. As required
by 31 U.S.C. 3716(c)(4), the fee will be
in an amount that FMS has determined
to be sufficient to reimburse FMS for the
full cost of conducting offsets under this
section. FMS will notify States and
Federal agencies of the amount of the
fee in advance.
Special Analysis
FMS is promulgating this interim rule
without opportunity for prior public
comment pursuant to the
Administrative Procedure Act, 5 U.S.C.
553 (the ‘‘APA’’), because FMS has
determined, for the following reasons,
that a comment period would be
unnecessary and contrary to the public
interest. The DCIA provision
authorizing the offset of Federal
payments to collect delinquent debt
owed to the States pursuant to
reciprocal agreements was effective on
August 26, 1996. A comment period is
unnecessary because this interim rule
does not change the ongoing offset
process under the TOP, but rather
provides guidance for State agencies
and Federal disbursing officials to
facilitate the addition of State debts into
TOP. Under this interim rule, State
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agencies are required to provide to the
debtor the same pre-offset notice,
opportunities, and rights to dispute the
debt and seek waiver as currently
required under 31 U.S.C. 3716 and
3720A and implementing regulations.
Since this interim rule provides
important guidance ensuring that
debtors receive appropriate notices and
opportunities from States that elect to
participate, FMS believes that it is in the
public interest to issue this interim rule
without opportunity for prior public
comment.
For the same reasons, FMS has
determined that good cause exists to
make this interim rule effective upon
publication without providing the 30day period between publication and the
effective date contemplated by 5 U.S.C.
553(d)(3). The public is invited to
submit comments on the interim rule,
which will be taken into account before
a final rule is issued.
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Regulatory Analysis
This interim rule is not a significant
regulatory action as defined in
Executive Order 12866. Because no
notice of proposed rulemaking is
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 the 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, and this rule
only sets forth the general procedures
for State participation. Additionally, as
described above, FMS has worked
closely with States in the development
of a pilot program that will operate
pursuant to this interim rule. As part of
that collaborative process, FMS has
consulted with the States participating
in the pilot regarding the provisions of
this rule and the operational
requirements for participation.
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.
List of Subjects in 31 CFR Part 285
Administrative practice and
procedure, Black lung benefits, Child
support, Claims, Credit, Debts,
Disability benefits, Federal employees,
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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
For the reasons set forth in the
preamble, 31 CFR part 285 is amended
as follows:
I
PART 285—DEBT COLLECTION
AUTHORITIES UNDER THE DEBT
COLLECTION IMPROVEMENT ACT OF
1996
1. The authority citation for part 285
continues to read as follows:
I
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.
2. Section 285.6 is added to part 285,
subpart A, to read as follows:
I
§ 285.6 Administrative offset under
reciprocal agreements with states.
(a) Scope. (1) This section sets forth
the rules that apply to the
administrative offset of Federal nontax
payments to collect delinquent debts
owed to States. As set forth in 31 U.S.C.
3716(h), States may participate in
administrative offset so long as they
meet certain requirements, including
entering into reciprocal agreements with
the Secretary of the Treasury. Such
reciprocal agreements may contain any
requirements that the Secretary
considers appropriate to facilitate offset.
Participation in offset under this section
is voluntary for both FMS and the
States. This section prescribes the
minimum requirements for such
reciprocal agreements, including
provisions applicable to the offset of
State payments, pursuant to State law,
to collect delinquent Federal debts.
Such offsets are defined in this section
as ‘‘State payment offsets.’’
(2) This section does not apply to the
offset of Federal salary payments,
Federal tax refunds (see 31 CFR 285.8),
or the collection of past-due support
debts (see 31 CFR 285.1 and 285.3).
(b) Definitions. (1) Unless otherwise
defined in paragraph § 285.5(b) of this
subpart.
(2) For purposes of this section:
Administrative offset has the meaning
set forth in 31 U.S.C. 3701(a) and means
withholding funds payable by the
United States to, or held by the United
States for, a person to satisfy a debt
owed by the payee. The term debt in
this definition means a State debt.
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Debtor means a person who owes a
debt to the United States or a State.
Federal debt means any amount of
money, funds or property that has been
determined by an appropriate official of
the Federal government to be owed to
the United States by a person,
organization, or entity, except another
Federal agency. The term includes debt
administered by a third party acting as
an agent for the Federal Government.
For purposes of this section, the term
‘‘Federal debt’’ does not include debts
arising under the Internal Revenue Code
of 1986 (26 U.S.C. 1 et seq.), the tariff
laws of the United States, or the Social
Security Act (42 U.S.C. 301 et seq.),
except to the extent provided in sections
204(f) and 1631(b)(4) of such Act (42
U.S.C. 404(f) and 1383(b)(4)(A),
respectively) and 31 U.S.C. 3716(c).
Offset means withholding funds
payable to a person to satisfy a debt
owed by the payee.
Participating State means a State that
has entered into a reciprocal agreement
under this section.
Reciprocal agreement means a written
agreement between FMS and a State,
entered into pursuant to 31 U.S.C.
§ 3716(h), which provides for
administrative offset and State payment
offset.
State has the meaning set forth in 31
U.S.C. 3701(b)(2) and includes the
several states of the United States, the
District of Columbia, American Samoa,
Guam, the United States Virgin Islands,
the Commonwealth of the Northern
Mariana Islands, and the
Commonwealth of Puerto Rico.
State debt means any amount of
money, funds or property that has been
determined by an appropriate State
official to be owed to that State by a
person, organization, or entity, except
the United States, a foreign sovereign, or
another State (including local
governments within a State). For
purposes of this rule, the term includes
debt administered by a third party
acting as an agent for the State.
State payment offset means
withholding funds payable by a State to,
or held by a State for, a person to satisfy
a debt owed by the payee to the United
States.
(c) General rule. FMS and other
disbursing officials of the Federal
Government will conduct
administrative offset to collect past-due
State debts certified to FMS, and
participating States will conduct State
payment offset to collect delinquent
Federal debts in accordance with the
terms of reciprocal agreements entered
into between the States and FMS, acting
on behalf of the Secretary. Upon
notification of a delinquent State debt
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from a participating State to FMS,
disbursing officials of the United States
shall offset the Federal payments
specified in the reciprocal agreement to
collect the State debt. The amount
offset, minus an offset fee, shall be
forwarded to the State to be distributed
in accordance with applicable laws and
procedures. Upon notification of a
delinquent Federal debt from FMS to a
participating State, authorized officials
of the participating State shall conduct
State payment offset as specified in the
applicable reciprocal agreement to
collect the Federal debt.
(d) Reciprocal agreements. (1) FMS
may enter into reciprocal agreements
with States for administrative offset and
State payment offset. The agreements
shall contain any requirements which
FMS considers appropriate to facilitate
the offset and prevent duplicative
efforts, and shall require States to
prescribe procedures governing the
collection of delinquent State debts
which are substantially similar to
requirements imposed on Federal
agencies pursuant to 31 U.S.C.
§ 3716(b). States may prescribe such
procedures through legislation or
regulations, as deemed appropriate by
State officials. States which have
entered into a reciprocal agreement with
FMS pursuant to this section may
thereafter request, in the manner
prescribed in the reciprocal agreement,
that administrative offsets be performed.
Such requests shall be made by the
appropriate State disbursing official,
which, for purposes of this section,
means an appropriate official of the
State agency that is responsible for
collecting the State debt. Reciprocal
agreements must be signed by a State
official authorized to enter into such
agreements.
(2) Once FMS has entered into a
reciprocal agreement with a State
pursuant to this section, FMS may
request that the State perform State
payment offsets to collect delinquent
Federal debts in accordance with the
terms of the reciprocal agreement.
(3) A duly executed reciprocal
agreement is required before a State may
request an administrative offset
pursuant to 31 U.S.C. 3716(h).
(e) Requirements for submitting State
debts for administrative offset—(1) Debt
eligibility. A State debt submitted to
FMS for collection by administrative
offset must meet the debt eligibility
requirements of 31 CFR 285.5(d)(3)(i).
(2) Certification. At the time a
participating State notifies FMS of a
State debt for purposes of collection by
administrative offset under this section,
the State shall comply with the
certification requirements set forth in
VerDate Aug<31>2005
14:19 Jan 10, 2007
Jkt 211001
paragraph 31 CFR 285.5(d)(6) with the
following two exceptions:
(i) Paragraph (d)(6)(ii)(E)—Federal
salary offset; and
(ii) Paragraph (d)(6)(iii)—Federal
requirements for the assessment of
interest and penalties to Federal debts.
Additionally, with respect to paragraph
(d)(6)(ii) of § 285.5, States shall only be
required to certify that they have
complied with the requirements of 31
U.S.C. 3716 (not 31 U.S.C. 3720A or 26
U.S.C. 6402) and this section 285.6.
States shall also certify that they have
complied with any requirements
imposed by State law or procedure that
may be applicable to administrative
offset.
(f) State debts submitted to FMS for
tax refund offset prior to the effective
date of this section. A State shall be
deemed to have complied with the
requirements of paragraph (e)(2) of this
section with respect to any State debt
that the State certified to Treasury prior
to the effective date of this section for
collection pursuant to 31 CFR 285.8,
Offset of tax refund payments to collect
state income tax obligations. However,
within 30 days of an administrative
offset under this section, the State shall
notify the debtor in writing that the
debtor may exercise the rights set forth
in the applicable sections of 31 CFR
285.5(d) as set forth in paragraph (e) of
this section, only if the State has not
previously informed the debtor in
writing that Federal payments other
than tax refunds may be offset to collect
the State debt, and the debtor has not
exercised such rights previously with
respect to the State debt that was
collected by the offset. Nothing in this
section requires any State to duplicate
any notice or any opportunity for a
hearing or review provided to the debtor
prior to administrative offset.
(g) Federal Payments subject to
administrative offset under this section.
(1) The Federal payments that will be
offset to collect a participating State’s
debts shall be set forth in the reciprocal
agreement. Federal payments that are
excluded from administrative offset
under this section include:
(i) Any payments described in 31 CFR
285.5(e)(2) ‘‘Payments excluded from
offset’’;
(ii) Payments due to an individual
under the Social Security Act;
(iii) Payments due an individual
pursuant to part B of the Black Lung
Benefits Act;
(iv) Payments due an individual
pursuant to any law administered by the
Railroad Retirement Board;
(v) Federal tax refunds; and
(vi) Federal salary payments.
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1287
(h) Conducting the administrative
offset. (1) Disbursing officials shall
conduct administrative offset under this
section in the same manner as set forth
in 31 CFR 285.5(f) through (i).
(2) When a payee owes more than one
delinquent State debt which has been
referred to FMS for collection, amounts
will be applied to delinquent State debts
under this section after any amounts
offset pursuant to any other section of
this subpart A and any amounts levied
pursuant 26 U.S.C. 6331.
(i) Liability of disbursing officials and
payment agencies. Neither the Federal
disbursing official nor the agency
authorizing the Federal payment shall
be liable to a debtor for the amount of
the administrative offset on the basis
that the underlying obligation,
represented by the payment before the
administrative offset was taken, was not
satisfied.
(j) Notification to a State of Federal
debt. (1) A State may set forth in the
reciprocal agreement the requirements
for FMS to follow when submitting a
Federal debt for collection by State
payment offset. Such agreements shall
set forth all requirements contained in
State law for the State payment offset.
Such requirements, however, may not
exceed the requirements for collecting
Federal debts by administrative offset as
set forth in § 285.5(d) of this subpart.
(2) FMS shall certify to a participating
State that each debt FMS submits for
State payment offset has been certified
by the Federal creditor agency to be
delinquent, valid, and legally
enforceable in the amount stated, and
that the Federal creditor agency owed
the debt has complied with the
requirements of 31 U.S.C. 3716(a) prior
to submitting the debt for offset.
(k) Conducting State payment offset.
(1) An official of a participating State
shall conduct State payment offset
pursuant to the laws and regulations of
the participating State; provided that:
(i) If a payment is owed jointly to
more than one payee, the entire
payment shall be offset for a debt of
either payee, unless otherwise
prohibited by law or regulation; and
(ii) If a payment is made to a person
solely in that person’s capacity as a
representative payee for another person
having the beneficial interest in the
payment, the disbursing official shall
offset that payment only to collect debts
owed by the person having the
beneficial interest in the payment.
(2) Any prohibitions on offsetting a
joint payment described in paragraph
(k)(1)(i) of this section shall be set forth
in the reciprocal agreement.
(3) An official of the participating
State shall notify the payee of the State
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Federal Register / Vol. 72, No. 7 / Thursday, January 11, 2007 / Rules and Regulations
payment offset. The reciprocal
agreement may contain detailed
guidance and procedures regarding
sending such notice, but shall, at a
minimum require that the notice inform
the payee of:
(i) The type and amount of the
payment that was offset;
(ii) The identity of the Federal agency
that requested the offset; and
(iii) A contact point within the
Federal agency that will handle
concerns regarding the offset.
(l) Limitations. A debt properly
submitted to FMS or the State for
administrative offset or State payment
offset shall remain subject to collection
until withdrawn by the entity that
submitted the debt for collection,
provided the debt remains past-due and
legally enforceable for purposes of
administrative offset or State payment
offset, as applicable. A debt which has
been reduced to a judgment shall
remain legally enforceable for purposes
of administrative offset and State
payment offset for as long as the
judgment remains enforceable against
the debtor.
(m) Fees. FMS shall deduct a fee from
each administrative offset and State
payment offset amount before
transferring the balance of the offset
funds to the State or Federal agency
owed the debt. Pursuant to 31 U.S.C.
3716(c)(4), the fee will be in an amount
that FMS has determined to be
sufficient to reimburse FMS for the full
cost of the offset procedure. FMS will
notify the States and creditor agencies,
annually and in advance, of the amount
of the fee FMS will charge for each
offset.
Dated: January 4, 2007.
Kenneth R. Papaj,
Commissioner.
[FR Doc. E7–127 Filed 1–10–07; 8:45 am]
BILLING CODE 4810–35–P
DEPARTMENT OF HOMELAND
SECURITY
Coast Guard
33 CFR Part 117
[CGD01–07–006]
cprice-sewell on PROD1PC66 with RULES
Drawbridge Operation Regulations;
Acushnet River, New Bedford and
Fairhaven, MA
Coast Guard, DHS.
Notice of temporary deviation
from regulations.
AGENCY:
ACTION:
SUMMARY: The Commander, First Coast
Guard District, has issued a temporary
VerDate Aug<31>2005
14:19 Jan 10, 2007
Jkt 211001
deviation from the regulation governing
the operation of the Route 6 highway
bridge across the Acushnet River, mile
0.0, between New Bedford and
Fairhaven, Massachusetts. Under this
temporary deviation a 30-minute
advance notice for bridge openings shall
be required between 7 a.m. and 5 p.m.,
Monday through Friday, from January 8,
2007 through February 2, 2007. This
deviation is necessary to facilitate
emergency bridge fender repairs.
DATES: This deviation is effective from
January 8, 2007 through February 2,
2007.
ADDRESSES: Materials referred to in this
document are available for inspection or
copying at the First Coast Guard
District, Bridge Branch Office, 408
Atlantic Avenue, Boston,
Massachusetts, 02110, between 7 a.m.
and 3 p.m., Monday through Friday,
except Federal holidays. The telephone
number is (617) 223–8364. The First
Coast Guard District Bridge Branch
Office maintains the public docket for
this temporary deviation.
FOR FURTHER INFORMATION CONTACT: John
McDonald, Project Officer, First Coast
Guard District, at (617) 223–8364.
SUPPLEMENTARY INFORMATION: The Route
6 highway bridge, across the Acushnet
River, mile 0.0, between New Bedford
and Fairhaven, Massachusetts, has a
vertical clearance in the closed position
of 8 feet at mean high water and 12 feet
at mean low water. The existing
drawbridge operation regulations are
listed at 33 CFR 117.585.
The owner of the bridge,
Massachusetts Highway Department,
requested a temporary deviation to
facilitate emergency bridge protective
fender repairs. The bridge fender system
on the east channel was recently
damaged by a vessel allision. The
damaged fender system must be
repaired as soon as possible in the
interest of navigational safety.
Under this temporary deviation the
Route 6 highway bridge shall require at
least a 30-minute advance notice for
bridge openings between 7 a.m. and 5
p.m., Monday through Friday, from
January 8, 2007 through February 2,
2007.
The bridge will continue to open in
accordance with the normal operating
schedule which requires the bridge to
open on the hour between 6 a.m. and 10
a.m. and at a quarter past the hour
between 11:15 a.m. and 6:15 p.m.
However, in order to perform necessary
bridge repairs, a 30 minute advance
notice for such openings is required
between 7 a.m. and 5 p.m., Mondays
through Fridays from January 8 through
February 2, 2007.
PO 00000
Frm 00022
Fmt 4700
Sfmt 4700
During this period the bridge shall
open at any time for vessels whose draft
exceeds 15 feet. However, such vessels
must also provide 30 minute advance
notice.
In accordance with 33 CFR 117.35,
this work will be performed with all due
speed in order to return the bridge to
normal operation as soon as possible.
Should the bridge maintenance
authorized by this temporary deviation
be completed before the end of the
effective period published in this notice,
the Coast Guard will rescind the
remainder of this temporary deviation,
and the bridge shall be returned to its
normal operating schedule. Notice of
the above action shall be provided to the
public in the Local Notice to Mariners
and the Federal Register, where
practicable.
This deviation from the operating
regulations is authorized under 33 CFR
117.35.
Dated: January 3, 2007.
Gary Kassof,
Bridge Program Manager, First Coast Guard
District.
[FR Doc. E7–240 Filed 1–10–07; 8:45 am]
BILLING CODE 4910–15–P
DEPARTMENT OF HOMELAND
SECURITY
Coast Guard
33 CFR Part 117
[CGD01–06–139]
Drawbridge Operation Regulations;
Shaw Cove, New London, CT
Coast Guard, DHS.
Notice of temporary deviation
from regulations.
AGENCY:
ACTION:
SUMMARY: The Commander, First Coast
Guard District, has issued a temporary
deviation from the regulation governing
the operation of the Amtrak Bridge
across Shaw Cove, mile 0.0., at New
London, Connecticut. Under this
temporary deviation, an advance notice
shall be required for bridge openings
during designated bridge opening time
periods each day from January 5, 2007
through March 30, 2007; however,
bridge openings shall be provided at any
time for DDLC Energy, if at least a 24hour advance notice is given. This
deviation is necessary to facilitate
scheduled bridge maintenance.
DATES: This deviation is effective from
January 5, 2007 through March 30, 2007.
ADDRESSES: Materials referred to in this
document are available for inspection or
copying at the First Coast Guard
E:\FR\FM\11JAR1.SGM
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]]>Agencies
[Federal Register Volume 72, Number 7 (Thursday, January 11, 2007)]
[Rules and Regulations]
[Pages 1283-1288]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-127]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF THE TREASURY
Fiscal Service
31 CFR Part 285
RIN 1510-AB09
Administrative Offset Under Reciprocal Agreements With States
AGENCY: Financial Management Service, Fiscal Service, Treasury.
ACTION: Interim rule with request for comments.
-----------------------------------------------------------------------
SUMMARY: This interim rule describes the rules applicable to the offset
of Federal nontax payments to collect delinquent debts owed to States
pursuant to reciprocal agreements between the Secretary of the Treasury
and the States. In addition to providing for the offset of Federal
nontax payments, the reciprocal agreements will provide for the offset
of State payments to collect delinquent, nontax Federal debts. The
offsets described in this rule will be processed by the Treasury Offset
Program (TOP). The Department of the Treasury's Financial Management
Service (FMS) established TOP in order to centralize the process by
which Federal payments are withheld or reduced (in other words, offset)
to collect delinquent debts. This interim rule specifically applies to
the centralized offset of Federal nontax payments by Federal disbursing
officials to collect delinquent debts owed to States pursuant to
reciprocal agreements. Therefore, this interim rule affects persons who
owe delinquent debts to a State of the United States and who receive
Federal payments. It also affects persons who owe delinquent, nontax
Federal debts and who receive payments from States. This rule does not
apply to collection of past-due support debts (see 31 CFR 285.1), the
offset of Federal tax refund payments, the offset of Federal salary
payments, or the offset of other Federal payments excluded from offset
by law.
DATES: This rule is effective January 11, 2007. Comments must be
received by March 12, 2007.
ADDRESSES: All comments should be addressed to Thomas Dungan, Senior
Policy Analyst, Debt Management Services, Financial Management Service,
Department of the Treasury, 401 14th Street, SW., Room 435B,
Washington, DC 20227. Comments may also be submitted via the internet
as directed on the FMS Web site at the following address: https://
www.fms.treas.gov/debt. A copy of this interim rule is being made
available for downloading from the Web site.
FOR FURTHER INFORMATION CONTACT: Thomas Dungan, Senior Policy Analyst,
at (202) 874-6660, or Tricia Long, Senior Counsel, at (202) 874-6680.
SUPPLEMENTARY INFORMATION:
Background
The Debt Collection Improvement Act of 1996 (DCIA), Pub. L. 104-
134, 110 Stat. 1321-358 et seq. (April 26, 1996), authorized Federal
disbursing officials to withhold or reduce eligible Federal payments to
pay the payee's delinquent debt owed to the United States. See 31
U.S.C. 3716(c). This process is known as ``administrative offset'' or
``offset.'' The DCIA also provided that Federal payments may be offset
to collect delinquent debts owed to States provided that the States
enter into reciprocal agreements with the Secretary of the Treasury and
meet
[[Page 1284]]
certain other qualifications. See 31 U.S.C. 3716(h).
FMS, a bureau of the Department of the Treasury (Treasury), is
responsible for the implementation of centralized administrative offset
of Federal payments for the collection of delinquent debt. FMS has
established TOP to meet this and other debt collection
responsibilities. By centralizing offset through TOP, FMS has
consolidated and simplified debt collection procedures for the Federal
Government. TOP works as follows: Creditor agencies submit information
about delinquent debts to FMS, which maintains the information in its
delinquent debtor database. Payment agencies prepare and certify
payment vouchers to FMS and disbursing officials at certain other
Federal agencies with disbursing authority (such as the Department of
Defense or the United States Postal Service), who then disburse
payments. The payment vouchers contain information about the payment
including the name and taxpayer identifying number (TIN) of the
recipient.
Before an eligible Federal payment is disbursed to a payee, FMS
compares the payment information (including information from payments
disbursed by other Federal agencies) with debtor information in FMS's
delinquent debtor database. If the payee's name and TIN match the name
and TIN of a debtor, the disbursing official offsets the payment, in
whole or in part, to satisfy the debt, to the extent legally allowed.
FMS transmits amounts collected through offset to the appropriate
creditor agencies after deducting fees to cover the costs of operating
the offset program, pursuant to 31 U.S.C. 3716(c)(4). If not otherwise
prohibited by law, creditor agencies may add the fees to the debts as
administrative costs, pursuant to 31 U.S.C. 3717(e).
Section 3716(h) authorizes the Secretary of the Treasury to allow
States to participate in administrative offset to collect delinquent
State debts so long as the States meet the requirements of 31 U.S.C.
3716(h), including entering into reciprocal agreements with the
Secretary of the Treasury. Such reciprocal agreements shall contain any
requirements that the Secretary considers appropriate to facilitate
offset and prevent duplicative efforts.
In order to determine if it is in the best interests of the United
States and the States to fully implement reciprocal offsets under this
section, FMS invited the States to participate in the development of a
pilot program. Three States have chosen to work with FMS to develop and
participate in the pilot. The purpose of the pilot is to test systems
and procedures to facilitate offset and to evaluate whether the
benefits of the program outweigh the costs. FMS will consider
information gained from the operation of the pilot, in addition to
comments received on this interim rule, before issuing a final rule.
Section Analysis
(a) Scope. Paragraph (a) describes the scope of this rule, which
governs the administrative offset of Federal nontax payments to collect
delinquent debts owed to States in accordance with the requirements of
31 U.S.C. 3716(h). This rule does not apply to the offset of Federal
tax refund payments, because the authority for this section--31 U.S.C.
3716--does not authorize the offset of Federal tax refunds to collect
debts. This rule also does not apply to the offset of Federal salary
payments. While Federal salary payments may be offset under 31 U.S.C.
3716, there are many statutes and regulations that affect Federal
salary offsets. FMS has chosen not to address those authorities in this
rule. Additionally, this rule does not apply to the collection of past-
due support payments. (See 31 CFR 285.1 for rules applicable to
administrative offset to collect past-due support).
(b) Definitions. Paragraph (b) of this rule sets forth definitions
applicable to this rule. Unless otherwise defined in this rule, all
terms have the meanings set forth in section 285.5(b) of this part. As
defined in this rule, ``administrative offset'' is used to describe the
offset of Federal payments to collect delinquent State debts. The
definition of ``State debt'' expressly excludes debts owed by other
governments. FMS has determined that TOP is not the appropriate tool
for resolving issues of indebtedness between State, local and foreign
governments. Also, the term ``debt'' is limited by statute to exclude
debts owed by agencies of the United States. See 31 U.S.C. 3701(c). The
term ``State payment offset'' means the offset of State payments,
pursuant to State law, to collect delinquent Federal nontax debts. The
term ``reciprocal agreement'' is defined to mean a written agreement
between FMS and a State, which will govern administrative offset to
collect that State's debts and the offset of that State's payments to
collect Federal debts.
(c) General rule. Paragraph (c) sets forth the general rule that
Federal disbursing officials are authorized to offset Federal payments
to collect delinquent State debts as long as the requirements of 31
U.S.C. 3716(h) are met. Among other things, States must enter into
reciprocal agreements with FMS that provide for the offset of State
payments to collect Federal nontax debts.
(d) Reciprocal agreements. Paragraph (d) sets forth the basic
parameters for the reciprocal agreements between FMS and the States. As
required by 31 U.S.C. 3716(h)(1)(B)(i), a State must enter into a
reciprocal agreement before it may collect its debts through
administrative offset under this section. The reciprocal agreement will
contain more detailed provisions consistent with this rule. A
reciprocal agreement will not necessarily require that each party will
offset the exact same types of payments. FMS and the State shall
determine which payments will be part of the offset programs in order
to make the agreements mutually beneficial and, thus, reciprocal.
(e) Requirements for administrative offset. Paragraph (e) sets
forth the requirements for collecting State debts by administrative
offset of Federal payments. State debts must meet the same eligibility
requirements for administrative offset as Federal debts are required to
meet under 31 CFR 285.5(d)(3)(i). States must comply with the same
certification requirements as Federal agencies under 31 CFR 285.5(d)(6)
except for requirements that are clearly inapplicable to administrative
offset under this section. The specific exceptions are establishment of
Federal salary offset procedures and the requirement to assess interest
on Federal debts.
Additionally, with respect to paragraph (d)(6)(ii) of section 285.5
of this part, States will only be required to certify that they have
complied with the requirements of 31 U.S.C. 3716 and this section;
States are not required to certify compliance with 31 U.S.C. 3720A or
26 U.S.C. 6402, both of which apply to Federal tax refund offsets.
States shall also certify that they have complied with any requirements
imposed by State law or procedure that may be applicable to
administrative offset under this section.
(f) Debts previously submitted by States for tax refund offset.
Pursuant to 31 CFR 285.8, States have submitted delinquent State income
tax obligations to FMS for collection by Federal tax refund offset. At
the time of submission, States certified the debts in substantially the
same manner as required under this rule, including that the State has
given the debtor notice of the State's intention to collect the debt
through offset of Federal tax refunds. State income tax obligations may
also be collected by administrative offset under this rule. FMS has
determined that it is unnecessary to require the States to
[[Page 1285]]
certify those debts again as a condition to eligibility for
administrative offset under this rule. However, with respect to these
debts, within 30 days of an administrative offset under this section,
the State must notify the debtor in writing that the debtor may
exercise the due process rights set forth in paragraph (e) of this
rule, if the State has not previously notified the debtor that Federal
payments other than tax refunds are subject to administrative offset,
and the debtor has not exercised his or her due process rights prior to
the submission of the debt to FMS. This paragraph also notes that
nothing in this rule requires the State to duplicate any notice or any
opportunity for a hearing or review previously provided to the debtor.
(g) Federal Payments subject to administrative offset under this
section. Paragraph (g) states that the types of Federal payments that
will be offset to collect a State's debts shall be set forth in the
reciprocal agreement. A number of payment types are expressly excluded
from administrative offset under this rule. In accordance with the
statutory prohibitions contained in 31 U.S.C. 3716(h), disbursing
officials may not offset the following payments to collect debts under
this rule: (a) Any payments exempted from offset as set forth in 31 CFR
285.5(e)(2); (b) payments due to an individual under the Social
Security Act; (c) payments due an individual pursuant to part B of the
Black Lung Benefits Act; and (d) payments due an individual pursuant to
any law administered by the Railroad Retirement Board. Additionally, as
explained above, offset of Federal tax refunds and salary payments are
not authorized by this rule.
(h) Conducting the administrative offset. Paragraph (h) instructs
Federal disbursing officials to conduct administrative offset under
this rule in the same manner as under 31 CFR 285.5. This paragraph also
specifies the priority for applying offset funds when a payment matches
with multiple debts in TOP. FMS uses TOP to collect many types of
delinquent debts under various legal authorities. If a payment matches
with multiple debts, the disbursing official shall apply offset amounts
to all other types of debts collected by offset under subpart A of 31
CFR part 285 (i.e., debts owed to Federal agencies and past due support
debts) before applying any available amounts to a debt under this rule.
Additionally, in accordance with 31 U.S.C. 3716(c)(8), a levy pursuant
to the Internal Revenue Code has precedence over offsets under this
section. Disbursing officials, therefore, will satisfy a levy to
collect tax debts prior to offsetting funds under this section.
(i) Liability of disbursing officials and payment agencies.
Paragraph (i) restates the statutory provision that disbursing
officials and payment agencies shall not be liable to the payee for
nonpayment of any amounts offset under this rule.
(j) Notification to a State of Federal debt. Paragraph (j)
addresses the requirements for offsetting a State payment to collect a
Federal debt. State payment offset is governed by the law of the State
conducting the offset. This paragraph provides that all State law
requirements that Federal creditor agencies must meet for State payment
offset shall be set forth in the reciprocal agreement. Such
requirements shall not exceed the requirements for collecting Federal
debts by administrative offset under 31 CFR 285.5(d). This paragraph
also provides that FMS will certify to the State conducting the offset
that the Federal debts FMS submits to the State have been certified as
valid and legally enforceable in accordance with 31 U.S.C. 3716(a).
(k) Conducting State payment offset. Paragraph (k) provides that
States shall conduct State payment offset pursuant to the State's laws
and regulations. The paragraph sets forth two requirements regarding
State payment offset that parallel requirements for conducting
administrative offset. First, in the case of a State payment that is
payable to two or more joint payees, the entire payment shall be
subject to offset to collect the debt of any one of the payees, unless
prohibited by State law. Such prohibition must be set forth in the
reciprocal agreements. Because the Treasury Offset Program only matches
one debtor at a time per payment, FMS will generally not enter into
reciprocal agreements that prohibit offsetting a payment to collect a
debt owed by only one of the joint payees. Second, if a payment is made
to a person solely in that person's capacity as a representative payee
for another person having the beneficial interest in the payment, the
State disbursing official shall only offset such payments for the debts
of the person having the beneficial interest. For example, if a State
makes a payment to a minor child, and the payment is made payable to
that child's parent as the representative payee for that child, the
State shall not offset the payment to collect a debt that the parent
owes to the United States.
Paragraph (k) also sets forth the requirement that the State notify
the payee of any State payment offset. While the reciprocal agreement
may set forth additional requirements, this rule requires, at a
minimum, that the notice inform the payee of the type and amount of the
payment that was offset, the identity of the Federal agency that
requested the offset, and a contact point within the Federal agency
that will handle concerns regarding the offset. Operationally, FMS will
provide this information to the State at the time FMS requests the
State payment offset.
(l) Limitations. Paragraph (l) sets forth limitations on the
collectibility of both Federal and State debts. Debts shall remain
eligible for State payment offset or administrative offset, as
applicable, so long as the debts remain valid and legally enforceable
for purposes of offset. Among other things, this means that, unless
otherwise provided by law, the debt has not been outstanding for more
than 10 years. See 31 U.S.C. 3716(e). The 10-year limitation, however,
does not apply to collecting debts reduced to judgment by
administrative offset. See the Federal Claims Collection Standards at
31 CFR 901.3(a)(4). There are no time limitations on collecting Federal
judgments. Many State judgments are also not subject to time
limitations. Therefore, this rule states that a Federal or State debt
that has been reduced to judgment shall remain enforceable for purposes
of administrative offset for as long as the judgment remains
enforceable against the debtor under the laws applicable to the
judgment.
(m) Fees. Paragraph (m) states that FMS will deduct a fee from
amounts offset pursuant to this rule. As required by 31 U.S.C.
3716(c)(4), the fee will be in an amount that FMS has determined to be
sufficient to reimburse FMS for the full cost of conducting offsets
under this section. FMS will notify States and Federal agencies of the
amount of the fee in advance.
Special Analysis
FMS is promulgating this interim rule without opportunity for prior
public comment pursuant to the Administrative Procedure Act, 5 U.S.C.
553 (the ``APA''), because FMS has determined, for the following
reasons, that a comment period would be unnecessary and contrary to the
public interest. The DCIA provision authorizing the offset of Federal
payments to collect delinquent debt owed to the States pursuant to
reciprocal agreements was effective on August 26, 1996. A comment
period is unnecessary because this interim rule does not change the
ongoing offset process under the TOP, but rather provides guidance for
State agencies and Federal disbursing officials to facilitate the
addition of State debts into TOP. Under this interim rule, State
[[Page 1286]]
agencies are required to provide to the debtor the same pre-offset
notice, opportunities, and rights to dispute the debt and seek waiver
as currently required under 31 U.S.C. 3716 and 3720A and implementing
regulations. Since this interim rule provides important guidance
ensuring that debtors receive appropriate notices and opportunities
from States that elect to participate, FMS believes that it is in the
public interest to issue this interim rule without opportunity for
prior public comment.
For the same reasons, FMS has determined that good cause exists to
make this interim rule effective upon publication without providing the
30-day period between publication and the effective date contemplated
by 5 U.S.C. 553(d)(3). The public is invited to submit comments on the
interim rule, which will be taken into account before a final rule is
issued.
Regulatory Analysis
This interim rule is not a significant regulatory action as defined
in Executive Order 12866. Because no notice of proposed rulemaking is
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 the
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, and this rule only sets forth
the general procedures for State participation. Additionally, as
described above, FMS has worked closely with States in the development
of a pilot program that will operate pursuant to this interim rule. As
part of that collaborative process, FMS has consulted with the States
participating in the pilot regarding the provisions of this rule and
the operational requirements for participation. 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.
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 continues 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. Section 285.6 is added to part 285, subpart A, to read as follows:
Sec. 285.6 Administrative offset under reciprocal agreements with
states.
(a) Scope. (1) This section sets forth the rules that apply to the
administrative offset of Federal nontax payments to collect delinquent
debts owed to States. As set forth in 31 U.S.C. 3716(h), States may
participate in administrative offset so long as they meet certain
requirements, including entering into reciprocal agreements with the
Secretary of the Treasury. Such reciprocal agreements may contain any
requirements that the Secretary considers appropriate to facilitate
offset. Participation in offset under this section is voluntary for
both FMS and the States. This section prescribes the minimum
requirements for such reciprocal agreements, including provisions
applicable to the offset of State payments, pursuant to State law, to
collect delinquent Federal debts. Such offsets are defined in this
section as ``State payment offsets.''
(2) This section does not apply to the offset of Federal salary
payments, Federal tax refunds (see 31 CFR 285.8), or the collection of
past-due support debts (see 31 CFR 285.1 and 285.3).
(b) Definitions. (1) Unless otherwise defined in paragraph Sec.
285.5(b) of this subpart.
(2) For purposes of this section:
Administrative offset has the meaning set forth in 31 U.S.C.
3701(a) and means withholding funds payable by the United States to, or
held by the United States for, a person to satisfy a debt owed by the
payee. The term debt in this definition means a State debt.
Debtor means a person who owes a debt to the United States or a
State.
Federal debt means any amount of money, funds or property that has
been determined by an appropriate official of the Federal government to
be owed to the United States by a person, organization, or entity,
except another Federal agency. The term includes debt administered by a
third party acting as an agent for the Federal Government. For purposes
of this section, the term ``Federal debt'' does not include debts
arising under the Internal Revenue Code of 1986 (26 U.S.C. 1 et seq.),
the tariff laws of the United States, or the Social Security Act (42
U.S.C. 301 et seq.), except to the extent provided in sections 204(f)
and 1631(b)(4) of such Act (42 U.S.C. 404(f) and 1383(b)(4)(A),
respectively) and 31 U.S.C. 3716(c).
Offset means withholding funds payable to a person to satisfy a
debt owed by the payee.
Participating State means a State that has entered into a
reciprocal agreement under this section.
Reciprocal agreement means a written agreement between FMS and a
State, entered into pursuant to 31 U.S.C. Sec. 3716(h), which provides
for administrative offset and State payment offset.
State has the meaning set forth in 31 U.S.C. 3701(b)(2) and
includes the several states of the United States, the District of
Columbia, American Samoa, Guam, the United States Virgin Islands, the
Commonwealth of the Northern Mariana Islands, and the Commonwealth of
Puerto Rico.
State debt means any amount of money, funds or property that has
been determined by an appropriate State official to be owed to that
State by a person, organization, or entity, except the United States, a
foreign sovereign, or another State (including local governments within
a State). For purposes of this rule, the term includes debt
administered by a third party acting as an agent for the State.
State payment offset means withholding funds payable by a State to,
or held by a State for, a person to satisfy a debt owed by the payee to
the United States.
(c) General rule. FMS and other disbursing officials of the Federal
Government will conduct administrative offset to collect past-due State
debts certified to FMS, and participating States will conduct State
payment offset to collect delinquent Federal debts in accordance with
the terms of reciprocal agreements entered into between the States and
FMS, acting on behalf of the Secretary. Upon notification of a
delinquent State debt
[[Page 1287]]
from a participating State to FMS, disbursing officials of the United
States shall offset the Federal payments specified in the reciprocal
agreement to collect the State debt. The amount offset, minus an offset
fee, shall be forwarded to the State to be distributed in accordance
with applicable laws and procedures. Upon notification of a delinquent
Federal debt from FMS to a participating State, authorized officials of
the participating State shall conduct State payment offset as specified
in the applicable reciprocal agreement to collect the Federal debt.
(d) Reciprocal agreements. (1) FMS may enter into reciprocal
agreements with States for administrative offset and State payment
offset. The agreements shall contain any requirements which FMS
considers appropriate to facilitate the offset and prevent duplicative
efforts, and shall require States to prescribe procedures governing the
collection of delinquent State debts which are substantially similar to
requirements imposed on Federal agencies pursuant to 31 U.S.C. Sec.
3716(b). States may prescribe such procedures through legislation or
regulations, as deemed appropriate by State officials. States which
have entered into a reciprocal agreement with FMS pursuant to this
section may thereafter request, in the manner prescribed in the
reciprocal agreement, that administrative offsets be performed. Such
requests shall be made by the appropriate State disbursing official,
which, for purposes of this section, means an appropriate official of
the State agency that is responsible for collecting the State debt.
Reciprocal agreements must be signed by a State official authorized to
enter into such agreements.
(2) Once FMS has entered into a reciprocal agreement with a State
pursuant to this section, FMS may request that the State perform State
payment offsets to collect delinquent Federal debts in accordance with
the terms of the reciprocal agreement.
(3) A duly executed reciprocal agreement is required before a State
may request an administrative offset pursuant to 31 U.S.C. 3716(h).
(e) Requirements for submitting State debts for administrative
offset--(1) Debt eligibility. A State debt submitted to FMS for
collection by administrative offset must meet the debt eligibility
requirements of 31 CFR 285.5(d)(3)(i).
(2) Certification. At the time a participating State notifies FMS
of a State debt for purposes of collection by administrative offset
under this section, the State shall comply with the certification
requirements set forth in paragraph 31 CFR 285.5(d)(6) with the
following two exceptions:
(i) Paragraph (d)(6)(ii)(E)--Federal salary offset; and
(ii) Paragraph (d)(6)(iii)--Federal requirements for the assessment
of interest and penalties to Federal debts. Additionally, with respect
to paragraph (d)(6)(ii) of Sec. 285.5, States shall only be required
to certify that they have complied with the requirements of 31 U.S.C.
3716 (not 31 U.S.C. 3720A or 26 U.S.C. 6402) and this section 285.6.
States shall also certify that they have complied with any requirements
imposed by State law or procedure that may be applicable to
administrative offset.
(f) State debts submitted to FMS for tax refund offset prior to the
effective date of this section. A State shall be deemed to have
complied with the requirements of paragraph (e)(2) of this section with
respect to any State debt that the State certified to Treasury prior to
the effective date of this section for collection pursuant to 31 CFR
285.8, Offset of tax refund payments to collect state income tax
obligations. However, within 30 days of an administrative offset under
this section, the State shall notify the debtor in writing that the
debtor may exercise the rights set forth in the applicable sections of
31 CFR 285.5(d) as set forth in paragraph (e) of this section, only if
the State has not previously informed the debtor in writing that
Federal payments other than tax refunds may be offset to collect the
State debt, and the debtor has not exercised such rights previously
with respect to the State debt that was collected by the offset.
Nothing in this section requires any State to duplicate any notice or
any opportunity for a hearing or review provided to the debtor prior to
administrative offset.
(g) Federal Payments subject to administrative offset under this
section. (1) The Federal payments that will be offset to collect a
participating State's debts shall be set forth in the reciprocal
agreement. Federal payments that are excluded from administrative
offset under this section include:
(i) Any payments described in 31 CFR 285.5(e)(2) ``Payments
excluded from offset'';
(ii) Payments due to an individual under the Social Security Act;
(iii) Payments due an individual pursuant to part B of the Black
Lung Benefits Act;
(iv) Payments due an individual pursuant to any law administered by
the Railroad Retirement Board;
(v) Federal tax refunds; and
(vi) Federal salary payments.
(h) Conducting the administrative offset. (1) Disbursing officials
shall conduct administrative offset under this section in the same
manner as set forth in 31 CFR 285.5(f) through (i).
(2) When a payee owes more than one delinquent State debt which has
been referred to FMS for collection, amounts will be applied to
delinquent State debts under this section after any amounts offset
pursuant to any other section of this subpart A and any amounts levied
pursuant 26 U.S.C. 6331.
(i) Liability of disbursing officials and payment agencies. Neither
the Federal disbursing official nor the agency authorizing the Federal
payment shall be liable to a debtor for the amount of the
administrative offset on the basis that the underlying obligation,
represented by the payment before the administrative offset was taken,
was not satisfied.
(j) Notification to a State of Federal debt. (1) A State may set
forth in the reciprocal agreement the requirements for FMS to follow
when submitting a Federal debt for collection by State payment offset.
Such agreements shall set forth all requirements contained in State law
for the State payment offset. Such requirements, however, may not
exceed the requirements for collecting Federal debts by administrative
offset as set forth in Sec. 285.5(d) of this subpart.
(2) FMS shall certify to a participating State that each debt FMS
submits for State payment offset has been certified by the Federal
creditor agency to be delinquent, valid, and legally enforceable in the
amount stated, and that the Federal creditor agency owed the debt has
complied with the requirements of 31 U.S.C. 3716(a) prior to submitting
the debt for offset.
(k) Conducting State payment offset. (1) An official of a
participating State shall conduct State payment offset pursuant to the
laws and regulations of the participating State; provided that:
(i) If a payment is owed jointly to more than one payee, the entire
payment shall be offset for a debt of either payee, unless otherwise
prohibited by law or regulation; and
(ii) If a payment is made to a person solely in that person's
capacity as a representative payee for another person having the
beneficial interest in the payment, the disbursing official shall
offset that payment only to collect debts owed by the person having the
beneficial interest in the payment.
(2) Any prohibitions on offsetting a joint payment described in
paragraph (k)(1)(i) of this section shall be set forth in the
reciprocal agreement.
(3) An official of the participating State shall notify the payee
of the State
[[Page 1288]]
payment offset. The reciprocal agreement may contain detailed guidance
and procedures regarding sending such notice, but shall, at a minimum
require that the notice inform the payee of:
(i) The type and amount of the payment that was offset;
(ii) The identity of the Federal agency that requested the offset;
and
(iii) A contact point within the Federal agency that will handle
concerns regarding the offset.
(l) Limitations. A debt properly submitted to FMS or the State for
administrative offset or State payment offset shall remain subject to
collection until withdrawn by the entity that submitted the debt for
collection, provided the debt remains past-due and legally enforceable
for purposes of administrative offset or State payment offset, as
applicable. A debt which has been reduced to a judgment shall remain
legally enforceable for purposes of administrative offset and State
payment offset for as long as the judgment remains enforceable against
the debtor.
(m) Fees. FMS shall deduct a fee from each administrative offset
and State payment offset amount before transferring the balance of the
offset funds to the State or Federal agency owed the debt. Pursuant to
31 U.S.C. 3716(c)(4), the fee will be in an amount that FMS has
determined to be sufficient to reimburse FMS for the full cost of the
offset procedure. FMS will notify the States and creditor agencies,
annually and in advance, of the amount of the fee FMS will charge for
each offset.
Dated: January 4, 2007.
Kenneth R. Papaj,
Commissioner.
[FR Doc. E7-127 Filed 1-10-07; 8:45 am]
BILLING CODE 4810-35-P
