Offset of Tax Refund Payments to Collect Past-Due, Legally Enforceable Nontax Debt, 27730-27731 [E9-13604]

Agencies

• Fiscal Service
• Department of Treasury

[Federal Register Volume 74, Number 111 (Thursday, June 11, 2009)]
[Proposed Rules]
[Pages 27730-27731]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-13604]


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DEPARTMENT OF TREASURY

Fiscal Service

31 CFR Part 285

RIN 1510-AB20


Offset of Tax Refund Payments to Collect Past-Due, Legally 
Enforceable Nontax Debt

AGENCY: Financial Management Service, Fiscal Service, Treasury.

ACTION: Notice of Proposed Rulemaking.

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SUMMARY: The Department of the Treasury, Financial Management Service, 
is proposing to amend its regulation governing the offset of tax refund 
payments to collect nontax debts owed to the United States. We are 
proposing to remove the ten-year time limitation on the collection of 
debts by tax refund offset. This change will allow for the use of tax 
refund offset to collect nontax debts owed to the United States 
irrespective of the amount of time the debt has been outstanding.

DATES: Comments must be received by August 10, 2009.

ADDRESSES: The Financial Management Service (FMS) participates in the 
U.S. government's eRulemaking Initiative by publishing rulemaking 
information on www.regulations.gov. Regulations.gov offers the public 
the ability to comment on, search, and view publicly available 
rulemaking materials, including comments received on rules.
    Comments on this rule, identified by docket FISCAL-FMS-2008-0003, 
should only be submitted using the following methods:
    Federal eRulemaking Portal: www.regulations.gov. Follow the 
instructions on the Web site for submitting comments.
    Mail: Tom Dungan, Debt Management Services, Financial Management 
Service, 401 14th Street SW., Washington, DC 20227.
    The fax and e-mail methods of submitting comments on rules to FMS 
have been retired.
    Instructions: All submissions received must include the agency name 
(``Financial Management Service'') and docket number FISCAL-FMS-2008-
0003 for this rulemaking. In general, comments received will be 
published on Regulations.gov without change, including any business or 
personal information provided. Comments received, including attachments 
and other supporting materials, are part of the public record and 
subject to public disclosure. Do not enclose any information in your 
comment or supporting materials that you consider confidential or 
inappropriate for public disclosure.
    You may also inspect and copy this proposed rule at: Treasury 
Department Library, Freedom of Information Act (FOIA) Collection, Room 
1428, Main Treasury Building, 1500 Pennsylvania Avenue, NW., 
Washington, DC 20220. Before visiting, you must call (202) 622-0990 for 
an appointment.

FOR FURTHER INFORMATION CONTACT: Thomas Dungan, Policy Analyst, at 
(202) 874-6660, or Tricia Long, Senior Attorney, at (202) 874-6680.

SUPPLEMENTARY INFORMATION: 

I. Background

    The Food, Conservation and Energy Act of 2008, Public Law 110-234, 
Section 14219, 22 Stat. 923 (2008) (``the Act'') amended the Debt 
Collection Act of 1982 (as amended by the Debt Collection Improvement 
Act of 1996) to remove a restriction on the collection of debt by 
offset of nontax payments. Prior to this change, nontax payments could 
be offset to collect debt only if the debt

[[Page 27731]]

was delinquent for a period of less than ten years. The amendment to 
the law allows for the collection of debt by offsetting nontax payments 
without any time limitation and applies to any debt outstanding on or 
after the date of the enactment of the Act.
    Although this statutory change does not directly apply to the 
offset of tax refund payments, we are nevertheless proposing to amend 
this regulation to mirror the statutory change because the regulatory 
time limitation contained in this regulation was intended to create 
uniformity in the way non-judicial offsets were conducted. Because 
there was no logical reason why the ten-year limitation applicable to 
the offset of nontax payments should not apply to non-judicial offsets 
under other statutes which did not contain their own limitations 
period, this regulation applied a ten-year limitation on the collection 
of debt by tax refund offset. However, now that the ten-year limitation 
has been eliminated for the offset of nontax payments, the rationale 
for including a ten-year limitation in this rule no longer applies.
    The proposed changes to this rule remove the limitations period by 
explicitly stating that no time limitation shall apply, and explain 
that by removing the time limitation, all debts, including debts that 
were ineligible for collection by offset prior to the removal of the 
limitations period, may now be collected by tax refund offset. 
Additionally, to avoid any undue hardship, we are proposing the 
addition of a notice requirement applicable to debts that were 
previously ineligible for collection by offset because they had been 
outstanding for more than ten years. For these debts, creditor agencies 
must certify to FMS that a notice of intent to offset was sent to the 
debtor after the debt became ten years delinquent. This notice of 
intent to offset is intended to alert the debtor that his debt may now 
be collected by offset and allows the debtor additional opportunities 
to dispute the debt, enter into a repayment agreement or otherwise 
avoid offset. This requirement will apply even in a case where notice 
was sent prior to the debt becoming ten years old. This requirement 
applies only with respect to debts that were previously ineligible for 
collection by offset because of the time limitation and does not apply 
to debts, such as Department of Education student loan debts, that 
could be collected by offset without regard to any time limitation 
prior to this regulatory change.

II. Procedural Analyses

Request for Comment on Plain Language

    Executive Order 12866 requires each agency in the Executive branch 
to write regulations that are simple and easy to understand. We invite 
comment on how to make the proposed rule clearer. For example, you may 
wish to discuss: (1) Whether we have organized the material to suit 
your needs; (2) whether the requirements of the rules are clear; or (3) 
whether there is something else we could do to make these rules easier 
to understand.

Regulatory Planning and Review

    The proposed rule does not meet the criteria for a ``significant 
regulatory action'' as defined in Executive Order 12866. Therefore, the 
regulatory review procedures contained therein do not apply.

Regulatory Flexibility Act Analysis

    It is hereby certified that the proposed rule will not have a 
significant economic impact on a substantial number of small entities. 
This rule merely removes the ten-year time limitation on the collection 
of debts by tax refund offset. Moreover, the provisions contained in 
this proposed rule would primarily affect federal creditor agencies and 
impose no additional costs to small entities. Accordingly, a regulatory 
flexibility analysis under the Regulatory Flexibility Act (5 U.S.C. 601 
et seq.) is not required.

List of Subjects in 31 CFR Part 285

    Administrative practice and procedure, Child support, Child 
welfare, Claims, Credits, 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, Veterans' benefits, Wages.

    For the reasons set forth in the preamble, we propose to amend 31 
CFR part 285 as follows:

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:

    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. In Sec.  285.2, remove paragraph (d)(1)(ii), redesignate 
paragraphs (d)(1)(iii) through (d)(1)(v) as paragraphs (d)(1)(ii) 
through (d)(1)(ii) through (d)(1)(iv) respectively, and add paragraph 
(d)(6) as follows:


Sec.  285.2  Offset of tax refund payments to collect past-due, legally 
enforceable nontax debt.

* * * * *
    (d) * * *
    (6)(i) Creditor agencies may submit debts to FMS for collection by 
tax refund offset irrespective of the amount of time the debt has been 
outstanding. Accordingly, all nontax debts, including debts that were 
delinquent for ten years or longer prior to [INSERT DATE 30 DAYS AFTER 
PUBLICATION OF THE FINAL RULE IN THE FEDERAL REGISTER] may be collected 
by tax refund offset.
    (ii) For debts outstanding more than ten years on or before [INSERT 
DATE 30 DAYS AFTER PUBLICATION OF THE FINAL RULE IN THE FEDERAL 
REGISTER], creditor agencies must certify to FMS that the notice of 
intent to offset described in paragraph (d)(1)(iii)(B) of this section 
was sent to the debtor after the debt became ten years delinquent. This 
requirement will apply even in a case where notice was also sent prior 
to the debt becoming ten years delinquent, but does not apply to any 
debt that could be collected by offset without regard to any time 
limitation prior to [INSERT DATE 30 DAYS AFTER PUBLICATION OF THE FINAL 
RULE IN THE FEDERAL REGISTER].
* * * * *

    Dated: May 29, 2009.
Gary Grippo,
Acting Fiscal Assistant Secretary.
[FR Doc. E9-13604 Filed 6-10-09; 8:45 am]
BILLING CODE 4810-35-P