Debt Collection Authorities Under the Debt Collection Improvement Act of 1996, 11660-11664 [2022-03584]

Agencies

• Fiscal Service
• DEPARTMENT OF THE TREASURY

[Federal Register Volume 87, Number 41 (Wednesday, March 2, 2022)]
[Proposed Rules]
[Pages 11660-11664]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-03584]



[[Page 11660]]

=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF THE TREASURY

Fiscal Service

31 CFR Part 285

[Docket No. Fiscal-2021-0007]
RIN 1530-AA21


Debt Collection Authorities Under the Debt Collection Improvement 
Act of 1996

AGENCY: Bureau of the Fiscal Service, Fiscal Service, Treasury.

ACTION: Notice of proposed rulemaking with request for comment.

-----------------------------------------------------------------------

SUMMARY: The Department of the Treasury (``Treasury''), Bureau of the 
Fiscal Service (``Fiscal Service''), proposes to amend its regulations 
regarding the Treasury Offset Program (``TOP'') and the Cross-Servicing 
program. The primary reason for doing so is to inform the public about 
how Fiscal Service will use Social Security numbers in mailings, as 
required by the Social Security Number Fraud Prevention Act of 2017, 
which requires Fiscal Service to have final regulations in place by 
September 15, 2022.

DATES: Comments must be received by May 2, 2022.

ADDRESSES: Fiscal Service 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.
    Instructions for comment submission: Comments on this proposed 
rule, identified by docket FISCAL-2021-0007, should only be submitted 
using the Federal eRulemaking Portal at regulations.gov. Follow the 
instructions on the website for submitting comments.
    All submissions received must include the agency name (``Bureau of 
the Fiscal Service'') and docket number (``FISCAL-2021-0007'') for this 
rulemaking. In general, comments 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.

FOR FURTHER INFORMATION CONTACT: Tawanna Edmonds, Director, Receivables 
Management & Debt Services Division, Debt Management Services, Bureau 
of the Fiscal Service at (202) 874-6810.

SUPPLEMENTARY INFORMATION:

I. Background

    Legal Authorities. The Debt Collection Improvement Act of 1996 
(``DCIA''), Public Law 104-134, 110 Stat. 1321-358 et seq. (April 26, 
1996), among other things, authorized Federal agencies to refer Federal 
nontax debt to Treasury for collection services. See 31 U.S.C. 3711(g). 
The DCIA also authorized Federal disbursing officials to withhold 
eligible Federal nontax payments to pay the payee's delinquent nontax 
debt owed to the United States. See 31 U.S.C. 3716(c). The DCIA also 
provided that Federal nontax payments may be offset to collect 
delinquent debt owed to States, including past-due support, and that 
payments made by States may be offset to collect delinquent nontax debt 
owed to the United States. See 31 U.S.C. 3716(h). Further, Federal tax 
refund payments may be offset to collect nontax debt owed to the United 
States and debt owed to States, including past-due support. See 26 
U.S.C. 6402, 31 U.S.C. 3720A, and 42 U.S.C. 664.
    Cross-Servicing program. Fiscal Service administers the Cross-
Servicing program, through which it provides delinquent nontax debt 
collection services pursuant to 31 U.S.C. 3711(g).
    Centralized Receivables Service. Fiscal Service administers the 
Centralized Receivables Service, or CRS, through which it provides 
invoicing and early delinquent debt collection services to Federal 
agencies under 31 U.S.C. 3711(g).
    Treasury Offset Program. Fiscal Service administers a centralized 
offset program, known as the Treasury Offset Program, or TOP, through 
which it offsets payments to collect debts.
    Revision of Existing Regulations. Fiscal Service promulgated 31 CFR 
285.12 to implement 31 U.S.C. 3711(g). Among other things, the 
regulation codified at 31 CFR 285.12 describes the procedures and 
criteria for transferring delinquent debt to Treasury. It also explains 
the statutory exceptions to this requirement and the standards under 
which the Secretary of the Treasury will determine whether to grant 
exemptions to this requirement.
    Fiscal Service promulgated 31 CFR part 285, subpart A to implement 
the centralized offset of payments through TOP, pursuant to the Debt 
Collection Improvement Act of 1996.
    Fiscal Service proposes to revise the regulations codified at 31 
CFR part 285, subpart A, and 31 CFR 285.12 (together, the ``existing 
regulations'') for several reasons. The primary reason for doing so is 
to inform the public about how Fiscal Service will use Social Security 
numbers in mailings, as required by the Social Security Number Fraud 
Prevention Act of 2017, which requires Fiscal Service to have final 
regulations in place by September 15, 2022. The proposed rule also adds 
definitions for previously undefined terms and rewords certain 
provisions for clarity, consistent with the requirements of the Plain 
Writing Act of 2010 and Executive Order 12866 (Sept. 1993).

II. Section Analysis

    This section describes, section-by-section, the reasoning for the 
proposed revision (the ``proposed rule'') of the existing regulations. 
Fiscal Service acknowledges that many of the provisions regarding the 
use of SSNs is repetitive. This repetition is necessary given the 
current structure of the rules. Fiscal Service may address this 
repetition in a subsequent regulation.

285.1(q)--Social Security Numbers

    The proposed rule would add Sec.  285.1(q) to address how Fiscal 
Service uses SSNs in TOP for offset of Federal nontax payments to 
collect past-due support, as required by the SSN Act.

285.3(m)--Social Security Numbers

    The proposed rule would add Sec.  285.3(m) to address how Fiscal 
Service uses SSNs in TOP for offset of Federal tax payments to collect 
past-due support, as required by the SSN Act.

285.5(l)--Social Security Numbers

    The proposed rule would add Sec.  285.5(l) to address how Fiscal 
Service uses SSNs in TOP for offset of Federal nontax payments to 
collect nontax debts owed to the United States, including offset of 
Federal tax refunds (see Sec.  285.2), Federal benefit payments (see 
Sec.  285.4), and Federal salary payments (see Sec.  285.7), as 
required by the SSN Act.

285.6(n)--Social Security Numbers

    The proposed rule would add Sec.  285.6(n) to address how Fiscal 
Service uses SSNs in TOP for offset of Federal nontax payments to 
collect state debts and the offset of payments made by States to 
collect Federal nontax debts, as required by the SSN Act.

285.8(k)--Social Security Numbers

    The proposed rule would add Sec.  285.8(k) to address how Fiscal 
Service uses SSNs in TOP for offset of Federal tax payments to collect 
certain debts owed by States, as required by the SSN Act.

[[Page 11661]]

285.12(a)--Definitions

    Centralized Receivables Service. The proposed rule would add a 
definition for the term ``Centralized Receivables Service,'' which is 
not used in the existing regulation. The Centralized Receivable 
Service, or CRS, is a program established by Fiscal Service to assist 
Federal agencies in the management of current, non-tax receivables. CRS 
aims to increase collections and prevent delinquencies while allowing 
agencies to focus on important core missions. CRS also provides early 
delinquent debt collection services. While Federal agencies are 
generally required to refer Federal nontax delinquent debts over 120 
days delinquent (or, in some cases, 180 days delinquent) to the Cross-
Servicing program, Federal agencies may use CRS in their discretion. 
The proposed rule describes the CRS program to inform the public of the 
existence of this program and to comply with the SSN Act, which 
requires Fiscal Service to address how it uses SSNs in its mailings. 
See Sec.  285.12(k) of the proposed rule.
    Cross-Servicing program. The proposed rule would add a definition 
for the term ``Cross-Servicing program,'' which is used but undefined 
by the existing regulation. The proposed rule would also remove 
language from Sec.  285.12(b) describing the term ``cross-servicing.''
    Days delinquent. The proposed rule would add a definition for the 
term ``days delinquent,'' which is used but undefined by the existing 
regulation. The definition is intended to provide additional clarity, 
but not substantively change the meaning of the term.
    Debt collection center. The proposed rule would make conforming 
changes given the definitions for ``Federal agency'' and ``Secretary.''
    Debtor. The proposed rule would add a definition for the term 
``debtor,'' which is used but undefined by the existing regulation. The 
definition is intended to provide additional clarity, but not 
substantively change the meaning of the term.
    Delinquent or past-due. The proposed rule would add a definition 
for the term ``delinquent or past-due,'' which is used but undefined by 
the existing regulation. The definition is intended to provide 
additional clarity, but not substantively change the meaning of the 
term. The proposed rule would also remove language from Sec.  
285.12(c)(3) that included a description of the meaning of the term 
``past-due.''
    Federal agency. The proposed rule would replace the term ``agency'' 
with ``Federal agency.'' The definition itself would remain unchanged. 
This proposed change is intended to provide clarity, but not a 
substantive change in meaning.
    Legally enforceable. The proposed rule would add a definition for 
the term ``legally enforceable,'' which is used but undefined by the 
existing regulation. The definition is similar to the definition for 
``legally enforceable'' that is used in regulations governing Fiscal 
Service's administration of the Treasury Offset Program. See 31 CFR 
285.5(b). An agency may have made a final agency determination that the 
debt is owed and is legally enforceable, even if the debtor has or may 
in the future appeal the debt with the agency or otherwise dispute the 
debt. If an agency has complied with due process prerequisites and if 
the agency's regulations do not preclude collection during an appeal, a 
pending appeal will not preclude the agency from referring the debt to 
the Cross-Servicing program for collection purposes. Debts that are not 
legally enforceable may not be referred to the Cross-Servicing program 
for collection purposes. The proposed rule would also remove language 
from Sec.  285.12(c)(3), which included a description of the meaning of 
the term ``legally enforceable.''
    Person. The proposed revision to the definition ``person'' is not a 
substantive change. It is intended to clarify that, for the purposes of 
this regulation, a person (and therefore a debtor) cannot be the United 
States.

285.12(b)--In General

    The existing regulation describes the requirement for Federal 
agencies to refer delinquent debts to Treasury for collection action, 
exceptions to this requirement, and what actions Fiscal Service will 
take on referred debt. The existing regulation does not describe CRS. 
The proposed rule expands the scope of this regulation from the Cross-
Servicing program to include both the Cross-Servicing program and CRS.

285.12(c)--Mandatory Transfer of Debts to Fiscal Service's Cross-
Servicing Program

    The proposed rule would amend the title to paragraph (c) to make 
clear that the provisions of paragraph (c) apply only to the Cross-
Servicing program, and not also to CRS, which is not mentioned in the 
existing regulation.
    The proposed rule would reorganize paragraph (c) for clarity and to 
eliminate unnecessary language. The proposed rule would clarify that 
debts are not subject to mandatory transfer if they are not legally 
enforceable or if they are below the threshold established by Fiscal 
Service.
    It would use the term ``centralized offset'' which refers to offset 
through TOP, rather than the term ``administrative offset,'' which can 
include non-centralized offsets performed outside of TOP.
    The proposed rule would define the terms ``legally enforceable'' 
and ``past due'' in the definition section of the regulation, rather 
than embedding the definitions into the substantive provisions of the 
regulation.
    The proposed rule would eliminate the provision permitting agencies 
to combine individual debts for purposes of meeting the $25 threshold 
(or such other threshold as Fiscal Service may determine). The 
permissibility of aggregating debts into a single debt file may be 
addressed in separate guidance that Fiscal Service may issue.

285.12(d)--Exceptions to Mandatory Transfer

    The proposed rule would amend paragraph (d)(1), which addresses 
exceptions to the requirement that agencies refer delinquent debt to 
the Cross-Servicing program. As described below, this proposed rule 
would delete paragraph (e), which addresses the schedule of private 
collection contractors. The proposed rule would restore the statutory 
exemption standard regarding private collection contractors. The 
proposed rule would move concepts from current paragraph (d)(6), which 
addresses the servicing and collection of debts by third parties, to 
paragraph (d)(1)(vi).
    The proposed rule would amend paragraph (d)(4), which addresses 
internal offset, to streamline and clarify the language.
    The proposed rule would amend paragraph (d)(5), which addresses 
requests for exemption of classes of debt from the requirement to refer 
debts to the Cross-Servicing program, by adding a title to the 
paragraph for clarity.
    As described above, the proposed rule would delete paragraph 
(d)(6), which addresses the servicing and collection of debts by third 
parties, as those concepts were moved to paragraph (d)(1)(vi).

285.12(e)--Schedule of Private Collection Contractors

    The proposed rule would delete paragraph (e), as it merely repeats 
the statutory requirement that Fiscal Service maintain a schedule of 
private collection contractors. To the extent an agency determines that 
referral of a debt to its own private collection contractor rather than 
referral to Fiscal Service's Cross-Servicing program is appropriate,

[[Page 11662]]

the agency should request an exemption from referral under the 
procedures specified in paragraph (d)(5).

285.12(i)--Certification

    The proposed rule would substitute the word ``delegatee'' to 
``delegate.'' The change in terminology is intended to make the 
language of the regulation consistent with other uses of the term. It 
is not intended to result in a substantive change in meaning.

285.12(j)--Fees

    The proposed rule would delete unnecessary language regarding the 
term ``debt collection centers,'' which is defined in paragraph (a). It 
would also clarify that the fees are charged to Federal agencies (as 
opposed to debtors), regardless of whether a Federal agency passes on 
the amount of fees charged with regard to a particular debt to the 
debtor. It would also clarify that Fiscal Service and other debt 
collection centers have broad flexibility regarding how they calculate 
fees.

285.12(k)--Social Security Numbers

    The proposed rule would add Sec.  285.12(k) to address how Fiscal 
Service will use SSNs in its Cross-Servicing program and in CRS, as 
required by the SSN Act.

III. Procedural Analyses

Federalism

    This proposed rule has been reviewed under Executive Order 13132, 
Federalism. This proposed rule would not have substantial direct 
effects on States, on the relationship between the National Government 
and the States, or on distribution of power and responsibilities among 
the various levels of government. Therefore, in accordance with 
Executive Order 13132, it is determined that this proposed rule does 
not have sufficient federalism implications to warrant the preparation 
of a federalism summary impact statement.

Paperwork Reduction Act

    The Paperwork Reduction Act does not apply because this proposed 
rule would not impose information collection requirements that require 
the approval of the Office of Management and Budget under 44 U.S.C. 
3501, et seq.

Regulatory Flexibility Act Analysis

    It is hereby certified that the proposed rule would not have a 
significant economic impact on a substantial number of small entities 
because this proposed rule only impacts persons who receive payments 
from Federal agencies or States and who are delinquent on debts owed to 
Federal agencies or States. Accordingly, an initial regulatory 
flexibility analysis under the Regulatory Flexibility Act is not 
required. Fiscal Service seeks comment on whether the certification 
made herein should be reconsidered and, if so, on what basis.

Regulatory Planning and Review

    This 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.

Unfunded Mandates Act of 1995

    Section 202 of the Unfunded Mandates Reform Act of 1995, 2 U.S.C. 
1532 (Unfunded Mandates Act), requires that the agency prepare a 
budgetary impact statement before promulgating any rule likely to 
result in a Federal mandate that may result in the expenditure by 
State, local, and tribal governments, in the aggregate, or by the 
private sector, of $100 million or more in any one year. If a budgetary 
impact statement is required, section 205 of the Unfunded Mandates Act 
also requires the agency to identify and consider a reasonable number 
of regulatory alternatives before promulgating the rule. We have 
determined that this proposed rule would not result in expenditures by 
State, local, and tribal governments, or by the private sector, of $100 
million or more in any one year. Accordingly, we have not prepared a 
budgetary impact statement or specifically addressed any regulatory 
alternatives.

List of Subjects in 31 CFR Part 285

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

    For the reasons set forth in the preamble, Fiscal Service proposes 
to amend 31 CFR part 285 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. In Sec.  285.1, add paragraph (q) to read as follows:


Sec.  285.1  Collection of past-due support by administrative offset.

* * * * *
    (q) Social Security numbers. Fiscal Service will ensure that an 
individual's Social Security number will not be visible on the outside 
of any package it sends by mail. In addition, Fiscal Service generally 
will redact or partially redact Social Security numbers in documents it 
sends by mail; however, to administer administrative offset, Fiscal 
Service (and other disbursing officials) may include Social Security 
numbers in mailed documents, including, for example:
    (1) In interoffice and interagency communications;
    (2) In notices, including notices to the debtor or payee that an 
offset has or will occur, when the Social Security number is (or is 
embedded in) a creditor agency's account number, debt identification 
number, or debtor identification number;
    (3) In response to a request of a debtor or a debtor's 
representative for records of Fiscal Service's offset activities; and
    (4) When required by law.
0
3. In Sec.  285.3, add paragraph (m) to read as follows:


Sec.  285.3  Offset of tax refund payments to collect past-due support.

* * * * *
    (m) Social Security numbers. Fiscal Service will to ensure that an 
individual's Social Security number will not be visible on the outside 
of any package it sends by mail. In addition, Fiscal Service generally 
will redact or partially redact Social Security numbers in documents it 
sends by mail; however, to administer the tax refund offset program, 
Fiscal Service (and other disbursing officials) may include Social 
Security numbers in mailed documents, including, for example:
    (1) In interoffice and interagency communications;
    (2) In notices, including notices to the debtor or payee that an 
offset has or will occur, when the Social Security number is (or is 
embedded in) a creditor

[[Page 11663]]

agency's account number, debt identification number, or debtor 
identification number; and
    (3) In response to a request of a debtor or a debtor's 
representative for records of Fiscal Service's offset activities;
    (4) When required by law.
0
4. In Sec.  285.5, add paragraph (l) to read as follows:


Sec.  285.5  Centralized offset of Federal payments to collect nontax 
debts owed to the United States.

* * * * *
    (l) Social Security numbers. Fiscal Service will ensure that an 
individual's Social Security number will not be visible on the outside 
of any package it sends by mail. In addition, Fiscal Service generally 
will redact or partially redact Social Security numbers in documents it 
sends by mail; however, to administer the Treasury Offset Program, 
Fiscal Service (and other disbursing officials) may include Social 
Security numbers in mailed documents, including, for example:
    (1) In interoffice and interagency communications;
    (2) In notices, including notices to the debtor or payee that an 
offset has or will occur, when the Social Security number is (or is 
embedded in) a creditor agency's account number, debt identification 
number, or debtor identification number;
    (3) In response to a request of a debtor or a debtor's 
representative for records of Fiscal Service's offset activities; and
    (4) When required by law.
0
5. In Sec.  285.6, add paragraph (n) to read as follows:


Sec.  285.6  Administrative offset under reciprocal agreements with 
states.

* * * * *
    (n) Social Security numbers. Fiscal Service will ensure that an 
individual's Social Security number will not be visible on the outside 
of any package it sends by mail. In addition, Fiscal Service generally 
will redact or partially redact Social Security numbers in documents it 
sends by mail; however, to administer administrative offset, Fiscal 
Service (and other disbursing officials) may include Social Security 
numbers in mailed documents, including, for example:
    (1) In interoffice and interagency communications;
    (2) In notices, including notices to the debtor or payee that an 
offset has or will occur, when the Social Security number is (or is 
embedded in) a creditor agency's account number, debt identification 
number, or debtor identification number;
    (3) In response to a request of a debtor or a debtor's 
representative for records of Fiscal Service's offset activities; and
    (4) When required by law.
0
6. In Sec.  285.8, add paragraph (k) to read as follows:


Sec.  285.8  Offset of tax refund payments to collect certain debts 
owed to States.

* * * * *
    (k) Social Security numbers. Fiscal Service will ensure that an 
individual's Social Security number will not be visible on the outside 
of any package it sends by mail. In addition, Fiscal Service generally 
will redact or partially redact Social Security numbers in documents it 
sends by mail; however, to administer the tax refund offset program, 
Fiscal Service (and other disbursing officials) may include Social 
Security numbers in mailed documents, including, for example:
    (1) In interoffice and interagency communications;
    (2) In notices, including notices to the debtor or payee that an 
offset has or will occur, when the Social Security number is (or is 
embedded in) a creditor agency's account number, debt identification 
number, or debtor identification number;
    (3) In response to a request of a debtor or a debtor's 
representative for records of Fiscal Service's offset activities; and
    (4) When required by law.
0
7. Sec.  285.12 is amended by:
0
a. Removing the words ``an agency'' and ``An agency'' and adding in 
their place the words ``a Federal agency'' and ``A Federal agency'', 
respectively;
0
b. Removing the words ``the agency'' and ``the agency's'' and adding in 
their place the words ``the Federal agency'' and ``the Federal 
agency's'', respectively;
0
c. In paragraph (a):
0
i. Removing the definition for ``Agency'',
0
ii. Adding in alphabetical order definitions for ``Centralized 
Receivables Service,'' ``Cross-Servicing program,'' and ``Days 
delinquent'';
0
iii. Removing the words ``Secretary of the Treasury'' and adding in 
their place the words ``Secretary'' in the definition for ``Debt 
collection center'';
0
iv. Adding in alphabetical order definitions for ``Debtor,'' 
``Delinquent or past-due,'' ``Federal agency,'' and ``Legally 
enforceable''; and
0
v. Removing the words ``a Federal agency'' and adding in their place 
the words ``the United States or a Federal agency'' in the definition 
for ``Person'';
0
d. Revising paragraphs (b), (c), and (d)(1)(iii);
0
e. Removing the word ``or'' at the end of paragraph (d)(1)(v);
0
f. Redesignating paragraph (d)(1)(vi) as paragraph (d)(1)(vii);
0
g. Adding a new paragraph (d)(1)(vi),
0
h. Revising paragraphs (d)(4) and (d)(5) introductory text;
0
i. Removing paragraph (d)(6);
0
j. Removing and reserving paragraph (e);
0
k. In paragraph (i), removing the words ``delegatee'' and ``the Federal 
agency'' and adding in their place the words ``delegate'' and ``the 
debt'', respectively;
0
l. Revising paragraph (j); and
0
m. Adding paragraph (k).
    The revisions and additions read as follows:


Sec.  285.12  Transfer of debts to Treasury for collection.

    (a) * * *
    Centralized Receivables Service means the program through which 
Fiscal Service provides servicing, pursuant to 31 U.S.C. 3711(g), for 
Federal nontax debt from the point at which a creditor agency 
establishes a debt until the debt is paid, otherwise resolved, or 
referred to the Cross-Servicing program for further action.
* * * * *
    Cross-Servicing program means the program through which Fiscal 
Service provides delinquent nontax debt collection services pursuant to 
31 U.S.C. 3711(g).
    Days delinquent refers to the number of days that a debt has been 
in a delinquent status. For administrative debts (e.g., debts arising 
from fines, penalties, and overpayments), the first day of delinquency 
generally is the date of the creditor agency's initial written demand 
for payment. For debts that arise from the extension of credit through 
direct loans, loan guarantees, or insurance, the date of delinquency 
generally is the due date specified in the applicable agreement or 
instrument.
* * * * *
    Debtor means a person who owes a debt.
    Delinquent or past-due refers to the status of a debt and means a 
debt has not been paid by the date specified in the creditor agency's 
initial written demand for payment, or other applicable agreement or 
instrument, unless other payment arrangements satisfactory to the 
creditor agency have been made.
    Federal agency means a department, agency, court, court 
administrative office, or instrumentality in the executive, judicial, 
or legislative branch of the Federal Government, including government 
corporations.
* * * * *

[[Page 11664]]

    Legally enforceable refers to a characteristic of a debt and means 
there has been a final agency determination that the debt, in the 
amount stated, is due, and there are no legal bars to collection. A 
debt would not be legally enforceable, for example, if the debt is:
    (1) The subject of a pending administrative review required by a 
statute or regulation that prohibits collection action during the 
review process; or
    (2) Governed by a statute that precludes collection.
    (b) In general. Fiscal Service and other debt collection centers 
may take debt collection action on behalf of one or more Federal 
agencies or a unit or subagency thereof. Fiscal Service provides these 
services through its Cross-Servicing program and its Centralized 
Receivables Service.
    (c) Mandatory transfer of debts to Fiscal Service's Cross-Servicing 
program. (1) A debt is considered eligible for transfer to the Cross-
Servicing program only if it is past due and is legally enforceable.
    (2) Except as set forth in paragraphs (c)(3) and (d) of this 
section, a creditor agency must transfer any eligible debt that is over 
$25 (or such other amount as Fiscal Service may determine) to the 
Cross-Servicing program by no later than 120 days delinquent if the 
creditor agency relies on the Cross-Servicing program to submit the 
transferred debts for centralized offset on the creditor agency's 
behalf or, otherwise, by no more than 180 days delinquent.
    (3) If a final agency determination resulting from an 
administrative appeal or review process is not made until after the 
time specified in paragraph (c)(2) of this section, the creditor agency 
must transfer such debt to the Cross-Servicing program within 30 days 
after the date of the final decision.
    (4) For accounting and reporting purposes, the debt remains on the 
books and records of the Federal agency, which transferred the debt.
    (5) On behalf of the creditor agency, Fiscal Service will take 
appropriate action to collect or compromise the transferred debt, or to 
suspend or terminate collection action thereon. Appropriate action to 
collect a debt may include referral to another debt collection center, 
a private collection contractor, or the Department of Justice for 
litigation. The creditor agency must advise Fiscal Service, in writing, 
of any specific statutory or regulatory requirements pertaining to its 
debt and will agree, in writing, to a collection strategy, which 
includes parameters for entering into compromise and repayments 
agreements with debtors.
    (d) * * *
    (1) * * *
    (iii) Is at a private collection contractor if the debt has been 
referred to a private collection contractor for a period of time 
determined by the Secretary;
* * * * *
    (vi) Is being serviced and/or collected in accordance with 
applicable statutes and/or regulations by third parties, such as 
private lenders or guaranty agencies; or
* * * * *
    (4) A debt is being collected by internal offset if a creditor 
agency expects the debt to be collected in full within three (3) years 
from the date of delinquency through the withholding of funds payable 
to the debtor by the creditor agency, or if the creditor agency has 
issued notice to the debtor of the creditor agency's intent to offset 
such funds.
    (5) The secretary may exempt classes of debt from mandatory 
referral.
* * * * *
    (j) Fees. Fiscal Service and other debt collection centers may 
charge Federal agencies fees sufficient to cover the full cost of 
providing debt collection services authorized by this section. Fiscal 
Service and other debt collection centers may calculate fees in any 
manner designed to cover up to the full cost of providing these 
services, including based on a percentage of collections received on 
account of a debt while it was being serviced under this section or a 
flat fee based on actions taken under this section by Fiscal Service or 
another debt collection center with regard to a debt or group of debts. 
Such fees may be determined based on overall program costs and need not 
be based on costs related to the collection of a specific debt. Fiscal 
Service and debt collection centers are authorized to retain fees from 
amounts collected and may deposit and use such fees in accordance with 
31 U.S.C. 3711(g). Fees charged by Fiscal Service and other debt 
collection centers may be added to the debt as an administrative cost 
if authorized under 31 U.S.C. 3717(e).
    (k) Social Security numbers. When conducting activities for or 
related to its Centralized Receivables Service or Cross-Servicing 
program, Fiscal Service will ensure that an individual's Social 
Security number will not be visible on the outside of any package it 
sends by physical mail or in the subject line of an email. In addition, 
Fiscal Service generally will redact or partially redact Social 
Security numbers in documents it sends by mail; however, to administer 
these programs, Fiscal Service may include Social Security numbers in 
mailed documents, including, for example:
    (1) In interoffice and interagency communications;
    (2) In communications with private collection contractor and agents 
that assist Fiscal Service in its debt collection activities;
    (3) In notices and letters, including demand letters and notices to 
employers regarding wage garnishment, when the Social Security number 
is (or is embedded in) a creditor agency's account number, debt 
identification number, or debtor identification number;
    (4) In notices to employers regarding wage garnishment;
    (5) In response to a request of a debtor or a debtor's 
representative for records of Fiscal Service's collection activities; 
and
    (6) When required by law.

David A. Lebryk,
Fiscal Assistant Secretary.
[FR Doc. 2022-03584 Filed 3-1-22; 8:45 am]
BILLING CODE 4810-AS-P