[Federal Register Volume 76, Number 41 (Wednesday, March 2, 2011)]
[Proposed Rules]
[Pages 11402-11404]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-4586]



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SOCIAL SECURITY ADMINISTRATION

20 CFR Parts 404, 408, 416, and 422

[Docket No. SSA-2010-0010]
RIN 0960-AH19


Recovery of Delinquent Debts--Treasury Offset Program 
Enhancements

AGENCY: Social Security Administration.

ACTION: Notice of proposed rulemaking.

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SUMMARY: We propose to amend our Tax Refund Offset (TRO) and 
Administrative Offset regulations. We are conforming our regulations to 
those of the Department of the Treasury (Treasury) for the following 
reasons: (1) Treasury removed the 10-year limitation to collect 
delinquent debts owed the United States by reducing eligible Federal 
payments, and (2) more States are participating in reciprocal 
agreements with Treasury to offset State payments, including tax 
refunds to reduce or extinguish a federally owed debt.
    The potential exists to increase collection of Federal debts for 
two reasons: (1) We are authorized to collect debts indefinitely by 
offsetting eligible Federal payments through the Treasury Offset 
Program (TOP), and (2) States that have reciprocal agreements with 
Treasury are authorized to offset payments to reduce or extinguish 
debts owed to the Federal agencies.

DATES: To ensure that your comments are considered, we must receive 
them no later than May 2, 2011.

ADDRESSES: You may submit comments by any one of three methods--
Internet, fax, or mail. Do not submit the same comments multiple times 
or by more than one method. Regardless of which method you choose, 
please state that your comments refer to Docket No. SSA-2010-0010 so 
that we may associate your comments with the correct regulation.
    Caution: You should be careful to include in your comments only 
information that you wish to make publicly available. We strongly urge 
you not to include in your comments any personal information, such as 
Social Security numbers or medical information.
    1. Internet: We strongly recommend that you submit your comments 
via the Internet. Please visit the Federal eRulemaking portal at http://www.regulations.gov. Use the Search function to find docket number 
SSA-2010-0010. The system will issue a tracking number to confirm your 
submission. You will not be able to view your comment immediately 
because we must post each comment manually. It may take up to a week 
for your comment to be viewable.
    2. Fax: Fax comments to (410) 966-2830.
    3. Mail: Mail your comments to the Office of Regulations, Social 
Security Administration, 107 Altmeyer Building, 6401 Security 
Boulevard, Baltimore, Maryland 21235-6401.
    Comments are available for public viewing on the Federal 
eRulemaking portal at http://www.regulations.gov or in person, during 
regular business hours, by arranging with the contact person identified 
below.

FOR FURTHER INFORMATION CONTACT: Jennifer C. Pendleton, Office of 
Payment and Recovery Policy, Social Security Administration, 6401 
Security Boulevard, Baltimore, MD 21235-6401, (410) 965-5652. For 
information on amendments to 20 CFR part 408, please contact: Benjamin 
Franco, Office of International Programs, Social Security 
Administration, 6401 Security Boulevard, Baltimore, MD 21235-6401, 
(410) 965-7342. For information on eligibility or filing for benefits, 
call our national toll-free number, 1-800-772-1213 or TTY 1-800-325-
0778, or visit our Internet site, Social Security Online, at http://www.socialsecurity.gov.

SUPPLEMENTARY INFORMATION:

Electronic Version

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

Background

    Due to increases in delinquent non-tax debt owed the United States, 
the Debt Collection Improvement Act (DCIA) of 1996 was enacted. Public 
Law 104-134, 110 Stat. 1321-358 et seq. (April 26, 1996).
    The DCIA requires Federal agencies to refer delinquent non-tax 
debts to the Treasury's Financial Management Services (FMS) to collect 
non-tax payments. The DCIA authorizes Federal disbursing officials to 
withhold or reduce eligible Federal payments to a payee for a 
delinquent debt owed by that payee to the United States. This process 
is known as ``administrative offset.''
    FMS uses the TOP process to collect these delinquent debts. TOP's 
delinquent debt matching and payment offset system results in an 
administrative offset. Currently, to collect debts owed to us, TOP uses 
the following types of administrative offset:
    a. Tax Refund Offset (TRO). TOP reduces or withholds Federal income 
tax refunds to recover delinquent titles II, VIII, and XVI debts.
    b. Other administrative offset. TOP reduces or withholds payments 
other than tax refunds, such as Federal travel and expense 
reimbursements, to collect unrecoverable titles II and XVI debts. (The 
use of other administrative offset is covered under regulations 
separate from TRO.)
    TOP identifies debtors and matches them against recipients of 
Federal and State payments. These Federal and State payments are then 
used to reduce the delinquent debt.

Existing Department of the Treasury Regulations

    The Treasury's Fiscal Service published an interim rule with 
request for comments on January 11, 2007. 72 FR 1283. In part, this 
interim rule describes the requirements that apply to offset of certain 
Federal non-tax payments to collect delinquent debts owed to the States 
based on reciprocal agreements between Treasury and participating 
States. Social Security, Special Veterans Benefits, and Supplemental 
Security Income benefits are excluded from offset to satisfy a State 
debt. 31 CFR 285.6(g)(1)(ii). The interim rule also provides for offset 
of State payments to collect certain delinquent Federal non-tax debts.
    Additionally, FMS launched a pilot program in Maryland and New 
Jersey. This pilot program evaluated if the benefits of the offset 
program outweighed its costs. FMS gathered information gained from this 
pilot program, as well as comments received on the interim rule, before 
issuing a final rule. On November 3, 2009, Treasury's Fiscal Service 
published a final rule stating that it would proceed with the 
reciprocal offset program with the States. 74 FR 56719. It intends to 
expand this reciprocal program between Treasury and the States. This 
expansion started with New York on January 20, 2010.
    On June 11, 2009, Treasury's Fiscal Service simultaneously 
published an NPRM and an interim final rule to remove the 10-year 
limitation to collect outstanding non-tax debts by offset. 74 FR 27730, 
27707. This change allows for collection of these debts without regard 
to any time limitation. To avoid undue hardship, Treasury added a 
requirement that debtors with debts outstanding more than 10 years on 
or before June 11, 2009 be notified of the intent to offset and of all 
applicable due process rights. This notification gives the debtor an 
opportunity to dispute the debt, enter into a repayment agreement, or 
possibly avoid offset.

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    On December 23, 2009, Treasury's Fiscal Service published a final 
rule adopting the interim rule. No comments were received on the 
interim rule. 74 FR 68149. On December 28, 2009, it also published a 
final rule based on the NPRM cited above. Two comments were received on 
the NPRM but no changes were made to that proposed rule, and it was 
also adopted. 74 FR 68537.
    Treasury's Fiscal Service published an amendment to correct the 
date for offsetting tax refund payments to collect past-due non-tax 
debt as of December 28, 2009. Non-tax debt, including delinquent debts 
of 10 years or longer prior to December 28, 2009 will be collected by 
tax refund offset.

Changes to Our Regulations

    We propose to change our regulations to conform to the Treasury 
regulations. In addition to collecting non-tax debts beyond the 
original 10-year statute of limitations, we will now collect delinquent 
titles II, VIII, and XVI overpayments by offset of various State 
payments, including State tax refunds. DCIA of 1996, 31 U.S.C. 3716; 31 
CFR 285.6.
    Therefore, we propose changes to Sec. Sec.  404.520, 404.521, 
408.940, 408.941, 416.580, 416.581, and 422.310. Under these sections, 
we notify the overpaid person and refer overpayments to Treasury for 
tax refund and administrative offset.

Clarity of These Rules

    Executive Order 12866 as supplemented by Executive Order 13563 
requires us to write all rules in plain language. In addition to your 
substantive comments on this proposed rule, we invite your comments on 
how to make rules easier to understand.
    For example:
    <bullet> Would more, but shorter, sections be better?
    <bullet> Are the requirements in the rule clearly stated?
    <bullet> Have we organized the material to suit your needs?
    <bullet> Could we improve clarity by adding tables, lists, or 
diagrams?
    <bullet> What else could we do to make the rule easier to 
understand?
    <bullet> Does the rule contain technical language or jargon that is 
not clear?
    <bullet> Would a different format make the rule easier to 
understand, e.g. grouping and order of sections, use of headings, 
paragraphing?

When will we start to use this rule?

    We will not use this rule until we evaluate public comments and 
publish a final rule in the Federal Register. Any final rule we issue 
includes an effective date. We will continue to use our current rule 
until that date. If we publish a final rule, we will include a summary 
of those relevant comments we received along with responses and an 
explanation of how we will apply the new rule.

Regulatory Procedures

Executive Order 12866 as Supplemented by Executive Order 13563

    We consulted with the Office of Management and Budget (OMB) and 
determined that this proposed rule meets the criteria for a significant 
regulatory action under Executive Order 12866 as supplemented by 
Executive Order 13563. Thus, OMB reviewed the proposed rule.

Regulatory Flexibility Act

    We certify that this proposed rule will not have a significant 
economic impact on a substantial number of small entities because it 
applies to individuals only. Thus, a regulatory flexibility analysis is 
not required under the Regulatory Flexibility Act, as amended.

Paperwork Reduction Act

    This rule does not create any new or affect any existing 
collections and does not require Office of Management and Budget 
approval under the Paperwork Reduction Act.

List of Subjects

20 CFR Part 404

    Administrative practice and procedure, Blind, Disability benefits, 
Income taxes, Old-Age, Survivors, and Disability Insurance, Reporting 
and recordkeeping requirements, Social Security.

20 CFR Part 408

    Administrative practice and procedure; Aged; Reporting and 
recordkeeping requirements; Social Security; Supplemental Security 
Income (SSI); Veterans.

20 CFR Part 416

    Administrative practice and procedure, Reporting and recordkeeping 
requirements, Supplemental Security Income (SSI).

20 CFR Part 422

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

Michael J. Astrue,
Commissioner of Social Security.
    For the reasons set out in the preamble, we propose to amend 20 CFR 
chapter III, parts 404, 408, 416, and 422 as set forth below:

PART 404--FEDERAL OLD-AGE, SURVIVORS AND DISABILITY INSURANCE 
(1950- )

Subpart F--[Amended]

    1. The authority citation for subpart F of part 404 is revised to 
read as follows:

    Authority:  Secs. 204, 205(a), 702(a)(5), and 1147 of the Social 
Security Act (42 U.S.C. 404, 405(a), 902(a)(5), and 1320b-17); 31 
U.S.C. 3716; 31 U.S.C. 3720A.

    2. Amend Sec.  404.520(b) by removing the word ``individuals'' and 
adding in its place the word ``persons'' in the second sentence, and by 
revising the third sentence to read as follows:


Sec.  404.520  Referral of overpayments to the Department of the 
Treasury for tax refund offset--General.

* * * * *
    (b) * * * We refer overpayments to the Department of the Treasury 
for offset against Federal tax refunds regardless of the amount of time 
the debts have been outstanding.
    3. Amend Sec.  404.521 by revising the section heading, 
introductory text, and paragraphs (a) and (b) to read as follows:


Sec.  404.521  Notice to overpaid persons.

    Before we request that an overpayment be collected by reduction of 
Federal and State income tax refunds, we will send a written notice of 
our action to the overpaid person. In our notice of intent to collect 
an overpayment through tax refund offset, we will state:
    (a) The amount of the overpayment; and
    (b) That we will collect the overpayment by requesting that the 
Department of the Treasury reduce any amounts payable to the overpaid 
person as refunds of Federal and State income taxes by an amount equal 
to the amount of the overpayment unless, within 60 calendar days from 
the date of our notice, the overpaid person:
    (1) Repays the overpayment in full;
    (2) Sends evidence to us at the address given in our notice that
    (i) The overpayment is not past due; or
    (ii) The overpayment is not legally enforceable; or

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    (3) Asks us to waive collection of the overpayment under section 
204(b) of the Act.
* * * * *

PART 408--SPECIAL BENEFITS FOR CERTAIN WORLD WAR II VETERANS

Subpart I--[Amended]

    4. The authority citation for subpart I of part 408 is revised to 
read as follows:

    Authority:  Secs. 702(a)(5), 808, and 1147 of the Social 
Security Act (42 U.S.C. 902(a)(5), 1008, and 1320b-17); 31 U.S.C. 
3716, 3720A.

    5. Amend Sec.  408.940(b) by revising the third sentence to read as 
follows:


Sec.  408.940  When will we refer an SVB overpayment to the Department 
of the Treasury for tax refund offset?

* * * * *
    (b) * * * We refer overpayments to the Department of the Treasury 
for offset against Federal tax refunds regardless of the amount of time 
the debts have been outstanding.
    6. Amend Sec.  408.941 by revising the introductory text, and 
paragraphs (a) and (b) to read as follows:


Sec.  408.941  Will we notify you before we refer an SVB overpayment 
for tax refund offset?

    Before we request that an overpayment be collected by reduction of 
Federal and State income tax refunds, we will send a written notice of 
our action to the overpaid person. In our notice of intent to collect 
an overpayment through tax refund offset, we will state:
    (a) The amount of the overpayment; and
    (b) That we will collect the overpayment by requesting that the 
Department of the Treasury reduce any amounts payable to the overpaid 
person as refunds of Federal and State income taxes by an amount equal 
to the amount of the overpayment unless, within 60 calendar days from 
the date of our notice, the overpaid person:
    (1) Repays the overpayment in full;
    (2) Sends evidence to us at the address given in our notice that
    (i) The overpayment is not past due; or
    (ii) The overpayment is not legally enforceable, or
    (3) Asks us to waive collection of the overpayment under section 
204(b) of the Act.
* * * * *

PART 416--SUPPLEMENTAL SECURITY INCOME FOR THE AGED, BLIND, AND 
DISABLED

Subpart E--[Amended]

    7. The authority citation for subpart E of part 416 is continues to 
read as follows:

    Authority:  Secs. 702(a)(5), 1147, 1601, 1602, 1611(c) and (e), 
and 1631(a)-(d) and (g) of the Social Security Act (42 U.S.C. 
902(a)(5), 1320b-17, 1381, 1381a, 1382(c) and (e), and 1383(a)-(d) 
and (g)); 31 U.S.C. 3716; 31 U.S.C. 3720A.

    8. Amend Sec.  416.580(b) by removing the word ``individuals'' in 
the second sentence and adding in its place ``persons'' and by revising 
the last sentence to read as follows:


Sec.  416.580  Referral of overpayments to the Department of the 
Treasury for tax refund offset--General.

* * * * *
    (b) * * * We refer overpayments to the Department of the Treasury 
for offset against Federal tax refunds regardless of the amount of time 
the debts have been outstanding.
    9. Amend Sec.  416.581 by revising the section heading, the 
introductory text, and paragraphs (a) and (b), and in paragraph (e) by 
removing the word ``individual'' in two places and adding in its place 
``person''.


Sec.  416.581  Notice to overpaid person.

    We will make a request for collection by reduction of Federal and 
State income tax refunds only after we determine that a person owes an 
overpayment that is past due and provide the overpaid person with 
written notice. Our notice of intent to collect an overpayment through 
tax refund offset will state:
    (a) The amount of the overpayment; and
    (b) That we will seek collection of the overpayment by requesting 
that the Department of the Treasury reduce any amounts payable to the 
overpaid person as refunds of Federal and State income taxes by an 
amount equal to the amount of the overpayment unless, within 60 
calendar days from the date of our notice, the overpaid person:
    (1) Repays the overpayment in full;
    (2) Sends evidence to us at the address given in our notice that
    (i) The overpayment is not past due; or
    (ii) The overpayment is not legally enforceable; or
    (3) Asks us to waive collection of the overpayment under section 
204(b) of the Act.
* * * * *

PART 422--ORGANIZATION AND PROCEDURES

Subpart D--[Amended]

    10. The authority citation for subpart D of part 422 continues to 
read as follows:

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

    11. Amend Sec.  422.310 by revising paragraphs (a)(1) and (b) to 
read as follows:


Sec.  422.310  Collection of overdue debts by administrative offset.

    (a) Referral to the Department of the Treasury for offset. (1) We 
recover overdue debts by offsetting Federal and State payments due the 
debtor through the Treasury Offset Program (TOP). TOP is a Government-
wide delinquent debt matching and payment offset process operated by 
the Department of the Treasury, whereby debts owed to the Federal 
Government are collected by offsetting them against Federal and State 
payments owed the debtor. Federal payments owed the debtor include 
current ``disposable pay,'' defined in 5 CFR 550.1103, owed by the 
Federal Government to a debtor who is an employee of the Federal 
Government. Deducting from such disposable pay to collect an overdue 
debt owed by the employee is called ``Federal salary offset'' in this 
subpart.
* * * * *
    (b) Debts we refer. We refer for administrative offset all 
qualifying debts that meet or exceed the threshold amounts used by the 
Department of the Treasury for collection from State and Federal 
payments, including Federal salaries.
* * * * *
[FR Doc. 2011-4586 Filed 3-1-11; 8:45 am]
BILLING CODE 4191-02-P