Federal Register / Vol. 69, No. 206 / Tuesday, October 26, 2004 / Rules and Regulations 62413

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Administration for Children and 

Families 

45 CFR Part 303

RIN 0970–AC09

Child Support Enforcement Program 

Federal Tax Refund Offset

AGENCY: Administration for Children 

and Families, Department of Health and 

Human Services (HHS).

ACTION: Final rule.

SUMMARY: This final rule responds to 

comments received on the interim final 

rule with comment period, published on 

June 26, 2003, that amended regulations 

on collecting child support arrears 

through the Federal Tax Refund Offset 

process. The interim final rule reflected 

changes in OCSE’s data processing 

protocols with the Department of the 

Treasury and incorporated current 

business practices and requests from 

State Child Support Enforcement 

agencies.

DATES: These regulations are effective 

October 26, 2004.

FOR FURTHER INFORMATION CONTACT:

Yvette Hilderson Riddick, Division of 

Policy, OCSE, 202–401–4885, e-mail: 

yriddick@acf.hhs.gov. Deaf and hearingimpaired individuals may call the 

Federal Dual Party Relay Service at 1–

800–877–8339 between 8 a.m. and 7 

p.m. eastern time.

SUPPLEMENTARY INFORMATION: 

Statutory Authority 

This regulation is issued under the 

authority granted to the Secretary of 

Health and Human Services (the 

Secretary) by section 1102 of the Social 

Security Act (the Act), 42 U.S.C. 1302. 

Section 1102 of the Act authorizes the 

Secretary to publish regulations that 

may be necessary for the efficient 

administration of the functions for 

which he is responsible under the Act. 

Interim Final Regulatory Provisions 

The interim final rule amending 45 

CFR 303.72, Requests for collection of 

past-due support by Federal tax refund 

offset, did not impose new requirements 

or burdens on States, but rather 

removed administrative requirements 

and burdens, principally the 

requirement that the support be three 

months delinquent before the debt is 

referred for Federal tax refund offset. 

The rule also removed the requirement 

for States to submit written notices to 

OCSE; i.e., to transmit paper responses 

or to submit referrals by magnetic tape. 

Under the new procedures, notices and 

referrals are sent to OCSE electronically, 

which is much simpler for the States. 

Finally, the rule incorporated several 

policies that were already in effect in 

order to have all the information 

pertaining to the submission of Federal 

tax refund offset cases in one place.

Response to Comments and Changes to 

the Interim Final Rule 

We received comments from four 

State IV–D agencies about the changes 

proposed in the interim final rule. The 

comments and our responses are 

discussed below. 

1. Comment: One commenter said 

that, in the interim final rule, OCSE’s 

use of the term ‘‘non-IV–A cases’’ is 

misleading or inaccurate. For example, 

a person may have been on assistance, 

but is currently not on assistance, yet 

has assigned arrears. Is this a IV–A case 

or not? The commenter suggested we 

use the terms ‘‘cases with support 

assigned to the State’’ and ‘‘cases with 

no support assigned to the State’’. 

Response: The term ‘‘non-IV–A cases’’

was not added or changed in the interim 

final rule. The reference to ‘‘non-IV–A 

cases’’ covers any cases that have 

unassigned past-due support which is 

being submitted for offset. ‘‘IV–A cases’’

cover any cases that have assigned pastdue support which is being submitted 

for offset, such as the example in the 

comment. The language that the 

commenter suggests changing is 

longstanding language that was not 

added or changed by the interim final 

regulation and thus, is not a proper 

subject for modification in the final rule. 

The regulatory language at § 303.72(a) 

lays out the rules for how support is 

submitted for offset. It differentiates 

past-due support qualifying for offset 

according to whether it is past-due 

support assigned to the State or past-due 

support that is not assigned to the State, 

but owed to the family. Assigned 

support and support owed to the family 

must meet different criteria for 

submittal, as outlined in paragraph (a). 

Thus, in a former assistance case with 

arrears assigned to the State and arrears 

owed to the family, the State will 

specify two separate amounts of pastdue support for offset. Additionally, this 

distinction is required under the 

Internal Revenue Code, 26 U.S.C. 

6402(c), the section of the Code 

pertaining to tax refund offset for child 

support. Under this subsection, first 

priority is given to ‘‘any past-due 

support which has been assigned to the 

State.’’ Next priority is other Federal 

debts, followed by unassigned past-due 

support. 

2. Comment: One commenter asked: If 

Federal tax refund offset is a mandatory 

tool, as stated in the preamble to the 

interim final rule, are States required to 

certify all cases with assigned arrears of 

$150 or more and, if so, by when? The 

commenter expressed concern that 

States may need to change laws, policies 

and procedures to meet this ‘‘new’’

requirement. One commenter agreed 

with the regulatory changes, but pointed 

out that her State will need to make 

some programming changes that will 

take a few months to complete. 

Response: The requirement to certify 

all cases that meet the criteria for 

submittal for Federal tax refund offset 

under 45 CFR 303.72 appears at 

§ 303.6(c)(3) and has not been changed. 

The timeframe for that submittal is 

‘‘according to the timeframes and in the 

manner specified by the Office in 

instructions’’ (§ 303.72(b)(1)). These 

instructions will be forthcoming in new 

guidance from the Federal Office of 

Child Support Enforcement. Currently, 

HHS requires States to update on at 

least a monthly basis, and recommends 

sending weekly updates if possible. 

OCSE will work closely with States 

before considering any changes to the 

timeframes and issuing instructions. 

OCSE does not contemplate instructions 

that will require changes to State law. 

The State may also use discretion to 

exclude a particular case as warranted, 

on a case-by-case basis. 

3. Comment: One commenter noted 

that OCSE mentioned, in the preamble 

to the interim final rule, that it amended 

§ 303.72(d)(2),(f)(3) and (g)(4) to 

recognize that the amount to be offset 

may increase as well as decrease after 

the submittal, due to the transition from 

annual updates to a continuous data 

processing schedule or due to an 

administrative review. However, in the 

first two instances cited, the regulation 

was not changed. 

Response: We have corrected the 

regulation by replacing ‘‘decrease’’ with 

‘‘change’’ in paragraphs (d)(2) and (f)(3). 

4. Comment: Paragraph § 303.72(g) 

sets forth procedures for contesting an 

offset in interstate cases. The amended 

§ 303.72(g)(4) requires the State with the 

order to report changes resulting from 

an administrative review to the 

submitting State and the submitting 

State to notify OCSE. One commenter 

said that we should define ‘‘State with 

the order’’, because the State with the 

order may not be involved in the case 

if the order is not in the initiating or 

responding State. 

Response: The commenter is correct 

in noting that the State with the order 

may be neither the initiating nor the 

responding State involved in a IV–D 

62414 Federal Register / Vol. 69, No. 206 / Tuesday, October 26, 2004 / Rules and Regulations 

case. The State with the order refers to 

the State with the order ‘‘upon which 

the referral for offset is based’’. We have 

added this language to paragraph (g)(4) 

for clarification. The provision allowing 

‘‘the State with the order’’ to conduct an 

administrative review is not a change to 

the regulation.

5. Comment: Paragraph § 303.72(h)(6) 

was amended to specify that collections 

from offset may only be applied ‘‘to 

cases’’ that were being enforced by the 

IV–D agency at the time the advance 

notice described in paragraph (e)(1) of 

this section was sent. The prior 

paragraph (h)(6) had provided that 

collections from offset could be applied 

only against the ‘‘past-due support 

amount’’ that was specified in the 

advance notice to the obligor. One 

commenter asked: If a collection came 

in during a transitional period before an 

update was processed by OCSE to make 

the case a non-IV–D case, could the 

money be kept and applied to the 

arrears on that case? 

Response: Regulations at 45 CFR 

303.11 contain case closure 

requirements. If the State closes a case 

before the date of offset, consistent with 

case closure requirements, the offset 

amount would have to be returned to 

the Treasury, since past-due support 

that qualifies for offset must be past-due 

support owed in a IV–D case. 

6. Comment: The change to paragraph 

(h)(6) narrows the past-due support to 

which collections from Federal income 

tax refund offsets may be applied. 

Under the regulations, the State, or 

OCSE at the State’s request, sends the 

obligor a pre-offset notice specifying the 

obligor’s right to contest that past-due 

support is owed and the right to an 

administrative review. The notice 

specifies that further arrears may be 

added to the obligor’s debt without 

further notice. This past-due support 

could have already included debt from 

more than one case involving that 

obligor. States may also offer an 

opportunity for a due process hearing at 

the point of offset. States that provide 

that additional due process protection at 

offset, and not just at the pre-offset 

stage, should have flexibility in 

applying collections to past-due support 

owed by an obligor. If a State’s due 

process has met State constitutional and 

due process requirements, the Federal 

regulation should continue to allow 

application of collections to all cases, 

similar to the handling of income 

withholding collections. 

Response: We have not changed this 

provision for the following reasons. 

Section 464 of the Act authorizes the 

collection of past-due support from 

Federal tax refunds only if certain 

conditions are met. First, the individual 

due the tax refund must owe past-due 

support which has been assigned to the 

State or which the State has agreed to 

collect for a child on whose behalf an 

application for services has been 

submitted. The statute defines ‘‘past-due 

support’’ as ‘‘the amount of a 

delinquency, determined under a court 

order, or an order of an administrative 

process established under State law, for 

support and maintenance of a child, or 

of a child and the parent with whom the 

child is living.’’ Second, the State must 

notify the Secretary of the Treasury that 

the individual owes past-due support in 

accordance with the procedures 

established by the Secretary of the 

Treasury. Third, prior to notifying the 

Secretary of the Treasury that the 

individual owes past-due support, the 

State must send a notice to the 

individual informing him or her that 

amounts will be withheld from any 

refund payable. The notice must also 

inform the individual of the steps that 

may be taken to contest the State’s 

determination that past-due support is 

owed or the amount of such past-due 

support and must comply with the 

regulations established by the Secretary 

of HHS. The regulation governing the 

advance notice that must be provided 

appears at § 303.72(e). Under this 

regulation, the required advance notice 

must inform the individual of four 

things, including the right to a review 

by the submitting State or the State with 

the order upon which the referral is 

based and the procedures and timeframe 

for contacting the IV–D agency of the 

submitting State to request a review. 

The purpose of the advance notice 

provisions is to inform the individual of 

the IV–D agency’s determination that he 

or she owes an amount of past-due 

support and to afford the individual an 

opportunity to contest the IV–D 

agency’s determination that such pastdue support is owed before the case is 

submitted for tax refund offset. In order 

to accomplish the purpose of the 

advance notice provisions and to 

comply with the statutory and 

regulatory provisions, an individual 

must be provided sufficient information 

concerning the past-due support 

claimed to be owed so as to enable a 

decision whether or not to request a 

review. An individual cannot contest a 

determination of past-due support about 

which he or she has not been notified. 

7. Comment: The OCSE automated 

system for Federal tax refund offset 

cannot send a second advance notice 

that would include a second family’s 

past-due support without first 

decertifying the first family’s past-due 

support, which creates a burden on 

families whose support has already been 

submitted by the State. 

Response: OCSE is programming a 

new transaction that will allow States to 

generate new pre-offset notices on an ad 

hoe basis without decertifying a case. It 

is expected to be available very soon.

8. Comment: The obligor’s debt is 

offset at the amount that is certified as 

of the date of offset. Define ‘‘date of 

offset.’’

Response: The ‘‘date of offset’’ is the 

date that Treasury’s Financial 

Management Services actually offsets 

the tax refund. This date is sent to the 

State with the payment file. 

9. Comment: One commenter 

mentioned a missing reference to 

paragraph (f)(3) in the amendatory 

language in the interim final rule. 

Response: We have corrected that 

omission in this final rule. In addition, 

we have identified several other 

typographical and technical errors in 

the text of the interim final rule that we 

have corrected in this final document. 

These corrections appear in paragraph 

(b)(1), where we corrected the 

placement of the parentheses; in 

paragraph (b)(2), where we added the 

word ‘‘delinquency’’ which had been 

left out in error; in paragraph (d)(1), 

where we changed ‘‘of’ to ‘‘for’’ in the 

phrase ‘‘referring past-due support of 

offset’’; and in paragraph (i)(1), where 

we added ‘‘U.S.’’ to the term 

‘‘Department of Treasury’’ and we 

added the words ‘‘of the’’ between 

‘‘amount’’ and ‘‘offset’’. 

Paperwork Reduction Act of 1995

No new information collection 

requirements are imposed by these 

regulations, nor are any existing 

requirements changed as a result of their 

promulgation. Therefore, the 

requirements of the Paperwork 

Reduction Act of 1995 (44 U.S.C. 

3507(d)), regarding reporting and record 

keeping, do not apply. 

Regulatory Flexibility Analysis 

The Secretary certifies, under 5 U.S.C. 

605(b), as enacted by the Regulatory 

Flexibility Act (Pub. L. 96–354), that 

this rule will not result in a significant 

impact on a substantial number of small 

entities. The primary impact is on State 

governments. State governments are not 

considered small entities under the Act. 

Regulatory Impact Analysis 

This final rule responds to comments 

on amended regulations on collecting 

child support arrears through the 

Federal Tax Refund Offset process. The 

changes make it easier for States to 

determine which cases are eligible for 

referral by eliminating certain 

Federal Register / Vol. 69, No. 206 / Tuesday, October 26, 2004 / Rules and Regulations 62415

requirements. Executive Order 12866 

requires that regulations be reviewed to 

ensure that they are consistent with the 

priorities and principles set forth in the 

Executive Order. The Department has 

determined that this rule is consistent 

with these priorities and principles. 

This rule is considered a ‘‘significant 

regulatory action’’ under the Executive 

Order and therefore has been reviewed 

by the Office of Management and 

Budget. 

Unfunded Mandates Reform Act of 

1995

Section 202 of the Unfunded 

Mandates Reform Act of 1995 requires 

that a covered agency prepare a 

budgetary impact statement before 

promulgating a rule that includes any 

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. 

The Department has determined that 

this rule would not impose a mandate 

that will result in the expenditure by 

State, local, and Tribal governments, in 

the aggregate, or by the private sector, of 

more than $100 million in any one year. 

Congressional Review 

This regulation is not a major rule as 

defined in 5 U.S.C. chapter 8. 

Assessment of Federal Regulations and 

Policies on Families 

Section 654 of the Treasury and 

General Government Appropriations 

Act of 1999 requires Federal agencies to 

determine whether a proposed policy or 

regulation may affect family well-being. 

If the agency’s determination is 

affirmative, then the agency must 

prepare an impact assessment 

addressing seven criteria specified in 

the law. These regulations will not have 

an impact on family well-being as 

defined in the legislation. 

Executive Order 13132

Executive Order 13132 on federalism 

applies to policies that have federalism 

implications, defined as ‘‘regulations, 

legislative comments or proposed 

legislation, and other policy statements 

or actions that have substantial direct 

effects on the States, or on the 

distributions of power and 

responsibilities among the various 

levels of government’’. This rule does 

not have federalism implications for 

State or local governments as defined in 

the Executive Order.

List of Subjects in 45 CFR Part 303

Child support, Grant programs/social 

programs.

(Catalog of Federal Domestic Assistance 

Programs No. 93.563, Child Support 

Enforcement Program)

Dated: June 28, 2004. 

Wade F. Horn, 

Assistant Secretary for Children and Families, 

Date Approved: August 6, 2004. 

Tommy G. Thompson, 

Secretary of Health and Human Services.

■ For the reasons discussed above, title 

45 CFR chapter III is amended as follows:

PART 303—STANDARDS FOR 

PROGRAM OPERATIONS

■ 1. The authority citation for part 303 

continues to read as follows:

Authority: 42 U.S.C. 651 through 658, 660, 

663, 664, 666, 667, 1302, 1396a(a)(25), 

1396b(d)(2), 1396b(o), 1396b(p) and 1396(k).

■ 2. Amend § 303.72 by revising 

paragraphs (b)(1), (b)(2) introductory 

text, (d)(1), (d)(2), (f)(3), (g)(4), and (i)(1) 

to read as follows:

§ 303.72 Requests for collection of pastdue support by Federal tax refund offset.

* * * * *

(b) * * *

(1) A State IV–D agency shall submit 

a notification (or notifications) of 

liability for past-due support to the 

Office according to the timeframes and 

in the manner specified by the Office in 

instructions. 

(2) To the extent specified by the 

Office in instructions, the notification of 

liability for past-due support shall 

contain with respect to each 

delinquency:

* * * * *

(d) * * *

(1) The State referring past-due 

support for offset must, in interstate 

situations, notify any other State 

involved in enforcing the support order 

when it submits an interstate case for 

offset and when it receives the offset 

amount from the Secretary of the U.S. 

Treasury. 

(2) The State IV–D agency shall, 

within timeframes established by the 

Office in instructions, notify the Deputy 

Director of any deletion of, or any 

change in, the arrears balance, if the 

change is significant according to the 

guidelines developed by the State. The 

notification shall contain the 

information specified in paragraph (b) of 

this section.

* * * * *

(f) * * *

(3) If the administrative review results 

in a deletion of, or change in, the arrears 

balance, the IV–D agency must notify 

OCSE within timeframes established by 

the Office and include the information 

specified in paragraph (b) of this 

section.

* * * * *

(g) * * *

(4) If the administrative review results 

in a deletion of, or change in, the arrears 

balance, the State with the order upon 

which the referral for offset is based 

must notify the submitting State within 

timeframes established by the Office 

and include the information specified in 

paragraph (b) of this section. The 

submitting State must then notify the 

Office within timeframes established by 

the Office and include the information 

specified in paragraph (b) of this 

section.

* * * * *

(i) * * *

(1) A refund offset fee, in such 

amount as the Secretary of the U.S. 

Treasury and the Secretary of Health 

and Human Services have agreed to be 

sufficient to reimburse the U.S. 

Department of Treasury for the full cost 

of the offset procedure, shall be 

deducted from the offset amount and 

credited to the U.S. Department of 

Treasury appropriations which bore all 

or part of the costs involved in making 

the collection. The full amount of the 

offset must be credited against the 

obligor’s payment record. The fee which 

the Secretary of the U.S. Treasury may 

impose with respect to non-IV–A 

submittals shall not exceed $25 per 

submittal.

* * * * *

[FR Doc. 04–23953 Filed 10–25–04; 8:45 am] 

BILLING CODE 4184–01–P

DEPARTMENT OF THE INTERIOR

Fish and Wildlife Service 

50 CFR Part 17

RIN 1018–AU02

Endangered and Threatened Wildlife 

and Plants; Interim Rule for the Beluga 

Sturgeon (Huso huso)

AGENCY: Fish and Wildlife Service, 

Interior.

ACTION: Interim rule.

SUMMARY: We, the U.S. Fish and 

Wildlife Service, will allow the trade in 

beluga sturgeon (Huso huso) and its byproducts, provided that specimens are 

accompanied by valid permits issued 

under the Convention on International 

Trade in Endangered Species of Wild 

Fauna and Flora (CITES). This interim 

rule will be effective until the 

publication of a final rule under Section 

4(d) of the Endangered Species Act of