PUBLIC LAW 104–134—APR. 26, 1996 110 STAT. 1321–358 

CHAPTER 8 

TREASURY, POSTAL SERVICE AND GENERAL GOVERNMENT 

INDEPENDENT AGENCIES 

GENERAL SERVICES ADMINISTRATION 

FEDERAL BUILDINGS FUND 

LIMITATIONS ON AVAILABILITY OF REVENUE 

(RESCISSION) 

Of the funds made available for installment acquisition pay­ ments under this heading in Public Law 104–52, $3,400,000 are 

rescinded: Provided, That the aggregate amount made available to the Fund shall be $5,062,749,000. 

CHAPTER 9 

DEPARTMENTS OF VETERANS AFFAIRS AND HOUSING AND 

URBAN DEVELOPMENT AND INDEPENDENT AGENCIES 

FEDERAL EMERGENCY MANAGEMENT AGENCY 

DISASTER RELIEF 

Of the funds made available under this heading and under 

the heading ‘‘Disaster relief emergency contingency fund’’ in Public 

Law 104–19, $1,000,000,000 are rescinded. 

CHAPTER 10 

DEBT COLLECTION IMPROVEMENTS 

SEC. 31001. DEBT COLLECTION IMPROVEMENT ACT OF 1996. Debt Collection 

Improvement Act (a)(1) This section may be cited as the ‘‘Debt Collection Improve- of 1996. 

ment Act of 1996’’. 31 USC 3701 

(2)(A) IN GENERAL.—The provisions of this section and the note. 

amendments made by this section shall take effect on the date	 Effective date. 

31 USC 3322 of the enactment of this Act. note. (B) OFFSETS FROM SOCIAL SECURITY PAYMENTS, ETC.— Applicability.

Subparagraph (A) of section 3716(c)(3) of title 31, United States 31 USC 3716 

Code (as added by subsection (d)(2) of this section), shall apply note. 

only to payments made after the date which is 4 months after 

the date of the enactment of this Act. 

(b) The purposes of this section are the following: 31 USC 3701 

(1) To maximize collections of delinquent debts owed to note. 

the Government by ensuring quick action to enforce recovery 

of debts and the use of all appropriate collection tools. 

(2) To minimize the costs of debt collection by consolidating 

related functions and activities and utilizing interagency teams. 

(3) To reduce losses arising from debt management activities by requiring proper screening of potential borrowers, 

aggressive monitoring of all accounts, and sharing of information within and among Federal agencies. 

(4) To ensure that the public is fully informed of the Federal 

Government’s debt collection policies and that debtors are cog-
110 STAT. 1321–359 PUBLIC LAW 104–134—APR. 26, 1996 

nizant of their financial obligations to repay amounts owed 

to the Federal Government. 

(5) To ensure that debtors have all appropriate due process 

rights, including the ability to verify, challenge, and compromise 

claims, and access to administrative appeals procedures which 

are both reasonable and protect the interests of the United 

States. 

(6) To encourage agencies, when appropriate, to sell delinquent debt, particularly debts with underlying collateral. 

(7) To rely on the experience and expertise of private sector 

professionals to provide debt collection services to Federal 

agencies. 

(c) Chapter 37 of title 31, United States Code, is amended— 

(1) in each of sections 3711, 3716, 3717, and 3718, by 

striking ‘‘the head of an executive or legislative agency’’ each 

place it appears and inserting ‘‘the head of an executive, 

judicial, or legislative agency’’; and 

(2) by amending section 3701(a)(4) to read as follows: 

‘‘(4) ‘executive, judicial, or legislative agency’ means a 

department, agency, court, court administrative office, or 

instrumentality in the executive, judicial, or legislative branch 

of Government, including government corporations.’’. 

(d)(1) PERSONS SUBJECT TO ADMINISTRATIVE OFFSET.—Section 

3701(c) of title 31, United States Code, is amended to read as 

follows: 

‘‘(c) In sections 3716 and 3717 of this title, the term ‘person’ 

does not include an agency of the United States Government.’’. 

(2) REQUIREMENTS AND PROCEDURES.—Section 3716 of title 31, 

United States Code, is amended— 

(A) by amending subsection (b) to read as follows: 

‘‘(b) Before collecting a claim by administrative offset, the head 

of an executive, judicial, or legislative agency must either— 

‘‘(1) adopt, without change, regulations on collecting by 

administrative offset promulgated by the Department of Justice, 

the General Accounting Office, or the Department of the Treasury; or 

‘‘(2) prescribe regulations on collecting by administrative 

offset consistent with the regulations referred to in paragraph 

(1).’’; 

(B) by amending subsection (c)(2) to read as follows: 

‘‘(2) when a statute explicitly prohibits using administrative 

offset or setoff to collect the claim or type of claim involved.’’; 

(C) by redesignating subsection (c) as subsection (e); and 

(D) by inserting after subsection (b) the following new 

subsections: 

‘‘(c)(1)(A) Except as otherwise provided in this subsection, a 

disbursing official of the Department of the Treasury, the Department of Defense, the United States Postal Service, or any other 

government corporation, or any disbursing official of the United 

States designated by the Secretary of the Treasury, shall offset 

at least annually the amount of a payment which a payment certifying agency has certified to the disbursing official for disbursement, 

by an amount equal to the amount of a claim which a creditor 

agency has certified to the Secretary of the Treasury pursuant 

to this subsection. 

‘‘(B) An agency that designates disbursing officials pursuant 

to section 3321(c) of this title is not required to certify claims 
PUBLIC LAW 104–134—APR. 26, 1996 110 STAT. 1321–360 

arising out of its operations to the Secretary of the Treasury before 

such agency’s disbursing officials offset such claims. 

‘‘(C) Payments certified by the Department of Education under 

a program administered by the Secretary of Education under title 

IV of the Higher Education Act of 1965 shall not be subject to 

administrative offset under this subsection. 

‘‘(2) Neither the disbursing official nor the payment certifying 

agency shall be liable— 

‘‘(A) 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; or 

‘‘(B) for failure to provide timely notice under paragraph 

(8). 

‘‘(3)(A)(i) Notwithstanding any other provision of law (including 

sections 207 and 1631(d)(1) of the Social Security Act (42 U.S.C. 

407 and 1383(d)(1)), section 413(b) of Public Law 91–173 (30 U.S.C. 

923(b)), and section 14 of the Act of August 29, 1935 (45 U.S.C. 

231m)), except as provided in clause (ii), all payments due to an 

individual under— 

‘‘(I) the Social Security Act, 

‘‘(II) part B of the Black Lung Benefits Act, or 

‘‘(III) any law administered by the Railroad Retirement 

Board (other than payments that such Board determines to 

be tier 2 benefits), 

shall be subject to offset under this section. 

‘‘(ii) An amount of $9,000 which a debtor may receive under 

Federal benefit programs cited under clause (i) within a 12-month 

period shall be exempt from offset under this subsection. In applying 

the $9,000 exemption, the disbursing official shall— 

‘‘(I) reduce the $9,000 exemption amount for the 12-month 

period by the amount of all Federal benefit payments made 

during such 12-month period which are not subject to offset 

under this subsection; and 

‘‘(II) apply a prorated amount of the exemption to each 

periodic benefit payment to be made to the debtor during the 

applicable 12-month period. 

For purposes of the preceding sentence, the amount of a periodic 

benefit payment shall be the amount after any reduction or deduction required under the laws authorizing the program under which 

such payment is authorized to be made (including any reduction 

or deduction to recover any overpayment under such program). 

‘‘(B) The Secretary of the Treasury shall exempt from administrative offset under this subsection payments under means-tested 

programs when requested by the head of the respective agency. 

The Secretary may exempt other payments from administrative 

offset under this subsection upon the written request of the head 

of a payment certifying agency. A written request for exemption 

of other payments must provide justification for the exemption 

under standards prescribed by the Secretary. Such standards shall 

give due consideration to whether administrative offset would tend 

to interfere substantially with or defeat the purposes of the payment 

certifying agency’s program. The Secretary shall report to the Con- Reports. 

gress annually on exemptions granted under this section. 

‘‘(C) The provisions of sections 205(b)(1) and 1631(c)(1) of the 

Social Security Act shall not apply to any administrative offset 
110 STAT. 1321–361 PUBLIC LAW 104–134—APR. 26, 1996 

executed pursuant to this section against benefits authorized by 

either title II or title XVI of the Social Security Act, respectively. 

‘‘(4) The Secretary of the Treasury may charge a fee sufficient 

to cover the full cost of implementing this subsection. The fee 

may be collected either by the retention of a portion of amounts 

collected pursuant to this subsection, or by billing the agency referring or transferring a claim for those amounts. Fees charged to 

the agencies shall be based on actual administrative offsets completed. Amounts received by the United States as fees under this 

subsection shall be deposited into the account of the Department 

of the Treasury under section 3711(g)(7) of this title, and shall 

be collected and accounted for in accordance with the provisions 

of that section. 

‘‘(5) The Secretary of the Treasury in consultation with the 

Commissioner of Social Security and the Director of the Office 

of Management and Budget, may prescribe such rules, regulations, 

and procedures as the Secretary of the Treasury considers necessary 

Rules, to carry out this subsection. The Secretary shall consult with the

regulations, and heads of affected agencies in the development of such rules, regula­ procedures. tions, and procedures. 

Notification. ‘‘(6) Any Federal agency that is owed by a person a past 

due, legally enforceable nontax debt that is over 180 days delinquent, including nontax debt administered by a third party acting 

as an agent for the Federal Government, shall notify the Secretary 

of the Treasury of all such nontax debts for purposes of administrative offset under this subsection. 

Notification. ‘‘(7)(A) The disbursing official conducting an administrative 

offset with respect to a payment to a payee shall notify the payee 

in writing of— 

‘‘(i) the occurrence of the administrative offset to satisfy 

a past due legally enforceable debt, including a description 

of the type and amount of the payment otherwise payable 

to the payee against which the offset was executed; 

‘‘(ii) the identity of the creditor agency requesting the offset; 

and 

‘‘(iii) a contact point within the creditor agency that will 

handle concerns regarding the offset. 

‘‘(B) If the payment to be offset is a periodic benefit payment, 

the disbursing official shall take reasonable steps, as determined 

by the Secretary of the Treasury, to provide the notice to the 

payee not later than the date on which the payee is otherwise 

scheduled to receive the payment, or as soon as practical thereafter, 

but no later than the date of the administrative offset. Notwithstanding the preceding sentence, the failure of the debtor to receive 

such notice shall not impair the legality of such administrative 

offset. 

‘‘(8) A levy pursuant to the Internal Revenue Code of 1986 

shall take precedence over requests for administrative offset pursuant to other laws. 

‘‘(d) Nothing in this section is intended to prohibit the use 

of any other administrative offset authority existing under statute 

or common law.’’. 

(3) NONTAX DEBT OR CLAIM DEFINED.—Section 3701 of title 

31, United States Code, is amended in subsection (a) by adding 

at the end the following new paragraph: 
PUBLIC LAW 104–134—APR. 26, 1996 110 STAT. 1321–362 

‘‘(8) ‘nontax’ means, with respect to any debt or claim, 

any debt or claim other than a debt or claim under the Internal 

Revenue Code of 1986.’’. 

(4) TREASURY CHECK WITHHOLDING.—Section 3712 of title 31, 

United States Code, is amended by adding at the end the following 

new subsection: 

‘‘(e) TREASURY CHECK OFFSET.— 

‘‘(1) IN GENERAL.—To facilitate collection of amounts owed 

by presenting banks pursuant to subsection (a) or (b), upon 

the direction of the Secretary, a Federal reserve bank shall 

withhold credit from banks presenting Treasury checks for 

ultimate charge to the account of the United States Treasury. 

By presenting Treasury checks for payment a presenting bank 

is deemed to authorize this offset. 

‘‘(2) ATTEMPT TO COLLECT REQUIRED.—Prior to directing 

offset under subsection (a)(1), the Secretary shall first attempt 

to collect amounts owed in the manner provided by sections 

3711 and 3716.’’. 

(e) Section 3716 of title 31, United States Code, as amended 

by subsection (d)(2) of this section, is further amended by adding 

at the end the following new subsections: 

‘‘(f) The Secretary may waive the requirements of sections 

552a(o) and (p) of title 5 for administrative offset or claims collection 

upon written certification by the head of a State or an executive, 

judicial, or legislative agency seeking to collect the claim that the 

requirements of subsection (a) of this section have been met. 

‘‘(g) The Data Integrity Board of the Department of the Treasury established under 552a(u) of title 5 shall review and include 

in reports under paragraph (3)(D) of that section a description 

of any matching activities conducted under this section. If the 

Secretary has granted a waiver under subsection (f) of this section, 

no other Data Integrity Board is required to take any action under 

section 552a(u) of title 5.’’. 

(f) Section 3716 of title 31, United States Code, as amended 

by subsections (d) and (e) of this section, is further amended by 

adding at the end the following new subsection: 

‘‘(h)(1) The Secretary may, in the discretion of the Secretary, 

apply subsection (a) with respect to any past-due, legally-enforceable 

debt owed to a State if— 

‘‘(A) the appropriate State disbursing official requests that 

an offset be performed; and 

‘‘(B) a reciprocal agreement with the State is in effect 

which contains, at a minimum— 

‘‘(i) requirements substantially equivalent to subsection 

(b) of this section; and 

‘‘(ii) any other requirements which the Secretary 

considers appropriate to facilitate the offset and prevent 

duplicative efforts. 

‘‘(2) This subsection does not apply to— 

‘‘(A) the collection of a debt or claim on which the administrative costs associated with the collection of the debt or claim 

exceed the amount of the debt or claim; 

‘‘(B) any collection of any other type, class, or amount 

of claim, as the Secretary considers necessary to protect the 

interest of the United States; or 
110 STAT. 1321–363 PUBLIC LAW 104–134—APR. 26, 1996 

‘‘(C) the disbursement of any class or type of payment 

exempted by the Secretary of the Treasury at the request 

of a Federal agency. 

‘‘(3) In applying this section with respect to any debt owed 

to a State, subsection (c)(3)(A) shall not apply.’’. 

(g)(1) TITLE 31.—Title 31, United States Code, is amended— 

(A) in section 3322(a), by inserting ‘‘section 3716 and section 3720A of this title and’’ after ‘‘Except as provided in’’; 

(B) in section 3325(a)(3), by inserting ‘‘or pursuant to payment intercepts or offsets pursuant to section 3716 or 3720A 

of this title,’’ after ‘‘voucher’’; and 

(C) in each of sections 3711(e)(2) and 3717(h) by inserting 

‘‘, the Secretary of the Treasury,’’ after ‘‘Attorney General’’. 

(2) INTERNAL REVENUE CODE OF 1986.—Subparagraph (A) of 

section 6103(l)(10) of the Internal Revenue Code of 1986 (26 U.S.C. 

6103(l)(10)) is amended by inserting ‘‘and to officers and employees 

of the Department of the Treasury in connection with such reduction’’ after ‘‘6402’’. 

(h) Section 5514 of title 5, United States Code, is amended— 

(A) in subsection (a)— 

(i) by adding at the end of paragraph (1) the following: 

‘‘All Federal agencies to which debts are owed and which 

have outstanding delinquent debts shall participate in a 

computer match at least annually of their delinquent debt 

records with records of Federal employees to identify those 

employees who are delinquent in repayment of those debts. 

The preceding sentence shall not apply to any debt under 

Records. the Internal Revenue Code of 1986. Matched Federal 

employee records shall include, but shall not be limited 

to, records of active Civil Service employees governmentwide, military active duty personnel, military reservists, 

United States Postal Service employees, employees of other 

government corporations, and seasonal and temporary 

employees. The Secretary of the Treasury shall establish 

and maintain an interagency consortium to implement centralized salary offset computer matching, and promulgate 

regulations for this program. Agencies that perform centralized salary offset computer matching services under this 

subsection are authorized to charge a fee sufficient to cover 

the full cost for such services.’’; 

(ii) by redesignating paragraphs (3) and (4) as paragraphs (4) and (5), respectively; 

(iii) by inserting after paragraph (2) the following new 

paragraph: 

‘‘(3) Paragraph (2) shall not apply to routine intra-agency 

adjustments of pay that are attributable to clerical or administrative 

errors or delays in processing pay documents that have occurred 

within the four pay periods preceding the adjustment and to any 

adjustment that amounts to $50 or less, if at the time of such 

adjustment, or as soon thereafter as practical, the individual is 

provided written notice of the nature and the amount of the adjustment and a point of contact for contesting such adjustment.’’; and 

(iv) by amending paragraph (5)(B) (as redesignated 

by clause (ii) of this subparagraph) to read as follows: 

‘‘(B) ‘agency’ includes executive departments and agencies, the United States Postal Service, the Postal Rate 

Commission, the United States Senate, the United States 
PUBLIC LAW 104–134—APR. 26, 1996 110 STAT. 1321–364 

House of Representatives, and any court, court administrative office, or instrumentality in the judicial or legislative 

branches of the Government, and government corporations.’’; 

(B) by adding after subsection (c) the following new subsection: 

‘‘(d) A levy pursuant to the Internal Revenue Code of 1986 

shall take precedence over other deductions under this section.’’. 

(i)(1) IN GENERAL.—Section 7701 of title 31, United States 

Code, is amended by adding at the end the following new subsections: 

‘‘(c)(1) The head of each Federal agency shall require each 

person doing business with that agency to furnish to that agency 

such person’s taxpayer identifying number. 

‘‘(2) For purposes of this subsection, a person shall be considered 

to be doing business with a Federal agency if the person is— 

‘‘(A) a lender or servicer in a Federal guaranteed or insured 

loan program administered by the agency; 

‘‘(B) an applicant for, or recipient of, a Federal license, 

permit, right-of-way, grant, or benefit payment administered 

by the agency or insurance administered by the agency; 

‘‘(C) a contractor of the agency; 

‘‘(D) assessed a fine, fee, royalty or penalty by the agency; 

and 

‘‘(E) in a relationship with the agency that may give rise 

to a receivable due to that agency, such as a partner of a 

borrower in or a guarantor of a Federal direct or insured 

loan administered by the agency. 

‘‘(3) Each agency shall disclose to a person required to furnish 

a taxpayer identifying number under this subsection its intent 

to use such number for purposes of collecting and reporting on 

any delinquent amounts arising out of such person’s relationship 

with the Government. 

‘‘(4) For purposes of this subsection, a person shall not be 

treated as doing business with a Federal agency solely by reason 

of being a debtor under third party claims of the United States. 

The preceding sentence shall not apply to a debtor owing claims 

resulting from petroleum pricing violations or owing claims resulting from Federal loan or loan guarantee/insurance programs. 

‘‘(d) Notwithstanding section 552a(b) of title 5, United States 

Code, creditor agencies to which a delinquent claim is owed, and 

their agents, may match their debtor records with Department 

of Health and Human Services, and Department of Labor records 

to obtain names (including names of employees), name controls, 

names of employers, taxpayer identifying numbers, addresses 

(including addresses of employers), and dates of birth. The preceding 

sentence shall apply to the disclosure of taxpayer identifying numbers only if such disclosure is not otherwise prohibited by section 

6103 of the Internal Revenue Code of 1986. The Department of 

Health and Human Services, and the Department of Labor shall 

release that information to creditor agencies and may charge reasonable fees sufficient to pay the costs associated with that release.’’. 

(2) INCLUDED FEDERAL LOAN PROGRAM DEFINED.—Subparagraph (C) of section 6103(l)(3) of the Internal Revenue Code of 

1986 (relating to disclosure that applicant for Federal loan has 26 USC 6103. 

tax delinquent account) is amended to read as follows:

110 STAT. 1321–365 PUBLIC LAW 104–134—APR. 26, 1996 

‘‘(C) INCLUDED FEDERAL LOAN PROGRAM DEFINED.— For purposes of this paragraph, the term ‘included Federal 

loan program’ means any program under which the United 

States or a Federal agency makes, guarantees, or insures 

loans.’’. 

(3) CLERICAL AMENDMENTS.— (A) The chapter title to chapter 77 of subtitle VI of title 

31, United States Code, is amended to read as follows: 

‘‘CHAPTER 77—ACCESS TO INFORMATION FOR DEBT COLLECTION’’. 

(B) The table of chapters for subtitle VI of title 31, United 

States Code, is amended by inserting before the item relating 

to chapter 91 the following new item: 

‘‘77. Access to information for debt collection ............................................ 7701’’. 

(j)(1) IN GENERAL.—Title 31, United States Code, is amended 

by inserting after section 3720A the following new section: 

‘‘§ 3720B. Barring delinquent Federal debtors from obtaining

Federal loans or loan insurance guarantees 

Standards. ‘‘(a) Unless this subsection is waived by the head of a Federal 

agency, a person may not obtain any Federal financial assistance 

in the form of a loan (other than a disaster loan) or loan insurance 

or guarantee administered by the agency if the person has an 

outstanding debt (other than a debt under the Internal Revenue 

Code of 1986) with any Federal agency which is in a delinquent 

status, as determined under standards prescribed by the Secretary 

of the Treasury. Such a person may obtain additional loans or 

loan guarantees only after such delinquency is resolved in accordance with those standards. The Secretary of the Treasury may 

exempt, at the request of an agency, any class of claims. 

‘‘(b) The head of a Federal agency may delegate the waiver 

authority under subsection (a) to the Chief Financial Officer of 

the agency. The waiver authority may be redelegated only to the 

Deputy Chief Financial Officer of the agency.’’ 

(2) CLERICAL AMENDMENT.—The table of sections for subchapter 

II of chapter 37 of title 31, United States Code, is amended by 

inserting after the item relating to section 3720A the following 

new item: 

‘‘3720B. Barring delinquent Federal debtors from obtaining Federal loans or loan insurance guarantees.’’. 

(k) Section 3711(f) of title 31, United States Code, is amended— 

(1) by striking ‘‘may’’ the first place it appears and inserting 

‘‘shall’’; 

(2) by striking ‘‘an individual’’ each place it appears and 

inserting ‘‘a person’’; 

(3) by striking ‘‘the individual’’ each place it appears and 

inserting ‘‘the person’’; and 

(4) by adding at the end the following new paragraphs: 

‘‘(4) The head of each executive agency shall require, as a 

condition for insuring or guaranteeing any loan, financing, or other 

extension of credit under any law to a person, that the lender 

provide information relating to the extension of credit to consumer 

reporting agencies or commercial reporting agencies, as appropriate. 

‘‘(5) The head of each executive agency may provide to a 

consumer reporting agency or commercial reporting agency information from a system of records that a person is responsible for 

a claim which is current, if notice required by section 552a(e)(4) 
PUBLIC LAW 104–134—APR. 26, 1996 110 STAT. 1321–366 

of title 5 indicates that information in the system may be disclosed 

to a consumer reporting agency or commercial reporting agency, 

respectively.’’. 

(l) Section 3718 of title 31, United States Code, is amended— 

(1) in subsection (a), by striking the first sentence and 

inserting the following: ‘‘Under conditions the head of an executive, judicial, or legislative agency considers appropriate, the 

head of the agency may enter into a contract with a person 

for collection service to recover indebtedness owed, or to locate 

or recover assets of, the United States Government. The head 

of an agency may not enter into a contract under the preceding 

sentence to locate or recover assets of the United States held 

by a State government or financial institution unless that 

agency has established procedures approved by the Secretary 

of the Treasury to identify and recover such assets.’’; and 

(2) in subsection (d), by inserting ‘‘, or to locate or recover 

assets of,’’ after ‘‘owed’’. 

(m)(1) IN GENERAL.—Section 3711 of title 31, United States 

Code, is amended by adding at the end the following new subsections: 

‘‘(g)(1) If a nontax debt or claim owed to the United States 

has been delinquent for a period of 180 days— 

‘‘(A) the head of the executive, judicial, or legislative agency 

that administers the program that gave rise to the debt or 

claim shall transfer the debt or claim to the Secretary of the 

Treasury; and 

‘‘(B) upon such transfer the Secretary of the Treasury shall 

take appropriate action to collect or terminate collection actions 

on the debt or claim. 

‘‘(2) Paragraph (1) shall not apply— 

‘‘(A) to any debt or claim that— 

‘‘(i) is in litigation or foreclosure; 

‘‘(ii) will be disposed of under an asset sales program 

within 1 year after becoming eligible for sale, or later 

than 1 year if consistent with an asset sales program 

and a schedule established by the agency and approved 

by the Director of the Office of Management and Budget; 

‘‘(iii) has been referred to a private collection contractor 

for collection for a period of time determined by the Secretary of the Treasury; 

‘‘(iv) has been referred by, or with the consent of, 

the Secretary of the Treasury to a debt collection center 

for a period of time determined by the Secretary of the 

Treasury; or 

‘‘(v) will be collected under internal offset, if such offset 

is sufficient to collect the claim within 3 years after the 

date the debt or claim is first delinquent; and 

‘‘(B) to any other specific class of debt or claim, as determined by the Secretary of the Treasury at the request of 

the head of an executive, judicial, or legislative agency or 

otherwise. 

‘‘(3) For purposes of this section, the Secretary of the Treasury 

may designate, and withdraw such designation of debt collection 

centers operated by other Federal agencies. The Secretary of the 

Treasury shall designate such centers on the basis of their performance in collecting delinquent claims owed to the Government. 
110 STAT. 1321–367 PUBLIC LAW 104–134—APR. 26, 1996 

‘‘(4) At the discretion of the Secretary of the Treasury, referral 

of a nontax claim may be made to— 

‘‘(A) any executive department or agency operating a debt 

collection center for servicing, collection, compromise, or suspension or termination of collection action; 

‘‘(B) a private collection contractor operating under a contract for servicing or collection action; or 

‘‘(C) the Department of Justice for litigation. 

‘‘(5) Nontax claims referred or transferred under this section 

shall be serviced, collected, or compromised, or collection action 

thereon suspended or terminated, in accordance with otherwise 

applicable statutory requirements and authorities. Executive 

departments and agencies operating debt collection centers may 

enter into agreements with the Secretary of the Treasury to carry 

out the purposes of this subsection. The Secretary of the Treasury 

shall— 

‘‘(A) maintain competition in carrying out this subsection; 

‘‘(B) maximize collections of delinquent debts by placing 

delinquent debts quickly; 

‘‘(C) maintain a schedule of private collection contractors 

and debt collection centers eligible for referral of claims; and 

‘‘(D) refer delinquent debts to the person most appropriate 

to collect the type or amount of claim involved. 

‘‘(6) Any agency operating a debt collection center to which 

nontax claims are referred or transferred under this subsection 

may charge a fee sufficient to cover the full cost of implementing 

this subsection. The agency transferring or referring the nontax 

claim shall be charged the fee, and the agency charging the fee 

shall collect such fee by retaining the amount of the fee from 

amounts collected pursuant to this subsection. Agencies may agree 

to pay through a different method, or to fund an activity from 

another account or from revenue received from the procedure 

described under section 3720C of this title. Amounts charged under 

this subsection concerning delinquent claims may be considered 

as costs pursuant to section 3717(e) of this title. 

‘‘(7) Notwithstanding any other law concerning the depositing 

and collection of Federal payments, including section 3302(b) of 

this title, agencies collecting fees may retain the fees from amounts 

collected. Any fee charged pursuant to this subsection shall be 

deposited into an account to be determined by the executive department or agency operating the debt collection center charging the 

fee (in this subsection referred to in this section as the ‘Account’). 

Amounts deposited in the Account shall be available until expended 

to cover costs associated with the implementation and operation 

of Governmentwide debt collection activities. Costs properly chargeable to the Account include— 

‘‘(A) the costs of computer hardware and software, word 

processing and telecommunications equipment, and other equipment, supplies, and furniture; 

‘‘(B) personnel training and travel costs; 

‘‘(C) other personnel and administrative costs; 

‘‘(D) the costs of any contract for identification, billing, 

or collection services; and 

‘‘(E) reasonable costs incurred by the Secretary of the Treasury, including services and utilities provided by the Secretary, 

and administration of the Account. 
PUBLIC LAW 104–134—APR. 26, 1996 110 STAT. 1321–368 

‘‘(8) Not later than January 1 of each year, there shall be 

deposited into the Treasury as miscellaneous receipts an amount 

equal to the amount of unobligated balances remaining in the 

Account at the close of business on September 30 of the preceding 

year, minus any part of such balance that the executive department 

or agency operating the debt collection center determines is necessary to cover or defray the costs under this subsection for the 

fiscal year in which the deposit is made. 

‘‘(9) Before discharging any delinquent debt owed to any executive, judicial, or legislative agency, the head of such agency shall 

take all appropriate steps to collect such debt, including (as 

applicable)— 

‘‘(A) administrative offset, 

‘‘(B) tax refund offset, 

‘‘(C) Federal salary offset, 

‘‘(D) referral to private collection contractors, 

‘‘(E) referral to agencies operating a debt collection center, 

‘‘(F) reporting delinquencies to credit reporting bureaus, 

‘‘(G) garnishing the wages of delinquent debtors, and 

‘‘(H) litigation or foreclosure. 

‘‘(10) To carry out the purposes of this subsection, the Secretary 

of the Treasury may prescribe such rules, regulations, and procedures as the Secretary considers necessary and transfer such funds 

from funds appropriated to the Department of the Treasury as 

may be necessary to meet existing liabilities and obligations 

incurred prior to the receipt of revenues that result from debt 

collections. 

‘‘(h)(1) The head of an executive, judicial, or legislative agency 

acting under subsection (a)(1), (2), or (3) of this section to collect 

a claim, compromise a claim, or terminate collection action on 

a claim may obtain a consumer report (as that term is defined 

in section 603 of the Fair Credit Reporting Act (15 U.S.C. 1681a)) 

or comparable credit information on any person who is liable for 

the claim. 

‘‘(2) The obtaining of a consumer report under this subsection 

is deemed to be a circumstance or purpose authorized or listed 

under section 604 of the Fair Credit Reporting Act (15 U.S.C. 

1681b).’’. 

(2) RETURNS RELATING TO CANCELLATION OF INDEBTEDNESS 

BY CERTAIN ENTITIES.— 

(A) IN GENERAL.—Subsection (a) of section 6050P of the 

Internal Revenue Code of 1986 (relating to returns relating 26 USC 6050P. 

to the cancellation of indebtedness by certain financial entities) 

is amended by striking ‘‘applicable financial entity’’ and inserting ‘‘applicable entity’’. 

(B) ENTITIES TO WHICH REQUIREMENT APPLIES.—Subsection 

(c) of section 6050P of such Code is amended— 

(i) by redesignating paragraphs (1) and (2) as paragraphs (2) and (3), respectively, and inserting before paragraph (2) (as so redesignated) the following new paragraph: 

‘‘(1) APPLICABLE ENTITY.—The term ‘applicable entity’ 

means— 

‘‘(A) an executive, judicial, or legislative agency (as 

defined in section 3701(a)(4) of title 31, United States 

Code), and 

‘‘(B) an applicable financial entity.’’, and 
110 STAT. 1321–369 PUBLIC LAW 104–134—APR. 26, 1996


26 USC 6050P. 

Effective date. 

31 USC 3711 

note. 

Notification. 

(ii) in paragraph (3), as so redesignated, by striking 

‘‘(1)(B)’’ and inserting ‘‘(1)(A) or (2)(B)’’. 

(C) ALTERNATIVE PROCEDURE.—Section 6050P of such Code 

is amended by adding at the end the following new subsection: 

‘‘(e) ALTERNATIVE PROCEDURE.—In lieu of making a return 

required under subsection (a), an agency described in subsection 

(c)(1)(A) may submit to the Secretary (at such time and in such 

form as the Secretary may by regulations prescribe) information 

sufficient for the Secretary to complete such a return on behalf 

of such agency. Upon receipt of such information, the Secretary 

shall complete such return and provide a copy of such return 

to such agency.’’ 

(D) CONFORMING AMENDMENTS.— 

(i) Subsection (d) of section 6050P of such Code is 

amended by striking ‘‘applicable financial entity’’ and 

inserting ‘‘applicable entity’’. 

(ii) The heading of section 6050P of such Code is 

amended to read as follows: 

‘‘SEC. 6050P. RETURNS RELATING TO THE CANCELLATION OF INDEBTEDNESS BY CERTAIN ENTITIES.’’ 

(iii) The table of sections for subpart B of part III 

of subchapter A of chapter 61 of such Code is amended 

by striking the item relating to section 6050P and inserting 

the following new item: 

‘‘Sec. 6050P. Returns relating to the cancellation of indebtedness by certain 

entities.’’ 

(n) Effective October 1, 1995, section 11 of the Administrative 

Dispute Resolution Act (Public Law 101–552, 5 U.S.C. 571 note) 

shall not apply to the amendment made by section 8(b) of such 

Act. 

(o)(1) IN GENERAL.—Chapter 37 of title 31, United States Code, 

is amended in subchapter II by adding after section 3720C, as 

added by subsection (t) of this section, the following new section: 

‘‘§ 3720D. Garnishment 

‘‘(a) Notwithstanding any provision of State law, the head of 

an executive, judicial, or legislative agency that administers a program that gives rise to a delinquent nontax debt owed to the 

United States by an individual may in accordance with this section 

garnish the disposable pay of the individual to collect the amount 

owed, if the individual is not currently making required repayment 

in accordance with any agreement between the agency head and 

the individual. 

‘‘(b) In carrying out any garnishment of disposable pay of an 

individual under subsection (a), the head of an executive, judicial, 

or legislative agency shall comply with the following requirements: 

‘‘(1) The amount deducted under this section for any pay 

period may not exceed 15 percent of disposable pay, except 

that a greater percentage may be deducted with the written 

consent of the individual. 

‘‘(2) The individual shall be provided written notice, sent 

by mail to the individual’s last known address, a minimum 

of 30 days prior to the initiation of proceedings, from the 

head of the executive, judicial, or legislative agency, informing 

the individual of— 

‘‘(A) the nature and amount of the debt to be collected; 
PUBLIC LAW 104–134—APR. 26, 1996 110 STAT. 1321–370


‘‘(B) the intention of the agency to initiate proceedings 

to collect the debt through deductions from pay; and 

‘‘(C) an explanation of the rights of the individual 

under this section. 

‘‘(3) The individual shall be provided an opportunity to 

inspect and copy records relating to the debt. 

‘‘(4) The individual shall be provided an opportunity to 

enter into a written agreement with the executive, judicial, 

or legislative agency, under terms agreeable to the head of 

the agency, to establish a schedule for repayment of the debt. 

‘‘(5) The individual shall be provided an opportunity for 

a hearing in accordance with subsection (c) on the determination of the head of the executive, judicial, or legislative agency 

concerning— 

‘‘(A) the existence or the amount of the debt, and 

‘‘(B) in the case of an individual whose repayment 

schedule is established other than by a written agreement 

pursuant to paragraph (4), the terms of the repayment 

schedule. 

‘‘(6) If the individual has been reemployed within 12 months 

after having been involuntarily separated from employment, 

no amount may be deducted from the disposable pay of the 

individual until the individual has been reemployed continuously for at least 12 months. 

‘‘(c)(1) A hearing under subsection (b)(5) shall be provided prior 

to issuance of a garnishment order if the individual, on or before 

the 15th day following the mailing of the notice described in subsection (b)(2), and in accordance with such procedures as the head 

of the executive, judicial, or legislative agency may prescribe, files 

a petition requesting such a hearing. 

‘‘(2) If the individual does not file a petition requesting a 

hearing prior to such date, the head of the agency shall provide 

the individual a hearing under subsection (a)(5) upon request, but 

such hearing need not be provided prior to issuance of a garnishment order. 

‘‘(3) The hearing official shall issue a final decision at the 

earliest practicable date, but not later than 60 days after the 

filing of the petition requesting the hearing. 

‘‘(d) The notice to the employer of the withholding order shall 

contain only such information as may be necessary for the employer 

to comply with the withholding order. 

‘‘(e)(1) An employer may not discharge from employment, refuse 

to employ, or take disciplinary action against an individual subject 

to wage withholding in accordance with this section by reason 

of the fact that the individual’s wages have been subject to garnishment under this section, and such individual may sue in a State 

or Federal court of competent jurisdiction any employer who takes 

such action. 

‘‘(2) The court shall award attorneys’ fees to a prevailing 

employee and, in its discretion, may order reinstatement of the 

individual, award punitive damages and back pay to the employee, 

or order such other remedy as may be reasonably necessary. 

‘‘(f)(1) The employer of an individual— 

‘‘(A) shall pay to the head of an executive, judicial, or 

legislative agency as directed in a withholding order issued 

in an action under this section with respect to the individual, 

and 

Records. 

Contracts. 

Courts. 
110 STAT. 1321–371 PUBLIC LAW 104–134—APR. 26, 1996 

‘‘(B) shall be liable for any amount that the employer 

fails to withhold from wages due an employee following receipt 

by such employer of notice of the withholding order, plus attorneys’ fees, costs, and, in the court’s discretion, punitive damages. 

‘‘(2)(A) The head of an executive, judicial, or legislative agency 

may sue an employer in a State or Federal court of competent 

jurisdiction to recover amounts for which the employer is liable 

under paragraph (1)(B). 

‘‘(B) A suit under this paragraph may not be filed before the 

termination of the collection action, unless earlier filing is necessary 

to avoid expiration of any applicable statute of limitations period. 

‘‘(3) Notwithstanding paragraphs (1) and (2), an employer shall 

not be required to vary its normal pay and disbursement cycles 

in order to comply with this subsection. 

‘‘(g) For the purpose of this section, the term ‘disposable pay’ 

means that part of the compensation of any individual from an 

employer remaining after the deduction of any amounts required 

by any other law to be withheld. 

Regulations. ‘‘(h) The Secretary of the Treasury shall issue regulations to 

Reports. 

implement this section.’’. 

(2) CLERICAL AMENDMENT.—The table of sections for subchapter 

II of chapter 37 of title 31, United States Code, is amended by 

inserting after the item relating to section 3720C (as added by 

subsection (t) of this section) the following new item: 

‘‘3720D. Garnishment.’’. 

(p) Section 3711 of title 31, United States Code, as amended 

by subsection (m) of this section, is further amended by adding 

at the end the following new subsection: 

‘‘(i)(1) The head of an executive, judicial, or legislative agency 

may sell, subject to section 504(b) of the Federal Credit Reform 

Act of 1990 and using competitive procedures, any nontax debt 

owed to the United States that is delinquent for more than 90 

days. Appropriate fees charged by a contractor to assist in the 

conduct of a sale under this subsection may be payable from the 

proceeds of the sale. 

‘‘(2) After terminating collection action, the head of an executive, judicial, or legislative agency shall sell, using competitive 

procedures, any nontax debt or class of nontax debts owed to 

the United States, if the Secretary of the Treasury determines 

the sale is in the best interests of the United States. 

‘‘(3) Sales of nontax debt under this subsection— 

‘‘(A) shall be for— 

‘‘(i) cash, or 

‘‘(ii) cash and a residuary equity or profit participation, 

if the head of the agency reasonably determines that the 

proceeds will be greater than sale solely for cash, 

‘‘(B) shall be without recourse, but may include the use 

of guarantees if otherwise authorized, and 

‘‘(C) shall transfer to the purchaser all rights of the Government to demand payment of the nontax debt, other than with 

respect to a residuary equity or profit participation under 

subparagraph (A)(ii). 

‘‘(4)(A) Within one year after the date of enactment of the 

Debt Collection Improvement Act of 1996, each executive agency 

with current and delinquent collateralized nontax debts shall report 

to the Congress on the valuation of its existing portfolio of loans, 
PUBLIC LAW 104–134—APR. 26, 1996 110 STAT. 1321–372 

notes and guarantees, and other collateralized debts based on standards developed by the Director of the Office of Management and 

Budget, in consultation with the Secretary of the Treasury. 

‘‘(B) The Director of the Office of Management and Budget 

shall determine what information is required to be reported to 

comply with subparagraph (A). At a minimum, for each financing 

account and for each liquidating account (as those terms are defined 

in sections 502(7) and 502(8), respectively, of the Federal Credit 

Reform Act of 1990) the following information shall be reported: 

‘‘(i) The cumulative balance of current debts outstanding, 

the estimated net present value of such debts, the annual 

administrative expenses of those debts (including the portion 

of salaries and expenses that are directly related thereto), and 

the estimated net proceeds that would be received by the 

Government if such debts were sold. 

‘‘(ii) The cumulative balance of delinquent debts, debts 

outstanding, the estimated net present value of such debts, 

the annual administrative expenses of those debts (including 

the portion of salaries and expenses that are directly related 

thereto), and the estimated net proceeds that would be received 

by the Government if such debts were sold. 

‘‘(iii) The cumulative balance of guaranteed loans outstanding, the estimated net present value of such guarantees, the 

annual administrative expenses of such guarantees (including 

the portion of salaries and expenses that are directly related 

to such guaranteed loans), and the estimated net proceeds 

that would be received by the Government if such loan guarantees were sold. 

‘‘(iv) The cumulative balance of defaulted loans that were 

previously guaranteed and have resulted in loans receivables, 

the estimated net present value of such loan assets, the annual 

administrative expenses of such loan assets (including the portion of salaries and expenses that are directly related to such 

loan assets), and the estimated net proceeds that would be 

received by the Government if such loan assets were sold. 

‘‘(v) The marketability of all debts. 

‘‘(5) This subsection is not intended to limit existing statutory 

authority of agencies to sell loans, debts, or other assets.’’. 

(q) Section 3717 of title 31, United States Code, is amended 

by adding at the end of subsection (h) the following new subsection: 

‘‘(i)(1) The head of an executive, judicial, or legislative agency 

may increase an administrative claim by the cost of living adjustment in lieu of charging interest and penalties under this section. 

Adjustments under this subsection will be computed annually. 

‘‘(2) For the purpose of this subsection— 

‘‘(A) the term ‘cost of living adjustment’ means the percentage by which the Consumer Price Index for the month of 

June of the calendar year preceding the adjustment exceeds 

the Consumer Price Index for the month of June of the calendar 

year in which the claim was determined or last adjusted; and 

‘‘(B) the term ‘administrative claim’ includes all debt that 

is not based on an extension of Government credit through 

direct loans, loan guarantees, or insurance, including fines, 

penalties, and overpayments.’’. 

(r)(1) IN GENERAL.—Chapter 37 of title 31, United States Code, 

is amended in subchapter II by adding after section 3720D, as 

added by subsection (o) of this section, the following new section: 
110 STAT. 1321–373 PUBLIC LAW 104–134—APR. 26, 1996


Regulations. 

Regulations. 

Federal Register, 

Publication. 

28 USC 2461 

note. 

‘‘§ 3720E. Dissemination of information regarding identity

of delinquent debtors 

‘‘(a) The head of any agency may, with the review of the 

Secretary of the Treasury, for the purpose of collecting any delinquent nontax debt owed by any person, publish or otherwise publicly 

disseminate information regarding the identity of the person and 

the existence of the nontax debt. 

‘‘(b)(1) The Secretary of the Treasury, in consultation with 

the Director of the Office of Management and Budget and the 

heads of other appropriate Federal agencies, shall issue regulations 

establishing procedures and requirements the Secretary considers 

appropriate to carry out this section. 

‘‘(2) Regulations under this subsection shall include— 

‘‘(A) standards for disseminating information that maximize 

collections of delinquent nontax debts, by directing actions 

under this section toward delinquent debtors that have assets 

or income sufficient to pay their delinquent nontax debt; 

‘‘(B) procedures and requirements that prevent dissemination of information under this section regarding persons who 

have not had an opportunity to verify, contest, and compromise 

their nontax debt in accordance with this subchapter; and 

‘‘(C) procedures to ensure that persons are not incorrectly 

identified pursuant to this section.’’. 

(2) CLERICAL AMENDMENT.—The table of sections for subchapter 

II of chapter 37 of title 31, United States Code, is amended by 

adding after the item relating to section 3720D (as added by subsection (o) of this section) the following new item: 

‘‘3720E. Dissemination of information regarding identity of delinquent debtors.’’. 

(s)(1) IN GENERAL.—The Federal Civil Penalties Inflation 

Adjustment Act of 1990 (Public Law 101–410, 104 Stat. 890; 28 

U.S.C. 2461 note) is amended— 

(A) by amending section 4 to read as follows: 

‘‘SEC. 4. The head of each agency shall, not later than 180 

days after the date of enactment of the Debt Collection Improvement 

Act of 1996, and at least once every 4 years thereafter— 

‘‘(1) by regulation adjust each civil monetary penalty provided by law within the jurisdiction of the Federal agency, 

except for any penalty (including any addition to tax and additional amount) under the Internal Revenue Code of 1986, the 

Tariff Act of 1930, the Occupational Safety and Health Act 

of 1970, or the Social Security Act, by the inflation adjustment 

described under section 5 of this Act; and 

‘‘(2) publish each such regulation in the Federal Register.’’; 

(B) in section 5(a), by striking ‘‘The adjustment described 

under paragraphs (4) and (5)(A) of section 4’’ and inserting 

‘‘The inflation adjustment under section 4’’; and 

(C) by adding at the end the following new section: 

‘‘SEC. 7. Any increase under this Act in a civil monetary penalty 

shall apply only to violations which occur after the date the increase 

takes effect.’’. 

(2) LIMITATION ON INITIAL ADJUSTMENT.—The first adjustment 

of a civil monetary penalty made pursuant to the amendment 

made by paragraph (1) may not exceed 10 percent of such penalty. 

(t)(1) IN GENERAL.—Title 31, United States Code, is amended 

by inserting after section 3720B (as added by subsection (j) of 

this section) the following new section: 
PUBLIC LAW 104–134—APR. 26, 1996 110 STAT. 1321–374 

‘‘§ 3720C. Debt Collection Improvement Account 

‘‘(a)(1) There is hereby established in the Treasury a special Nomenclature. 

fund to be known as the ‘Debt Collection Improvement Account’ 

(hereinafter in this section referred to as the ‘Account’). 

‘‘(2) The Account shall be maintained and managed by the 

Secretary of the Treasury, who shall ensure that agency programs 

are credited with amounts transferred under subsection (b)(1). 

‘‘(b)(1) Not later than 30 days after the end of a fiscal year, 

an agency may transfer to the Account the amount described in 

paragraph (3), as adjusted under paragraph (4). 

‘‘(2) Agency transfers to the Account may include collections 

from— 

‘‘(A) salary, administrative, and tax refund offsets; 

‘‘(B) the Department of Justice; 

‘‘(C) private collection agencies; 

‘‘(D) sales of delinquent loans; and 

‘‘(E) contracts to locate or recover assets. 

‘‘(3) The amount referred to in paragraph (1) shall be 5 percent 

of the amount of delinquent debt collected by an agency in a 

fiscal year, minus the greater of— 

‘‘(A) 5 percent of the amount of delinquent nontax debt 

collected by the agency in the previous fiscal year, or 

‘‘(B) 5 percent of the average annual amount of delinquent 

nontax debt collected by the agency in the previous 4 fiscal 

years. 

‘‘(4) In consultation with the Secretary of the Treasury, the 

Office of Management and Budget may adjust the amount described 

in paragraph (3) for an agency to reflect the level of effort in 

credit management programs by the agency. As an indicator of 

the level of effort in credit management, the Office of Management 

and Budget shall consider the following: 

‘‘(A) The number of days between the date a claim or 

debt became delinquent and the date which an agency referred 

the debt or claim to the Secretary of the Treasury or obtained 

an exemption from this referral under section 3711(g)(2) of 

this title. 

‘‘(B) The ratio of delinquent debts or claims to total receivables for a given program, and the change in this ratio over 

a period of time. 

‘‘(c)(1) The Secretary of the Treasury may make payments 

from the Account solely to reimburse agencies for qualified expenses. 

For agencies with franchise funds, such payments may be credited 

to subaccounts designated for debt collection. 

‘‘(2) For purposes of this section, the term ‘qualified expenses’ 

means expenditures for the improvement of credit management, 

debt collection, and debt recovery activities, including— 

‘‘(A) account servicing (including cross-servicing under section 3711(g) of this title), 

‘‘(B) automatic data processing equipment acquisitions, 

‘‘(C) delinquent debt collection, 

‘‘(D) measures to minimize delinquent debt, 

‘‘(E) sales of delinquent debt, 

‘‘(F) asset disposition, and 

‘‘(G) training of personnel involved in credit and debt 

management. 

‘‘(3)(A) Amounts transferred to the Account shall be available 

to the Secretary of the Treasury for purposes of this section to 
110 STAT. 1321–375 PUBLIC LAW 104–134—APR. 26, 1996 

the extent and in amounts provided in advance in appropriations 

Acts. 

‘‘(B) As soon as practicable after the end of the third fiscal 

year after which amounts transferred are first available pursuant 

to this section, and every 3 years thereafter, any uncommitted 

balance in the Account shall be transferred to the general fund 

of the Treasury as miscellaneous receipts. 

‘‘(d) For direct loans and loan guarantee programs subject to 

title V of the Congressional Budget Act of 1974, amounts credited 

in accordance with subsection (c) shall be considered administrative 

costs. 

Rules, ‘‘(e) The Secretary of the Treasury shall prescribe such rules,

regulations, and regulations, and procedures as the Secretary considers necessary procedures. or appropriate to carry out the purposes of this section.’’. 

(2) CLERICAL AMENDMENT.—The table of sections for chapter 

37 of title 31, United States Code, is amended by inserting after 

the item relating to section 3720B (as added by subsection (j) 

of this section) the following new item: 

‘‘3720C. Debt Collection Improvement Account.’’. 

(u)(1) DISCRETIONARY AUTHORITY.—Section 3720A of title 31, 

United States Code, is amended by adding after subsection (h) 

the following new subsection: 

‘‘(i) An agency subject to section 9 of the Act of May 18, 

1933 (16 U.S.C. 831h), may implement this section at its discretion.’’. 

(2) FEDERAL AGENCY DEFINED.—Section 6402(f) of the Internal 

Revenue Code of 1986 (26 U.S.C. 6402(f)) is amended to read 

as follows: 

‘‘(f) FEDERAL AGENCY.—For purposes of this section, the term 

‘Federal agency’ means a department, agency, or instrumentality 

of the United States, and includes a Government corporation (as 

such term is defined in section 103 of title 5, United States Code).’’. 

(v)(1) NOTIFICATION OF SECRETARY OF THE TREASURY.—Section 

3720A(a) of title 31, United States Code, is amended to read as 

follows: 

Notification. ‘‘(a) Any Federal agency that is owed by a person a pastdue, legally enforceable debt (including debt administered by a 

third party acting as an agent for the Federal Government) shall, 

and any agency subject to section 9 of the Act of May 18, 1933 

(16 U.S.C. 831h), owed such a debt may, in accordance with regulations issued pursuant to subsections (b) and (d), notify the Secretary 

of the Treasury at least once each year of the amount of such 

debt.’’. 

(2) IMPLEMENTATION OF SUPPORT COLLECTION BY SECRETARY 

OF THE TREASURY.—Section 464(a) of the Social Security Act (42 

U.S.C. 664(a)) is amended— 

(1) in paragraph (1), by adding at the end the following: 

‘‘This subsection may be executed by the disbursing official 

of the Department of the Treasury.’’; and 

(2) in paragraph (2)(A), by adding at the end the following: 

‘‘This subsection may be executed by the Secretary of the 

Department of the Treasury or his designee.’’. 

(w) Section 3720A(h) of title 31, United States Code, is amended 

to read as follows: 

‘‘(h)(1) The disbursing official of the Department of the Treasury— 

Notification. ‘‘(1) shall notify a taxpayer in writing of— 
PUBLIC LAW 104–134—APR. 26, 1996 110 STAT. 1321–376


‘‘(A) the occurrence of an offset to satisfy a past-due 

legally enforceable nontax debt; 

‘‘(B) the identity of the creditor agency requesting the 

offset; and 

‘‘(C) a contact point within the creditor agency that 

will handle concerns regarding the offset; 

‘‘(2) shall notify the Internal Revenue Service on a weekly 

basis of— 

‘‘(A) the occurrence of an offset to satisfy a past-due 

legally enforceable non-tax debt; 

‘‘(B) the amount of such offset; and 

‘‘(C) any other information required by regulations; 

and 

‘‘(3) shall match payment records with requests for offset 

by using a name control, taxpayer identifying number (as that 

term is used in section 6109 of the Internal Revenue Code 

of 1986), and any other necessary identifiers.’’. 

‘‘(h)(2) The term ‘disbursing official’ of the Department of the 

Treasury means the Secretary or his designee.’’ 

(x)(1) AMENDMENTS RELATING TO ELECTRONIC FUNDS TRANSFER.—Section 3332 of title 31, United States Code, popularly known 

as the Federal Financial Management Act of 1994, is amended— 

(A) by redesignating subsection (e) as subsection (h), and 

inserting after subsection (d) the following new subsections: 

‘‘(e)(1) Notwithstanding subsections (a) through (d) of this section, sections 5120 (a) and (d) of title 38, and any other provision 

of law, all Federal payments to a recipient who becomes eligible 

for that type of payment after 90 days after the date of the enactment of the Debt Collection Improvement Act of 1996 shall be 

made by electronic funds transfer. 

‘‘(2) The head of a Federal agency shall, with respect to Federal 

payments made or authorized by the agency, waive the application 

of paragraph (1) to a recipient of those payments upon receipt 

of written certification from the recipient that the recipient does 

not have an account with a financial institution or an authorized 

payment agent. 

‘‘(f)(1) Notwithstanding any other provision of law (including 

subsections (a) through (e) of this section and sections 5120 (a) 

and (d) of title 38), except as provided in paragraph (2) all Federal 

payments made after January 1, 1999, shall be made by electronic 

funds transfer. 

‘‘(2)(A) The Secretary of the Treasury may waive application 

of this subsection to payments— 

‘‘(i) for individuals or classes of individuals for whom 

compliance imposes a hardship; 

‘‘(ii) for classifications or types of checks; or 

‘‘(iii) in other circumstances as may be necessary. 

‘‘(B) The Secretary of the Treasury shall make determinations 

under subparagraph (A) based on standards developed by the Secretary. 

‘‘(g) Each recipient of Federal payments required to be made 

by electronic funds transfer shall— 

‘‘(1) designate 1 or more financial institutions or other 

authorized agents to which such payments shall be made; and 

‘‘(2) provide to the Federal agency that makes or authorizes 

the payments information necessary for the recipient to receive 

Notification. 

Records. 
110 STAT. 1321–377 PUBLIC LAW 104–134—APR. 26, 1996 

electronic funds transfer payments through each institution 

or agent designated under paragraph (1).’’; and 

(B) by adding after subsection (h) (as so redesignated) 

the following new subsections: 

‘‘(i)(1) The Secretary of the Treasury may prescribe regulations 

that the Secretary considers necessary to carry out this section. 

‘‘(2) Regulations under this subsection shall ensure that individuals required under subsection (g) to have an account at a financial 

institution because of the application of subsection (f)(1)— 

‘‘(A) will have access to such an account at a reasonable 

cost; and 

‘‘(B) are given the same consumer protections with respect 

to the account as other account holders at the same financial 

institution. 

‘‘(j) For purposes of this section— 

‘‘(1) The term ‘electronic funds transfer’ means any transfer 

of funds, other than a transaction originated by cash, check, 

or similar paper instrument, that is initiated through an electronic terminal, telephone, computer, or magnetic tape, for the 

purpose of ordering, instructing, or authorizing a financial 

institution to debit or credit an account. The term includes 

Automated Clearing House transfers, Fed Wire transfers, transfers made at automatic teller machines, and point-of-sale 

terminals. 

‘‘(2) The term ‘Federal agency’ means— 

‘‘(A) an agency (as defined in section 101 of this title); 

and 

‘‘(B) a Government corporation (as defined in section 

103 of title 5). 

‘‘(3) The term ‘Federal payments’ includes— 

‘‘(A) Federal wage, salary, and retirement payments; 

‘‘(B) vendor and expense reimbursement payments; and 

‘‘(C) benefit payments. 

Such term shall not include any payment under the Internal 

Revenue Code of 1986.’’ 

(2) AMENDMENTS RELATING TO SUBSTITUTE CHECKS.—Section 

3331 of title 31, United States Code, is amended— 

(A) in subsection (b), by striking ‘‘subsection (c)’’ and inserting ‘‘subsection (c) or (f)’’; 

(B) by redesignating subsection (f) as subsection (g); and 

(C) by inserting after subsection (e) the following new 

subsection: 

‘‘(f) The Secretary may waive any provision of this section 

as may be necessary to ensure that claimants receive timely 

payments.’’. 

(3) PERMANENT FUNDING OF THE CHECK FORGERY INSURANCE 

FUND.—Section 3343 of title 31, United States Code, is amended— 

(A) in subsection (a), by amending the second sentence 

to read as follows: ‘‘Necessary amounts are hereafter appropriated to the Fund out of any moneys in the Treasury not 

otherwise appropriated, and shall remain available until 

expended to make the payments required or authorized under 

this section.’’; 

(B) in subsection (b)— 

(i) by inserting ‘‘in the determination of the Secretary 

the payee or special endorse establishes that’’ after ‘‘without 

interest if’’; 
PUBLIC LAW 104–134—APR. 26, 1996 110 STAT. 1321–378 

(ii) in paragraph (2), by inserting ‘‘and’’ after the semicolon; 

(iii) in paragraph (3), by striking ‘‘; and’’ and inserting 

a period; and 

(iv) by striking paragraph (4); 

(C) in subsection (d), by inserting after the first sentence 

the following new sentence: ‘‘The Secretary may use amounts 

in the Fund to reimburse payment certifying or authorizing 

agencies for any payment that the Secretary determines would 

otherwise have been payable from the Fund, and may reimburse 

certifying or authorizing agencies with amounts recovered 

because of payee nonentitlement.’’; 

(D) by redesignating subsection (e) as subsection (g); and 

(E) by inserting after subsection (d) the following new 

subsections: 

‘‘(e) The Secretary may waive any provision of this section 

as may be necessary to ensure that claimants receive timely 

payments. 

‘‘(f) Under such conditions as the Secretary may prescribe, 

the Secretary may delegate duties and powers of the Secretary 

under this section to the head of an agency. Consistent with a 

delegation from the Secretary under this subsection, the head of 

an agency may redelegate those duties and powers to officers or 

employees of the agency.’’. 

(y) Section 3325 of title 31, United States Code, is amended 

by adding at the end the following new subsection: 

‘‘(d) The head of an executive agency or an officer or employee 

of an executive agency referred to in subsection (a)(1)(B), as 

applicable, shall include with each certified voucher submitted to 

a disbursing official pursuant to this section the taxpayer identifying 

number of each person to whom payment may be made under 

the voucher.’’. 

(z)(1) IN GENERAL.—Section 3701 of title 31, United States 

Code, is amended— 

(A) by amending subsection (a)(1) to read as follows: 

‘‘(1) ‘administrative offset’ means withholding funds payable by the United States (including funds payable by the 

United States on behalf of a State government) to, or held 

by the United States for, a person to satisfy a claim.’’; 

(B) by amending subsection (b) to read as follows: 

‘‘(b)(1) In subchapter II of this chapter and subsection (a)(8) 

of this section, the term ‘claim’ or ‘debt’ means any amount of 

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 other than another Federal 

agency. A claim includes, without limitation— 

‘‘(A) funds owed on account of loans made, insured, or 

guaranteed by the Government, including any deficiency or 

any difference between the price obtained by the Government 

in the sale of a property and the amount owed to the Government on a mortgage on the property, 

‘‘(B) expenditures of nonappropriated funds, 

‘‘(C) over-payments, including payments disallowed by 

audits performed by the Inspector General of the agency administering the program, 

‘‘(D) any amount the United States is authorized by statute 

to collect for the benefit of any person, 
110 STAT. 1321–379 PUBLIC LAW 104–134—APR. 26, 1996 

‘‘(E) the unpaid share of any non-Federal partner in a 

program involving a Federal payment and a matching, or costsharing, payment by the non-Federal partner, 

‘‘(F) any fines or penalties assessed by an agency; and 

‘‘(G) other amounts of money or property owed to the 

Government. 

‘‘(2) For purposes of section 3716 of this title, each of the 

terms ‘claim’ and ‘debt’ includes an amount of funds or property 

owed by a person to a State (including any past-due support being 

enforced by the State), the District of Columbia, American Samoa, 

Guam, the United States Virgin Islands, the Commonwealth of 

the Northern Mariana Islands, or the Commonwealth of Puerto 

Rico.’’; 

(C) by adding after subsection (d) the following new subsection: 

‘‘(e) In section 3716 of this title— 

‘‘(1) ‘creditor agency’ means any agency owed a claim that 

seeks to collect that claim through administrative offset; and 

‘‘(2) ‘payment certifying agency’ means any agency that 

has transmitted a voucher to a disbursing official for disbursement. 

‘‘(f) In section 3711 of this title, ‘private collection contractor’ 

means private debt collectors under contract with an agency to 

collect a nontax debt or claim owed the United States. The term 

includes private debt collectors, collection agencies, and commercial 

attorneys.’’; and 

(D) by amending subsection (d) to read as follows: 

‘‘(d) Sections 3711(f) and 3716–3719 of this title do not apply 

to a claim or debt under, or to an amount payable under— 

‘‘(1) the Internal Revenue Code of 1986 (26 U.S.C. 1 et 

seq.), 

‘‘(2) the Social Security Act (42 U.S.C. 301 et seq.), except 

to the extent provided under section 204(f) of such Act and 

section 3716(c) of this title, or 

‘‘(3) the tariff laws of the United States.’’. 

(2) SOCIAL SECURITY.— 

(A) APPLICATION OF AMENDMENTS MADE BY THIS ACT.— 

Subsection (f) of section 204 of the Social Security Act (42 

U.S.C. 404) is amended to read as follows: 

‘‘(f)(1) With respect to any deliquent amount, the Commissioner of Social Security may use the collection practices 

described in sections 3711(f), 3716, 3717, and 3718 of title 

31, United States Code and in section 5514 of title 5, United 

States Code, as in effect immediately after the enactment of 

the Debt Collection Improvement Act of 1996.’’ 

(B) PERMANENT APPLICATION.—Subsection (c) of section 5 

of the Social Security Domestic Reform Act of 1994 (Public 

31 USC 3701 Law 103–387) is amended by striking ‘‘and before’’ and all 

note. that follows and inserting a period. 

31 USC 3711 (aa)(1) GUIDELINES.—The Secretary of the Treasury, in connote. sultation with concerned Federal agencies, may establish guidelines, 

including information on outstanding debt, to assist agencies in 

the performance and monitoring of debt collection activities. 

31 USC 3711 (2) REPORT.—Not later than 3 years after the date of enactment 

note. of this Act, the Secretary of the Treasury shall report to the Congress on collection services provided by Federal agencies or entities 

collecting debt on behalf of other Federal agencies under the 
PUBLIC LAW 104–134—APR. 26, 1996 110 STAT. 1321–380


authorities contained in section 3711(g) of title 31, United States 

Code, as added by subsection (m) of this section. 

(3) AGENCY REPORTS.—Section 3719 of title 31, United States 

Code, is amended— 

(A) in subsection (a)— 

(i) by amending the first sentence to read as follows: 

‘‘In consultation with the Comptroller General of the United 

States, the Secretary of the Treasury shall prescribe regulations requiring the head of each agency with outstanding 

nontax claims to prepare and submit to the Secretary at 

least once each year a report summarizing the status of 

loans and accounts receivable that are managed by the 

head of the agency.’’; and 

(ii) in paragraph (3), by striking ‘‘Director’’ and inserting ‘‘Secretary’’; and 

(B) in subsection (b), by striking ‘‘Director’’ and inserting 

‘‘Secretary’’. 

(4) CONSOLIDATION OF REPORTS.—Notwithstanding any other 

provision of law, the Secretary of the Treasury may consolidate 

reports concerning debt collection otherwise required to be submitted by the Secretary into one annual report. 

(bb) The Director of the Office of Management and Budget 

shall— 

(1) review the standards and policies of each Federal agency 

for compromising, writing-down, forgiving, or discharging 

indebtedness arising from programs of the agency; 

(2) determine whether those standards and policies are 

consistent and protect the interests of the United States; 

(3) in the case of any Federal agency standard or policy 

that the Director determines is not consistent or does not 

protect the interests of the United States, direct the head 

of the agency to make appropriate modifications to the standard 

or policy; and 

(4) report annually to the Congress on— 

(A) deficiencies in the standards and policies of Federal 

agencies for compromising, writing-down, forgiving, or 

discharging indebtedness; and 

(B) progress made in improving those standards and 

policies. 

(cc)(1) ELIMINATION OF MINIMUM NUMBER OF CONTRACTS.— 

Section 3718(b)(1)(A) of title 31, United States Code, is amended 

by striking the fourth sentence. 

(2) REPEAL.—Sections 3 and 5 of the Act of October 28, 1986 

(popularly known as the Federal Debt Recovery Act; Public Law 

99–578, 100 Stat. 3305) are hereby repealed. 

FEDERAL ADMINISTRATIVE AND PERSONAL SERVICES 

EXPENSES 

(RECISSIONS) 

SEC. 31002. (a) Of the funds available to the agencies of the 

Federal Government, $500,000,000 are hereby rescinded: Provided, 

That rescissions pursuant to this paragraph shall be taken only 

from administrative and personal services and contractual services 

and supplies accounts: Provided further, That rescissions shall be 

taken on a pro rata basis from funds available to every Federal 

Regulations. 

31 USC 3719 

note. 

31 USC 3711 

note. 

31 USC 3718 

notes. 
110 STAT. 1321–381 PUBLIC LAW 104–134—APR. 26, 1996 

agency, department, and office in the Executive Branch, including 

the Office of the President. 

Records. (b) Within 30 days of enactment of this Act, the Director of

the Office of Management and Budget shall submit to the Committees on Appropriations of the House and Senate a listing of the 

amounts by account of the reductions made pursuant to the provisions of subsections (a) and (b) of this section. 

This Act may be cited as the ‘‘Omnibus Consolidated Rescissions 

and Appropriations Act of 1996’’. 

Approved April 26, 1996. 

LEGISLATIVE HISTORY—H.R. 3019 (S. 1594): 

HOUSE REPORTS: No. 104–537 (Comm. of Conference). 

SENATE REPORTS: No. 104–236 accompanying S. 1594 (Comm. on Appropriations). 

CONGRESSIONAL RECORD, Vol. 142 (1996): 

Mar. 7, considered and passed House. 

Mar. 11–15, 18, 19, considered and passed Senate, amended. 

Apr. 25, House and Senate agreed to conference report. 

WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS, Vol. 32 (1996): 

Apr. 26, Presidential statement. 

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