federal register

46141

Friday

August 28, 1998

Part VIII

Department of the

Treasury

Fiscal Service

31 CFR Part 285

Administrative Offset—Collection of PastDue Support; Final Rule
46142 Federal Register / Vol. 63, No. 167 / Friday, August 28, 1998 /Rules and Regulations

DEPARTMENT OF THE TREASURY

Fiscal Service

31 CFR Part 285

RIN 1510–AA58

Administrative Offset—Collection of

Past-Due Support

AGENCY: Financial Management Service,

Fiscal Service, Treasury.

ACTION: Final rule; adoption of interim

rule with changes.

SUMMARY: The Debt Collection

Improvement Act of 1996 (DCIA),

enacted on April 26, 1996, authorized

the Secretary of the Treasury (Secretary)

to collect past-due support by the

administrative offset of Federal

payments. Executive Order 13019 of

September 28, 1996 directed the

Secretary to promptly develop and

implement procedures necessary for the

collection of past-due support debts by

administrative offset. The Financial

Management Service (FMS), a bureau of

the Department of the Treasury,

published an interim rule on July 7,

1997. This final rule adopts the interim

rule with changes incorporating

suggestions provided in comments on

the interim rule.

EFFECTIVE DATE: September 28, 1998.

ADDRESSES: Inquiries may be mailed to

Gerry Isenberg, Financial Program

Specialist, Debt Management Services,

Financial Management Service,

Department of the Treasury, 401 14th

Street S.W., Room 151, Washington,

D.C. 20227. A copy of this final rule is

being made available for downloading

from the Financial Management Service

web site at the following address:

http://www.fms.treas.gov.

FOR FURTHER INFORMATION CONTACT:

Gerry Isenberg, Financial Program

Specialist, at (202) 874–6660; J. Martin

Mills, Director, Treasury Offset Program,

at (202) 874–8700; Randall S. Lewis,

Attorney-Advisor, at (202) 874–6680.

SUPPLEMENTARY INFORMATION:

Background

The Debt Collection Improvement Act

of 1996 (DCIA), Pub. L. 104–134, 110

Stat. 1321–358 et seq. (April 26, 1996),

requires that disbursing officials of the

Department of the Treasury and other

Federal disbursing officials offset

Federal payments to collect nontax

delinquent debts owed to the Federal

government. In addition, subsection (h)

of 31 U.S.C. 3716, as added by section

31001(f) of the DCIA, authorizes the

Secretary of the Treasury (Secretary) to

collect debts owed to States, including

past-due support, by the administrative

offset of Federal payments. See also

section 31001(z)(1)(B) of the DCIA,

codified at 31 U.S.C. 3701(b)(2). To

accomplish these goals, Treasury has

established a centralized offset program,

known as the Treasury Offset Program

(TOP). Under TOP, Federal payments

are matched against a database of

delinquent debtors maintained by FMS.

When a match occurs and all of the

prerequisites for offset have been met,

the payment is offset to satisfy the debt.

The TOP will include offsets of all

eligible Federal payments, including, as

of January 1, 1999, Federal tax refund

payments.

On September 28, 1996, the President

issued Executive Order 13019 entitled

‘‘Supporting Families: Collecting

Delinquent Child Support Obligations’’

(Executive Order) which requires that

the Secretary promptly develop and

implement procedures necessary to

collect past-due support debts by

administrative offset. The Executive

Order recognizes that the failure of some

parents to meet their child support

obligations threatens the health,

education, and well-being of their

children and requires the collection of

delinquent child support obligations

from persons who may be entitled or

eligible to receive certain Federal

payments. FMS published an interim

regulation on July 7, 1997 (62 FR 36205)

describing the procedures applicable to

the collection of past-due support debts

by administrative offset of non-tax

Federal payments in accordance with 31

U.S.C. 3716(h) and the Executive Order.

Currently, regulations promulgated by

the Internal Revenue Service and the

Department of Health and Human

Services (HHS) govern the offsetting of

federal tax refund payments to collect

past due child support as authorized

under 26 U.S.C. 6402 and 42 U.S.C. 664.

See 26 CFR 301.6402–5 and 45 CFR

303.72. Effective January 1, 1999, FMS

will operate the tax refund offset

program as part of TOP. FMS will

publish a regulation governing the

offsetting of tax refund payments to

collect past-due support beginning

January 1, 1999. In addition, FMS has

promulgated or will promulgate other

rules governing the offset of Federal

payments to collect debts other than

child support owed to Federal agencies

and States. FMS anticipates that Part

285 of this title ultimately will contain

all of the provisions relating to

centralized offset for the collection of

debts owed to the Federal Government

and to State governments, including

past-due child support being enforced

by States.

FMS continues to work closely with

HHS to implement procedures

necessary to report to the Secretary

information on past-due support debts

referred to HHS by States under 31

U.S.C. 3716(h) and this rule. HHS

issued guidance to all States on August

8, 1997. In addition, FMS is working

closely with HHS to implement

procedures necessary to report to the

Secretary information on past-due

support debts referred to HHS by States

for tax refund offset purposes under 42

U.S.C. 664 and 26 U.S.C. 6402(c). It is

anticipated that States will continue to

refer debts to HHS and that HHS will

report those debts to the Secretary for

offset from both Federal tax refunds and

other Federal payments.

Public Comments

FMS received comments from 11

states and one Federal agency on the

interim rule published on July 7, 1997.

Many of the comments related to

technical questions such as

specifications for the electronic

submission of past-due support

information. Such questions are not

addressed in this final rule, but will be

addressed by FMS or HHS in separate

procedural instructions. Following is a

discussion of the substantive issues

raised in the comments.

Relationship among Treasury, HHS, and

the States

States will continue to refer debts to

HHS for the collection of past-due

support through the offset of both

Federal tax payments under the tax

refund offset program (TROP) and other

Federal payments under administrative

offset (AO). HHS will report these debts

to Treasury for offset purposes. Though

this rule provides States with the

flexibility to refer past-due support

debts directly to FMS, current HHS

rules governing programs under Chapter

7, Subchapter IV, Part D (IV–D) of the

Social Security Act require States to

report past-due support debts to HHS.

This rule is not intended to supersede

existing HHS rules; it merely provides

flexibility should HHS decide to amend

its rules in the future to allow States to

refer past-due support debts directly to

FMS.

Relationship between AO and TROP

The referral of past-due support to

Treasury for collection by AO is

voluntary. Therefore, cases submitted

for TROP will not automatically be

processed through AO. The TOP, which

encompasses both TROP and AO, when

fully developed, will allow States to

control which debts may be collected by

offset of tax refunds, other Federal
Federal Register / Vol. 63, No. 167 / Friday, August 28, 1998 /Rules and Regulations 46143

payments, or both. States also will be

able to control whether a particular type

of payment, such as Federal salary

payments, should be offset with respect

to an individual debtor.

Comments outside the scope of this rule

Several comments were outside the

scope of this rule and have not been

addressed. For example, one commenter

was concerned about the reporting of

past-due support balances exceeding

$5,000 to the Secretary of State for

purposes of denying passports to the

obligors under 42 U.S.C. 652(k) and

654(31). Another commenter was

concerned that past-due support debts

would be reported to consumer

reporting agencies by Treasury. Federal

agencies are not authorized to report

such amounts to consumer reporting

agencies. FMS also received several

comments regarding choice of law in

situations involving more than one

State. Paragraph (d) of this final rule

requires States to certify that they have

complied with all of the requirements of

this rule, as well as State law and

procedure. Determination of applicable

State law is outside the scope of this

rule, and must be determined under

applicable Federal and State law by the

States involved in a particular situation.

§ 285.1(a)—Definition of past-due

support

In response to several comments, the

definition of ‘‘past-due support’’ has

been amended by adding the following

at the end of the definition included in

the interim rule: ‘‘The term child as

used in this definition is not limited to

minor children.’’ This amendment

clarifies that, unless prohibited by court

order, or by State law or procedure,

past-due support may be collected by

offsetting the obligor’s nontax Federal

payments even after the child has

reached the age of majority. Compare

Federal law governing tax refund offset

which, unlike administrative offset,

prohibits collection of past-due support

(which has not been assigned to a State)

for a child who has reached the age of

majority. See 42 U.S.C. 664(c)(2).

§ 285.1(a)—Definition of past-due

support being enforced by the State

The definition of ‘‘past-due support

being enforced by the State’’ has been

amended to clarify that AO may be used

to collect past-due support debts

enforced by States pursuant to

cooperative agreements with or by

Indian tribal governments. See Section

1(b) of the Executive Order.

§ 285.1(a)—Definition of State

The public was specifically invited to

comment on the impact of including or

excluding legal subdivisions of States in

the definition of State. Three States

commented that FMS was correct in not

including subdivisions within the

definition of State. A fourth State

indicated that it would prefer to certify

cases on a statewide basis, but believed

that States which operate on a county

basis should have the discretion to

certify cases at the county level. Based

on the comments received and

discussions with HHS regarding current

procedures for county reporting, FMS

determined that the existing definition

does not create an impediment to the

collection of past-due support. Counties

seeking to participate may do so by

reporting through the State’s IV—D

program director. Therefore, the

definition of ‘‘State’’ was not changed to

include legal subdivisions.

§ 285.1(c)—Agreements

One commenter expressed concern

over the amount of time the States will

have to review and approve reciprocal

agreements for the referral of past-due

child support. As stated previously,

FMS anticipates that States will

continue to refer past-due support debts

to HHS until such time as HHS changes

its rules and reciprocal agreements are

in place. Currently, there is no need for

reciprocal agreements between FMS and

States for the purpose of referring pastdue support debts. However, should

HHS change its rules to allow States the

option of referring past-due support

debts directly to FMS, States will be

provided the time necessary to review

and approve any reciprocal agreement

that would be the basis for such

referrals.

§ 285.1(d)—Notification to FMS of pastdue support

Several States commented that the

interim rule should be revised to define

better which State should submit a debt

for offset when a particular past-due

support debt involves more than one

State. One State commented that HHS

guidance requires that, in nonassignment cases, the case must be

submitted by the State in which the

child resides. Another State suggested

that, in assignment cases, the case

should be submitted by the State in

which the custodial parent applied for

public assistance. Other States

questioned whether the interim rule is

consistent with provisions of 28 U.S.C.

1738B, Full Faith and Credit for Child

Support Orders Act (FFCCSOA).

In response to these comments, FMS,

after consulting with HHS, determined

that this provision of section 285.1(d) of

the final rule will be unchanged from

the interim rule. Paragraph 285.1(d)

covers all situations that may arise as

the residence and status of the parties

change, and is not inconsistent with the

FFCCSOA.

Several States also were concerned as

to whether the notification requirements

that apply when more than one State is

involved create an administrative

burden. One State was particularly

concerned that the notice requirement

would result in the creation of a

separate, unique notification system for

these types of cases, and suggested that

an easier and less burdensome way to

provide such notices be developed.

After consulting with HHS, FMS

determined that the final rule should

remain unchanged. The provision

requiring a State to notify other States

involved in enforcing the past-due

support when it refers the debt for offset

is necessary to ensure that debts are not

referred by more than one State.

Further, this requirement is consistent

with existing HHS regulations governing

the offset of tax refund payments, and,

therefore, should not result in the

creation of a new, separate reporting

system by the States. See 45 CFR

303.72(d).

One State requested that the rule

include a specific listing of the types of

past-due support that may be submitted

for offset against Federal non-tax

payments, including statutory citations

for each type of past-due support. Such

a list is unnecessary. Unlike the

statutory authority for offsets against

Federal tax refund payments, which

includes specific references to 42 U.S.C.

608(a)(3), 671(a)(17) and 654(4), the

statutory authority for offset against

other Federal payments does not

include specific references to the type of

past-due support debts that may be

collected under AO. The only

requirement is that the debt be past-due

support being enforced by the State.

Although FMS currently intends to

accept only those types of past-due

support debts that are eligible for offset

against Federal tax payments, FMS will

not apply the age and minimum debt

amount restrictions applicable to TROP

to AO. FMS and/or HHS will provide

additional guidance relating to the

referral of past-due support collection

by AO under this rule.

§ 285.1(e)—Minimum amount of pastdue support

Several States commented that the

$25 threshold for reporting cases for AO

is too low. FMS has determined that the
46144 Federal Register / Vol. 63, No. 167 / Friday, August 28, 1998 /Rules and Regulations

administrative costs associated with the

collection of past-due support debts less

than $25 exceed the amount of such

debts. Therefore, it is not cost-effective

for FMS to process debts less than $25.

States, however, may determine that

their costs to collect justify a higher

threshold amount for referring debts to

FMS for offset purposes. Since the

referral of past-due support for

collection by AO is voluntary, States are

not required to refer all debts over $25,

but may establish their own higher

threshold based on their own costeffectiveness determination.

§ 285.1(g)—Notification of changes in

status of debt

Eight States commented on the

provisions concerning notification of

changes in the status of debt. Several

comments related specifically to the

amount and/or timing of changes that

must be reported. In the past, it has not

been necessary for States to report

insignificant decreases in the amounts

of debt balances because States were not

allowed to report increases in debt

balances. Insignificant decreases

generally were less than unreported

increases, and, as a result, there

generally were no problems with offsets

that were greater than the actual amount

of the debt balance. However, because

States now may refer increases in the

amount of debts as well as decreases, to

avoid situations where offsets exceed

the actual amount of the debt balance,

it is imperative that all decreases in debt

balances be reported. There will,

however, be flexibility in the time and

manner in which decreases may be

reported. To make the rule as flexible as

possible with regard to the timing and

manner of reporting changes in the

amounts of debts, the word ‘‘any’’ was

deleted from paragraph (g) in the final

rule. FMS or HHS will provide

additional guidance relating to the

timing and manner in which the

amounts of increases and decreases in

debt balances must be reported.

States also expressed concern that the

regulation does not specifically allow

States to report changes in the status of

debt by providing updated balances.

FMS and/or HHS will provide

additional guidance on how States will

report changes in the amount of a debt

referred for administrative offset.

§ 285.1(h)—Advance notice of intent to

collect by administrative offset

Several States commented on the

provisions governing advance notices to

debtors providing notice of the States’

intent to submit past-due support for

administrative offset. Two States

requested that the language of the rule

be revised to make clear that a one-time

notice to a debtor is sufficient. A third

State expressed a concern that the

regulation could result in debtors being

notified that payments were to be offset

to pay debts that had not yet accrued.

As stated in the preamble to the

interim rule, before a State may report

increases to the amount of a past-due

support debt referred for AO, the State

must meet the requirements of

paragraph (h) as well as State law and

procedure; only then has a State met the

due process requirements of Federal law

with respect to the offset of Federal

payments set forth in 31 U.S.C. 3716(a).

A notice to an obligor that includes a

statement to the effect that future

amounts, in addition to the amount

included in the notice, will be collected

by means of AO (i.e., a ‘‘one-time’’

notice), is sufficient for purposes of

paragraph (h) only if such a statement

meets the notice requirements of

applicable State law as determined by

the State. Thus, no changes to the rule

have been made.

One State requested that the provision

regarding case reviews by the States be

revised to reflect provisions of the

FFCCSOA relating to exclusive

jurisdiction. After consulting with HHS,

FMS determined that provisions in the

rule regarding reviews are not

inconsistent with the provisions of the

FFCCSOA. The rule provides the

flexibility necessary for a review to be

held in any State as may be authorized

in any given situation under the

FFCCSOA.

§ 285.1(i)—Payments subject to offset

One State requested that the final rule

include a listing of the payments subject

to AO; another State asked whether a

particular type of payment would be

subject to offset. Such a list is

impractical. Federal agencies make

payments under hundreds of Federal

programs. Payments under all such

programs are subject to offset unless the

payment type is exempted either by

statute or by the Secretary of the

Treasury upon request by the head of an

agency. A list of payment types that are

exempt from AO may be obtained from

the FMS website.

§ 285.1(j)—Special provisions

applicable to Federal salary payments

FMS received several comments

concerning the special provisions

applicable to Federal salary payments.

One State questioned whether FMS

would deduct up to 65% in a situation

where a lower percentage had been

agreed to or had been determined by

court order. In such situations, States

will be able to indicate the lower

percentage to be applied, or will be able

to indicate that a particular debt is not

to be collected by administrative offset

of a Federal salary payment. Paragraph

(j) of the final rule has been revised to

state that, when a lower percentage is to

be applied, the State must inform FMS

or HHS of the lower percentage at the

time the debt is referred for collection

by AO. FMS and/or HHS will provide

additional guidance to States regarding

this process.

Another commenter questioned the

allowable deductions from a Federal

salary payment when calculating the

applicable withholding percentage. FMS

adopted the standards of the Consumer

Credit Protection Act, 15 U.S.C. 1671 et

seq., as well as the standards of 42

U.S.C. 659 which apply to the

enforcement of individual’s legal

obligations to provide child support or

make alimony payments by means of

income withholding, garnishment, and

similar proceedings against amounts

payable to Federal employees. The

exclusions included in this paragraph

are consistent with Office of Personnel

Management regulations governing

Salary Offset (5 CFR 550.1101 et seq.)

and Processing Garnishment Orders for

Child Support and/or Alimony (5 CFR

Part 581).

§ 285.1(k)—Payments exempt from

administrative offset

One State asked FMS to include in the

regulation a list of payments that are

exempt from administrative offset.

Because the list of exempt payments

changes as the Secretary of the Treasury

approves requests from Federal agencies

and/or as Federal laws are promulgated

or amended, it is inappropriate for the

regulation to include such a listing.

However, a listing of exemptions may be

obtained from the FMS website.

§ 285.1(l)—Fees

The preamble of the interim rule

applicable to the fees provision

included the follow up statement,

‘‘[s]tates may add [the] fee to the amount

of the debt if permitted by law.’’ One

commenter was concerned that

paragraph (l) of the interim rule may be

inconsistent with HHS rules which

provide that ‘‘past-due support may not

include fees or court costs or any other

non-child support debts owed to the

State or to the family.’’

There is no inconsistency. The

guidance cited by the commenter

specifically applies to collections of

past-due support through the tax refund

offset process and reflects statutory

restrictions, codified at 42 U.S.C. 664,

that require the full amounts offset from

tax refund payments to be paid to the
Federal Register / Vol. 63, No. 167 / Friday, August 28, 1998 /Rules and Regulations 46145

states for distribution. There are no

similar restrictions applicable to

amounts collected by means of AO. The

statement in the preamble explains that

States may add the fees charged under

this rule to the amount of the debt owed

only if permitted by law. Statutes or

regulations prohibiting States from

adding fees to the amount of the debt

are not superseded by this regulation.

In addition, several States commented

on the amount of the fees charged by

FMS for collection of past-due support

by AO. One State was concerned that

States could end up owing FMS where

the amount of an offset was less than the

fee charged; other States believed that

the fee amount was too high and should

either be limited to a maximum amount

per month or be less for subsequent

offsets when the collection is from an

on-going stream of payments. One State

requested that the regulation include the

fee schedule. Under 31 U.S.C.

3716(c)(4), the Secretary may charge a

fee sufficient to cover the full cost of

conducting AO. FMS will review the

amount of the fee periodically to ensure

that the fees charged and collected meet,

but do not exceed, the costs of the

program. With regard to concerns that

States may owe FMS in instances where

the amount collected is less than the

offset fee, since AO is voluntary, States

may withdraw debts from the program

at any time pursuant to the provisions

of paragraph (g) when collection by

offset is no longer cost effective. States

will be advised of any changes in the fee

schedule.

§ 285.1(m)—Conducting the offset

One State asked about FMS’ authority

to reverse an offset made in error. In

response, a provision concerning

reversals was added to paragraph (m)

which provides that FMS will notify

HHS or the appropriate State when an

erroneous offset payment has been

made. FMS will collect the amount of

the erroneous payment from HHS or the

State either by deducting the amount

from future payments by FMS or by

requesting a return of the erroneous

offset payment by HHS or the State.

FMS will provide States with additional

procedural guidance concerning how

and when reversals will be conducted.

One State asked what restrictions will

apply to payment amounts eligible for

offset, and how they will be applied;

another asked whether each Federal

payment agency will set the terms and

conditions for enforcing AO. With

regard to the restrictions that apply to

payment amounts under AO, as noted

previously, payments subject to AO are

made under hundreds of Federal

programs and are governed by the laws

applicable to those programs. FMS will

work with payment agencies in

determining the appropriate amount

that should be offset against their

payments. Thus, there may be specific

limitations on the amount which can be

offset from a particular payment type.

The provisions of this regulation apply

to all disbursing officials who conduct

offsets under the AO program.

§ 285.1(n)—Priorities

Several States commented that the

priorities included in the interim rule

are inconsistent with the distribution

rules outlined in 42 U.S.C. 657 and HHS

guidance. Other States commented that

the regulation should address other

situations such as when more than one

State is attempting to offset the same

payment; still others suggested that

amounts collected be prorated among

States without regard to case type.

The final rule retains the priorities

specified in the interim rule. Unlike the

statute governing TROP, 26 U.S.C.

6402(c), 31 U.S.C. 3716 does not include

provisions governing priority when

debts are being collected by

administrative offset. Furthermore, the

priorities in this rule do not conflict

with the distribution rules in 42 U.S.C.

657 and HHS guidance. The priorities

applied by the States to amounts

collected for distribution under 42

U.S.C. 657 are distinct from the

priorities applied by FMS when

collecting debts under 31 U.S.C. 3716.

In order to clarify this distinction,

paragraph (n) has been revised. As

suggested, paragraph (n) of the final rule

is labeled Administrative Offset

Priorities, and specifically refers to

offsets by FMS and other disbursing

officials. FMS will include information

relating to priorities within debt

categories in procedural guidance.

§ 285.1(o)—Notification of offset

Several States commented that they

need information regarding the source

of collection, as well as information

relating to cases for which there is no

offset. Executive Order No. 13109

requires FMS, to the extent permitted by

law, to provide to the Secretary of HHS

certain information from payment

records of persons who are delinquent

in child support obligations. Under 42

U.S.C. 653, the Secretary of HHS may

request such information. The rule has

been revised to state that FMS and other

disbursing agencies, upon the request of

the Secretary of HHS, will provide such

information to HHS to the extent such

information is available from TOP

activities. HHS will provide information

to the States to the extent authorized by

law.

Regulatory Analyses

This rule is not a significant

regulatory action as defined in

Executive Order 12866. It is hereby

certified that this rule will not have a

significant economic impact on a

substantial number of small entities.

Therefore, a regulatory flexibility

analysis is not required. This regulation

only impacts individuals and States and

will not impose significant costs on

small businesses.

The collections of information

contained in this final regulation have

been reviewed and approved by the

Office of Management and Budget in

accordance with the requirements of the

Paperwork Reduction Act (44 U.S.C.

3507) under control number 1510–0069.

Authority and Issuance

Accordingly, the interim rule

amending 31 CFR part 285 which was

published at 62 FR 36205 on July 7,

1997, is adopted as a final rule with the

following changes:

1. The authority citation for part 285

continues to read as follows:

Authority: 26 U.S.C. 6402; 31 U.S.C. 321,

3701, 3711, 3716, 3720A, 3720D; E.O. 13019;

3 CFR, 1996 Comp., p. 216.

2. In § 285.1, amend paragraph (a) by

revising the definitions for ‘‘past-due

support’’ and ‘‘past-due support being

enforced by the State’’; revise

paragraphs (g), (m), (n) and (o); and add

paragraph (j)(5) to read as follows:

§ 285.1 Collection of Past-Due Support By

Administrative Offset.

(a) * * *

Past-due support means the amount

of support determined under a court

order, or an order of an administrative

procedure established under State law,

for support and maintenance of a child,

or of a child and the parent with whom

the child is living, which has not been

paid. The term child as used in this

definition is not limited to minor

children.

Past-due support being enforced by

the State means there has been an

assignment of the support rights to the

State, or the State making the request for

offset is providing services to

individuals pursuant to 42 U.S.C. 654(5)

(section 454(5) of the Social Security

Act), or the State is enforcing support

pursuant to a cooperative agreement

with or by an Indian tribal government.

* * * * *

(g) Notification of changes in status of

debt. The State notifying FMS or HHS

of past-due support shall, in the manner

and in the time frames provided by FMS

or HHS, notify FMS or HHS of deletions

or decreases in the amount of a debt
46146 Federal Register / Vol. 63, No. 167 / Friday, August 28, 1998 /Rules and Regulations

referred for collection by administrative

offset. The State may notify FMS or

HHS of any increases in the amount of

a debt referred for collection by

administrative offset provided the State

has complied with the requirements of

paragraph (h) of this section with regard

to those amounts.

* * * * *

(j) Special provisions applicable to

Federal salary payments. * * *

(5) At the time the past-due support

debt is submitted for offset, the State

shall advise FMS or HHS if the

maximum amount of a Federal salary

payment that may be offset is less than

the amount described under this

paragraph.

* * * * *

(m) Offsetting payments. (1)

Conducting the offset. Disbursing

officials of the Department of the

Treasury, the Department of Defense,

the United States Postal Service, or any

other Government corporation, any

disbursing official of the United States

designated by the Secretary, or any

disbursing official of an executive

department or agency that disburses

Federal payments shall offset payments

subject to offset under this section to

satisfy, in whole or part, a debt owed by

the payee. Disbursing officials shall

compare payment certification records

with records of debts submitted to FMS

for collection by administrative offset. A

match will occur when the taxpayer

identifying number and name control of

a payment record are the same as the

taxpayer identifying number and name

control of a debt record. The taxpayer

identifying number for an individual is

the individual’s social security number.

When a match occurs and all other

requirements for offset have been met,

the disbursing official shall offset the

payment to satisfy, in whole or part, the

debt. Any amounts not offset shall be

paid to the payee. The amount that can

be offset from a single payment is the

lesser of the amount of the debt

(including interest, penalties, and

administrative costs); the amount of the

payment; or the amount of the payment

available for offset if a statute or

regulation prohibits offset of the entire

amount. Debts remain subject to

collection by offset until paid in full.

(2) Disposition of amounts collected.

FMS will transmit amounts collected for

debts, less fees charged under paragraph

(l) of this section, to HHS or to the

appropriate State. If FMS learns that an

erroneous offset payment has been made

to HHS or any State, FMS will notify

HHS or the appropriate State that an

erroneous offset payment has been

made. FMS may deduct the amount of

the erroneous offset payment from

amounts payable to HHS or the State, as

the case may be. Alternatively, upon

FMS’ request, the State shall return

promptly to the affected payee or FMS

an amount equal to the amount of the

erroneous payment (unless the State

previously has paid such amounts, or

any portion of such amounts, to the

affected payee). HHS and States shall

notify FMS any time HHS or a State

returns an erroneous offset payment to

an affected payee. FMS and HHS, or the

appropriate State, will adjust their

debtor records accordingly.

(n) Administrative offset priorities.

When a payee/debtor owes more than

one debt which has been referred to

FMS for collection by administrative

offset, any offset by a disbursing official

will be applied first to past-due support

assigned to a State and will be applied

to any other past-due support after any

other reductions allowed by law.

(o) Notification of offset. (1)

Disbursing officials of FMS or any other

disbursing official which conducts an

offset will notify the payee in writing of

the occurrence of the offset to satisfy

past-due support. The notice shall

inform the payee of the type and

amount of the payment that was offset;

the identity of the State which requested

the offset; and a contact point within the

State that will handle concerns

regarding the offset. Disbursing officials

shall not be liable for failure to provide

this notice.

(2) Disbursing officials of FMS or any

other disbursing official which conducts

an offset under this section will share

with HHS, upon request by the

Secretary of HHS, information

contained in payment certification

records of persons who are delinquent

in child support obligations that would

assist in the collection of such debts.

When no offset is conducted, disbursing

officials of FMS or any other disbursing

official, will provide such information

to HHS to the extent such information

is available from offset activities

conducted by FMS and other disbursing

officials.

* * * * *

Dated: August 24, 1998.

Richard L. Gregg,

Commissioner.

[FR Doc. 98–23093 Filed 8–27–98; 8:45 am]

BILLING CODE 4810–35–P