[Federal Register: August 21, 1998 (Volume 63, Number 162)]
[Rules and Regulations]
[Page 44985-44990]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr21au98-14]

[[Page 44985]]

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Part III

Department of the Treasury

_______________________________________________________________________

Fiscal Service

_______________________________________________________________________

31 CFR Part 285

Offset of Federal Benefit Payments to Collect Past-due, Legally
Enforceable Nontax Debt; Interim and Proposed Rules

[[Page 44986]]

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DEPARTMENT OF THE TREASURY

Fiscal Service

31 CFR Part 285

RIN 1510-AA74


Offset of Federal Benefit Payments To Collect Past-due, Legally
Enforceable Nontax Debt

AGENCY: Financial Management Service, Fiscal Service, Treasury.

ACTION: Interim rule with request for comments.

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SUMMARY: The Debt Collection Improvement Act of 1996 requires the
Federal Government to withhold or reduce certain Federal payments to
satisfy delinquent nontax debts owed to the United States by the payee.
This process is known as ``administrative offset.'' This interim rule
establishes the rules governing the administrative offset of Federal
benefit payments issued under the Social Security Act (other than
Supplemental Security Income), part B of the Black Lung Benefits Act,
and any law administered by the Railroad Retirement Board (other than
tier 2 benefit payments). This rule affects individuals who receive
these types of benefit payments and who owe delinquent nontax debts to
the Federal Government.

DATES: Effective: August 21, 1998. Comments must be received on or
before September 21, 1998.

ADDRESSES: All comments should be addressed to Gerry Isenberg,
Financial Program Specialist, Debt Management Services, Financial
Management Service, 401 14th Street SW, Room 151, Washington, D.C.
20227. A copy of this interim rule is being made available for
downloading from the Financial Management Service web site at the
following address: http://www.fms.treas.gov/debt/dms.html.

FOR FURTHER INFORMATION CONTACT: Gerry Isenberg, Financial Program
Specialist, at (202) 874-6660; Ellen Neubauer or Ronda Kent, Senior
Attorneys, at (202) 874-6680.

SUPPLEMENTARY INFORMATION:

Background

    A major purpose of the Debt Collection Improvement Act of 1996
(DCIA), Pub. L. 104-134, 110 Stat. 1321-358 et seq. (April 26, 1996),
is to increase the collection of delinquent nontax debts owed to the
Federal Government. Among other things, the DCIA established a
centralized process for withholding or reducing eligible Federal
payments, including certain benefit payments, to pay the payee's
delinquent debt owed to the United States. This process is known as
``administrative offset.''
    The Financial Management Service (FMS), a bureau of the Department
of the Treasury (Treasury), disburses more than 850 million Federal
payments annually, including Federal benefit payments on behalf of
agencies such as the Social Security Administration, the Railroad
Retirement Board, and the Department of Veterans Affairs. As the
Treasury disbursing agency, FMS is responsible for the implementation
of centralized administrative offset of Federal payments for the
collection of delinquent nontax debt. To meet this responsibility, FMS
has established the Treasury Offset Program.
    The Treasury Offset Program works as follows. FMS maintains a
delinquent debtor database. The database includes delinquent debtor
information submitted and updated by Federal agencies either owed debts
(creditor agencies) or collecting debts on behalf of other Federal
agencies. Before a Federal payment is disbursed to a payee, FMS
compares the payee information with debtor information in FMS''
delinquent debtor database. If the payee's name and taxpayer
identifying number (TIN) match the name and TIN of a debtor, the
payment is offset, in whole or in part, to satisfy the debt, to the
extent legally allowed.
    FMS transmits amounts collected through offset to the appropriate
agencies owed the delinquent debt after deducting a fee charged to
cover the cost of the offset program. FMS' authority to charge fees is
found at 31 U.S.C. 3716(c)(4). Under 31 U.S.C. 3717(e), the agencies
which are owed the delinquent debt may add the fees to the debt as part
of the administrative cost, if not otherwise prohibited by law.
Information about a delinquent debt remains in the debtor database and
offsets of eligible Federal benefit and other payments will continue
until debt collection activity for the debt is terminated because of
full payment, compromise, write-off or other reasons justifying
termination. In centralizing offset through the Treasury Offset
Program, FMS will consolidate and simplify offset procedures for the
Federal Government.
    This interim rule governs only the administrative offset of Federal
benefit payments issued under the Social Security Act (other than
Supplemental Security Income (SSI)); part B of the Black Lung Benefits
Act (governing claims for benefits filed before December 31, 1973); and
any law administered by the Railroad Retirement Board (other than tier
2 benefit payments, i.e., the portion of the railroad retirement
annuity based exclusively on railroad service) for the collection of
delinquent nontax debt owed to the Federal Government. Other rules and
procedures reflect requirements for other types of payments or debts,
as well as the general rules applicable to collection of debts by
offset. FMS has promulgated and will promulgate other rules governing
the centralized offset of Federal payments (other than Federal benefit
payments) for the collection of debts owed to Federal agencies, for the
collection of debts owed to States, and for the collection of past-due
child support. FMS anticipates that Part 285 of this title will contain
all of the provisions relating to the centralized offset of Federal
payments for the collection of debts owed to the Federal Government and
to State governments, including past-due child support.
    FMS developed this interim rule in consultation with the Social
Security Administration, the Railroad Retirement Board, the Department
of Labor, the Department of Veterans Affairs, the Office of Management
and Budget, and other affected agencies, and acknowledges their
constructive assistance.

Phased Implementation

    Under the DCIA, Federal benefit payments issued under the Social
Security Act (other than SSI); part B of the Black Lung Benefits Act;
and any law administered by the Railroad Retirement Board (other than
tier 2 benefit payments), hereinafter referred to as ``covered benefit
payments,'' may be offset to collect delinquent debt owed to the United
States subject to certain limitations. First, the DCIA provides for a
threshold level of covered benefit payments which a debtor must receive
before an offset may occur. Under the DCIA, only those amounts of
covered benefit payments which a debtor receives in excess of $9,000
per year (or $750 per month) may be offset. Second, the DCIA requires a
reduction in this threshold amount by the amount of benefit payments a
debtor receives which are not subject to offset. Benefit payments not
subject to offset include without limitation, SSI payments and benefit
payments paid under any law administered by the Secretary of Veterans
Affairs; part C of the Black Lung Benefits Act; any law administered by
the Railroad Retirement Board that such Board determines to be tier 2
benefits; and any other law under which Federal benefit payments are

[[Page 44987]]

made if such payments are exempt from offset.
    FMS intends to implement the offset of covered benefit payments in
two phases. During phase I and as described in this rule, FMS will
offset only those monthly covered benefit payments which individually
exceed the $750 threshold. During phase II, FMS will offset all covered
benefit payments, provided the total amount received by the debtor
exceeds the threshold amount. The DCIA requirement that the amount
offset be increased for individuals who also receive benefit payments
not subject to offset will be implemented during phase II. Calculating
the maximum allowable offset amount for debtors who receive more than
one type of benefit payment is operationally complex. FMS therefore has
adopted a phased approach to allow for some offsets to begin (i.e.,
offsets of monthly covered benefit payments which exceed $750), while
FMS continues to work out the complexities of fully implementing the
DCIA's benefit offset provisions. This approach will allow for the
orderly implementation of benefit offset ensuring that more complex
offsets are accomplished in an efficient and cost-effective manner.
Prior to implementation of phase II, FMS will amend this rule to
include the procedures applicable to phase II.

Section Analysis

(a) Scope

    Paragraph (a) explains that the rules contained in this regulation
apply only to the offset of certain Federal benefit payments, i.e.,
benefit payments payable to individuals under the Social Security Act
(other than SSI payments); part B of the Black Lung Benefits Act; and
any law administered by the Railroad Retirement Board (other than
payments that such Board determines to be tier 2 benefits).
    This paragraph also explains that FMS and/or the agency that
authorizes a payment, are not liable for amounts offset on the basis
that the underlying obligation, that is, the amount of the payment
before the offset was taken, was not satisfied. For example, where an
individual is ``due'' a Social Security payment of $900, the obligation
to pay $900 to that individual is met even though a portion of that
payment was offset and thus not actually received by the individual.

(b) Definitions

    The term ``covered benefit payments'' is used throughout the rule
to describe those benefit payments which are subject to the provisions
of this rule. Covered benefit payments means all Federal benefit
payments payable to an individual under the Social Security Act (other
than SSI payments); part B of the Black Lung Benefits Act; and any law
administered by the Railroad Retirement Board (other than payments that
such Board determines to be tier 2 benefits). The amount of the covered
benefit payment payable to a debtor for purposes of this rule will be
the amount after reduction or deduction required under the laws
authorizing the program. For example, if the amount of a debtor's $450
monthly Social Security payment is reduced by a $45 monthly Medicare
insurance premium, the amount of $405 will be used in calculating the
amount available for offset. Reductions to recover benefit overpayments
are likewise excluded from the covered benefit payment when calculating
amounts available for offset.
    It is important to note that there are other Federal benefit
payments which may be subject to offset under 31 U.S.C. 3716 but are
not covered by this rule, such as Office of Personnel Management
retirement payments.
    ``Monthly covered benefit payments'' are defined as covered benefit
payments which are payable to a payee on a recurring basis at monthly
intervals and are expected to continue for at least 12 months.
    The term ``payee'' as defined in the rule refers to a person who is
entitled to receive the benefit of all or part of a payment. FMS
recognizes that many Federal benefit payments are made to third
parties, sometimes known as representative payees, acting on behalf of
the person entitled to receive the benefit of all or part of the
payment (the beneficiary). Under these circumstances, an offset will
not occur unless the name and TIN of the beneficiary match the name and
TIN of the debtor. For example, if X owes a debt and receives a Social
Security retirement payment on his/her own behalf, the Social Security
retirement payment could be offset to satisfy the debt. If, however, X
receives a Social Security retirement payment as the representative
payee of Y, the payment could not be offset to satisfy X's debt. In
this case the offset could occur only if Y, the beneficiary, is the
debtor. FMS is working with payment agencies to insure that the names
and TINs of beneficiaries are identified.

(c) Administrative Offset, Generally

    Paragraph (c) explains how the administrative offset program works
generally and explains that covered benefit payments are among the
types of payments which are offset to collect debts owed to the United
States.

(d) Submission of Debts to FMS for Collection by Administrative Offset

    Paragraph (d) states the DCIA requirement that creditor agencies
must notify FMS of all past-due, legally enforceable debt delinquent
for more than 180 days for purposes of collection by administrative
offset. Additionally, this paragraph provides that creditor agencies
may notify FMS of debts delinquent for less than 180 days for purposes
of administrative offset. Before submitting a delinquent debt to FMS
for collection by offset, creditor agencies are responsible for
notifying debtors that their debt is delinquent and that the agency
intends to collect the debt by offset. The DCIA and this rule do not
change pre-offset due process and other requirements under 31 U.S.C.
3716(a) and agency specific laws and regulations. By written notice,
the creditor agency must inform debtors of the opportunity to review
applicable agency records and to seek a review of the determination of
the debt. Upon receipt of the notice, the debtor may provide evidence
to the creditor agency that collection of the debt by administrative
offset would result in a financial hardship and make alternate
arrangements, acceptable to the creditor agency, to repay the debt.
This section provides that the creditor agency must certify to FMS that
the requirements of 31 U.S.C. 3716(a) and applicable agency-specific
laws and regulations related to offset have been met.

(e) Offset Amount

    As described in paragraph (e)(1), the amount offset from a monthly
covered benefit payment will be the lesser of: (i) the amount of the
debt; (ii) an amount equal to 15% of the monthly covered benefit
payment; or, (iii) the amount, if any, by which the monthly covered
benefit payment exceeds $750.
    15% Limitation. When the DCIA was enacted, members of Congress
expressed concern that regulations developed by Treasury contain
safeguards to separate those debtors who cannot repay their debts from
those who refuse to pay. Federal benefit recipients, particularly
Social Security benefit recipients, may be dependent upon their Federal
benefits for a substantial part of their income. See House Conference
Report No. 104-537 on H.R. 3019, Balanced Budget Down Payment Act, II
(April 25, 1996); Senate Report No. 104-330 on H.R. 3756, Treasury,
Postal Service, and General Government Appropriation Bill 1997 (July
23, 1996); Conference Report accompanying the 1997 Appropriations

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Act, Congressional Record, September 28, 1996, H12005. Recognizing the
dependence recipients may have on their Federal benefits, this rule
limits the maximum amount that will be offset from an individual's
covered benefit payment to 15% of the payment.
    $750 Threshold. Under the DCIA, only those covered benefit payments
which exceed an annual threshold amount of $9,000 are subject to
offset. The DCIA provides that the $9,000 annual threshold may be
prorated when applied to monthly benefit payments. Thus the threshold
amount for monthly benefit payments is $750.
    Paragraph (e)(2) explains that a debtor is not entitled to a refund
of amounts offset if monthly benefit payments are reduced, terminated,
suspended or otherwise not actually received for a period of 12 months.
    Paragraph (e)(3) contains the following examples to illustrate how
the amount offset will be determined for offsets which occur during
phase I:
    Example (i): A debtor receives monthly Social Security benefits of
$850. The amount offset is the lesser of $127.50 (15% of $850) or $100
(the amount by which $850 exceeds $750). In this example, the amount
offset is $100 (assuming the debt is $100 or more).
    Example (ii): A debtor receives monthly Social Security benefits of
$1250. The amount offset is the lesser of $187.50 (15% of $1250) or
$500 (the amount by which $1250 exceeds $750). In this example, the
amount offset is $187.50 (assuming the debt is $187.50 or more).
    Example (iii): A debtor receives monthly Social Security payments
of $650. No amount will be offset because $650 is less than $750.

(f) Notification of Offset

    Paragraph (f) explains that before FMS begins to offset a debtor's
monthly covered benefit payments, although not required by the DCIA to
do so, FMS intends to notify the debtor of the anticipated offset, the
name of the creditor agency to which any amounts offset will be paid,
and a contact within that creditor agency who will handle questions
regarding the delinquent debt.
    As required by the DCIA, when FMS offsets a payment, FMS will
notify the debtor of the amount and date of the offset, the creditor
agency to which the amount offset was paid, and a contact within the
creditor agency who will handle concerns or questions regarding the
delinquent debt which triggered the offset. See 31 U.S.C. 3716(c)(7).
Typically, this notice will be provided no later than the date the
debtor is otherwise scheduled to receive the payment, or as soon as
practical thereafter. Non-receipt by the debtor of the notices
referenced in paragraph (f) of this section does not impair the
legality of the offset.

(g) Fees

    Paragraph (g) describes the authority under the DCIA, codified at
31 U.S.C. 3716(c)(4), for FMS to charge a fee for the full cost of
conducting offsets. Under 31 U.S.C. 3717(e) the agencies which are owed
the delinquent debt may add this fee to the debt as part of the
administrative cost of collection unless otherwise prohibited under 31
U.S.C. 3717(g).

(h) Disposition of Amounts Collected

    Paragraph (h) describes how amounts collected from covered benefit
payments will be transmitted to creditor agencies.

Regulatory Analyses

    This interim rule is not a significant regulatory action as defined
in Executive Order 12866. Because no notice of proposed rulemaking is
required for this interim rule, the provisions of the Regulatory
Flexibility Act do not apply.

Special Analyses

    FMS is promulgating this interim rule without opportunity for prior
public comment pursuant to the Administrative Procedure Act, 5 U.S.C.
553 (the ``APA''), because FMS has determined, for the following
reasons, that a comment period would be unnecessary, impracticable and
contrary to the public interest. The DCIA provision authorizing the
offset of covered benefit payments to collect delinquent debt owed to
the United States was effective on August 26, 1996. A comment period is
unnecessary because this interim rule does not change the ongoing
offset process under the Treasury Offset Program, but rather provides
guidance for creditor agencies and disbursing officials to facilitate
the addition of covered benefit payments into the Treasury Offset
Program. Under this interim rule, creditor agencies are required to
provide to the debtor the same pre-offset notice, opportunities, and
rights to dispute the debt and seek waiver as currently required under
31 U.S.C. 3716 and implementing regulations. Since this interim rule
provides critical guidance needed to facilitate the offset of benefit
payments to collect delinquent debt owed to the United States, FMS
believes that it is in the public interest to issue this interim rule
without opportunity for prior public comment.
    The public is invited to submit comments on the interim rule which
will be taken into account before a final rule is issued.
    FMS has determined that good cause exists to make this interim rule
effective upon publication without providing the 30 day period between
publication and the effective date contemplated by 5 U.S.C. 553(d). The
purpose of a delayed effective date is to afford persons affected by a
rule a reasonable time to prepare for compliance. However, in this
case, as required by the DCIA, agencies already participate in the
Treasury Offset Program. Inasmuch as this interim rule provides
important guidance that is expected to facilitate implementation of the
authority contained in the law, and effective as of August 26, 1996,
FMS believes that good cause exists to make the rule effective upon
publication.

List of Subjects in 31 CFR Part 285

    Administrative practice and procedures, Black lung benefits,
Claims, Debts, Disability benefits, Railroad retirement, Railroad
unemployment insurance, Social Security benefits, Supplemental Security
Income (SSI), Veterans benefits.

Authority and Issuance

    For the reasons set forth in the preamble, 31 CFR Part 285 is
amended as follows:

PART 285--DEBT COLLECTION AUTHORITIES UNDER THE DEBT COLLECTION
IMPROVEMENT ACT OF 1996

    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. Section 285.4 is added to Part 285, Subpart A, to read as
follows:

Sec. 285.4  Offset of Federal benefit payments to collect past-due,
legally enforceable nontax debt.

    (a) Scope. (1) This section sets forth special rules applicable to
the offset of Federal benefit payments payable to an individual under
the Social Security Act (other than Supplemental Security Income (SSI)
payments), part B of the Black Lung Benefits Act, or any law
administered by the Railroad Retirement Board (other than payments that
such Board determines to be tier 2 benefits) to collect delinquent
nontax debt owed to the United States.
    (2) As used in this section, benefit payments ``due to'' an
individual, ``payable to'' an individual, and/or

[[Page 44989]]

benefit payments ``received by'' an individual, refer to those benefit
payments expected to be paid to an individual before any amounts are
offset to satisfy the payee's delinquent debt owed to the United
States. Nothing in these phrases, similar phrases, or this section is
intended to imply or confer any new or additional rights or benefits on
an individual with respect to his or her entitlement to benefit
payments. The Financial Management Service (FMS), the Social Security
Administration, the Railroad Retirement Board, and other payment
agencies are not liable for the amount offset from an individual's
benefit payment on the basis that the underlying obligation,
represented by the payment before the offset was taken, was not
satisfied. See 31 U.S.C. 3716(c)(2)(A).
    (b) Definitions. As used in this section:
    Administrative offset or 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 debt.
    Agency or Federal agency means a department, agency, court, court
administrative office, or instrumentality in the executive, judicial,
or legislative branch of the Federal Government, including government
corporations.
    Covered benefit payment means a Federal benefit payment payable to
an individual under the Social Security Act (other than SSI payments),
part B of the Black Lung Benefits Act, or any law administered by the
Railroad Retirement Board (other than payments that such Board
determines to be tier 2 benefits). The amount of the covered benefit
payment payable to a debtor for purposes of this section will be the
amount after reduction or deduction required under the laws authorizing
the program. Reductions to recover benefit overpayments are excluded
from the covered benefit payment when calculating amounts available for
offset.
    Creditor agency means a Federal agency owed a debt that seeks to
collect that debt through administrative offset.
    Debt or claim means an amount of money, funds, or property which
has been determined by an agency official to be due the United States
from any person, organization, or entity except another Federal agency.
Debt or claim does not include a debt or claim arising under the
Internal Revenue Code of 1986 or the tariff laws of the United States.
    Debtor means a person who owes a debt. The term ``person'' includes
any individual, organization or entity, except another Federal agency.
    Disbursing official means an official who has authority to disburse
public money pursuant to 31 U.S.C. 3321 or another law, including an
official of the Department of the Treasury, the Department of Defense,
the United States Postal Service, or any other government corporation,
or any official of the United States designated by the Secretary of the
Treasury to disburse public money.
    FMS means the Financial Management Service, a bureau of the
Department of the Treasury.
    Monthly covered benefit payment means a covered benefit payment
payable to a payee on a recurring basis at monthly intervals that is
not expressly limited in duration, at the time the first payment is
made, to a period of less than 12 months.
    Payee means a person who is due a payment from a disbursing
official. For purposes of this section, a ``payee'' is a person who is
entitled to the benefit of all or part of a payment from a disbursing
official.
    Taxpayer identifying number means the identifying number described
under section 6109 of the Internal Revenue Code of 1986 (26 U.S.C.
6109). For an individual, the taxpayer identifying number generally is
the individual's social security number.
    (c) Administrative offset, generally. Disbursing officials shall
offset payments to satisfy, in whole or in part, debts owed by the
payee. Disbursing officials shall compare payment records with records
of debts submitted to FMS for collection by administrative offset. A
match will occur when the taxpayer identifying number and name of the
payee (as defined in paragraph (b) of this section) on a payment record
are the same as the taxpayer identifying number and name of the debtor
on a debt record. 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 in part, the debt. Any amounts not offset shall
be paid to the payee. Covered benefit payments, i.e., payments made to
individuals under the Social Security Act (other than Supplemental
Security Income (SSI) payments), part B of the Black Lung Benefits Act,
or any law administered by the Railroad Retirement Board (RRB) (other
than tier 2 benefit payments) are among the types of payments which may
be offset to collect debts owed to the United States. Offset of covered
benefit payments are subject to the limitations contained in this
section. Offsets of covered benefit payments will occur only if the
name and taxpayer identifying number of the person who is entitled to
the benefit of all or a part of the payment matches the name and
taxpayer identifying number of the debtor.
    (d) Submission of debts to FMS for collection by administrative
offset. Creditor agencies must notify FMS of all past-due, legally
enforceable debt delinquent for more than 180 days for purposes of
collection by administrative offset. Creditor agencies may notify FMS
of all debt delinquent for less than 180 days for purposes of
collection by administrative offset. Prior to such notification,
creditor agencies must certify to FMS that the debt is past-due,
legally enforceable, and that the creditor agency has provided the
debtor with notice and an opportunity for a review in accordance with
the provisions of 31 U.S.C. 3716(a) and other applicable law.
    (e) Offset amount. (1) The amount offset from a monthly covered
benefit payment shall be the lesser of:
    (i) The amount of the debt, including any interest, penalties and
administrative costs;
    (ii) An amount equal to 15% of the monthly covered benefit payment;
or
    (iii) The amount, if any, by which the monthly covered benefit
payment exceeds $750.
    (2) A debtor shall not receive a refund of any amounts offset if
the debtor's monthly covered benefit payments are reduced, suspended,
terminated, or otherwise not received for a period of 12 months.
    (3) Examples. (i) A debtor receives monthly Social Security
benefits of $850. The amount offset is the lesser of $127.50 (15% of
$850) or $100 (the amount by which $850 exceeds $750). In this example,
the amount offset is $100 (assuming the debt is $100 or more).
    (ii) A debtor receives monthly Social Security benefits of $1250.
The amount offset is the lesser of $187.50 (15% of $1250) or $500 (the
amount by which $1250 exceeds $750). In this example, the amount offset
is $187.50 (assuming the debt is $187.50 or more).
    (iii) A debtor receives monthly Social Security payments of $650.
No amount will be offset because $650 is less than $750.
    (f) Notification of offset. (1) Before offsetting a covered benefit
payment, the disbursing official will notify the payee in writing of
the date offset will commence. The notice shall inform the payee of the
type of payment that will be offset; the identity of the creditor
agency which requested the offset; and a contact point within the
creditor agency that will handle concerns regarding the offset.

[[Page 44990]]

    (2) The disbursing official conducting the offset will notify the
payee in writing of the occurrence of the offset to satisfy, in whole
or in part, a delinquent debt owed to the United States. The notice
shall inform the payee of the type and amount of the payment that was
offset; the identity of the creditor agency which requested the offset;
and a contact point within the creditor agency that will handle
concerns regarding the offset.
    (3) Non-receipt by the debtor of the notices described in
paragraphs (f)(1) and (f)(2) of this section shall not impair the
legality of the administrative offset.
    (g) Fees. A fee which FMS has determined to be sufficient to cover
the full cost of the offset procedure, shall be deducted from each
offset amount. Creditor agencies may add this fee to the debt if not
otherwise prohibited by law.
    (h) Disposition of amounts collected. The disbursing official
conducting the offset will transmit amounts collected for debts, less
fees charged under paragraph (g) of this section, to the appropriate
creditor agency. If an erroneous offset payment is made to a creditor
agency, the disbursing official will notify the creditor agency that an
erroneous offset payment has been made. The disbursing official may
deduct the amount of the erroneous offset payment from future amounts
payable to the creditor agency. Alternatively, upon the disbursing
official's request, the creditor agency shall return promptly to the
disbursing official or the affected payee an amount equal to the amount
of the erroneous payment. The disbursing official and the creditor
agency shall adjust the debtor records appropriately.

    Dated: August 13, 1998.
Richard L. Gregg,
Commissioner.
[FR Doc. 98-22394 Filed 8-20-98; 8:45 am]
BILLING CODE 4810-35-P