[Federal Register Volume 62, Number 183 (Monday, September 22, 1997)]
[Rules and Regulations]
[Pages 49437-49440]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-25023]


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SOCIAL SECURITY ADMINISTRATION

20 CFR Part 416

RIN 0960-AE67


Supplementary Security Income; Overpayment Recovery by Offset of 
Federal Income Tax Refund

AGENCY: Social Security Administration

ACTION: Final rules.

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SUMMARY: These final regulations govern use of the Federal income tax 
refund offset program established under section 2653 of the Deficit 
Reduction Act of 1984, Pub. L. No. 98-369. They permit the recovery of 
supplemental security income (SSI) overpayments through the withholding 
of amounts due to former SSI recipients as Federal income tax refunds. 
In these rules, we reflect the provisions of the statute and explain 
the procedures that we will follow in referring SSI overpayments to the 
Department of the Treasury for income tax refund offset (TRO).

EFFECTIVE DATE: These final rules are effective September 22, 1997.

FOR FURTHER INFORMATION CONTACT: Robert J. Augustine, Legal Assistant, 
Division of Regulations and Rulings, Social Security Administration, 
6401 Security Boulevard, Baltimore, MD 21235, (410) 966-5121. For 
information on eligibility or claiming benefits, call our national 
toll-free number, 1-800-772-1213.

SUPPLEMENTARY INFORMATION: Section 2653 of the Deficit Reduction Act of 
1984, codified at 31 U.S.C. Sec. 3720A and 26 U.S.C. Sec. 6402(d), 
authorized the Secretary of the Treasury, upon receiving notice from a 
Federal agency that a named individual owes the agency a past-due, 
legally enforceable debt, to withhold all or a part of any income tax 
refund that is due to the debtor and pay the amount withheld to the 
agency. Section 2653 specifically precluded the use of these procedures 
to recover overpayments of Social Security benefits paid under title II 
of the Social Security Act (the Act). Under 31 U.S.C. Sec. 3720A, a 
Federal agency that is owed a past-due, legally enforceable debt by an 
individual shall notify the Secretary of the Treasury of the debt in 
accordance with regulations issued by the Department of the Treasury. 
The applicable Treasury regulations are codified at 31 CFR Part 285 (62 
FR 34175). Before an agency may refer a debt to Treasury, it must, 
under 31 U.S.C. Sec. 3720A, take the following actions: (1) notify the 
debtor that the agency proposes to refer the debt for tax refund 
offset; (2) give the debtor at least 60 days to present evidence that 
all or part of the debt is not past-due or not legally enforceable; (3) 
consider all evidence the debtor presents in determining that all or a 
part of the debt is past-due and legally enforceable; and (4) satisfy 
any other conditions that the Secretary of the Treasury may prescribe 
to ensure that the agency's findings are valid and that the agency has 
made reasonable efforts to obtain the payment of the debt.
    Although section 2653 gave us the authority to use the TRO 
provisions to recover overpayments made to recipients of SSI payments 
under title XVI of the Act, we elected not to do so at that time 
because we did not think it appropriate to use a procedure we were 
precluded from using to recover title II overpayments to recover 
overpayments made under the needs-based title XVI program.
    Section 5129 of the Omnibus Budget Reconciliation Act of 1990 (OBRA 
90) removed the restriction on using the TRO provisions to recover 
title II overpayments. Section 5129 added several additional conditions 
to the referral of title II overpayments for offset. These included: 
(1) the overpaid individual may not be currently entitled to Social 
Security benefits under title II of the Act; (2) the notice that we 
send to the overpaid individual concerning our intent to seek the 
offset must describe the conditions under which we are required to 
waive recovery of an overpayment under section 204(b) of the Act; and 
(3) if the overpaid individual requests that we waive recovery of the 
overpayment within the 60-day period allowed under the program for 
presenting evidence that the debt is not past due or not legally 
enforceable, we may not certify the overpayment to Treasury without 
first issuing a determination on the waiver request. We issued final 
regulations on October 21, 1991 (56 FR 52466) implementing these 
statutory changes.
    Since that time, we have been modifying our computer systems to 
extend the TRO provisions to various subgroups of former title II 
program beneficiaries. We now have the necessary systems modifications 
in place to permit us to extend the TRO provisions to the title XVI 
program, as well. These title XVI rules closely follow the existing 
rules for the title II program, including the same conditions that the 
OBRA 90 legislation required for the title II program. That is, these 
rules provide that: (1) the overpaid individual may not currently be 
eligible to receive SSI payments under title XVI of the Act; (2) the 
notice we send to the overpaid individual concerning our

[[Page 49438]]

intent to seek offset must describe the conditions under which we are 
required to waive recovery of an overpayment under section 
1631(b)(1)(B) of the Act; and (3) if the overpaid individual requests 
that we waive recovery of the overpayment within the 60-day period 
allowed under the program for presenting evidence that the debt is not 
past due or legally enforceable, we may not certify the overpayment to 
Treasury without first issuing a determination on the waiver request.
    On June 23, 1997, we published proposed rules in the Federal 
Register at 62 FR 33778 and provided a 30-day period for interested 
individuals to comment. We received no comments. We are, therefore, 
publishing these rules essentially unchanged.

Explanation of Changes to Regulations

    We are adding new Secs. 416.580 through 416.586 to our regulations 
to explain our rules on recovery of title XVI overpayments through the 
withholding of amounts due to former SSI recipients as Federal income 
tax refunds. Section 416.580 provides general information about the tax 
refund offset program and explains that we may pursue collection of an 
overpayment through this program if the overpaid individual is not 
eligible for benefits. This new regulatory section also explains that 
we will not initiate the tax refund offset to collect an overpayment 
more than 10 years after our right to collect the overpayment first 
accrued, thereby making this section consistent with proposed TRO 
regulations for title II (62 FR 42439) and the applicable Department of 
the Treasury regulations (31 CFR Part 285).
    Section 416.581 explains that, before we refer an overpayment to 
the Treasury Department, we will notify the overpaid individual of our 
intention to do so. This notice will advise the individual of the 
amount of the overpayment and the conditions under which we will waive 
recovery of an overpayment under section 1631(b)(1)(B) of the Act. The 
notice will also explain that unless, within 60 days from the date of 
our notice, the overpaid individual repays the overpayment, presents 
evidence that the overpayment is not past due or not legally 
enforceable, or requests a waiver of the overpayment, we will refer the 
overpayment to the Department of the Treasury to offset any tax refund 
payable to the overpaid individual. The notice additionally will advise 
the individual of the right to inspect and copy our records related to 
the overpayment.
    Sections 416.582 and 416.583 explain our procedures for reviewing 
and making findings when an overpaid individual submits evidence that 
an overpayment is not past due or not legally enforceable.
    Section 416.584 explains our procedures for the overpaid individual 
who wishes to review our records related to the overpayment.
    Section 416.585 explains that if, within 60 days after the date of 
our notice of intent to seek an offset, an individual presents evidence 
that the overpayment is not past due or not legally enforceable or asks 
us to waive collection of the overpayment, we will suspend our referral 
of the overpayment to the Department of the Treasury for offset until 
we issue written findings that affirm that all or a part of the 
overpayment is past due and legally enforceable and, where appropriate, 
determine that waiver of the overpayment is unwarranted.
    Section 416.586 sets out our intention, in cases where a tax refund 
is insufficient in a tax year to satisfy the amount of the overpayment, 
to continue to offset in succeeding years any amount of the overpayment 
that remains, as long as the remainder of the overpayment continues to 
meet the criteria for referral under the tax refund offset program in 
succeeding years. This differs from our title II rules on TRO which 
provide that, where a tax refund is insufficient to recover an 
overpayment in a given year, we will recertify the remainder for offset 
in the following year. This proposed section reflects the fact that the 
Department of the Treasury now has the systems capability to retain the 
overpaid amount in their records for offset against future tax refunds 
the individual may be due. On August 7, 1997, we published separate 
proposed rules dealing with title II overpayments that would make this 
same change in the title II TRO rules (62 FR 42439).
    We are also adding to Sec. 416.1403(a) a new paragraph (17) that 
includes in the list of administrative actions that are not initial 
determinations findings on whether we can collect an SSI overpayment by 
using the Federal income tax refund offset procedure. Administrative 
actions that are not initial determinations may be reviewed by us, but 
they are not subject to the administrative review process provided by 
subpart N of our regulations, and they are not subject to judicial 
review.

Regulatory Procedures

    Pursuant to section 702(a)(5) of the Act, 42 U.S.C. 902(a)(5), as 
amended by section 102 of Pub. L. 103-296, the Social Security 
Administration follows the Administrative Procedure Act (APA) 
rulemaking procedures specified in 5 U.S.C. 553 in the development of 
its regulations. The APA provides in 5 U.S.C. 553(d)(3) for an 
exception to the requirement of publication of a substantive rule 30 
days before its effective date for good cause. In order to use the TRO 
provisions to recover title XVI overpayments from income tax refunds 
payable in 1998, these final rules must be effective in early October 
1997, so that we can begin notifying individuals that we propose to 
refer their overpayments to the Department of the Treasury for offset. 
Any delay in sending the notices and referring these debts to Treasury 
will result in lost program savings of up to $6 million. These final 
rules benefit the public by allowing for substantial program savings, 
while adequately safeguarding the rights of former SSI recipients by 
giving overpaid individuals the right to repay the amount, present 
evidence that the overpayment is not past due or not legally 
enforceable, or request us to waive collection of the overpayment, 
before referral to the Department of the Treasury is made. We will 
issue written findings affirming that all or part of the overpayment is 
past due and legally enforceable and, where appropriate, determine that 
waiver of the overpayment is unwarranted before making such a referral. 
In light of these considerations, we find that it is in the public 
interest to make these rules effective upon publication.

Executive Order 12866

    We have consulted with the Office of Management and Budget (OMB) 
and determined that these final rules do not meet the criteria for a 
significant regulatory action under Executive Order 12866. Thus, they 
were not subject to OMB review.

Regulatory Flexibility Act

    We certify that these final regulations will not have a significant 
economic impact on a substantial number of small entities because they 
affect only individuals. Thus, a regulatory flexibility analysis as 
provided in the Regulatory Flexibility Act, as amended, is not 
required.

Paperwork Reduction Act

    These final regulations will impose no additional reporting or 
recordkeeping requirements requiring OMB clearance.

(Catalog of Federal Domestic Assistance Programs: No. 96.006 
Supplemental Security Income)

List of Subjects in 20 CFR Part 416

    Administrative practice and procedure, Aged, Blind, Disability 
benefits, Public assistance programs,

[[Page 49439]]

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

    Dated: September 12, 1997.
John J. Callahan,
Acting Commissioner of Social Security.

    For the reasons set out in the preamble, subparts E and N of part 
416 of chapter III of title 20 of the Code of Federal Regulations are 
amended to read as follows:
    1. The authority citation for subpart E is revised to read as 
follows:

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

    2. Sections 416.580, 416.581, 416.582, 416.583, 416.584, 416.585, 
and 416.586 are added to subpart E to read as follows:


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

    (a) The standards we will apply and the procedures we will follow 
before requesting the Department of the Treasury to offset income tax 
refunds due taxpayers who have an outstanding overpayment are set forth 
in Secs. 416.580 through 416.586 of this subpart. These standards and 
procedures are authorized by the Deficit Reduction Act of 1984 [31 
U.S.C. Sec. 3720A], as implemented through Department of the Treasury 
regulations at 31 CFR 285.2.
    (b) We will use the Department of the Treasury tax refund offset 
procedure to collect overpayments that are certain in amount, past due 
and legally enforceable, and eligible for tax refund offset under 
regulations issued by the Secretary of the Treasury. We will use these 
procedures to collect overpayments only from individuals who are not 
currently entitled to monthly supplemental security income benefits 
under title XVI of the Act. We will refer an overpayment to the 
Secretary of the Treasury for offset against tax refunds no later than 
10 years after our right to collect the overpayment first accrued.


Sec. 416.581  Notice to overpaid individual.

    A request for reduction of a Federal income tax refund will be made 
only after we determine that an amount is owed and past due and provide 
the overpaid individual with 60 calendar days written notice. Our 
notice of intent to collect an overpayment through Federal income tax 
refund offset will state:
    (a) The amount of the overpayment;
    (b) That unless, within 60 calendar days from the date of our 
notice, the overpaid individual repays the overpayment, sends evidence 
to us at the address given in our notice that the overpayment is not 
past due or not legally enforceable, or asks us to waive collection of 
the overpayment under section 1631(b)(1)(B) of the Act, we intend to 
seek collection of the overpayment by requesting that the Department of 
the Treasury reduce any amounts payable to the overpaid individual as 
refunds of Federal income taxes by an amount equal to the amount of the 
overpayment;
    (c) The conditions under which we will waive recovery of an 
overpayment under section 1631(b)(1)(B) of the Act;
    (d) That we will review any evidence presented that the overpayment 
is not past due or not legally enforceable;
    (e) That the overpaid individual has the right to inspect and copy 
our records related to the overpayment as determined by us and will be 
informed as to where and when the inspection and copying can be done 
after we receive notice from the overpaid individual that inspection 
and copying are requested.


Sec. 416.582  Review within SSA that an overpayment is past due and 
legally enforceable.

    (a) Notification by overpaid individual.--An overpaid individual 
who receives a notice as described in Sec. 416.581 of this subpart has 
the right to present evidence that all or part of the overpayment is 
not past due or not legally enforceable. To exercise this right, the 
individual must notify us and present evidence regarding the 
overpayment within 60 calendar days from the date of our notice.
    (b) Submission of evidence. The overpaid individual may submit 
evidence showing that all or part of the debt is not past due or not 
legally enforceable as provided in paragraph (a) of this section. 
Failure to submit the notification and evidence within 60 calendar days 
will result in referral of the overpayment to the Department of the 
Treasury, unless the overpaid individual, within this 60-day time 
period, has asked us to waive collection of the overpayment under 
section 1631(b)(1)(B) of the Act and we have not yet determined whether 
we can grant the waiver request. If the overpaid individual asks us to 
waive collection of the overpayment, we may ask that evidence to 
support the request be submitted to us.
    (c) Review of the evidence. After a timely submission of evidence 
by the overpaid individual, we will consider all available evidence 
related to the overpayment. We will make findings based on a review of 
the written record, unless we determine that the question of 
indebtedness cannot be resolved by a review of the documentary 
evidence.


Sec. 416.583  Findings by SSA.

    (a) Following the review of the record, we will issue written 
findings which include supporting rationale for the findings. Issuance 
of these findings concerning whether the overpayment or part of the 
overpayment is past due and legally enforceable is the final Agency 
action with respect to the past-due status and enforceability of the 
overpayment. If we make a determination that a waiver request cannot be 
granted, we will issue a written notice of this determination in 
accordance with the regulations in subpart E of this part. Our referral 
of the overpayment to the Department of the Treasury will not be 
suspended under Sec. 416.585 of this subpart pending any further 
administrative review of the waiver request that the individual may 
seek.
    (b) Copies of the findings described in paragraph (a) of this 
section will be distributed to the overpaid individual and the overpaid 
individual's attorney or other representative, if any.
    (c) If the findings referred to in paragraph (a) of this section 
affirm that all or part of the overpayment is past due and legally 
enforceable and, if waiver is requested and we determine that the 
request cannot be granted, we will refer the overpayment to the 
Department of the Treasury. However, no referral will be made if, based 
on our review of the overpayment, we reverse our prior finding that the 
overpayment is past due and legally enforceable or, upon consideration 
of a waiver request, we determine that waiver of our collection of the 
overpayment is appropriate.


Sec. 416.584  Review of our records related to the overpayment.

    (a) Notification by the overpaid individual. An overpaid individual 
who intends to inspect or copy our records related to the overpayment 
as determined by us must notify us stating his or her intention to 
inspect or copy.
    (b) Our response. In response to a notification by the overpaid 
individual as described in paragraph (a) of this section, we will 
notify the overpaid individual of the location and time when the 
overpaid individual may inspect or copy our records related to the 
overpayment. We may also, at our discretion, mail copies of the

[[Page 49440]]

overpayment-related records to the overpaid individual.


Sec. 416.585  Suspension of offset.

    If, within 60 days of the date of the notice described in 
Sec. 416.581 of this subpart, the overpaid individual notifies us that 
he or she is exercising a right described in Sec. 416.582(a) of this 
subpart and submits evidence pursuant to Sec. 416.582(b) of this 
subpart or requests a waiver under Sec. 416.550 of this subpart, we 
will suspend any notice to the Department of the Treasury until we have 
issued written findings that affirm that an overpayment is past due and 
legally enforceable and, if applicable, make a determination that a 
waiver request cannot be granted.


Sec. 416.586  Tax refund insufficient to cover amount of overpayment.

    If a tax refund is insufficient to recover an overpayment in a 
given year, the case will remain with the Department of the Treasury 
for succeeding years, assuming that all criteria for certification are 
met at that time.
    3. The authority citation for subpart N is revised to read as 
follows:

    Authority: Secs. 702(a)(5), 1631, and 1633 of the Social 
Security Act (42 U.S.C. 902(a)(5), 1383, and 1383b); 31 U.S.C. 
3720A.

    4. Section 416.1403 is amended by deleting the word ``and'' at the 
end of paragraph (a)(15), replacing the period at the end of paragraph 
(a)(16) with ``; and'', and adding paragraph (a)(17) to read as 
follows:


Sec. 416.1403  Administrative actions that are not initial 
determinations.

    (a) * * *
    (17) Findings on whether we can collect an overpayment by using the 
Federal income tax refund offset procedure. (See Sec. 416.583).
* * * * *
[FR Doc. 97-25023 Filed 9-19-97; 8:45 am]
BILLING CODE 4190-29-P