[Federal Register Volume 62, Number 234 (Friday, December 5, 1997)]
[Rules and Regulations]
[Pages 64274-64279]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-32008]


-----------------------------------------------------------------------

SOCIAL SECURITY ADMINISTRATION

20 CFR Parts 404 and 422

RIN 0960-AE09


Federal Old-Age, Survivors, and Disability Insurance; Disclosure 
of Information to Consumer Reporting Agencies and Overpayment Recovery 
Through Administrative Offset Against Federal Payments

AGENCY: Social Security Administration.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: In this final rule, we are making several revisions to our 
regulations dealing with debt collection. First, we are modifying the 
regulations dealing with the recovery of benefit overpayments under 
title II of the Social Security Act (the Act) to reflect statutory 
authority for the Social Security Administration (SSA) to selectively 
refer information to consumer reporting agencies and to recover title 
II overpayments through administrative offset by the Department of the 
Treasury against other Federal payments to which the overpaid 
individual may be entitled. These collection practices are limited to 
overpayments made to a person after he or she attained age 18 that are 
determined to be otherwise unrecoverable under section 204 of the Act 
after the individual ceases to be a beneficiary under title II of the 
Act. Second, as an independent agency in the executive branch of the 
U.S. Government, we are establishing a new subpart D in part 422 of 
title 20 of the Code of Federal Regulations which explains our rules on 
debt collection procedures for both administrative debts and for title 
II program overpayments determined to be otherwise unrecoverable under 
section 204 of the Act. These rules for the new subpart D address the 
reporting of delinquent debts to consumer and other credit reporting 
agencies and the use of administrative offset through the Department of 
the Treasury. Third, we are revising our rules on the recovery of title 
II program overpayments through the use of the Federal income tax 
refund offset (TRO) provisions to reflect that, beginning January 1, 
1998, the Department of the Treasury, rather than the Internal Revenue 
Service (IRS), will administer the TRO program, and to reflect other 
changes in policies and procedures applied by the IRS and the 
Department of the Treasury in the TRO program.

EFFECTIVE DATE: This final rule is effective January 5, 1998.

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 204 of the Act prescribes the 
methods SSA may use to recover Social Security benefits erroneously 
paid under title II of the Act (title II program overpayments), as 
distinguished from the methods SSA may use to collect other debts owed 
the agency (administrative debts) that are recoverable under other 
statutory authority. Until recently, SSA was authorized to recover 
title II program overpayments only through adjustment of future 
benefits payable to the overpaid individual or to others on the 
earnings record on which the overpayment was made, by direct recovery 
from the overpaid person (or the overpaid person's estate, if 
deceased), or by offset against Federal income tax refunds due from the 
Department of the Treasury. Amendments to section 204 of the Act by 
section 5 of Pub. L. 103-387 (1994) and section 31001(z)(2) of Pub. L. 
104-134 (1996) permit SSA to use several debt collection procedures 
that have been available to Federal agencies (including SSA) by statute 
since 1982, but that SSA had been precluded from using to recover title 
II program overpayments. Among other things, these procedures include 
reporting delinquent debts to consumer and other credit reporting 
agencies and recovering debts by administrative offset against other 
Federal payments to which the debtor is entitled. Under section 204(f) 
of the Act (42 U.S.C. 404(f)), these additional debt collection 
procedures may be used to recover title II program overpayments only if 
the overpayment was made to a person after he or she attained age 18 
and the overpayment has been determined to be otherwise unrecoverable 
under section 204 of the Act after the overpaid person is no longer 
entitled to benefits under title II of the Act.
    Before we can refer information to consumer or other credit 
reporting agencies or refer a debt to the Department of the Treasury 
for administrative offset (either title II program overpayments or 
administrative debts), we must (1) send the debtor written notice (or, 
in the case of an individual for whom we do not have a current address, 
take reasonable action to locate and send written notice) describing 
the amount and nature of the debt, the action that we propose to take, 
and the debtor's rights to an explanation of the debt, to request us to 
review the debt, to dispute the accuracy of the information about the 
debt, and to inspect or copy our records about the debt; and (2) give 
the debtor at least 60

[[Page 64275]]

calendar days to present evidence that all or part of the debt is not 
past-due or not legally enforceable, or enter into a written agreement 
to pay the debt.
    Prior to March 31, 1995, SSA was an operating division of the 
Department of Health and Human Services (DHHS). SSA relied on the DHHS 
rules at 45 CFR part 30 for debt collection (other than collection of 
title II program overpayments). The Social Security Independence and 
Program Improvements Act of 1994 (SSIPIA), Pub. L. 103-296, established 
SSA as an independent agency in the executive branch of the Federal 
government effective March 31, 1995, and vested general regulatory 
authority in the Commissioner of Social Security (the Commissioner). 
Under section 106(b) of the SSIPIA, DHHS regulations in effect 
immediately before March 31, 1995, which relate to functions now vested 
in the Commissioner by reason of SSA's independence, continue to apply 
to SSA until such time as they are modified, suspended, terminated, or 
repealed by the Commissioner. In this final rule, we are establishing a 
new subpart D in part 422 of our regulations which sets forth the SSA 
rules on debt collection for title II program overpayments that have 
been determined to be otherwise unrecoverable under section 204 of the 
Act and for administrative debts. At this time, we are setting forth in 
subpart D our rules on referral to consumer and other credit reporting 
agencies and referral to the Department of the Treasury for 
administrative offset. In the future, as we make the necessary systems 
changes and develop policies and procedures to enable us to use 
additional debt collection tools for recovery of title II program 
overpayments, we will modify subpart D of part 422. In the meantime, we 
will continue to rely on the definitions and additional collection 
methods contained in the DHHS regulations in 45 CFR part 30 to recover 
administrative debts owed the Federal government.
    We are also revising our rules on the recovery of title II program 
overpayments through the withholding of amounts due to former 
beneficiaries as Federal income tax refunds to reflect the fact that, 
beginning January 1, 1998, the TRO program will be administered by the 
Department of the Treasury, Financial Management Service (FMS), instead 
of the IRS. The policy requiring agencies to delay referral of debts 
for TRO for three months after the right to collect first accrued has 
been rescinded. Also, the TRO program, as administered by FMS, will be 
ongoing rather than cyclical so that it will no longer be necessary for 
agencies to recertify amounts of a particular debt for collection by 
TRO each year. Instead, if the entire debt is not recovered in a given 
year, the case will remain with FMS for collection of the remainder by 
offset in succeeding years.

Public Comments

    On August 7, 1997, we published proposed rules in the Federal 
Register at 62 FR 42439 and provided a 60-day period for interested 
individuals to comment. We received a total of three letters on the 
proposed rules: one from a private attorney, one from a disability law 
center, and one from a member of Congress. After carefully considering 
the comments received, we have decided to adopt the proposed rules with 
only a few clarifying changes. The comments and our responses to them 
are summarized below.
    Comment: Two commenters objected to the proposed rules based on the 
assumption that the debtors subject to these rules have no input into 
the calculation of their debts and are without adequate protections.
    Response: The debtors who will be selected for the new debt 
collection techniques are those from whom SSA has attempted numerous 
times to collect the debts, both by written notices and personal 
contacts. In the initial overpayment notice, SSA advises the debtor of 
the right to request reconsideration of the fact and amount of the 
debt, and thereby challenge the calculation and existence of the debt. 
In this same notice, SSA also advises the debtor about the right to 
request waiver. In addition, SSA's separate notice to the debtor of the 
Agency's intent to refer information about the debt to the Department 
of the Treasury and to the consumer reporting agencies offers the 
debtor the opportunity to request waiver, present evidence showing that 
the debt is not past-due and/or legally enforceable, and dispute the 
accuracy of information about the debt that we would refer. We believe 
that our procedures adequately protect individuals by allowing ample 
opportunity to the debtors to both dispute the amount of the 
overpayment and/or to request waiver.
    Comment: One commenter asked the Agency not to issue final 
regulations until it: (1) runs a test program to assure that 
overpayments preventable by SSA are not occurring; (2) tests a program 
of appointing free advocates (who may be SSA employees) to counsel and 
represent those accused of receiving overpayments; and (3) assures that 
people accused of using overpayments understand that a report is made 
to a consumer reporting agency immediately unless they appeal or reach 
agreement with SSA.
    Response: We are not adopting this comment. With regard to the 
commenter's first concern above, SSA has had a longstanding and 
comprehensive quality assurance program that reviews overpayments, 
including those preventable by SSA. The program studies significant 
samples of claims, identifying problem areas that need to be corrected. 
We believe this quality assurance program corresponds to the test 
program suggested by the commenter.
    With regard to the commenter's second point, SSA already takes 
several steps toward helping overpaid individuals obtain 
representation. Information on the individual's right to seek and use 
representation is included in SSA's initial overpayment notices. In 
addition, SSA offers to provide information on advocacy groups that do 
not charge people who qualify for their services.
    Regarding the commenter's third point, SSA will not report 
information to consumer reporting agencies immediately. SSA will wait 
at least 60 days after the date of the notice to report the delinquency 
to consumer reporting agencies. During the 60-day due process period, 
SSA provides the debtor with the opportunity to request review of the 
debt, dispute the accuracy of the information to be reported, request 
waiver, or enter into an installment agreement. All of these rights are 
clearly explained in the notice to the debtor.
    Comment: One commenter objected to the practice of sending one pre-
offset notice to the debtor explaining that the debt is being referred 
to the Department of the Treasury for TRO and that future tax refunds 
will be offset to recover the overpayment. The commenter believes that 
we should provide separate notices before subsequent offsets.
    Response: This practice is consistent with the Department of the 
Treasury's existing process whereby no additional notice is necessary 
if there are multiple offsets in one year to recover an overpayment 
debt. It is also consistent with the Department of the Treasury's 
regulations and operating procedures which require notice at least 60 
calendar days before the date of referral to the Department of the 
Treasury.
    Comment: SSA's notices described in Sec. 404.521 of the proposed 
rules should contain language explaining that the debtor may enter into 
a repayment agreement with SSA.
    Response: Since the beginning of the TRO program, SSA's notices 
have contained such language. The notices issued under these final 
regulations also

[[Page 64276]]

contain the language which offers the opportunity to pay the debt by 
installments. One of the principles that SSA uses in the offset program 
is to extend to the debtor as many opportunities as possible to pay the 
debt voluntarily, rather than by offset. As long as the debtor repays 
by regular installments in accordance with his or her payment agreement 
with SSA, offset will not be used to collect the debt.
    Comment: No referral to the Department of the Treasury should occur 
until all administrative reviews have been completed or until a 
decision of the Agency becomes final, in the event that no appeal is 
taken. In addition, recovery efforts by the SSA and the Department of 
the Treasury should be stopped until a waiver request received after 
referral to the Department of the Treasury has been given full 
consideration.
    Response: When an individual submits a timely request for 
reconsideration of the initial overpayment decision and/or requests 
waiver of collection of the overpayment, SSA is precluded from any 
recovery action until SSA renders a decision affirming the initial 
determination and/or denying the waiver request. See Califano v. 
Yamasaki, 442 U.S. 682 (1979) and Sec. 404.506. SSA is not required to 
refrain from taking collection action concerning a title II overpayment 
debt after a decision on a request for reconsideration of the initial 
overpayment determination is issued and after a determination on a 
request for waiver of recovery of the overpayment is made after the 
debtor had the opportunity for a prerecoupment personal conference. 
However, under the process adopted to implement these final regulations 
SSA would not select a title II overpayment debt for referral to the 
Department of the Treasury while an administrative appeal regarding 
that debt is pending.
    Section 204(f) of the Act, as amended, authorizes SSA to collect 
such debts through administrative offset by the Department of the 
Treasury against Federal payments due the debtor when, among other 
things, SSA determines, under regulations, that such debts are 
otherwise unrecoverable under section 204 of the Act. In accordance 
with Sec. 404.527(b) of these final regulations, SSA would not select a 
debt as ``unrecoverable'' until a reconsideration determination 
requested on the initial determination of overpayment, or an initial 
determination (after opportunity for a personal conference) on a 
request for waiver of collection, is issued and either the billing 
system sequence is completed or further collection action is suspended 
or terminated. The billing system sequence on a title II overpayment 
debt would not be completed, and collection action on such a debt would 
not be suspended or terminated, while an administrative appeal at any 
level of adjudication is pending on the matter. Thus, under these final 
regulations SSA would not select a title II overpayment debt for 
collection by the Department of the Treasury through offset against 
other Federal payments while an administrative appeal is pending at any 
level of adjudication on the fact or amount of the overpayment or on 
waiver.
    Similarly, the changes in these regulations will not affect any 
former beneficiary's ability to request waiver. If the debtor requests 
waiver after a case has been referred, SSA will instruct the Department 
of the Treasury to cease collection efforts until the waiver request is 
adjudicated.
    Comment: SSA should raise its monetary threshold for referral to 
the Department of the Treasury from $25 to $500.
    Response: The $25 debt threshold is consistent with the regulations 
issued by Treasury and is used governmentwide. SSA has also determined 
it to be cost-effective. SSA will continue to use the $25 threshold in 
applying these rules.
    Comment: The notice SSA will send to debtors informing them that 
the Agency intends to report their debts to consumer reporting agencies 
should include the right to request waiver of the overpayment.
    Response: Unlike 31 U.S.C. 3720A(f) pertaining to the TRO notice to 
debtors, the statute (31 U.S.C. 3711(e)(1)(C)) pertaining to the notice 
to debtors about referral to consumer reporting agencies does not 
require an explanation of waiver. However, SSA notifies debtors about 
TRO, offset of other Federal payments and referral to consumer 
reporting agencies concurrently, and these notices explain the debtors' 
waiver rights. If the debtor requests waiver within the 60-calendar-day 
period allowed by the notice, SSA will not report the debt to the 
credit bureaus until the waiver request has been adjudicated.

Explanation of Changes to Regulations

    We are revising our title II rules on TRO at Secs. 404.520-404.526 
to reflect several changes in the TRO process promulgated by the 
Department of the Treasury. Beginning January 1, 1998, we will be 
referring title II program overpayments for TRO to the Department of 
the Treasury, rather than to IRS. Section 404.520 is revised to delete 
the requirement that a debt may not be referred for TRO before the 
expiration of three months after our right to collect first accrued. 
Section 404.526 is also revised by deleting reference to the need to 
recertify an overpayment for TRO in cases where a tax refund is 
insufficient to recover the entire amount of an overpayment in a given 
year, reflecting the fact that the case will now remain with the 
Department of the Treasury for offset in succeeding years without need 
for recertification. In this final rule, we have inserted at the end of 
Sec. 404.520(a) a reference to the current regulation of the Department 
of the Treasury (31 CFR 285.2) which supersedes the IRS regulation (26 
CFR 301.6402-6) that was cited in the notice of proposed rulemaking.
    We are adding a new Sec. 404.527 to our regulations to explain that 
we will use the additional debt collection methods authorized by 
section 204(f) of the Act to recover title II program overpayments if 
the overpayment occurred after the individual attained age 18, and the 
overpayment has been determined to be otherwise unrecoverable under 
section 204 of the Act after the individual is no longer entitled to 
benefits under title II of the Act. Section 404.527 also contains the 
criteria under which we determine that an overpayment is ``otherwise 
unrecoverable under section 204 of the Act.'' An overpayment debt will 
be determined to be unrecoverable when all of the following conditions 
are met: we completed our billing sequence or collection activity has 
been suspended or terminated in accordance with the Federal Claims 
Collection Standards in 4 CFR 104.2 and 104.3; there is no installment 
payment agreement or the overpaid person has failed to pay in 
accordance with such an agreement for two consecutive months; the 
overpaid individual has not requested waiver or, after appropriate 
review of such a request, we have determined that we will not waive 
collection of the overpayment; the overpaid person has not requested 
reconsideration of the initial overpayment determination or, after our 
review of such determination, we have affirmed such determination 
wholly or partially; we cannot collect the overpayment by adjusting 
benefits payable to individuals other than the overpaid person. For 
purposes of Sec. 404.527, an overpayment will be deemed to be 
unrecoverable from an individual who lived in a separate household from 
the overpaid person when the overpayment occurred and who did not 
receive the overpayment.

[[Page 64277]]

Adjustment of benefits is waived when waiver is requested under these 
circumstances. See Sec. 404.509.
    We are adding to Sec. 404.903 new paragraphs (t) and (u) to include 
in the list of administrative actions that are not initial 
determinations our determinations whether we will refer information 
about an overpayment debt to consumer reporting agencies and whether we 
will refer the debt to the Department of the Treasury for offset 
against other Federal payments due the overpaid person. 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 J of our regulations at 20 CFR Part 404, and they are not 
subject to judicial review.
    We are also creating a new subpart D to part 422 of our regulations 
to contain our rules on certain debt collection practices and 
procedures. In Sec. 422.301, we specify that the debt collection tools 
in subpart D may be used to recover both title II program overpayments 
the Commissioner has determined to be unrecoverable under section 204 
of the Act and overdue administrative debts owed the agency.
    In Sec. 422.305, we explain that we will refer all overdue title II 
program debts over $25, found to be otherwise unrecoverable under 
section 204 of the Act, to consumer reporting agencies. We describe the 
information we must include in the notice we send to the debtor before 
we report the debt to a consumer reporting agency. We also explain in 
this section that, in cases where an individual disputes the 
information we propose to refer to a consumer reporting agency within 
60 calendar days of our notice of our proposed referral, we will not 
send the information until we determine the correct information.
    In Sec. 422.306, we explain that we will refer all overdue 
administrative debts over $25 to credit reporting agencies. We also 
describe the information we must include in the notice we send to the 
debtor before we report the debt to a credit reporting agency. Examples 
of administrative debts are overpayments of employees' pay and 
allowances, debts for civil money penalties imposed under section 
1140(b) of the Act, debts for unpaid fees for reimbursable services by 
SSA (e.g., disclosure of information), contractor debts, etc.
    In Sec. 422.310, we explain our rules relating to referring debts 
to the Department of the Treasury for administrative offset. 
Specifically, we explain that we will refer overdue debts over $25 to 
the Department of the Treasury for offset against any Federal payments 
due the debtor. We also describe the information we must include in the 
notice we send to the debtor before referring the debt to the 
Department of the Treasury for administrative offset.
    In this final rule, we are revising the language of 
Secs. 422.305(b)(2), 422.306(b)(2) and 422.310(c)(2) as it appeared in 
the proposed rules to clearly state that we will not refer information 
on debts to consumer reporting agencies or to the Department of the 
Treasury for administrative offset before the expiration of 60 calendar 
days from the dates of the notices described in those regulations.
    In Sec. 422.315, we explain that a debtor has the right to inspect 
or copy our records related to a debt before we refer the debt to a 
consumer or credit reporting agency or to the Department of the 
Treasury for administrative offset, and the procedures for exercising 
that right.
    In Sec. 422.317, we explain that a debtor has the right to have us 
review the debt. To exercise this right, the debtor must notify us 
within 60 calendar days from the date of our notice of proposed 
referral and give us evidence that he or she does not owe all or part 
of the debt, or we do not have the right to collect it. After our 
review of the evidence, we explain that we will issue written findings 
of our review. If the debtor requests review and submits evidence 
within the 60-day period, we will not refer the debt to consumer or 
credit reporting agencies or to the Department of the Treasury unless 
and until we have completed our review and sent our findings to the 
debtor that all or part of the debt is overdue and legally enforceable.

Regulatory Procedures

Executive Order 12866

    We have consulted with the Office of Management and Budget (OMB) 
and determined that these proposed 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 proposed regulations will not have a 
significant impact on a substantial number of small entities. 
Therefore, a regulatory flexibility analysis, as provided in the 
Regulatory Flexibility Act, as amended, is not required.

Paperwork Reduction Act

    These proposed regulations will impose no new reporting or 
recordkeeping requirements requiring OMB clearance.

(Catalog of Federal Domestic Assistance Programs No. 96.001, Social 
Security--Disability Insurance; 96.002 Social Security--Retirement 
Insurance; 96.003 Social Security--Special Benefits for Persons Aged 
72 and Over; 96.004, Social Security--Survivors Insurance)

List of Subjects

20 CFR Part 404

    Administrative practice and procedure, Death benefits, Blind, 
Disability benefits, Old-Age, Survivors and Disability Insurance, 
Reporting and recordkeeping requirements, Social Security.

20 CFR Part 422

    Administrative practice and procedure, Organization and functions 
(Government agencies), Social Security.

    Dated: December 2, 1997.
Kenneth S. Apfel,
Commissioner of Social Security.

    For the reasons set out in the preamble, subparts F and J of Part 
404 of Chapter III of Title 20 of the Code of Federal Regulations are 
amended and a new subpart D is added to Part 422 of Chapter III of 
Title 20 of the Code of Federal Regulations as follows:

PART 404--[AMENDED]

    1. The authority citation for subpart F of Part 404 is revised to 
read as follows:

    Authority: Secs. 204, 205(a), and 702(a)(5) of the Social 
Security Act (42 U.S.C. 404, 405(a), and 902(a)); 31 U.S.C. 3720A.

    2. Section 404.520 is revised to read as follows:


Sec. 404.520  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. 404.520 through 404.526. These standards and procedures are 
authorized by 31 U.S.C. 3720A and are 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 Department of the Treasury. We will use these 
procedures to collect overpayments only from individuals who are not 
currently entitled to

[[Page 64278]]

monthly Social Security benefits under title II of the Act. We will 
refer an overpayment to the Department of the Treasury for offset 
against tax refunds no later than 10 years after our right to collect 
the overpayment first accrued.
    3. Section 404.521 is amended by revising the introductory text to 
read as follows:


Sec. 404.521  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 send 
the overpaid individual written notice. Our notice of intent to collect 
an overpayment through tax refund offset will state:
* * * * *
    4. Section 404.526 is revised to read as follows:


Sec. 404.526  Tax refund insufficient to cover amount of overpayment.

    If a tax refund for a given taxable year is insufficient to recover 
an overpayment completely, the case will remain with the Department of 
the Treasury for offset, assuming that all criteria for offset continue 
to be met.
    5. Section 404.527 is added to subpart F to read as follows:


Sec. 404.527  Additional methods for recovery of title II benefit 
overpayments.

    (a) General. In addition to the methods specified in Secs. 404.502 
and 404.520, an overpayment under title II of the Act is also subject 
to recovery under the rules in subpart D of part 422, provided:
    (1) The overpayment occurred after the individual has attained age 
18;
    (2) The overpaid individual is no longer entitled to benefits under 
title II of the Act; and
    (3) Pursuant to paragraph (b) of this section, we have determined 
that the overpayment is otherwise unrecoverable under section 204 of 
the Act.
    (b) When an overpayment is considered to be otherwise 
unrecoverable. An overpayment under title II of the Act is considered 
to be otherwise unrecoverable under section 204 of the Act if all of 
the following conditions are met:
    (1) Our billing system sequence has been completed (i.e., we have 
sent the individual an initial notice of the overpayment, a reminder 
notice, and a past-due notice) or collection activity has been 
suspended or terminated in accordance with the Federal Claims 
Collection Standards in 4 CFR 104.2 or 104.3.
    (2) We have not entered into an installment payment arrangement 
with the overpaid individual or, if we have entered into such an 
arrangement, the overpaid individual has failed to make any payment for 
two consecutive months.
    (3) The overpaid individual has not requested waiver pursuant to 
Sec. 404.506 or Sec. 404.522 or, after a review conducted pursuant to 
those sections, we have determined that we will not waive collection of 
the overpayment.
    (4) The overpaid individual has not requested reconsideration of 
the initial overpayment determination pursuant to Secs. 404.907 and 
404.909 or, after a review conducted pursuant to Sec. 404.913, we have 
affirmed, in whole or in part, the initial overpayment determination.
    (5) The overpayment cannot be recovered pursuant to Sec. 404.502 by 
adjustment of benefits payable to any individual other than the 
overpaid individual. For purposes of this paragraph, an overpayment 
will be deemed to be unrecoverable from any individual who was living 
in a separate household from the overpaid person at the time of the 
overpayment and did not receive the overpayment.
    6. In addition to the amendments set forth above, remove the 
acronym ``IRS'' and add, in its place, the words ``Department of the 
Treasury'' in the following places:
    (a) Section 404.521(b);
    (b) Section 404.522(b);
    (c) Section 404.523 (a) and (c) (both places); and
    (d) Section 404.525.
    7. The authority citation for subpart J of Part 404 is revised to 
read as follows:

    Authority: Secs. 201(j), 204(f), 205(a), (b), (d)-(h), and (j), 
221, 225, and 702(a)(5) of the Social Security Act (42 U.S.C. 
401(j), 404(f), 405(a), (b), (d)-(h), and (j), 421, 425, and 
902(a)(5)); 31 U.S.C. 3720A; sec. 5, Pub. L. 97-455, 96 Stat. 2500 
(42 U.S.C. 405 note); secs. 5, 6(c)-(e), and 15, Pub. L. 98-460, 98 
Stat. 1802 (42 U.S.C. 421 note).

    8. Section 404.903 is amended by deleting the word ``and'' at the 
end of paragraph (r), replacing the period at the end of paragraph (s) 
with a semicolon, and adding paragraphs (t) and (u) to read as follows:


Sec. 404.903  Administrative actions that are not initial 
determinations.

* * * * *
    (t) Determining whether we will refer information about your 
overpayment to a consumer reporting agency (see Secs. 404.527 and 
422.305 of this chapter); and
    (u) Determining whether we will refer your overpayment to the 
Department of the Treasury for collection by offset against Federal 
payments due you (see Secs. 404.527 and 422.310 of this chapter).

PART 422--ORGANIZATION AND PROCEDURES

    10. Subpart D is added to read as follows:

Subpart D--Claims Collection

Sec.
422.301  Material included in this subpart.
422.305  Report of overdue title II program overpayment debts to 
consumer reporting agencies.
422.306  Report of overdue administrative debts to credit reporting 
agencies.
422.310  Collection of overdue debts by administrative offset.
422.315  Review of our records related to the debt.
422.317  Review of the debt.

Subpart D--Claims Collection

    Authority: Secs. 204(f), 205(a), and 702(a)(5) of the Social 
Security Act (42 U.S.C. 404(f), 405(a), and 902(a)(5)); 31 U.S.C. 
3711(e); 31 U.S.C. 3716.


Sec. 422.301  Material included in this subpart.

    This subpart describes the procedures relating to collection of:
    (a) Overdue administrative debts, and
    (b) Overdue title II program overpayments described in Sec. 404.527 
of this chapter.


Sec. 422.305  Report of overdue title II program overpayment debts to 
consumer reporting agencies.

    (a) Debts we will report. We will report to consumer reporting 
agencies all overdue title II program overpayment debts over $25.
    (b) Notice to debtor. Before we report any such debt to a consumer 
reporting agency, we will send the debtor written notice of the 
following:
    (1) We have determined that payment of the debt is overdue;
    (2) We will refer the debt to a consumer reporting agency at the 
expiration of not less than 60 calendar days after the date of the 
notice unless, within that 60-day period, the debtor pays the full 
amount of the debt or takes either of the actions described in 
paragraphs (b)(6) or (b)(7) of this section;
    (3) The specific information we will provide to the consumer 
reporting agency, including information that identifies the debtor 
(e.g., name, address, and social security number) and the amount, 
status, and history of the debt;
    (4) The debtor has the right to a complete explanation of the debt;
    (5) The debtor may dispute the accuracy of the information to be 
provided to the consumer reporting agency;
    (6) The debtor may request a review of the debt by giving us 
evidence

[[Page 64279]]

showing that he or she does not owe all or part of the amount of the 
debt or that we do not have the right to collect it; and
    (7) The debtor may request an installment payment plan.
    (c) Disputing the information that we would send to consumer 
reporting agencies. If a debtor believes that the information we 
propose to send to consumer reporting agencies is incorrect, the debtor 
may ask us to correct such information. If, within 60 calendar days 
from the date of our notice described in paragraph (b) of this section, 
the debtor notifies us that any information to be sent to consumer 
reporting agencies is incorrect, we will not send the information to 
consumer reporting agencies until we determine the correct information.


Sec. 422.306  Report of overdue administrative debts to credit 
reporting agencies.

    (a) Debts we will report. We will report to credit reporting 
agencies all overdue administrative debts over $25. Some examples of 
administrative debts are as follows: overpayments of pay and allowances 
paid to employees, debts for civil monetary penalties imposed under 
section 1140(b) of the Act, debts for unpaid fees for reimbursable 
services performed by SSA (e.g., disclosures of information), and 
contractor debts.
    (b) Notice to debtor. Before we report any administrative debt to a 
credit reporting agency, we will send the debtor written notice of the 
following:
    (1) We have determined that payment of the debt is overdue;
    (2) We will refer the debt to a credit reporting agency at the 
expiration of not less than 60 calendar days after the date of the 
notice unless, within that 60-day period, the debtor pays the full 
amount of the debt or takes either of the actions described in 
paragraphs (b)(6) or (b)(7) of this section;
    (3) The specific information we will provide to the credit 
reporting agency, including information that identifies the debtor 
(e.g., name, address, social security number, and employer 
identification number) and the amount, status, and history of the debt;
    (4) The debtor has the right to a complete explanation of the debt;
    (5) The debtor may dispute the accuracy of the information to be 
provided to the credit reporting agency;
    (6) The debtor may request a review of the debt by giving us 
evidence showing that he or she does not owe all or part of the amount 
of the debt or that we do not have the right to collect it; and
    (7) The debtor may request an installment payment plan.


Sec. 422.310  Collection of overdue debts by administrative offset.

    (a) Referral to the Department of the Treasury for offset. We will 
recover overdue debts by offsetting Federal payments due the debtor 
through the Treasury Offset Program (TOP). TOP is a Governmentwide 
delinquent debt matching and payment offset process operated by the 
Department of the Treasury, whereby debts owed to the Federal 
Government are collected by offsetting them against Federal payments 
owed the debtor.
    (b) Debts we will refer. We will refer for administrative offset 
all overdue debts over $25.
    (c) Notice to debtor. Before we refer any debt for collection by 
administrative offset, we will send the debtor written notice that:
    (1) We have determined that payment of the debt is overdue;
    (2) We will refer the debt for administrative offset at the 
expiration of not less than 60 calendar days after the date of the 
notice unless, within that 60-day period, the debtor pays the full 
amount of the debt or takes either of the actions described in 
paragraphs (c)(4) or (c)(5) of this section;
    (3) The debtor may inspect or copy our records relating to the 
debt;
    (4) The debtor may request a review of the debt by giving us 
evidence showing that the debtor does not owe all or part of the amount 
of the debt or that we do not have the right to collect it; and
    (5) The debtor may request an installment payment plan.


Sec. 422.315  Review of our records related to the debt.

    (a) Notification by the debtor. The debtor may request to inspect 
or copy our records related to the debt.
    (b) Our response. In response to a request from the debtor 
described in paragraph (a) of this section, we will notify the debtor 
of the location and time at which the debtor may inspect or copy our 
records related to the debt. We may also, at our discretion, mail to 
the debtor copies of the records relating to the debt.


Sec. 422.317  Review of the debt.

    (a) Notification and presentation of evidence by the debtor. A 
debtor who receives a notice described in Sec. 422.305(b), 
Sec. 422.306(b), or Sec. 422.310(c) has a right to have us review the 
debt. To exercise this right, within 60 calendar days from the date of 
our notice, the debtor must notify us and give us evidence that he or 
she does not owe all or part of the debt or that we do not have the 
right to collect it. If the debtor does not notify us and give us this 
evidence within the 60 calendar-day period, we may take the action 
described in our notice.
    (b) Review of the evidence. If the debtor notifies us and presents 
evidence within the 60 calendar-day period described in paragraph (a) 
of this section, we will not take the action described in our notice 
unless and until we consider all of the evidence and send the debtor 
our findings that all or part of the debt is overdue and legally 
enforceable.
    (c) Findings by SSA. Following our review of all of the evidence 
presented, we will issue written findings, including the supporting 
rationale for the findings. Issuance of these findings will be the 
final Agency action on the debtor's request for review. If we find that 
the debt is not overdue or we do not have the right to collect it, we 
will not send information about the debt to consumer or other credit 
reporting agencies or refer the debt to the Department of the Treasury 
for administrative offset.

[FR Doc. 97-32008 Filed 12-4-97; 8:45 am]
BILLING CODE 4190-29-P