23354 Federal Register / Vol. 63, No. 81 /Tuesday, April 28, 1998 /Rules and Regulations

DEPARTMENT OF THE TREASURY

Fiscal Service

31 CFR Part 285

RIN 1510–AA70

Salary Offset

AGENCY: Financial Management Service,

Fiscal Service, Treasury.

ACTION: Interim rule with request for

comments.

SUMMARY: The Debt Collection

Improvement Act of 1996 (DCIA)

requires the Federal Government to

withhold or reduce certain Federal

payments to satisfy the delinquent

nontax debts owed to the United States

by the payee. This process is known as

‘‘administrative offset.’’ In addition, the

DCIA requires Federal agencies, using a

process known as centralized salary

offset computer matching, to identify

Federal employees who owe delinquent

nontax debt to the United States. This

interim rule establishes centralized

computer matching procedures for

comparing delinquent debt information

with Federal salary payment

information for the purpose of offsetting

the salary payments of those employees

who owe debt to the United States once

they are identified. This interim rule

also establishes the rules governing the

administrative offset of Federal salary

payments through a centralized offset

process operated by the Financial

Management Service of the U.S.

Department of the Treasury.

DATES: This rule is effective April 28,

1998. Comments must be received on or

before May 28, 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.

FOR FURTHER INFORMATION CONTACT:

Gerry Isenberg, Financial Program

Specialist, at (202) 874–6859; or 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 Federal

salary payments, to pay the payee’s

delinquent debt owed to the United

States. This process is known as

‘‘administrative offset.’’ The DCIA also

established a requirement that Federal

agencies match their delinquent debtor

records with records of Federal

employees, at least annually, to identify

Federal employees who owe delinquent

debt to the Federal Government. This

rule establishes centralized procedures

for matching delinquent debt records

with Federal salary payment records for

the purpose of offsetting a debtor’s

Federal salary payments where a match

occurs.

The Financial Management Service

(FMS), a bureau of the Department of

the Treasury (Treasury), disburses more

than 850 million Federal payments

annually, including Federal salary

payments. 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. By

participating in the Treasury Offset

Program in accordance with the

provisions of this rule, Federal agencies

will comply with the DCIA

requirements regarding Federal

employees who owe delinquent nontax

debts to the United States.

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 and States. Under the DCIA,

Federal agencies are required to notify

FMS of all past-due, legally enforceable

nontax debts owed to the United States

that are over 180 days delinquent for

inclusion in this delinquent debtor

database.

As part of the Federal payment

process, FMS and other Federal

disbursing officials compare the payee

information with debtor information in

the delinquent debtor database operated

by FMS. 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 part, to

satisfy the debt, to the extent allowed by

law. This rule establishes specific

procedures for the comparison of

information contained in the delinquent

debtor database with payee information

contained on Federal salary payments

and for the offset of those payments

where a match occurs.

Amounts collected are transmitted to

the appropriate agencies owed the

delinquent debt after the disbursing

official deducts a fee charged to cover

the cost of the offset program. The

authority of disbursing officials to

charge fees is found at 31 U.S.C.

3716(c)(4). Additionally, as authorized

by 5 U.S.C. 5514, agencies that perform

centralized salary offset computer

matching services may charge a fee

sufficient to cover the full cost for such

services. 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 permitted

by law.

Information about a delinquent debt

remains in the debtor database and

offsets of eligible Federal salary and

other payments will continue until debt

collection activity for the debt is

terminated because of full payment,

establishment of a repayment plan,

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.

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 or

will promulgate other rules governing

the centralized offset of Federal

payments (other than Federal salary

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.

Section Analysis

(a) Purpose and Scope. Paragraph (a)

explains that this rule establishes

procedures for matching records of

delinquent debtors with Federal

employee records as required under 5

U.S.C. 5514(a)(1) and, where a match

occurs, for offsetting Federal salary

payments through centralized

administrative offset under 31 U.S.C.

3716. Nothing in this rule precludes an

agency from pursuing collection

remedies in addition to salary offset.

(b) Definitions. This rule includes the

following definitions.

Administrative offset. The term

‘‘administrative offset’’ or ‘‘offset’’ as
Federal Register / Vol. 63, No. 81 /Tuesday, April 28, 1998 /Rules and Regulations 23355

defined in this rule has the same

meaning as found in 31 U.S.C.

3701(a)(1).

Agency. The term ‘‘agency’’ as defined

in this rule has the same meaning as

found in 31 U.S.C. 3701(a)(4) and

includes all agencies required by 5

U.S.C. 5514(a)(1) to participate in

centralized salary offset computer

matching. The term refers to an agency

in the executive, judicial or legislative

branches of the Government, including

government corporations, that

administers the program that gave rise

to the debt.

Centralized salary offset computer

matching. The phrase ‘‘centralized

salary offset computer matching’’

describes the computerized process

used to match delinquent debt records

with Federal salary payment records

when the purpose of the match is to

identify Federal employees who owe

debt to the Federal Government.

Debt. For the purposes of this rule, the

term ‘‘debt’’ has the same meaning as

found in 31 U.S.C. 3701(b)(1) and does

not include tax debt.

Delinquent debt record. For purposes

of this rule, the term ‘‘delinquent debt

record’’ refers to the information about

a debt that an agency submits to FMS

when the agency refers the debt for

collection by offset in accordance with

the provisions of 31 U.S.C. 3716.

Disbursing official. ‘‘Disbursing

official’’ means an official who has

authority to disburse Federal salary

payments pursuant to 31 U.S.C. 3321 or

another law. It includes disbursing

officials of the Department of the

Treasury, the Department of Defense,

the United States Postal Service, or any

other government corporation, any

disbursing official of the United States

designated by the Secretary of the

Treasury, or any disbursing official of

any other executive department or

agency that disburses Federal salary

payments.

Disposable pay. ‘‘Disposable pay’’ has

the same meaning as prescribed by the

Office of Personnel Management (OPM)

in 5 CFR 550.1103. As defined by OPM,

‘‘disposable pay’’ means that part of

current basic pay, special pay, incentive

pay, retired pay, retainer pay, or in the

case of an employee not entitled to basic

pay, other authorized pay remaining

after the deduction of (a) any amount

required by law to be withheld; (b)

amounts properly withheld for Federal,

state or local income tax purposes; (c)

amounts deducted as health insurance

premiums; (d) amounts deducted as

normal retirement contributions, not

including amounts deducted for

supplementary coverage; and (e)

amounts deducted as normal life

insurance premiums not including

amounts deducted for supplementary

coverage.

Federal employee. The term ‘‘Federal

employee’’ is intended to cover any

individual who is employed by any

agency of the Federal Government,

including temporary and seasonal

employees.

Federal employee records. ‘‘Federal

employee records’’ are the Federal

salary payment records. To request

salary payments for their employees,

Federal agencies prepare and certify

payment vouchers. Disbursing officials

of the Federal Government issue salary

payments upon receipt of certified

payment vouchers. To identify Federal

employees who owe debt to the United

States, the Federal salary payment

records will be compared with the

delinquent debt records submitted to

FMS.

Paying agency. The ‘‘paying agency’’

is the employing agency or the payroll

agency (e.g., the United States

Department of Agriculture’s National

Finance Center). The paying agency

prepares and certifies payment vouchers

pursuant to which disbursing officials

issue salary payments.

Salary offset. ‘‘Salary offset’’ is a type

of administrative offset. As amended by

section 31001(d)(2)(B) of the DCIA, 31

U.S.C. 3716 is applicable to the offset of

all Federal payments even if another

statute provides for using offset to

collect a particular type of debt. See 31

U.S.C. 3716(e) (formerly 31 U.S.C.

3716(c)). Thus, the provisions of 31

U.S.C. 3716 apply to salary offset even

though procedures governing the offset

of a Federal employee’s salary are

provided for in 5 U.S.C. 5514. The

requirements to provide a Federal

employee with notice and an

opportunity to dispute the debt are

contained in 5 U.S.C. 5514 and

implementing regulations. Nothing in

this rule is intended to change the

prerequisites to salary offset.

Taxpayer identifying number. For an

individual the ‘‘taxpayer identifying

number’’ is the social security number.

An offset of an individual’s salary

payment will not occur unless the

taxpayer identifying number and name

of the payee match the taxpayer

identifying number and name of the

debtor.

(c) Establishment of the consortium.

Paragraph (c) defines the interagency

consortium that the Secretary, by

issuance of this rule, establishes in

accordance with the requirement

contained in 5 U.S.C. 5514(a)(1). The

purpose of the interagency consortium

is to establish a centralized salary offset

computer matching process. Therefore,

paragraph (c) provides that the

interagency consortium initially

consists of all agencies which disburse

Federal salary payments and which are

required to offset Federal payments to

collect debts. See 31 U.S.C.

3716(c)(1)(A). These agencies have the

information necessary to identify all

Federal employees who are receiving

Federal salary payments. The

membership of the consortium may be

changed at the discretion of the

Secretary, and the Secretary will be

responsible for the ongoing coordination

of the activities of the consortium.

(d) Creditor agency participation. The

DCIA requires agencies to notify FMS of

all past-due, legally enforceable debt

over 180 days delinquent for purposes

of administrative offset. See 31 U.S.C.

3716(c)(6). As explained in paragraph

(d)(1), by complying with this

notification requirement, agencies

simultaneously will comply with the

salary offset matching requirement

under 5 U.S.C. 5514(a)(1). It is

anticipated that all Federal disbursing

officials will match Federal salary

payment records against the debtor

records contained in the delinquent

debtor database. Currently, however,

full implementation of the centralized

salary offset computer matching process

is not complete. Therefore, until the

procedures described in this rule are

fully implemented, it is important that

agencies continue existing salary

matching processes to identify, and

collect debt owed from the salaries of,

Federal employees who may not be

identified through the Treasury Offset

Program process.

Debts referred to FMS for purposes of

administrative offset will be matched

with all Federal payment records,

including Federal salary payments.

After a match occurs, unless offset is

legally prohibited, the payee’s payment

will be offset to pay the payee’s debt

after proper notice and opportunity to

review and dispute the debt have been

provided to the payee (see paragraph

(d)(3) of this section). Agencies also may

refer debts less than 180 days

delinquent so long as the debt is pastdue and legally enforceable and all

prerequisites to offset have been met.

Paragraph (d)(2) provides that before

submitting a debt to FMS for purposes

of administrative offset and salary offset

matching, agencies must have issued

regulations governing the collection of

debt by both administrative offset and

salary offset. Agency regulations

governing the collection of debt by

administrative offset must comply with

31 U.S.C. 3716(b) and with the Federal

Claims Collection Standards (4 CFR

Parts 101–105; see also, Notice of
23356 Federal Register / Vol. 63, No. 81 /Tuesday, April 28, 1998 /Rules and Regulations

Proposed Rulemaking concerning

revisions to the Federal Claims

Collection Standards, 62 FR 68475, Dec.

31, 1997). Agency regulations governing

the collection of debt by salary offset

must comply with 5 U.S.C. 5514 and

with regulations issued by OPM (5 CFR

550.1101 through 550.1108; see also,

Notice of Proposed Rulemaking

concerning revisions to the OPM

regulations, 63 FR 18850, April 16,

1998). Although salary offsets under this

rule are being conducted through a

centralized process under 31 U.S.C.

3716, agencies must nevertheless

comply with the requirements for

regulations contained in 5 U.S.C. 5514

and OPM regulations. An agency that

has already published offset regulations

need not publish new regulations except

as may be necessary to conform the

regulations to DCIA requirements.

Paragraph (d)(3) describes agency

certification requirements when

submitting a debt to FMS for offset,

including salary offset. Nothing in the

DCIA modified the pre-offset due

process notices and opportunities

afforded to debtors, in general, and

Federal employees, in particular.

Therefore, a debt may not be submitted

to FMS for offset and salary offset

matching unless the creditor agency

certifies, in writing, that the debtor has

been afforded the legally required due

process. Paragraph (d)(3)(iv) explains

that, with the approval of FMS, the

specific notices and opportunities

required as a prerequisite to salary offset

may be provided to the debtor after the

debt is submitted to FMS, but must be

provided prior to the offset of an

employee’s salary.

Paragraph (d)(4) explains that the

creditor agency is responsible for

notifying FMS of any changes to the

debt amount (other than offset

collections) and any changes to the

status of the legal enforceability of the

debt. For example, unless the creditor

agency determines that the automatic

stay imposed at the time of a bankruptcy

filing pursuant to 11 U.S.C. 362 has

been lifted or is no longer in effect, in

most cases collection activity against the

debtor should stop immediately.

Therefore, it is imperative that the

creditor agency notify FMS immediately

upon learning that a bankruptcy petition

has been filed with respect to a debtor.

(e) Centralized salary offset computer

match. Paragraph (e) explains that the

delinquent debt records submitted by

creditor agencies will be compared with

the Federal employee records (salary

payment records) maintained by the

members of the consortium described in

paragraph (c). A match will occur when

the taxpayer identifying number and

name of a payee match the taxpayer

identifying number and name of a

debtor. For purposes of the computer

matching process, the ‘‘name’’ will be a

portion of the name, known as a ‘‘name

control,’’ designed to ensure accurate

matching. The purpose of the computer

matching process is to identify those

Federal employees who owe delinquent

debt and, once identified, to offset the

employee’s salary to pay the employee’s

delinquent debt. As noted above, salary

offset is a type of administrative offset.

Although generally such computer

matches are subject to the Computer

Matching and Privacy Protection Act of

1988, Pub. L. No. 100–503 (Computer

Matching Act), the DCIA authorizes the

Secretary to waive certain provisions of

the Computer Matching Act for

administrative offset. See 31 U.S.C.

3716(f). Specifically, the Secretary is

authorized to waive the Computer

Matching Act requirements of

completing matching agreements

(contained in 5 U.S.C. 552a(o)) and postmatch notification to the individual and

verification of the resulting data

(contained in 5 U.S.C. 552a(p)). The

waiver is authorized upon the written

certification by the head of the creditor

agency that the requirements of 31

U.S.C. 3716(a) have been met. The

waiver authority has been delegated by

the Secretary to FMS. The certification

that agencies are required to submit

when referring their debts to FMS for

offset, as described in paragraph

(d)(3)(iii) of the rule, meets the

certification requirement for waiver.

Section 3716(a) requires that, prior to

collecting a debt by administrative

offset, agencies shall provide the debtor

with written notice of the nature and

amount of the debt and an opportunity

to inspect and copy records, for review

of the debt determination, and to enter

into a repayment agreement. Agencies

also must notify the debtor that the

agency intends to collect the debt by

administrative offset. FMS will not

accept any debts into the debtor

database (and therefore will not conduct

any computer matches for offset

purposes) unless the debts are

accompanied by the written certification

required by paragraph (d)(3)(iii) of this

rule. In addition to certifying that the

agency has complied with the

requirements of 31 U.S.C. 3716 for

offset, prior to offset of an employee’s

salary, the creditor agency must certify

that the prerequisites to salary offset

also have been met.

(f) Salary offset. Paragraph (f) states

that when a match occurs, and all other

requirements for offset have been met,

Federal disbursing officials will offset

the Federal employee’s salary payment

to satisfy, in whole or in part, the debt.

As discussed in paragraph (e)(1), a

match occurs when the taxpayer

identifying number and name of a payee

match the taxpayer identifying number

and name of a debtor.

Under 5 U.S.C. 5514 and as described

in paragraph (g), the amount that may be

offset from a Federal employee’s salary

payment is limited to 15% of the

employee’s disposable pay. Since

disbursing officials may not have the

information necessary to calculate 15%

of an employee’s disposable pay,

disbursing officials may request that the

paying agency deduct the amount to be

offset before payment is certified to a

disbursing official for payment.

(g) Offset amount. Under 5 U.S.C.

5514, the amount that may be offset

from an employee’s salary payment is

limited to 15% of the employee’s

disposable pay. A disbursing official,

after notifying the creditor agency or at

the request of a creditor agency, may

offset less than 15%. In addition, the

debtor may agree to the offset of an

amount greater than 15%.

(h) Priorities. As required by 5 U.S.C.

5514(d), paragraph (h)(1) of this section

provides that tax levies imposed by the

Internal Revenue Service take

precedence over deductions from an

employee’s salary to pay a nontax debt

owed to the United States.

Paragraph (h)(2) states that amounts

offset from a Federal employee’s salary

will be applied first to the employee’s

past-due child support obligations

which have been assigned to a State

before being applied to the nontax debts

owed by the employee to the United

States. As currently set forth in this rule,

only those child support debts which

have been assigned to a State as

reimbursement for public assistance

paid to a family are given priority over

debts owed to the Federal government.

Amounts offset from a Federal

employee’s salary will be applied to

child support obligations that have not

been assigned to a State (and are owed

directly to the custodial family) after

payment of assigned child support debts

and Federal debts owed by the

employee. The priorities set forth in this

interim rule parallel the statutory

priorities that govern the offset of a

debtor’s tax refund payment. See 26

U.S.C. 6402(c) and 6402(d)(2). The

public is invited to comment

specifically on the priorities set forth in

this rule and whether, for salary offset

purposes, child support debts assigned

to a State should have priority over

debts owed to the Federal government.

In addition, the public is invited to

comment specifically on whether debts

owed to the Federal government should
Federal Register / Vol. 63, No. 81 /Tuesday, April 28, 1998 /Rules and Regulations 23357

have priority over child support debts

which have not been assigned to a State.

(i) Notice. Before offsetting a salary

payment, the disbursing official, or the

paying agency on behalf of the

disbursing official, must notify the

Federal employee in writing of the date

deductions from salary will begin and of

the amount of such deductions. The

amount of the deductions may be stated

as a percentage of pay. Additionally,

once an offset of a salary payment has

occurred, the disbursing official, or the

paying agency on behalf of the

disbursing official, must provide written

notice to the Federal employee that the

offset has occurred. This written notice

may appear on a Leave and Earnings

Statement (or similar statement)

provided to the Federal employee. The

disbursing official also will inform the

creditor agency that an offset has

occurred but will not inform the

creditor agency of the payment source of

the amounts collected. Since disbursing

agencies will be conducting offsets of

various payment types, debt repayment

may result from any one of a number of

payment sources.

(j) Fees. Agencies that perform salary

offset matching services may charge fees

pursuant to 5 U.S.C. 5514(a)(1). FMS, or

a paying agency acting on behalf of

FMS, may charge a fee sufficient to

cover the full cost of implementing the

offset program pursuant to 31 U.S.C.

3716(c)(4). The creditor agency may add

any fees to the debt as an administrative

cost pursuant to 31 U.S.C. 3717(e), if

permitted by law. Fees may be deducted

from the amount offset before that

amount is transmitted to the creditor

agency. The amount of the fee may be

adjusted annually to ensure that the fee

adequately covers the administrative

costs of the offset program.

(k) Disposition of amounts collected.

Paragraph (k) describes how amounts

collected from salary payments will be

transmitted to creditor agencies.

Regulatory Analysis

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. A comment

period is unnecessary because this

interim rule does not change how the

Federal salary offset process affects the

Federal employee who owes delinquent

nontax debt. The interim rule reflects

changes to the procedures as to how

creditor agencies will identify Federal

employees who owe delinquent nontax

debt for purposes of offsetting the salary

payments of the identified Federal

employees. 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 5 U.S.C. 5514 and

implementing regulations.

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 which

was effective on April 26, 1996,

agencies already participate in the

Treasury Offset Program. Many agencies

have collected debts by salary offset

over the last 15 years. Procedures

affecting debtors remain unchanged in

this rule.

Centralized salary offset computer

matching for offset purposes will

improve the efficiency of Treasury’s

government-wide collection of nontax

delinquent debts owed by Federal

employees. This rule provides critical

guidance that will facilitate creditor

agencies’ participation in centralized

salary offset computer matching as

required by the DCIA. Therefore, FMS

believes that good cause exists and that

it is in the public interest to issue the

interim rule without opportunity for

prior public comment.

The public is invited to submit

comments on the interim rule in general

and on the specific points mentioned

above which will be taken into account

before a final rule is issued.

List of Subjects in 31 CFR Part 285

Administrative practice and

procedure, Claims, Debt, Federal

employees, Salaries, Wages.

Authority and Issuance

For the reasons set forth in the

preamble, part 285 of 31 CFR chapter II,

subchapter A, is amended as follows:

PART 285—DEBT COLLECTION

AUTHORITIES UNDER THE DEBT

COLLECTION IMPROVEMENT ACT OF

1996

1. The authority citation for part 285

is revised to read as follows:

Authority: 5 U.S.C. 5514; 26 U.S.C. 6402;

31 U.S.C. 321, 3701, 3711, 3716, 3720A; E.O.

13019; 3 CFR, 1996 Comp., p. 216.

2. Section 285.7 is added to Subpart

A to read as follows:

§ 285.7 Salary offset.

(a) Purpose and scope. (1) This

section establishes procedures for the

offset of Federal salary payments,

through FMS’ administrative offset

program, to collect delinquent debts

owed to the Federal Government. This

process is known as salary offset. Rules

issued by the Office of Personnel

Management contain the requirements

Federal agencies must follow prior to

conducting salary offset and the

procedures for requesting offsets

directly from a paying agency. See 5

CFR 550.1101 through 550.1108.

(2) This section implements the

requirement under 5 U.S.C. 5514(a)(1)

that all Federal agencies, using a process

known as centralized salary offset

computer matching, identify Federal

employees who owe delinquent nontax

debt to the United States. Centralized

salary offset computer matching is the

computerized comparison of delinquent

debt records with records of Federal

employees. The purpose of centralized

salary offset computer matching is to

identify those debtors whose Federal

salaries should be offset to collect

delinquent debts owed to the Federal

Government.

(3) This section specifies the

delinquent debt records and Federal

employee records that must be included

in the salary offset matching process.

For purposes of this section, delinquent

debt records consist of the debt

information submitted to the Financial

Management Service for purposes of

administrative offset as required under

31 U.S.C. 3716(c)(6). Agencies that

submit their debt to FMS for purposes

of administrative offset are not required

to submit duplicate information for

purposes of centralized salary offset

computer matching under 5 U.S.C. 5514

and this section.

(4) This section establishes an

interagency consortium to implement

centralized salary offset computer

matching on a government-wide basis as

required under 5 U.S.C. 5514(a)(1).

Federal employee records consist of

records of Federal salary payments

disbursed by members of the

consortium.
23358 Federal Register / Vol. 63, No. 81 /Tuesday, April 28, 1998 /Rules and Regulations

(5) The receipt of collections from

salary offsets does not preclude a

creditor agency from pursuing other

debt collection remedies, including the

offset of other Federal payments to

satisfy delinquent nontax debt owed to

the United States. A creditor agency

should pursue, when deemed

appropriate by such agency, such debt

collection remedies separately or in

conjunction with salary offset.

(b) Definitions. For purposes of this

section:

Administrative offset means

withholding funds payable by the

United States to, or held by the United

States for, a person to satisfy a debt

owed by the payee.

Agency means a department, agency

or subagency, court, court

administrative office, or instrumentality

in the executive, judicial, or legislative

branch of the Federal government,

including government corporations.

Centralized salary offset computer

matching means the computerized

comparison of Federal employee records

with delinquent debt records to identify

Federal employees who owe such debts.

Creditor agency means any agency

that is owed a debt.

Debt means any amount of money,

funds, or property that has been

determined by an appropriate official of

the Federal government to be owed to

the United States by a person, including

debt administered by a third party

acting as an agent for the Federal

Government. For purposes of this

section, the term ‘‘debt’’ does not

include debts arising under the Internal

Revenue Code of 1986 (26 U.S.C.).

Delinquent debt record means

information about a past-due, legally

enforceable debt, submitted by a

creditor agency to FMS for purposes of

administrative offset (including salary

offset) in accordance with the

provisions of 31 U.S.C. 3716 and

applicable regulations. Debt information

includes the amount and type of debt

and the debtor’s name, address, and

taxpayer identifying number.

Disbursing official means an officer or

employee designated to disburse

Federal salary payments. This section

applies to all disbursing officials of

Federal salary payments, including but

not limited to, disbursing officials of the

Department of the Treasury, the

Department of Defense, the United

States Postal Service, any government

corporation, and any disbursing official

of the United States designated by the

Secretary.

Disposable pay has the same meaning

as that term is defined in 5 CFR

550.1103.

Federal employee means a current

employee of an agency, including a

current member of the Armed Forces or

a Reserve of the Armed Forces

(Reserves), employees of the United

States Postal Service, and seasonal and

temporary employees.

Federal employee records means

records of Federal salary payments that

a paying agency has certified to a

disbursing official for disbursement.

FMS means the Financial

Management Service, a bureau of the

Department of the Treasury.

Paying agency means the agency that

employs the Federal employee who

owes the debt and authorizes the

payment of his or her current pay. A

paying agency also includes an agency

that performs payroll services on behalf

of the employing agency.

Salary offset means administrative

offset to collect a debt owed by a

Federal employee from the current pay

account of the employee.

Secretary means the Secretary of the

Treasury or his or her delegate.

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 is the individual’s social

security number.

(c) Establishment of the consortium.

As required by the provisions of 5

U.S.C. 5514(a)(1), by issuance of this

section, the Secretary establishes an

interagency consortium to implement

centralized salary offset computer

matching. The consortium initially

includes all agencies that disburse

Federal salary payments, including but

not limited to, FMS, the Department of

Defense, the United States Postal

Service, government corporations, and

agencies with Treasury-designated

disbursing officials. The membership of

the consortium may be changed at the

discretion of the Secretary, and the

Secretary will be responsible for the

ongoing coordination of the activities of

the consortium.

(d) Creditor agency participation. (1)

As required under 5 U.S.C. 5514(a)(1),

creditor agencies shall participate at

least annually in centralized salary

offset computer matching. To meet this

requirement, creditor agencies shall

notify FMS of all past-due, legally

enforceable debts delinquent for more

than 180 days for purposes of

administrative offset, as required under

31 U.S.C. 3716(c)(6). Additionally,

creditor agencies may notify FMS of

past-due, legally enforceable debts

delinquent for less than 180 days for

purposes of administrative offset.

(2) Prior to submitting debts to FMS

for purposes of administrative offset

(including salary offset) and centralized

salary offset computer matching,

Federal agencies shall prescribe

regulations in accordance with the

requirements of 31 U.S.C. 3716

(administrative offset) and 5 U.S.C. 5514

(salary offset).

(3) Prior to submitting a debt to FMS

for purposes of collection by

administrative offset, including salary

offset, creditor agencies shall provide

written certification to FMS that:

(i) The debt is past-due and legally

enforceable in the amount submitted to

FMS and that the creditor agency will

ensure that collections (other than

collections through offset) are properly

credited to the debt;

(ii) Except in the case of a judgment

debt or as otherwise allowed by law, the

debt is referred for offset within ten

years after the agency’s right of action

accrues;

(iii) The creditor agency has complied

with the provisions of 31 U.S.C. 3716

(administrative offset) and related

regulations including, but not limited

to, the provisions requiring that the

creditor agency provide the debtor with

applicable notices and opportunities for

a review of the debt; and

(iv) The creditor agency has complied

with the provisions of 5 U.S.C. 5514

(salary offset) and related regulations

including, but not limited to, the

provisions requiring that the creditor

agency provide the debtor with

applicable notices and opportunities for

a hearing.

(4) FMS may waive the certification

requirement set forth in paragraph

(d)(3)(iv) of this section as a prerequisite

to submitting the debt to FMS. If FMS

waives the certification requirement,

before an offset occurs, the creditor

agency shall provide the Federal

employee with the notices and

opportunities for a hearing as required

by 5 U.S.C. 5514 and applicable

regulations, and shall certify to FMS

that the requirements of 5 U.S.C. 5514

and applicable regulations have been

met.

(5) The creditor agency shall notify

FMS immediately of any payments

credited by the creditor agency to the

debtor’s account, other than credits for

amounts collected by offset, after

submission of the debt to FMS. The

creditor agency also shall notify FMS

immediately of any change in the status

of the legal enforceability of the debt, for

example, if the creditor agency receives

notice that the debtor has filed for

bankruptcy protection.

(e) Centralized salary offset computer

match. (1) Delinquent debt records will
Federal Register / Vol. 63, No. 81 /Tuesday, April 28, 1998 /Rules and Regulations 23359

be compared with Federal employee

records maintained by members of the

consortium or paying agencies. The

records will be compared to identify

Federal employees who owe delinquent

debts for purposes of collecting the debt

by administrative offset. A match will

occur when the taxpayer identifying

number and name of a Federal

employee are the same as the taxpayer

identifying number and name of a

debtor.

(2) As authorized by the provisions of

31 U.S.C. 3716(f), FMS, under a

delegation of authority from the

Secretary, has waived certain

requirements of the Computer Matching

and Privacy Protection Act of 1988, 5

U.S.C. 552a, as amended, for

administrative offset, including salary

offset, upon written certification by the

head of the creditor agency that the

requirements of 31 U.S.C. 3716(a) have

been met. Specifically, FMS has waived

the requirements for a computer

matching agreement contained in 5

U.S.C. 552a(o) and for post-match notice

and verification contained in 5 U.S.C.

552a(p). The creditor agency will

provide certification in accordance with

the provisions of paragraph (d)(3)(iii) of

this section.

(f) Salary offset. When a match occurs

and all other requirements for offset

have been met, as required by the

provisions of 31 U.S.C. 3716(c) the

disbursing official shall offset the

Federal employee’s salary payment to

satisfy, in whole or part, the debt owed

by the employee. Alternatively, the

paying agency, on behalf of the

disbursing official, may deduct the

amount of the offset from an employee’s

disposable pay before the employee’s

salary payment is certified to a

disbursing official for disbursement.

(g) Offset amount. (1) The amount

offset from a salary payment under this

section shall be the lesser of:

(i) The amount of the debt, including

any interest, penalties and

administrative costs; or

(ii) An amount up to 15% of the

debtor’s disposable pay.

(2) Alternatively, the amount offset

may be an amount agreed upon, in

writing, by the debtor and the creditor

agency.

(3) Offsets will continue until the

debt, including any interest, penalties,

and costs, is paid in full or otherwise

resolved to the satisfaction of the

creditor agency.

(h) Priorities. (1) A levy pursuant to

the Internal Revenue Code of 1986 shall

take precedence over other deductions

under this section.

(2) When a salary payment may be

reduced to collect more than one debt,

amounts offset under this section will

be applied to a debt only after amounts

offset have been applied to satisfy past

due child support debts assigned to a

State pursuant to 402(a)(26) or section

471(a)(17) of the Social Security Act.

(i) Notice. (1) Before offsetting a salary

payment, the disbursing official, or the

paying agency on behalf of the

disbursing official, shall notify the

Federal employee in writing of the date

deductions from salary will commence

and of the amount of such deductions.

(2)(i) When an offset occurs under this

section, the disbursing official, or the

paying agency on behalf of the

disbursing official, shall notify the

Federal employee in writing that an

offset has occurred including:

(A) A description of the payment and

the amount of offset taken;

(B) The identity of the creditor agency

requesting the offset; and,

(C) A contact point within the creditor

agency that will handle concerns

regarding the offset.

(ii) The information described in

paragraphs (i)(2)(i)(B) and (i)(2)(i)(C) of

this section does not need to be

provided to the Federal employee when

the offset occurs if such information was

included in a prior notice from the

disbursing official or paying agency.

(3) The disbursing official will advise

each creditor agency of the names,

mailing addresses, and taxpayer

identifying numbers of the debtors from

whom amounts of past-due, legally

enforceable debt were collected and of

the amounts collected from each debtor

for that agency. The disbursing official

will not advise the creditor agency of

the source of payment from which such

amounts were collected.

(j) Fees. Agencies that perform

centralized salary offset computer

matching services may charge a fee

sufficient to cover the full cost for such

services. In addition, FMS, or a paying

agency acting on behalf of FMS, may

charge a fee sufficient to cover the full

cost of implementing the administrative

offset program. FMS may deduct the

fees from amounts collected by offset or

may bill the creditor agencies. Fees

charged for offset shall be based on

actual administrative offsets completed.

(k) Disposition of amounts collected.

The disbursing official conducting the

offset will transmit amounts collected

for debts, less fees charged under

paragraph (j) 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 (without regard to whether any

other amounts payable to such agency

have been paid). The disbursing official

and the creditor agency shall adjust the

debtor records appropriately.

Dated: April 22, 1998.

Richard L. Gregg,

Commissioner.

[FR Doc. 98–11203 Filed 4–27–98; 8:45 am]

BILLING CODE 4810–35–P