[Federal Register Volume 74, Number 110 (Wednesday, June 10, 2009)]
[Rules and Regulations]
[Pages 27432-27433]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-13613]


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DEPARTMENT OF THE TREASURY

Fiscal Service

31 CFR Part 285

RIN 1510-AB22


Disbursing Official Offset

AGENCY: Financial Management Service, Fiscal Service, Treasury.

ACTION: Interim final rule.

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SUMMARY: The Department of the Treasury, Financial Management Service, 
is amending its regulations governing the offset of Federal payments to 
collect nontax debts owed to the United States and States through the 
Treasury Offset Program. This amendment changes the priorities for 
collecting debt when a debtor owes more than one debt which has been 
referred to the Treasury Offset Program for collection by offset, 
consistent with a change in the statute on which the priority is based. 
The statutory change, enacted as part of the Deficit Reduction Act of 
2005, amends the priority given to the collection of certain past-due 
support debts.

DATES: This final rule is effective June 10, 2009.

ADDRESSES: The Financial Management Service participates in the U.S. 
government's eRulemaking Initiative by publishing rulemaking 
information on www.regulations.gov. Regulations.gov offers the public 
the ability to comment on, search, and view publicly available 
rulemaking materials, including comments received on rules.
    Comments on this rule, identified by docket FISCAL-FMS-2008-0005, 
should only be submitted using the following methods:
    <bullet> Federal eRulemaking Portal: www.regulations.gov. Follow 
the instructions on the Web site for submitting comments.
    <bullet> Mail: Thomas Dungan, Policy Analyst, Financial Management 
Service, 401 14th Street, SW., Washington, DC 20227.
    The fax and e-mail methods of submitting comments on rules to FMS 
have been retired.
    Instructions: All submissions received must include the agency name 
(``Financial Management Service'') and docket number FISCAL-FMS-2008-
0005 for this rulemaking. In general, comments will be published on 
Regulations.gov without change, including any business or personal 
information provided. Comments received, including attachments and 
other supporting materials, are part of the public record and subject 
to public disclosure. Do not enclose any information in your comment or 
supporting materials that you consider confidential or inappropriate 
for public disclosure.
    You may also inspect and copy this rule at: Treasury Department 
Library, Freedom of Information Act (FOIA) Collection, Room 1428, Main 
Treasury Building, 1500 Pennsylvania Avenue, NW., Washington, DC 20220. 
Before visiting, you must call (202) 622-0990 for an appointment.

FOR FURTHER INFORMATION CONTACT: Thomas Dungan, Policy Analyst, at 
(202) 874-6660 or Tricia Long, Senior Attorney, at (202) 874-6680.

SUPPLEMENTARY INFORMATION:

I. Background

    The Deficit Reduction Act of 2005 (Pub. L. 109-171) amended section 
6402 of the Internal Revenue Code (26 U.S.C. 6402) by changing the 
order of priority for collecting debt when a debtor owes more than one 
debt which is subject to collection by tax refund offset. Prior to this 
change, the order of priority was as follows: (1) Past-due support 
debts which had been assigned to a State under section 402(a)(26) or 
471(a)(17) of the Social Security Act; (2) nontax debt owed to Federal 
agencies; (3) other past-due support debts; and (4) other reductions 
allowed by law. Effective October 1, 2008, the order of priority is: 
(1) All past-due support debts; (2) nontax debt owed to Federal 
agencies and (3) other reductions allowed by law.
    The changes to this rule conform to the statutory change by 
reordering the order of priority for collecting debt through the 
Treasury Offset Program. Although the statutory change is directed to 
the offset of tax refund payments, the portions of this rule that 
govern offset of nontax payments are also being changed to conform to 
the new priority order. This is necessary for operational consistency 
and to create uniformity in how offsets are conducted.

II. Procedural Analyses

Administrative Procedures Act

    This rule is being issued without prior public notice and comment 
as to tax refund payments, because the changes to the rule are being 
made to conform to statutory requirements. As to other payments, the 
change does not adversely affect the rights of the public. Under 5 
U.S.C. 553(b) and (d)(3), good cause exists to determine that notice 
and comment rulemaking is unnecessary and contrary to the public 
interest. The amendments made by this rule regarding the offset of tax 
refund payments are required due to amendments enacted into law. The 
amendments made by this rule regarding the offset of nontax payments 
mirror those statutory amendments and are necessary to achieve 
consistency in how non-judicial offsets are conducted. These changes 
relate to procedures between and among agencies that are owed 
delinquent debt; therefore, public comment is not necessary. Further 
delay in making these amendments is contrary to the public interest 
because it would create an inconsistency both between the law and the 
regulations and between the regulations themselves, and would cause 
confusion.

Request for Comment on Plain Language

    Executive Order 12866 requires each agency in the Executive branch 
to write regulations that are simple and easy to understand. We invite 
comment on how to make the proposed rule clearer. For example, you may 
wish to discuss: (1) Whether we have organized the material to suit 
your needs; (2) whether the requirements of the rules are clear; or (3) 
whether there is something else we could do to make these rules easier 
to understand.

Regulatory Planning and Review

    The final rule does not meet the criteria for a ``significant 
regulatory action'' as defined in Executive Order 12866. Therefore, the 
regulatory review procedures contained therein do not apply.

Regulatory Flexibility Act Analysis

    Because no notice of rulemaking is required, the provisions of the 
Regulatory Flexibility Act (5 U.S.C. et seq.) do not apply.

List of Subjects in 31 CFR Part 285

    Administrative practice and procedure, Child support, Child 
welfare, Claims, Credits, Debts, Disability benefits, Federal 
employees, Garnishment of wages, Hearing and appeal procedures, Loan 
programs, Privacy, Railroad retirement, Railroad unemployment 
insurance, Salaries, Social Security benefits, Supplemental Security 
Income (SSI), Taxes, Veteran's benefits, Wages.

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For the reasons set forth in the preamble, we are amending 31 CFR part 
285 as follows:

[[Page 27433]]

PART 285--DEBT COLLECTION AUTHORITIES UNDER THE DEBT COLLECTION 
IMPROVEMENT ACT OF 1996

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1. The authority citation for part 285 continues to read as follows:

    Authority:  5 U.S.C. 5514; 26 U.S.C. 6402; 31 U.S.C. 321, 3701, 
3711, 3716, 3719, 3720A, 3720B, 3720D; 42 U.S.C. 664; E.O. 13019, 61 
FR 51763, 3 CFR, 1996 Comp., p. 216.


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2. In Sec.  285.1, revise paragraph (n) to read as follows:


Sec.  285.1  Collection of past-due support by administrative offset.

* * * * *
    (n) Administrative offset priorities. (1) A levy pursuant to the 
Internal Revenue Code of 1986 shall take precedence over deductions 
under this section.
    (2) Offsets will be applied first to past-due support being 
enforced by the State before any other offsets under this part.
* * * * *


Sec.  285.2  [Amended]

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3. Amend Sec.  285.2 as follows:
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a. Remove paragraph (e);
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b. Redesignate paragraphs (f) through (l) as (e) through (k).
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c. In newly redesignated paragraph (e)(1)(ii), revise the reference to 
``paragraph (f)(1)(i)'' to read ``paragraph (e)(1)(i)'' and revise the 
reference to ``paragraph (g)'' to read ``paragraph (f)''; and
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d. In newly redesignated paragraph (g), revise the reference to 
``paragraph (i)'' to read ``paragraph (h)''.

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4. In Sec.  285.3, revise paragraph (d)(1) to read as follows:


Sec.  285.3  Offset of tax refund payments to collect past-due support.

* * * * *
    (d) Priorities for offset. (1) As provided in 26 U.S.C. 6402, a tax 
refund payment shall be reduced in the following order of priority:
    (i) First, by the amount of any past-due support which is to be 
offset under 26 U.S.C. 6402(c) and 42 U.S.C. 464;
    (ii) Second, by the amount of any past-due, legally enforceable 
debt owed to a Federal agency which is to be offset under 26 U.S.C. 
6402(d), 31 U.S.C. 3720A and Sec.  285.2 of this part; and
    (iii) Third, by the amount of any past-due, legally enforceable 
debt owed to States (other than past-due support) which is to be offset 
under 26 U.S.C. 6402(e) or 26 U.S.C. 6402(f).
* * * * *

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5. In Sec.  285.5, revise paragraph (f)(3) to read as follows:


Sec.  285.5  Centralized offset of Federal payments to collect nontax 
debts owed to the United States.

* * * * *
    (f) * * *
    (3) Priorities for collecting multiple debts owed by the payee. (i) 
A levy pursuant to the Internal Revenue Code of 1986 shall take 
precedence over deductions under this section.
    (ii) When a payment may be offset to collect more than one debt, 
amounts offset will be applied:
    (A) First, to satisfy any past-due support that that the State is 
collecting under section 464 of the Social Security Act (see 285.1 and 
285.3 of this part);
    (B) Second, to satisfy any debts owed to Federal agencies, as 
described in this Sec.  285.5; and
    (C) Third, to any debts owed to States for debts other than past-
due support (see Sec. Sec.  285.6 and 285.8 of this part).
* * * * *

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6. In Sec.  285.7, revise paragraph (h)(2) to read as follows:


Sec.  285.7  Salary offset.

* * * * *
    (h) * * *
    (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 have been applied to satisfy past-due support debts being 
collected by the State pursuant to Section 464 of the Social Security 
Act.
* * * * *

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7. In Sec.  285.8, revise paragraph (d)(1) to read as follows:


Sec.  285.8  Offset of tax refund payments to collect state income tax 
obligations.

* * * * *
    (d) * * *
    (1) As provided in 26 U.S.C. 6402, a tax refund payment shall be 
reduced first by the amount of any past-due support being enforced 
under section 464 of the Social Security Act which is to be offset 
under 26 U.S.C. 6402(c); second by the amount of any past-due, legally 
enforceable debt owed to a Federal agency which is to be offset under 
26 U.S.C. 6402(d); and third by any past-due, legally enforceable debt 
owed to a State (other than past-due support) which is to be offset 
under 26 U.S.C. 6402(e) or 26 U.S.C. 6402(f).
* * * * *

    Dated: May 29, 2009.
Gary Grippo,
Acting Fiscal Assistant Secretary.
[FR Doc. E9-13613 Filed 6-9-09; 8:45 am]
BILLING CODE 4810-35-P