Source: https://www.federalregister.gov/documents/2010/07/22/2010-18008/debt-collection
Timestamp: 2018-04-24 03:13:41
Document Index: 791153414

Matched Legal Cases: ['art 4903', 'arts 900', 'art 4903', 'art 550', 'art 4007', 'art 4071', 'art 4062', 'art 4022', 'arts 4000', '§\u20094903', '§\u20094903', 'art 4007', '§\u20094903', 'art 4000', 'arts 4003', '§\u20094003', '§\u20094903', '§\u20094903', '§\u20094903', '§\u20094903', '§\u20094903', '§\u2009285', '§\u20094903', '§\u20094903', '§\u20094903', '§\u20094903', '§\u2009285', '§\u20094903', '§\u20094903', '§\u20094903', '§\u20094903', '§\u20094903', '§\u20094903', '§\u2009285', '§\u20094903', '§\u20094903', '§\u20094903']

A Proposed Rule by the Pension Benefit Guaranty Corporation on 07/22/2010
Comments must be received by September 20, 2010.
42662-42672 (11 pages)
https://www.federalregister.gov/d/2010-18008 https://www.federalregister.gov/d/2010-18008
This proposed rule will revise and replace the PBGC's debt collection regulations found at 29 CFR part 4903 to conform to the Debt Collection Improvement Act of 1996 (DCIA), Public Law 104-134, 110 Stat. 1321, 1358 (April 26, 1996), the revised Federal Claims Collection Standards, 31 CFR chapter IX (parts 900 through 904), and other laws applicable to the collection of non-tax debt owed to the Government.
In 1994, PBGC adopted a regulation on debt collection to provide procedures to implement administrative offset, as authorized by the Federal Claims Collection Act of 1966, as amended by the Debt Collection Act of 1982 (31 U.S.C. 3701, et seq.), and in accordance with regulations issued by the Department of Justice and the General Accountability Office. In 1995, PBGC adopted a regulation on debt collection to provide procedures to implement tax refund offset, as required for participation in the Federal tax refund offset program authorized by 31 U.S.C. 3720A and in accordance with regulations issued by the Treasury Department. Together, these regulations comprise PBGC's current debt collection regulation (29 CFR part 4903) providing procedures for debt collection through administrative offset and tax refund offset. Administrative offset allows PBGC to request that debts owed to PBGC by a debtor (e.g., in connection with government contractual obligations) be offset by amounts another Federal agency may owe to the debtor. Likewise, other Federal agencies may request the collection of debts owed to them be offset by amounts PBGC may owe the debtor. Tax refund offset allows PBGC to request that debts owed to PBGC by a debtor be offset by amounts the Government may owe to the debtor. The Debt Collection Improvement Act of 1996 (DCIA) fundamentally changed the manner in which the Federal Government is required to manage the collection of its delinquent debts. Under DCIA, Congress directed that the management of Start Printed Page 42663delinquent obligations is to be centralized at the Treasury Department in order to increase the efficiency of the Government's collection efforts.
This proposed regulation would revise the procedures for the collection of non-tax debts owed to PBGC through administrative offset and tax refund offset. It would adopt the FCCS and supplement it by prescribing procedures consistent with the FCCS, as necessary and appropriate for PBGC operations. The proposed regulation would also provide for the collection of debts via salary offset and the use of administrative wage garnishment. Salary offset is the collection of debt owed by a Federal employee by withholding up to 15 percent of the employee's disposable pay. The procedures for salary offset are governed by 5 U.S.C. 5514, and Office of Personnel Management (OPM) regulations (5 CFR part 550, subpart k). OPM regulations provide for salary offset through the Treasury Offset Program.[1] Administrative wage garnishment is the collection of a debt owed by a former Federal employee by ordering a non-Federal employer to withhold funds from a debtor's wages. The procedures for administrative wage garnishment are governed by 31 U.S.C. 3720D and 31 CFR 285.11.
As with the PBGC's current debt collection regulation, the proposed regulation would apply to collection of debts to PBGC by employers (e.g., unpaid premium, penalty and interest under part 4007, information penalties under part 4071, and employer liability under part 4062) and to the recovery of benefit overpayments to participants in cases where PBGC does not recoup the overpayment under part 4022 (e.g., where a participant is not entitled to future annuity benefits as of the plan's termination date). The proposed regulation would also apply to debts owed to the United States by current and former PBGC employees.
The proposed regulation would not apply to the collection of tax debts, which is governed by the Internal Revenue Code of 1986 (26 U.S.C. 1 et seq.) and regulations, policies, and procedures issued by the Internal Revenue Service.
Under the proposed regulation, benefits paid by PBGC generally would not be offset, in accordance with the anti-alienation provisions under 29 U.S.C. 1056(d) and 26 U.S.C. 401(a)(13). However, benefits paid by PBGC could be offset under certain limited exceptions from those provisions (e.g., in certain fiduciary breach situations).
Nothing in the proposed regulation would preclude the use of collection procedures not contained in the regulation. For example, PBGC would be able to collect unused travel advances through setoff of an employee's pay under 5 U.S.C. 5705. Moreover, certain PBGC efforts to obtain payment of debts arising out of activities under ERISA are authorized by and subject to requirements prescribed under other Federal statutes. Whether, and to what extent, such requirements apply to the collection of a debt by PBGC, PBGC's activities will be consistent with such requirements, as well as with any other applicable requirements (see e.g., parts 4000, 4003, 4007, and 4062). PBGC would be able to use multiple collection methods at the same time to collect a debt, as permitted by law. Nothing in this regulation requires PBGC to duplicate notices or administrative proceedings required by contract, this part, or other laws or regulations.
PBGC maintains a system of records to collect debts owed to PBGC by various individuals, PBGC-13, Debt Collection. See 65 FR 25397 (May 1, 2000).
Subpart A of this proposed regulation addresses the general provisions applicable to the collection of non-tax debts owed to PBGC. Proposed § 4903.5 includes procedures for the collection of debts owed to PBGC, other than those subject to recoupment.
Under proposed § 4903.2, PBGC would not be required to duplicate notices or administrative proceedings provided by contract, this proposed regulation, or other laws or regulations. PBGC would not be required to provide a debtor with two hearings on the same issue simply because PBGC used two different collection tools, each of which requires that the debtor be provided with a hearing. For example, if PBGC has provided a debtor with notice of unpaid premium under part 4007, it need not provide additional notice to the debtor before using this regulation to collect the debt owed to PBGC.
Proposed § 4903.4 states that PBGC's rules under part 4000 regarding permissible methods of filing with PBGC, determining dates of filing and computation of time apply for purposes of this regulation.
Subpart B of this proposed regulation describes the procedures to be followed by PBGC when collecting debts owed to it. Among other things, subpart B outlines the due process procedures PBGC would be required to follow when using offset (administrative, tax refund, and salary) to collect a debt owed to it, when garnishing a debtor's non-Federal wages, or before reporting a debt owed to it to a credit bureau. Specifically, PBGC would be required to provide debtors with notice of the amount and type of the debt, the intended collection action to be taken, how a debtor may pay the debt or make alternate payment arrangements, how a debtor could review documents related to the debt, and the consequences to the debtor if the debt is not repaid. Subpart B also describes how a debtor may request a hearing to contest the noticed debt.
Subpart B would update PBGC procedures to reflect changes required by DCIA. For example, DCIA centralized the use of offset by requiring agencies to refer debts delinquent for more than 180 days to the Financial Management Service (FMS) of the Treasury Department for offset. See 31 U.S.C. 3716(c)(6). FMS is required to offset payments to persons who owe delinquent debts to the Government. The proposed regulation would revise PBGC's regulations to comply with DCIA requirements for all types of offsets. This proposed regulation would also incorporate procedures for several Start Printed Page 42664collection remedies authorized by DCIA, such as administrative wage garnishment.
Subpart C of this proposed regulation describes the procedures to be followed when a Federal agency, other than PBGC, wishes to use the offset process to collect a debt from a non-tax payment issued by PBGC as a payment agency. Subpart C governs the process for offsets that occur on a case-by-case basis to collect debts from payments made by PBGC to its employees, its vendors, and others whom PBGC is required or authorized to pay. While centralized offset through the Treasury Offset Program is the Government's primary offset collection tool, this proposed regulation provides the procedures to be used when centralized offset is not otherwise available or appropriate. An agency's use of the non-centralized administrative offset process shall not provide grounds to invalidate any offset on the basis that centralized offset was not used.
PBGC certifies under section 605(b) of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) that the amendments in this proposed regulation would not have a significant economic impact on a substantial number of small entities. Accordingly, as provided in section 605 of the Regulatory Flexibility Act, sections 603 and 604 do not apply.
For the reasons given above, PBGC proposes to amend 29 CFR parts 4003 and 4903 as follows:
§ 4003.32
How will PBGC report to credit bureaus debts owed to PBGC?
How will PBGC refer to private collection agencies debts owed to PBGC?
When will PBGC refer to the Department of Justice debts owed to PBGC?
Will PBGC issue a refund if money is erroneously collected on a debt owed to PBGC?
Creditor agency means any Federal agency that is owed a debt.Start Printed Page 42665
(a) Notice requirements. PBGC will collect debts owed to PBGC. PBGC will promptly send at least one written notice to a debtor informing the debtor of the consequences of failing to pay or otherwise resolve a debt owed to PBGC. Start Printed Page 42666The notice(s) will be sent to the debtor at the most current address of the debtor in PBGC's records. Generally, before starting the collection actions described in §§ 4903.6 and 4903.10 through 4903.18 of this part, PBGC will send no more than two written notices to the debtor. The notice will explain why the debt is owed to PBGC, the amount of the debt, how a debtor may pay the debt or make alternate repayment arrangements, how a debtor may review non-privileged documents related to the debt, how a debtor may dispute the debt, the collection remedies available to PBGC if the debtor refuses or otherwise fails to pay the debt, and other consequences to the debtor if the debt is not paid. Except as otherwise provided in paragraph (b) of this section, the written notice(s) will explain to the debtor:
(4) PBGC's willingness to discuss alternative payment arrangements and how the debtor may enter into a written agreement to repay the debt under terms acceptable to PBGC (see § 4903.7 of this part);
(a) Assessment and notice. PBGC will assess interest, penalties and administrative costs on PBGC debts in accordance with the provisions of 31 U.S.C. 3717, 31 CFR 901.9 and other applicable requirements. Administrative Start Printed Page 42667costs, including the costs of processing and handling a delinquent debt, will be determined by PBGC. PBGC will explain in the notice to the debtor how interest, penalties, costs, and other charges are assessed, unless the requirements are included in a contract or other legally binding agreement.
(c) Administrative review. The notice described in § 4903.5 of this part will explain to the debtor how to request an administrative review of PBGC's determination that the debtor owes a debt to PBGC and how to present Start Printed Page 42668evidence that the debt is not delinquent or legally enforceable. In addition to challenging the existence and amount of the debt owed to PBGC, the debtor may seek a review of the terms of repayment. In most cases, PBGC will provide administrative review based upon the written record, including documentation provided by the debtor. PBGC may provide the debtor with a reasonable opportunity for an oral hearing when the debtor requests reconsideration of the debt owed to PBGC, and PBGC determines that the question of the indebtedness cannot be resolved by review of the documentary evidence. Unless otherwise required by law, an oral hearing under this section is not required to be a formal evidentiary hearing. PBGC will carefully document all significant matters discussed at the hearing. PBGC may suspend collection through administrative offset and/or other collection actions pending the resolution of a debtor's dispute.
(a) Tax refund offset. In most cases, the Financial Management Service uses the Treasury Offset Program to collect debts owed to PBGC by the offset of tax refunds and other Federal payments. See § 4903.10(c) of this part. If not already transferred to the Financial Management Service under § 4903.10 of this part, PBGC will refer to the Treasury Offset Program any past-due, legally enforceable debt for collection by tax refund offset. See 26 U.S.C. 6402(d), 31 U.S.C. 3720A and 31 CFR § 285.2.
(e) Administrative review—(1) Request for administrative review. A Federal employee who has received a notice that his or her debt will be collected by means of salary offset may request administrative review concerning the existence or amount of the debt owed to PBGC. The Federal employee also may request administrative review concerning the amount proposed to be deducted from the employee's pay each pay period. The employee must send any request for administrative review in writing to the office designated in the notice described in § 4903.5. See § 4903.5(a)(11). The request must be received by the Start Printed Page 42669designated office on or before the 15th day following the employee's receipt of the notice. The employee must sign the request and specify whether an oral hearing is requested. If an oral hearing is requested, the employee must explain why the matter cannot be resolved by review of the documentary evidence alone. All travel expenses incurred by the Federal employee in connection with an in-person hearing will be borne by the employee. See 31 CFR 901.3(a)(7).
(g) Salary offset process—(1) Determination of disposable pay. PBGC will implement salary offset when requested to do so by PBGC, as described in paragraph (c) of this section, or another agency, as described in § 4903.21 of this part. If the debtor is not employed by PBGC, the agency employing the debtor will determine the amount of the employee's disposable pay and will implement salary offset upon request.
(ii) Installment deductions will be made over a period of no greater than the anticipated period of employment. An installment deduction will not exceed 15 percent of the disposable pay from which the deduction is made unless the employee has agreed in writing to the deduction of a greater Start Printed Page 42670amount, or the creditor agency has determined that smaller deductions are appropriate based on the employee's ability to pay.
(2) If the employee is already separated from employment and all payments due from his or her former payment agency have been made, PBGC may request that money due and payable to the employee from the Civil Service Retirement Fund and Disability Fund, the Federal Employee Retirement System, or other similar funds, be administratively offset to collect the debt. Generally, PBGC will collect such monies through the Treasury Offset Program as described in § 4903.10(c) of this part.
(a) PBGC is authorized to collect debts owed to PBGC from an individual debtor's wages by means of administrative wage garnishment in accordance with the requirements of 31 U.S.C. 3720D and 31 CFR 285.11. This part adopts and incorporates all of the provisions of 31 CFR § 285.11 concerning administrative wage garnishment, including the hearing procedures described in 31 CFR 285.11(f). PBGC may use administrative wage garnishment to collect a delinquent debt unless the debtor is making timely payments under an agreement to pay the debt in installments (see § 4903.7 of this part). Thirty (30) days prior to initiating an administrative wage garnishment, PBGC will send notice to the debtor in accordance with the requirements of § 4903.5 of this part, including the requirements of § 4903.5(a)(10) of this part. For debts referred to the Financial Management Service under § 4903.10 of this part, PBGC may authorize the Financial Management Service to send a notice informing the debtor that administrative wage garnishment will be initiated and how the debtor may request a hearing as described in § 4903.5(a)(10) of this part. If a debtor makes a timely request for a hearing, administrative wage garnishment will not begin until a hearing is held and a decision is sent to the debtor. PBGC will determine whether the matter requires an oral hearing or if a determination based upon review of the written record is sufficient. PBGC will provide the debtor with a reasonable opportunity for an oral hearing when it determines that the issues in dispute cannot be resolved by a review of the documentary evidence. See 31 CFR 285.11(f)(1)-(4). Even if a debtor's hearing request is not timely, PBGC may suspend collection by administrative wage garnishment in accordance with the provisions of 31 CFR 285.11(f)(5). All travel expenses incurred by the debtor in connection with an in-person hearing will be borne by the debtor.
(c) A debtor who has a judgment lien against the debtor's property for a debt to the United States is not eligible to Start Printed Page 42671receive grants, loans or funds directly or indirectly from the United States until the judgment is paid in full or otherwise satisfied. This prohibition does not apply to funds to which the debtor is entitled as beneficiary. PBGC may promulgate regulations to allow for waivers of this ineligibility. See 28 U.S.C. 3201(e).
(2) This subpart C does not apply to debts owed to PBGC. See §§ 4903.11 through 4903.13 of this part for offset procedures applicable to debts owed to PBGC .
(3) This subpart C does not apply to the collection of non-PBGC debts through tax refund offset. See 31 CFR § 285.2 for tax refund offset procedures.
(b) Amount of deductions from a PBGC employee's salary. The amount deducted under § 4903.21(b) of this part will be the lesser of the amount of the debt certified by the creditor agency or an amount up to 15 percent of the debtor's disposable pay so long as that amount does not exceed limitations imposed by 15 U.S.C. 1673. Deductions will continue until PBGC knows that the debt is paid in full or until otherwise Start Printed Page 42672instructed by the creditor agency. Alternatively, the amount offset may be an amount agreed upon, in writing, by the debtor and the creditor agency. See § 4903.13(g) (salary offset process).
(2) Notice to the creditor agency. If the employee is separated from PBGC before the debt is paid in full, PBGC will certify to the creditor agency the total amount of its collection. If PBGC knows that the employee is entitled to payments from the Civil Service Retirement and Disability Fund, Federal Employee Retirement System, or other similar payments, PBGC will provide written notice to the agency making such payments that the debtor owes a debt (including the amount) and that the provisions of 5 CFR 550.1109 have been fully complied with. The creditor agency is responsible for submitting a certified claim to the agency responsible for making such payments before collection may begin. Generally, creditor agencies will collect such monies through the Treasury Offset Program as described in § 4903.10(c) of this part.
[FR Doc. 2010-18008 Filed 7-21-10; 8:45 am]