Source: https://www.federalregister.gov/documents/2006/07/05/E6-10435/federal-old-age-survivors-and-disability-insurance-and-supplemental-security-income-collection-of
Timestamp: 2017-11-22 21:23:40
Document Index: 193727914

Matched Legal Cases: ['art 422', '§\u2009422', '§\u2009422', 'art 422', 'art 30', 'art 30', 'art 404', '§\u2009422', '§\u2009422', 'art 422', '§\u2009422', '§\u2009422', '§\u2009422', '§\u2009422', '§\u2009422', '§\u2009422', '§\u2009422', '§\u2009422', 'art 422', '§\u2009422', '§\u2009422', '§\u2009422', '§\u2009422', 'art 422', 'art 404', 'art 416', '§\u2009422', 'art 422', '§\u2009422', '§\u2009422', '§\u2009422', '§\u2009422', 'art 422', '§\u2009422', '§\u2009422']

A Rule by the Social Security Administration on 07/05/2006
These regulations are effective August 4, 2006.
71 FR 38066
38066-38071 (6 pages)
E6-10435
https://www.federalregister.gov/d/E6-10435 https://www.federalregister.gov/d/E6-10435
The proposed rules published in the Federal Register on March 13, 2006 at 71 FR 12648, are adopted as final with no changes. These regulations modify our regulations dealing with the recovery of benefit overpayments under titles II and XVI of the Social Security Act (the Act), as well as recovery of administrative debts owed to us. Specifically, we are modifying our regulations to implement statutory authority for the use of Federal Salary Offset (FSO). FSO is a process whereby the salary-paying agency withholds and pays to us up to 15 percent of the debtor's disposable pay until the debt has been repaid. In the case of title II program overpayment debts, we would apply FSO to collect only overpayments made to a person after he or she attained age 18, and we would pursue FSO after that person ceases to be a beneficiary and we determine that the overpayment is otherwise unrecoverable under section 204 of the Act. In the case of title XVI program overpayment debts, these same restrictions apply, but we must determine the overpayment to be otherwise unrecoverable under section 1631(b) of the Act, rather than section Start Printed Page 38067204 of the Act. FSO is only applicable if the debtor is a Federal employee.
Suzanne DiMarino, Social Insurance Specialist, Office of Regulations, Social Security Administration, Room 107 Altmeyer Building, 6401 Security Boulevard, Baltimore, MD 21235-6401, (410) 965-1769, or TTY (410) 966-5609. For information on eligibility or filing for benefits, call our national toll-free number, 1-800-772-1213 or TTY 1-800-325-0778, or visit our Internet web site, Social Security Online, at http://www.socialsecurity.gov.
Section 204 of the Act prescribes many of the methods that we may use to recover Social Security benefits overpaid under title II of the Act (title II program overpayments), as distinguished from the methods that we may use to collect administrative debts owed the agency that are recoverable under other statutory authority. Until 1994, we were authorized to recover title II program overpayments only by adjusting future title II 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 and other statutes by section 5 of Public Law 103-387 (1994) and section 31001(z)(2) of Public Law 104-134 (1996) permit us to use several debt collection procedures that have been available to other Federal agencies by statute since 1982, but that we had been precluded from using to recover title II program overpayments. Among other things, these procedures include recovering debts by FSO under 5 U.S.C. 5514 and by offset under 31 U.S.C. 3716 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 ceases to be a beneficiary under title II of the Act.
Before we can begin to use FSO to recover debts, we must issue regulations that comply with standards prescribed in the regulations of the Office of Personnel Management (OPM). See 5 U.S.C. 5514(b) and 5 CFR 550.1104. The Department of the Treasury administers FSO as part of the Treasury Offset Program, the Government-wide process for offsetting Federal payments to collect delinquent debts owed by debtors to the Federal Government. (See 31 CFR 285.7) Our current regulations at 20 CFR part 422, subpart D, address the procedures required for participation in the Treasury Offset Program. We are amending appropriate sections of those regulations to comply with the standards prescribed in the OPM regulations and make other changes.
The OPM regulations on FSO impose these and several additional requirements. Our current regulations on administrative offset against Federal payments due the debtor already reflect many of the requirements of 5 U.S.C. 5514 and the OPM regulations. We are revising 20 CFR 422.301, 422.310 and 422.317 so that our regulations permit the use of FSO and meet the requirements of the statute and OPM standards and to make other changes as set forth below. In addition, we are adding a new section 20 CFR 422.303 to meet OPM standards.
We are revising § 422.301(a) and (b), adding a new paragraph (c) and deleting information from § 422.306(b) to clarify that subpart D of part 422 does not apply to administrative debts incurred by our employees, including overpayments of pay and allowances. As authorized by section 106(b) of Public Law 103-296, we have applied the rules of the Department of Health and Human Services in 45 CFR part 30 that were in effect immediately before March 31, 1995. The rules in 45 CFR part 30 allow us to collect administrative debts owed by our employees by withholding money payable to our employees by the U.S. Government. Amounts available for such withholding include the Federal salaries of our employee/debtors. For this reason, the current provisions in subpart D of 20 CFR part 404 on Treasury offset and the FSO provisions described in these final rules do not apply to administrative debts owed by our employees.
The employee's Medicare entitlement is continued because the individual is deemed to be entitled to Start Printed Page 38068title II disability benefits under section 226(b) of the Social Security Act; or
OPM regulations require that our regulations on FSO contain a provision about charging the debtor with interest, late payment penalties, and administrative costs of collection on the delinquent debt pursuant to 31 U.S.C. 3717. See 5 CFR 550.1104(n). We are authorized, but are not required, to impose these charges on a debtor. See 42 U.S.C. 404(f) and 1383(b)(4). In order to comply with 5 CFR 550.1104(n), we are adding § 422.303 to subpart D. This new section provides that we will impose these charges when authorized by specific regulations that we will issue in accordance with the Federal Claims Collection Standards (FCCS) at 31 CFR 901.9.
In § 422.310, we describe generally the procedures we use to initiate recovery of debts under the Treasury Offset Program and the notice required before we initiate recovery. Paragraph (a)(1) states that, if the debtor is a Federal employee, we will recover overdue debts through this program by reducing the debtor's Federal “disposable pay,” defined in 5 CFR 550.1103, and that such action is called “Federal salary offset” in part 422, subpart D. Paragraph (a)(2) states that we will use FSO to collect overdue program debts from our employees and overdue program and administrative debts from employees of other Federal agencies.
We are deleting the specific dollar amount in current § 422.310 (b) to allow more flexibility in the regulation to accommodate changes in the dollar threshold amount as required by the Treasury. Currently, the minimum dollar threshold amount for FSO is $100.
Paragraph (c) of § 422.310 describes the written notice requirements for initiating recovery under the Treasury Offset Program. We are revising the paragraph to include provisions required for FSO. The notice explains the nature and amount of the debt, our determination that the debt is overdue, our intention to refer the debt for administrative offset (including FSO if the debtor is a Federal employee), and the frequency and amount of any FSO deduction. The notice also explains that the debtor has the following rights:
The notice also informs the debtor that we will refer the debt to the Department of the Treasury for administrative offset at the expiration of 60 calendar days after the date of the notice unless, within that period, the debtor pays the full amount of the debt, requests review of the debt or the FSO payment schedule stated in the notice, or requests an installment payment plan. Finally, the notice advises that, if the debtor furnishes false or frivolous statements, representations, or evidence, the debtor may be subject to civil or criminal penalties and (if the debtor is a Federal employee) appropriate disciplinary actions.
We are adding paragraph (c)(9), which explains that we will refer the debt for FSO at the expiration of not less than 30 calendar days after the date of the notice in accordance with 5 U.S.C. 5514(a), unless the debtor takes the action described above within that period.
We are adding paragraph (d) to § 422.310 to address the amount, frequency and duration of FSO deductions and hearing request timeframes. This new paragraph explains that deductions from a debtor's Federal salary will not exceed 15% of the debtor's disposable pay every payday. FSO will begin no sooner than the first payday following 30 calendar days after the date of the notice to the debtor and will continue until we recover the full amount of the debt, the debt is otherwise resolved, or the debtor ceases to be a Federal employee, whichever occurs first.
We are adding paragraph (e) to § 422.310 regarding refunds. Paragraph (e) explains that we will promptly refund to the debtor any amounts collected that the debtor does not owe. Such refunds will not bear interest unless required or permitted by law or contract.
We explain in new paragraph (a)(1) that, if the debtor requests review and gives us evidence within 60 calendar days from the date of our notice (except as provided in new paragraph (a)(3) for FSO), we will not take any action described in our notice 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. A similar explanation is deleted from current paragraph (b) of § 422.317.
Under new paragraph (a)(2), if the debtor does not notify us and give us evidence within 60 calendar days from the date of our notice (except as provided in new paragraph (a)(4) for FSO), we will conduct the review, but we may take the action described in the notice (refer information on the debt for offset against Federal payments or refer information about the debt to consumer reporting agencies or credit reporting agencies).
New paragraph (a)(3) explains that, if the debtor is a Federal employee who requests review and gives us evidence within 30 calendar days from the date of our notice, we will not take any FSO action described in our notice 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 and (when appropriate) our findings on the FSO payment schedule.
We are revising paragraphs (a) and (b) of § 422.317 to allow an exception when the debtor has good cause for failing to request review within the 60-day period described in paragraph (a)(1) or the 30-day period described in paragraph (a)(3). If the debtor has good cause for making the request late, we will treat the request as received within the prescribed period. Thus, if the debtor requests review late, but has good cause, we will not take any action (or we will stop any action we had initiated) while our decision on the request is pending. New paragraphs (a)(2) and (a)(4) provide that if the debtor does not notify us and give us evidence within the prescribed Start Printed Page 38069period and does not have good cause for failing to request review on time, we will conduct the review, but we may initiate any action described in our notice without further delay.
Under § 422.317(b), we will determine good cause under the rules in § 422.410(b)(1) and (2) of subpart E, part 422, the regulations on administrative wage garnishment. In determining whether the debtor had good cause, we will consider: any circumstances that kept the debtor from making the request on time; whether our action misled the debtor; whether the debtor had any physical, mental, educational, or linguistic limitations (including any lack of facility with the English language) that prevented the debtor from making a request on time or from understanding the need to make a request on time.
As revised by these final rules, paragraph (c) of § 422.317 will generally describe our review (hearing) process. The review will cover our records pertaining to the debt and all of the evidence and statements presented by the debtor.
We are adding a new paragraph (d) to § 422.317 that provides special rules on the conduct of the review when we would use FSO. The review available to the debtor under revised § 422.317 will satisfy the requirement in 5 U.S.C. 5514(a)(2) that, before we begin to collect a debt by FSO, we must provide the debtor with the opportunity for a hearing concerning the existence and amount of the debt and the terms of the repayment schedule stated in the notice. The following special rules apply to the conduct of the review:
An official designated in accordance with 5 U.S.C. 5514(a)(2) will conduct the review requested by a Federal employee who is subject to FSO.
When reviewing the payment schedule for FSO, the reviewing official will apply the rules regarding financial hardship in § 422.415 (b), (c), and (d) of subpart E, part 422, the regulations on administrative wage garnishment.
The reviewing official will review our records on the debt and any evidence and written statements submitted by the debtor and would issue the final decision.
The reviewing official will complete the review within 60 calendar days from the date on which we receive the request for review and the debtor's evidence. If the reviewing official does not make a decision on the request within that 60-day period and the debt was referred to the Department of the Treasury for FSO (e.g., when the request was received late), we will notify the Department of the Treasury to suspend FSO. Offset will not begin or resume before we send the debtor the findings that all or part of the debt is overdue and legally enforceable or (if appropriate) the findings on the payment schedule.
The OPM regulations provide that the proper content and form of the hearing required by 5 U.S.C. 5514(a)(2) depend on the nature of the matter under which the debt arose and that we must consult the Federal Claims Collection Standards (FCCS) for guidance. 5 CFR 550.1104(g)(2). Our current regulations provide an administrative appeal process for the debtor on our original determination of indebtedness, including the opportunity for an oral hearing conducted by an administrative law judge. (See 20 CFR part 404, subpart J & part 416, subpart N). This appeal process will be available to the debtor before we initiate the process for using FSO, described in § 422.310, or any other action described in 20 CFR part 422, subpart D. The appeal process for the determination of indebtedness is available to resolve any issue pertaining to that determination, including credibility or veracity, for which an oral hearing would be appropriate.
The review process for FSO described in § 422.317 affords the debtor a “paper hearing” on issues pertaining to the current status of the debt and the terms of repayment stated in the notice described in § 422.310. We believe that review of written evidence and statements will be adequate and appropriate to resolve those issues. We have determined that the combination of the administrative appeal process available on the original determination of indebtedness and the hearing afforded by the review of documents and written statements described in our final regulations meet the requirements of the applicable provisions in the FCCS. (See 31 CFR 901.3(b)(4)(iv), (e)).
The provisions regarding the review findings, currently in paragraph (c) of § 422.317, appear in new paragraph (e). Issuing the review findings is our final action on the debtor's request for review. We are revising the current provisions to clarify the actions we take based on the findings, particularly where FSO is involved. If the debtor requested review of the payment schedule for FSO, the written findings will cover that matter. If the reviewing official finds that the payment schedule will cause financial hardship, we will notify the debtor and the Department of the Treasury of the revised payment schedule. If we already initiated FSO, but the reviewing official finds that the individual does not owe the debt, the debt is not overdue, or we do not have the right to collect it, we will cancel that action and refund any amounts collected that the debtor does not owe or that we do not have the right to collect.
On March 13, 2006, we published the Notice of Proposed Rulemaking (NPRM) in the Federal Register at 71 FR 12648 and provided the public a 60-day comment period that ended on May 12, 2006. We received no comments. Therefore, we are publishing these final rules unchanged.
We have consulted with the Office of Management and Budget (OMB) and determined that these final rules meet the criteria for a significant regulatory action under Executive Order 12866, as amended by Executive Order 13258. Thus, OMB reviewed them.
We certify that these final 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.
These final rules contain information collection activities at §§ 422.310 and 422.317. However, the activities are exempt from the Paperwork Reduction Act as administrative actions under 44 U.S.C. 3518(c)(1)(B)(ii) and from the clearance requirements of 44 U.S.C. 3507 as amended by section 2 of Public Law 104-13 (May 22, 1995), the Paperwork Reduction Act of 1995.
For the reasons set forth in the preamble, we are amending subpart D of part 422 of Chapter III of Title 20 of the Code of Federal Regulations as follows:
§ 422.306
(ii) The debtor takes any of the actions described in paragraphs (c)(6) or (c)(7) of this section.
(9) We will refer the debt for Federal salary offset at the expiration of not less than 30 calendar days after the date of the notice unless, within that 30 day period the debtor takes any actions described in paragraphs (c)(3)(i), (c)(6) or (c)(7) of this section.
(d) Federal salary offset: amount, frequency and duration of deductions.
(1) We may collect the overdue debt from an employee of the Federal Government through the deduction of an amount not to exceed 15% of the debtor's current disposable pay each payday.
(3) Once begun, Federal salary offset will continue until we recover the full amount of the debt, the debt is otherwise resolved, or the debtor's Federal employment ceases, whichever occurs first. Start Printed Page 38071
(4) After Federal salary offset begins, the debtor may request a reduction in the amount deducted from disposable pay each payday. When we determine that the amount deducted causes financial harm under the rules in § 422.415(b), (c), and (d) of this chapter, we will reduce that amount.
(b) Good cause for failure to timely request review.
(1) If we decide that the debtor has good cause for failing to request review within the applicable period mentioned in paragraphs (a)(1) and (a)(3) of this section, we will treat the request for review as if we received it within the applicable period.
(d) Special rules regarding Federal salary offset.
(1) When we use Federal salary offset to collect a debt owed by an employee of the Federal Government, an official designated in accordance with 5 U.S.C. 5514(a)(2) will conduct the review described in this section and will issue the findings.
(2) In addition to the requirements in paragraphs (a) and (b) of this section, the Federal employee must submit the request for review in writing. The request must
(e) The findings.
(1) Following the review described in paragraphs (c) or (d) of this section, we will send the written findings to the debtor. The findings will state the nature and origin of the debt, the analysis, findings and conclusions regarding the amount and validity of the debt, and, when appropriate, the repayment schedule for Federal salary offset. Issuance of these findings will be the final action on the debtor's request for review.
[FR Doc. E6-10435 Filed 7-3-06; 8:45 am]