PART 212—GARNISHMENT OF ACCOUNTS CONTAINING FEDERAL BENEFIT PAYMENTS Authority: 5 U.S.C. 8346; 5 U.S.C. 8470; 5 U.S.C. 1103; 31 U.S.C. 321; 31 U.S.C. 3321; 31 U.S.C. 3332; 38 U.S.C. 5301(a); 38 U.S.C. 501(a); 42 U.S.C. 405(a); 42 U.S.C. 407; 42 U.S.C. 659; 42 U.S.C. 1383(d)(1); 45 U.S.C. 231f(b); 45 U.S.C. 231m; 45 U.S.C. 352(e); 45 U.S.C. 362(1). Source: 76 FR 9955, Feb. 23, 2011, unless otherwise noted. § 212.1 Purpose. The purpose of this part is to implement statutory provisions that protect Federal benefits from garnishment by establishing procedures that a financial institution must follow when served a garnishment order against an account holder into whose account a Federal benefit payment has been directly deposited. § 212.2 Scope. This part applies to: (a) Entities. (b) Funds. (1) SSA benefit payments protected under 42 U.S.C. 407 and 42 U.S.C. 1383(d)(1); (2) VA benefit payments protected under 38 U.S.C. 5301(a); (3) RRB benefit payments protected under 45 U.S.C. 231m(a) and 45 U.S.C. 352(e); and (4) OPM benefit payments protected under 5 U.S.C. 8346 and 5 U.S.C. 8470. § 212.3 Definitions. For the purposes of this part, the following definitions apply. Account Account holder Account review Benefit agency Benefit payment Federal banking agency Financial institution Freeze account freeze Garnish garnishment Garnishment fee Garnishment order order Lookback period Protected amount State State child support enforcement agency United States (1) A Federal corporation, (2) An agency, department, commission, board, or other entity of the United States, or (3) An instrumentality of the United States, as set forth in 28 U.S.C. 3002(15). [76 FR 9955, Feb. 23, 2011, as amended at 78 FR 32109, May 29, 2013] § 212.4 Initial action upon receipt of a garnishment order. (a) Examination of order for Notice of Right to Garnish Federal Benefits. (b) Notice of Right to Garnish Federal Benefits is attached to or included with the order. (c) No Notice of Right to Garnish Federal Benefits. § 212.5 Account review. (a) Timing of account review. (1) No later than two business days following receipt of (A) the order, and (B) sufficient information from the creditor that initiated the order to determine whether the debtor is an account holder, if such information is not already included in the order; or (2) In cases where the financial institution is served a batch of a large number of orders, by a later date that may be permitted by the creditor that initiated the orders, consistent with the terms of the orders. The financial institution shall maintain records on such batches and creditor permissions, consistent with § 212.11(b), (b) No benefit payment deposited during lookback period. (c) Benefit payment deposited during lookback period. (d) Uniform application of account review. (1) The presence of other funds, from whatever source, that may be commingled in the account with funds from a benefit payment; (2) The existence of a co-owner on the account; (3) The existence of benefit payments to multiple beneficiaries, and/or under multiple programs, deposited in the account; (4) The balance in the account, provided the balance is above zero dollars on the date of account review; (5) Instructions to the contrary in the order; or (6) The nature of the debt or obligation underlying the order. (e) Priority of account review. (f) Separate account reviews. § 212.6 Rules and procedures to protect benefits. The following provisions apply if an account review shows that a benefit agency deposited a benefit payment into an account during the lookback period. (a) Protected amount. (b) Separate protected amounts. (c) No challenge of protection. (d) Funds in excess of the protected amount. (e) Notice. (f) One-time account review process. (g) No continuing or periodic garnishment responsibilities. (h) Impermissible garnishment fee. [76 FR 9955, Feb. 23, 2011, as amended at 78 FR 32109, May 29, 2013] § 212.7 Notice to the account holder. A financial institution shall issue the notice required by § 212.6(e) in accordance with the following provisions. (a) Notice requirement. (1) A benefit agency deposited a benefit payment into an account during the lookback period; (2) The balance in the account on the date of account review was above zero dollars and the financial institution established a protected amount; and (3) There are funds in the account in excess of the protected amount. (b) Notice content. (1) The financial institution's receipt of an order against the account holder. (2) The date on which the order was served. (3) A succinct explanation of garnishment. (4) The financial institution's requirement under Federal regulation to ensure that account balances up to the protected amount specified in § 212.3 are protected and made available to the account holder if a benefit agency deposited a benefit payment into the account in the last two months. (5) The account subject to the order and the protected amount established by the financial institution. (6) The financial institution's requirement pursuant to State law to freeze other funds in the account to satisfy the order and the amount frozen, if applicable. (7) The amount of any garnishment fee charged to the account, consistent with § 212.6. (8) A list of the Federal benefit payments subject to this part, as identified in § 212.2(b). (9) The account holder's right to assert against the creditor that initiated the order a further garnishment exemption for amounts above the protected amount, by completing exemption claim forms, contacting the court of jurisdiction, or contacting the creditor, as customarily applicable for a given jurisdiction. (10) The account holder's right to consult an attorney or legal aid service in asserting against the creditor that initiated the order a further garnishment exemption for amounts above the protected amount. (11) The name of the creditor, and, if contact information is included in the order, means of contacting the creditor. (c) Optional notice content. (1) Means of contacting a local free attorney or legal aid service. (2) Means of contacting the financial institution, (3) By issuing the notice required by this part, the financial institution is not providing legal advice. (d) Amending notice content. (e) Notice delivery. (f) Notice timing. (g) One notice for multiple accounts. (h) Not legal advice. [76 FR 9955, Feb. 23, 2011, as amended at 78 FR 32109, May 29, 2013] § 212.8 Other rights and authorities. (a) Exempt status. (b) Account agreements. § 212.9 Preemption of State law. (a) Inconsistent law preempted. (b) Consistent law not preempted. § 212.10 Safe harbor. (a) Protection during examination and pending review. (1) The two business days following the financial institution's receipt of a garnishment order during which the financial institution must determine if the United States or a State child support enforcement agency has attached or included a Notice of Right to Garnish Federal Benefits, as set forth in § 212.4; or (2) The time between the financial institution's receipt of the garnishment order and the date by which the financial institution must perform the account review, as set forth in § 212.5. (b) Protection when protecting or freezing funds. (1) A benefit agency has deposited a benefit payment into an account during the lookback period, or (2) The financial institution has determined that the order was obtained by the United States or issued by a State child support enforcement agency by following the procedures in § 212.4. (c) Protection for providing additional information to account holder. (d) Protection for financial institutions from other potential liabilities. (1) Bona fide errors that occur despite reasonable procedures maintained by the financial institution to prevent such errors in complying with the provisions of this part; (2) Customary clearing and settlement adjustments that affect the balance in an account, including a protected amount, such as deposit reversals caused by the return of unpaid items, or debit card transactions settled for amounts higher than the amounts originally authorized; or (3) Honoring an account holder's express written instruction, that is both dated and provided by the account holder to the financial institution following the date on which it has been served a particular garnishment order, to use an otherwise protected amount to satisfy the order. § 212.11 Compliance and record retention. (a) Enforcement. (b) Record retention. § 212.12 Amendment of this part. This part may be amended only by a rulemaking issued jointly by Treasury and all of the benefit agencies as defined in § 212.3. Appendix A to Part 212—Model Notice to Account Holder A financial institution may use the following model notice to meet the requirements of § 212.7. Although use of the model notice is not required, a financial institution using it properly is deemed to be in compliance with § 212.7. Information in brackets should be completed by the financial institution. Where the bracketed information indicates a choice of words, as indicated by a slash, the financial institution should either select the appropriate words or provide substitute words suitable to the garnishment process in a given jurisdiction. Parenthetical wording in italics represents instructions to the financial institution and should not be printed with the notice. In most cases, this wording indicates that the model language either is optional for the financial institution, or should only be included if some condition is met. MODEL NOTICE: [Financial institution name, city, and State, shown as letterhead or otherwise printed at the beginning of the notice] IMPORTANT INFORMATION ABOUT YOUR ACCOUNT Date: Notice to: Account Number: Why am I receiving this notice? On [date on which garnishment order was served], [Name of financial institution] received a garnishment order from a court to [freeze/remove] funds in your account. The amount of the garnishment order was for $[amount of garnishment order]. We are sending you this notice to let you know what we have done in response to the garnishment order. What is garnishment? Garnishment is a legal process that allows a creditor to remove funds from your [bank]/[credit union] account to satisfy a debt that you have not paid. In other words, if you owe money to a person or company, they can obtain a court order directing your [bank]/[credit union] to take money out of your account to pay off your debt. If this happens, you cannot use that money in your account. What has happened to my account? On [date of account review], we researched your account and identified one or more Federal benefit payments deposited in the last 2 months. In most cases, Federal benefit payments are protected from garnishment. As required by Federal regulations, therefore, we have established a “protected amount” of funds that will remain available to you and that will not be [frozen/removed] from your account in response to the garnishment order. ( Conditional paragraph if funds have been frozen The chart below summarizes this information about your account(s): Account Summary as of [date of account review] Account number Amount in Amount protected Amount subject to garnishment (now [frozen/removed]) Garnishment fee charged ( If the account holder has multiple accounts, add a row for each account. Please note that these amount(s) may be affected by deposits or withdrawals after the protected amount was calculated on [date of account review]. Do I need to do anything to access my protected funds? You may use the “protected amount” of money in your account as you normally would. There is nothing else that you need to do to make sure that the “protected amount” is safe. Who garnished my account? The creditor who obtained a garnishment order against you is [name of creditor]. What types of Federal benefit payments are protected from garnishment? In most cases, you have protections from garnishment if the funds in your account include one or more of the following Federal benefit payments: • Social Security benefits • Supplemental Security Income benefits • Veterans benefits • Railroad retirement benefits • Railroad Unemployment Insurance benefits • Civil Service Retirement System benefits • Federal Employees Retirement System benefits ( Conditional section if funds have been frozen If you believe that additional funds in your account(s) are from Federal benefit payments and should not have been [frozen/removed], there are several things you can do. ( Conditional sentence if applicable for the jurisdiction You may contact the creditor that garnished your account and explain that additional funds are from Federal benefit payments and should be released back to you. ( Conditional sentence if contact information is in the garnishment order You may also consult an attorney (lawyer) to help you prove to the creditor who garnished your account that additional funds are from Federal benefit payments and cannot be taken. If you cannot afford an attorney, you can seek assistance from a free attorney or a legal aid society. ( Optional sentences) http://www.lawhelp.org ( Optional section This notice contains all the information that we have about the garnishment order. However, if you have a question about your account, you may contact us at [contact number]. Appendix B to Part 212—Form of Notice of Right to Garnish Federal Benefits The United States, or a State child support enforcement agency, certifying its right to garnish Federal benefits shall attach or include with a garnishment order the following Notice, on official organizational letterhead. Information in brackets should be completed by the United States or a State child support enforcement agency, as applicable. Where the bracketed information indicates a choice of words, as indicated by a slash, the appropriate words should be selected from the options. Notice of Right to Garnish Federal Benefits Date: [Garnishment Order Number]/[State Case ID]: ______ The attached garnishment order was [obtained by the United States, pursuant to the Federal Debt Collection Procedures Act, 28 U.S.C. § 3205, or the Mandatory Victims Restitution Act, 18 U.S.C. § 3613, or other Federal statute]/[issued by (name of the State child support enforcement agency), pursuant to authority to attach or seize assets of noncustodial parents in financial institutions in the State of (name of State), 42 U.S.C. § 666]. Accordingly, the garnishee is hereby notified that the procedures established under 31 CFR part 212 for identifying and protecting Federal benefits deposited to accounts at financial institutions do not apply to this garnishment order. The garnishee should comply with the terms of this order, including instructions for withholding and retaining any funds deposited to any account(s) covered by this order, pending further order of [name of the court]/[the name of the State child support enforcement agency]. Appendix C to Part 212—Examples of the Lookback Period and Protected Amount The following examples illustrate this definition of lookback period. Example 1: Account review performed same day garnishment order is served. A financial institution receives garnishment order on Wednesday, March 17. The financial institution performs account review the same day on Wednesday, March 17. The lookback period begins on Tuesday, March 16, the date preceding the date of account review. The lookback period ends on Saturday, January 16, the corresponding date two months earlier. Example 2: Account review performed the day after garnishment order is served. A financial institution receives garnishment order on Wednesday, November 17. The financial institution performs account review next business day on Thursday, November 18. The lookback period begins on Wednesday, November 17, the date preceding the date of account review. The lookback period ends on Friday, September 17, the corresponding date two months earlier. Example 3: No corresponding date two months earlier. A financial institution receives garnishment order on Tuesday, August 30. The financial institution performs the account review two business days later on Thursday, September 1. The lookback period begins on Wednesday, August 31, the date preceding the date of account review. The lookback period ends on Wednesday, June 30, the last date of the month two months earlier, since June 31 does not exist to correspond with August 31. Example 4: Weekend between receipt of garnishment order and account review. A financial institution receives garnishment order on Friday, December 10. The financial institution performs the account review two business days later on Tuesday, December 14. The lookback period begins on Monday, December 13, the date preceding the date of account review. The lookback period ends on Wednesday, October 13, the corresponding date two months earlier. The following examples illustrate the definition of protected amount. Example 1: Account balance less than sum of benefit payments. A financial institution receives a garnishment order against an account holder for $2,000 on May 20. The date of account review is the same day, May 20, and the balance in the account when the review is performed is $1,000. The lookback period begins on May 19, the date preceding the date of account review, and ends on March 19, the corresponding date two months earlier. The account review shows that two Federal benefit payments were deposited to the account during the lookback period totaling $2,500, one for $1,250 on Friday, April 30 and one for $1,250 on Tuesday, April 1. Since the $1,000 balance in the account when the account review is performed is less than the $2,500 sum of benefit payments posted to the account during the lookback period, the financial institution establishes the protected amount at $1,000. The financial institution is not required to send a notice to the account holder. Example 2: Three benefit payments during lookback period. A financial institution receives a garnishment order against an account holder for $8,000 on December 2. The date of account review is the same day, December 2, and the balance in the account when the account review is performed is $5,000. The lookback period begins on December 1, the date preceding the date of account review, and ends on October 1, the corresponding date two months earlier. The account review shows that three Federal benefit payments were deposited to the account during the lookback period totaling $4,500, one for $1,500 on December 1, another for $1,500 on November 1, and a third for $1,500 on October 1. Since the $4,500 sum of the three benefit payments posted to the account during the lookback period is less than the $5,000 balance in the account when the account review is performed, the financial institution establishes the protected amount at $4,500 and seizes the remaining $500 in the account consistent with State law. The financial institution is required to send a notice to the account holder. Example 3: Intraday transactions. A financial institution receives a garnishment order against an account holder for $4,000 on Friday, September 10. The date of account review is Monday, September 13, when the opening balance in the account is $6,000. A cash withdrawal for $1,000 is processed after the open of business on September 13, but before the financial institution has performed the account review, so that the balance in the account is $5,000 when the financial institution initiates an automated program to conduct the account review. The lookback period begins on Sunday, September 12, the date preceding the date of account review, and ends on Monday, July 12, the corresponding date two months earlier. The account review shows that two Federal benefit payments were deposited to the account during the lookback period totaling $3,000, one for $1,500 on Wednesday, July 21, and the other for $1,500 on Wednesday, August 18. Since the $3,000 sum of the two benefit payments posted to the account during the lookback period is less than the $5,000 balance in the account when the account review is performed, the financial institution establishes the protected amount at $3,000 and, consistent with State law, freezes the $2,000 remaining in the account after the cash withdrawal. The financial institution is required to send a notice to the account holder. Example 4: Benefit payment on date of account review. A financial institution receives a garnishment order against an account holder for $5,000 on Thursday, July 1. The date of account review is the same day, July 1, when the opening balance in the account is $3,000, and reflects a Federal benefit payment of $1,000 posted that day. The lookback period begins on Wednesday, June 30, the date preceding the date of account review, and ends on Friday, April 30, the corresponding date two months earlier. The account review shows that two Federal benefit payments were deposited to the account during the lookback period totaling $2,000, one for $1,000 on Friday, April 30 and one for $1,000 on Tuesday, June 1. Since the $2,000 sum of the two benefit payments posted to the account during the lookback period is less than the $3,000 balance in the account when the account review is performed, the financial institution establishes the protected amount at $2,000 and places a hold on the remaining $1,000 in the account in accordance with State law. The financial institution is required to send a notice to the account holder. Example 5: Account co-owners with benefit payments. A financial institution receives a garnishment order against an account holder for $3,800 on March 22. The date of account review is the same day, March 22, and the balance in the account is $7,000. The lookback period begins on March 21, the date preceding the date of account review, and ends on January 21, the corresponding date two months earlier. The account review shows that four Federal benefit payments were deposited to the account during the lookback period totaling $7,000. Two of these benefit payments, totaling $3,000, were made to the account holder against whom the garnishment order was issued. The other two payments, totaling $4,000, were made to a co-owner of the account. Since the financial institution must perform the account review based only on the presence of benefit payments, without regard to the existence of co-owners on the account or payments to multiple beneficiaries or under multiple programs, the financial institution establishes the protected amount at $7,000, equal to the sum of the four benefit payments posted to the account during the lookback period. Since $7,000 is also the balance in the account at the time of the account review, there are no additional funds in the account which can be frozen. The financial institution is not required to send a notice to the account holder. [76 FR 9955, Feb. 23, 2011, as amended at 78 FR 32109, May 29, 2013]