31 CFR Part 285 — Debt Collection Authorities Under the Debt Collection Improvement Act of 1996

PART 285—DEBT COLLECTION AUTHORITIES UNDER THE DEBT COLLECTION IMPROVEMENT ACT OF 1996 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. Source: 62 FR 34179, June 25, 1997, unless otherwise noted. Subpart A—Disbursing Official Offset § 285.1 Collection of past-due support by administrative offset. (a) Definitions. Administrative offset Debt Disbursing official Fiscal Service HHS Past-due support Past-due support being enforced by the State State Secretary (b) General rule. (c) Agreements. (d) Notification to Fiscal Service of past-due support. (2) When a State has knowledge that past-due support is being enforced by more than one State, the State notifying Fiscal Service or HHS of the past-due support must inform any other State involved in enforcing the past-due support when it refers the debt for offset and when it receives the offset amount. (3) The notification of past-due support must be accompanied by a certification that the debt is past-due, legally enforceable, and that the State has complied with all the requirements as set forth in paragraph (h) of this section and with any requirements imposed by State law or procedure. For debts so certified, the Secretary may waive sections 552a (o) and (p) of Title 5, United States Code, where applicable, in accordance with the Secretary's authority under 31 U.S.C. 3716(f). (4) Fiscal Service may reject a notification of past-due support which does not comply with the requirements of this section. The State will be notified of the rejection along with the reason for the rejection. (e) Minimum amount of past-due support. (f) Limitations. (g) Notification of changes in status of debt. (h) Advance notification of intent to collect by administrative offset. (i) The nature and amount of the debt; and (ii) The right to an administrative review by the State referring the debt or, upon the request of the individual, by the State with the order upon which the referral was based, of the determination of the State with respect to the debt and of the procedures and time frames established by the State for such reviews. (2) Prior to referring a debt to Fiscal Service for collection by administrative offset, States must provide individuals with a reasonable opportunity to exercise the rights enumerated in paragraph (h)(1) of this section in accordance with procedures prescribed by the State. (i) Payments subject to offset. (1) Payments due to an individual under (i) Title IV of the Higher Education Act of 1965; (ii) The Social Security Act; (iii) Part B of the Black Lung Benefits Act; (iv) Any law administered by the Railroad Retirement Board; (2) Payments which the Secretary determines are exempt from offset in accordance with paragraph (k) of this section; (3) Payments from which collection of past-due support by administrative offset is expressly prohibited by law; (4) Payments made under the Internal Revenue Code of 1986 (except that tax refund payments are subject to offset under separate authority); and (5) Payments made under the tariff laws of the United States. (j) Special provisions applicable to Federal salary payments. (i) Fifty (50%) percent of the debtor's aggregate disposable earnings for any pay period, where the debtor asserts by affidavit, or by other acceptable evidence, that he/she is supporting a spouse and/or dependent child, other than the former spouse and/or child for whom support is being collected, except that an additional five (5%) percent will apply if it appears that such earnings are to enforce past-due support for a period which is twelve (12) weeks or more prior to the pay period to which the offset applies. A debtor shall be considered to be supporting a spouse and/or dependent child only if the debtor provides over half of the spouse's and/or dependent child's support. (ii) Sixty (60%) percent of the debtor's aggregate disposable earnings for any pay period where the debtor fails to assert by affidavit or establish by other acceptable evidence that he/she is supporting a spouse and/or dependent child, other than a former spouse and/or child for whom support is being collected, except that an additional five (5%) percent will apply if it appears that such earnings are to enforce past-due support for a period which is twelve (12) weeks or more prior to the pay period to which the offset applies. (2) The maximum allowable offset amount shall be reduced by the amount of any deductions in pay resulting from a garnishment order for support. Nothing in this rule is intended to alter rules applicable to processing garnishment orders for child support and/or alimony. (3) Federal salary payments subject to offset for the collection of past-due support include current basic pay, special pay, incentive pay, retainer pay, overtime, or in the case of an employee not entitled to basic pay, other authorized pay. Aggregate disposable earnings for purposes of determining the maximum amounts which may be offset under paragraph (j)(1) of this section is Federal salary pay remaining after the deduction of: (i) Any amount required by law to be withheld; (ii) Amounts properly withheld for Federal, State or local income tax purposes; (iii) Amounts deducted as health insurance premiums; (iv) Amounts deducted as normal retirement contributions, not including amounts deducted for supplementary coverage; and (v) Amounts deducted as normal life insurance premiums not including amounts deducted for supplementary coverage. (4) At least 30 days in advance of offset, the disbursing official shall send written notice to the debtor of the maximum offset limitations described in paragraph (j)(1) of this section. The notice shall include a request that the debtor submit supporting affidavits or other documentation necessary to determine the applicable offset percentage limitation. The notice shall also inform the debtor of the percentage that will be deducted if he/she fails to submit the requested documentation. (5) At the time the past-due support debt is submitted for offset, the State shall advise Fiscal Service or HHS if the maximum amount of a Federal salary payment that may be offset is less than the amount described under this paragraph. (k) Payments exempt from administrative offset to collect past-due support being enforced by a State. (l) Fees. (m) Offsetting payments Conducting the offset. (2) Disposition of amounts collected. (n) Administrative offset priorities. (2) Offsets will be applied first to past-due support being enforced by the State before any other offsets under this part. (o) Notification of offset. (2) Disbursing officials of Fiscal Service or any other disbursing official which conducts an offset under this section will share with HHS, upon request by the Secretary of HHS, information contained in payment certification records of persons who are delinquent in child support obligations that would assist in the collection of such debts. When no offset is conducted, disbursing officials of Fiscal Service or any other disbursing official, will provide such information to HHS to the extent such information is available from offset activities conducted by Fiscal Service and other disbursing officials. (p) Liability of disbursing officials and payment agencies. (q) Social Security numbers. (1) In interoffice and interagency communications; (2) In notices, including notices to the debtor or payee that an offset has or will occur, when the Social Security number is (or is embedded in) a creditor agency's account number, debt identification number, or debtor identification number; (3) In response to a request of a debtor or a debtor's representative for records of Fiscal Service's offset activities; and (4) When required by law. [62 FR 36210, July 7, 1997, as amended at 63 FR 46145, Aug. 28, 1998; 74 FR 27433, June 10, 2009; 87 FR 50248, Aug. 16, 2022] § 285.2 Offset of tax refund payments to collect past-due, legally enforceable nontax debt. (a) Definitions. Creditor agency Debt claim Debtor Fiscal Service IRS Tax refund offset Tax refund payment (b) General rule. (2) Fiscal Service will compare tax refund payment records, as certified by the IRS, with records of debts submitted to Fiscal Service. A match will occur when the taxpayer identifying number (as that term is used in 26 U.S.C. 6109) and name (or derivation of the name, known as a “name control”) of a payment certification record are the same as the taxpayer identifying number and name control of a debtor record. When a match occurs and all other requirements for tax refund offset have been met, Fiscal Service will reduce the amount of any tax refund payment payable to a debtor by the amount of any past-due, legally enforceable debt owed by the debtor. Any amounts not offset will be paid to the payee(s) listed in the payment certification record. (3) This section does not apply to any debt or claim arising under the Internal Revenue Code. (4)(i) This section applies to Federal Old Age, Survivors and Disability Insurance (OASDI) overpayments provided the requirements of 31 U.S.C. 3720A(f)(1) and (2) are met with respect to such overpayments. (ii) For purposes of this section, OASDI overpayment et seq. (5) A creditor agency is not precluded from using debt collection procedures, such as wage garnishment, to collect debts that have been submitted to Fiscal Service for purposes of offset under this part. Such debt collection procedures may be used separately or in conjunction with offset collection procedures. (c) Regulations. (d) Agency certification and referral of debt Past-due, legally enforceable debt eligible for tax refund offset. (i) The debt is past-due and legally enforceable in the amount submitted to Fiscal Service and that the agency will ensure that collections are properly credited to the debt; (ii) The creditor agency has made reasonable efforts to obtain payment of the debt in that the agency has: (A) Submitted the debt to Fiscal Service for collection by administrative offset and complied with the provisions of 31 U.S.C. 3716(a) and related regulations, to the extent that collection of the debt by administrative offset is not prohibited by statute; (B) Notified, or has made a reasonable attempt to notify, the debtor that the debt is past-due, and unless repaid within 60 days after the date of the notice, will be referred to Fiscal Service for tax refund offset; (C) Given the debtor at least 60 days to present evidence that all or part of the debt is not past-due or legally enforceable, considered any evidence presented by the debtor, and determined that the debt is past-due and legally enforceable; and (D) Provided the debtor with an opportunity to make a written agreement to repay the amount of the debt; (iii) The debt is at least $25; and (iv) In the case of an OASDI overpayment— (A) The individual is not currently entitled to monthly insurance benefits under title II of the Social Security Act (42 U.S.C. 401 et seq. (B) The notice describes conditions under which the Commissioner of Social Security is required to waive recovery of the overpayment, as provided under 42 U.S.C. 404(b); and (C) If the debtor files a request for a waiver under 42 U.S.C. 404(b) within the 60-day notice period, the agency has considered the debtor's request. (2) Pre-offset notice and consideration of evidence for past-due, legally enforceable debt. (ii) For purposes of paragraph (d)(1)(iii)(C) of this section, if the evidence presented by the debtor is considered by an agent of the creditor agency, or other entities or persons acting on the agency's behalf, the debtor must be accorded at least 30 days from the date the agent or other entity or person determines that all or part of the debt is past-due and legally enforceable to request review by an officer or employee of the agency of any unresolved dispute. The agency must then notify the debtor of its decision. (3) Referral of past-due, legally enforceable debt. (i) The name and taxpayer identifying number (as defined in 26 U.S.C. 6109) of the debtor who is responsible for the debt; (ii) The amount of such past-due and legally enforceable debt; (iii) The date on which the debt became past-due; (iv) The designation of the Federal agency or subagency referring the debt; and (v) In the case of an OASDI overpayment, a certification by the Commissioner of Social Security designating whether the amount payable to the agency is to be deposited in either the Federal Old-Age and Survivors Insurance Trust Fund or the Federal Disability Insurance Trust Fund, but not both. (4) Correcting and updating referral. (5) Fiscal Service may reject a certification which does not comply with the requirements of paragraph (d)(1) of this section. Upon notification of the rejection and the reason for the rejection, a creditor agency may resubmit the debt with a corrected certification. (6)(i) Creditor agencies may submit debts to Fiscal Service for collection by tax refund offset irrespective of the amount of time the debt has been outstanding. Accordingly, all nontax debts, including debts that were delinquent for ten years or longer prior to December 28, 2009 may be collected by tax refund offset. (ii) For debts outstanding more than ten years on or before December 28, 2009, creditor agencies must certify to Fiscal Service that the notice of intent to offset described in paragraph (d)(1)(ii)(B) of this section was sent to the debtor after the debt became ten years delinquent. This requirement will apply even in a case where notice was also sent prior to the debt becoming ten years delinquent, but does not apply to any debt that could be collected by offset without regard to any time limitation prior to December 28, 2009. (e) Post-offset notice to the debtor, the creditor agency, and the IRS. (A) The amount and date of the offset to satisfy a past-due, legally enforceable nontax debt; (B) The creditor agency to which this amount has been paid or credited; and (C) A contact point within the creditor agency that will handle concerns or questions regarding the offset. (ii) The notice in paragraph (e)(1)(i) of this section will also advise any non-debtor spouse who may have filed a joint tax return with the debtor of the steps which a non-debtor spouse may take in order to secure his or her proper share of the tax refund. See paragraph (f) of this section. (2) Fiscal Service will advise each creditor agency of the names, mailing addresses, and 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. Fiscal Service will not advise the creditor agency of the source of payment from which such amounts were collected. If a payment from which an amount of past-due, legally enforceable debt is to be withheld is payable to two individual payees, Fiscal Service will notify the creditor agency and furnish the name and address of each payee to whom the payment was payable. (3) At least weekly, Fiscal Service will notify the IRS of the names and taxpayer identifying numbers of the debtors from whom amounts of past-due, legally enforceable debt were collected and the amounts collected from each debtor. (f) Offset made with regard to a tax refund payment based upon joint return. (g) Disposition of amounts collected. (h) Fees. (i) Review of tax refund offsets. (j) Access to and use of confidential tax information. (k) Effective date. [62 FR 34179, June 25, 1997, as amended at 74 FR 27433, June 10, 2009; 74 FR 68538, Dec. 28, 2009; 75 FR 746, Jan. 4, 2010] § 285.3 Offset of tax refund payments to collect past-due support. (a) Definitions. Debt Debtor Fiscal Service HHS IRS Past-due support State Tax refund offset Tax refund payment (b) General rule. (2) Fiscal Service will compare tax refund payment records, as certified by the IRS, with records of debts submitted to Fiscal Service. A match will occur when the taxpayer identifying number (as that term is used in 26 U.S.C. 6109) and name of a payment certification record are the same as the taxpayer identifying number and name of a delinquent debtor record. When a match occurs and all other requirements for tax refund offset have been met, Fiscal Service will reduce the amount of any tax refund payment payable to a debtor by the amount of any past-due support debt owed by the debtor. Any amounts not offset will be paid to the payee(s) listed in the payment certification record. (c) Notification of past-due support Past-due support eligible for tax refund offset. (i)(A) There has been an assignment of the support obligation to a State and the amount of past-due support is not less than $25.00, or such higher amount as HHS rules may allow, whichever is greater; or (B) A State agency is providing support collection services under 42 U.S.C. 654(4) and the amount of the past-due support is not less than $500.00; and (ii) A notification of liability for past-due support has been received by Fiscal Service as prescribed by paragraphs (c)(2) or (c)(3) of this section. (2) Notification of liability for past-due support and transmission of information to Fiscal Service by HHS. (3) Notification of liability for past-due support transmitted directly to Fiscal Service by States. (4) Advance notification to debtor of intent to collect by tax refund offset. (i) Instruct the debtor of the steps which may be taken to contest the State's determination that past-due support is owed or the amount of the past-due support; (ii) Advise any non-debtor who may file a joint tax return with the debtor of the steps which a non-debtor spouse may take in order to secure his or her proper share of the tax refund; and (iii) In cases when a debt is being enforced by more than one State, advise the debtor of his or her opportunities to request a review with the State enforcing collection or the State issuing the support order as prescribed by the provisions of 45 CFR 303.72(g). (5) Correcting and updating notification. (6) Collection of past-due support enforced by multiple States. (d) Priorities for offset. (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 § 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). (2) Reduction of the tax refund payment pursuant to 26 U.S.C. 6402(a), (c), (d), and (e) shall occur prior to crediting the overpayment to any future liability for an internal revenue tax. Any amount remaining after tax refund offset under 26 U.S.C. 6402(a), (c), (d), and (e) shall be refunded to the taxpayer, or applied to estimated tax, if elected by the taxpayer pursuant to IRS regulations. (e) Post-offset notice. (A) The amount and date of the offset to satisfy past-due support; (B) The State to which this amount has been paid or credited; and (C) A contact point within the State that will handle concerns or questions regarding the offset. (ii) The notice in paragraph (e)(1)(i) of this section also will advise any non-debtor who may have filed a joint tax return with the debtor of the steps which a non-debtor spouse may take in order to secure his or her proper share of the tax refund. See paragraph (f) of this section. (2) Fiscal Service will advise HHS of the names, mailing addresses, and identifying numbers of the debtors from whom amounts of past-due support were collected, of the amounts collected from each debtor through tax refund offset, the names of any non-debtor spouses who may have filed a joint return with the debtor, and of the State on whose behalf each collection was made. Alternatively, Fiscal Service will provide such information to each State that refers debts directly to Fiscal Service. Fiscal Service will inform HHS and each State that the payment source is a tax refund payment. (3) At least weekly, Fiscal Service will notify the IRS of the names and taxpayer identifying numbers of the debtors from whom amounts owed for past-due support were collected from tax refund offsets and the amounts collected from each debtor. (4) At such time and in such manner as Fiscal Service and HHS agree, but no less than annually, Fiscal Service will advise HHS of the States which have furnished notices of past-due support, the number of cases in each State with respect to which such notices have been furnished, the amount of past-due support sought to be collected by each State, and the amount of such tax refund offset collections actually made in the case of each State. As Fiscal Service and HHS may agree, Fiscal Service may provide additional offset-related information about States which have furnished notices of past-due support. (f) Offset made with regard to a tax refund payment based upon joint return. (g) Disposition of amounts collected. (h) Time limitation. i.e., (i) Fees. (j) Review of tax refund offsets. (k) Access to and use of confidential tax information. (l) Effective date. (m) Social Security numbers. (1) In interoffice and interagency communications; (2) In notices, including notices to the debtor or payee that an offset has or will occur, when the Social Security number is (or is embedded in) a creditor agency's account number, debt identification number, or debtor identification number; (3) In response to a request of a debtor or a debtor's representative for records of Fiscal Service's offset activities; and (4) When required by law. [63 FR 72094, Dec. 30, 1998, as amended at 72 FR 59480, Oct. 22, 2007; 74 FR 27433, June 10, 2009; 80 FR 81465, Dec. 30, 2015; 87 FR 50248, Aug. 16, 2022] § 285.4 Offset of Federal benefit payments to collect past-due, legally enforceable nontax debt. (a) Scope. (2) As used in this section, benefit payments “due to” an individual, “payable to” an individual, and/or benefit payments “received by” an individual, refer to those benefit payments expected to be paid to an individual before any amounts are offset to satisfy the payee's delinquent debt owed to the United States. Nothing in these phrases, similar phrases, or this section is intended to imply or confer any new or additional rights or benefits on an individual with respect to his or her entitlement to benefit payments. The Bureau of the Fiscal Service (Fiscal Service), the Social Security Administration, the Railroad Retirement Board, and other payment agencies are not liable for the amount offset from an individual's benefit payment on the basis that the underlying obligation, represented by the payment before the offset was taken, was not satisfied. See 31 U.S.C. 3716(c)(2)(A). (b) Definitions. Administrative offset offset Agency Federal agency Covered benefit payment Creditor agency Debt claim Debtor Disbursing official Fiscal Service Monthly covered benefit payment Payee Taxpayer identifying number (c) Administrative offset, generally. (d) Submission of debts to Fiscal Service for collection by administrative offset. (e) Offset amount. (i) The amount of the debt, including any interest, penalties and administrative costs; (ii) An amount equal to 15% of the monthly covered benefit payment; or (iii) The amount, if any, by which the monthly covered benefit payment exceeds $750. (2) A debtor shall not receive a refund of any amounts offset if the debtor's monthly covered benefit payments are reduced, suspended, terminated, or otherwise not received for a period of 12 months. (3) Examples. (ii) A debtor receives monthly Social Security benefits of $1250. The amount offset is the lesser of $187.50 (15% of $1250) or $500 (the amount by which $1250 exceeds $750). In this example, the amount offset is $187.50 (assuming the debt is $187.50 or more). (iii) A debtor receives monthly Social Security payments of $650. No amount will be offset because $650 is less than $750. (f) Notification of offset. (2) The disbursing official conducting the offset will notify the payee in writing of the occurrence of the offset to satisfy, in whole or in part, a delinquent debt owed to the United States. The notice shall inform the payee of the type and amount of the payment that was offset; the identity of the creditor agency which requested the offset; and a contact point within the creditor agency that will handle concerns regarding the offset. (3) Non-receipt by the debtor of the notices described in paragraphs (f)(1) and (f)(2) of this section shall not impair the legality of the administrative offset. (g) Fees. (h) Disposition of amounts collected. [63 FR 44988, Aug. 21, 1998, as amended at 81 FR 1319, Jan. 12, 2016] § 285.5 Centralized offset of Federal payments to collect nontax debts owed to the United States. (a) Scope. (2) Special rules apply to the collection of delinquent, nontax debts through the centralized offset of certain types of Federal payments, including tax refunds (31 CFR 285.2), Federal benefit payments (31 CFR 285.4), and Federal salary payments (31 CFR 285.7). While this rule applies to such payments, nothing in this rule is intended to contradict any provision of those more specific sections. To the extent any provision of this rule is inconsistent with a more specific provision of § 285.2, § 285.4 or § 285.7 of this part, the more specific provision shall apply. (3) The receipt of collections pursuant to this section does not preclude a Federal agency from pursuing other debt collection remedies in conjunction with centralized offset. Nothing in this section precludes an agency from pursuing all available debt collection remedies simultaneously, provided that collections do not exceed the amount of the debt, including any interest, penalties, and administrative costs. (b) Definitions. Agency Federal agency Centralized offset Creditor agency Debt claim et seq. et seq. Debt collection center Debtor Delinquent past-due Delinquent debt record Disbursing official Fiscal Service Legally enforceable Match Offset Past-due Payee Payment agency Payment record Person Recurring payment Representative payee Secretary Taxpayer identifying number (c) General rule. (2) Disbursing officials shall compare payment records with delinquent debt records submitted to Fiscal Service for collection by offset. When a match occurs, and all other requirements for offset have been met, the disbursing official shall offset the payment to satisfy, in whole or part, the payee's debt to the extent allowed by law. The disbursing official shall pay any amounts not offset to the payee. See paragraphs (e), (f), (g), and (h) of this section. (d) Requirements for creditor agencies Mandatory notification of delinquent debts. (2) Discretionary notification of delinquent debts. (3) Debt eligibility. (A) Past-due in the amount stated by the creditor agency; (B) Legally enforceable; (C) More than $25, or such other amount as Fiscal Service may prescribe; and (D) Not secured by collateral subject to a pending foreclosure action, unless the creditor agency certifies that offset will not affect the Government's rights to the secured collateral. (ii) The creditor agency must certify that the debt is eligible for collection by offset, as required in paragraph (d)(6) of this section. (iii) Debts owed by foreign sovereigns may be referred to Treasury Offset Program at the discretion of the creditor agency to the extent allowed by law, but are excluded from mandatory referral under paragraph (d)(1) of this section. (iv) In accordance with 31 U.S.C. 3719 and the procedures promulgated thereunder, creditor agencies must report to Treasury the amount of debt over 120 days delinquent eligible for the Treasury Offset Program. The procedures require that such report include the amount of debt over 120 days delinquent that the creditor agency has determined is not eligible for the Treasury Offset Program and the reasons for such determination. (v) Creditor agencies may submit nontax debts to Fiscal Service for collection by centralized offset irrespective of the amount of time the debt has been outstanding. Accordingly, all nontax debts, including debts that were outstanding for ten years or longer prior to June 11, 2009 may be collected by centralized offset. (4) Creditor agency regulations. (5) Delinquent debt information requirements. (i) Name and taxpayer identifying number of the person who owes the debt; (ii) Debtor's address last known to the creditor agency; (iii) The amount of the debt (including, as applicable, interest, penalties and administrative costs) and the date on which the debt became delinquent; (iv) The address and telephone number of the contact point within the creditor agency who will handle questions, concerns or communications regarding the debt; (v) Written certification as required in paragraph (d)(6) of this section; and (vi) Other information as may be requested by Fiscal Service. (6) Creditor agency certification. (i) The debt meets the requirements described in paragraph (d)(3)(i) of this section; (ii) In compliance with 31 U.S.C. 3716, 3720A, 26 U.S.C. 6402, and applicable regulations, the creditor agency has made a reasonable attempt to provide each debtor with: (A) Written notification, at least sixty days prior to submitting the debt and at the debtor's most current address known to the agency, of the nature and the amount of the debt, the intention of the creditor agency to collect the debt through offset, and an explanation of the rights of the debtor; (B) An opportunity to inspect and copy the records of the creditor agency with respect to the debt; (C) An opportunity for a review within the creditor agency of the determination of indebtedness, including the opportunity to present evidence that all or part of the debt is not past-due or legally enforceable; (D) An opportunity to enter into a written repayment agreement with the creditor agency; and (E) In the case of Federal employees, an opportunity for a hearing prior to submitting the debt for Federal salary offset. See 5 U.S.C. 5514 and 5 CFR 550.1104. (See 31 CFR 285.7(d), which describes the authority to waive the salary offset certification as a prerequisite to referring the debt for other types of offsets.) (iii) For debts outstanding more than ten years on or before June 11, 2009, the notice of intent to offset described in paragraph (d)(6)(ii)(A) of this section was sent to the debtor after the debt was outstanding for more than ten years, and that the debtor was afforded the rights described in paragraphs (d)(6)(ii)(B) through (E). This requirement will apply even in a case where notice was also sent prior to the debt being outstanding for ten years but does not apply to any debt that could be collected by offset without regard to any time limitation prior to June 11, 2009. (iv) The creditor agency has complied with all statutes, regulations, and policies applicable to the creditor agency's assessment of interest, penalties and administrative costs (including, as applicable, 31 U.S.C. 3717), and that the creditor agency has provided a written notice to debtors explaining the creditor agency's requirements concerning any such charges assessed against those debtors; (v) The individual signing the certification has the delegated authority to execute the certification on behalf of the head of the creditor agency; and (vi) Such additional information that Fiscal Service may from time to time require in compliance with law, regulation or policy. (7) Updating certification. (i) The debt continues to meet the requirements described in paragraph (d)(3) of this section; and (ii) The creditor agency has properly credited all collections to the debt balance (other than collections received through centralized offset). (8) Fiscal Service instructions to creditor agencies. (9) Agencies which are both creditor and disbursing officials. (10) Correcting and updating debt information. (ii) The creditor agency shall update delinquent debt records, in the manner and time frames required by Fiscal Service, to reflect any amounts credited by the creditor agency to the debtor's account after submission of the debt to Fiscal Service (other than credits for amounts collected by centralized offset). (iii) The creditor agency may update delinquent debt records to reflect any increases in the amount of the debt submitted to Fiscal Service for collection by offset provided that the creditor agency has complied with the requirements of paragraph (d)(6) of this section with regard to the increased amounts. (iv) The creditor agency shall notify Fiscal Service 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. (v) The creditor agency shall notify Fiscal Service if it has returned any monies to the debtor/payee. (11) Debts at Fiscal Service, a debt collection center, or the Department of Justice. (12) Certification of amount to be offset if different than maximum allowed by law. (13) Duplication of notices not required. (e) Payments made by the United States Payments eligible for offset. (2) Payments excluded from offset under this section. (i) Black Lung Part C benefit payments, or Railroad Retirement tier 2 payments; (ii) Payments made under the tariff laws of the United States; (iii) Veterans Affairs benefit payments to the extent such payments are exempt from offset pursuant to 38 U.S.C. 5301; (iv) Payments made under any program administered by the Secretary of Education under title IV of the Higher Education Act of 1965 for which payments are certified by the Department of Education; (v) Payments made under any other Federal law if offset is expressly prohibited by Federal statute; (vi) Payments made under any program for which the Secretary has granted an exemption in accordance with the provisions of 31 U.S.C. 3716(c)(3)(B) and paragraph (e)(7) of this section; and (vii) Federal loan payments other than travel advances. (3) Specific rules for certain payment types. (A) Social Security benefit payments (excluding Supplemental Security Income payments), Black Lung (part B) payments, and Railroad Retirement (other than tier 2) payments to the extent such payments are subject to offset under 31 U.S.C. 3716(c)(3)(A) (see 31 CFR 285.4); (B) Federal salary payments (see 31 CFR 285.7; 5 CFR 550.1101 through 550.1108); and (C) Tax refund payments (see 31 CFR 285.2). (ii) This section governs the offset of such payments to the extent that this section is not inconsistent with the special rules that apply for a particular type of payment. (4) Payments made to joint payees. i.e. (5) Payments made to representative payees. (6) Assigned payments. (ii) An assigned payment will also be subject to offset to collect delinquent debts owed by the assignor unless: (A) In accordance with 41 U.S.C. 15(e)-(f), the payment has been properly assigned to a financial institution pursuant to a Federal contract, the contract contains provisions prohibiting the payment from being reduced or offset for debts owed by the contractor, and the debt arose independently of the contract; or (B) pursuant to 31 U.S.C. 3727, the payment is being made to the assignee as settlement or satisfaction of a claim brought by the assignee against the creditor agency based upon the contract, and the debt of the contractor arises independently of the contract; or (C) the debtor has properly assigned the right to such payments and the debt arose after the effective date of the assignment. (7) Payment agency requests for exemptions from centralized offset pursuant to 31 U.S.C. 3716(c)(3)(B) Means-tested payments. (ii) Payments made under programs which are not means-tested. See www.fiscal.treasury.gov/debt. (iii) Procedures for requesting exemptions. See www.fiscal.treasury.gov/debt. (iv) Exemptions apply to classes of payments. (8) Payment agency responsibilities. (ii) Payment agencies shall also review the nature of payments the agency certifies and notify Fiscal Service of any legal bars to centralized offset of payments. (9) Payment and disbursing officials have satisfied the obligation underlying the payment. (f) Offset When offset occurs. (2) Offset amount. (A) The amount of the payment as shown on the payment record; or (B) The amount of the debt, including any interest, penalties and administrative costs; or (C) In the case of retirement annuity payments certified by the Office of Personnel Management, up to twenty-five percent of the amount of the payment as shown on the payment record. (ii) Notwithstanding paragraph (f)(2)(i) of this section, if a creditor agency has specified another amount, either in dollars or as a percentage of the payment, pursuant to paragraph (d)(15) of this section, the disbursing official shall offset the amount specified by the creditor agency. (3) Priorities for collecting multiple debts owed by the payee. (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 § 285.5; and (C) Third, to any debts owed to States for debts other than past-due support (see §§ 285.6 and 285.8 of this part). (g) Notices Warning notice by disbursing official to payee/debtor. (2) No additional warning notice when collections are suspended and resumed. (3) Offset notice. (i) A description of the payment and the amount of offset taken; (ii) The identity of the creditor agency requesting the offset; and (iii) The address and telephone number of the contact point within the creditor agency who will handle concerns regarding the offset. (h) Notification to creditor and payment agencies. (2) When a non-Treasury disbursing official conducts the offset, that disbursing official will transmit to Fiscal Service all of the information necessary for Fiscal Service to send notification under paragraph (h)(1) of this section, including the amount of any fees that the creditor agency is responsible for paying. (3) Fiscal Service will make available to the payment agency the information contained in the notification of offset, so that the payment agency may direct any questions concerning the claim to the appropriate contact person in the creditor agency. (i) Disposition of amounts collected. (2) If Fiscal Service learns from a paying agency that a payment should not have been made, and thus not offset, Fiscal Service will notify the creditor agency. Fiscal Service may deduct the offset amount from future amounts payable to the creditor agency. Alternatively, upon Fiscal Service's request, the creditor agency shall return promptly to the disbursing official an amount equal to the amount of the offset (without regard to whether any other amounts payable to such disbursing official have been paid). (3) Generally, the disbursing official is not responsible for refunding money to debtors. The creditor agency shall notify Fiscal Service any time the creditor agency returns all or any part of an offset payment to an affected payee. See paragraph (d)(10)(v) of this section. Fiscal Service and the creditor agency shall adjust the debtor records appropriately. (j) Fees. (k) Waiver of certain provisions under the Computer Matching Privacy and Protection Act of 1988. (l) Social Security numbers. (1) In interoffice and interagency communications; (2) In notices, including notices to the debtor or payee that an offset has or will occur, when the Social Security number is (or is embedded in) a creditor agency's account number, debt identification number, or debtor identification number; (3) In response to a request of a debtor or a debtor's representative for records of Fiscal Service's offset activities; and (4) When required by law. [67 FR 78942, Dec. 26, 2002, as amended at 70 FR 7135, Jan. 21, 2005; 74 FR 27433, June 10, 2009; 74 FR 27708, June 11, 2009; 81 FR 1319, Jan. 12, 2016; 87 FR 50248, Aug. 16, 2022] § 285.6 Administrative offset under reciprocal agreements with states. (a) Scope. (2) This section does not apply to the offset of Federal salary payments, Federal tax refunds (see 31 CFR 285.8), or the collection of past-due support debts (see 31 CFR 285.1 and 285.3). (b) Definitions. (2) For purposes of this section: Administrative offset debt Debtor Federal debt et seq. et seq. Offset Participating State Reciprocal agreement State State debt State payment offset (c) General rule. (d) Reciprocal agreements. (2) Once Fiscal Service has entered into a reciprocal agreement with a State pursuant to this section, Fiscal Service may request that the State perform State payment offsets to collect delinquent Federal debts in accordance with the terms of the reciprocal agreement. (3) A duly executed reciprocal agreement is required before a State may request an administrative offset pursuant to 31 U.S.C. 3716(h). (e) Requirements for submitting State debts for administrative offset Debt eligibility. (2) Certification. (i) Paragraph (d)(6)(ii)(E)—Federal salary offset; and (ii) Paragraph (d)(6)(iii)—Federal requirements for the assessment of interest and penalties to Federal debts. Additionally, with respect to paragraph (d)(6)(ii) of § 285.5, States shall only be required to certify that they have complied with the requirements of 31 U.S.C. 3716 (not 31 U.S.C. 3720A or 26 U.S.C. 6402) and this section 285.6. States shall also certify that they have complied with any requirements imposed by State law or procedure that may be applicable to administrative offset. (f) State debts submitted to Fiscal Service for tax refund offset. (g) Federal Payments subject to administrative offset under this section. (i) Any payments described in 31 CFR 285.5(e)(2) “Payments excluded from offset”; (ii) Payments due to an individual under the Social Security Act; (iii) Payments due an individual pursuant to part B of the Black Lung Benefits Act; (iv) Payments due an individual pursuant to any law administered by the Railroad Retirement Board; (v) Federal tax refunds; and (vi) Federal salary payments. (h) Conducting the administrative offset. (2) When a payee owes more than one delinquent State debt which has been referred to Fiscal Service for collection, amounts will be applied to delinquent State debts under this section after any amounts offset pursuant to any other section of this subpart A and any amounts levied pursuant 26 U.S.C. 6331. (i) Liability of disbursing officials and payment agencies. (j) Notification to a State of Federal debt. (2) Fiscal Service shall certify to a participating State that each debt Fiscal Service submits for State payment offset has been certified by the Federal creditor agency to be delinquent, valid, and legally enforceable in the amount stated, and that the Federal creditor agency owed the debt has complied with the requirements of 31 U.S.C. 3716(a) prior to submitting the debt for offset. (k) Conducting State payment offset. (i) If a payment is owed jointly to more than one payee, the entire payment shall be offset for a debt of either payee, unless otherwise prohibited by law or regulation; and (ii) If a payment is made to a person solely in that person's capacity as a representative payee for another person having the beneficial interest in the payment, the disbursing official shall offset that payment only to collect debts owed by the person having the beneficial interest in the payment. (2) Any prohibitions on offsetting a joint payment described in paragraph (k)(1)(i) of this section shall be set forth in the reciprocal agreement. (3) An official of the participating State shall notify the payee of the State payment offset. The reciprocal agreement may contain detailed guidance and procedures regarding sending such notice, but shall, at a minimum require that the notice inform the payee of: (i) The type and amount of the payment that was offset; (ii) The identity of the Federal agency that requested the offset; and (iii) A contact point within the Federal agency that will handle concerns regarding the offset. (l) Limitations. (m) Fees. (n) Social Security numbers. (1) In interoffice and interagency communications; (2) In notices, including notices to the debtor or payee that an offset has or will occur, when the Social Security number is (or is embedded in) a creditor agency's account number, debt identification number, or debtor identification number; (3) In response to a request of a debtor or a debtor's representative for records of Fiscal Service's offset activities; and (4) When required by law. [72 FR 1286, Jan. 11, 2007, as amended at 74 FR 56721, Nov. 3, 2009; 87 FR 50248, Aug. 16, 2022] § 285.7 Salary offset. (a) Purpose and scope. (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 Bureau of the Fiscal Service for purposes of administrative offset as required under 31 U.S.C. 3716(c)(6). Agencies that submit their debt to Fiscal Service 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). (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. (6) This section does not govern the centralized offset of final salary payments or lump-sum payments made to employees who have left an agency's employ. The centralized offset of such payments is governed by § 285.5 of this part. (b) Definitions. Administrative offset Agency Centralized salary offset computer matching Creditor agency Debt Delinquent debt record Disbursing official Disposable pay Federal employee Federal employee records Fiscal Service Paying agency Salary offset Secretary Taxpayer identifying number (c) Establishment of the consortium. (d) Creditor agency participation. (2) Prior to submitting debts to Fiscal Service 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 Fiscal Service for purposes of collection by administrative offset, including salary offset, creditor agencies shall provide written certification to Fiscal Service that: (i) The debt is past-due and legally enforceable in the amount submitted to Fiscal Service and that the creditor agency will ensure that collections (other than collections through offset) are properly credited to the debt; (ii) 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 (iii) 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) The creditor agency is not required to submit the certification set forth in paragraph (d)(3)(iii) of this section prior to submitting a debt to Fiscal Service. However, if the creditor agency does not provide such certification initially, the creditor agency shall provide the Federal employee with the notices and opportunity for a hearing, as required by 5 U.S.C. 5514 and applicable regulations, and shall make the necessary certification before the disbursing official offsets a salary payment pursuant to this section. A creditor agency may submit a debt without the requirement set forth in paragraph (d)(3)(iii) of this section, only if the creditor agency intends to complete the certification after complying with the provisions of 5 U.S.C. 5514 and applicable regulations. (5) The creditor agency shall notify Fiscal Service 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 Fiscal Service. The creditor agency also shall notify Fiscal Service 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. (6) Creditor agencies may submit nontax debts to Fiscal Service for collection by centralized salary offset irrespective of the amount of time the debt has been outstanding. Accordingly, all nontax debts, including debts that were outstanding for ten years or longer prior to June 11, 2009, may be collected by centralized salary offset. (7) For debts that were outstanding more than ten years on or before June 11, 2009, creditor agencies must certify to Fiscal Service that the notice described in paragraph (d)(3)(ii) of this section was sent to the debtor after the debt was outstanding for ten years. This requirement will apply even in a case where notice was also sent prior to the debt being outstanding for ten years but does not apply to any debt that could be collected by offset without regard to any time limitation prior to June 11, 2009. (e) Centralized salary offset computer match. (2) As authorized by the provisions of 31 U.S.C. 3716(f), Fiscal Service, 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, Fiscal Service 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. (g) Offset amount. (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. (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. (i) Notice. (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. (k) Disposition of amounts collected. [63 FR 23357, Apr. 28, 1998, as amended at 70 FR 22789, May 3, 2005; 74 FR 27433, June 10, 2009; 74 FR 27708, June 11, 2009; 81 FR 1319, Jan. 12, 2016] § 285.8 Offset of tax refund payments to collect certain debts owed to States. (a) Definitions. Debt Debtor Fiscal Service IRS Past-due, legally enforceable State income tax obligation (1) A judgment rendered by a court of competent jurisdiction which has determined an amount of State income tax to be due, (2) A determination after an administrative hearing which has determined an amount of state income tax to be due and which is no longer subject to judicial review, or (3) A State income tax assessment (including self-assessments) which has become final in accordance with State law but not collected and which has not been delinquent for more than 10 years. State State income tax obligation Tax refund offset Tax refund payment Unemployment compensation debt (1) A past-due debt for erroneous payment of unemployment compensation due to fraud or the person's failure to report earnings which has become final under the law of a State certified by the Secretary of Labor pursuant to 26 U.S.C. 3304 and which remains uncollected; (2) Contributions due to the unemployment fund of a State for which the State has determined the person to be liable and which remain uncollected; and (3) Any penalties and interest assessed on such debt. (b) General rule. (2) Fiscal Service will compare tax refund payment records, as certified by the IRS, with records of debts submitted to Fiscal Service. A match will occur when the taxpayer identifying number (as that term is used in 26 U.S.C. 6109) and name on a payment certification record are the same as the taxpayer identifying number and name (or derivative of the name) on a delinquent debt record. When a match occurs and all other requirements for tax refund offset have been met, Fiscal Service will reduce the amount of any tax refund payment payable to a debtor by the amount of any past-due, legally enforceable State income tax obligation or unemployment compensation debt owed by the debtor. Any amounts not offset will be paid to the payee(s) listed in the payment certification record. (3) Fiscal Service will only offset a tax refund payment for a State income tax obligation if the address shown on the Federal tax return for the taxable year of the overpayment is an address within the State seeking the offset. (c) Notification of past-due, legally enforceable State income tax obligations or unemployment compensation debts Notification. (2) Minimum amount of past-due, legally enforceable State income tax obligations that may be submitted. Fiscal Service only will accept notification of past-due, legally enforceable State income tax obligations of $25 or more or such higher amounts as determined by Fiscal Service. States will be notified annually of any changes in the minimum debt amount. (3)(i) Advance notification to the debtor of the State's intent to collect by Federal tax refund offset. (ii) Determination. (iii) Reasonable efforts. (4) Correcting and updating notification. (d) Priorities for offset. (2) Reduction of the tax refund payment pursuant to 26 U.S.C. 6402(a), (c), (d), (e) and (f) shall occur prior to crediting the overpayment to any future liability for an internal revenue tax. Any amount remaining after tax refund offset under 26 U.S.C. 6402(a), (c), (d), (e) and (f) shall be refunded to the taxpayer, or applied to estimated tax, if elected by the taxpayer pursuant to IRS regulations. (3) If Fiscal Service receives notice from a State of more than one debt subject to this section that is owed by a debtor to the State, any overpayment by the debtor shall be applied against such debts in the order in which such debts accrued. (e) Post-offset notice. (i) The amount and date of the offset and that the purpose of the offset was to satisfy a past-due, legally enforceable State income tax obligation or unemployment compensation debt; (ii) The State to which this amount has been paid or credited; and (iii) A contact point within the State that will handle concerns or questions regarding the offset. (2) The notice in paragraph (e)(1) of this section also will advise any non-debtor spouse who may have filed a joint return with the debtor of the steps which the non-debtor spouse may take in order to secure his or her proper share of the tax refund. See paragraph (f) of this section. (3) Fiscal Service will advise States of the names, mailing addresses, and taxpayer identifying numbers of the debtors from whom amounts of State income tax obligations or unemployment compensation debts were collected, and of the amounts collected from each debtor through tax refund offset. (4) At least weekly, Fiscal Service will notify the IRS of the names and taxpayer identifying numbers of the debtors from whom amounts owed for past-due, legally enforceable State income tax obligations or unemployment compensation debts were collected from tax refund offsets and the amounts collected from each debtor. (f) Offset made with regard to a tax refund payment based upon joint return. (g) Disposition of amounts collected. (h) Fees. (i) Review of tax refund offsets. (j) Access to and use of confidential tax information. (k) Social Security numbers. (1) In interoffice and interagency communications; (2) In notices, including notices to the debtor or payee that an offset has or will occur, when the Social Security number is (or is embedded in) a creditor agency's account number, debt identification number, or debtor identification number; (3) In response to a request of a debtor or a debtor's representative for records of Fiscal Service's offset activities; and (4) When required by law. [64 FR 71231, Dec. 20, 1999, as amended at 74 FR 27433, June 10, 2009; 76 FR 5071, Jan. 28, 2011; 87 FR 50248, Aug. 16, 2022] Subpart B—Authorities Other Than Offset § 285.11 Administrative wage garnishment. (a) Purpose. (b) Scope. (2) This section shall apply notwithstanding any provision of State law. (3) Nothing in this section precludes the compromise of a debt or the suspension or termination of collection action in accordance with applicable law. See, for example, the Federal Claims Collection Standards (FCCS), 31 CFR parts 900-904. (4) The receipt of payments pursuant to this section does not preclude a Federal agency from pursuing other debt collection remedies, including the offset of Federal payments to satisfy delinquent nontax debt owed to the United States. A Federal agency may pursue such debt collection remedies separately or in conjunction with administrative wage garnishment. (5) This section does not apply to the collection of delinquent nontax debt owed to the United States from the wages of Federal employees from their Federal employment. Federal pay is subject to the Federal salary offset procedures set forth in 5 U.S.C. 5514 and other applicable laws. (6) Nothing in this section requires agencies to duplicate notices or administrative proceedings required by contract or other laws or regulations. (c) Definitions. Agency Business day Day Debt claim Debtor Delinquent nontax debt Disposable pay Employer Evidence of service Garnishment Withholding order (d) General rule. (e) Notice requirements. (i) The nature and amount of the debt; (ii) The intention of the agency to initiate proceedings to collect the debt through deductions from pay until the debt and all accumulated interest, penalties and administrative costs are paid in full; and (iii) An explanation of the debtor's rights, including those set forth in paragraph (e)(2) of this section, and the time frame within which the debtor may exercise his or her rights. (2) The debtor shall be afforded the opportunity: (i) To inspect and copy agency records related to the debt; (ii) To enter into a written repayment agreement with the agency under terms agreeable to the agency; and (iii) For a hearing in accordance with paragraph (f) of this section concerning the existence or the amount of the debt or the terms of the proposed repayment schedule under the garnishment order. However, the debtor is not entitled to a hearing concerning the terms of the proposed repayment schedule if these terms have been established by written agreement under paragraph (e)(2)(ii) of this section. (3) The agency will retain evidence of service indicating the date of mailing of the notice. (f) Hearing In general. (2) Request for hearing. (3) Type of hearing or review. (ii) If the agency determines that an oral hearing is appropriate, the time and location of the hearing shall be established by the agency. An oral hearing may, at the debtor's option, be conducted either in-person or by telephone conference. All travel expenses incurred by the debtor in connection with an in-person hearing will be borne by the debtor. All telephonic charges incurred during the hearing will be the responsibility of the agency. (iii) In those cases when an oral hearing is not required by this section, an agency shall nevertheless accord the debtor a “paper hearing,” that is, an agency will decide the issues in dispute based upon a review of the written record. The agency will establish a reasonable deadline for the submission of evidence. (4) Effect of timely request. (5) Failure to timely request a hearing. (6) Hearing official. (7) Procedure. (i) The date and time of a telephonic hearing; (ii) The date, time, and location of an in-person oral hearing; or (iii) The deadline for the submission of evidence for a written hearing. (8) Burden of proof. (ii) Thereafter, if the debtor disputes the existence or amount of the debt, the debtor must present by a preponderance of the evidence that no debt exists or that the amount of the debt is incorrect. In addition, the debtor may present evidence that the terms of the repayment schedule are unlawful, would cause a financial hardship to the debtor, or that collection of the debt may not be pursued due to operation of law. (9) Record. (10) Date of decision. (i) The agency may not issue a withholding order until the hearing is held and a decision rendered; or (ii) If the agency had previously issued a withholding order to the debtor's employer, the agency must suspend the withholding order beginning on the 61st day after the receipt of the hearing request and continuing until a hearing is held and a decision is rendered. (11) Content of decision. (i) A summary of the facts presented; (ii) The hearing official's findings, analysis and conclusions; and (iii) The terms of any repayment schedules, if applicable. (12) Final agency action. et seq. (13) Failure to appear. (g) Wage garnishment order. (i) Within 30 days after the debtor fails to make a timely request for a hearing ( i.e. (ii) If a timely request for a hearing is made by the debtor, within 30 days after a final decision is made by the agency to proceed with garnishment, or, (iii) As soon as reasonably possible thereafter. (2) The withholding order sent to the employer under paragraph (g)(1) of this section shall be in a form prescribed by the Secretary of the Treasury. The withholding order shall contain the signature of, or the image of the signature of, the head of the agency or his/her delegatee. The order shall contain only the information necessary for the employer to comply with the withholding order. Such information includes the debtor's name, address, and social security number, as well as instructions for withholding and information as to where payments should be sent. (3) The agency will retain evidence of service indicating the date of mailing of the order. (h) Certification by employer. (i) Amounts withheld. (2)(i) Subject to the provisions of paragraphs (i)(3) and (i)(4) of this section, the amount of garnishment shall be the lesser of: (A) The amount indicated on the garnishment order up to 15% of the debtor's disposable pay; or (B) The amount set forth in 15 U.S.C. 1673(a)(2) (Restriction on Garnishment). The amount set forth at 15 U.S.C. 1673(a)(2) is the amount by which a debtor's disposable pay exceeds an amount equivalent to thirty times the minimum wage. See 29 CFR 870.10. (3) When a debtor's pay is subject to withholding orders with priority the following shall apply: (i) Unless otherwise provided by Federal law, withholding orders issued under this section shall be paid in the amounts set forth under paragraph (i)(2) of this section and shall have priority over other withholding orders which are served later in time. Notwithstanding the foregoing, withholding orders for family support shall have priority over withholding orders issued under this section. (ii) If amounts are being withheld from a debtor's pay pursuant to a withholding order served on an employer before a withholding order issued pursuant to this section, or if a withholding order for family support is served on an employer at any time, the amounts withheld pursuant to the withholding order issued under this section shall be the lesser of: (A) The amount calculated under paragraph (i)(2) of this section, or (B) An amount equal to 25% of the debtor's disposable pay less the amount(s) withheld under the withholding order(s) with priority. (iii) If a debtor owes more than one debt to an agency, the agency may issue multiple withholding orders provided that the total amount garnished from the debtor's pay for such orders does not exceed the amount set forth in paragraph (i)(2) of this section. For purposes of this paragraph (i)(3)(iii), the term agency (4) An amount greater than that set forth in paragraphs (i)(2) and (i)(3) of this section may be withheld upon the written consent of debtor. (5) The employer shall promptly pay to the agency all amounts withheld in accordance with the withholding order issued pursuant to this section. (6) An employer shall not be required to vary its normal pay and disbursement cycles in order to comply with the withholding order. (7) Any assignment or allotment by an employee of his earnings shall be void to the extent it interferes with or prohibits execution of the withholding order issued under this section, except for any assignment or allotment made pursuant to a family support judgment or order. (8) The employer shall withhold the appropriate amount from the debtor's wages for each pay period until the employer receives notification from the agency to discontinue wage withholding. The garnishment order shall indicate a reasonable period of time within which the employer is required to commence wage withholding. (j) Exclusions from garnishment. (k) Financial hardship. (2) A debtor requesting a review under paragraph (k)(1) of this section shall submit the basis for claiming that the current amount of garnishment results in a financial hardship to the debtor, along with supporting documentation. Agencies shall consider any information submitted in accordance with procedures and standards established by the agency. (3) If a financial hardship is found, the agency shall downwardly adjust, by an amount and for a period of time agreeable to the agency, the amount garnished to reflect the debtor's financial condition. The agency will notify the employer of any adjustments to the amounts to be withheld. (l) Ending garnishment. (2) At least annually, an agency shall review its debtors' accounts to ensure that garnishment has been terminated for accounts that have been paid in full. (m) Actions prohibited by the employer. (n) Refunds. (2) Unless required by Federal law or contract, refunds under this section shall not bear interest. (o) Right of action. [63 FR 25139, May 6, 1998, as amended at 64 FR 22908, Apr. 28, 1999; 66 FR 51868, Oct. 11, 2001] § 285.12 Transfer of debts to Treasury for collection. (a) Definitions. Centralized Receivables Service Creditor agency Cross-Servicing program Days delinquent Debt Debt collection center Debtor Delinquent or past-due Federal agency Fiscal Service Legally enforceable (1) The subject of a pending administrative review required by a statute or regulation that prohibits collection action during the review process; or (2) Governed by a statute that precludes collection. Person Secretary (b) In general. (c) Mandatory transfer of debts to Fiscal Service's Cross-Servicing program. (2) Except as set forth in paragraphs (c)(3) and (d) of this section, a creditor agency must transfer any eligible debt that is over $25 (or such other amount as Fiscal Service may determine) to the Cross-Servicing program by no later than 120 days delinquent if the creditor agency relies on the Cross-Servicing program to submit the transferred debts for centralized offset on the creditor agency's behalf or, otherwise, by no more than 180 days delinquent. (3) If a final agency determination resulting from an administrative appeal or review process is not made until after the time specified in paragraph (c)(2) of this section, the creditor agency must transfer such debt to the Cross-Servicing program within 30 days after the date of the final decision. (4) For accounting and reporting purposes, the debt remains on the books and records of the Federal agency, which transferred the debt. (5) On behalf of the creditor agency, Fiscal Service will take appropriate action to collect or compromise the transferred debt, or to suspend or terminate collection action thereon. Appropriate action to collect a debt may include referral to another debt collection center, a private collection contractor, or the Department of Justice for litigation. The creditor agency must advise Fiscal Service, in writing, of any specific statutory or regulatory requirements pertaining to its debt and will agree, in writing, to a collection strategy, which includes parameters for entering into compromise and repayments agreements with debtors. (d) Exceptions to mandatory transfer. (i) Is in litigation or foreclosure as described in paragraph (d)(2) of this section; (ii) Is scheduled for sale as described in paragraph (d)(3) of this section; (iii) Is at a private collection contractor if the debt has been referred to a private collection contractor for a period of time determined by the Secretary; (iv) Is at a debt collection center if the debt has been referred to a Treasury-designated debt collection center in accordance with paragraph (f) of this section; (v) Is being collected by internal offset as described in paragraph (d)(4) of this section; (vi) Is being serviced and/or collected in accordance with applicable statutes and/or regulations by third parties, such as private lenders or guaranty agencies; or (vii) Is covered by an exemption granted by the Secretary as described in paragraph (d)(5) of this section. (2)(i) A debt is in litigation if: (A) The debt has been referred to the Attorney General for litigation by the creditor agency; or (B) The debt is the subject of proceedings pending in a court of competent jurisdiction, including bankruptcy proceedings, whether initiated by the creditor agency, the debtor, or any other party. (ii) A debt is in foreclosure if: (A)( 1 ( 2 (B) The creditor agency anticipates that proceeds will be available from the liquidation of the collateral for application to the debt. (3) A debt is scheduled for sale if: (i) The debt will be disposed of under an asset sales program within one (1) year after becoming eligible for sale; or (ii) The debt will be disposed of under an asset sales program and a schedule established by the creditor agency and approved by the Director of the Office of Management and Budget. (4) A debt is being collected by internal offset if a creditor agency expects the debt to be collected in full within three (3) years from the date of delinquency through the withholding of funds payable to the debtor by the creditor agency, or if the creditor agency has issued notice to the debtor of the creditor agency's intent to offset such funds. (5) The Secretary may exempt classes of debt from mandatory referral. (i) Upon the written request of the head of a Federal agency, or as the Secretary may determine on his/her own initiative, the Secretary may exempt any class of debts from the application of the requirement described in paragraph (c)(1) of this section. In determining whether to exempt a class of debts, the Secretary will determine whether exemption is in the best interests of the Government after considering the following factors: (A) Whether an exemption is the best means to protect the government's financial interest, taking into consideration the number, dollar amount, age and collection rates of the debts for which exemption is requested; (B) Whether the nature of the program under which the delinquencies have arisen is such that the transfer of such debts would interfere with program goals; and (C) Whether an exemption would be consistent with the purposes of the Debt Collection Improvement Act of 1996 (DCIA), Pub. L. 104-134, 110 Stat. 1321-358 (April 26, 1996). (ii) Requests for exemptions must clearly identify the class of debts for which an exemption is sought and must explain how application of the factors listed above to that class of debts warrants an exemption. (iii) Requests for exemption must be made by the head of the agency requesting the exemption, the Chief Financial Officer of the agency, or the Deputy Chief Financial Officer of the agency. For purposes of this section, the head of an agency does not include the head of a subordinate organization within a department or agency. (e) [Reserved] (f) Debt collection centers. (g) Administrative offset. i.e., (h) Voluntary referral of debts less than 180 days delinquent. (i) Certification. (j) Fees. (k) Social Security numbers. (1) In interoffice and interagency communications; (2) In communications with private collection contractor and agents that assist Fiscal Service in its debt collection activities; (3) In notices and letters, including demand letters and notices to employers regarding wage garnishment, when the Social Security number is (or is embedded in) a creditor agency's account number, debt identification number, or debtor identification number; (4) In notices to employers regarding wage garnishment; (5) In response to a request of a debtor or a debtor's representative for records of Fiscal Service's collection activities; and (6) When required by law. [63 FR 16356, Apr. 2, 1998, as amended at 64 FR 22908, Apr. 28, 1999; 81 FR 1319, Jan. 12, 2016; 87 FR 50249, Aug. 16, 2022] § 285.13 Barring delinquent debtors from obtaining Federal loans or loan insurance or guarantees. (a) Definitions. Agency Creditor agency Debt Federal financial assistance financial assistance Fiscal Service Nontax debt et seq. Person Secretary (b) Purpose and scope. (2) Additional guidance concerning debt collection and debt management is provided in “Managing Federal Receivables” and other Fiscal Service publications. (3) Nothing in this section requires an agency to grant Federal financial assistance if denial otherwise is authorized by statute, regulation, or agency policies and procedures. For example, if an agency requires borrowers to have a satisfactory credit history, the agency may deny financial assistance even if a delinquent debt has been resolved. (4) This section does not confer any new rights or benefits on persons seeking Federal financial assistance. (5) This section applies to any person owing delinquent nontax debt and to any agency that administers a program that grants Federal financial assistance. (c) General rule. (2) An agency from which a person seeks Federal financial assistance may determine, under standards issued by the agency, that a person is ineligible for Federal financial assistance under this section if: (i) The person is controlled by a person owing an outstanding nontax debt that is in delinquent status (e.g., a corporation is controlled by an officer, director, or shareholder who owes a debt); or (ii) The person controls a person owing an outstanding nontax debt that is in delinquent status (e.g., a corporation controls a wholly-owned or partially-owned subsidiary which owes a debt). (3) A creditor agency may obtain information concerning whether or not a person seeking Federal financial assistance owes a delinquent debt from, among other sources, credit reports, information contained on credit applications, and the Department of Housing and Urban Development's Credit Alert Interactive Voice Response System (CAIVRS). For information about participating in the CAIVRS program, agencies should contact the Director of Information Resources Management, Policy and Management Division, Office of Information Technology, Department of Housing and Urban Development, 451 7th Street, S.W., Washington, DC 20410. (d) Delinquent status. (2) For purposes of this section, a debt is not in delinquent status if: (i) The person seeking Federal financial assistance has been released by the creditor agency from any obligation to pay the debt, or there has been an adjudication or determination that such person does not owe or does not have to pay the debt; (ii) The debtor is the subject of, or has been discharged in, a bankruptcy proceeding, and if applicable, the person seeking Federal financial assistance is current on any court authorized repayment plan; or (iii) The existence of the debt or the agency's determination that the debt is delinquent is being challenged under an ongoing administrative appeal or contested judicial proceeding and the appeal was filed by the debtor in a timely manner. Unless otherwise prohibited, an agency may defer making a determination as to whether or not to extend credit until the appeal process is completed. (3) Unless the provisions of paragraph (d)(2) apply, a debt is in delinquent status even if the creditor agency has suspended or terminated collection activity with respect to such debt. For example, a delinquent nontax debt that has been written off the books of the creditor agency or reported to the Internal Revenue Service as discharged ( i.e. (4) Nothing in this section defines the terms “delinquent” or “delinquent status” for any purposes other than those described in this section. (e) Delinquency resolution. (i) Pays or otherwise satisfies the delinquent debt in full; (ii) Pays the delinquent debt in part if the creditor agency accepts such part payment as a compromise in lieu of payment in full; (iii) Cures the delinquency under terms acceptable to the creditor agency in that the person pays any overdue payments, plus all interest, penalties, late charges, and administrative charges assessed by the creditor agency as a result of the delinquency; or (iv) Enters into a written repayment agreement with the creditor agency to pay the debt, in whole or in part, under terms and conditions acceptable to the creditor agency. (2) Unless the provisions of paragraph (e)(1) of this section apply, a delinquent debt is not resolved even if the creditor agency has suspended or terminated collection activity with respect to such debt. For example, a delinquent nontax debt that has been written off the books of the creditor agency or reported to the Internal Revenue Service as discharged ( i.e. (f) Exemptions by the Secretary. (2) The creditor agency recommending an exemption for a class of debts will provide the Secretary with information about: (i) The nature of the program under which the delinquencies have arisen; (ii) The number, dollar amount, and age of the debts in the program for which exemption is recommended; (iii) The reasons why an exemption is justified, including why the granting of financial assistance to persons owing the type of debt for which exemption is requested would not be contrary to the Government's goal to reduce losses by requiring proper screening of potential borrowers; and, (iv) Other information the Secretary deems necessary to consider the exemption request. (3) The Secretary may exempt a class of debts if exemption is in the best interests of the Federal Government. (g) Waivers by the agency. (2) The authorized agency official should balance the following factors when deciding whether to grant a waiver under paragraph (g)(1) of this section: (i) Whether the denial of the financial assistance to the person would tend to interfere substantially with or defeat the purposes of the financial assistance program or otherwise would not be in the best interests of the Federal Government; and (ii) Whether the agency's granting of the financial assistance to the person is contrary to the Government's goal to reduce losses from debt management activities by requiring proper screening of potential borrowers. (3) When balancing the factors described in paragraph (d)(2) of this section, the authorized agency official should consider: (i) The age, amount, and cause(s) of the delinquency and the likelihood that the person will resolve the delinquent debt; and (ii) The amount of total debt, delinquent or otherwise, owed by the person and the person's credit history with respect to repayment of debt. (4) Each agency shall retain a centralized record of the number and type of waivers granted under this section. (h) Effect of denial of Federal financial assistance. [63 FR 67756, Dec. 8, 1998]

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