Federal Register: June 11, 2009 (Volume 74, Number 111)
DOCID: fr11jn09-25 FR Doc E9-13604
DEPARTMENT OF TREASURY
Fiscal Service
CFR Citation: 31 CFR Part 285
RIN ID: RIN 1510-AB20
NOTICE: PROPOSED RULES
DOCID: fr11jn09-25
DOCUMENT ACTION: Notice of Proposed Rulemaking.
SUBJECT CATEGORY:
Offset of Tax Refund Payments to Collect Past-Due, Legally Enforceable Nontax Debt
DATES: Comments must be received by August 10, 2009.
DOCUMENT SUMMARY:
The Department of the Treasury, Financial Management Service, is proposing to amend its regulation governing the offset of tax refund payments to collect nontax debts owed to the United States. We are proposing to remove the tenyear time limitation on the collection of debts by tax refund offset. This change will allow for the use of tax refund offset to collect nontax debts owed to the United States irrespective of the amount of time the debt has been outstanding.
SUMMARY:
Offset of Tax Refund Payments to Collect Past-Due, Legally Enforceable Nontax Debt
SUPPLEMENTAL INFORMATION
I. Background
The Food, Conservation and Energy Act of 2008, Public Law 110234,
Section 14219, 22 Stat. 923 (2008) (``the Act'') amended the Debt
Collection Act of 1982 (as amended by the Debt Collection Improvement
Act of 1996) to remove a restriction on the collection of debt by
offset of nontax payments. Prior to this change, nontax payments could be offset to collect debt only if the debt
[[Page 27731]]
was delinquent for a period of less than ten years. The amendment to
the law allows for the collection of debt by offsetting nontax payments
without any time limitation and applies to any debt outstanding on or after the date of the enactment of the Act.
Although this statutory change does not directly apply to the offset of tax refund payments, we are nevertheless proposing to amend this regulation to mirror the statutory change because the regulatory time limitation contained in this regulation was intended to create uniformity in the way nonjudicial offsets were conducted. Because there was no logical reason why the tenyear limitation applicable to the offset of nontax payments should not apply to nonjudicial offsets under other statutes which did not contain their own limitations period, this regulation applied a tenyear limitation on the collection of debt by tax refund offset. However, now that the tenyear limitation has been eliminated for the offset of nontax payments, the rationale for including a tenyear limitation in this rule no longer applies.
The proposed changes to this rule remove the limitations period by
explicitly stating that no time limitation shall apply, and explain
that by removing the time limitation, all debts, including debts that
were ineligible for collection by offset prior to the removal of the
limitations period, may now be collected by tax refund offset.
Additionally, to avoid any undue hardship, we are proposing the
addition of a notice requirement applicable to debts that were
previously ineligible for collection by offset because they had been
outstanding for more than ten years. For these debts, creditor agencies
must certify to FMS that a notice of intent to offset was sent to the
debtor after the debt became ten years delinquent. This notice of
intent to offset is intended to alert the debtor that his debt may now
be collected by offset and allows the debtor additional opportunities
to dispute the debt, enter into a repayment agreement or otherwise
avoid offset. This requirement will apply even in a case where notice
was sent prior to the debt becoming ten years old. This requirement
applies only with respect to debts that were previously ineligible for
collection by offset because of the time limitation and does not apply
to debts, such as Department of Education student loan debts, that
could be collected by offset without regard to any time limitation prior to this regulatory change.
II. Procedural Analyses
Request for Comment on Plain Language
Executive Order 12866 requires each agency in the Executive branch to write regulations that are simple and easy to understand. We invite comment on how to make the proposed rule clearer. For example, you may wish to discuss: (1) Whether we have organized the material to suit your needs; (2) whether the requirements of the rules are clear; or (3) whether there is something else we could do to make these rules easier to understand.
Regulatory Planning and Review
The proposed rule does not meet the criteria for a ``significant regulatory action'' as defined in Executive Order 12866. Therefore, the regulatory review procedures contained therein do not apply. Regulatory Flexibility Act Analysis
It is hereby certified that the proposed rule will not have a significant economic impact on a substantial number of small entities. This rule merely removes the tenyear time limitation on the collection of debts by tax refund offset. Moreover, the provisions contained in this proposed rule would primarily affect federal creditor agencies and impose no additional costs to small entities. Accordingly, a regulatory flexibility analysis under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) is not required.
List of Subjects in 31 CFR Part 285
Administrative practice and procedure, Child support, Child welfare, Claims, Credits, Debts, Disability benefits, Federal employees, Garnishment of wages, Hearing and appeal procedures, Loan programs, Privacy, Railroad retirement, Railroad unemployment insurance, Salaries, Social Security benefits, Supplemental Security Income (SSI), Taxes, Veterans' benefits, Wages.
For the reasons set forth in the preamble, we propose to amend 31 CFR part 285 as follows:
PART 285DEBT COLLECTION AUTHORITIES UNDER THE DEBT COLLECTION IMPROVEMENT ACT OF 1996
1. The authority citation for part 285 continues to read as follows:
Authority: 5 U.S.C. 5514; 26 U.S.C. 6402; 31 U.S.C. 321, 3701, 3711, 3716, 3719, 3720A, 3720B, 3720D; 42 U.S.C. 664; E.O. 13019, 61 FR 51763, 3 CFR, 1996 Comp., p. 216.
2. In Sec. 285.2, remove paragraph (d)(1)(ii), redesignate
paragraphs (d)(1)(iii) through (d)(1)(v) as paragraphs (d)(1)(ii)
through (d)(1)(ii) through (d)(1)(iv) respectively, and add paragraph (d)(6) as follows:
Sec. 285.2 Offset of tax refund payments to collect pastdue, legally enforceable nontax debt.
* * * * *
(d) * * *
(6)(i) Creditor agencies may submit debts to FMS 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 [INSERT DATE 30 DAYS AFTER
PUBLICATION OF THE FINAL RULE IN THE FEDERAL REGISTER] may be collected by tax refund offset.
(ii) For debts outstanding more than ten years on or before [INSERT
DATE 30 DAYS AFTER PUBLICATION OF THE FINAL RULE IN THE FEDERAL
REGISTER], creditor agencies must certify to FMS that the notice of
intent to offset described in paragraph (d)(1)(iii)(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 [INSERT DATE 30 DAYS AFTER PUBLICATION OF THE FINAL RULE IN THE FEDERAL REGISTER].
* * * * *
Dated: May 29, 2009.
Gary Grippo,
Acting Fiscal Assistant Secretary.
[FR Doc. E913604 Filed 61009; 8:45 am]
BILLING CODE 481035P
FOR FURTHER INFORMATION CONTACT
Thomas Dungan, Policy Analyst, at (202) 8746660, or Tricia Long, Senior Attorney, at (202) 8746680.