Historical context and authority
Background The Debt Collection Improvement Act of 1996 (DCIA), Pub.L. Source
This interim final rule is not an unfunded Federal mandate within the meaning of the Unfunded Mandates Reform Act of 1995, Pub. Source
Scope of the federal rule
Federal Register, Volume 63 Issue 5 (Thursday, January 8, 1998) [Federal Register Volume 63, Number 5 (Thursday, January 8, 1998)] [Rules and Regulations] [Pages 1063-1069] From the Federal Register Online via the Government Publishing Office [ www.gpo.gov ] [FR Doc No: 98-310] ======================================================================= ----------------------------------------------------------------------- FEDERAL EMERGENCY MANAGEMENT AGENCY 44 CFR Part 11 RIN 3067-AC77 Debt Collection AGENCY: Federal Emergency Management Agency (FEMA). Source
We invite comments on the rule, which should be submitted on or before March 9, 1998. Source
ADDRESSES: Please submit any comments to the Rules Docket Clerk, Office of the General Counsel, Federal Emergency Management Agency, 500 C Street SW., room 840, Washington, DC 20472. Source
Comments may also be submitted to the Rules Docket Clerk by facsimile at (202) 646-4536, or by e:mail addressed to Crane.M [email protected] . Source
The new FMS rule allows agencies to use the three collection methods concurrently. Source
This is to transfer this quasi-adjudicatory function from the ACO to OGC, which bears responsibility for legal interpretations of FEMA regulations. Source
We invite public comments on the interim final rule, which comments will be taken into account when the final rule is published. Source
The Regulatory Flexibility Act does not apply to this interim final rule; no regulatory analysis has been prepared. Source
This interim final rule is not a ``major rule'' within the meaning of that Act. Source
This interim final rule is exempt (1) from the requirements of the Regulatory Flexibility Act, as certified previously, and (2) from the Paperwork Reduction Act. Source
If the debt is over 6 years old but is not 10 years old, the ACO or the ACO's designee shall examine the debt and decide whether using these procedures is cost effective. Source
Treasury offset procedures
abstract":"Under this rule FEMA will refer delinquent debts owed to this Agency to the Department of the Treasury for collection under the Government-wide Treasury Offset Program (TOP) and for tax refund offsets at the same time. Source
----------------------------------------------------------------------- SUMMARY: Under this rule FEMA will refer delinquent debts owed to this Agency to the Department of the Treasury for collection under the Government-wide Treasury Offset Program (TOP) and for tax refund offsets at the same time. Source
Creditor Federal agencies are to receive any funds that are offset and are to apply them against outstanding debts. Source
The DCIA also provides that the Department of the Treasury manage the tax refund offset program, previously administered by the Internal Revenue Service (IRS). Source
The FMS rule requires that all Federal agencies revise their debt collection regulations so that the agencies refer their delinquent debts to the Department of the Treasury. Source
This FMS rule also centralizes and streamlines collection of delinquent non-tax Federal debt by having the Department of the Treasury (Treasury) manage the tax refund offset program as part of the Treasury's Government-wide offset program. Source
The FMS rule also requires Federal agencies to amend their debt collection regulations on administrative offset and tax refund offset by the end of 1997 to conform to the FMS rule. Source
Under the FMS rule, FEMA will refer delinquent debt to Treasury for both TOP and tax refund offset. Source
The FMS rule allows agencies to report delinquent consumer debt to credit bureaus either before or after submitting a debt to the Treasury Offset Program, that is, credit bureau reporting is not a prerequisite to tax refund offset under this rule. Source
FEMA debt collection regulations had provided for common law offset against these entities. Source
Section-by-Section Analysis of the Regulations Section 11.43, Administrative Offset, is changed to allow FEMA to: 1. Source
Take administrative offsets against States and units of general local government; 2. Source
Refer specifically delinquent debt to the Department of the Treasury for TOP in addition to conducting Agency administrative offset. Source
Use offset under principles of common law in addition to FEMA's having the ability to collect by administrative offset. Source
Section 11.44, Collection of debts from Federal agencies or States or units of general local government by common law offset has been removed and the section reserved. Source
The DCIA now allows Federal agencies to use DCA administrative offset against States and units of general local government, and excepts Federal departments and agencies from administrative offset. Source
Before the enactment of the DCIA, FEMA provided procedures by which FEMA would exercise common law offsets against these entities. Source
These sections have been changed so that the procedures may be applied against any tax refund, whether the refund is for customs, alcohol, tobacco and firearms, or any other tax collected under the aegis of the Department of the Treasury. Source
Section 11.65, Stay of Offset This section is changed only to substitute ``Department of the Treasury'' where IRS had previously been used. Source
This interim final rule does not contain any significant, substantive changes from the Internal Revenue Service regulations and does not change how the tax refund offset program affects the taxpayer who owes delinquent nontax debt. Source
This interim rule reflects changes to internal procedures under which FEMA as a creditor agency will submit delinquent debt information to the Department of the Treasury in compliance with requirements of the Debt Collection Improvement Act. Source
Further, the procedural changes in this interim final rule primarily affect how FEMA will participate in the offset program. Source
In order to implement the offset programs for tax refund payments made after January 1, 1998, FEMA needs to modify and publish its offset regulations. Source
List of Subjects in 44 CFR Part 11 Administrative practices and procedures, Claims, Debts, Offsets, Taxes, Refunds. Source
Notice and collection administration
FEMA amends its administrative offset regulations to allow administrative offset against delinquent debtor States and units of general local government. Source
3720A, provides that the Department of the Treasury ensure that any Federal Government payment to a delinquent non-tax Federal debtor is subject to automatic offset against any tax refunds that may be owed to the debtor. Source
Collect, through the use of administrative offset and tax refund offset, debts owed by individuals and other private sector delinquent debtors to States and local governments, which arise under programs administered by FEMA. Source
If a debtor owed a debt under the IFG Program, then FEMA could use administrative and tax refund offsets to recover the State's 25% share; 3. Source
Change the period in which the debtor could request an administrative review from 15 days after receipt of the administrative offset notice to 60 days after FEMA mails such notice to the debtor. Source
Since the period is calculated from the date of mailing rather than from date of receipt of notice, FEMA no longer has to use expensive certified mail, return receipt requested, for mailing such notices. Source
Administrative review means that FEMA considers evidence and arguments submitted by the debtor and takes a fresh look as to whether FEMA should continue collection efforts for the full amount of the debt. Source
Stay offset action where the debtor made a request for administrative review within the 60-day request period until FEMA has rendered a decision on the debtor's request; 6. Source
Continue offset action where the debtor has made a late request (after the 60-day period) for administrative review. Source
Under such circumstances, FEMA will review the debtor's evidence and arguments. Source
If the FEMA Administrative Review Official (ARO) finds that the debtor owes less than amounts already offset at the time of the decision, then FEMA will refund the difference to the debtor; 7. Source
Determine that the debtor's failure to receive FEMA's notice of administrative offset, where this Agency had mailed the notice to debtors' last known address, will not affect the validity of the administrative offset action; 9. Source
Make debtors liable for all costs incurred by the Federal Government administrative offsets. Source
A debt becomes delinquent when it is not paid for by the due date or if a debtor has entered into a payment plan and fails to make a payment when due under the plan. Source
Previously, FEMA deemed a debt to be delinquent if the debtor did not pay the debt in full within 30 days after FEMA first notified the debtor that the debt was due. Source
Where a debtor owes FEMA more than one debt and the debtor makes an involuntary partial payment the FMS states that the payment should be applied to the oldest debt first. Source
However, where the debtor makes a voluntary payment the debtor may choose to which debt the payment may be credited. Source
However, FEMA may demand that the requesting government provide accounting, economic, and demographic data to enable the ACO or the deputy to reach an informed conclusion as to whether to grant the waiver. Source
FEMA's prior tax refund offset regulations granted debtors 65 days from the mailing of notice that FEMA was intending to use tax refund offset to collect delinquent debt. Source
In this interim final rule FEMA no longer eliminates certain debtors from the tax refund offset process. Source
FEMA will continue aggressive use of credit bureau reporting of delinquent debtors, of collection by offsets against Federal employees, members of the uniformed services, and Federal retirees, and of administrative offsets, such as TOP. Source
Section 11.63, Notice to Debtor Before Tax Refund Offset Aside from the amendments made to all FEMA's tax refund offset regulations described above, this section has been amended to refer to ``tax refund offsets'' generically, rather than ``income tax refund offsets'' as previously. Source
Section 11.64, Review Within Federal Emergency Management Agency Section 11.64 changes to 60 days after mailing of the notice the time in which the debtor may make a timely request for a review within FEMA. Source
If the request is filed late, FEMA will consider the debtor's arguments and evidence but the Federal Government will not stay offset while preparing a decision. Source
If the decision results in the debtor owing less (possibly zero) than amounts previously offset, then FEMA will refund the difference to the debtor. Source
We amend 11.64 to substitute the OGC for the ACO as the office to render decisions where debtors request administrative reviews. Source
The procedural changes do not affect the rights of the debtor to dispute the nature or the amount of the debt or method of collection; they reflect changes required by merger of the tax refund offset with the Treasury Offset Program, or by enactment of the Debt Collection Improvement Act. Source
This interim final rule was not reviewed by the Office of Management and Budget under Executive Order 12866. Source
Congressional Review of Agency Rulemaking FEMA has submitted this interim final rule to the Congress and to the General Accounting Office under the Congressional Review of Agency Rulemaking Act, Pub. Source
The procedures prescribed by this section shall not be used if the debtor has executed a written agreement satisfactory to the ACO or the ACO's designee for the payment of the debt so long as the debtor adheres to the provisions of the agreement. Source
Interest, penalties, and charges
FEMA also amends its regulations to change the method for calculating interest, penalty and administrative charges assessed on delinquent debts and to make States and units of general local government subject to such charges. Source
FEMA's interim final rule allows FEMA to use administrative offset and to assess interest, penalty and administrative charges against these governments. Source
Previously, FEMA charged States and units of general local government interest under principles of common law. Source
However, principles of common law did not allow creditors, such as Federal agencies, to assess penalties or costs of collection against States and units of general local government. Source
For instance, delinquent debtors will have to pay the charges, now (in 1997) $7.02 per offset, that the Department of the Treasury incurs in making a TOP offset. Source
Previously, FEMA had assessed interest against these entities only under principles of common law. Source
At common law, any creditor could charge interest against debtors who were tardy in making payments of debts. Source
However, principles of common law did not permit creditors, or Federal agencies, to assess penalties and administrative costs of collection against delinquent debtors. Source
Waiver of Interest and Penalties Section 11.48(f)(5) now provides that the FEMA Agency Collections Officer (ACO) or the ACO's designee may waive assessment of interest where such assessment would be against equity and good conscience and not in the best interests of the United States. Source
The penalty accrual period will start with the date of notification rather than 30 days after the date of the notification letter. Source
Penalty will accrue also on unpaid interest as it accumulates and on administrative charges from the date that the Federal Government incurred them. Source
FEMA is eliminating as grounds for waiver of interest and penalty the debtor's having a valid dispute with FEMA on issues involved in the debt. Source
Where a statute or regulation provides for a mandatory review, FEMA must waive interest and penalty charges (see the Federal Claims Collection Standards, 4 CFR 102.13(h)). Source
This rule transfers an adjudicative function from the ACO, whose staff is charged with collecting debts, to OGC where the staff is concerned with legal interpretations and determining equities of situations. Source
FEMA has determined that a comment period would be unnecessary, impractical, and contrary to the public interest. Source
FEMA determines that good cause exists and that it is in the public interest to issue this interim final rule without opportunity for prior public comment. Source
Before using the procedures of this section, the ACO or the ACO's designee shall examine the debt to determine whether the likelihood of collecting such a debt and the best interests of the United States justify the use of administrative offset. Source
Government obligations and implementation
Please refer to RIN 3067- AC61, Debt Collection when submitting your comments. Source
Buck, IV, Financial Policy Division, Office of Financial Management, Federal Emergency Management Agency, 500 C Street SW., Washington, DC 20472, (202) 646-4091. Source
For instance, FEMA administers the Individual & Family Grant (IFG) program, which is funded 75% by the FEMA and 25% by the States. Source
It does not result in nor is it likely to result in an annual effect on the economy of $100,000,000 or more; it will not result in a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies, or geographic regions; and it will not have ``significant adverse effects'' on competition, employment, investment, productivity, innovation, or on the ability of United States-based enterprises to compete with foreign-based enterprises. Source