[Code of Federal Regulations]
[Title 31, Volume 2]
[Revised as of July 1, 2002]
From the U.S. Government Printing Office via GPO Access
[CITE: 31CFR285.1]

[Page 100-104]
 
                  TITLE 31--MONEY AND FINANCE: TREASURY
 
         CHAPTER II--FISCAL SERVICE, DEPARTMENT OF THE TREASURY
 
PART 285--DEBT COLLECTION AUTHORITIES UNDER THE DEBT COLLECTION IMPROVEMENT ACT OF 1996--Table of Contents
 
                  Subpart A--Disbursing Official Offset
 
Sec. 285.1  Collection of past-due support by administrative offset.


    (a) Definitions. For purposes of this section:
    Administrative offset means withholding funds payable by the United 
States (including funds payable by the United States on behalf of a 
State government) to, or held by the United States for, a person to 
satisfy a debt.
    Debt as used in this section is synonymous with the term past-due 
support.
    Disbursing official includes an official who has authority to 
disburse public money pursuant to 31 U.S.C. 3321 or another Federal law.
    FMS means the Financial Management Service, a bureau of the 
Department of the Treasury. FMS is the designee of the Secretary of the 
Treasury for all matters concerning this section, unless otherwise 
specified.
    HHS means the Department of Health and Human Services, Office of 
Child Support Enforcement.
    Past-due support means the amount of support determined under a 
court order, or an order of an administrative procedure established 
under State law, for support and maintenance of a child, or of a child 
and the parent with whom the child is living, which has not been paid. 
The term child as used in this definition is not limited to minor 
children.
    Past-due support being enforced by the State means there has been an 
assignment of the support rights to the State, or the State making the 
request for offset is providing services to individuals pursuant to 42 
U.S.C. 654(5) (section 454(5) of the Social Security Act), or the State 
is enforcing support pursuant to a cooperative agreement with or by an 
Indian tribal government.
    State means the several States of the United States. The term State 
also includes the District of Columbia, American Samoa, Guam, the United 
States Virgin Islands, the Commonwealth of the Northern Mariana Islands, 
and the Commonwealth of Puerto Rico.
    Secretary means the Secretary of the Treasury.
    (b) General rule. FMS may enter into a reciprocal agreement with a 
State for the collection of past-due support being enforced by the State 
by administrative offset from certain Federal payments. Upon 
notification of past-due support either directly from a State which has 
entered into such an agreement or from HHS, disbursing officials of FMS 
or any other disbursing official of the United States shall offset 
Federal payments which are subject to offset under this section, to 
collect past-due support. The amount offset, minus the offset fee, shall 
be forwarded to the

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State to be distributed in accordance with applicable laws and 
procedures.
    (c) Agreements. FMS may enter into reciprocal agreements with States 
for disbursing officials of FMS and any other Federal disbursing 
official to offset certain Federal payments to collect past-due support 
being enforced by the State. The agreement shall contain any 
requirements which FMS considers appropriate to facilitate the offset 
and prevent duplicative efforts and shall require States to prescribe 
procedures governing the collection of past-due support by Federal 
administrative offset. For purposes of this section, reciprocal means of 
mutual benefit. An agreement between FMS and a State to collect past-due 
support by offsetting Federal payments will be considered of mutual 
benefit and it is not required that States conduct administrative 
offsets to collect debts owed to the Federal Government. States which 
have entered into an agreement with FMS pursuant to this section may 
thereafter request, in the manner prescribed herein, that an offset be 
performed. Such requests shall be made by the appropriate State 
disbursing official which, for purposes of this section, means an 
appropriate official of the State agency which administers or supervises 
the administration of the State plan under Title IV-D of the Social 
Security Act.
    (d) Notification to FMS of past-due support. (1) States notifying 
FMS of past-due support must do so in the manner and format prescribed 
by FMS. States notifying HHS of past-due support must do so in the 
manner and format prescribed by HHS. HHS shall notify FMS of all past-
due support referred to HHS by States for collection by administrative 
offset provided that the requirements of paragraphs (d)(3) and (h) of 
this section have been met.
    (2) When a State has knowledge that past-due support is being 
enforced by more than one State, the State notifying FMS 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) FMS 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. FMS will reject a 
notification of past-due support where the past-due support owed is less 
than $25.00. This amount may be adjusted from time to time by FMS to 
ensure that the cost of collection does not exceed the debt.
    (f) Limitations. Debts properly submitted to FMS for administrative 
offset will remain subject to collection by administrative offset until 
withdrawn by the State provided the debt remains past-due and legally 
enforceable.
    (g) Notification of changes in status of debt. The State notifying 
FMS or HHS of past-due support shall, in the manner and in the time 
frames provided by FMS or HHS, notify FMS or HHS of deletions or 
decreases in the amount of a debt referred for collection by 
administrative offset. The State may notify FMS or HHS of any increases 
in the amount of a debt referred for collection by administrative offset 
provided the State has complied with the requirements of paragraph (h) 
of this section with regard to those amounts.
    (h) Advance notification of intent to collect by administrative 
offset. (1) The State, or FMS or HHS on behalf of the State, if the 
State requests and FMS or HHS agrees, shall send a written notification, 
at least 30 days in advance of referral of the debt for offset, to the 
individual owing past-due support, informing the individual that the 
State intends to refer the debt for collection by administrative offset 
against Federal payments. The notice must also inform the individual of:
    (i) The nature and amount of the debt; and

[[Page 102]]

    (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 FMS 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. Federal payments subject to offset 
under this section include all Federal payments except:
    (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. (1) 
Unless a lower maximum offset limitation is provided by applicable State 
law, the maximum part of a Federal salary payment per pay period subject 
to offset to collect past-due support shall not exceed those amounts set 
forth at section 1673(b)(2) (A) and (B) of Title 15, United States Code, 
as follows:
    (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

[[Page 103]]

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 FMS 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. The Secretary will exempt from 
administrative offset under this part payments made under means-tested 
programs when requested by the head of the Federal agency which 
administers the program. For purposes of this section, means-tested 
programs are programs for which eligibility is based on a determination 
that income and/or assets of the beneficiary are inadequate to provide 
the beneficiary with an adequate standard of living without program 
assistance. The Secretary may exempt from administrative offset under 
this section any other class or type of payment upon the written request 
of the head of the agency which authorizes the payments. In determining 
whether or not to grant such exemptions, the Secretary shall give due 
consideration to whether administrative offset would tend to interfere 
substantially with or defeat the purposes of the payment agency's 
program.
    (l) Fees. A fee which FMS has determined to be sufficient to 
reimburse FMS for the full cost of the offset procedure, shall be 
deducted from each offset amount. FMS will notify the States, annually 
and in advance, of the amount of the fee to be charged for each offset.
    (m) Offsetting payments--(1) Conducting the offset. Disbursing 
officials of the Department of the Treasury, the Department of Defense, 
the United States Postal Service, or any other Government corporation, 
any disbursing official of the United States designated by the 
Secretary, or any disbursing official of an executive department or 
agency that disburses Federal payments shall offset payments subject to 
offset under this section to satisfy, in whole or part, a debt owed by 
the payee. Disbursing officials shall compare payment certification 
records with records of debts submitted to FMS for collection by 
administrative offset. A match will occur when the taxpayer identifying 
number and name control of a payment record are the same as the taxpayer 
identifying number and name control of a debt record. The taxpayer 
identifying number for an individual is the individual's social security 
number. 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 debt. Any amounts not offset shall be paid to the 
payee. The amount that can be offset from a single payment is the lesser 
of the amount of the debt (including interest, penalties, and 
administrative costs); the amount of the payment; or the amount of the 
payment available for offset if a statute or regulation prohibits offset 
of the entire amount. Debts remain subject to collection by offset until 
paid in full.
    (2) Disposition of amounts collected. FMS will transmit amounts 
collected for debts, less fees charged under paragraph (l) of this 
section, to HHS or to the appropriate State. If FMS learns that an 
erroneous offset payment has been made to HHS or any State, FMS will 
notify HHS or the appropriate State that an erroneous offset payment has 
been made. FMS may deduct the amount of the erroneous offset payment 
from amounts payable to HHS or the State, as the case may be. 
Alternatively, upon FMS' request, the State shall return promptly to the 
affected payee or FMS an amount equal to the amount of the erroneous 
payment (unless the State previously has paid such amounts, or any 
portion of such amounts, to the affected payee). HHS and States shall 
notify FMS any time

[[Page 104]]

HHS or a State returns an erroneous offset payment to an affected payee. 
FMS and HHS, or the appropriate State, will adjust their debtor records 
accordingly.
    (n) Administrative offset priorities. When a payee/debtor owes more 
than one debt which has been referred to FMS for collection by 
administrative offset, any offset by a disbursing official will be 
applied first to past-due support assigned to a State and will be 
applied to any other past-due support after any other reductions allowed 
by law.
    (o) Notification of offset. (1) Disbursing officials of FMS or any 
other disbursing official which conducts an offset will notify the payee 
in writing of the occurrence of the offset to satisfy past-due support. 
The notice shall inform the payee of the type and amount of the payment 
that was offset; the identity of the State which requested the offset; 
and a contact point within the State that will handle concerns regarding 
the offset. Disbursing officials shall not be liable for failure to 
provide this notice.
    (2) Disbursing officials of FMS 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 FMS or any other disbursing 
official, will provide such information to HHS to the extent such 
information is available from offset activities conducted by FMS and 
other disbursing officials.
    (p) Liability of disbursing officials and payment agencies. Neither 
the disbursing official nor the agency authorizing the payment shall be 
liable for the amount of the administrative offset on the basis that the 
underlying obligation, represented by the payment before the 
administrative offset was taken, was not satisfied. Disbursing officials 
will notify the agency authorizing the payment that the offset has 
occurred so that the agency authorizing the payment may direct any 
inquiries concerning the offset to the appropriate State.

[62 FR 36210, July 7, 1997, as amended at 63 FR 46145, Aug. 28, 1998]