Debt Collection Authorities Under the Debt Collection Improvement Act of 1996

CourtFiscal Service
Record Number2022-03584
Published date02 March 2022
Federal Register, Volume 87 Issue 41 (Wednesday, March 2, 2022)
[Federal Register Volume 87, Number 41 (Wednesday, March 2, 2022)]
                [Proposed Rules]
                [Pages 11660-11664]
                From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
                [FR Doc No: 2022-03584]
                [[Page 11660]]
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                DEPARTMENT OF THE TREASURY
                Fiscal Service
                31 CFR Part 285
                [Docket No. Fiscal-2021-0007]
                RIN 1530-AA21
                Debt Collection Authorities Under the Debt Collection Improvement
                Act of 1996
                AGENCY: Bureau of the Fiscal Service, Fiscal Service, Treasury.
                ACTION: Notice of proposed rulemaking with request for comment.
                -----------------------------------------------------------------------
                SUMMARY: The Department of the Treasury (``Treasury''), Bureau of the
                Fiscal Service (``Fiscal Service''), proposes to amend its regulations
                regarding the Treasury Offset Program (``TOP'') and the Cross-Servicing
                program. The primary reason for doing so is to inform the public about
                how Fiscal Service will use Social Security numbers in mailings, as
                required by the Social Security Number Fraud Prevention Act of 2017,
                which requires Fiscal Service to have final regulations in place by
                September 15, 2022.
                DATES: Comments must be received by May 2, 2022.
                ADDRESSES: Fiscal Service participates in the U.S. Government's
                eRulemaking Initiative by publishing rulemaking information on
                www.regulations.gov. Regulations.gov offers the public the ability to
                comment on, search, and view publicly available rulemaking materials,
                including comments received on rules.
                 Instructions for comment submission: Comments on this proposed
                rule, identified by docket FISCAL-2021-0007, should only be submitted
                using the Federal eRulemaking Portal at regulations.gov. Follow the
                instructions on the website for submitting comments.
                 All submissions received must include the agency name (``Bureau of
                the Fiscal Service'') and docket number (``FISCAL-2021-0007'') for this
                rulemaking. In general, comments will be published on Regulations.gov
                without change, including any business or personal information
                provided. Comments received, including attachments and other supporting
                materials, are part of the public record and subject to public
                disclosure. Do not enclose any information in your comment or
                supporting materials that you consider confidential or inappropriate
                for public disclosure.
                FOR FURTHER INFORMATION CONTACT: Tawanna Edmonds, Director, Receivables
                Management & Debt Services Division, Debt Management Services, Bureau
                of the Fiscal Service at (202) 874-6810.
                SUPPLEMENTARY INFORMATION:
                I. Background
                 Legal Authorities. The Debt Collection Improvement Act of 1996
                (``DCIA''), Public Law 104-134, 110 Stat. 1321-358 et seq. (April 26,
                1996), among other things, authorized Federal agencies to refer Federal
                nontax debt to Treasury for collection services. See 31 U.S.C. 3711(g).
                The DCIA also authorized Federal disbursing officials to withhold
                eligible Federal nontax payments to pay the payee's delinquent nontax
                debt owed to the United States. See 31 U.S.C. 3716(c). The DCIA also
                provided that Federal nontax payments may be offset to collect
                delinquent debt owed to States, including past-due support, and that
                payments made by States may be offset to collect delinquent nontax debt
                owed to the United States. See 31 U.S.C. 3716(h). Further, Federal tax
                refund payments may be offset to collect nontax debt owed to the United
                States and debt owed to States, including past-due support. See 26
                U.S.C. 6402, 31 U.S.C. 3720A, and 42 U.S.C. 664.
                 Cross-Servicing program. Fiscal Service administers the Cross-
                Servicing program, through which it provides delinquent nontax debt
                collection services pursuant to 31 U.S.C. 3711(g).
                 Centralized Receivables Service. Fiscal Service administers the
                Centralized Receivables Service, or CRS, through which it provides
                invoicing and early delinquent debt collection services to Federal
                agencies under 31 U.S.C. 3711(g).
                 Treasury Offset Program. Fiscal Service administers a centralized
                offset program, known as the Treasury Offset Program, or TOP, through
                which it offsets payments to collect debts.
                 Revision of Existing Regulations. Fiscal Service promulgated 31 CFR
                285.12 to implement 31 U.S.C. 3711(g). Among other things, the
                regulation codified at 31 CFR 285.12 describes the procedures and
                criteria for transferring delinquent debt to Treasury. It also explains
                the statutory exceptions to this requirement and the standards under
                which the Secretary of the Treasury will determine whether to grant
                exemptions to this requirement.
                 Fiscal Service promulgated 31 CFR part 285, subpart A to implement
                the centralized offset of payments through TOP, pursuant to the Debt
                Collection Improvement Act of 1996.
                 Fiscal Service proposes to revise the regulations codified at 31
                CFR part 285, subpart A, and 31 CFR 285.12 (together, the ``existing
                regulations'') for several reasons. The primary reason for doing so is
                to inform the public about how Fiscal Service will use Social Security
                numbers in mailings, as required by the Social Security Number Fraud
                Prevention Act of 2017, which requires Fiscal Service to have final
                regulations in place by September 15, 2022. The proposed rule also adds
                definitions for previously undefined terms and rewords certain
                provisions for clarity, consistent with the requirements of the Plain
                Writing Act of 2010 and Executive Order 12866 (Sept. 1993).
                II. Section Analysis
                 This section describes, section-by-section, the reasoning for the
                proposed revision (the ``proposed rule'') of the existing regulations.
                Fiscal Service acknowledges that many of the provisions regarding the
                use of SSNs is repetitive. This repetition is necessary given the
                current structure of the rules. Fiscal Service may address this
                repetition in a subsequent regulation.
                285.1(q)--Social Security Numbers
                 The proposed rule would add Sec. 285.1(q) to address how Fiscal
                Service uses SSNs in TOP for offset of Federal nontax payments to
                collect past-due support, as required by the SSN Act.
                285.3(m)--Social Security Numbers
                 The proposed rule would add Sec. 285.3(m) to address how Fiscal
                Service uses SSNs in TOP for offset of Federal tax payments to collect
                past-due support, as required by the SSN Act.
                285.5(l)--Social Security Numbers
                 The proposed rule would add Sec. 285.5(l) to address how Fiscal
                Service uses SSNs in TOP for offset of Federal nontax payments to
                collect nontax debts owed to the United States, including offset of
                Federal tax refunds (see Sec. 285.2), Federal benefit payments (see
                Sec. 285.4), and Federal salary payments (see Sec. 285.7), as
                required by the SSN Act.
                285.6(n)--Social Security Numbers
                 The proposed rule would add Sec. 285.6(n) to address how Fiscal
                Service uses SSNs in TOP for offset of Federal nontax payments to
                collect state debts and the offset of payments made by States to
                collect Federal nontax debts, as required by the SSN Act.
                285.8(k)--Social Security Numbers
                 The proposed rule would add Sec. 285.8(k) to address how Fiscal
                Service uses SSNs in TOP for offset of Federal tax payments to collect
                certain debts owed by States, as required by the SSN Act.
                [[Page 11661]]
                285.12(a)--Definitions
                 Centralized Receivables Service. The proposed rule would add a
                definition for the term ``Centralized Receivables Service,'' which is
                not used in the existing regulation. The Centralized Receivable
                Service, or CRS, is a program established by Fiscal Service to assist
                Federal agencies in the management of current, non-tax receivables. CRS
                aims to increase collections and prevent delinquencies while allowing
                agencies to focus on important core missions. CRS also provides early
                delinquent debt collection services. While Federal agencies are
                generally required to refer Federal nontax delinquent debts over 120
                days delinquent (or, in some cases, 180 days delinquent) to the Cross-
                Servicing program, Federal agencies may use CRS in their discretion.
                The proposed rule describes the CRS program to inform the public of the
                existence of this program and to comply with the SSN Act, which
                requires Fiscal Service to address how it uses SSNs in its mailings.
                See Sec. 285.12(k) of the proposed rule.
                 Cross-Servicing program. The proposed rule would add a definition
                for the term ``Cross-Servicing program,'' which is used but undefined
                by the existing regulation. The proposed rule would also remove
                language from Sec. 285.12(b) describing the term ``cross-servicing.''
                 Days delinquent. The proposed rule would add a definition for the
                term ``days delinquent,'' which is used but undefined by the existing
                regulation. The definition is intended to provide additional clarity,
                but not substantively change the meaning of the term.
                 Debt collection center. The proposed rule would make conforming
                changes given the definitions for ``Federal agency'' and ``Secretary.''
                 Debtor. The proposed rule would add a definition for the term
                ``debtor,'' which is used but undefined by the existing regulation. The
                definition is intended to provide additional clarity, but not
                substantively change the meaning of the term.
                 Delinquent or past-due. The proposed rule would add a definition
                for the term ``delinquent or past-due,'' which is used but undefined by
                the existing regulation. The definition is intended to provide
                additional clarity, but not substantively change the meaning of the
                term. The proposed rule would also remove language from Sec.
                285.12(c)(3) that included a description of the meaning of the term
                ``past-due.''
                 Federal agency. The proposed rule would replace the term ``agency''
                with ``Federal agency.'' The definition itself would remain unchanged.
                This proposed change is intended to provide clarity, but not a
                substantive change in meaning.
                 Legally enforceable. The proposed rule would add a definition for
                the term ``legally enforceable,'' which is used but undefined by the
                existing regulation. The definition is similar to the definition for
                ``legally enforceable'' that is used in regulations governing Fiscal
                Service's administration of the Treasury Offset Program. See 31 CFR
                285.5(b). An agency may have made a final agency determination that the
                debt is owed and is legally enforceable, even if the debtor has or may
                in the future appeal the debt with the agency or otherwise dispute the
                debt. If an agency has complied with due process prerequisites and if
                the agency's regulations do not preclude collection during an appeal, a
                pending appeal will not preclude the agency from referring the debt to
                the Cross-Servicing program for collection purposes. Debts that are not
                legally enforceable may not be referred to the Cross-Servicing program
                for collection purposes. The proposed rule would also remove language
                from Sec. 285.12(c)(3), which included a description of the meaning of
                the term ``legally enforceable.''
                 Person. The proposed revision to the definition ``person'' is not a
                substantive change. It is intended to clarify that, for the purposes of
                this regulation, a person (and therefore a debtor) cannot be the United
                States.
                285.12(b)--In General
                 The existing regulation describes the requirement for Federal
                agencies to refer delinquent debts to Treasury for collection action,
                exceptions to this requirement, and what actions Fiscal Service will
                take on referred debt. The existing regulation does not describe CRS.
                The proposed rule expands the scope of this regulation from the Cross-
                Servicing program to include both the Cross-Servicing program and CRS.
                285.12(c)--Mandatory Transfer of Debts to Fiscal Service's Cross-
                Servicing Program
                 The proposed rule would amend the title to paragraph (c) to make
                clear that the provisions of paragraph (c) apply only to the Cross-
                Servicing program, and not also to CRS, which is not mentioned in the
                existing regulation.
                 The proposed rule would reorganize paragraph (c) for clarity and to
                eliminate unnecessary language. The proposed rule would clarify that
                debts are not subject to mandatory transfer if they are not legally
                enforceable or if they are below the threshold established by Fiscal
                Service.
                 It would use the term ``centralized offset'' which refers to offset
                through TOP, rather than the term ``administrative offset,'' which can
                include non-centralized offsets performed outside of TOP.
                 The proposed rule would define the terms ``legally enforceable''
                and ``past due'' in the definition section of the regulation, rather
                than embedding the definitions into the substantive provisions of the
                regulation.
                 The proposed rule would eliminate the provision permitting agencies
                to combine individual debts for purposes of meeting the $25 threshold
                (or such other threshold as Fiscal Service may determine). The
                permissibility of aggregating debts into a single debt file may be
                addressed in separate guidance that Fiscal Service may issue.
                285.12(d)--Exceptions to Mandatory Transfer
                 The proposed rule would amend paragraph (d)(1), which addresses
                exceptions to the requirement that agencies refer delinquent debt to
                the Cross-Servicing program. As described below, this proposed rule
                would delete paragraph (e), which addresses the schedule of private
                collection contractors. The proposed rule would restore the statutory
                exemption standard regarding private collection contractors. The
                proposed rule would move concepts from current paragraph (d)(6), which
                addresses the servicing and collection of debts by third parties, to
                paragraph (d)(1)(vi).
                 The proposed rule would amend paragraph (d)(4), which addresses
                internal offset, to streamline and clarify the language.
                 The proposed rule would amend paragraph (d)(5), which addresses
                requests for exemption of classes of debt from the requirement to refer
                debts to the Cross-Servicing program, by adding a title to the
                paragraph for clarity.
                 As described above, the proposed rule would delete paragraph
                (d)(6), which addresses the servicing and collection of debts by third
                parties, as those concepts were moved to paragraph (d)(1)(vi).
                285.12(e)--Schedule of Private Collection Contractors
                 The proposed rule would delete paragraph (e), as it merely repeats
                the statutory requirement that Fiscal Service maintain a schedule of
                private collection contractors. To the extent an agency determines that
                referral of a debt to its own private collection contractor rather than
                referral to Fiscal Service's Cross-Servicing program is appropriate,
                [[Page 11662]]
                the agency should request an exemption from referral under the
                procedures specified in paragraph (d)(5).
                285.12(i)--Certification
                 The proposed rule would substitute the word ``delegatee'' to
                ``delegate.'' The change in terminology is intended to make the
                language of the regulation consistent with other uses of the term. It
                is not intended to result in a substantive change in meaning.
                285.12(j)--Fees
                 The proposed rule would delete unnecessary language regarding the
                term ``debt collection centers,'' which is defined in paragraph (a). It
                would also clarify that the fees are charged to Federal agencies (as
                opposed to debtors), regardless of whether a Federal agency passes on
                the amount of fees charged with regard to a particular debt to the
                debtor. It would also clarify that Fiscal Service and other debt
                collection centers have broad flexibility regarding how they calculate
                fees.
                285.12(k)--Social Security Numbers
                 The proposed rule would add Sec. 285.12(k) to address how Fiscal
                Service will use SSNs in its Cross-Servicing program and in CRS, as
                required by the SSN Act.
                III. Procedural Analyses
                Federalism
                 This proposed rule has been reviewed under Executive Order 13132,
                Federalism. This proposed rule would not have substantial direct
                effects on States, on the relationship between the National Government
                and the States, or on distribution of power and responsibilities among
                the various levels of government. Therefore, in accordance with
                Executive Order 13132, it is determined that this proposed rule does
                not have sufficient federalism implications to warrant the preparation
                of a federalism summary impact statement.
                Paperwork Reduction Act
                 The Paperwork Reduction Act does not apply because this proposed
                rule would not impose information collection requirements that require
                the approval of the Office of Management and Budget under 44 U.S.C.
                3501, et seq.
                Regulatory Flexibility Act Analysis
                 It is hereby certified that the proposed rule would not have a
                significant economic impact on a substantial number of small entities
                because this proposed rule only impacts persons who receive payments
                from Federal agencies or States and who are delinquent on debts owed to
                Federal agencies or States. Accordingly, an initial regulatory
                flexibility analysis under the Regulatory Flexibility Act is not
                required. Fiscal Service seeks comment on whether the certification
                made herein should be reconsidered and, if so, on what basis.
                Regulatory Planning and Review
                 This 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.
                Unfunded Mandates Act of 1995
                 Section 202 of the Unfunded Mandates Reform Act of 1995, 2 U.S.C.
                1532 (Unfunded Mandates Act), requires that the agency prepare a
                budgetary impact statement before promulgating any rule likely to
                result in a Federal mandate that may result in the expenditure by
                State, local, and tribal governments, in the aggregate, or by the
                private sector, of $100 million or more in any one year. If a budgetary
                impact statement is required, section 205 of the Unfunded Mandates Act
                also requires the agency to identify and consider a reasonable number
                of regulatory alternatives before promulgating the rule. We have
                determined that this proposed rule would not result in expenditures by
                State, local, and tribal governments, or by the private sector, of $100
                million or more in any one year. Accordingly, we have not prepared a
                budgetary impact statement or specifically addressed any regulatory
                alternatives.
                List of Subjects in 31 CFR Part 285
                 Administrative practice and procedure, Black lung benefits, Child
                support, Child welfare, Claims, Credit, Debts, Disability benefits,
                Federal employees, Garnishment of wages, Hearing and appeal procedures,
                Income taxes, Loan programs, Payments, Privacy, Railroad retirement,
                Railroad unemployment insurance, Salaries, Social Security benefits,
                Supplemental Security Income, Taxes, Unemployment compensation,
                Veteran's benefits, Wages.
                 For the reasons set forth in the preamble, Fiscal Service proposes
                to amend 31 CFR part 285 as follows:
                PART 285--DEBT COLLECTION AUTHORITIES UNDER THE DEBT COLLECTION
                IMPROVEMENT ACT OF 1996
                0
                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.
                0
                2. In Sec. 285.1, add paragraph (q) to read as follows:
                Sec. 285.1 Collection of past-due support by administrative offset.
                * * * * *
                 (q) Social Security numbers. Fiscal Service will ensure that an
                individual's Social Security number will not be visible on the outside
                of any package it sends by mail. In addition, Fiscal Service generally
                will redact or partially redact Social Security numbers in documents it
                sends by mail; however, to administer administrative offset, Fiscal
                Service (and other disbursing officials) may include Social Security
                numbers in mailed documents, including, for example:
                 (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.
                0
                3. In Sec. 285.3, add paragraph (m) to read as follows:
                Sec. 285.3 Offset of tax refund payments to collect past-due support.
                * * * * *
                 (m) Social Security numbers. Fiscal Service will to ensure that an
                individual's Social Security number will not be visible on the outside
                of any package it sends by mail. In addition, Fiscal Service generally
                will redact or partially redact Social Security numbers in documents it
                sends by mail; however, to administer the tax refund offset program,
                Fiscal Service (and other disbursing officials) may include Social
                Security numbers in mailed documents, including, for example:
                 (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
                [[Page 11663]]
                agency's account number, debt identification number, or debtor
                identification number; and
                 (3) In response to a request of a debtor or a debtor's
                representative for records of Fiscal Service's offset activities;
                 (4) When required by law.
                0
                4. In Sec. 285.5, add paragraph (l) to read as follows:
                Sec. 285.5 Centralized offset of Federal payments to collect nontax
                debts owed to the United States.
                * * * * *
                 (l) Social Security numbers. Fiscal Service will ensure that an
                individual's Social Security number will not be visible on the outside
                of any package it sends by mail. In addition, Fiscal Service generally
                will redact or partially redact Social Security numbers in documents it
                sends by mail; however, to administer the Treasury Offset Program,
                Fiscal Service (and other disbursing officials) may include Social
                Security numbers in mailed documents, including, for example:
                 (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.
                0
                5. In Sec. 285.6, add paragraph (n) to read as follows:
                Sec. 285.6 Administrative offset under reciprocal agreements with
                states.
                * * * * *
                 (n) Social Security numbers. Fiscal Service will ensure that an
                individual's Social Security number will not be visible on the outside
                of any package it sends by mail. In addition, Fiscal Service generally
                will redact or partially redact Social Security numbers in documents it
                sends by mail; however, to administer administrative offset, Fiscal
                Service (and other disbursing officials) may include Social Security
                numbers in mailed documents, including, for example:
                 (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.
                0
                6. In Sec. 285.8, add paragraph (k) to read as follows:
                Sec. 285.8 Offset of tax refund payments to collect certain debts
                owed to States.
                * * * * *
                 (k) Social Security numbers. Fiscal Service will ensure that an
                individual's Social Security number will not be visible on the outside
                of any package it sends by mail. In addition, Fiscal Service generally
                will redact or partially redact Social Security numbers in documents it
                sends by mail; however, to administer the tax refund offset program,
                Fiscal Service (and other disbursing officials) may include Social
                Security numbers in mailed documents, including, for example:
                 (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.
                0
                7. Sec. 285.12 is amended by:
                0
                a. Removing the words ``an agency'' and ``An agency'' and adding in
                their place the words ``a Federal agency'' and ``A Federal agency'',
                respectively;
                0
                b. Removing the words ``the agency'' and ``the agency's'' and adding in
                their place the words ``the Federal agency'' and ``the Federal
                agency's'', respectively;
                0
                c. In paragraph (a):
                0
                i. Removing the definition for ``Agency'',
                0
                ii. Adding in alphabetical order definitions for ``Centralized
                Receivables Service,'' ``Cross-Servicing program,'' and ``Days
                delinquent'';
                0
                iii. Removing the words ``Secretary of the Treasury'' and adding in
                their place the words ``Secretary'' in the definition for ``Debt
                collection center'';
                0
                iv. Adding in alphabetical order definitions for ``Debtor,''
                ``Delinquent or past-due,'' ``Federal agency,'' and ``Legally
                enforceable''; and
                0
                v. Removing the words ``a Federal agency'' and adding in their place
                the words ``the United States or a Federal agency'' in the definition
                for ``Person'';
                0
                d. Revising paragraphs (b), (c), and (d)(1)(iii);
                0
                e. Removing the word ``or'' at the end of paragraph (d)(1)(v);
                0
                f. Redesignating paragraph (d)(1)(vi) as paragraph (d)(1)(vii);
                0
                g. Adding a new paragraph (d)(1)(vi),
                0
                h. Revising paragraphs (d)(4) and (d)(5) introductory text;
                0
                i. Removing paragraph (d)(6);
                0
                j. Removing and reserving paragraph (e);
                0
                k. In paragraph (i), removing the words ``delegatee'' and ``the Federal
                agency'' and adding in their place the words ``delegate'' and ``the
                debt'', respectively;
                0
                l. Revising paragraph (j); and
                0
                m. Adding paragraph (k).
                 The revisions and additions read as follows:
                Sec. 285.12 Transfer of debts to Treasury for collection.
                 (a) * * *
                 Centralized Receivables Service means the program through which
                Fiscal Service provides servicing, pursuant to 31 U.S.C. 3711(g), for
                Federal nontax debt from the point at which a creditor agency
                establishes a debt until the debt is paid, otherwise resolved, or
                referred to the Cross-Servicing program for further action.
                * * * * *
                 Cross-Servicing program means the program through which Fiscal
                Service provides delinquent nontax debt collection services pursuant to
                31 U.S.C. 3711(g).
                 Days delinquent refers to the number of days that a debt has been
                in a delinquent status. For administrative debts (e.g., debts arising
                from fines, penalties, and overpayments), the first day of delinquency
                generally is the date of the creditor agency's initial written demand
                for payment. For debts that arise from the extension of credit through
                direct loans, loan guarantees, or insurance, the date of delinquency
                generally is the due date specified in the applicable agreement or
                instrument.
                * * * * *
                 Debtor means a person who owes a debt.
                 Delinquent or past-due refers to the status of a debt and means a
                debt has not been paid by the date specified in the creditor agency's
                initial written demand for payment, or other applicable agreement or
                instrument, unless other payment arrangements satisfactory to the
                creditor agency have been made.
                 Federal agency means a department, agency, court, court
                administrative office, or instrumentality in the executive, judicial,
                or legislative branch of the Federal Government, including government
                corporations.
                * * * * *
                [[Page 11664]]
                 Legally enforceable refers to a characteristic of a debt and means
                there has been a final agency determination that the debt, in the
                amount stated, is due, and there are no legal bars to collection. A
                debt would not be legally enforceable, for example, if the debt is:
                 (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.
                 (b) In general. Fiscal Service and other debt collection centers
                may take debt collection action on behalf of one or more Federal
                agencies or a unit or subagency thereof. Fiscal Service provides these
                services through its Cross-Servicing program and its Centralized
                Receivables Service.
                 (c) Mandatory transfer of debts to Fiscal Service's Cross-Servicing
                program. (1) A debt is considered eligible for transfer to the Cross-
                Servicing program only if it is past due and is legally enforceable.
                 (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) * * *
                 (1) * * *
                 (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;
                * * * * *
                 (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
                * * * * *
                 (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.
                * * * * *
                 (j) Fees. Fiscal Service and other debt collection centers may
                charge Federal agencies fees sufficient to cover the full cost of
                providing debt collection services authorized by this section. Fiscal
                Service and other debt collection centers may calculate fees in any
                manner designed to cover up to the full cost of providing these
                services, including based on a percentage of collections received on
                account of a debt while it was being serviced under this section or a
                flat fee based on actions taken under this section by Fiscal Service or
                another debt collection center with regard to a debt or group of debts.
                Such fees may be determined based on overall program costs and need not
                be based on costs related to the collection of a specific debt. Fiscal
                Service and debt collection centers are authorized to retain fees from
                amounts collected and may deposit and use such fees in accordance with
                31 U.S.C. 3711(g). Fees charged by Fiscal Service and other debt
                collection centers may be added to the debt as an administrative cost
                if authorized under 31 U.S.C. 3717(e).
                 (k) Social Security numbers. When conducting activities for or
                related to its Centralized Receivables Service or Cross-Servicing
                program, Fiscal Service will ensure that an individual's Social
                Security number will not be visible on the outside of any package it
                sends by physical mail or in the subject line of an email. In addition,
                Fiscal Service generally will redact or partially redact Social
                Security numbers in documents it sends by mail; however, to administer
                these programs, Fiscal Service may include Social Security numbers in
                mailed documents, including, for example:
                 (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.
                David A. Lebryk,
                Fiscal Assistant Secretary.
                [FR Doc. 2022-03584 Filed 3-1-22; 8:45 am]
                BILLING CODE 4810-AS-P
                

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