Regulations: Public Law 104-134

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Regulations: Public Law 104-134

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PUBLIC LAW 104–134—APR. 26, 1996

110 STAT. 1321–358

CHAPTER 8
TREASURY, POSTAL SERVICE AND GENERAL GOVERNMENT
INDEPENDENT AGENCIES
GENERAL SERVICES ADMINISTRATION
FEDERAL BUILDINGS FUND
LIMITATIONS ON AVAILABILITY OF REVENUE
(RESCISSION)

Of the funds made available for installment acquisition pay­
ments under this heading in Public Law 104–52, $3,400,000 are
rescinded: Provided, That the aggregate amount made available
to the Fund shall be $5,062,749,000.
CHAPTER 9
DEPARTMENTS OF VETERANS AFFAIRS AND HOUSING AND
URBAN DEVELOPMENT AND INDEPENDENT AGENCIES
FEDERAL EMERGENCY MANAGEMENT AGENCY
DISASTER RELIEF

Of the funds made available under this heading and under
the heading ‘‘Disaster relief emergency contingency fund’’ in Public
Law 104–19, $1,000,000,000 are rescinded.
CHAPTER 10
DEBT COLLECTION IMPROVEMENTS
SEC. 31001. DEBT COLLECTION IMPROVEMENT ACT OF 1996.

(a)(1) This section may be cited as the ‘‘Debt Collection Improvement Act of 1996’’.
(2)(A) IN GENERAL.—The provisions of this section and the
amendments made by this section shall take effect on the date	
of the enactment of this Act.
(B) OFFSETS FROM SOCIAL SECURITY PAYMENTS, ETC.—
Subparagraph (A) of section 3716(c)(3) of title 31, United States
Code (as added by subsection (d)(2) of this section), shall apply
only to payments made after the date which is 4 months after
the date of the enactment of this Act.
(b) The purposes of this section are the following:
(1) To maximize collections of delinquent debts owed to
the Government by ensuring quick action to enforce recovery
of debts and the use of all appropriate collection tools.
(2) To minimize the costs of debt collection by consolidating
related functions and activities and utilizing interagency teams.
(3) To reduce losses arising from debt management activi­
ties by requiring proper screening of potential borrowers,
aggressive monitoring of all accounts, and sharing of informa­
tion within and among Federal agencies.
(4) To ensure that the public is fully informed of the Federal
Government’s debt collection policies and that debtors are cog-

Debt Collection
Improvement Act
of 1996.
31 USC 3701
note.
Effective date.
31 USC 3322
note.
Applicability.
31 USC 3716
note.

31 USC 3701
note.

110 STAT. 1321–359

PUBLIC LAW 104–134—APR. 26, 1996

nizant of their financial obligations to repay amounts owed
to the Federal Government.
(5) To ensure that debtors have all appropriate due process
rights, including the ability to verify, challenge, and compromise
claims, and access to administrative appeals procedures which
are both reasonable and protect the interests of the United
States.
(6) To encourage agencies, when appropriate, to sell delin­
quent debt, particularly debts with underlying collateral.
(7) To rely on the experience and expertise of private sector
professionals to provide debt collection services to Federal
agencies.
(c) Chapter 37 of title 31, United States Code, is amended—
(1) in each of sections 3711, 3716, 3717, and 3718, by
striking ‘‘the head of an executive or legislative agency’’ each
place it appears and inserting ‘‘the head of an executive,
judicial, or legislative agency’’; and
(2) by amending section 3701(a)(4) to read as follows:
‘‘(4) ‘executive, judicial, or legislative agency’ means a
department, agency, court, court administrative office, or
instrumentality in the executive, judicial, or legislative branch
of Government, including government corporations.’’.
(d)(1) PERSONS SUBJECT TO ADMINISTRATIVE OFFSET.—Section
3701(c) of title 31, United States Code, is amended to read as
follows:
‘‘(c) In sections 3716 and 3717 of this title, the term ‘person’
does not include an agency of the United States Government.’’.
(2) REQUIREMENTS AND PROCEDURES.—Section 3716 of title 31,
United States Code, is amended—
(A) by amending subsection (b) to read as follows:
‘‘(b) Before collecting a claim by administrative offset, the head
of an executive, judicial, or legislative agency must either—
‘‘(1) adopt, without change, regulations on collecting by
administrative offset promulgated by the Department of Justice,
the General Accounting Office, or the Department of the Treas­
ury; or
‘‘(2) prescribe regulations on collecting by administrative
offset consistent with the regulations referred to in paragraph
(1).’’;
(B) by amending subsection (c)(2) to read as follows:
‘‘(2) when a statute explicitly prohibits using administrative
offset or setoff to collect the claim or type of claim involved.’’;
(C) by redesignating subsection (c) as subsection (e); and
(D) by inserting after subsection (b) the following new
subsections:
‘‘(c)(1)(A) Except as otherwise provided in this subsection, a
disbursing official of the Department of the Treasury, the Depart­
ment of Defense, the United States Postal Service, or any other
government corporation, or any disbursing official of the United
States designated by the Secretary of the Treasury, shall offset
at least annually the amount of a payment which a payment certify­
ing agency has certified to the disbursing official for disbursement,
by an amount equal to the amount of a claim which a creditor
agency has certified to the Secretary of the Treasury pursuant
to this subsection.
‘‘(B) An agency that designates disbursing officials pursuant
to section 3321(c) of this title is not required to certify claims

PUBLIC LAW 104–134—APR. 26, 1996

110 STAT. 1321–360

arising out of its operations to the Secretary of the Treasury before
such agency’s disbursing officials offset such claims.
‘‘(C) Payments certified by the Department of Education under
a program administered by the Secretary of Education under title
IV of the Higher Education Act of 1965 shall not be subject to
administrative offset under this subsection.
‘‘(2) Neither the disbursing official nor the payment certifying
agency shall be liable—
‘‘(A) for the amount of the administrative offset on the
basis that the underlying obligation, represented by the pay­
ment before the administrative offset was taken, was not satis­
fied; or
‘‘(B) for failure to provide timely notice under paragraph
(8).
‘‘(3)(A)(i) Notwithstanding any other provision of law (including
sections 207 and 1631(d)(1) of the Social Security Act (42 U.S.C.
407 and 1383(d)(1)), section 413(b) of Public Law 91–173 (30 U.S.C.
923(b)), and section 14 of the Act of August 29, 1935 (45 U.S.C.
231m)), except as provided in clause (ii), all payments due to an
individual under—
‘‘(I) the Social Security Act,
‘‘(II) part B of the Black Lung Benefits Act, or
‘‘(III) any law administered by the Railroad Retirement
Board (other than payments that such Board determines to
be tier 2 benefits),
shall be subject to offset under this section.
‘‘(ii) An amount of $9,000 which a debtor may receive under
Federal benefit programs cited under clause (i) within a 12-month
period shall be exempt from offset under this subsection. In applying
the $9,000 exemption, the disbursing official shall—
‘‘(I) reduce the $9,000 exemption amount for the 12-month
period by the amount of all Federal benefit payments made
during such 12-month period which are not subject to offset
under this subsection; and
‘‘(II) apply a prorated amount of the exemption to each
periodic benefit payment to be made to the debtor during the
applicable 12-month period.
For purposes of the preceding sentence, the amount of a periodic
benefit payment shall be the amount after any reduction or deduc­
tion required under the laws authorizing the program under which
such payment is authorized to be made (including any reduction
or deduction to recover any overpayment under such program).
‘‘(B) The Secretary of the Treasury shall exempt from adminis­
trative offset under this subsection payments under means-tested
programs when requested by the head of the respective agency.
The Secretary may exempt other payments from administrative
offset under this subsection upon the written request of the head
of a payment certifying agency. A written request for exemption
of other payments must provide justification for the exemption
under standards prescribed by the Secretary. Such standards shall
give due consideration to whether administrative offset would tend
to interfere substantially with or defeat the purposes of the payment
certifying agency’s program. The Secretary shall report to the Congress annually on exemptions granted under this section.
‘‘(C) The provisions of sections 205(b)(1) and 1631(c)(1) of the
Social Security Act shall not apply to any administrative offset

Reports.

110 STAT. 1321–361

Rules,
regulations, and
procedures.
Notification.

Notification.

PUBLIC LAW 104–134—APR. 26, 1996

executed pursuant to this section against benefits authorized by
either title II or title XVI of the Social Security Act, respectively.
‘‘(4) The Secretary of the Treasury may charge a fee sufficient
to cover the full cost of implementing this subsection. The fee
may be collected either by the retention of a portion of amounts
collected pursuant to this subsection, or by billing the agency refer­
ring or transferring a claim for those amounts. Fees charged to
the agencies shall be based on actual administrative offsets com­
pleted. Amounts received by the United States as fees under this
subsection shall be deposited into the account of the Department
of the Treasury under section 3711(g)(7) of this title, and shall
be collected and accounted for in accordance with the provisions
of that section.
‘‘(5) The Secretary of the Treasury in consultation with the
Commissioner of Social Security and the Director of the Office
of Management and Budget, may prescribe such rules, regulations,
and procedures as the Secretary of the Treasury considers necessary
to carry out this subsection. The Secretary shall consult with the
heads of affected agencies in the development of such rules, regula­
tions, and procedures.
‘‘(6) Any Federal agency that is owed by a person a past
due, legally enforceable nontax debt that is over 180 days delin­
quent, including nontax debt administered by a third party acting
as an agent for the Federal Government, shall notify the Secretary
of the Treasury of all such nontax debts for purposes of administra­
tive offset under this subsection.
‘‘(7)(A) The disbursing official conducting an administrative
offset with respect to a payment to a payee shall notify the payee
in writing of—
‘‘(i) the occurrence of the administrative offset to satisfy
a past due legally enforceable debt, including a description
of the type and amount of the payment otherwise payable
to the payee against which the offset was executed;
‘‘(ii) the identity of the creditor agency requesting the offset;
and
‘‘(iii) a contact point within the creditor agency that will
handle concerns regarding the offset.
‘‘(B) If the payment to be offset is a periodic benefit payment,
the disbursing official shall take reasonable steps, as determined
by the Secretary of the Treasury, to provide the notice to the
payee not later than the date on which the payee is otherwise
scheduled to receive the payment, or as soon as practical thereafter,
but no later than the date of the administrative offset. Notwith­
standing the preceding sentence, the failure of the debtor to receive
such notice shall not impair the legality of such administrative
offset.
‘‘(8) A levy pursuant to the Internal Revenue Code of 1986
shall take precedence over requests for administrative offset pursu­
ant to other laws.
‘‘(d) Nothing in this section is intended to prohibit the use
of any other administrative offset authority existing under statute
or common law.’’.
(3) NONTAX DEBT OR CLAIM DEFINED.—Section 3701 of title
31, United States Code, is amended in subsection (a) by adding
at the end the following new paragraph:

PUBLIC LAW 104–134—APR. 26, 1996

110 STAT. 1321–362

‘‘(8) ‘nontax’ means, with respect to any debt or claim,
any debt or claim other than a debt or claim under the Internal
Revenue Code of 1986.’’.
(4) TREASURY CHECK WITHHOLDING.—Section 3712 of title 31,
United States Code, is amended by adding at the end the following
new subsection:
‘‘(e) TREASURY CHECK OFFSET.—
‘‘(1) IN GENERAL.—To facilitate collection of amounts owed
by presenting banks pursuant to subsection (a) or (b), upon
the direction of the Secretary, a Federal reserve bank shall
withhold credit from banks presenting Treasury checks for
ultimate charge to the account of the United States Treasury.
By presenting Treasury checks for payment a presenting bank
is deemed to authorize this offset.
‘‘(2) ATTEMPT TO COLLECT REQUIRED.—Prior to directing
offset under subsection (a)(1), the Secretary shall first attempt
to collect amounts owed in the manner provided by sections
3711 and 3716.’’.
(e) Section 3716 of title 31, United States Code, as amended
by subsection (d)(2) of this section, is further amended by adding
at the end the following new subsections:
‘‘(f) The Secretary may waive the requirements of sections
552a(o) and (p) of title 5 for administrative offset or claims collection
upon written certification by the head of a State or an executive,
judicial, or legislative agency seeking to collect the claim that the
requirements of subsection (a) of this section have been met.
‘‘(g) The Data Integrity Board of the Department of the Treas­
ury established under 552a(u) of title 5 shall review and include
in reports under paragraph (3)(D) of that section a description
of any matching activities conducted under this section. If the
Secretary has granted a waiver under subsection (f) of this section,
no other Data Integrity Board is required to take any action under
section 552a(u) of title 5.’’.
(f) Section 3716 of title 31, United States Code, as amended
by subsections (d) and (e) of this section, is further amended by
adding at the end the following new subsection:
‘‘(h)(1) The Secretary may, in the discretion of the Secretary,
apply subsection (a) with respect to any past-due, legally-enforceable
debt owed to a State if—
‘‘(A) the appropriate State disbursing official requests that
an offset be performed; and
‘‘(B) a reciprocal agreement with the State is in effect
which contains, at a minimum—
‘‘(i) requirements substantially equivalent to subsection
(b) of this section; and
‘‘(ii) any other requirements which the Secretary
considers appropriate to facilitate the offset and prevent
duplicative efforts.
‘‘(2) This subsection does not apply to—
‘‘(A) the collection of a debt or claim on which the adminis­
trative costs associated with the collection of the debt or claim
exceed the amount of the debt or claim;
‘‘(B) any collection of any other type, class, or amount
of claim, as the Secretary considers necessary to protect the
interest of the United States; or

110 STAT. 1321–363

Records.

PUBLIC LAW 104–134—APR. 26, 1996

‘‘(C) the disbursement of any class or type of payment
exempted by the Secretary of the Treasury at the request
of a Federal agency.
‘‘(3) In applying this section with respect to any debt owed
to a State, subsection (c)(3)(A) shall not apply.’’.
(g)(1) TITLE 31.—Title 31, United States Code, is amended—
(A) in section 3322(a), by inserting ‘‘section 3716 and sec­
tion 3720A of this title and’’ after ‘‘Except as provided in’’;
(B) in section 3325(a)(3), by inserting ‘‘or pursuant to pay­
ment intercepts or offsets pursuant to section 3716 or 3720A
of this title,’’ after ‘‘voucher’’; and
(C) in each of sections 3711(e)(2) and 3717(h) by inserting
‘‘, the Secretary of the Treasury,’’ after ‘‘Attorney General’’.
(2) INTERNAL REVENUE CODE OF 1986.—Subparagraph (A) of
section 6103(l)(10) of the Internal Revenue Code of 1986 (26 U.S.C.
6103(l)(10)) is amended by inserting ‘‘and to officers and employees
of the Department of the Treasury in connection with such reduc­
tion’’ after ‘‘6402’’.
(h) Section 5514 of title 5, United States Code, is amended—
(A) in subsection (a)—
(i) by adding at the end of paragraph (1) the following:
‘‘All Federal agencies to which debts are owed and which
have outstanding delinquent debts shall participate in a
computer match at least annually of their delinquent debt
records with records of Federal employees to identify those
employees who are delinquent in repayment of those debts.
The preceding sentence shall not apply to any debt under
the Internal Revenue Code of 1986. Matched Federal
employee records shall include, but shall not be limited
to, records of active Civil Service employees government­
wide, military active duty personnel, military reservists,
United States Postal Service employees, employees of other
government corporations, and seasonal and temporary
employees. The Secretary of the Treasury shall establish
and maintain an interagency consortium to implement cen­
tralized salary offset computer matching, and promulgate
regulations for this program. Agencies that perform central­
ized salary offset computer matching services under this
subsection are authorized to charge a fee sufficient to cover
the full cost for such services.’’;
(ii) by redesignating paragraphs (3) and (4) as para­
graphs (4) and (5), respectively;
(iii) by inserting after paragraph (2) the following new
paragraph:
‘‘(3) Paragraph (2) shall not apply to routine intra-agency
adjustments of pay that are attributable to clerical or administrative
errors or delays in processing pay documents that have occurred
within the four pay periods preceding the adjustment and to any
adjustment that amounts to $50 or less, if at the time of such
adjustment, or as soon thereafter as practical, the individual is
provided written notice of the nature and the amount of the adjust­
ment and a point of contact for contesting such adjustment.’’; and
(iv) by amending paragraph (5)(B) (as redesignated
by clause (ii) of this subparagraph) to read as follows:
‘‘(B) ‘agency’ includes executive departments and agen­
cies, the United States Postal Service, the Postal Rate
Commission, the United States Senate, the United States

PUBLIC LAW 104–134—APR. 26, 1996

110 STAT. 1321–364

House of Representatives, and any court, court administra­
tive office, or instrumentality in the judicial or legislative
branches of the Government, and government corpora­
tions.’’;
(B) by adding after subsection (c) the following new sub­
section:
‘‘(d) A levy pursuant to the Internal Revenue Code of 1986
shall take precedence over other deductions under this section.’’.
(i)(1) IN GENERAL.—Section 7701 of title 31, United States
Code, is amended by adding at the end the following new sub­
sections:
‘‘(c)(1) The head of each Federal agency shall require each
person doing business with that agency to furnish to that agency
such person’s taxpayer identifying number.
‘‘(2) For purposes of this subsection, a person shall be considered
to be doing business with a Federal agency if the person is—
‘‘(A) a lender or servicer in a Federal guaranteed or insured
loan program administered by the agency;
‘‘(B) an applicant for, or recipient of, a Federal license,
permit, right-of-way, grant, or benefit payment administered
by the agency or insurance administered by the agency;
‘‘(C) a contractor of the agency;
‘‘(D) assessed a fine, fee, royalty or penalty by the agency;
and
‘‘(E) in a relationship with the agency that may give rise
to a receivable due to that agency, such as a partner of a
borrower in or a guarantor of a Federal direct or insured
loan administered by the agency.
‘‘(3) Each agency shall disclose to a person required to furnish
a taxpayer identifying number under this subsection its intent
to use such number for purposes of collecting and reporting on
any delinquent amounts arising out of such person’s relationship
with the Government.
‘‘(4) For purposes of this subsection, a person shall not be
treated as doing business with a Federal agency solely by reason
of being a debtor under third party claims of the United States.
The preceding sentence shall not apply to a debtor owing claims
resulting from petroleum pricing violations or owing claims result­
ing from Federal loan or loan guarantee/insurance programs.
‘‘(d) Notwithstanding section 552a(b) of title 5, United States
Code, creditor agencies to which a delinquent claim is owed, and
their agents, may match their debtor records with Department
of Health and Human Services, and Department of Labor records
to obtain names (including names of employees), name controls,
names of employers, taxpayer identifying numbers, addresses
(including addresses of employers), and dates of birth. The preceding
sentence shall apply to the disclosure of taxpayer identifying num­
bers only if such disclosure is not otherwise prohibited by section
6103 of the Internal Revenue Code of 1986. The Department of
Health and Human Services, and the Department of Labor shall
release that information to creditor agencies and may charge reason­
able fees sufficient to pay the costs associated with that release.’’.
(2) INCLUDED FEDERAL LOAN PROGRAM DEFINED.—Subpara­
graph (C) of section 6103(l)(3) of the Internal Revenue Code of
1986 (relating to disclosure that applicant for Federal loan has
tax delinquent account) is amended to read as follows:


26 USC 6103.

110 STAT. 1321–365

PUBLIC LAW 104–134—APR. 26, 1996

‘‘(C) INCLUDED FEDERAL LOAN PROGRAM DEFINED.—
For purposes of this paragraph, the term ‘included Federal
loan program’ means any program under which the United
States or a Federal agency makes, guarantees, or insures
loans.’’.
(3) CLERICAL AMENDMENTS.—
(A) The chapter title to chapter 77 of subtitle VI of title
31, United States Code, is amended to read as follows:
‘‘CHAPTER 77—ACCESS TO INFORMATION FOR DEBT COLLECTION’’.

(B) The table of chapters for subtitle VI of title 31, United
States Code, is amended by inserting before the item relating
to chapter 91 the following new item:
‘‘77. Access to information for debt collection ............................................ 7701’’.

(j)(1) IN GENERAL.—Title 31, United States Code, is amended
by inserting after section 3720A the following new section:

Standards.

‘‘§ 3720B. Barring delinquent Federal debtors from obtaining
Federal loans or loan insurance guarantees
‘‘(a) Unless this subsection is waived by the head of a Federal
agency, a person may not obtain any Federal financial assistance
in the form of a loan (other than a disaster loan) or loan insurance
or guarantee administered by the agency if the person has an
outstanding debt (other than a debt under the Internal Revenue
Code of 1986) with any Federal agency which is in a delinquent
status, as determined under standards prescribed by the Secretary
of the Treasury. Such a person may obtain additional loans or
loan guarantees only after such delinquency is resolved in accord­
ance with those standards. The Secretary of the Treasury may
exempt, at the request of an agency, any class of claims.
‘‘(b) The head of a Federal agency may delegate the waiver
authority under subsection (a) to the Chief Financial Officer of
the agency. The waiver authority may be redelegated only to the
Deputy Chief Financial Officer of the agency.’’
(2) CLERICAL AMENDMENT.—The table of sections for subchapter
II of chapter 37 of title 31, United States Code, is amended by
inserting after the item relating to section 3720A the following
new item:
‘‘3720B. Barring delinquent Federal debtors from obtaining Federal loans or loan in­
surance guarantees.’’.

(k) Section 3711(f) of title 31, United States Code, is amended—
(1) by striking ‘‘may’’ the first place it appears and inserting
‘‘shall’’;
(2) by striking ‘‘an individual’’ each place it appears and
inserting ‘‘a person’’;
(3) by striking ‘‘the individual’’ each place it appears and
inserting ‘‘the person’’; and
(4) by adding at the end the following new paragraphs:
‘‘(4) The head of each executive agency shall require, as a
condition for insuring or guaranteeing any loan, financing, or other
extension of credit under any law to a person, that the lender
provide information relating to the extension of credit to consumer
reporting agencies or commercial reporting agencies, as appropriate.
‘‘(5) The head of each executive agency may provide to a
consumer reporting agency or commercial reporting agency informa­
tion from a system of records that a person is responsible for
a claim which is current, if notice required by section 552a(e)(4)

PUBLIC LAW 104–134—APR. 26, 1996

110 STAT. 1321–366

of title 5 indicates that information in the system may be disclosed
to a consumer reporting agency or commercial reporting agency,
respectively.’’.
(l) Section 3718 of title 31, United States Code, is amended—
(1) in subsection (a), by striking the first sentence and
inserting the following: ‘‘Under conditions the head of an execu­
tive, judicial, or legislative agency considers appropriate, the
head of the agency may enter into a contract with a person
for collection service to recover indebtedness owed, or to locate
or recover assets of, the United States Government. The head
of an agency may not enter into a contract under the preceding
sentence to locate or recover assets of the United States held
by a State government or financial institution unless that
agency has established procedures approved by the Secretary
of the Treasury to identify and recover such assets.’’; and
(2) in subsection (d), by inserting ‘‘, or to locate or recover
assets of,’’ after ‘‘owed’’.
(m)(1) IN GENERAL.—Section 3711 of title 31, United States
Code, is amended by adding at the end the following new sub­
sections:
‘‘(g)(1) If a nontax debt or claim owed to the United States
has been delinquent for a period of 180 days—
‘‘(A) the head of the executive, judicial, or legislative agency
that administers the program that gave rise to the debt or
claim shall transfer the debt or claim to the Secretary of the
Treasury; and
‘‘(B) upon such transfer the Secretary of the Treasury shall
take appropriate action to collect or terminate collection actions
on the debt or claim.
‘‘(2) Paragraph (1) shall not apply—
‘‘(A) to any debt or claim that—
‘‘(i) is in litigation or foreclosure;
‘‘(ii) will be disposed of under an asset sales program
within 1 year after becoming eligible for sale, or later
than 1 year if consistent with an asset sales program
and a schedule established by the agency and approved
by the Director of the Office of Management and Budget;
‘‘(iii) has been referred to a private collection contractor
for collection for a period of time determined by the Sec­
retary of the Treasury;
‘‘(iv) has been referred by, or with the consent of,
the Secretary of the Treasury to a debt collection center
for a period of time determined by the Secretary of the
Treasury; or
‘‘(v) will be collected under internal offset, if such offset
is sufficient to collect the claim within 3 years after the
date the debt or claim is first delinquent; and
‘‘(B) to any other specific class of debt or claim, as deter­
mined by the Secretary of the Treasury at the request of
the head of an executive, judicial, or legislative agency or
otherwise.
‘‘(3) For purposes of this section, the Secretary of the Treasury
may designate, and withdraw such designation of debt collection
centers operated by other Federal agencies. The Secretary of the
Treasury shall designate such centers on the basis of their perform­
ance in collecting delinquent claims owed to the Government.

110 STAT. 1321–367

PUBLIC LAW 104–134—APR. 26, 1996

‘‘(4) At the discretion of the Secretary of the Treasury, referral
of a nontax claim may be made to—
‘‘(A) any executive department or agency operating a debt
collection center for servicing, collection, compromise, or suspen­
sion or termination of collection action;
‘‘(B) a private collection contractor operating under a con­
tract for servicing or collection action; or
‘‘(C) the Department of Justice for litigation.
‘‘(5) Nontax claims referred or transferred under this section
shall be serviced, collected, or compromised, or collection action
thereon suspended or terminated, in accordance with otherwise
applicable statutory requirements and authorities. Executive
departments and agencies operating debt collection centers may
enter into agreements with the Secretary of the Treasury to carry
out the purposes of this subsection. The Secretary of the Treasury
shall—
‘‘(A) maintain competition in carrying out this subsection;
‘‘(B) maximize collections of delinquent debts by placing
delinquent debts quickly;
‘‘(C) maintain a schedule of private collection contractors
and debt collection centers eligible for referral of claims; and
‘‘(D) refer delinquent debts to the person most appropriate
to collect the type or amount of claim involved.
‘‘(6) Any agency operating a debt collection center to which
nontax claims are referred or transferred under this subsection
may charge a fee sufficient to cover the full cost of implementing
this subsection. The agency transferring or referring the nontax
claim shall be charged the fee, and the agency charging the fee
shall collect such fee by retaining the amount of the fee from
amounts collected pursuant to this subsection. Agencies may agree
to pay through a different method, or to fund an activity from
another account or from revenue received from the procedure
described under section 3720C of this title. Amounts charged under
this subsection concerning delinquent claims may be considered
as costs pursuant to section 3717(e) of this title.
‘‘(7) Notwithstanding any other law concerning the depositing
and collection of Federal payments, including section 3302(b) of
this title, agencies collecting fees may retain the fees from amounts
collected. Any fee charged pursuant to this subsection shall be
deposited into an account to be determined by the executive depart­
ment or agency operating the debt collection center charging the
fee (in this subsection referred to in this section as the ‘Account’).
Amounts deposited in the Account shall be available until expended
to cover costs associated with the implementation and operation
of Governmentwide debt collection activities. Costs properly charge­
able to the Account include—
‘‘(A) the costs of computer hardware and software, word
processing and telecommunications equipment, and other equip­
ment, supplies, and furniture;
‘‘(B) personnel training and travel costs;
‘‘(C) other personnel and administrative costs;
‘‘(D) the costs of any contract for identification, billing,
or collection services; and
‘‘(E) reasonable costs incurred by the Secretary of the Treas­
ury, including services and utilities provided by the Secretary,
and administration of the Account.

PUBLIC LAW 104–134—APR. 26, 1996

110 STAT. 1321–368

‘‘(8) Not later than January 1 of each year, there shall be
deposited into the Treasury as miscellaneous receipts an amount
equal to the amount of unobligated balances remaining in the
Account at the close of business on September 30 of the preceding
year, minus any part of such balance that the executive department
or agency operating the debt collection center determines is nec­
essary to cover or defray the costs under this subsection for the
fiscal year in which the deposit is made.
‘‘(9) Before discharging any delinquent debt owed to any execu­
tive, judicial, or legislative agency, the head of such agency shall
take all appropriate steps to collect such debt, including (as
applicable)—
‘‘(A) administrative offset,
‘‘(B) tax refund offset,
‘‘(C) Federal salary offset,
‘‘(D) referral to private collection contractors,
‘‘(E) referral to agencies operating a debt collection center,
‘‘(F) reporting delinquencies to credit reporting bureaus,
‘‘(G) garnishing the wages of delinquent debtors, and
‘‘(H) litigation or foreclosure.
‘‘(10) To carry out the purposes of this subsection, the Secretary
of the Treasury may prescribe such rules, regulations, and proce­
dures as the Secretary considers necessary and transfer such funds
from funds appropriated to the Department of the Treasury as
may be necessary to meet existing liabilities and obligations
incurred prior to the receipt of revenues that result from debt
collections.
‘‘(h)(1) The head of an executive, judicial, or legislative agency
acting under subsection (a)(1), (2), or (3) of this section to collect
a claim, compromise a claim, or terminate collection action on
a claim may obtain a consumer report (as that term is defined
in section 603 of the Fair Credit Reporting Act (15 U.S.C. 1681a))
or comparable credit information on any person who is liable for
the claim.
‘‘(2) The obtaining of a consumer report under this subsection
is deemed to be a circumstance or purpose authorized or listed
under section 604 of the Fair Credit Reporting Act (15 U.S.C.
1681b).’’.
(2) RETURNS RELATING TO CANCELLATION OF INDEBTEDNESS
BY CERTAIN ENTITIES.—
(A) IN GENERAL.—Subsection (a) of section 6050P of the
Internal Revenue Code of 1986 (relating to returns relating
to the cancellation of indebtedness by certain financial entities)
is amended by striking ‘‘applicable financial entity’’ and insert­
ing ‘‘applicable entity’’.
(B) ENTITIES TO WHICH REQUIREMENT APPLIES.—Subsection
(c) of section 6050P of such Code is amended—
(i) by redesignating paragraphs (1) and (2) as para­
graphs (2) and (3), respectively, and inserting before para­
graph (2) (as so redesignated) the following new paragraph:
‘‘(1) APPLICABLE ENTITY.—The term ‘applicable entity’
means—
‘‘(A) an executive, judicial, or legislative agency (as
defined in section 3701(a)(4) of title 31, United States
Code), and
‘‘(B) an applicable financial entity.’’, and

26 USC 6050P.

110 STAT. 1321–369

26 USC 6050P.

PUBLIC LAW 104–134—APR. 26, 1996


(ii) in paragraph (3), as so redesignated, by striking
‘‘(1)(B)’’ and inserting ‘‘(1)(A) or (2)(B)’’.
(C) ALTERNATIVE PROCEDURE.—Section 6050P of such Code
is amended by adding at the end the following new subsection:
‘‘(e) ALTERNATIVE PROCEDURE.—In lieu of making a return
required under subsection (a), an agency described in subsection
(c)(1)(A) may submit to the Secretary (at such time and in such
form as the Secretary may by regulations prescribe) information
sufficient for the Secretary to complete such a return on behalf
of such agency. Upon receipt of such information, the Secretary
shall complete such return and provide a copy of such return
to such agency.’’
(D) CONFORMING AMENDMENTS.—
(i) Subsection (d) of section 6050P of such Code is
amended by striking ‘‘applicable financial entity’’ and
inserting ‘‘applicable entity’’.
(ii) The heading of section 6050P of such Code is
amended to read as follows:
‘‘SEC. 6050P. RETURNS RELATING TO THE CANCELLATION OF INDEBTEDNESS BY CERTAIN ENTITIES.’’

(iii) The table of sections for subpart B of part III
of subchapter A of chapter 61 of such Code is amended
by striking the item relating to section 6050P and inserting
the following new item:
‘‘Sec. 6050P. Returns relating to the cancellation of indebtedness by certain
entities.’’
Effective date.
31 USC 3711
note.

Notification.

(n) Effective October 1, 1995, section 11 of the Administrative
Dispute Resolution Act (Public Law 101–552, 5 U.S.C. 571 note)
shall not apply to the amendment made by section 8(b) of such
Act.
(o)(1) IN GENERAL.—Chapter 37 of title 31, United States Code,
is amended in subchapter II by adding after section 3720C, as
added by subsection (t) of this section, the following new section:
‘‘§ 3720D. Garnishment
‘‘(a) Notwithstanding any provision of State law, the head of
an executive, judicial, or legislative agency that administers a pro­
gram that gives rise to a delinquent nontax debt owed to the
United States by an individual may in accordance with this section
garnish the disposable pay of the individual to collect the amount
owed, if the individual is not currently making required repayment
in accordance with any agreement between the agency head and
the individual.
‘‘(b) In carrying out any garnishment of disposable pay of an
individual under subsection (a), the head of an executive, judicial,
or legislative agency shall comply with the following requirements:
‘‘(1) The amount deducted under this section for any pay
period may not exceed 15 percent of disposable pay, except
that a greater percentage may be deducted with the written
consent of the individual.
‘‘(2) The individual shall be provided written notice, sent
by mail to the individual’s last known address, a minimum
of 30 days prior to the initiation of proceedings, from the
head of the executive, judicial, or legislative agency, informing
the individual of—
‘‘(A) the nature and amount of the debt to be collected;

PUBLIC LAW 104–134—APR. 26, 1996

110 STAT. 1321–370


‘‘(B) the intention of the agency to initiate proceedings
to collect the debt through deductions from pay; and
‘‘(C) an explanation of the rights of the individual
under this section.
‘‘(3) The individual shall be provided an opportunity to
inspect and copy records relating to the debt.
‘‘(4) The individual shall be provided an opportunity to
enter into a written agreement with the executive, judicial,
or legislative agency, under terms agreeable to the head of
the agency, to establish a schedule for repayment of the debt.
‘‘(5) The individual shall be provided an opportunity for
a hearing in accordance with subsection (c) on the determina­
tion of the head of the executive, judicial, or legislative agency
concerning—
‘‘(A) the existence or the amount of the debt, and
‘‘(B) in the case of an individual whose repayment
schedule is established other than by a written agreement
pursuant to paragraph (4), the terms of the repayment
schedule.
‘‘(6) If the individual has been reemployed within 12 months
after having been involuntarily separated from employment,
no amount may be deducted from the disposable pay of the
individual until the individual has been reemployed continu­
ously for at least 12 months.
‘‘(c)(1) A hearing under subsection (b)(5) shall be provided prior
to issuance of a garnishment order if the individual, on or before
the 15th day following the mailing of the notice described in sub­
section (b)(2), and in accordance with such procedures as the head
of the executive, judicial, or legislative agency may prescribe, files
a petition requesting such a hearing.
‘‘(2) If the individual does not file a petition requesting a
hearing prior to such date, the head of the agency shall provide
the individual a hearing under subsection (a)(5) upon request, but
such hearing need not be provided prior to issuance of a garnish­
ment order.
‘‘(3) The hearing official shall issue a final decision at the
earliest practicable date, but not later than 60 days after the
filing of the petition requesting the hearing.
‘‘(d) The notice to the employer of the withholding order shall
contain only such information as may be necessary for the employer
to comply with the withholding order.
‘‘(e)(1) An employer may not discharge from employment, refuse
to employ, or take disciplinary action against an individual subject
to wage withholding in accordance with this section by reason
of the fact that the individual’s wages have been subject to garnish­
ment under this section, and such individual may sue in a State
or Federal court of competent jurisdiction any employer who takes
such action.
‘‘(2) The court shall award attorneys’ fees to a prevailing
employee and, in its discretion, may order reinstatement of the
individual, award punitive damages and back pay to the employee,
or order such other remedy as may be reasonably necessary.
‘‘(f)(1) The employer of an individual—
‘‘(A) shall pay to the head of an executive, judicial, or
legislative agency as directed in a withholding order issued
in an action under this section with respect to the individual,
and

Records.
Contracts.

Courts.

110 STAT. 1321–371

Regulations.

PUBLIC LAW 104–134—APR. 26, 1996

‘‘(B) shall be liable for any amount that the employer
fails to withhold from wages due an employee following receipt
by such employer of notice of the withholding order, plus attor­
neys’ fees, costs, and, in the court’s discretion, punitive dam­
ages.
‘‘(2)(A) The head of an executive, judicial, or legislative agency
may sue an employer in a State or Federal court of competent
jurisdiction to recover amounts for which the employer is liable
under paragraph (1)(B).
‘‘(B) A suit under this paragraph may not be filed before the
termination of the collection action, unless earlier filing is necessary
to avoid expiration of any applicable statute of limitations period.
‘‘(3) Notwithstanding paragraphs (1) and (2), an employer shall
not be required to vary its normal pay and disbursement cycles
in order to comply with this subsection.
‘‘(g) For the purpose of this section, the term ‘disposable pay’
means that part of the compensation of any individual from an
employer remaining after the deduction of any amounts required
by any other law to be withheld.
‘‘(h) The Secretary of the Treasury shall issue regulations to
implement this section.’’.
(2) CLERICAL AMENDMENT.—The table of sections for subchapter
II of chapter 37 of title 31, United States Code, is amended by
inserting after the item relating to section 3720C (as added by
subsection (t) of this section) the following new item:
‘‘3720D. Garnishment.’’.

Reports.

(p) Section 3711 of title 31, United States Code, as amended
by subsection (m) of this section, is further amended by adding
at the end the following new subsection:
‘‘(i)(1) The head of an executive, judicial, or legislative agency
may sell, subject to section 504(b) of the Federal Credit Reform
Act of 1990 and using competitive procedures, any nontax debt
owed to the United States that is delinquent for more than 90
days. Appropriate fees charged by a contractor to assist in the
conduct of a sale under this subsection may be payable from the
proceeds of the sale.
‘‘(2) After terminating collection action, the head of an execu­
tive, judicial, or legislative agency shall sell, using competitive
procedures, any nontax debt or class of nontax debts owed to
the United States, if the Secretary of the Treasury determines
the sale is in the best interests of the United States.
‘‘(3) Sales of nontax debt under this subsection—
‘‘(A) shall be for—
‘‘(i) cash, or
‘‘(ii) cash and a residuary equity or profit participation,
if the head of the agency reasonably determines that the
proceeds will be greater than sale solely for cash,
‘‘(B) shall be without recourse, but may include the use
of guarantees if otherwise authorized, and
‘‘(C) shall transfer to the purchaser all rights of the Govern­
ment to demand payment of the nontax debt, other than with
respect to a residuary equity or profit participation under
subparagraph (A)(ii).
‘‘(4)(A) Within one year after the date of enactment of the
Debt Collection Improvement Act of 1996, each executive agency
with current and delinquent collateralized nontax debts shall report
to the Congress on the valuation of its existing portfolio of loans,

PUBLIC LAW 104–134—APR. 26, 1996

110 STAT. 1321–372

notes and guarantees, and other collateralized debts based on stand­
ards developed by the Director of the Office of Management and
Budget, in consultation with the Secretary of the Treasury.
‘‘(B) The Director of the Office of Management and Budget
shall determine what information is required to be reported to
comply with subparagraph (A). At a minimum, for each financing
account and for each liquidating account (as those terms are defined
in sections 502(7) and 502(8), respectively, of the Federal Credit
Reform Act of 1990) the following information shall be reported:
‘‘(i) The cumulative balance of current debts outstanding,
the estimated net present value of such debts, the annual
administrative expenses of those debts (including the portion
of salaries and expenses that are directly related thereto), and
the estimated net proceeds that would be received by the
Government if such debts were sold.
‘‘(ii) The cumulative balance of delinquent debts, debts
outstanding, the estimated net present value of such debts,
the annual administrative expenses of those debts (including
the portion of salaries and expenses that are directly related
thereto), and the estimated net proceeds that would be received
by the Government if such debts were sold.
‘‘(iii) The cumulative balance of guaranteed loans outstand­
ing, the estimated net present value of such guarantees, the
annual administrative expenses of such guarantees (including
the portion of salaries and expenses that are directly related
to such guaranteed loans), and the estimated net proceeds
that would be received by the Government if such loan guaran­
tees were sold.
‘‘(iv) The cumulative balance of defaulted loans that were
previously guaranteed and have resulted in loans receivables,
the estimated net present value of such loan assets, the annual
administrative expenses of such loan assets (including the por­
tion of salaries and expenses that are directly related to such
loan assets), and the estimated net proceeds that would be
received by the Government if such loan assets were sold.
‘‘(v) The marketability of all debts.
‘‘(5) This subsection is not intended to limit existing statutory
authority of agencies to sell loans, debts, or other assets.’’.
(q) Section 3717 of title 31, United States Code, is amended
by adding at the end of subsection (h) the following new subsection:
‘‘(i)(1) The head of an executive, judicial, or legislative agency
may increase an administrative claim by the cost of living adjust­
ment in lieu of charging interest and penalties under this section.
Adjustments under this subsection will be computed annually.
‘‘(2) For the purpose of this subsection—
‘‘(A) the term ‘cost of living adjustment’ means the percent­
age by which the Consumer Price Index for the month of
June of the calendar year preceding the adjustment exceeds
the Consumer Price Index for the month of June of the calendar
year in which the claim was determined or last adjusted; and
‘‘(B) the term ‘administrative claim’ includes all debt that
is not based on an extension of Government credit through
direct loans, loan guarantees, or insurance, including fines,
penalties, and overpayments.’’.
(r)(1) IN GENERAL.—Chapter 37 of title 31, United States Code,
is amended in subchapter II by adding after section 3720D, as
added by subsection (o) of this section, the following new section:

110 STAT. 1321–373

Regulations.

PUBLIC LAW 104–134—APR. 26, 1996


‘‘§ 3720E. Dissemination of information regarding identity
of delinquent debtors
‘‘(a) The head of any agency may, with the review of the
Secretary of the Treasury, for the purpose of collecting any delin­
quent nontax debt owed by any person, publish or otherwise publicly
disseminate information regarding the identity of the person and
the existence of the nontax debt.
‘‘(b)(1) The Secretary of the Treasury, in consultation with
the Director of the Office of Management and Budget and the
heads of other appropriate Federal agencies, shall issue regulations
establishing procedures and requirements the Secretary considers
appropriate to carry out this section.
‘‘(2) Regulations under this subsection shall include—
‘‘(A) standards for disseminating information that maximize
collections of delinquent nontax debts, by directing actions
under this section toward delinquent debtors that have assets
or income sufficient to pay their delinquent nontax debt;
‘‘(B) procedures and requirements that prevent dissemina­
tion of information under this section regarding persons who
have not had an opportunity to verify, contest, and compromise
their nontax debt in accordance with this subchapter; and
‘‘(C) procedures to ensure that persons are not incorrectly
identified pursuant to this section.’’.
(2) CLERICAL AMENDMENT.—The table of sections for subchapter
II of chapter 37 of title 31, United States Code, is amended by
adding after the item relating to section 3720D (as added by sub­
section (o) of this section) the following new item:
‘‘3720E. Dissemination of information regarding identity of delinquent debtors.’’.

Regulations.

Federal Register,
Publication.

28 USC 2461
note.

(s)(1) IN GENERAL.—The Federal Civil Penalties Inflation
Adjustment Act of 1990 (Public Law 101–410, 104 Stat. 890; 28
U.S.C. 2461 note) is amended—
(A) by amending section 4 to read as follows:
‘‘SEC. 4. The head of each agency shall, not later than 180
days after the date of enactment of the Debt Collection Improvement
Act of 1996, and at least once every 4 years thereafter—
‘‘(1) by regulation adjust each civil monetary penalty pro­
vided by law within the jurisdiction of the Federal agency,
except for any penalty (including any addition to tax and addi­
tional amount) under the Internal Revenue Code of 1986, the
Tariff Act of 1930, the Occupational Safety and Health Act
of 1970, or the Social Security Act, by the inflation adjustment
described under section 5 of this Act; and
‘‘(2) publish each such regulation in the Federal Register.’’;
(B) in section 5(a), by striking ‘‘The adjustment described
under paragraphs (4) and (5)(A) of section 4’’ and inserting
‘‘The inflation adjustment under section 4’’; and
(C) by adding at the end the following new section:
‘‘SEC. 7. Any increase under this Act in a civil monetary penalty
shall apply only to violations which occur after the date the increase
takes effect.’’.
(2) LIMITATION ON INITIAL ADJUSTMENT.—The first adjustment
of a civil monetary penalty made pursuant to the amendment
made by paragraph (1) may not exceed 10 percent of such penalty.
(t)(1) IN GENERAL.—Title 31, United States Code, is amended
by inserting after section 3720B (as added by subsection (j) of
this section) the following new section:

PUBLIC LAW 104–134—APR. 26, 1996

110 STAT. 1321–374

‘‘§ 3720C. Debt Collection Improvement Account
‘‘(a)(1) There is hereby established in the Treasury a special
fund to be known as the ‘Debt Collection Improvement Account’
(hereinafter in this section referred to as the ‘Account’).
‘‘(2) The Account shall be maintained and managed by the
Secretary of the Treasury, who shall ensure that agency programs
are credited with amounts transferred under subsection (b)(1).
‘‘(b)(1) Not later than 30 days after the end of a fiscal year,
an agency may transfer to the Account the amount described in
paragraph (3), as adjusted under paragraph (4).
‘‘(2) Agency transfers to the Account may include collections
from—
‘‘(A) salary, administrative, and tax refund offsets;
‘‘(B) the Department of Justice;
‘‘(C) private collection agencies;
‘‘(D) sales of delinquent loans; and
‘‘(E) contracts to locate or recover assets.
‘‘(3) The amount referred to in paragraph (1) shall be 5 percent
of the amount of delinquent debt collected by an agency in a
fiscal year, minus the greater of—
‘‘(A) 5 percent of the amount of delinquent nontax debt
collected by the agency in the previous fiscal year, or
‘‘(B) 5 percent of the average annual amount of delinquent
nontax debt collected by the agency in the previous 4 fiscal
years.
‘‘(4) In consultation with the Secretary of the Treasury, the
Office of Management and Budget may adjust the amount described
in paragraph (3) for an agency to reflect the level of effort in
credit management programs by the agency. As an indicator of
the level of effort in credit management, the Office of Management
and Budget shall consider the following:
‘‘(A) The number of days between the date a claim or
debt became delinquent and the date which an agency referred
the debt or claim to the Secretary of the Treasury or obtained
an exemption from this referral under section 3711(g)(2) of
this title.
‘‘(B) The ratio of delinquent debts or claims to total receiv­
ables for a given program, and the change in this ratio over
a period of time.
‘‘(c)(1) The Secretary of the Treasury may make payments
from the Account solely to reimburse agencies for qualified expenses.
For agencies with franchise funds, such payments may be credited
to subaccounts designated for debt collection.
‘‘(2) For purposes of this section, the term ‘qualified expenses’
means expenditures for the improvement of credit management,
debt collection, and debt recovery activities, including—
‘‘(A) account servicing (including cross-servicing under sec­
tion 3711(g) of this title),
‘‘(B) automatic data processing equipment acquisitions,
‘‘(C) delinquent debt collection,
‘‘(D) measures to minimize delinquent debt,
‘‘(E) sales of delinquent debt,
‘‘(F) asset disposition, and
‘‘(G) training of personnel involved in credit and debt
management.
‘‘(3)(A) Amounts transferred to the Account shall be available
to the Secretary of the Treasury for purposes of this section to

Nomenclature.

110 STAT. 1321–375

Rules,
regulations, and
procedures.

PUBLIC LAW 104–134—APR. 26, 1996

the extent and in amounts provided in advance in appropriations
Acts.
‘‘(B) As soon as practicable after the end of the third fiscal
year after which amounts transferred are first available pursuant
to this section, and every 3 years thereafter, any uncommitted
balance in the Account shall be transferred to the general fund
of the Treasury as miscellaneous receipts.
‘‘(d) For direct loans and loan guarantee programs subject to
title V of the Congressional Budget Act of 1974, amounts credited
in accordance with subsection (c) shall be considered administrative
costs.
‘‘(e) The Secretary of the Treasury shall prescribe such rules,
regulations, and procedures as the Secretary considers necessary
or appropriate to carry out the purposes of this section.’’.
(2) CLERICAL AMENDMENT.—The table of sections for chapter
37 of title 31, United States Code, is amended by inserting after
the item relating to section 3720B (as added by subsection (j)
of this section) the following new item:
‘‘3720C. Debt Collection Improvement Account.’’.

Notification.

Notification.

(u)(1) DISCRETIONARY AUTHORITY.—Section 3720A of title 31,
United States Code, is amended by adding after subsection (h)
the following new subsection:
‘‘(i) An agency subject to section 9 of the Act of May 18,
1933 (16 U.S.C. 831h), may implement this section at its discre­
tion.’’.
(2) FEDERAL AGENCY DEFINED.—Section 6402(f) of the Internal
Revenue Code of 1986 (26 U.S.C. 6402(f)) is amended to read
as follows:
‘‘(f) FEDERAL AGENCY.—For purposes of this section, the term
‘Federal agency’ means a department, agency, or instrumentality
of the United States, and includes a Government corporation (as
such term is defined in section 103 of title 5, United States Code).’’.
(v)(1) NOTIFICATION OF SECRETARY OF THE TREASURY.—Section
3720A(a) of title 31, United States Code, is amended to read as
follows:
‘‘(a) Any Federal agency that is owed by a person a past­
due, legally enforceable debt (including debt administered by a
third party acting as an agent for the Federal Government) shall,
and any agency subject to section 9 of the Act of May 18, 1933
(16 U.S.C. 831h), owed such a debt may, in accordance with regula­
tions issued pursuant to subsections (b) and (d), notify the Secretary
of the Treasury at least once each year of the amount of such
debt.’’.
(2) IMPLEMENTATION OF SUPPORT COLLECTION BY SECRETARY
OF THE TREASURY.—Section 464(a) of the Social Security Act (42
U.S.C. 664(a)) is amended—
(1) in paragraph (1), by adding at the end the following:
‘‘This subsection may be executed by the disbursing official
of the Department of the Treasury.’’; and
(2) in paragraph (2)(A), by adding at the end the following:
‘‘This subsection may be executed by the Secretary of the
Department of the Treasury or his designee.’’.
(w) Section 3720A(h) of title 31, United States Code, is amended
to read as follows:
‘‘(h)(1) The disbursing official of the Department of the Treas­
ury—
‘‘(1) shall notify a taxpayer in writing of—

PUBLIC LAW 104–134—APR. 26, 1996

110 STAT. 1321–376


‘‘(A) the occurrence of an offset to satisfy a past-due
legally enforceable nontax debt;
‘‘(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;
‘‘(2) shall notify the Internal Revenue Service on a weekly
basis of—
‘‘(A) the occurrence of an offset to satisfy a past-due
legally enforceable non-tax debt;
‘‘(B) the amount of such offset; and
‘‘(C) any other information required by regulations;
and
‘‘(3) shall match payment records with requests for offset
by using a name control, taxpayer identifying number (as that
term is used in section 6109 of the Internal Revenue Code
of 1986), and any other necessary identifiers.’’.
‘‘(h)(2) The term ‘disbursing official’ of the Department of the
Treasury means the Secretary or his designee.’’
(x)(1) AMENDMENTS RELATING TO ELECTRONIC FUNDS TRANSFER.—Section 3332 of title 31, United States Code, popularly known
as the Federal Financial Management Act of 1994, is amended—
(A) by redesignating subsection (e) as subsection (h), and
inserting after subsection (d) the following new subsections:
‘‘(e)(1) Notwithstanding subsections (a) through (d) of this sec­
tion, sections 5120 (a) and (d) of title 38, and any other provision
of law, all Federal payments to a recipient who becomes eligible
for that type of payment after 90 days after the date of the enact­
ment of the Debt Collection Improvement Act of 1996 shall be
made by electronic funds transfer.
‘‘(2) The head of a Federal agency shall, with respect to Federal
payments made or authorized by the agency, waive the application
of paragraph (1) to a recipient of those payments upon receipt
of written certification from the recipient that the recipient does
not have an account with a financial institution or an authorized
payment agent.
‘‘(f)(1) Notwithstanding any other provision of law (including
subsections (a) through (e) of this section and sections 5120 (a)
and (d) of title 38), except as provided in paragraph (2) all Federal
payments made after January 1, 1999, shall be made by electronic
funds transfer.
‘‘(2)(A) The Secretary of the Treasury may waive application
of this subsection to payments—
‘‘(i) for individuals or classes of individuals for whom
compliance imposes a hardship;
‘‘(ii) for classifications or types of checks; or
‘‘(iii) in other circumstances as may be necessary.
‘‘(B) The Secretary of the Treasury shall make determinations
under subparagraph (A) based on standards developed by the Sec­
retary.
‘‘(g) Each recipient of Federal payments required to be made
by electronic funds transfer shall—
‘‘(1) designate 1 or more financial institutions or other
authorized agents to which such payments shall be made; and
‘‘(2) provide to the Federal agency that makes or authorizes
the payments information necessary for the recipient to receive

Notification.

Records.

110 STAT. 1321–377

PUBLIC LAW 104–134—APR. 26, 1996

electronic funds transfer payments through each institution
or agent designated under paragraph (1).’’; and
(B) by adding after subsection (h) (as so redesignated)
the following new subsections:
‘‘(i)(1) The Secretary of the Treasury may prescribe regulations
that the Secretary considers necessary to carry out this section.
‘‘(2) Regulations under this subsection shall ensure that individ­
uals required under subsection (g) to have an account at a financial
institution because of the application of subsection (f)(1)—
‘‘(A) will have access to such an account at a reasonable
cost; and
‘‘(B) are given the same consumer protections with respect
to the account as other account holders at the same financial
institution.
‘‘(j) For purposes of this section—
‘‘(1) The term ‘electronic funds transfer’ means any transfer
of funds, other than a transaction originated by cash, check,
or similar paper instrument, that is initiated through an elec­
tronic terminal, telephone, computer, or magnetic tape, for the
purpose of ordering, instructing, or authorizing a financial
institution to debit or credit an account. The term includes
Automated Clearing House transfers, Fed Wire transfers, trans­
fers made at automatic teller machines, and point-of-sale
terminals.
‘‘(2) The term ‘Federal agency’ means—
‘‘(A) an agency (as defined in section 101 of this title);
and
‘‘(B) a Government corporation (as defined in section
103 of title 5).
‘‘(3) The term ‘Federal payments’ includes—
‘‘(A) Federal wage, salary, and retirement payments;
‘‘(B) vendor and expense reimbursement payments; and
‘‘(C) benefit payments.
Such term shall not include any payment under the Internal
Revenue Code of 1986.’’
(2) AMENDMENTS RELATING TO SUBSTITUTE CHECKS.—Section
3331 of title 31, United States Code, is amended—
(A) in subsection (b), by striking ‘‘subsection (c)’’ and insert­
ing ‘‘subsection (c) or (f)’’;
(B) by redesignating subsection (f) as subsection (g); and
(C) by inserting after subsection (e) the following new
subsection:
‘‘(f) The Secretary may waive any provision of this section
as may be necessary to ensure that claimants receive timely
payments.’’.
(3) PERMANENT FUNDING OF THE CHECK FORGERY INSURANCE
FUND.—Section 3343 of title 31, United States Code, is amended—
(A) in subsection (a), by amending the second sentence
to read as follows: ‘‘Necessary amounts are hereafter appro­
priated to the Fund out of any moneys in the Treasury not
otherwise appropriated, and shall remain available until
expended to make the payments required or authorized under
this section.’’;
(B) in subsection (b)—
(i) by inserting ‘‘in the determination of the Secretary
the payee or special endorse establishes that’’ after ‘‘without
interest if’’;

PUBLIC LAW 104–134—APR. 26, 1996

110 STAT. 1321–378

(ii) in paragraph (2), by inserting ‘‘and’’ after the semi­
colon;
(iii) in paragraph (3), by striking ‘‘; and’’ and inserting
a period; and
(iv) by striking paragraph (4);
(C) in subsection (d), by inserting after the first sentence
the following new sentence: ‘‘The Secretary may use amounts
in the Fund to reimburse payment certifying or authorizing
agencies for any payment that the Secretary determines would
otherwise have been payable from the Fund, and may reimburse
certifying or authorizing agencies with amounts recovered
because of payee nonentitlement.’’;
(D) by redesignating subsection (e) as subsection (g); and
(E) by inserting after subsection (d) the following new
subsections:
‘‘(e) The Secretary may waive any provision of this section
as may be necessary to ensure that claimants receive timely
payments.
‘‘(f) Under such conditions as the Secretary may prescribe,
the Secretary may delegate duties and powers of the Secretary
under this section to the head of an agency. Consistent with a
delegation from the Secretary under this subsection, the head of
an agency may redelegate those duties and powers to officers or
employees of the agency.’’.
(y) Section 3325 of title 31, United States Code, is amended
by adding at the end the following new subsection:
‘‘(d) The head of an executive agency or an officer or employee
of an executive agency referred to in subsection (a)(1)(B), as
applicable, shall include with each certified voucher submitted to
a disbursing official pursuant to this section the taxpayer identifying
number of each person to whom payment may be made under
the voucher.’’.
(z)(1) IN GENERAL.—Section 3701 of title 31, United States
Code, is amended—
(A) by amending subsection (a)(1) to read as follows:
‘‘(1) ‘administrative offset’ means withholding funds pay­
able 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 claim.’’;
(B) by amending subsection (b) to read as follows:
‘‘(b)(1) In subchapter II of this chapter and subsection (a)(8)
of this section, the term ‘claim’ or ‘debt’ means any amount of
funds or property that has been determined by an appropriate
official of the Federal Government to be owed to the United States
by a person, organization, or entity other than another Federal
agency. A claim includes, without limitation—
‘‘(A) funds owed on account of loans made, insured, or
guaranteed by the Government, including any deficiency or
any difference between the price obtained by the Government
in the sale of a property and the amount owed to the Govern­
ment on a mortgage on the property,
‘‘(B) expenditures of nonappropriated funds,
‘‘(C) over-payments, including payments disallowed by
audits performed by the Inspector General of the agency admin­
istering the program,
‘‘(D) any amount the United States is authorized by statute
to collect for the benefit of any person,

110 STAT. 1321–379

31 USC 3701
note.
31 USC 3711
note.

31 USC 3711
note.

PUBLIC LAW 104–134—APR. 26, 1996

‘‘(E) the unpaid share of any non-Federal partner in a
program involving a Federal payment and a matching, or cost­
sharing, payment by the non-Federal partner,
‘‘(F) any fines or penalties assessed by an agency; and
‘‘(G) other amounts of money or property owed to the
Government.
‘‘(2) For purposes of section 3716 of this title, each of the
terms ‘claim’ and ‘debt’ includes an amount of funds or property
owed by a person to a State (including any past-due support being
enforced by the State), the District of Columbia, American Samoa,
Guam, the United States Virgin Islands, the Commonwealth of
the Northern Mariana Islands, or the Commonwealth of Puerto
Rico.’’;
(C) by adding after subsection (d) the following new sub­
section:
‘‘(e) In section 3716 of this title—
‘‘(1) ‘creditor agency’ means any agency owed a claim that
seeks to collect that claim through administrative offset; and
‘‘(2) ‘payment certifying agency’ means any agency that
has transmitted a voucher to a disbursing official for disburse­
ment.
‘‘(f) In section 3711 of this title, ‘private collection contractor’
means private debt collectors under contract with an agency to
collect a nontax debt or claim owed the United States. The term
includes private debt collectors, collection agencies, and commercial
attorneys.’’; and
(D) by amending subsection (d) to read as follows:
‘‘(d) Sections 3711(f) and 3716–3719 of this title do not apply
to a claim or debt under, or to an amount payable under—
‘‘(1) the Internal Revenue Code of 1986 (26 U.S.C. 1 et
seq.),
‘‘(2) the Social Security Act (42 U.S.C. 301 et seq.), except
to the extent provided under section 204(f) of such Act and
section 3716(c) of this title, or
‘‘(3) the tariff laws of the United States.’’.
(2) SOCIAL SECURITY.—
(A) APPLICATION OF AMENDMENTS MADE BY THIS ACT.—
Subsection (f) of section 204 of the Social Security Act (42
U.S.C. 404) is amended to read as follows:
‘‘(f)(1) With respect to any deliquent amount, the Commis­
sioner of Social Security may use the collection practices
described in sections 3711(f), 3716, 3717, and 3718 of title
31, United States Code and in section 5514 of title 5, United
States Code, as in effect immediately after the enactment of
the Debt Collection Improvement Act of 1996.’’
(B) PERMANENT APPLICATION.—Subsection (c) of section 5
of the Social Security Domestic Reform Act of 1994 (Public
Law 103–387) is amended by striking ‘‘and before’’ and all
that follows and inserting a period.
(aa)(1) GUIDELINES.—The Secretary of the Treasury, in con­
sultation with concerned Federal agencies, may establish guidelines,
including information on outstanding debt, to assist agencies in
the performance and monitoring of debt collection activities.
(2) REPORT.—Not later than 3 years after the date of enactment
of this Act, the Secretary of the Treasury shall report to the Con­
gress on collection services provided by Federal agencies or entities
collecting debt on behalf of other Federal agencies under the

PUBLIC LAW 104–134—APR. 26, 1996

110 STAT. 1321–380


authorities contained in section 3711(g) of title 31, United States
Code, as added by subsection (m) of this section.
(3) AGENCY REPORTS.—Section 3719 of title 31, United States
Code, is amended—
(A) in subsection (a)—
(i) by amending the first sentence to read as follows:
‘‘In consultation with the Comptroller General of the United
States, the Secretary of the Treasury shall prescribe regula­
tions requiring the head of each agency with outstanding
nontax claims to prepare and submit to the Secretary at
least once each year a report summarizing the status of
loans and accounts receivable that are managed by the
head of the agency.’’; and
(ii) in paragraph (3), by striking ‘‘Director’’ and insert­
ing ‘‘Secretary’’; and
(B) in subsection (b), by striking ‘‘Director’’ and inserting
‘‘Secretary’’.
(4) CONSOLIDATION OF REPORTS.—Notwithstanding any other
provision of law, the Secretary of the Treasury may consolidate
reports concerning debt collection otherwise required to be submit­
ted by the Secretary into one annual report.
(bb) The Director of the Office of Management and Budget
shall—
(1) review the standards and policies of each Federal agency
for compromising, writing-down, forgiving, or discharging
indebtedness arising from programs of the agency;
(2) determine whether those standards and policies are
consistent and protect the interests of the United States;
(3) in the case of any Federal agency standard or policy
that the Director determines is not consistent or does not
protect the interests of the United States, direct the head
of the agency to make appropriate modifications to the standard
or policy; and
(4) report annually to the Congress on—
(A) deficiencies in the standards and policies of Federal
agencies for compromising, writing-down, forgiving, or
discharging indebtedness; and
(B) progress made in improving those standards and
policies.
(cc)(1) ELIMINATION OF MINIMUM NUMBER OF CONTRACTS.—
Section 3718(b)(1)(A) of title 31, United States Code, is amended
by striking the fourth sentence.
(2) REPEAL.—Sections 3 and 5 of the Act of October 28, 1986
(popularly known as the Federal Debt Recovery Act; Public Law
99–578, 100 Stat. 3305) are hereby repealed.
FEDERAL ADMINISTRATIVE AND PERSONAL SERVICES
EXPENSES
(RECISSIONS)

SEC. 31002. (a) Of the funds available to the agencies of the
Federal Government, $500,000,000 are hereby rescinded: Provided,
That rescissions pursuant to this paragraph shall be taken only
from administrative and personal services and contractual services
and supplies accounts: Provided further, That rescissions shall be
taken on a pro rata basis from funds available to every Federal

Regulations.

31 USC 3719
note.

31 USC 3711
note.

31 USC 3718
notes.

110 STAT. 1321–381

Records.

PUBLIC LAW 104–134—APR. 26, 1996

agency, department, and office in the Executive Branch, including
the Office of the President.
(b) Within 30 days of enactment of this Act, the Director of
the Office of Management and Budget shall submit to the Commit­
tees on Appropriations of the House and Senate a listing of the
amounts by account of the reductions made pursuant to the provi­
sions of subsections (a) and (b) of this section.
This Act may be cited as the ‘‘Omnibus Consolidated Rescissions
and Appropriations Act of 1996’’.
Approved April 26, 1996.

LEGISLATIVE HISTORY—H.R. 3019 (S. 1594):
HOUSE REPORTS: No. 104–537 (Comm. of Conference).
SENATE REPORTS: No. 104–236 accompanying S. 1594 (Comm. on Appropria­
tions).
CONGRESSIONAL RECORD, Vol. 142 (1996):
Mar. 7, considered and passed House.
Mar. 11–15, 18, 19, considered and passed Senate, amended.
Apr. 25, House and Senate agreed to conference report.
WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS, Vol. 32 (1996):
Apr. 26, Presidential statement.

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