||September 24, 1998
Revision of the Tax Refund Offset Program
DEPARTMENT OF THE TREASURY
Internal Revenue Service 26 CFR Part 301 [REG-104565-97] RIN 1545-
TITLE: Revision of the Tax Refund Offset Program
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Notice of proposed rulemaking.
SUMMARY: This document contains proposed regulations relating to the
administration of the Tax Refund Offset Program (TROP). This action
is necessary because TROP, which is currently administered by the
IRS, is being merged into the centralized administrative offset
program known as the Treasury Offset Program (TOP), which is
administered by the Financial Management Service (FMS). These
regulations will affect State and Federal agencies that participate
DATES: Written comments and requests for a public hearing must be
received by November 30, 1998.
ADDRESSES: Send submissions to: CC:DOM:CORP:R (REG-104565-97), room
5226, Internal Revenue Service, POB 7604, Ben Franklin Station,
Washington, DC 20044.
Submissions may be hand delivered between the hours of 8 a.m. and 5
p.m. to: CC:DOM:CORP:R (REG-104565-97), Courier's Desk, Internal
Revenue Service, 1111 Constitution Ave., NW., Washington, DC.
Alternatively, taxpayers may submit comments electronically via the
Internet by selecting the "Tax Regs" option on the IRS Home Page, or
by submitting comments directly to the IRS internet site at
FOR FURTHER INFORMATION CONTACT: John J. McGreevy, (202) 622- 4910
(not toll-free number).
This document contains proposed amendments to the Procedure and
Administration Regulations (26 CFR part 301) relating to section
6402(c) and (d). The proposed regulations contain revised effective
dates for the regulations under section 6402(c) and (d).
Explanation of Provisions Section 6402(c) provides, in general, that
the amount of any overpayment to be refunded to the person making
the overpayment must be reduced by the amount of any past-due
support (as defined in section 464(c) of the Social Security Act)
owed by that person of which the Secretary has been notified by a
State in accordance with section 464 of the Social Security Act.
Section 6402(d) provides, in general, that upon receiving notice
from any Federal agency that a named person owes a past-due, legally
enforceable debt to that agency, the Secretary must reduce the
amount of any overpayment payable to that person by the amount of
the debt, pay the amount by which the overpayment is reduced to the
agency, and notify the person making the overpayment that the
overpayment has been reduced.
The IRS currently makes offsets pursuant to section 6402(c) and (d)
according to regulations prescribed under those sections.
See §§301.6402-5 and 301.6402-6 of the Regulations on Procedure and
Section 31001(v)(2) and (w) of the Debt Collection Improvement Act
of 1996 (110 Stat. 1321-375), amended 42 U.S.C.
664(a)(2)(A) and 31 U.S.C. 3720A(h), respectively, to clarify that
the disbursing agency of the Treasury Department may conduct tax
refund offsets. The disbursing agency of the Treasury Department is
The IRS and FMS have agreed that the Tax Refund Offset Program
(TROP), which is currently administered by the IRS, will be merged
into the centralized administrative offset program known as the
Treasury Offset Program (TOP), which is administered by the FMS. The
merger of the two programs is intended to maximize and improve the
Treasury Department's government-wide collection of nontax debts,
including those subject to offset against the debtor's Federal tax
refund. The full merger of TROP with TOP is expected to occur by
January 1, 1999.
Interim rules concerning the manner in which the FMS will administer
the collection of nontax federal debts after the merger of TROP with
TOP were published by the FMS in the Federal Register on June 25,
1997 (62 FR 34175) (codified at 31 CFR Part 285) effective for
refunds payable after January 1, 1998. The regulations proposed in
this document provide an ending effective date for §301.6402-6 to
accommodate the beginning effective date of the FMS regulations.
Accordingly, §301.6402-6 will not apply to refunds payable after
January 1, 1998.
A notice of proposed rulemaking concerning the manner in which the
FMS will administer the collection of past-due child support
payments was published by the FMS in the Federal Register on August
4, 1998 (63 FR 41688) (which when finalized will be codified at 31
CFR Part 285), effective for refunds payable after January 1, 1999.
The regulations in this document provide an ending effective date
for §301.6402-5 to accommodate the expected beginning date for the
full merger of TROP with TOP.
Accordingly, it is expected that §301.6402-5 will not apply to
refunds payable after January 1, 1999.
It has been determined that this notice of proposed rulemaking is
not a significant regulatory action as defined in EO 12866.
Therefore, a regulatory assessment is not required.
It also has been determined that section 553(b) of the
Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to
these regulations, and because the regulation does not impose a
collection of information on small entities, the Regulatory
Flexibility Act (5 U.S.C. chapter 6) does not apply. Pursuant to
section 7805(f) of the Internal Revenue Code, this notice of
proposed rulemaking will be submitted to the Chief Counsel for
Advocacy of the Small Business Administration for comment on its
impact on small business.
Comments and Requests for a Public Hearing Before these proposed
regulations are adopted as final regulations, consideration will be
given to any electronic or written comments (a signed original and
eight (8) copies of written comments) that are submitted timely to
the IRS. All comments will be available for public inspection and
copying. A public hearing may be scheduled if requested in writing
by a person that timely submits written comments. If a public
hearing is scheduled, notice of the date, time, and place for the
hearing will be published in the Federal Register.
The principal author of these regulations is John J.
McGreevy, Office of Assistant Chief Counsel (Income Tax and
Accounting). However, other personnel from the IRS and the Treasury
Department participated in the development of the regulations.
List of Subjects in 26 CFR Part 301 Employment taxes, Estate taxes,
Excise taxes, Gift taxes, Income taxes, Penalties, Reporting and
Proposed Amendments to the Regulations Accordingly, 26 CFR part 301
is proposed to be amended as follows:
PART 301--PROCEDURE AND ADMINISTRATION
Paragraph 1. The authority citation for part 301 continues to read
in part as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 2. Section 301.6402-5 is amended by adding paragraph (h) to
read as follows:
§301.6402-5 Offset of past-due support against overpayments.
* * * * *
(h) Effective dates. This section applies to refunds payable on or
before January 1, 1999. For the rules applicable after January 1,
1999, see 31 CFR part 285.
Par. 3. Section 301.6402-6 is amended by revising paragraph (n) to
read as follows:
§301.6402-6 Offset of past-due, legally enforceable debt against
* * * * *
(n) Effective dates. This section applies to refunds payable under
section 6402 after April 15, 1992, and on or before January 1, 1998.
For the rules applicable after January 1, 1998, see 31 CFR part 285.
Michael P. Dolan
Deputy Commissioner of Internal Revenue
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