[Code of Federal Regulations]
[Title 26, Volume 18]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR301.6402-6]

[Page 344-347]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 301_PROCEDURE AND ADMINISTRATION--Table of Contents
 
                    Abatements, Credits, and Refunds
 
Sec. 301.6402-6  Offset of past-due, legally enforceable debt against 
overpayment.

    (a) General rule. (1) A Federal agency (as defined in section 
6402(f)) that has entered into an agreement with the Internal Revenue 
Service with regard to its participation in the tax refund offset 
program and that is owed a past-due, legally enforceable debt may refer 
the past-due, legally enforceable debt to the Internal Revenue Service 
to be collected by Federal tax refund offset. The Service shall, after 
making appropriate credits as provided by Sec. 301.6402-3(a)(6) (i) and 
(ii), reduce the amount of any overpayment payable to a taxpayer by the 
amount of any past-due, legally enforceable debt owed to the agency and 
properly referred to the Service. This section does not apply to any 
debt subject to section 464 of the Social Security Act (past-due 
support).
    (2)(i) This section applies to OASDI overpayments provided the 
requirements of 31 U.S.C. 3720A(f)(1) and (2) are met with respect to 
such overpayments.
    (ii) For purposes of this section, ``OASDI overpayment'' means any 
overpayment of benefits made to an individual under title II of the 
Social Security Act.
    (b) Eligible Federal agencies. (1) A Federal agency is eligible to 
participate in the tax refund offset program if the agency--
    (i) Has promulgated temporary of final regulations under 31 U.S.C. 
3720A, governing the operation of the Federal tax refund offset program 
in the agency;
    (ii) Has promulgated temporary or final regulations under 31 U.S.C. 
3716, governing the operation of the administrative offset program in 
the agency; and
    (iii) Has promulgated temporary or final regulations under 5 U.S.C. 
5514(a), governing the operation of the salary offset program in the 
agency (unless the agency has certified that, relying on the most 
current information reasonably available, it will not refer to the 
Service any names of present or former Federal employees or other 
persons whose debts are subject to offset under the provisions of 5 
U.S.C. 5514(a)(1)).
    (2) An agency prohibited by Federal law from meeting any of the 
requirements of paragraph (b)(1) or (c) of this section shall notify the 
Service in writing of the specific legal impediment to meeting these 
requirements. This notification shall be made prior to entering into an 
agreement with the Service to

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participate in the tax refund offset program. The Service will determine 
in writing whether the agency is prohibited by Federal law from meeting 
any of the requirements of paragraph (b)(1) or (c) of this section. The 
Service will waive in writing any requirement that it determines the 
agency is prohibited by Federal law from meeting.
    (c) Past-due, legally enforceable debt eligible for refund offset. 
For purposes of this section, a Federal agency may refer a past-due, 
legally enforceable debt to the Service for offset if--
    (1) Except in the case of a judgment debt or any debts specifically 
exempt from this requirement (for example, debts referred by the 
Department of Education that were pending on or after April 9, 1991, and 
referred to the Service for offset before November 15, 1992), the debt 
is referred for offset within ten years after the agency's right of 
action accrues;
    (2) The debt cannot be currently collected pursuant to the salary 
offset provisions of 5 U.S.C. 5514(a)(1);
    (3) The debt is ineligible for administrative offset under 31 U.S.C. 
3716(a) by reason of 31 U.S.C. 3716(c)(2), or cannot be currently 
collected by administrative offset under 31 U.S.C. 3716(a) by the 
referring agency against amounts payable to the taxpayer by the 
referring agency;
    (4) The agency has notified, or has made a reasonable attempt to 
notify, the taxpayer that the debt is past-due, and unless repaid within 
60 days thereafter, will be referred to the Service for offset against 
an overpayment of tax;
    (5) The agency has given the taxpayer at least 60 days to present 
evidence that all or part of the debt is not past-due or legally 
enforceable, has considered any evidence presented by the taxpayer, and 
has determined that the debt is past-due and legally enforceable;
    (6) The debt has been disclosed by the agency to a consumer 
reporting agency as authorized by 31 U.S.C. 3711(f), unless the consumer 
reporting agency would be prohibited from reporting information 
concerning the debt by reason of 15 U.S.C. 1681c, or unless the amount 
of the debt does not exceed $100;
    (7) The debt is at least $25; and
    (8) In the case of an OASDI overpayment--
    (i) The individual is not currently entitled to monthly insurance 
benefits under title II of the Social Security Act;
    (ii) The notice describes conditions under which the Department of 
Health and Human Services is required to waive recovery of the 
overpayment, as provided under section 204(b) of the Social Security 
Act; and
    (iii) If the taxpayer files for a waiver under section 204(b) of the 
Social Security Act within the 60-day notice period, the agency has 
considered the taxpayer's request.
    (d) Pre-offset notice and consideration of evidence. (1) For 
purposes of paragraph (c)(4) of this section, an agency has made a 
reasonable attempt to notify the taxpayer if the agency uses the most 
recent address information obtained from the Service pursuant to section 
6103(m) (2), (4), or (5) of the Code, unless the agency receives clear 
and concise notification from the taxpayer that notices from the agency 
are to be sent to an address different from the address obtained from 
the Service. Clear and concise notification means that the taxpayer has 
provided the agency with written notification including the taxpayer's 
name and identifying number (as defined in section 6109), the taxpayer's 
new address, and the taxpayer's intent to have agency notices sent to 
the new address.
    (2) For purposes of paragraph (c)(5) of this section, if the 
evidence presented by the taxpayer is considered by an agent of the 
agency, or other entities or persons acting on the agency's behalf, the 
taxpayer must be accorded at least 30 days from the date the agent or 
other entity or person determines that all or part of the debt is past-
due and legally enforceable to request review by an officer or employee 
of the agency of any unresolved dispute. The agency must then notify the 
taxpayer of its decision.
    (e) Referral of past-due, legally enforceable debt. A Federal agency 
must refer a past-due, legally enforceable debt to the Service in the 
time and manner prescribed by the Service. The referral must contain--

[[Page 346]]

    (1) The name and identifying number (as defined in section 6109) of 
the taxpayer who is responsible for the debt;
    (2) The amount of such past-due and legally enforceable debt;
    (3) The date on which the debt became past-due;
    (4) The designation of the Federal agency or subagency referring the 
debt; and
    (5) In the case of an OASDI overpayment, a certification by the 
Secretary of Health and Human Services designating whether the amount 
payable to the agency is to be deposited in either the Federal Old-Age 
and Survivors Insurance Trust Fund or the Federal Disability Insurance 
Trust Fund, but not both.
    (f) Correction of referral. If, after referring a past-due, legally 
enforceable debt to the Service as provided by paragraph (e) of this 
section, an agency determines that an error has been made with respect 
to the information transmitted to the Service, or if an agency receives 
a payment or credits a payment to the account of a taxpayer referred to 
the Service for offset, the agency shall promptly notify the Service. 
The Service shall make the appropriate correction of its records. 
However, this paragraph (f) does not permit an agency to increase the 
amount of a past-due, legally enforceable debt or refer additional 
debtors to the Service for offset after an agency makes its original 
referral of debts for tax refund offset. The agency may refer additional 
debts to the Service for refund offset in subsequent tax refund offset 
years.
    (g) Priorities for offset. (1) An overpayment shall be reduced first 
by the amount of an outstanding liability for any tax under section 
6402(a); second, by the amount of any past-due support assigned to a 
State under section 402(a)(26) or section 471(a)(17) of the Social 
Security Act which is to be offset under section 6402(c) and the 
regulations thereunder; third, by the amount of any past-due, legally 
enforceable debt owed to a Federal agency under section 6402(d) and this 
section; and fourth, by the amount of any qualifying past-due support 
not assigned to a State which is to be offset under section 6402(c) and 
the regulations thereunder.
    (2) If a taxpayer owes more than one past-due, legally enforceable 
debt to a Federal agency or agencies, the overpayment shall be credited 
against the debts in the order in which the debts accrued. A debt shall 
be considered to have accrued at the time at which the agency determines 
that the debt became past due.
    (3) Reduction of the overpayment pursuant to section 6402 (a), (c), 
and (d) shall occur prior to crediting the overpayment to any future 
liability for an internal revenue tax. Any amount remaining after offset 
under section 6402 (a), (c), and (d) shall be refunded to the taxpayer, 
or applied to estimated tax, if elected by the taxpayer.
    (h) Post-offset notice to the taxpayer and the agency. (1) The 
Service shall notify the taxpayer in writing of the amount and date of 
the offset for a past-due, legally enforceable debt and of the Federal 
agency to which this amount has been paid or credited. For joint 
returns, see paragraph (i) of this section.
    (2) The Service shall advise each agency of the names, mailing 
addresses, and identifying numbers of the taxpayers from whom amounts of 
past-due, legally enforceable debt were collected and of the amounts 
collected from each taxpayer. If the refund from which an amount of 
past-due, legally enforceable debt is to be withheld is based upon a 
joint return, the Service shall notify the agency and furnish the names 
and addresses of each taxpayer filing the joint return.
    (i) Offset made with regard to refund based upon joint return. (1) 
In the case of an offset from a refund based on a joint return, the 
Service shall issue a notice in writing to any person who may have filed 
a joint return with the taxpayer, including the amount and date of any 
offset and the steps which the non-debtor spouse may take in order to 
secure his or her proper share of the refund (unless the non-debtor 
spouse has already taken these steps prior to offset).
    (2) If the person filing the joint return with the taxpayer owing 
the past-due, legally enforceable debt takes appropriate action to 
secure his or her proper share of a refund from which an offset was 
made, the Service shall pay

[[Page 347]]

the person his or her share of the refund and shall deduct that amount 
from amounts payable to the agency.
    (j) Disposition of amounts collected. Amounts collected under this 
section shall be transferred to a special account maintained by the 
Financial Management Service (FMS) for each Federal agency. If an 
erroneous payment is made to any agency, the Service shall deduct the 
amount of such payment from amounts payable to the agency.
    (k) Fees. The agency shall enter into a separate agreement with the 
Service and FMS to reimburse the Service and FMS for the full cost of 
administering the tax refund offset program. The fees shall be deducted 
from amounts collected prior to disposition. The fees shall be deposited 
in the United States Treasury and credited to the appropriation accounts 
which bore all or part of the costs involved in administering the refund 
offset procedures.
    (l) Review of offset of refunds. Any reduction of a taxpayer's 
refund made pursuant to section 6402(c) or (d) shall not be subject to 
review by any court of the United States or by the Service in an 
administrative proceeding. No action brought against the United States 
to recover the amount of this reduction shall be considered to be a suit 
for refund of tax. Any legal, equitable, or administrative action by any 
person seeking to recover the amount of the reduction of the overpayment 
must be taken against the Federal agency to which the amount of the 
reduction was paid. Any action which is otherwise available with respect 
to recoveries of overpayments of benefits under section 204 of the 
Social Security Act must be taken against the Secretary of Health and 
Human Services.
    (m) Access to and use of confidential tax information. Access to and 
use of confidential tax information in connection with the tax refund 
offset program are restricted by section 6103 of the Code. However, 
section 6103(l)(10) permits Federal officers and employees of agencies 
participating in the tax refund offset program to have access to and use 
of confidential tax information. Agencies receiving such information are 
subject to the safeguard, recordkeeping, and reporting requirements of 
section 6103(p)(4) and the regulations thereunder. The agency shall 
inform its officers and employees who access or use confidential tax 
information of the restrictions and penalties under the Internal Revenue 
Code for misuse of confidential tax information.
    (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.

[T.D. 8413, 57 FR 13038, Apr. 15, 1992; 57 FR 36691, Aug. 14, 1992, as 
amended by T.D. 8837, 64 FR 48548, Sept. 7, 1999]