§ 1.1936   Administrative wage garnishment.

   (a) Purpose. This section provides procedures for the Commission to collect
   money  from  a debtor's disposable pay by means of administrative wage
   garnishment to satisfy delinquent non-tax debt owed to the United States.

   (b) Scope. (1) This section applies to Commission-administered programs that
   give rise to a delinquent nontax debt owed to the United States and to the
   Commission's pursuit of recovery of such debt.

   (2) This section shall apply notwithstanding any provision of State law.

   (3)  Nothing in this section precludes the compromise of a debt or the
   suspension or termination of collection action in accordance with applicable
   law. See, for example, the Federal Claims Collection Standards (FCCS), 31
   CFR parts 900 through 904.

   (4) The receipt of payments pursuant to this section does not preclude the
   Commission from pursuing other debt collection remedies, including the
   offset of Federal payments to satisfy delinquent nontax debt owed to the
   United States. The Commission may pursue such debt collection remedies
   separately or in conjunction with administrative wage garnishment.

   (5) This section does not apply to the collection of delinquent nontax debt
   owed  to the Commission from the wages of Federal employees from their
   Federal employment. Federal pay is subject to the Federal salary offset
   procedures set forth in 5 U.S.C. 5514, § § 1.1925 through 1.1935, and other
   applicable laws.

   (6) Nothing in this section requires the Commission to duplicate notices or
   administrative  proceedings  required  by  contract  or  other laws or
   regulations.

   (c) Definitions. In addition to the definitions set forth in § 1.1901 as used
   in this section, the following definitions shall apply:

   (1) Business day means Monday through Friday. For purposes of computation,
   the last day of the period will be included unless it is a Federal legal
   holiday.

   (2)  Certificate of service means a certificate signed by a Commission
   official indicating the nature of the document to which it pertains, the
   date of mailing of the document, and to whom the document is being sent.

   (3) Day means calendar day. For purposes of computation, the last day of the
   period will be included unless it is a Saturday, a Sunday, or a Federal
   legal holiday.

   (4) Disposable pay means that part of the debtor's compensation (including,
   but not limited to, salary, bonuses, commissions, and vacation pay) from an
   employer remaining after the deduction of health insurance premiums and any
   amounts required by law to be withheld.

   (5) Amounts required by law to be withheld include amounts for deductions
   such as social security taxes and withholding taxes, but do not include any
   amount withheld pursuant to a court order.

   (6) Employer means a person or entity that employs the services of others
   and that pays their wages or salaries. The term employer includes, but is
   not limited to, State and local Governments, but does not include an agency
   of the Federal Government.

   (7) Garnishment means the process of withholding amounts from an employee's
   disposable pay and the paying of those amounts to a creditor in satisfaction
   of a withholding order.

   (8) Withholding order means any order for withholding or garnishment of pay
   issued by an agency, or judicial or administrative body. For purposes of
   this section, the terms “wage garnishment order” and “garnishment order”
   have the same meaning as “withholding order.”

   (d) General rule. Whenever the Commission determines that a delinquent debt
   is  owed  by  an  individual,  the Commission may initiate proceedings
   administratively to garnish the wages of the delinquent debtor as governed
   by procedures prescribed by 31 CFR 285. Wage garnishment will usually be
   performed for the Commission by the Treasury as part of the debt collection
   processes for Commission debts referred to Treasury for further collection
   action.

   (e) Notice requirements. (1) At least 30 days before the initiation of
   garnishment proceedings, the Commission shall mail, by first class mail, to
   the debtor's last known address a written notice informing the debtor of:

   (i) The nature and amount of the debt;

   (ii) The intention of the Commission to initiate proceedings to collect the
   debt  through  deductions  from pay until the debt and all accumulated
   interest, penalties and administrative costs are paid in full; and

   (iii) An explanation of the debtor's rights, including those set forth in
   paragraph (e)(2) of this section, and the time frame within which the debtor
   may exercise his or her rights.

   (2) The debtor shall be afforded the opportunity:

   (i) To inspect and copy agency records related to the debt;

   (ii) To enter into a written repayment agreement with the Commission under
   terms agreeable to the Commission; and

   (iii)  For  a hearing in accordance with paragraph (f) of this section
   concerning the existence or the amount of the debt or the terms of the
   proposed repayment schedule under the garnishment order. However, the debtor
   is not entitled to a hearing concerning the terms of the proposed repayment
   schedule if these terms have been established by written agreement under
   paragraph (e)(2)(ii) of this section.

   (3) The Commission will keep a copy of a certificate of service indicating
   the  date  of mailing of the notice. The certificate of service may be
   retained electronically so long as the manner of retention is sufficient for
   evidentiary purposes.

   (f) Hearing. Pursuant to 31 CFR 285.11(f)(1), the Commission hereby adopts
   by reference the hearing procedures of 31 CFR 285.11(f).

   (g) Wage garnishment order. (1) Unless the Commission receives information
   that  the Commission believes justifies a delay or cancellation of the
   withholding  order,  the  Commission will send, by first class mail, a
   withholding order to the debtor's employer within 30 days after the debtor
   fails to make a timely request for a hearing (i.e., within 15 business days
   after  the mailing of the notice described in paragraph (e)(1) of this
   section), or, if a timely request for a hearing is made by the debtor,
   within 30 days after a final decision is made by the Commission to proceed
   with garnishment, or as soon as reasonably possible thereafter.

   (2) The withholding order sent to the employer under paragraph (g)(1) of
   this section shall be in a form prescribed by the Secretary of the Treasury
   on the Commission's letterhead and signed by the head of the Commission or
   his/her delegate. The order shall contain only the information necessary for
   the employer to comply with the withholding order, including the debtor's
   name, address, and social security number, as well as instructions for
   withholding and information as to where payments should be sent.

   (3) The Commission will keep a copy of a certificate of service indicating
   the date of mailing of the order. The certificate of service may be retained
   electronically  so  long  as the manner of retention is sufficient for
   evidentiary purposes.

   (h)  Certification  by employer. Along with the withholding order, the
   Commission shall send to the employer a certification in a form prescribed
   by the Secretary of the Treasury. The employer shall complete and return the
   certification to the Commission within the time frame prescribed in the
   instructions to the form addressing matters such as information about the
   debtor's employment status and disposable pay available for withholding.

   (i) Amounts withheld. (1) After receipt of the garnishment order issued
   under this section, the employer shall deduct from all disposable pay paid
   to the applicable debtor during each pay period the amount of garnishment
   described in paragraph (i)(2) of this section.

   (2)  Subject to the provisions of paragraphs (i)(3) and (i)(4) of this
   section, the amount of garnishment shall be the lesser of:

   (i) The amount indicated on the garnishment order up to 15% of the debtor's
   disposable pay; or

   (ii)  The  amount  set  forth  in 15 U.S.C. 1673(a)(2) (Restriction on
   Garnishment). The amount set forth at 15 U.S.C. 1673(a)(2) is the amount by
   which a debtor's disposable pay exceeds an amount equivalent to thirty times
   the minimum wage. See 29 CFR 870.10.

   (3) When a debtor's pay is subject to withholding orders with priority the
   following shall apply:

   (i) Unless otherwise provided by Federal law, withholding orders issued
   under this section shall be paid in the amounts set forth under paragraph
   (i)(2) of this section and shall have priority over other withholding orders
   which are served later in time. Notwithstanding the foregoing, withholding
   orders for family support shall have priority over withholding orders issued
   under this section.

   (ii)  If  amounts are being withheld from a debtor's pay pursuant to a
   withholding order served on an employer before a withholding order issued
   pursuant to this section, or if a withholding order for family support is
   served on an employer at any time, the amounts withheld pursuant to the
   withholding order issued under this section shall be the lesser of:

   (A) The amount calculated under paragraph (i)(2) of this section, or

   (B) An amount equal to 25% of the debtor's disposable pay less the amount(s)
   withheld under the withholding order(s) with priority.

   (iii) If a debtor owes more than one debt to the Commission, the Commission
   may  issue  multiple withholding orders provided that the total amount
   garnished from the debtor's pay for such orders does not exceed the amount
   set  forth  in  paragraph (i)(2) of this section. For purposes of this
   paragraph (i)(3)(iii), the term agency refers to the Commission that is owed
   the debt.

   (4) An amount greater than that set forth in paragraphs (i)(2) and (i)(3) of
   this section may be withheld upon the written consent of debtor.

   (5) The employer shall promptly pay to the Commission all amounts withheld
   in accordance with the withholding order issued pursuant to this section.

   (6)  An  employer  shall  not  be  required to vary its normal pay and
   disbursement cycles in order to comply with the withholding order.

   (7) Any assignment or allotment by an employee of his earnings shall be void
   to the extent it interferes with or prohibits execution of the withholding
   order issued under this section, except for any assignment or allotment made
   pursuant to a family support judgment or order.

   (8) The employer shall withhold the appropriate amount from the debtor's
   wages for each pay period until the employer receives notification from the
   Commission to discontinue wage withholding. The garnishment order shall
   indicate a reasonable period of time within which the employer is required
   to commence wage withholding.

   (j) Exclusions from garnishment. The Commission may not garnish the wages of
   a debtor who it knows has been involuntarily separated from employment until
   the debtor has been reemployed continuously for at least 12 months. The
   debtor has the burden of informing the Commission of the circumstances
   surrounding an involuntary separation from employment.

   (k) Financial hardship. (1) A debtor whose wages are subject to a wage
   withholding order under this section, may, at any time, request a review by
   the  Commission  of  the amount garnished, based on materially changed
   circumstances such as disability, divorce, or catastrophic illness which
   result in demonstrated financial hardship.

   (2) A debtor requesting a review under paragraph (k)(1) of this section
   shall submit the basis for claiming that the current amount of garnishment
   results  in  demonstrated financial hardship to the debtor, along with
   supporting documentation. The Commission will consider any information
   submitted;  however,  demonstrated financial hardship must be based on
   financial records that include Federal and state tax returns, affidavits
   executed  under  the  pain and penalty of perjury, and, in the case of
   business-related financial hardship (e.g., the debtor is a partner or member
   of a business-agency relationship) full financial statements (audited and/or
   submitted  under  oath)  in  accordance  with procedures and standards
   established by the Commission.

   (3) If a financial hardship is found, the Commission will downwardly adjust,
   by an amount and for a period of time agreeable to the Commission, the
   amount  garnisheed  to  reflect  the debtor's financial condition. The
   Commission will notify the employer of any adjustments to the amounts to be
   withheld.

   (l) Ending garnishment. (1) Once the Commission has fully recovered the
   amounts  owed  by  the  debtor,  including  interest,  penalties,  and
   administrative costs consistent with the FCCS, the Commission will send the
   debtor's employer notification to discontinue wage withholding.

   (2) At least annually, the Commission shall review its debtors' accounts to
   ensure that garnishment has been terminated for accounts that have been paid
   in full.

   (m) Actions prohibited by the employer. An employer may not discharge,
   refuse to employ, or take disciplinary action against the debtor due to the
   issuance of a withholding order under this section.

   (n)  Refunds. (1) If a hearing official, at a hearing held pursuant to
   paragraph (f)(3) of this section, determines that a debt is not legally due
   and owing to the United States, the Commission shall promptly refund any
   amount collected by means of administrative wage garnishment.

   (2) Unless required by Federal law or contract, refunds under this section
   shall not bear interest.

   (o) Right of action. The Commission may sue any employer for any amount that
   the employer fails to withhold from wages owed and payable to an employee in
   accordance with paragraphs (g) and (i) of this section. However, a suit may
   not be filed before the termination of the collection action involving a
   particular debtor, unless earlier filing is necessary to avoid expiration of
   any applicable statute of limitations period. For purposes of this section,
   “termination  of the collection action” occurs when the Commission has
   terminated collection action in accordance with the FCCS or other applicable
   standards. In any event, termination of the collection action will have been
   deemed to occur if the Commission has not received any payments to satisfy
   the debt from the particular debtor whose wages were subject to garnishment,
   in whole or in part, for a period of one (1) year.

   return arrow Back to Top