§ 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.

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