DATE: June 27, 2000

FROM: Barry McVay, CPCM

SUBJECT: Small Business Administration; Administrative Wage Garnishment

SOURCE: Federal Register, June 27, 2000, Vol. 65, No. 124, page 39567

AGENCIES: Small Business Administration (SBA)

ACTION: Notice of Proposed Rulemaking

SYNOPSIS: SBA is proposing to amend its regulations to implement provisions of the Debt Collection Improvement Act of 1996 (Public Law 104-134) by allowing SBA to garnish the wages of a person indebted to the United States for any non-tax debt without first obtaining a judgment. The debtor generally would be entitled to a hearing before a Judge assigned to SBA's Office of Hearings and Appeals.

EDITOR'S NOTE: The SBA's regulations being amended are in Title 13 of the Code of Federal Regulations (CFR), Business and Credit Administration; Chapter 1, Small Business Administration; Part 140, Debt Collection.

DATES: Submit comments on or before August 28, 2000.

ADDRESSES: Send comments to Arnold S. Rosenthal, Assistant Administrator, Office of Portfolio Management, Small Business Administration, 409 Third Street SW, Washington, DC 20416; e-mail: Walter.Intlekofer@sba.gov as Microsoft Word 97 or as ASCII files.

FOR FURTHER INFORMATION CONTACT: Arnold S. Rosenthal, Assistant Administrator, Office of Portfolio Management, 202-205-6481.

SUPPLEMENTAL INFORMATION: On May 6, 1998, the Department of the Treasury published garnishment regulations which require agencies to publish regulations for administrative wage garnishment hearings. These regulations are in 31 CFR 285.11.

The primary action taken by this rule is the addition of Subpart C, Debt Collection Through Administrative Wage Garnishment, to Part 140. It would consist of two sections: 13 CFR 140.10, What does this subpart cover?; and 13 CFR 140.11, What type of debt is subject to administrative wage garnishment, and how can the SBA get an administrative wage garnishment of my pay? The core of SBA's proposed rule will be 13 CFR 140.11, and it will be identical in subsection, paragraph, and subparagraph organization to 31 CFR 285.11. For example, Section 285.11(f)(11) of the Treasury regulations corresponds to Section 140.11(f)(11) of this proposed rule.

Though this proposed rule is substantially identical to the Treasury regulations, it is somewhat different in that it provides for a hearing by a judge assigned to the case by SBA's Assistant Administrator for Hearings and Appeals (AA/OHA), rather than a hearing official designated by the Administrator (13 CFR 140.11(f)(7)). In addition, it makes minor editorial changes in accordance with plain-language directives.

The rule would permit SBA to garnish the wages of a person indebted to the United States for any non-tax debt without first obtaining a judgment (13 CFR 140.11(d)). SBA merely notifies the debtor it intends to garnish his or her wages (13 CFR 140.11(e)). Subject to the exercise of appeal rights (13 CFR 140.121(f)), SBA may notify the debtor's employer to begin the garnishment (13 CFR 140.11(g)). (EDITOR'S NOTE: A definition of "employer" would be added to 13 CFR 140.2, Definitions: "A person or entity that employs the services of others and pays their wages or salaries. The term employer includes state and local governments, but does not include a federal agency.")

FOR FURTHER INFORMATION CONTACT: Barry McVay at 703-451-5953 or by e-mail to BarryMcVay@FedGovContracts.com.

Copyright 2000 by Panoptic Enterprises. All Rights Reserved.

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