31 U.S.C. § 3716 : US Code - Section 3716: Administrative offset

      (a) After trying to collect a claim from a person under section
    3711(a) of this title, the head of an executive, judicial, or
    legislative agency may collect the claim by administrative offset.
    The head of the agency may collect by administrative offset only
    after giving the debtor - 
        (1) written notice of the type and amount of the claim, the
      intention of the head of the agency to collect the claim by
      administrative offset, and an explanation of the rights of the
      debtor under this section;
        (2) an opportunity to inspect and copy the records of the
      agency related to the claim;
        (3) an opportunity for a review within the agency of the
      decision of the agency related to the claim; and
        (4) an opportunity to make a written agreement with the head of
      the agency to repay the amount of the claim.

      (b) Before collecting a claim by administrative offset, the head
    of an executive, judicial, or legislative agency must either - 
        (1) adopt, without change, regulations on collecting by
      administrative offset promulgated by the Department of Justice,
      the Government Accountability Office, or the Department of the
      Treasury; or
        (2) prescribe regulations on collecting by administrative
      offset consistent with the regulations referred to in paragraph
      (1).

      (c)(1)(A) Except as otherwise provided in this subsection, a
    disbursing official of the Department of the Treasury, the
    Department of Defense, the United States Postal Service, the
    Department of Health and Human Services, or any other government
    corporation, or any disbursing official of the United States
    designated by the Secretary of the Treasury, shall offset at least
    annually the amount of a payment which a payment certifying agency
    has certified to the disbursing official for disbursement, by an
    amount equal to the amount of a claim which a creditor agency has
    certified to the Secretary of the Treasury pursuant to this
    subsection.
      (B) An agency that designates disbursing officials pursuant to
    section 3321(c) of this title is not required to certify claims
    arising out of its operations to the Secretary of the Treasury
    before such agency's disbursing officials offset such claims.
      (C) Payments certified by the Department of Education under a
    program administered by the Secretary of Education under title IV
    of the Higher Education Act of 1965 shall not be subject to
    administrative offset under this subsection.
      (2) Neither the disbursing official nor the payment certifying
    agency shall be liable - 
        (A) for the amount of the administrative offset on the basis
      that the underlying obligation, represented by the payment before
      the administrative offset was taken, was not satisfied; or
        (B) for failure to provide timely notice under paragraph (8).

      (3)(A)(i) Notwithstanding any other provision of law (including
    sections 207 and 1631(d)(1) of the Social Security Act (42 U.S.C.
    407 and 1383(d)(1)), section 413(b) of Public Law 91-173 (30 U.S.C.
    923(b)), and section 14 of the Act of August 29, 1935 (45 U.S.C.
    231m)), except as provided in clause (ii), all payments due to an
    individual under - 
        (I) the Social Security Act,
        (II) part B of the Black Lung Benefits Act, or
        (III) any law administered by the Railroad Retirement Board
      (other than payments that such Board determines to be tier 2
      benefits),

    shall be subject to offset under this section.
      (ii) An amount of $9,000 which a debtor may receive under Federal
    benefit programs cited under clause (i) within a 12-month period
    shall be exempt from offset under this subsection. In applying the
    $9,000 exemption, the disbursing official shall - 
        (I) reduce the $9,000 exemption amount for the 12-month period
      by the amount of all Federal benefit payments made during such 12-
      month period which are not subject to offset under this
      subsection; and
        (II) apply a prorated amount of the exemption to each periodic
      benefit payment to be made to the debtor during the applicable 12-
      month period.

    For purposes of the preceding sentence, the amount of a periodic
    benefit payment shall be the amount after any reduction or
    deduction required under the laws authorizing the program under
    which such payment is authorized to be made (including any
    reduction or deduction to recover any overpayment under such
    program).
      (B) The Secretary of the Treasury shall exempt from
    administrative offset under this subsection payments under means-
    tested programs when requested by the head of the respective
    agency. The Secretary may exempt other payments from administrative
    offset under this subsection upon the written request of the head
    of a payment certifying agency. A written request for exemption of
    other payments must provide justification for the exemption under
    standards prescribed by the Secretary. Such standards shall give
    due consideration to whether administrative offset would tend to
    interfere substantially with or defeat the purposes of the payment
    certifying agency's program. The Secretary shall report to the
    Congress annually on exemptions granted under this section.
      (C) The provisions of sections 205(b)(1), 809(a)(1), and
    1631(c)(1) of the Social Security Act shall not apply to any
    administrative offset executed pursuant to this section against
    benefits authorized by title II, VIII, or title XVI of the Social
    Security Act, respectively.
      (D) This section shall apply to payments made after the date
    which is 90 days after the enactment of this subparagraph (or such
    earlier date as designated by the Secretary of Health and Human
    Services) with respect to claims or debts, and to amounts payable,
    under title XVIII of the Social Security Act.
      (4) The Secretary of the Treasury may charge a fee sufficient to
    cover the full cost of implementing this subsection. The fee may be
    collected either by the retention of a portion of amounts collected
    pursuant to this subsection, or by billing the agency referring or
    transferring a claim for those amounts. Fees charged to the
    agencies shall be based on actual administrative offsets completed.
    Amounts received by the United States as fees under this subsection
    shall be deposited into the account of the Department of the
    Treasury under section 3711(g)(7) of this title, and shall be
    collected and accounted for in accordance with the provisions of
    that section.
      (5) The Secretary of the Treasury in consultation with the
    Commissioner of Social Security and the Director of the Office of
    Management and Budget, may prescribe such rules, regulations, and
    procedures as the Secretary of the Treasury considers necessary to
    carry out this subsection. The Secretary shall consult with the
    heads of affected agencies in the development of such rules,
    regulations, and procedures.
      (6) Any Federal agency that is owed by a person a past due,
    legally enforceable nontax debt that is over 180 days delinquent,
    including nontax debt administered by a third party acting as an
    agent for the Federal Government, shall notify the Secretary of the
    Treasury of all such nontax debts for purposes of administrative
    offset under this subsection.
      (7)(A) The disbursing official conducting an administrative
    offset with respect to a payment to a payee shall notify the payee
    in writing of - 
        (i) the occurrence of the administrative offset to satisfy a
      past due legally enforceable debt, including a description of the
      type and amount of the payment otherwise payable to the payee
      against which the offset was executed;
        (ii) the identity of the creditor agency requesting the offset;
      and
        (iii) a contact point within the creditor agency that will
      handle concerns regarding the offset.

      (B) If the payment to be offset is a periodic benefit payment,
    the disbursing official shall take reasonable steps, as determined
    by the Secretary of the Treasury, to provide the notice to the
    payee not later than the date on which the payee is otherwise
    scheduled to receive the payment, or as soon as practical
    thereafter, but no later than the date of the administrative
    offset. Notwithstanding the preceding sentence, the failure of the
    debtor to receive such notice shall not impair the legality of such
    administrative offset.
      (8) A levy pursuant to the Internal Revenue Code of 1986 shall
    take precedence over requests for administrative offset pursuant to
    other laws.
      (d) Nothing in this section is intended to prohibit the use of
    any other administrative offset authority existing under statute or
    common law.
      (e)(1) Notwithstanding any other provision of law, regulation, or
    administrative limitation, no limitation on the period within which
    an offset may be initiated or taken pursuant to this section shall
    be effective.
      (2) This section does not apply when a statute explicitly
    prohibits using administrative offset or setoff to collect the
    claim or type of claim involved.
      (f) The Secretary may waive the requirements of sections 552a(o)
    and (p) of title 5 for administrative offset or claims collection
    upon written certification by the head of a State or an executive,
    judicial, or legislative agency seeking to collect the claim that
    the requirements of subsection (a) of this section have been met.
      (g) The Data Integrity Board of the Department of the Treasury
    established under 552a(u) of title 5 shall review and include in
    reports under paragraph (3)(D) of that section a description of any
    matching activities conducted under this section. If the Secretary
    has granted a waiver under subsection (f) of this section, no other
    Data Integrity Board is required to take any action under section
    552a(u) of title 5.
      (h)(1) The Secretary may, in the discretion of the Secretary,
    apply subsection (a) with respect to any past-due, legally-
    enforceable debt owed to a State if - 
        (A) the appropriate State disbursing official requests that an
      offset be performed; and
        (B) a reciprocal agreement with the State is in effect which
      contains, at a minimum - 
          (i) requirements substantially equivalent to subsection (b)
        of this section; and
          (ii) any other requirements which the Secretary considers
        appropriate to facilitate the offset and prevent duplicative
        efforts.

      (2) This subsection does not apply to - 
        (A) the collection of a debt or claim on which the
      administrative costs associated with the collection of the debt
      or claim exceed the amount of the debt or claim;
        (B) any collection of any other type, class, or amount of
      claim, as the Secretary considers necessary to protect the
      interest of the United States; or
        (C) the disbursement of any class or type of payment exempted
      by the Secretary of the Treasury at the request of a Federal
      agency.

      (3) In applying this section with respect to any debt owed to a
    State, subsection (c)(3)(A) shall not apply.