H.R. 8463 — Pre-Payment Fraud Prevention and Treasury Data Access Act

This section establishes new agency duties under 31 U.S.C. §3325a for fraud and improper payment prevention before certifying payment vouchers under §3325, requiring (1) compliance with Treasury regulations on pre-certification verification (to be issued within 180 days of enactment in consultation with OMB), including confirmation that funds are available, payee details and identifiers are valid and correct, the payee is not deceased, and the bank account (if any) is open and belongs to the payee; (2) adherence to Treasury disbursement instructions; and (3) use of required payment validation programs, including agency fraud-risk evaluations under §§3352 and 3554(b)(1). It further directs Treasury, in consultation with OMB, to issue guidance authorizing the return of noncompliant vouchers to agencies and a process for agency exemptions from these requirements; amends §3528(a) to incorporate these duties and subchapter IV compliance into certifying officials' responsibilities, along with covered recipient reporting under §6107; and modifies §3325(d) to reference §3325a(b) information and adds §3325(e) requiring verification of payment disbursement accuracy, including bank account details.

This section revises the Do Not Pay Initiative (renaming it the Do Not Pay System under 31 U.S.C. §3354) to require executive agency heads to screen all persons or entities seeking federal awards or payments against system data assets—including the Death Master File, Social Security Death Index, incarceration records, and newly added National Directory of New Hires, certain IRS data under 26 U.S.C. §6103(i)(9)(A), and SSA data under 42 U.S.C. §435—prior to award or payment (replacing prior "as appropriate" reviews). It further (1) directs the Treasury Secretary to establish and maintain the system via the Fiscal Service, incorporating specified and additional designated data assets; (2) establishes a process for designating additional data assets with public notice and comment (at least 30 days), coordination with OMB, and privacy protections for sensitive information; (3) exempts system data matching from Privacy Act "matching program" requirements (5 U.S.C. §552a); (4) limits data use to improper payment prevention or law enforcement and imposes penalties for knowing unauthorized disclosure (fine up to $5,000, imprisonment up to 5 years, or both); (5) allows agency exemptions for statutorily required payments with notice to Treasury and OMB; and (6) extends screening requirements to states, localities, and contractors administering federal funds. (As background, the Do Not Pay System helps prevent improper payments—estimated at over $200 billion annually governmentwide—by verifying payee eligibility against databases of deceased, incarcerated, or ineligible individuals.)

This section adds a new section 6107 to chapter 61 of title 31, United States Code, requiring the head of each federal agency administering a covered award to mandate that covered recipients submit a one-time report on the first use of award funds within 180 days of receipt (with program-wide exceptions permitted via regulation). Directs the Director of the Office of Management and Budget (OMB), in coordination with the Secretary of the Treasury and the standard-setting agency under 31 U.S.C. §6402(a)(1), to promulgate regulations within one year of enactment—and update them at least every five years—establishing governmentwide content and format standards for the report that, at minimum, (1) verify funds are used for authorized purposes; (2) identify fraud risks warranting investigation or False Claims Act referrals; (3) require subrecipient data for aggregate reporting; (4) apply chapter 64 data standards; (5) align with Federal Funding Accountability and Transparency Act requirements; (6) minimize duplication; and (7) clarify deadline exceptions. Requires agencies to update award terms and Notices of Funding Opportunity, provide plain-language guidance using existing reports where practicable, and establish noncompliance procedures—including written notice, halted disbursements, and blocked payments until compliance; agencies must retain reports for five years and make them available to OMB, Treasury, the Attorney General, agency Inspectors General, and congressional committees.

This section authorizes the Secretary of the Treasury to access three data sources solely to detect, prevent, and recover improper payments (as defined in 31 U.S.C. § 3351) via the Do Not Pay system (31 U.S.C. § 3354). (1) Amends SSA § 453(j) to grant Treasury access to the National Directory of New Hires and permit its disclosure to Treasury agents/contractors, authorized Directory users, Do Not Pay system users, and others agreed upon by SSA and Treasury. (2) Amends IRC § 6103(i) to permit IRS disclosure of specified taxpayer return information (i.e., identity, filing status, adjusted gross income, Schedule C net profit/loss, bank/routing details, no-return indicator, taxable year, and identity theft reports) for at least the three most recent available taxable years, subject to an intra-agency agreement and with redisclosure limited to other authorized Do Not Pay system users; includes conforming amendments to IRC §§ 6103(a), (p), and 7213(a), effective after enactment. (3) Adds new SSA § 235 requiring the Commissioner of Social Security to agree with Treasury on a secure name/SSN verification method for authorized Do Not Pay system users.