To protect stimulus checks from garnishment and fees and from being used as an offset by a credit union or depository institution, and for other purposes.

I 116TH CONGRESS 2D SESSION H. R. 6850 To protect stimulus checks from garnishment and fees and from being used as an offset by a credit union or depository institution, and for other purposes. IN THE HOUSE OF REPRESENTATIVES MAY 13, 2020 Mr. MEEKS (for himself, Ms. PRESSLEY, and Ms. WATERS) introduced the fol- lowing bill; which was referred to the Committee on Ways and Means, and in addition to the Committee on Financial Services, for a period to be subsequently determined by the Speaker, in each case for consider- ation of such provisions as fall within the jurisdiction of the committee concerned A BILL To protect stimulus checks from garnishment and fees and from being used as an offset by a credit union or deposi- tory institution, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act have been cited as the ‘‘Protect our Checks 4 Act of 2020’’. 5 SEC. 2. PROTECTING STIMULUS CHECKS FROM GARNISH- 6 MENT AND FEES. 7 (a) PROTECTION OF 2020 RECOVERY REBATES.— 8 VerDate Sep 11 2014 04:28 May 30, 2020 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H6850.IH H6850 kjohnson on DSK79L0C42PROD with BILLS 2 •HR 6850 IH (1) IN GENERAL.—Section 2201(d) of the 1 CARES Act (Public Law 116–136) is amended— 2 (A) by redesignating paragraphs (1), (2), 3 and (3) as subparagraphs (A), (B), and (C), 4 and by moving such subparagraphs 2 ems to 5 the right; 6 (B) in the heading, by striking ‘‘REDUC- 7 TION OR OFFSET’’ and inserting ‘‘REDUCTION, 8 OFFSET, GARNISHMENT, ETC.’’; 9 (C) by striking ‘‘Any credit’’ and inserting 10 the following: 11 ‘‘(1) IN GENERAL.—Any credit’’; and 12 (D) by adding at the end the following new 13 paragraphs: 14 ‘‘(2) ASSIGNMENT OF BENEFITS.— 15 ‘‘(A) IN GENERAL.—The right of any per- 16 son to any applicable payment shall not be 17 transferable or assignable, at law or in equity, 18 and no applicable payment shall be subject to 19 execution, levy, attachment, garnishment, or 20 other legal process or the operation of any 21 bankruptcy or insolvency law. 22 ‘‘(B) ENCODING OF PAYMENTS.—As soon 23 as practicable, in the case of an applicable pay- 24 ment that is paid electronically by direct deposit 25 VerDate Sep 11 2014 04:28 May 30, 2020 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H6850.IH H6850 kjohnson on DSK79L0C42PROD with BILLS 3 •HR 6850 IH through the Automated Clearing House (ACH) 1 network, the Secretary of the Treasury shall 2 issue the payment using a unique identifier that 3 is reasonably sufficient to allow a financial in- 4 stitution to identify the payment as a payment 5 protected under subparagraph (A). The Sec- 6 retary shall further encode the payment pursu- 7 ant to the same specifications as required for a 8 benefit payment (as defined in section 212.3 of 9 section 31, Code of Federal Regulations). 10 ‘‘(C) GARNISHMENT.— 11 ‘‘(i) ENCODED PAYMENTS.—Upon re- 12 ceipt of a garnishment order that applies 13 to an account that has received an applica- 14 ble payment that is encoded as provided in 15 subparagraph (B), a financial institution 16 shall follow the requirements and proce- 17 dures set forth in part 212 of title 31, 18 Code of Federal Regulations, except a fi- 19 nancial institution shall not, with regard to 20 any applicable payment, be required to 21 provide the notice referenced in section 22 212.6 or 212.7 of such title 31. This para- 23 graph shall not alter the status of pay- 24 ments as tax refunds or other nonbenefit 25 VerDate Sep 11 2014 04:28 May 30, 2020 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H6850.IH H6850 kjohnson on DSK79L0C42PROD with BILLS 4 •HR 6850 IH payments for purpose of any reclamation 1 rights of the Department of Treasury or 2 the Internal Revenue Service as per part 3 210 of such title 31. 4 ‘‘(ii) OTHER PAYMENTS.—If a finan- 5 cial institution receives a garnishment 6 order, other than an order that has been 7 served by the United States, that applies 8 to an account into which an applicable 9 payment that has not been encoded as pro- 10 vided in subparagraph (B) has been depos- 11 ited electronically or by check on any date 12 in the lookback period, the financial insti- 13 tution, upon the request of the account 14 holder, shall treat the amount of the funds 15 in the account at the time of the request, 16 up to the amount of the applicable pay- 17 ment, as exempt under law from a garnish- 18 ment order without requiring the consent 19 of the party serving the garnishment order 20 or the judgment creditor. 21 ‘‘(iii) LIABILITY.—A financial institu- 22 tion that acts in good faith in reliance on 23 clause (i) or (ii) shall not be subject to li- 24 ability or regulatory action under any Fed- 25 VerDate Sep 11 2014 04:28 May 30, 2020 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H6850.IH H6850 kjohnson on DSK79L0C42PROD with BILLS 5 •HR 6850 IH eral or State law, regulation, court or other 1 order, or regulatory interpretation for ac- 2 tions concerning any applicable payments. 3 ‘‘(D) DEFINITIONS.—For purposes of this 4 paragraph: 5 ‘‘(i) ACCOUNT HOLDER.—The term 6 ‘account holder’ means a natural person 7 whose name appears in a financial institu- 8 tion’s records as the direct or beneficial 9 owner of an account. 10 ‘‘(ii) ACCOUNT REVIEW.—The term 11 ‘account review’ means the process of ex- 12 amining deposits in an account to deter- 13 mine if an applicable payment has been de- 14 posited into the account during the 15 lookback period. A financial institution 16 shall perform an account review following 17 the procedures outlined in section 212.5 of 18 title 31, Code of Federal Regulations, and 19 in accordance with the requirements of sec- 20 tion 212.6 of such title 31. 21 ‘‘(iii) APPLICABLE PAYMENT.—The 22 term ‘applicable payment’ means any pay- 23 ment of credit or refund by reason of sec- 24 VerDate Sep 11 2014 04:28 May 30, 2020 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H6850.IH H6850 kjohnson on DSK79L0C42PROD with BILLS 6 •HR 6850 IH tion 6428 of the Internal Revenue Code of 1 1986 or subsection (c). 2 ‘‘(iv) GARNISHMENT.—The term ‘gar- 3 nishment’ means execution, levy, attach- 4 ment, garnishment, or other legal process. 5 ‘‘(v) GARNISHMENT ORDER.—The 6 term ‘garnishment order’ means a writ, 7 order, notice, summons, judgment, levy, or 8 similar written instruction issued by a 9 court, a State or State agency, or a mu- 10 nicipality or municipal corporation to effect 11 a garnishment against a debtor. 12 ‘‘(vi) LOOKBACK PERIOD.—The term 13 ‘lookback period’ means the two month pe- 14 riod that begins on the date preceding the 15 date of an account review and ends on the 16 corresponding date of the month two 17 months earlier, or on the last date of the 18 month two months earlier if the cor- 19 responding date does not exist.’’. 20 (2) EFFECTIVE DATE.— 21 (A) IN GENERAL.—Section 2201(d)(2) of 22 the CARES Act, as added by subsection (a), 23 shall take effect upon enactment. 24 VerDate Sep 11 2014 04:28 May 30, 2020 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H6850.IH H6850 kjohnson on DSK79L0C42PROD with BILLS 7 •HR 6850 IH (B) EXCEPTION.—Notwithstanding para- 1 graph (1), clauses (i) and (ii) of section 2 2201(d)(2)(C) of the CARES Act, as added by 3 subsection (a), shall take effect after the end of 4 the 10-day period beginning on the date of en- 5 actment of this Act. 6 (b) PROHIBITION ON USE OF COVID-19 STIMULUS 7 PAYMENTS AS OFFSET BY CREDIT UNIONS AND DEPOSI- 8 TORY INSTITUTIONS.— 9 (1) IN GENERAL.—A credit union or depository 10 institution may not offset or seize a COVID–19 11 stimulus payment to pay any amount due, or alleg- 12 edly due, to the credit union or depository institu- 13 tion. 14 (2) ENCODING OF PAYMENTS.—As soon as 15 practicable, in the case of a COVID–19 stimulus 16 payment that is paid electronically by direct deposit 17 through the Automated Clearing House (ACH) net- 18 work, the Secretary of the Treasury shall issue a 19 COVID–19 stimulus payment using a unique identi- 20 fier that is reasonably sufficient to allow a credit 21 union or depository institution to identify the pay- 22 ment as a payment protected under paragraph (1). 23 (3) DEFINITIONS.—In this subsection: 24 VerDate Sep 11 2014 04:28 May 30, 2020 Jkt 099200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H6850.IH H6850 kjohnson on DSK79L0C42PROD with BILLS 8 •HR 6850 IH (A) COVID–19 STIMULUS PAYMENT.—The 1 term ‘‘COVID–19 stimulus payment’’ means 2 any payment made pursuant to section 6428 of 3 the Internal Revenue Code of 1986 or section 4 2201(c) of the CARES Act. 5 (B) CREDIT UNION.—The term ‘‘credit 6 union’’ means a Federal credit union and a 7 State credit union, as such terms are defined, 8 respectively, under section 101 of the Federal 9 Credit Union Act. 10 (C) DEPOSITORY INSTITUTION.—The term 11 ‘‘depository institution’’ has the meaning given 12 that term under section 3 of the Federal De- 13 posit Insurance Act. 14 Æ VerDate Sep 11 2014 04:28 May 30, 2020 Jkt 099200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6301 E:\BILLS\H6850.IH H6850 kjohnson on DSK79L0C42PROD with BILLS