[Federal Register Volume 64, Number 18 (Thursday, January 28, 1999)]
[Rules and Regulations]
[Pages 4315-4322]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-1769]
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CORPORATION FOR NATIONAL AND COMMUNITY SERVICE
45 CFR Part 2506
RIN 3045-AA21
Claims Collection
AGENCY: Corporation for National and Community Service.
ACTION: Interim rule with request for comments.
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SUMMARY: The Corporation for National and Community Service
(hereinafter the ``Corporation'') is issuing interim regulations to
govern the collection of debts owed to the Corporation and to other
federal agencies. These regulations describe a number of actions that
the Corporation may take to collect debts owed to it. These regulations
also provide that the Corporation will enter into a cross-servicing
agreement with the U.S. Department of the Treasury (Treasury) under
which the Treasury will take authorized action to collect amounts owed
to the Corporation.
DATES: These regulations are effective on January 28, 1999. Written
comments must be received on or before March 29, 1999.
ADDRESSES: Send comments to: Corporation for National and Community
Service, Kenneth L. Klothen, General Counsel, 1201 New York Avenue,
N.W., Washington, D.C. 20525; telefax number (202) 565-2796.
FOR FURTHER INFORMATION CONTACT: Suzanne Dupre, Associate General
Counsel, telephone number (202) 606-5000, extension 396.
SUPPLEMENTARY INFORMATION: These regulations describe a number of
actions that the Corporation may take to collect debts owed to it,
including: making offsets against amounts (including salary payments)
owed to the debtor by the Corporation or other federal agencies; making
offsets against tax refunds owed to the debtor by the Internal Revenue
Service; referring the debt to a private collection contractor, and
referring the matter to the U.S. Department of Justice (DOJ) for the
initiation of an action in a judicial proceeding against the debtor. In
addition, these regulations describe the actions necessary for the
Corporation to take collection actions on behalf of another federal
agency. These actions could include making offsets against the salary
of a Corporation employee or any other amounts owed by the Corporation.
The regulations of this part are issued under section 3 of the
Federal Claims Collection Act of 1966, Public Law 89-508, 80 Stat. 308;
the Debt Collection Act of 1982, Public Law 97-365, 96 Stat. 1749; the
Debt Collection Improvement Act of 1996, Public Law 104-134, 110 Stat.
1321; 31 U.S.C. 3720A; and in conformity with the Federal guidelines
for agency debt collection issued by the DOJ and the General Accounting
Office (4 CFR chapter II) and the guidelines of the Office of Personnel
Management (5 CFR part 550, subpart K) on offsets against Federal
employee salaries. These regulations also provide that the Corporation
will enter into a cross-servicing agreement with the Treasury which is
authorized under the Debt Collection Improvement Act of 1996, to take
all of the above-listed actions to collect the debt for the
Corporation. The Corporation anticipates that some of these procedures
may change when revised Federal Claims Collection Standards are issued
by the DOJ and the Treasury.
Regulatory Flexibility Act
I certify that these regulations will not have a significant
economic impact on a substantial number of small entities.
Paperwork Reduction Act
I certify that these regulations do not require additional
reporting under the criteria of the Paperwork Reduction Act of 1980.
[[Page 4316]]
Waiver of Notice of Proposed Rulemaking and 30-Day Delay of
Effective Date
Under 5 U.S.C. 553(b)(3)(B) and (d)(3), I find that good cause
exists for waiving the general notice of proposed rulemaking and for
making these regulations effective in less than 30 days. The
Corporation wishes to have these procedures in effect at the earliest
possible date in order to initiate debt collection action against
persons who owe money to the Corporation.
Unfunded Mandates Reform Act of 1995
Pursuant to the Unfunded Mandates Reform Act of 1995, 2 U.S.C.
1531, the effect of these regulations on State, local, and tribal
governments and the private sector has been assessed. Other than by
incorporating requirements specifically set forth in law, this
regulation will not compel either the private sector or State, local,
and tribal governments (in the aggregate) to expend $100 million or
more in any one year. Therefore, a statement under 2 U.S.C. 1532 is not
required.
Submission to Congress and the General Accounting Office
Under 5 U.S.C. 801(a)(1)(A), the Corporation submitted a report
containing this rule and other required information to the U.S. Senate,
the U.S. House of Representatives, and the Comptroller General of the
United States before publication of this rule in today's Federal
Register. This interim rule is not a major rule as defined at 5 U.S.C.
804(2).
List of Subjects in 45 CFR Part 2506
Administrative practice and procedure, Claims, Government
employees, Grants administration, Income taxes, Penalties, Wages.
For the reasons stated in the preamble, the Corporation amends 45
CFR Chapter XXV by adding Part 2506 to read as follows:
PART 2506--CLAIMS COLLECTION
Subpart A--Definitions, Authority, Administrative Collection,
Compromise, Termination, and Referral of Claims
Sec.
2506.1 What definitions apply to the regulations in this Part?
2506.2 What is the Corporation's authority to issue these
regulations?
2506.3 What other regulations also apply to the Corporation's debt
collection efforts?
2506.4 Do these regulations apply to claims involving fraud or
misrepresentation?
2506.5 What is the extent of the Chief Executive Officer's
authority to compromise debts owed to the Corporation?
2506.6 What notice will I be provided if I owe a debt to the
Corporation?
2506.7 What interest, penalty, and administrative costs will I have
to pay on a debt owed to the Corporation?
2506.8 What opportunity do I have to obtain a review of my debt
within the Corporation?
2506.9 How can I resolve the Corporation's claim through a
voluntary repayment agreement?
2506.10 How will the Corporation use credit reporting agencies to
collect its claims?
2506.11 How will the Corporation contract for collection services?
2506.12 When will the Corporation refer claims to the DOJ?
2506.13 Will the Corporation use a cross-servicing agreement with
the Treasury to collect its claims?
Subpart B--Salary Offset
2506.20 What debts are included or excluded from coverage of these
regulations on salary offset?
2506.21 May I ask the Corporation to waive an overpayment that
would otherwise be collected by offsetting my salary as a federal
employee?
2506.22 What are the Corporation's procedures for salary offset?
2506.23 How will the Corporation coordinate salary offsets with
other agencies?
2506.24 Under what conditions will the Corporation make a refund of
amounts collected by salary offset?
2506.25 Will the collection of a claim by salary offset act as a
waiver of my rights to dispute the claimed debt?
Subpart C--Tax Refund Offset
2506.30 Which debts can the Corporation refer to the Department of
the Treasury for collection by offsetting tax refunds?
2506.31 What are the Corporation's procedures for collecting debts
by tax refund offset?
Subpart D--Administrative Offset
2506.40 Under what circumstances will the Corporation collect
amounts that I owe to the Corporation (or some other federal agency)
by offsetting the debt against payments that the Corporation (or
some other federal agency) owes me?
2506.41 How will the Corporation request that my debt to the
Corporation be collected by offsetting against some payment that
another federal agency owes me?
2506.42 What procedures will the Corporation use to collect amounts
I owe to a federal agency by offsetting a payment that the
Corporation would otherwise make to me?
2506.43 When may the Corporation make an offset in an expedited
manner?
Authority: 31 U.S.C. 3711, 3716, 3720A; 42 U.S.C. 12651f.
Subpart A--Definitions, Authority, Administrative Collection,
Compromise, Termination, and Referral of Claims
Sec. 2506.5 What definitions apply to the regulations in this Part?
As used in this part:
(a) Administrative offset means the withholding of funds payable by
the United States to any person (including funds payable to the United
States on behalf of a State government), or the withholding of funds
held by the United States for any person, in order to satisfy a debt
owed to the United States.
(b) Agency means an executive department or agency, the United
States Postal Service, the Postal Rate Commission, the United States
Senate, the United States House of Representatives, and any court,
court administrative office, or instrumentality in the judicial or
legislative branches of the Government, and Government corporations.
(c) Corporation means the Corporation for National and Community
Service.
(d) Certification means a written debt claim form received from a
creditor agency which requests the paying agency to offset the salary
of an employee.
(e) Chief Executive Officer means the Chief Executive Officer of
the Corporation for National and Community Service, or his or her
designee.
(f) Creditor agency means an agency of the Federal Government to
which the debt is owed.
(g) Debt means money owed by a person to the United States,
including a debt owed to the Corporation or to any other Federal
agency.
(h) Debtor means a person who owes a debt. Uses of the terms ``I'',
``you,'' ``me,'' and similar references to the reader of the
regulations in this part are meant to apply to debtors as defined in
this paragraph (h).
(i) Delinquent debt means a debt that has not been paid within the
time limit prescribed by the Corporation.
(j) Disposable pay means that part of current basic pay, special
pay, incentive pay, retirement pay, retainer pay, or, in the case of an
employee not entitled to basic pay, other authorized pay remaining
after the deduction of any amount required by law to be withheld,
excluding any garnishment under 5 CFR parts 581 and 582. The
Corporation will deduct the following items in determining the amount
of disposable pay that will be subject to salary offset:
(1) Federal Social Security and Medicare taxes;
[[Page 4317]]
(2) Federal, state, and local income taxes, but no more than would
be the case if the employee claimed all dependents to which he or she
is entitled and any additional amounts for which the employee presents
evidence of a tax obligation supporting the additional withholding;
(3) Health insurance premiums;
(4) Normal retirement contributions as set forth in 5 CFR
581.105(e);
(5) Normal life insurance premiums, excluding optional life
insurance premiums; and
(6) Levies pursuant to the Internal Revenue Code, as defined in 5
U.S.C. 5514(d).
(k) Employee means a current employee of an agency, including a
current member of the Armed Forces or Reserve of the Armed Forces of
the United States.
(l) Federal Claims Collection Standards means the standards
published at 4 CFR chapter II.
(m) Paying agency means the agency of the Federal Government that
employs the individual who owes a debt to the United States. In some
cases, the Corporation may be both the creditor agency and the paying
agency.
(n) Payroll office means the payroll office in the paying agency
that is primarily responsible for the payroll records and the
coordination of pay matters with the appropriate personnel office with
respect to an employee.
(o) Person includes a natural person or persons, profit or non-
profit corporation, partnership, association, trust, estate,
consortium, State and local government, or other entity that is capable
of owing a debt to the United States Government; however, agencies of
the United States are excluded.
(p) Private collection contractor means a private debt collector
under contract with an agency to collect a non-tax debt owed to the
United States.
(q) Salary offset means a payroll procedure to collect a debt under
5 U.S.C. 5514 by deduction(s) at one or more officially established pay
intervals from the current pay account of an employee, without his or
her consent.
(r) Tax refund offset means the reduction of a tax refund by the
amount of a past-due legally enforceable debt owed to the Corporation
or any other Federal agency.
(s) Waiver means the cancellation, remission, forgiveness, or non-
recovery of a debt allegedly owed by a person to the Corporation or any
other Federal agency as permitted or required by 5 U.S.C. 5584 or
8346(b), 10 U.S.C. 2774, 32 U.S.C. 716, or any other law.
Sec. 2506.2 What is the Corporation's authority to issue these
regulations?
The Corporation is issuing regulations in this part under 42 U.S.C.
12651f and 31 U.S.C. 3711, 3716, and 3720A. The Corporation is also
issuing the regulations in this part in conformity with the Federal
Claims Collection Standards, 4 CFR chapter II, which prescribe
standards for the handling of the federal government's claims for money
or property, including standards for administrative collection,
compromise, termination of agency collection action, and referral to
the U.S. Department of Justice (DOJ) for litigation.
Sec. 2506.3 What other regulations also apply to the Corporation's
debt collection efforts?
All provisions of the Federal Claims Collection Standards also
apply to the regulations in this part. This part supplements the
Federal Claims Collection Standards by prescribing procedures and
directives necessary and appropriate for operations of the Corporation.
Sec. 2506.4 Do these regulations apply to claims involving fraud or
misrepresentation?
The Federal Claims Collection Standards and this part do not apply
to any claim as to which there is an indication of fraud or
misrepresentation, as described in the Federal Claims Collection
Standards, unless returned to the Corporation by the DOJ to the
Corporation for handling.
Sec. 2506.5 What is the extent of the Chief Executive Officer's
authority to compromise debts owed to the Corporation?
The Chief Executive Officer may exercise his or her compromise
authority for those debts not exceeding $100,000, excluding interest,
in conformity with the Federal Claims Collection Act of 1966, as
amended; the Federal Claims Collection Standards issued thereunder; and
this part, except where standards are established by other statutes or
authorized regulations issued pursuant to them.
Sec. 2506.6 What notice will I be provided if I owe a debt to the
Corporation?
(a) When the Chief Executive Officer determines that you owe a debt
to the Corporation, he or she will send you a written notice. The
notice will be hand-delivered or sent to you by certified mail, return
receipt requested at the most current address known to the Corporation.
The notice will inform you of the following:
(1) The amount, nature, and basis of the debt, and that a
designated Corporation official has reviewed the claim and has
determined that the debt is valid;
(2) That payment of your debt is due as of the date of the notice,
and that the debt will be considered delinquent if you do not pay it
within 30 days of the date the notice is mailed or hand-delivered;
(3) The Corporation's policy concerning interest, penalties, and
administrative costs, including a statement that such assessments must
be made against you unless excused in accordance with the Federal
Claims Collection Standards and this part;
(4) That you have the right to inspect and copy Corporation records
pertaining to your debt, or to receive copies of those records if
personal inspection is impractical;
(5) That you have the opportunity to enter into an agreement, in
writing and signed by both you and the Chief Executive Officer, for
voluntary repayment of the debt; and
(6) The address, telephone number, and name of the Corporation
official available to discuss the debt.
(b) Notice of possible collection actions. The notice provided by
the Chief Executive Officer under paragraph (a) of this section will
also advise you that, if your debt (including any interest, penalties
and administrative costs) is not paid within 60 days of the date of the
notice, or you do not enter into a voluntary repayment agreement within
60 days of the date of the notice, the Corporation may enforce the
collection of the debt by any or all of the following methods:
(1) Referral to a credit reporting agency (See Sec. 2506.10), a
collection agency (See Sec. 2506.11), or the DOJ (See Sec. 2506.12);
(2) If you are a Corporation employee, by deducting money from your
disposable pay account (in the amount and with the frequency,
approximate beginning date and duration specified by the Corporation)
until the debt (and all accumulated interest, penalties, and
administrative costs) is paid in full, and that such proceedings with
respect to the debt are governed by 5 U.S.C. 5514;
(3) If you are an employee of a federal agency other than the
Corporation, by initiating certification procedures to implement a
salary offset by the federal agency, as appropriate (which may not
exceed 15 percent of the employee's disposable pay), and that such
proceedings with respect to the debt are governed by 5 U.S.C. 5514;
(4) By referring the debt to the U.S. Department of the Treasury
(Treasury) for offset against any refund of overpayment of tax (see
Subpart C of this part); or
[[Page 4318]]
(5) By administrative offset (see Subpart D of this part).
(c) Notice of opportunity for review. The notice provided by the
Chief Executive Officer under paragraph (a) of this section will also
advise you of the opportunity to obtain a review within the Corporation
concerning the existence or amount of the debt, the proposed schedule
for offset of federal employee salary payments, or whether the debt is
past due or legally enforceable. The notice shall also advise you:
(1) Of the name, address, and telephone number of an officer or
employee of the Corporation who may be contacted concerning procedures
for requesting a review;
(2) Of the method and time period for requesting a review;
(3) That the timely filing of a request for a review on or before
the 60th calendar day following the date of the notice to the debtor
will stay the commencement of collection proceedings;
(4) Of the name and address of the officer or employee of the
Corporation to whom you should send the request for a review;
(5) That a final decision on the review (if one is requested) will
be issued at the earliest practical date, but not later than 60 days
after the receipt of the request for a review, unless you request, and
the review official grants, a delay in the proceedings;
(6) That any knowingly false or frivolous statements,
representations, or evidence may subject you to:
(i) Disciplinary procedures appropriate under 5 U.S.C. chapter 75,
5 CFR part 752, or any other applicable statute or regulations;
(ii) Penalties under the False Claims Act, 31 U.S.C. 3729-3733, or
any other applicable statutory authority; and
(iii) Criminal penalties under 18 U.S.C. 286, 287, 1001, and 102,
or any other applicable statutory authority;
(7) Of any other rights available to you to dispute the validity of
the debt or to have recovery of the debt waived, or remedies available
to you under statutes or regulations governing the program for which
the collection is being made; and
(8) That unless there are applicable contractual or statutory
provisions to the contrary, amounts paid on or deducted for the debt
which are later waived or found not owed will be promptly refunded to
you.
(d) The Corporation will respond promptly to communications from
you.
Sec. 2506.7 What interest, penalty, and administrative costs will I
have to pay on a debt owed to the Corporation?
(a) Interest. (1) The Corporation will assess interest on all
delinquent debts unless prohibited by statute, regulation, or contract.
(2) Interest begins to accrue on all debts from the date that the
debt becomes delinquent. The Corporation will not recover interest if
you pay the debt within 30 days of the date on which interest begins to
accrue. Unless otherwise established in a contract, repayment
agreement, or by statute, the Corporation shall assess interest at the
rate established annually by the Secretary of the Treasury under 31
U.S.C. 3717, unless a different rate is necessary to protect the
interests of the Corporation. The Corporation will notify you of the
basis for its finding when a different rate is necessary to protect the
Corporation's interests.
(3) The Chief Executive Officer may extend the 30-day period for
payment without interest where he or she determines that such action is
in the best interest of the Corporation. A decision to extend or not to
extend the payment period is final and is not subject to further
review.
(b) Penalty. The Corporation will assess a penalty charge, not to
exceed six percent a year, on any portion of a debt that is delinquent
for more than 90 days.
(c) Administrative costs. The Corporation will assess charges to
cover administrative costs incurred as a result of your failure to pay
a debt before it becomes delinquent. Administrative costs include the
additional costs incurred in processing and handling the debt because
it became delinquent, such as costs incurred in obtaining a credit
report, or in using a private collection contractor, or service fees
charged by a Federal agency for collection activities undertaken on
behalf of the Corporation.
(d) Allocation of payments. A partial payment by a debtor will be
applied first to outstanding administrative costs, second to penalty
assessments, third to accrued interest, and then to the outstanding
debt principal.
(e) Waiver. (1) The Chief Executive Officer may (without regard to
the amount of the debt) waive collection of all or part of accrued
interest, penalty, or administrative costs, if he or she determines
that collection of these charges would be against equity and good
conscience or not in the best interest of the Corporation.
(2) A decision to waive interest, penalty charges, or
administrative costs may be made at any time before a debt is paid.
However, where these charges have been collected before the waiver
decision, they will not be refunded. The Chief Executive Officer's
decision to waive or not waive collection of these charges is final and
is not subject to further review.
Sec. 2506.8 What opportunity do I have to obtain a review of my debt
within the Corporation.
(a) Request for review. If you desire a review within the
Corporation concerning the existence or amount of the debt, the
proposed schedule for offset of federal employee salary payments, or
whether the debt is past due or legally enforceable, you must send such
a request to the Corporation office designated in the notice to debtor.
(See Sec. 2506.6(c)).
(1) Your request for review must be signed by you and fully
identify and explain with reasonable specificity all the facts and
evidence that support your position.
(2) The request for review must be received by the designated
office on or before the 60th calendar day following the date of the
notice. Timely filing will stay the commencement of collection
procedures. If you file a request for a review after the expiration of
the 60 day period provided for in this section, the Corporation will
accept the request if you can show that the delay was the result of
circumstances beyond his or her control or because you did not receive
notice of the filing deadline (unless you had actual notice of the
filing deadline).
(b) Review of Corporation records related to the debt. (1) In
accordance with Sec. 2506.6, if you want to inspect or copy Corporation
records related to the debt, you must send a letter to the official
designated in the notice to the debtor stating his or her intention.
Your letter must be received within 30 calendar days after the date of
the notice to debtor.
(2) In response to a timely request submitted by the debtor, the
designated official will notify you of the location and time when you
may inspect and copy records related to the debt.
(3) If personal inspection is impractical, reasonable arrangements
will be made to send you copies of those records.
(c) Review official. The Chief Executive Officer shall designate an
officer or employee of the Corporation (who was not involved in the
determination of the debt) as the review official. When required by law
or regulation, the Corporation may request an administrative law judge
to conduct the review, or may obtain a review
[[Page 4319]]
official who is an official, employee, or agent of the United States
(but who is not under the supervision or control of the Chief Executive
Officer). However, unless the review is conducted by an official or
employee of the Corporation, any unresolved dispute you have regarding
whether all or part of the debt is past due or legally enforceable (for
purposes of collection by tax refund offset under Sec. 2506.31), must
be referred to the Chief Executive Officer for ultimate administrative
disposition, and the Chief Executive Officer must directly notify you
of his or her determination.
(d) Review procedure. After you request a review, the reviewing
official will notify you of the form of the review to be provided. The
reviewing official shall determine the type of review to be conducted
(i.e. whether an oral hearing is required), and shall conduct the
review in accordance with the standards included in 4 CFR 102.3(c). If
the review will include an oral hearing, the notice will set forth the
date, time, and location of the hearing. If the review will be on a
written record, you will be notified that you should submit arguments
and evidence in writing to the review official by a specified date
after which the record will be closed. This date will give you
reasonable time to submit documentation.
(e) Date of decision. The reviewing official will issue a written
decision, based upon either the written record or documentary evidence
and information developed at an oral hearing, as soon as practical, but
not later than 60 days after the date on which the Corporation received
your request for a review, unless you request and the review official
grants a delay in the proceedings.
(f) Content of review decision. The review official shall prepare a
written decision that will include:
(1) A statement of the facts presented to support the origin,
nature, and amount of the debt;
(2) The reviewing official's findings, analysis, and conclusions;
and
(3) The terms of any repayment schedules, if applicable.
(g) Interest, penalty, and administrative cost accrual during
review period. During the review period, interest, penalties, and
administrative costs authorized by law will continue to accrue.
Sec. 2506.9 How can I resolve the Corporation's claim through a
voluntary repayment agreement?
In response to a notice of a debt owed to the Corporation, you may
propose to the Corporation you be allowed to repay a debt through a
voluntary payment agreement in lieu of the Corporation taking other
collection actions under this part.
(a) Your request to enter into a voluntary repayment must:
(1) Admit the existence of the debt; and
(2) Either propose payment of the debt (together with interest,
penalties, and administrative costs) in a lump sum, or set forth a
proposed repayment schedule.
(b) The Corporation will consider a request to enter into a
voluntary repayment agreement consistent with the standards in 4 CFR
102.11. The Chief Executive Officer may request additional information
from you in order to make a determination of whether to accept a
voluntary repayment agreement, including requesting financial
statements if you request to make payments in installments. It is
within the Chief Executive Officer's discretion to accept a repayment
agreement instead of proceeding with other debt collection actions
under this part, and to set the necessary terms of any voluntary
repayment agreement. At the Corporation's option, you may be required
to enter into a confess-judgment note or bond of indemnity with surety
as part of an agreement to make payments in installments.
Notwithstanding the provisions of this section, any reduction or
compromise of a claim will be governed by 31 U.S.C. 3711.
Sec. 2506.10 How will the Corporation use credit reporting agencies to
collect its claims?
(a) The Corporation may report delinquent debts to appropriate
credit reporting agencies by providing the following information:
(1) A statement that the debt is valid and is overdue;
(2) The name, address, taxpayer identification number, and any
other information necessary to establish the identity of the debtor;
(3) The amount, status, and history of the debt; and
(4) The program or pertinent activity under which the debt arose.
(b) Before disclosing debt information to a credit reporting
agency, the Corporation will:
(1) Take reasonable action to locate the debtor if a current
address is not available; and
(2) If a current address is available, provide the notice required
under Sec. 2506.6.
(c) At the time debt information is submitted to a credit reporting
agency, the Corporation will provide a written statement to the
reporting agency that all required actions have been taken. In
addition, the Corporation will, thereafter, ensure that the credit
reporting agency is promptly informed of any substantive change in the
conditions or amount of the debt, and promptly verify or correct
information relevant to the claim.
(d) If a debtor disputes the validity of the debt, the credit
reporting agency will refer the matter to the appropriate Corporation
official. The credit reporting agency will exclude the debt from its
reports until the Corporation certifies in writing that the debt is
valid.
Sec. 2506.11 How will the Corporation contract for collection
services?
The Corporation will use the services of a private collection
contractor where it determines that such use is in the best interest of
the Corporation. When the Corporation determines that there is a need
to contract for collection services, it will--
(a) Retain sole authority to:
(1) Resolve any dispute with the debtor regarding the validity of
the debt;
(2) Compromise the debt;
(3) Suspend or terminate collection action;
(4) Refer the debt to the DOJ for litigation; and
(5) Take any other action under this part which does not result in
full collection of the debt;
(b) Require the contractor to comply with the Privacy Act of 1974,
as amended, to the extent specified in 5 U.S.C. 552a(m), with
applicable Federal and State laws pertaining to debt collection
practices (e.g., the Fair Debt Collection Practices Act (15 U.S.C.
1692-1692o)), and with applicable regulations of the Corporation in
this chapter;
(c) Require the contractor to account accurately and fully for all
amounts collected; and
(d) Require the contractor to provide to the Corporation, upon
request, all data and reports contained in its files relating to its
collection actions on a debt.
Sec. 2506.12 When will the Corporation refer claims to the DOJ?
The Chief Executive Officer will refer to the DOJ for litigation
all claims on which aggressive collection actions have been taken but
which could not be collected, compromised, suspended, or terminated.
Referrals will be made as early as possible, consistent with aggressive
Corporation collection action, and within the period for bringing a
timely suit against the debtor.
[[Page 4320]]
Sec. 2506.13 Will the Corporation use a cross-servicing agreement with
the Treasury to collect its claims?
Yes. The Corporation will enter into a cross-servicing agreement
with the Treasury which will authorize the Treasury to take all of the
debt collection actions described in this part. These debt collection
services will be provided to the Corporation in accordance with 31
U.S.C. Chapter 37.
Subpart B--Salary Offset
Sec. 2506.20 What debts are included or excluded from coverage of
these regulations on salary offset?
(a) The regulations in this subpart provide Corporation procedures
for the collection by salary offset of a federal employee's pay to
satisfy certain debts owed to the Corporation or to other federal
agencies.
(b) The regulations in this subpart apply to collections by the
Chief Executive Officer, from:
(1) Federal employees who owe debts to the Corporation; and
(2) Employees of the Corporation who owe debts to other federal
agencies.
(c) The regulations in subpart A and this subpart do not apply to
debts arising under the Internal Revenue Code of 1986, as amended
(title 26, United States Code); the Social Security Act (42 U.S.C. 301
et seq.); the tariff laws of the United States; or to any case where
collection of a debt by salary offset is explicitly provided for or
prohibited by another statute (e.g., travel advances in 5 U.S.C. 5705
and employee training expenses in 5 U.S.C. 4108).
(d) Nothing in the regulations in this subpart precludes the
compromise, suspension, or termination of collection actions under the
standards implementing the Federal Claims Collection Act (31 U.S.C.
3711 et seq., 4 CFR parts 101-105, 38 CFR 1.900-1.994).
(e) A levy pursuant to the Internal Revenue Code takes precedence
over a salary offset under this subpart, as provided in 5 U.S.C.
5514(d).
(f) This subpart does not apply to any adjustment to pay arising
out of an employee's election of coverage or a change in coverage under
a Federal benefits program requiring periodic deductions from pay, if
the amount to be recovered was accumulated over four or fewer pay
periods.
Sec. 2506.21 May I ask the Corporation to waive an overpayment that
would otherwise be collected by offsetting my salary as a federal
employee?
Yes, the regulations in this subpart do not preclude an employee
from requesting waiver of an overpayment under 5 U.S.C. 5584 or
8346(b), 10 U.S.C. 2774, 32 U.S.C. 716, or under other statutory
provisions pertaining to the particular debts being collected.
Sec. 2506.22 What are the Corporation's procedures for salary offset?
(a) The Corporation will coordinate salary deductions under this
subpart as appropriate.
(b) The Corporation's payroll office will determine the amount of
an employee's disposable pay and will implement the salary offset.
(c) Deductions will begin within three official pay periods
following receipt by the Corporation's payroll office of certification
of debt from the creditor agency.
(d) Types of collection--
(1) Lump-sum offset. If the amount of the debt is equal to or less
than 15 percent of disposable pay, the debt generally will be collected
through one lump-sum offset.
(2) Installment deductions. Installment deductions will be made
over a period not greater than the anticipated period of employment.
The size and frequency of installment deductions will bear a reasonable
relation to the size of the debt and the employee's ability to pay.
However, the amount deducted from any period will not exceed 15 percent
of the disposable pay from which the deduction is made unless the
employee has agreed in writing to the deduction of a greater amount.
(3) Deductions from final check. A deduction exceeding the 15
percent disposable pay limitation may be made from any final salary
payment under 31 U.S.C. 3716 and the Federal Claims Collection
Standards, in order to liquidate the debt, whether the employee is
being separated voluntarily or involuntarily.
(4) Deductions from other sources. If an employee subject to salary
offset is separated from the Corporation, and the balance of the debt
cannot be liquidated by offset of the final salary check, the
Corporation may offset any later payments of any kind against the
balance of the debt, as allowed by 31 U.S.C. 3716 and the Federal
Claims Collection Standards.
(e) Multiple debts. In instances where two or more creditor
agencies are seeking salary offsets, or where two or more debts are
owed to a single creditor agency, the Corporation's payroll office may,
at its discretion, determine whether one or more debts should be offset
simultaneously within the 15 percent limitation.
Sec. 2506.23 How will the Corporation coordinate salary offsets with
other agencies?
(a) Responsibilities of the Corporation as the creditor agency.
Upon completion of the procedures established in the regulations in
this subpart and pursuant to 5 U.S.C. 5514, the Corporation must submit
a debt claim to a paying agency.
(1) The Corporation must include in its claim a certification, in
writing, that:
(i) The employee owes the debt;
(ii) The amount and basis of the debt;
(iii) The date the Corporation's right to collect the debt first
accrued;
(iv) That the Corporation's regulations in this subpart have been
approved by the Office of Personnel Management under 5 CFR part 550,
subpart K;
(2) If the collection must be made in installments, the
Corporation's claim will also advise the paying agency of the amount or
percentage of disposable pay to be collected in each installment. The
Corporation may also advise the paying agency of the number of
installments to be collected, and the date of the first installment if
that date is other than the next officially established pay period.
(3) The Corporation shall also include in its claim either:
(i) The employee's written consent to the salary offset;
(ii) The employee's signed statement acknowledging receipt of the
procedures required by 5 U.S.C. 5514; or
(iii) Information regarding the completion of procedures required
by 5 U.S.C. 5514, including the actions taken and the dates of those
actions.
(4) If the employee is in the process of separating and has not
received a final salary check or other final payment(s) from the paying
agency, the Corporation must submit its debt claim to the paying agency
for collection under 31 U.S.C. 3716. The paying agency will (under its
regulations adopted under 5 U.S.C. 5514 and 5 CFR part 550, subpart K),
certify the total amount of its collection on the debt and notify the
employee and the Corporation. If the paying agency's collection does
not fully satisfy the debt, and the paying agency is aware that the
debtor is entitled to payments from the Civil Service Retirement and
Disability Fund or other similar payments that may be due the debtor
employee from other Federal Government sources, then (under its
regulations adopted under 5 U.S.C. 5514 and 5 CFR part 550, subpart K),
the paying agency will provide written notice of the outstanding debt
to the agency responsible for making the other payments to the debtor
employee. The written notice will state that the employee owes a debt,
the amount of the debt, and that the provisions of this
[[Page 4321]]
section have been fully complied with. However, the Corporation must
submit a properly certified claim under this paragraph (a)(4) to the
agency responsible for making the payments before the collection can be
made.
(5) Separated employee. If the employee is already separated and
all payments due from his or her former paying agency have been paid,
the Corporation may request, unless otherwise prohibited, that money
due and payable to the employee from the Civil Service Retirement and
Disability Fund (5 CFR part 831, subpart R, or 5 CFR part 845, subpart
D) or other similar funds, be administratively offset to collect the
debt.
(6) Employee transfer. When an employee transfers from one paying
agency to another paying agency, the Corporation will not repeat the
due process procedures described in 5 U.S.C. 5514 and this subpart to
resume the collection. The Corporation will submit a properly certified
claim to the new paying agency and will subsequently review the debt to
make sure the collection is resumed by the new paying agency.
(b) Responsibility of the Corporation as the paying agency. (1)
Complete claim. When the Corporation receives a certified claim from a
creditor agency (under the creditor agency's regulations adopted under
5 U.S.C. 5514 and 5 CFR part 550, subpart K), deductions should be
scheduled to begin within three officially established pay intervals.
Before deductions can begin, the employee will receive a written notice
from the Corporation including:
(i) A statement that the Corporation has received a certified debt
claim from the creditor agency;
(ii) The amount of the debt claim;
(iii) The date salary offset deductions will begin; and
(iv) The amount of such deductions.
(2) Incomplete claim. When the Corporation receives an incomplete
certification of debt from a creditor agency, the Corporation will
return the debt claim with a notice that the creditor agency must
comply with the procedures required under 5 U.S.C. 5514 and 5 CFR part
550, subpart K, and must properly certify a debt claim to the
Corporation before the Corporation will take action to collect from the
employee's current pay account.
(3) Review. The Corporation is not authorized to review the merits
of the creditor agency's determination with respect to the amount or
validity of the debt certified by the creditor agency.
(4) Employees who transfer from the Corporation to another paying
agency. If, after the creditor agency has submitted the debt claim to
the Corporation, the employee transfers from the Corporation to a
different paying agency before the debt is collected in full, the
Corporation will certify the total amount collected on the debt and
notify the employee and the creditor agency in writing. The
notification to the creditor agency will include information on the
employee's transfer.
Sec. 2506.24 Under what conditions will the Corporation make a refund
of amounts collected by salary offset?
If the Corporation is the creditor agency, it will promptly refund
any amount deducted under the authority of 5 U.S.C. 5514, when:
(a) The debt is waived or all or part of the funds deducted are
otherwise found not to be owed (unless expressly prohibited by statute
or regulation); or
(b) An administrative or judicial order directs the Corporation to
make a refund.
(c) Unless required or permitted by law or contract, refunds under
this section will not bear interest.
Sec. 2506.25 Will the collection of a claim by salary offset act as a
waiver of my rights to dispute the claimed debt?
Your involuntary payment of all or any portion of a debt being
collected under this subpart will not be construed as a waiver of any
rights which you may have under 5 U.S.C. 5514 or any other provisions
of a written contract or law, unless there are statutory or contractual
provisions to the contrary.
Subpart C--Tax Refund Offset
Sec. 2506.30 Which debts can the Corporation refer to the Department
of the Treasury for collection by offsetting tax refunds?
(a) The regulations in this subpart implement 31 U.S.C. 3720A which
authorizes the Treasury to reduce a tax refund by the amount of a past-
due legally enforceable debt owed to a Federal agency.
(b) For purposes of this section, a past-due legally enforceable
debt referable to the Treasury for tax refund offset is a debt that is
owed to the Corporation; and:
(1) Is at least $25.00 dollars;
(2) Except in the case of a judgment debt, has been delinquent for
at least three months and will not have been delinquent more than 10
years at the time the offset is made;
(3) Cannot be currently collected under the salary offset
provisions of 5 U.S.C. 5514;
(4) Is ineligible for administrative offset under 31 U.S.C. 3716(a)
by reason of 31 U.S.C. 3716(c)(2) or cannot be collected by
administrative offset under 31 U.S.C. 3716(a) by the Corporation
against amounts payable to the debtor by the Corporation;
(5) With respect to which the Corporation has given the debtor at
least 60 days to present evidence that all or part of the debt is not
past due or legally enforceable, has considered evidence presented by
the debtor, and has determined that an amount of the debt is past due
and legally enforceable;
(6) Which has been disclosed by the Corporation to a credit
reporting agency as authorized by 31 U.S.C. 3711(e), unless the credit
reporting agency would be prohibited from reporting information
concerning the debt by reason of 15 U.S.C. 1681c;
(7) With respect to which the Corporation has notified or has made
a reasonable attempt to notify the debtor that:
(i) The debt is past due, and
(ii) Unless repaid within 60 days thereafter, the debt will be
referred to the Treasury for offset against any refund of overpayment
of tax; and
(8) All other requirements of 31 U.S.C. 3720A and the Treasury
regulations relating to the eligibility of a debt for tax return offset
have been satisfied (31 CFR 285.2).
Sec. 2506.31 What are the Corporation's procedures for collecting
debts by tax refund offset?
(a) The Chief Executive Officer will be the point of contact with
the Treasury for administrative matters regarding the offset program.
(b) The Corporation will ensure that the procedures prescribed by
the Treasury are followed in developing information about past-due
debts and submitting the debts to the Treasury.
(c) The Corporation will submit a notification of a taxpayer's
liability for past-due legally enforceable debt to the Treasury which
will contain:
(1) The name and taxpayer identifying number (as defined in section
6109 of the Internal Revenue Code, 26 U.S.C. 6109) of the person who is
responsible for the debt;
(2) The dollar amount of the past-due and legally enforceable debt;
(3) The date on which the original debt became past due;
(4) A statement certifying that, with respect to each debt
reported, all of the requirements of eligibility of the debt for
referral for the refund offset have been satisfied. (See
Sec. 2506.30(b)). For purposes of this section, notice that collection
of the debt is affected by a bankruptcy proceeding involving the
individual will bar referral of the debt to the Treasury.
[[Page 4322]]
(d) The Corporation shall promptly notify the Treasury to correct
Corporation data submitted when it:
(1) Determines that an error has been made with respect to a debt
that has been referred;
(2) Receives or credits a payment on the debt; or
(3) Receives notice that the person owing the debt has filed for
bankruptcy under Title 11 of the United States Code or has been
adjudicated bankrupt and the debt has been discharged.
(e) When advising debtors of an intent to refer a debt to the
Treasury for offset, the Corporation will also advise the debtors of
remedial actions available to defer or prevent the offset from taking
place.
Subpart D--Administrative Offset
Sec. 2506.40 Under what circumstances will the Corporation collect
amounts that I owe to the Corporation (or some other federal agency) by
offsetting the debt against payments that the Corporation (or some
other federal agency) owes me?
(a) The regulations in this subpart apply to the collection of any
debts you owe to the Corporation, or to any request from another
federal agency that the Corporation collect a debt you owe by
offsetting your debt against a payment the Corporation owes you.
Administrative offset is authorized under section 5 of the Federal
Claims Collection Act of 1966, as amended (31 U.S.C. 3716). The
Corporation shall carry out administrative offset in accordance with
the provisions of the Federal Claims Collection Standards; the
regulations in this subpart are intended only to supplement the
provisions of the Federal Claims Collection Standards.
(b) The Chief Executive Officer, after attempting to collect a debt
you owe to the Corporation under section 3(a) of the Federal Claims
Collection Act of 1966, as amended (31 U.S.C. 3711(a)), may collect the
debt by administrative offset, subject to the following:
(1) The debt you owe is certain in amount; and
(2) It is in the best interest of the Corporation to collect your
debt by administrative offset because of the decreased costs of
collection and acceleration in the payment of the debt.
(c) The Chief Executive Officer may initiate administrative offset
with regard to debts you owe to another federal agency. The head of the
creditor agency, or his or her designee, must submit a written request
for the offset with a certification that the debt exists and that you
have been afforded the necessary due process rights.
(d) The Chief Executive Officer may request another federal agency
that holds funds payable to you to instead pay those funds to the
Corporation in settlement of your debt. The Corporation will provide
certification that:
(1) The debt exists; and
(2) You have been afforded the necessary due process rights.
(e) No collection by administrative offset will be made on any debt
that has been outstanding for more than 10 years unless facts material
to the Corporation or a federal agency's right to collect the debt were
not known, and reasonably could not have been known, by the official or
officials responsible for discovering and collecting the debt.
(f) The regulations in this subpart do not apply to:
(1) A case in which administrative offset of the type of debt
involved is explicitly provided for or prohibited by another statute;
or
(2) Debts owed to the Corporation by federal agencies or by any
State or local government.
Sec. 2506.41 How will the Corporation request that my debt to the
Corporation be collected by offsetting against some payment that
another federal agency owes me?
The Chief Executive Officer may request that funds due and payable
to you by another federal agency instead be paid to the Corporation in
payment of a debt you owe to the Corporation. In requesting
administrative offset, the Corporation, as creditor, will certify in
writing to the federal agency that is holding funds for you:
(a) That you owe the debt;
(b) The amount and basis of the debt; and
(c) That the Corporation has complied with the requirements of 31
U.S.C. 3716, its own administrative offset regulations in this subpart,
and the applicable provisions of the Federal Claims Collection
Standards with respect to providing the debtor with due process.
Sec. 2506.42 What procedures will the Corporation use to collect
amounts I owe to a federal agency by offsetting a payment that the
Corporation would otherwise make to me?
Any federal agency may request that the Corporation
administratively offset funds due and payable to you in order to
collect a debt you owe to that agency. The Corporation will initiate
the requested offset only:
(a) Upon receipt of written certification from the creditor agency
stating:
(1) That you owe the debt;
(2) The amount and basis of the debt;
(3) That the agency has prescribed regulations for the exercise of
administrative offset; and
(4) That the agency has complied with its own administrative offset
regulations and with the applicable provisions of the Federal Claims
Collection Standards, including providing you with any required hearing
or review; and
(b) Upon a determination by the Chief Executive Officer that
offsetting funds payable to you by the Corporation in order to collect
a debt owed by you would be in the best interest of the United States
as determined by the facts and circumstances of the particular case,
and that such an offset would not otherwise be contrary to law.
Sec. 2506.43 When may the Corporation make an offset in an expedited
manner?
The Corporation may effect an administrative offset against a
payment to be made to you before completion of the procedures required
by Secs. 2506.41 and 2506.42 if failure to take the offset would
substantially jeopardize the Corporation's ability to collect the debt
and the time before the payment is to be made does not reasonably
permit the completion of those procedures. An expedited offset will be
promptly followed by the completion of those procedures. Amounts
recovered by offset, but later found not to be owed to the Corporation,
will be promptly refunded.
Dated: January 15, 1999.
Kenneth L. Klothen,
General Counsel.
[FR Doc. 99-1769 Filed 1-27-99; 8:45 am]
BILLING CODE 6050-28-U