Claims Collection Standards; Debt Collection Act of 1982: Salary Offset

OFFICE OF PERSONNEL MANAGEMENT

5 CFR Part 179

RIN 3206-AF29

Claims Collection Standards; Debt Collection Act of 1982: Salary

Offset

AGENCY: Office of Personnel Management.

ACTION: Final rule.

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SUMMARY: The Office of Personnel Management (OPM) is issuing final

regulations to govern the collection of debts owed to OPM's

administrative accounts by Federal employees. These regulations

implement the debt collection procedures provided under the Debt

Collection Act of 1982 (Act). The Act authorizes the Federal Government

to collect debts by means of offset from the salaries of Federal

employees without the employee's consent, provided that the employee is

properly notified and given the opportunity to exercise certain

administrative rights. OPM's collection of debts due the Retirement and

Insurance Group for payment to the Civil Service Retirement and

Disability Fund, Employees' Life Insurance Fund, the Retired Federal

Employees Health Benefits Fund, or the Employees' Health Benefits Fund

is governed by other regulatory provisions.

DATES: These regulations are effective July 11, 1994.

FOR FURTHER INFORMATION CONTACT:

Anna Wilson, Chief, Financial Policy Division, Office of the Chief

Financial Officer (CFO), (202) 606-5075.

SUPPLEMENTARY INFORMATION: Section 5 of the Debt Collection Act of 1982

(Act) Pub. L. 97-365) codified at 5 U.S.C. 5514, makes several changes

in the way Executive and Legislative agencies collect debts owed the

Government. The purpose of the Act is to improve the ability of the

Government to collect monies owed it.

Under the Act, when the head of an agency determines that an

employee of any agency is indebted to the United States, or is notified

by the head of another agency that an agency employee is indebted to

the United States, the employee's debt may be offset against his/her

pay. Before agencies may use the salary offset recovery procedure,

certain due process rights must be extended to the debtor.

Before the Government may collect a debt by salary offset, an

employee-debtor must be provided with notice of the debt and the

opportunity to inspect and copy Government records relating to the

debt, enter into a written repayment agreement, and request an

impartial hearing on the determination of the agency concerning the

existence or the amount of the debt. The employee must notify the

agency of his/her intent to exercise these rights within the time

period prescribed in the regulations.

The Act requires agencies to issue regulations for salary offset.

This final rule establishes the procedures the Office of Personnel

Management (OPM) will follow in making a salary offset. OPM has

determined that this document is interpretative; it implements a

definitive statutory scheme and the requirements contained in

regulations promulgated by OPM, codified in 5 CFR part 550, subpart K.

Accordingly, no Notice of Proposed Rulemaking is required pursuant to 5

U.S.C. 553(b)(A). In addition, because this rule relates to agency

management and personnel, no Notice of Proposed Rulemaking is required

pursuant to 5 U.S.C. 553(a)(2). For these reasons, a delayed effective

date is not required pursuant to 5 U.S.C. 553(d)(2).

Analysis and Comments

The Interim Rule was published in the Federal Register on November

19, 1993 (58 FR 60993). The comment period closed on January 18, 1994.

Two labor organizations responded with comments. OPM has fully

considered all of their comments.

Section 179.201 Purpose

One commentor requested that we change the 10 years in the second

sentence (i.e., the time allowed for commencing actions brought by the

United States) to 6 years. They cited no basis for the request. Section

179.201 is based on 31 U.S.C. 3716 which precludes agencies from

initiating offset to collect a debt more than 10 years after the

Government's right to collect the debt first accrued, with certain

exceptions explained in that section.

Section 179.202 Scope

In response to a commenter, we corrected the reference ``Section

179.207, Notice Requirement'' to ``Section 179.207, Hearing.''

Section 179.206 Notice Requirements Before Offset

(a)(16) One commenter wished to insert ``with interest'' after the

word ``employee'' in this sentence. While the Debt Collection Act of

1982 requires the assessment of interest, penalty fees, and

administrative costs on delinquent debts as a means of strengthening

enforcement of collections, it makes no provision to pay interest to

the debtor for erroneous collections. OPM is not authorized to make

such payments in the absence of a specific statute or authority. This

reasoning applies also to the same comment regarding section 179.215

Refunds.

Section 179.207 Hearing

Both commenters objected to the perceived inequity in treatment of

parties who fail to appear (Sec. 179.207(j)). We have inserted the

following language:

* * * proceed with the hearing as scheduled and make his/her

determination based upon the oral testimony presented and the

documentary evidence submitted by both parties. With the agreement

of both parties, the hearing official shall schedule a new hearing

date.

One commenter suggested several other changes to this section,

Secs. 179.208 and 179.209 but provided no bases for the changes. Since

the regulation as published complies with requirements of the Debt

Collection Act of 1982, the suggested changes were not made.

Executive Order (E.O.) 12291, Federal Regulation

OPM has determined that this is not a major rule as defined under

section 1(b) of E.O. 12291, Federal Regulation.

Regulatory Flexibility Act

I certify that these regulations will not have a significant

economic impact on a substantial number of small entities because they

are regulations that will affect only employees of the Federal

Government.

List of Subjects in 5 CFR Part 179

Claims.

Office of Personnel Management.

James B. King,

Director.

Accordingly, OPM is amending title 5, Code of Federal Regulations,

part 179 as follows:

PART 179--CLAIMS COLLECTION STANDARDS

1. The authority citation for part 179 is revised to read as

follows:

Authority: 31 U.S.C. 952; 5 U.S.C. 1103; Reorganization Plan No.

2 of 1978; 5 U.S.C. 5514; 5 CFR part 550 subpart K; 31 U.S.C. 3701;

31 U.S.C. 3711; 31 U.S.C. 3716; 31 U.S.C. 3720A.

2. Section 179.102 of subpart A is revised to read as follows:

Sec. 179.102 Delegation of authority.

(a) The Chief Financial Officer and his or her delegates are

designated by the Director and authorized to perform all the duties for

which the Director is responsible under the Debt Collection Act of 1982

and Office of Personnel Management regulations with the exception of

debts arising from the Civil Service Retirement and Disability Fund,

the Employees' Life Insurance Fund, the Retired Federal Employees

Health Benefits Act (74 Stat. 849), and the Employees Health Benefits

Fund. However, the Chief Financial Officer and his or her delegates

will request a review by the General Counsel or his or her designee for

all claims processed (in amounts of $2500 or more) for compromise,

suspension, and termination of collection action.

(b) The Associate Director for Retirement and Insurance and his or

her delegates are designated by the Director and authorized to perform

all the duties for which the Director is responsible under the Debt

Collection Act of 1982 and Office of Personnel Management regulations

on debts caused by payments from the Civil Service Retirement and

Disability Fund (subchapter III of chapter 83 or chapter 84), claims

under the provisions of the Federal Employees' Life Insurance Fund

(chapter 87), the Retired Federal Employees Health Benefits Act (74

Stat. 849), the Employees Health Benefits Fund (chapter 89), the Panama

Canal Construction Annuity Act (58 Stat. 257), and, the Lighthouse

Service Widows' Annuity Act (64 Stat. 465).

3. Subpart B, consisting of Secs. 179.201 through 179.218, is

revised to read as follows:

Subpart B--Salary Offset

Sec.

179.201 Purpose.

179.202 Scope.

179.203 Definitions.

179.204 Applicability of regulations.

179.205 Waiver requests and claims to the General Accounting

Office.

179.206 Notice requirements before offset.

179.207 Hearing.

179.208 Certification.

179.209 Voluntary repayment agreement as alternative to salary

offset.

179.210 Special review.

179.211 Notice of salary offset.

179.212 Procedures for salary offset.

179.213 Coordinating salary offset with other agencies.

179.214 Interest, penalties and administrative costs.

179.215 Refunds.

179.216 Request for the services of a hearing official when the

creditor agency is not OPM.

179.217 Non-waiver of rights by payments.

179.218 Additional administrative collection action.

Subpart B--Salary Offset

Sec. 179.201 Purpose.

The purpose of the Debt Collection Act of 1982 (Pub. L. 97-365), is

to provide a comprehensive statutory approach to the collection of

debts due the Federal Government. These regulations implement section 5

of the Act which authorizes the collection of debts owed by Federal

employees to the Federal Government by means of salary offset, except

that no claim may be collected by such means if outstanding for more

than 10 years after the agency's right to collect the debt first

accrued, unless facts material to the Government's right to collect

were not known, and could not reasonably have been known, by the

official or officials who were charged with the responsibility for

discovery and collection of such debts. These regulations are

consistent with the regulations on salary offset published by the

Office of Personnel Management (OPM) on July 3, 1984 (49 FR 27470) in 5

CFR part 550, subpart K.

Sec. 179.202 Scope.

(a) These regulations provide procedures for the collection of

monies from a Federal employee's pay by salary offset to satisfy

certain debts owed the Government.

(b) These regulations apply to all collections by the Director of

OPM (except collections involving debts because of payments made from

the Civil Service Retirement and Disability Fund, payments made under

the Retired Federal Employees Health Benefits Act (74 Stat. 849), the

Panama Canal Construction Annuity Act and the Lighthouse Service

Widows' Annuity Act and payments or premiums relating to the Federal

Employees' Life Insurance Fund or the Federal Employees Health Benefits

Fund) from:

(1) Federal employees who owe debts to OPM; and

(2) OPM employees who owe debts to other agencies.

(c) These regulations do not apply to debts or claims arising under

the Internal Revenue Code of 1954, as amended (26 U.S.C. 1 et seq.);

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) Section 179.207 does not apply to any adjustment to pay arising

from 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 pay periods or less.

(e) Nothing in these regulations precludes the compromise,

suspension, or termination of collection actions, where appropriate,

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 et seq.).

(f) Nothing in these regulations precludes an employee from

requesting a waiver of the debt under applicable statute; under the

standards and procedures specified by the Federal Claims Collection

Standards (FCCS); or waiver of salary overpayment under 5 U.S.C. 5584,

10 U.S.C. 2774, or 32 U.S.C. 716, by submitting a subsequent claim to

the General Accounting Office in accordance with procedures established

by the General Accounting Office.

Sec. 179.203 Definitions.

As used in this subpart the following definitions shall apply:

Agency means:

(1) An Executive Agency as defined by section 105 of title 5,

United States Code;

(2) A military department as defined by section 102 of title 5,

United States Code;

(3) An agency or court of the judicial branch including a court as

defined in section 610 of title 28, United States Code, the District

Court for the Northern Mariana Islands and the Judicial Panel and

Multidistrict Litigation;

(4) An agency of the legislative branch, including the U.S. Senate

and the U.S. House of Representatives; and

(5) Other independent establishments that are entities of the

Federal Government.

Certification means a written debt claim, as prescribed by

Sec. 179.209, that is received from a creditor agency and which

requests the paying agency to offset the salary of an employee.

Claim See debt.

Creditor agency means an agency of the Federal Government to which

the debt is owed. For purposes of this part creditor agency includes

OPM, unless otherwise noted.

Debt means money owed by an employee of the Federal Government to

an agency of the Federal Government, from sources which include loans

insured or guaranteed by the United States and all other amounts due

the Government from fees, leases, rents, royalties, services, sales of

real or personal property, overpayments, penalties, damages, interests,

fines and forfeitures (except those arising under the Uniform Code of

Military Justice) and all other similar sources.

Delinquent means the failure to pay an obligation or debt by the

date specified in the initial notification or applicable contractual

agreement, unless other payment arrangements have been agreed to by OPM

and the debtor by that date, or if, at any time thereafter, the debtor

fails to satisfy the obligations under a payment agreement with the

creditor agency.

Director means the Director of OPM or his or her designee.

Disposable pay means that part of current basic pay, special pay,

incentive pay, retired 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. OPM

shall allow the following deductions, and any others required by law to

be withheld, in determining disposable pay subject to salary offset;

(1) Federal employment taxes;

(2) Amounts mandatorily withheld for the U.S. Soldiers' and

Airmen's Home;

(3) Fines and forfeitures ordered by a court martial or by a

commanding officer;

(4) Federal, state or local income taxes no greater than would be

the case if the employee claimed all dependents to which he or she is

entitled and such additional amounts for which the employee presents

evidence of a tax obligation supporting the additional withholding;

(5) Amounts withheld from benefits payable under title II of the

Social Security Act where the withholding is required by law;

(6) Amounts deducted for Medicare;

(7) Health insurance premiums;

(8) Normal retirement contributions as explained in 5 CFR

581.105(e) (e.g., Civil Service Retirement deductions, Survivor Benefit

Plan or Retired Serviceman's Family Protection Plan); and

(9) Normal life insurance premiums (e.g., Serviceman's Group Life

Insurance and basic Federal Employee's Group Life Insurance premiums)

exclusive of optional life insurance premiums.

Employee means a current employee of OPM or other agency, including

a current member of the Armed Forces or Reserve of the Armed Forces of

the United States.

FCCS means the Federal Claims Collection Standards jointly

published by the Department of Justice and the General Accounting

Office of 4 CFR 101.1 et seq.

Hearing official means an individual (including an administrative

law judge) responsible for conducting any hearing with respect to the

existence or amount of a debt claimed, and rendering a decision on the

basis of such hearing. A hearing official may not be under the

supervision or control of the Director of OPM when OPM is the creditor

agency.

Notice of intent to offset or notice of intent means a written

notice from a creditor agency to an employee that states the creditor

agency's determination that the employee owes a debt to the creditor

agency and apprises the employee of certain administrative rights.

Notice of salary offset means a written notice from the paying

agency to an employee after a certification has been issued by the

creditor agency, informing the employee that salary offset will begin

at the next officially established pay interval.

Office means the central and regional offices of the Office of

Personnel Management.

Paying agency means the agency of the Federal Government which

employs the individual who owes a debt to an agency of the Federal

Government. In some cases, OPM may be both the creditor agency and the

paying agency.

Payroll office means the payroll office in the paying agency which

is primarily responsible for the payroll records and the coordination

of pay matters with the appropriate personnel office with respect to an

employee. Payroll office, with respect to OPM, means the central

payroll office.

Salary offset means an administrative offset 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.

Salary Offset Coordinator means an official, designated by the

Director of OPM, who is responsible for coordinating debt collection

activities for OPM.

Waiver means the cancellation, remission, forgiveness, or non-

recovery of a debt allegedly owed by an employee to OPM or another

agency as permitted or required by 5 U.S.C. 5584, 10 U.S.C. 2774, 32

U.S.C. 716, or any other law.

Sec. 179.204 Applicability of regulations.

These regulations are to be followed for all OPM collections

(except those involving retirement, life, and health insurance debts

for recovery by the Associate Director for Retirement and Insurance) in

instances where:

(a) OPM is owed a debt by an individual currently employed by

another agency;

(b) OPM is owed a debt by an individual who is a current employee

of OPM; or

(c) OPM currently employs an individual who owes a debt to another

Federal agency. Upon receipt of proper certification from the creditor

agency, OPM will offset the debtor-employee's salary in accordance with

these regulations.

Sec. 179.205 Waiver requests and claims to the General Accounting

Office.

These regulations do not preclude an employee from requesting

waiver of an overpayment under 5 U.S.C. 5584, 10 U.S.C. 2774, 32 U.S.C.

716, or in any way questioning the amount or validity of a debt by

submitting a subsequent claim to the General Accounting Office in

accordance with the procedures prescribed by the General Accounting

Office. These regulations do not preclude an employee from requesting a

waiver pursuant to other statutory provisions pertaining to the

particular debt being collected.

Sec. 179.206 Notice requirements before offset.

(a) Deductions under the authority of 5 U.S.C. 5514 shall not be

made unless the creditor agency provides the employee with written

notice that he/she owes a debt to the Federal government a minimum of

30 calendar days before salary offset is initiated. When OPM is the

creditor agency, this notice of intent to offset an employee's salary

shall be hand-delivered at work, or sent by registered mail, return

receipt requested, to the employee's most current address that is

available to the Office and will state:

(1) That the creditor agency has reviewed the records relating to

the claim and has determined that a debt is owed, the amount of the

debt, and the facts giving rise to the debt;

(2) The creditor agency's intention to collect the debt by means of

deduction from the employee's current disposable pay account until the

debt and all accumulated interest are paid in full;

(3) The amount, frequency, beginning date, and duration of the

intended deductions;

(4) An explanation of OPM's policy concerning interest, penalties

and administrative costs including a statement that such assessments

must be made unless excused in accordance with the FCCS, 4 CFR 101.1 et

seq. (Sec. 179.214);

(5) The employee's right to inspect and copy all records of the

office pertaining to the debt claimed, or to request and to receive

copies of such records if personal inspection is impractical;

(6) If not previously provided, the opportunity to establish a

schedule for the voluntary repayment of the debt through offset or to

enter into an agreement to establish a schedule for repayment of the

debt in lieu of offset (4 CFR 102.2(e)). The agreement must contain

terms agreeable to the Office and must be in such form that it is

legally enforceable. The agreement must:

(i) Be in writing;

(ii) Be signed by both the employee and the creditor agency;

(iii) Specify all the terms of the arrangement for payment; and

(iv) Contain a provision accelerating the debt in the event of a

default by the debtor, but such an increase may not result in a

deduction that exceeds 15 percent of the employee's disposable pay

unless the employee has agreed in writing to the deduction of a greater

amount (5 CFR 550.1104(i)).

(7) The right to a hearing conducted by an impartial hearing

official (an administrative law judge, or alternatively, a hearing

official not under the supervision or control of the Director) with

respect to the existence and amount of the debt claimed, or the

repayment schedule (i.e., the percentage of disposable pay to be

deducted each pay period), so long as a petition is filed by the

employee as prescribed in Sec. 179.207;

(8) The method and time period for requesting a hearing;

(9) The name, address and phone number of an official or employee

of the Office who may be contacted concerning procedures for requesting

a hearing;

(10) The name and address of the office to which the petition for a

hearing should be sent;

(11) That a timely and properly filed petition for hearing will

stay the commencement of collection proceedings (a timely filing must

be received in the office specified under paragraph (a)(10) of this

section within 15 calendar days after receipt of such notice of intent

to offset);

(12) That the Office will initiate certification procedures to

implement a salary offset (which may not exceed 15 percent of the

employee's disposable pay) not less than 30 days from the date of

receipt of the notice of debt, unless the employee files a timely

petition for a hearing;

(13) That a final decision on the hearing (if a hearing is

requested) will be issued at the earliest practical date, but not later

than 60 days after the filing of the petition requesting the hearing,

unless the employee requests and the hearing official grants a delay in

the proceedings;

(14) That any knowingly false or frivolous statements,

representations, or evidence may subject the employee to;

(i) Disciplinary procedures appropriate under chapter 75 of title

5, United States code; part 752 of title 5, Code of Federal

Regulations; or any other applicable statute or regulations;

(ii) Penalties under the False Claims Act, sections 3729 through

3731 of title 31, United States Code, or any other applicable statutory

authority; and

(iii) Criminal penalties under sections 286, 287, 1001, and 1002 of

title 18, United States code, or any other applicable statutory

authority;

(15) Any other rights and remedies available to the employee under

statutes or regulations governing the program for which the collection

is being made;

(16) 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 to the United States, will be

promptly refunded to the employee; and

(17) That proceedings with respect to such debt are governed by

section 5 of the Debt Collection Act of 1982 (5 U.S.C. 5514).

(b) The Office is not required to comply with paragraph (a) of this

section for any adjustment to pay arising from:

(1) An employee's selection 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 pay

periods or less; or

(2) An employee's consent to make voluntary withholdings from his

or her current pay account.

Sec. 179.207 Hearing.

(a) Request for hearing. Except as provided in paragraph (b) of

this section, an employee who desires a hearing concerning the

existence or amount of the debt or the proposed offset schedule must

send such a request to the office designated in the notice of intent

(Sec. 179.207(a)(10)). The request (or petition) for hearing must be

received by the designated office not later than 15 calendar days

following the employee's receipt of the notice. The employee's request

(or petition) must:

(1) Be signed by the employee;

(2) Fully identify and explain with reasonable specificity all the

facts, evidence and witnesses, if any, that the employee believes

support his or her position; and

(3) Specify whether an oral or paper hearing is requested. If an

oral hearing is desired, the request should explain why the matter

cannot be resolved by review of the documentary evidence alone (4 CFR

102.3(c)).

(b) Failure to timely submit. (1) If the employee files a petition

for a hearing after the expiration of the 15 calendar day period

provided for in paragraph (a) of this section, the Office may accept

the request if the employee can show that the delay was the result of

circumstances beyond his of her control or failure to receive actual

notice of the filing deadline (unless the employee had actual notice of

the filing deadline).

(2) An employee waives the right to a hearing, and will have his or

her disposable pay offset in accordance with the Office offset

schedule, if the employee:

(i) Fails to file a timely request for a hearing unless such

failure is excused; or

(ii) Fails to appear at an oral hearing of which he or she was

notified unless the hearing official determines that failure to appear

was due to circumstances beyond the employee's control.

(c) Representation at the hearing. The creditor agency may be

represented by legal counsel. The employee may represent himself or

herself or may be represented by an individual of his or her choice and

at his or her expense.

(d) Review of Office records related to the debt. (1) An employee

who intends to inspect or copy creditor agency records related to the

debt, as provided by Sec. 179.207(a)(5), must send a letter to the

official designated in the notice of intent to offset stating his or

her intention. The letter must be received within 15 calendar days

after the employee's receipt of the notice.

(2) In response to a timely request submitted by the debtor, the

designated official will notify the employee of the location and time

when the employee may inspect and copy records related to the debt.

(3) If personal inspection is impractical, arrangements shall be

made to end copies of such records to the employee.

(e) Hearing official. The Office may request an administrative law

judge to conduct the hearing, or the Office may obtain a hearing

official who is not under the supervision or control of the Director of

OPM.

(f) Obtaining the services of a hearing official when OPM is the

creditor agency. (1) When the debtor is not an OPM employee and the

Office cannot provide a prompt and appropriate hearing before a hearing

official furnished pursuant to another lawful arrangement, the Office

may contact an agent of the paying agency designated in 5 CFR part 581,

appendix A, or other individual designated by the paying agency, and

request a hearing official.

(2) When the debtor is an OPM employee, the Office may contact any

agent of another agency designated in 5 CFR part 581, appendix A, or

otherwise designated by that agency, to request a hearing official.

(g) Procedure.--(1) General. After the employee requests a hearing,

the hearing official shall notify the employee of the form of the

hearing to be provided. If the hearing will be oral, the notice shall

set forth the date, time and location of the hearing. If the hearing

will be paper, the employee shall be notified that he or she should

submit arguments in writing to the hearing official by a specified date

after which the record shall be closed. This date shall give the

employee reasonable time to submit documentation.

(2) Oral hearing. An employee who requests an oral hearing shall be

provided an oral hearing if the hearing official determines that the

matter cannot be resolved by review of documentary evidence alone

(e.g., when an issue of credibility or veracity is involved). The

hearing is not an adversarial adjudication and need not take the form

of an evidentiary hearing. Oral hearings may take the form of, but are

not limited to:

(i) Informal conferences with the hearing official, in which the

employee and agency representative will be given full opportunity to

present evidence, witnesses, and argument;

(ii) Informal meetings with an interview of the employee; or

(iii) Formal written submissions with an opportunity for oral

presentation.

(3) Paper hearing. If the hearing official determines that an oral

hearing is not necessary, he or she will make a determination based

upon a review of the available written record (4 CFR 102.3(c) (2) and

(3)).

(4) Record. The hearing official must maintain a summary record of

any hearing provided by this subpart (4 CFR 102.3(c)(1)(ii)). Witnesses

who testify in oral hearings will do so under oath or affirmation.

(h) Date of decision. The hearing official shall issue a written

opinion stating his or her decision, based upon documentary evidence

and information developed at the hearing, as soon as practicable after

the hearing, but not later than 60 days after the date on which the

petition was received by the creditor agency, unless the employee

requests a delay in the proceedings. In such case the 60-day decision

period shall be extended by the number of days by which the hearing was

postponed.

(i) Content of decision. The written decision shall include:

(1) A statement of the facts presented to support the origin,

nature, and amount of the debt;

(2) The hearing official's findings, analysis, and conclusions

including a determination whether the debtor's petition for hearing was

baseless and resulted from an intent to delay creditor agency

collection activity and whether the Office should pursue other actions

against the debtor as provided by 5 CFR 550.1104(d)(11); and

(3) The terms of any repayment schedules, if applicable.

(j) Failure to appear. In the absence of good cause shown (e.g.,

illness), an employee who fails to appear at a hearing shall be deemed,

for the purpose of this subpart, to admit the existence and amount of

the debt as described in the notice of intent. If the representative of

the creditor agency fails to appear, the hearing official shall proceed

with the hearing as scheduled and make his/her determination based upon

the oral testimony presented and the documentary evidence submitted by

both parties. With the agreement of both parties, the hearing official

shall schedule a new hearing date. Both parties shall be given

reasonable notice of the time and place of the new hearing.

Sec. 179.208 Certification.

(a) OPM salary offset coordinator shall provide a certification to

the paying agency in all cases where:

(1) The hearing official determines that a debt exists;

(2) The employee fails to contest the existence and amount of the

debt by failing to request a hearing; or

(3) The employee fails to contest the existence of the debt by

failing to appear at a hearing.

(b) The certification must be in writing and must state:

(1) That the employee owes the debt;

(2) The amount and basis of the debt;

(3) The date the Government's right to collect the debt first

accrued;

(4) That the Office's regulations have been approved by OPM

pursuant to 5 CFR part 550, subpart K;

(5) The date on which payment(s) is due;

(6) If the collection is to be made in installments, the number of

installments to be collected, the amount of each installment or

percentage of disposable pay, and the commencement date of the first

installment, if a date other than the next officially established pay

period is required; and

(7) The date(s) of any action(s) taken under 5 U.S.C. 5514(b).

Sec. 179.209 Voluntary repayment agreement as alternative to salary

offset.

(a)(1) In response to a notice of intent, an employee may propose

to repay the debt by making voluntary installment payments as an

alternative to salary offset. An employee who wishes to repay a debt

without salary offset shall submit in writing a proposed agreement to

repay the debt. The proposal shall admit the existence of the debt, and

the agreement must be in such form that it is legally enforceable. The

agreement must:

(i) Be in writing;

(ii) Be signed by both the employee and the creditor agency;

(iii) Specify all the terms of the arrangement for payment; and

(iv) Contain a provision accelerating the debt in the event of

default by the debtor, but such an increase may not result in a

deduction that exceeds 15 percent of the employee's disposable pay

unless the employee has agreed in writing to deduction of a greater

amount (5 CFR 550.1104(i)).

(2) Any proposal under paragraph (a) of this section must be

received by the official designated in the notice of intent within 30

calendar days after receipt of the notice.

(b) The creditor agency will review a timely and properly submitted

repayment proposal by the employee debtor and notify the employee

whether the proposed written agreement for repayment is acceptable. It

is within the creditor agency's discretion to accept a repayment

agreement instead of proceeding by offset.

(c) If the creditor agency decides that the proposed repayment

agreement is unacceptable, the employee will have 15 days from the date

he or she received notice of that decision to file a petition for a

hearing or a special review as provided by Sec. 179.210.

(d) If the creditor agency decides that the proposed repayment

agreement is acceptable, the alternative arrangement must be in

writing, signed by both the employee and the creditor agency designee

and meet the other requirements of this section for a voluntary

repayment agreement.

Sec. 179.210 Special review.

(a) An OPM employee subject to salary offset or a voluntary

repayment agreement, may, at any time, request a special review by the

Office of the amount of the salary offset or voluntary payment, based

on materially changed circumstances such as, but not limited to,

catastrophic illness, divorce, death, or disability.

(b) In determining whether an offset would prevent the employee

from meeting essential subsistence expenses (food, housing, clothing,

transportation and medical care), the employee shall submit a detailed

statement and supporting documents for the employee, his or her spouse,

and dependents indicating:

(1) Income from all sources;

(2) Assets;

(3) Liabilities;

(4) Number of dependents;

(5) Expenses for food, housing, clothing and transportation;

(6) Medical expenses; and

(7) Exceptional expenses, if any.

If an OPM employee requests a special review under this section, the

employee shall file an alternative proposed offset or payment schedule

and a statement, with supporting documents (Sec. 179.210(b)), stating

why the current salary offset or payments result in an extreme

financial hardship to the employee.

(c) The Director shall evaluate the statement and supporting

documents, and determine whether the original offset or repayment

schedule imposes an extreme financial hardship on the employee. The

Director shall notify the employee in writing of such determination,

including, if appropriate, a revised offset or repayment schedule.

(d) If the special review results in a revised offset or repayment

schedule, the OPM salary offset coordinator shall provide a new

certification to the payroll office.

Sec. 179.211 Notice of salary offset.

(a) Upon receipt of proper certification from a creditor agency,

the OPM payroll office will send the OPM employee, identified in the

certification as the debtor, a written notice of salary offset. Such

notice shall, at a minimum:

(1) State that OPM has received a properly certified debt claim

from a creditor agency;

(2) Contain a copy of the certification received from the creditor

agency;

(3) Advise the employee that salary offset will be initiated at the

next officially established pay interval; and

(4) State the amount of the claim and amount of deductions.

(b) The payroll office shall provide a copy of the notice to the

creditor agency and advise such agency of the dollar amount to be

offset and the pay period when the offset will begin.

Sec. 179.212 Procedures for salary offset.

(a) The Director or his or her designee shall coordinate salary

deductions under this subpart.

(b) OPM payroll office shall determine the amount of an employee's

disposable pay and implement the salary offset.

(c) Deductions shall begin effective the pay period following

receipt by OPM's payroll office of proper certification of the debt

(Sec. 179.208).

(d) Types of collection.--(1) Lump-sum payment. A debt will be

collected in a lump sum if possible. If an employee is financially

unable to pay in one lump sum or the amount of the debt exceeds 15

percent of disposable pay for an officially established pay interval,

collection must be made in installments.

(2) Installment deductions. Installment deductions will be made

over a period not greater than the anticipated period of employment

and, except in rare circumstances, not to exceed 3 years. 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. The amount

deducted for 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) Lump-sum deductions from final check. A lump-sum deduction

exceeding the 15 percent disposable pay limitation may be made from any

final salary payment pursuant to 31 U.S.C. 3716 in order to liquidate

the debt, whether the employee is being separated voluntarily or

involuntarily.

(4) Lump-sum deductions from other sources. When an employee

subject to salary offset is separated from OPM and the balance of the

debt cannot be liquidated by offset of the final salary check, the

Office, pursuant to 31 U.S.C. 3716, the FCCS and OPM's implementing

regulations, may offset the balance of the debt against any financial

payment due the employee from the U.S. Government.

(e) Multiple debts. In instances where two or more creditor

agencies are seeking salary offset, or where two or more debts are owed

to a single creditor agency, OPM payroll office may, at its discretion,

determine whether one or more debts should be offset simultaneously

within the 15 percent limitation.

(f) Precedence of debts owed to OPM. For OPM employees, debts owed

to the Office generally take precedence over debts owed to other

agencies. In the event that a debt to the Office is certified while an

employee is subject to a salary offset to repay another agency, the OPM

payroll office may decide whether to have that debt repaid in full

before collecting its claim or whether changes should be made in the

salary deduction being sent to the other agency. If debts owed the

Office can be collected in one pay period, the payroll office may

suspend the salary offset to the other agency for that pay period in

order to liquidate the office debt.

(g) When an employee owes two or more debts, the best interests of

the Government shall be the primary consideration in determining the

order of debt collection. The OPM payroll office, in making this

determination, will be guided primarily by the statute of limitations

that affects the collection of the debt(s).

Sec. 179.213 Coordinating salary offset with other agencies.

(a) Responsibility of OPM as the creditor agency. (1) The Director

or his or her designee shall coordinate debt collections with other

agencies and shall, as appropriate:

(i) Arrange for a hearing or special review upon proper petitioning

by a Federal employee; and

(ii) Prescribe, upon consultation with the General Counsel, such

additional practices and procedures as may be necessary to carry out

the intent of this regulation.

(2) The designated salary offset coordinator will be responsible

for:

(i) Ensuring that each notice of intent to offset is consistent

with the requirements of Sec. 179.206;

(ii) Ensuring that each certification of debt that is sent to a

paying agency is consistent with the requirements of Sec. 179.208;

(iii) Obtaining hearing officials from other agencies pursuant to

Sec. 179.207(f); and

(iv) Ensuring that hearings are properly scheduled.

(3) Requesting recovery from current paying agency. Upon completion

of the procedures established in these regulations and pursuant to 5

U.S.C. 5514, the Office must:

(i) Certify, in writing, to the paying agency that the employee

owes the debt, the amount and basis of the debt, the date on which

payment(s) is due, the date the Government's right to collect the debt

first accrued, and that the Office's regulations implementing 5 U.S.C.

5514 have been approved by the Office of Personnel Management;

(ii) Advise the paying agency of the amount or percentage of

disposable pay to be collected in each installment and the number and

commencing date of the installments (if a date other than the next

officially established pay period is required);

(iii) Advise the paying agency of the action(s) taken under 5

U.S.C. 5514(b) and give the date(s) and action(s) was taken (unless the

employee has consented to the salary offset in writing or signed a

statement acknowledging receipt of the required procedures and the

written consent or statement is forwarded to the paying agency);

(iv) Submit a debt claim certification containing the information

specified in paragraphs (a)(3)(i), (a)(3)(ii) and (a)(3)(iii) of this

section and an installment agreement (or other instruction on the

payment schedule), if applicable, to the employee's paying agency; and

(v) Submit the debt claim, as provided in Sec. 179.208, to the

employee's paying agency for collection 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 paying agency must

certify the total amount of its collection on the debt and send a copy

of the certification to the employee and another copy to the creditor

agency. 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, the paying agency will provide written notification

of the outstanding debt to the agency responsible for making such other

payments to the debtor employee. The written notification shall state

that the employee owes a debt (including the amount) and that the

provisions of this section have been fully complied with. The Office

must submit a properly certified claim to the agency responsible for

making such payments before the collection can be made.

(4) Separated employee. If the employee is already separated and

all payments due from his or her former paying agency have been paid,

the Office may request, unless otherwise prohibited, that money due and

payable to the employee from the Civil Service Retirement and

Disability Fund (5 CFR 831.1801 et seq. or 5 CFR 845.401 et seq.) or

other similar funds, be administratively offset to collect the debt (31

U.S.C. 3716 and the FCCS).

(5) Employee transfer. When an employee transfers from one paying

agency to another paying agency, the Office is not required to repeat

the due process procedures described in 5 U.S.C. 5514 and this subpart

to resume the collection. The Office 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 Office as the paying agency--(1) Complete

claim. When the Office receives a certified claim from a creditor

agency, deductions should be scheduled to begin at the next officially

established pay interval. Before deductions can begin, the employee

must receive written notice from the Office including:

(i) A statement that the Office 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 Office receives an incomplete

certification of debt from a creditor agency, the Office must return

the debt claim with notice that procedures under 5 U.S.C. 5514 and 5

CFR 550.1101 et seq. must be followed and a properly certified debt

claim received before action will be taken to collect from the

employee's current pay account.

(3) Review. The Office 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 one paying agency to another. If,

after the creditor agency has submitted the debt claim to the Office,

the employee transfers from OPM to a different paying agency before the

debt is collected in full, the Office will certify the total amount

collected on the debt. One copy of the certification will be furnished

to the employee and one copy to the creditor agency along with notice

of the employee's transfer.

Sec. 179.214 Interest, penalties and administrative costs.

The office shall assess interest, penalties and administrative

costs on debts owed pursuant to 31 U.S.C. 3717 and 4 CFR part 101.1 et

seq. Penalties and administrative costs will be assessed on all

delinquent debts.

(a) In cases of default on a previous repayment agreement, the

Office reserves the right to set a new interest rate which reflects the

current value of funds to the Treasury at the time a new repayment

agreement is executed.

(b) The Office, on a case-by-case basis, may waive all interest

accrued on debts paid in full within 60 days of the due date if there

is no indication of fault or lack of good faith on the part of the

debtor.

(c) The Office may waive, in whole or in part, the collection of

interest, penalties, and/or administrative costs assessed under this

section under the criteria specified in part 103 of 4 CFR, chapter II,

relating to the compromise of claims (without regard to the amount of

the debt).

(d) The Office may waive, in whole or in part, the collection of

interest, penalties, and/or administrative costs assessed under this

section if the Office determines that collection of these charges would

be against equity and good conscience or not in the best interests of

the United States.

(e) The Office shall waive the accrual of interest pending

consideration of a request for reconsideration, administrative review,

or waiver of the underlying debt under provisions of a permissive

statute providing for such review related to the debt.

(f) The Office shall waive interest on repayment agreements when

the amount of interest accruing equals or exceeds the amount of

installments the debtor can reasonably afford and there is no

indication of fault or lack of good faith on the part of the debtor.

Sec. 179.215 Refunds.

(a) The Office shall promptly refund any amounts deducted under the

authority of 5 U.S.C. 5514 when:

(1) The debt is waived or otherwise found not to be owing the

United States (unless expressly prohibited by statute or regulation);

or

(2) An administrative or judicial order directs the Office to make

a refund.

(b) Unless required or permitted by law or contract, refunds under

this subsection shall not bear interest.

Sec. 179.216 Request for the services of a hearing official when the

creditor agency is not OPM.

(a) The Office will provide a hearing official upon request of the

creditor agency when the debtor is employed by the Office and the

creditor agency cannot provide a prompt and appropriate hearing before

a hearing official furnished pursuant to another lawful arrangement.

(b) The salary offset coordinator will secure qualified personnel

to serve as hearing officials.

(c) Services rendered under this section will be provided on a

fully reimbursable basis pursuant to the Economy Act of 1932, as

amended, 31 U.S.C. 1535.

Sec. 179.217 Non-waiver of rights by payments.

An employee's involuntary payment of all or any portion of a debt

collected under this subpart must not be construed as a waiver of any

rights which the employee may have under 5 U.S.C. 5514 or any other

provision of contract or law unless there are statutory or contractual

provisions to the contrary.

Sec. 179.218 Additional administrative collection action.

Nothing contained in this subpart is intended to preclude the use

of any other administrative remedy which may be appropriate.

[FR Doc. 94-16633 Filed 7-8-94; 8:45 am]

BILLING CODE 6325-01-M