Collection of Claims Owed the United States

Federal RegisterMar 21, 1994

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FARM CREDIT ADMINISTRATION

12 CFR Part 608

RIN 3052-AB02

Collection of Claims Owed the United States

AGENCY: Farm Credit Administration.

ACTION: Final rule.

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SUMMARY: The Farm Credit Administration (FCA), by the Farm Credit

Administration Board, adopts final regulations implementing the Debt

Collection Act of 1982. This action provides procedures for the FCA to

administer claims owed to the United States arising from activities

under FCA jurisdiction. The FCA is required by law to issue these

regulations.

EFFECTIVE DATE: These regulations shall become effective on the

expiration of 30 days after this publication during which either or

both Houses of Congress are in session. Notice of the effective date

will be published in the Federal Register.

FOR FURTHER INFORMATION CONTACT:

John J. Hays, Policy Analyst, Regulation Development, Office of

Examination, Farm Credit Administration, McLean, VA 22102-5090, (703)

883-4498, TDD (703) 883-4444, or

Philip J. Shebest, Senior Attorney, Administrative Law and Enforcement

Division, Office of General Counsel, Farm Credit Administration,

McLean, VA 22102-5090, (703) 883-4020, TDD (703) 883-4444.

SUPPLEMENTARY INFORMATION: These regulations implement the Federal

Claims Collection Act of 1966, as amended by the Debt Collection Act of

1982 (Pub. L. 97-365, 96 Stat. 1749) (31 U.S.C. 3701-3719 and 5 U.S.C.

5514). In addition, these regulations supplement the regulations

published jointly by the General Accounting Office and the Department

of Justice (4 CFR parts 101-105).

The proposed regulations were published on October 29, 1993, 58 FR

58137. The FCA received no public comment. In addition, the Office of

Personnel Management, on January 21, 1994, approved the proposed

regulations for publication as final regulations in accordance with

section 8(1) of Executive Order 11609, as redesignated by Executive

Order 12107, and 5 CFR 550.1105. As a result, the proposed regulations

are being adopted as final without changing the regulatory text.

List of Subjects in 12 CFR Part 608

Government, Claims, Collection.

For the reasons stated in the preamble, part 608 of chapter VI,

title 12 of the Code of Federal Regulations is added to subchapter A to

read as follows:

PART 608--COLLECTION OF CLAIMS OWED THE UNITED STATES

Subpart A--Administrative Collection of Claims

Sec.

608.801 Authority.

608.802 Applicability.

608.803 Definitions.

608.804 Delegation of authority.

608.805 Responsibility for collection.

608.806 Demand for payment.

608.807 Right to inspect and copy records.

608.808 Right to offer to repay claim.

608.809 Right to agency review.

608.810 Review procedures.

608.811 Special review.

608.812 Charges for interest, administrative costs, and penalties.

608.813 Contracting for collection services.

608.814 Reporting of credit information.

608.815 Credit report.

Subpart B--Administrative Offset

608.820 Applicability.

608.821 Collection by offset.

608.822 Notice requirements before offset.

608.823 Right to review of claim.

608.824 Waiver of procedural requirements.

608.825 Coordinating offset with other Federal agencies.

608.826 Stay of offset.

608.827 Offset against amounts payable from Civil Service

Retirement and Disability Fund.

Subpart C--Offset Against Salary

608.835 Purpose.

608.836 Applicability of regulations.

608.837 Definitions.

608.838 Waiver requests and claims to the General Accounting

Office.

608.839 Procedures for salary offset.

608.840 Refunds.

608.841 Requesting current paying agency to offset salary.

608.842 Responsibility of the FCA as the paying agency.

608.843 Nonwaiver of rights by payments.

Authority: Sec. 5.17 of the Farm Credit Act; 12 U.S.C. 2252; 31

U.S.C. 3701-3719; 5 U.S.C. 5514; 4 CFR parts 101-105; 5 CFR part

550.

Subpart A--Administrative Collection of Claims

Sec. 608.801 Authority.

The regulations of this part are issued under the Federal Claims

Collection Act of 1966, as amended by the Debt Collection Act of 1982,

31 U.S.C. 3701-3719 and 5 U.S.C. 5514, and in conformity with the joint

regulations issued under that Act by the General Accounting Office and

the Department of Justice (joint regulations) prescribing standards for

administrative collection, compromise, suspension, and termination of

agency collection actions, and referral to the General Accounting

Office and to the Department of Justice for litigation of civil claims

for money or property owed to the United States (4 CFR parts 101-105).

Sec. 608.802 Applicability.

This part applies to all claims of indebtedness due and owing to

the United States and collectible under procedures authorized by the

Federal Claims Collection Act of 1966, as amended by the Debt

Collection Act of 1982. The joint regulations and this part do not

apply to conduct in violation of antitrust laws, tax claims, claims

between Federal agencies, or to any claim which appears to involve

fraud, presentation of a false claim, or misrepresentation on the part

of the debtor or any other party having an interest in the claim,

unless the Justice Department authorizes the Farm Credit

Administration, pursuant to 4 CFR 101.3, to handle the claim in

accordance with the provisions of 4 CFR parts 101-105. Additionally,

this part does not apply to Farm Credit Administration assessments

under part 607 of this chapter.

Sec. 608.803 Definitions.

In this part (except where the term is defined elsewhere in this

part), the following definitions shall apply:

(a) Administrative offset or offset, as defined in 31 U.S.C.

3701(a)(1), means withholding money payable by the United States

Government to, or held by the Government for, a person to satisfy a

debt the person owes the Government.

(b) Agency means a department, agency, or instrumentality in the

executive or legislative branch of the Government.

entity to an agency of the Federal Government. A ``claim'' or ``debt''

includes amounts due the Government from loans insured by or guaranteed

by the United States and all other amounts due from fees, leases,

rents, royalties, services, sales of real or personal property,

overpayment, penalties, damages, interest, and fines.

(d) Claim certification means a creditor agency's written request

to a paying agency to effect an administrative offset.

(e) Creditor agency means an agency to which a claim or debt is

owed.

(f) Debtor means the person or entity owing money to the Federal

Government.

(g) FCA means the Farm Credit Administration.

(h) Hearing official means an individual who is responsible for

reviewing a claim under Sec. 608.810 of this part.

(i) Paying agency means an agency of the Federal Government owing

money to a debtor against which an administrative or salary offset can

be effected.

(j) Salary offset means an administrative offset to collect a debt

under 5 U.S.C. 5514 by deductions at one or more officially established

pay intervals from the current pay account of a debtor.

Sec. 608.804 Delegation of authority.

The FCA official(s) designated by the Chairman of the Farm Credit

Administration are authorized to perform all duties which the Chairman

is authorized to perform under these regulations, the Federal Claims

Collection Act of 1966, as amended, and the joint regulations issued

under that Act.

Sec. 608.805 Responsibility for collection.

(a) The collection of claims shall be aggressively pursued in

accordance with the provisions of the Federal Claims Collection Act of

1966, as amended, the joint regulations issued under that Act, and

these regulations. Debts owed to the United States, together with

charges for interest, penalties, and administrative costs, should be

collected in one lump sum unless otherwise provided by law. If a debtor

requests installment payments, the debtor, as requested by the FCA,

shall provide sufficient information to demonstrate that the debtor is

unable to pay the debt in one lump sum. When appropriate, the FCA shall

arrange an installment payment schedule. Claims which cannot be

collected directly or by administrative offset shall be either written

off as administratively uncollectible or referred to the General

Counsel for further consideration.

(b) The Chairman, or designee of the Chairman, may compromise

claims for money or property arising out of the activities of the FCA,

where the claim (exclusive of charges for interest, penalties, and

administrative costs) does not exceed $100,000. When the claim exceeds

$100,000 (exclusive of charges for interest, penalties, and

administrative costs), the authority to accept a compromise rests

solely with the Department of Justice. The standards governing the

compromise of claims are set forth in 4 CFR part 103.

terminate the collection of claims which do not exceed $100,000

(exclusive of charges for interest, penalties, and administrative

costs) after deducting the amount of any partial payments or

collections. If, after deducting the amount of any partial payments or

collections, a claim exceeds $100,000 (exclusive of charges for

interest, penalties, and administrative costs), the authority to

suspend or terminate rests solely with the Department of Justice. The

standards governing the suspension or termination of claim collections

are set forth in 4 CFR part 104.

(d) The FCA shall refer claims to the Department of Justice for

litigation or to the General Accounting Office (GAO) for claims arising

from audit exceptions taken by the GAO to payments made by the FCA in

accordance with 4 CFR part 105.

Sec. 608.806 Demand for payment.

(a) A total of three progressively stronger written demands at not

more than 30-day intervals should normally be made upon a debtor,

unless a response or other information indicates that additional

written demands would either be unnecessary or futile. When necessary

to protect the Government's interest, written demands may be preceded

by other appropriate actions under Federal law, including immediate

referral for litigation and/or administrative offset.

(b) The initial demand for payment shall be in writing and shall

inform the debtor of the following:

(1) The amount of the debt, the date it was incurred, and the facts

upon which the determination of indebtedness was made;

(2) The payment due date, which shall be 30 calendar days from the

date of mailing or hand delivery of the initial demand for payment;

(3) The right of the debtor to inspect and copy the records of the

agency related to the claim or to receive copies if personal inspection

is impractical. The debtor shall be informed that the debtor may be

assessed for the cost of copying the documents in accordance with

Sec. 608.807;

(4) The right of the debtor to obtain a review of the FCA's

determination of indebtedness;

(5) The right of the debtor to offer to enter into a written

agreement with the agency to repay the amount of the claim. The debtor

shall be informed that the acceptance of such an agreement is

discretionary with the agency;

(6) That charges for interest, penalties, and administrative costs

will be assessed against the debtor, in accordance with 31 U.S.C. 3717,

if payment is not received by the payment due date;

(7) That if the debtor has not entered into an agreement with the

FCA to pay the debt, has not requested the FCA to review the debt, or

has not paid the debt by the payment due date, the FCA intends to

collect the debt by all legally available means, which may include

initiating legal action against the debtor, referring the debt to a

collection agency for collection, collecting the debt by offset, or

asking other Federal agencies for assistance in collecting the debt by

offset;

(8) The name and address of the FCA official to whom the debtor

shall send all correspondence relating to the debt; and

(9) Other information, as may be appropriate.

the FCA determines to collect the debt by either administrative or

salary offset, the FCA shall follow, as applicable, the requirements

for a Notice of Intent to Collect by Administrative Offset or a Notice

of Intent to Collect by Salary Offset set forth in Sec. 608.822.

(d) If no response to the initial demand for payment is received by

the payment due date, the FCA shall take further action under this

part, under the Federal Claims Collection Act of 1966, as amended,

under the joint regulations (4 CFR parts 101-105), or under any other

applicable State or Federal law. These actions may include reports to

credit bureaus, referrals to collection agencies, termination of

contracts, debarment, and salary or administrative offset.

Sec. 608.807 Right to inspect and copy records.

The debtor may inspect and copy the FCA records related to the

claim. The debtor shall give the FCA reasonable advance notice that it

intends to inspect and copy the records involved. The debtor shall pay

copying costs unless they are waived by the FCA. Copying costs shall be

assessed pursuant to Sec. 602.267 of this chapter.

Sec. 608.808 Right to offer to repay claim.

(a) The debtor may offer to enter into a written agreement with the

FCA to repay the amount of the claim. The acceptance of such an offer

and the decision to enter into such a written agreement is at the

discretion of the FCA.

(b) If the debtor requests a repayment arrangement because payment

of the amount due would create a financial hardship, the FCA shall

analyze the debtor's financial condition. The FCA may enter into a

written agreement with the debtor permitting the debtor to repay the

debt in installments if the FCA determines, in its sole discretion,

that payment of the amount due would create an undue financial hardship

for the debtor. The written agreement shall set forth the amount and

frequency of installment payments and shall, in accordance with

Sec. 608.812, provide for the imposition of charges for interest,

penalties, and administrative costs unless waived by the FCA.

confess-judgment note when the total amount of the deferred

installments will exceed $750. The FCA shall provide the debtor with a

written explanation of the consequences of signing a confess-judgment

note. The debtor shall sign a statement acknowledging receipt of the

written explanation. The statement shall recite that the written

explanation was read and understood before execution of the note and

that the debtor signed the note knowingly and voluntarily.

Documentation of these procedures will be maintained in the FCA's file

on the debtor.

Sec. 608.809 Right to agency review.

(a) If the debtor disputes the claim, the debtor may request a

review of the FCA's determination of the existence of the debt or of

the amount of the debt. If only part of the claim is disputed, the

undisputed portion should be paid by the payment due date.

(b) To obtain a review, the debtor shall submit a written request

for review to the FCA official named in the initial demand letter,

within 15 calendar days after receipt of the letter. The debtor's

request for review shall state the basis on which the claim is

disputed.

FCA has received the request for review. The FCA shall conduct its

review of the claim in accordance with Sec. 608.810.

(d) Upon completion of its review of the claim, the FCA shall

notify the debtor whether the FCA's determination of the existence or

amount of the debt has been sustained, amended, or canceled. The

notification shall include a copy of the written decision issued by the

hearing official pursuant to Sec. 608.810(e). If the FCA's

determination is sustained, this notification shall contain a provision

which states that the FCA intends to collect the debt by all legally

available means, which may include initiating legal action against the

debtor, referring the debt to a collection agency for collection,

collecting the debt by offset, or asking other Federal agencies for

assistance in collecting the debt by offset.

Sec. 608.810 Review procedures.

(a) Unless an oral hearing is required by Sec. 608.823(d), the

FCA's review shall be a review of the written record of the claim.

(b) If an oral hearing is required under Sec. 608.823(d), the FCA

shall provide the debtor with a reasonable opportunity for such a

hearing. The oral hearing, however, shall not be an adversarial

adjudication and need not take the form of a formal evidentiary

hearing. All significant matters discussed at the hearing, however,

will be carefully documented.

written record or an oral hearing, shall be conducted by a hearing

official. In the case of a salary offset, the hearing official shall

not be under the supervision or control of the Chairman of the Farm

Credit Administration.

(d) The FCA may be represented by legal counsel. The debtor may

represent himself or herself or may be represented by an individual of

the debtor's choice and at the debtor's expense.

(e) The hearing official shall issue a final written decision based

on documentary evidence and, if applicable, information developed at an

oral hearing. The written decision shall be issued as soon as

practicable after the review but not later than 60 days after the date

on which the request for review was received by the FCA, unless the

debtor requests a delay in the proceedings. A delay in the proceedings

shall be granted if the hearing official determines, in his or her sole

discretion, that there is good cause to grant the delay. If a delay is

granted, the 60-day decision period shall be extended by the number of

days by which the review was postponed.

(f) Upon issuance of the written opinion, the FCA shall promptly

notify the debtor of the hearing official's decision. Said notification

shall include a copy of the written decision issued by the hearing

official pursuant to paragraph (e) of this section.

Sec. 608.811 Special review.

(a) An employee subject to salary offset, under subpart C of this

part, or a voluntary repayment agreement, may, at any time, request a

special review by the FCA of the amount of the salary offset or

voluntary repayment, based on materially changed circumstances such as,

but not limited to, catastrophic illness, divorce, death, or

disability.

(b) To determine whether an offset would prevent the employee from

meeting essential subsistence expenses (costs incurred for 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.

the employee shall file an alternative proposed offset or payment

schedule and a statement, with supporting documents, showing why the

current salary offset or payments result in an extreme financial

hardship to the employee.

(d) The FCA shall evaluate the statement and supporting documents,

and determine whether the original offset or repayment schedule imposes

an undue financial hardship on the employee. The FCA shall notify the

employee in writing of such determination, including, if appropriate, a

revised offset or payment schedule.

Sec. 608.812 Charges for interest, administrative costs, and

penalties.

(a) Except as provided in paragraph (d) of this section, the FCA

shall:

(1) Assess interest on unpaid claims;

(2) Assess administrative costs incurred in processing and handling

overdue claims; and

(3) Assess penalty charges not to exceed 6 percent a year on any

part of a debt more than 90 days past due. The imposition of charges

for interest, administrative costs, and penalties shall be made in

accordance with 31 U.S.C. 3717.

(b)(1) Interest shall accrue from the date of mailing or hand

delivery of the initial demand for payment or the Notice of Intent to

Collect by either Administrative or Salary Offset if the amount of the

claim is not paid within 30 days from the date of mailing or hand

delivery of the initial demand or notice.

(2) The 30-day period may be extended on a case-by-case basis if

the FCA reasonably determines that such action is appropriate. Interest

shall only accrue on the principal of the claim and the interest rate

shall remain fixed for the duration of the indebtedness, except, as

provided in paragraph (c) of this section, in cases where a debtor has

defaulted on a repayment agreement and seeks to enter into a new

agreement, or if the FCA reasonably determines that a higher rate is

necessary to protect the interests of the United States.

enter into a new agreement, the FCA may assess a new interest rate on

the unpaid claim. In addition, charges for interest, administrative

costs, and penalties which accrued but were not collected under the

original repayment agreement shall be added to the principal of the

claim to be paid under the new repayment agreement. Interest shall

accrue on the entire principal balance of the claim, as adjusted to

reflect any increase resulting from the addition of these charges.

(d) The FCA may waive charges for interest, administrative costs,

and/or penalties if it determines that:

(1) The debtor is unable to pay any significant sum toward the

claim within a reasonable period of time;

(2) Collection of charges for interest, administrative costs, and/

or penalties would jeopardize collection of the principal of the claim;

(3) Collection of charges for interest, administrative costs, or

penalties would be against equity and good conscience; or

(4) It is otherwise in the best interest of the United States,

including the situation where an installment payment agreement or

offset is in effect.

Sec. 608.813 Contracting for collection services.

The Chairman, or designee of the Chairman, may contract for

collection services in accordance with 31 U.S.C. 3718 and 4 CFR 102.6

to recover debts.

Sec. 608.814 Reporting of credit information.

The Chairman, or designee of the Chairman, may disclose to a

consumer reporting agency information that an individual is responsible

for a debt owed to the United States. Information will be disclosed to

reporting agencies in accordance with the terms and conditions of

agreements entered into between the FCA and the reporting agencies. The

terms and conditions of such agreements shall specify that all of the

rights and protection afforded to the debtor under 31 U.S.C. 3711(f)

have been fulfilled. The FCA shall notify each consumer reporting

agency, to which a claim was disclosed, when the debt has been

satisfied.

Sec. 608.815 Credit report.

In order to aid the FCA in making appropriate determinations

regarding the collection and compromise of claims; the collection of

charges for interest, administrative costs, and penalties; the use of

administrative offset; the use of other collection methods; and the

likelihood of collecting the claim, the FCA may institute, consistent

with the provisions of the Fair Credit Reporting Act (15 U.S.C. 1681,

et seq.), a credit investigation of the debtor immediately following a

determination that the claim exists.

Subpart B--Administrative Offset

Sec. 608.820 Applicability.

(a) The provisions of this subpart shall apply to the collection of

debts by administrative [or salary] offset under 31 U.S.C. 3716, 5

U.S.C. 5514, or other statutory or common law.

(b) Offset shall not be used to collect a debt more than 10 years

after the Government's right to collect the debt first accrued, unless

facts material to the Government's right to collect the debt were not

known and could not reasonably have been known by the official or

officials of the Government who were charged with the responsibility of

discovering and collecting such debt.

(1) Debts owed by other agencies of the United States or by any

State or local government;

(2) Debts arising under or payments made under the Social Security

Act, the Internal Revenue Code of 1986, as amended, or tariff laws of

the United States; or

(3) Any case in which collection by offset of the type of debt

involved is explicitly provided for or prohibited by another statute.

(d) Unless otherwise provided by contract or law, debts or payments

which are not subject to offset under 31 U.S.C. 3716 or 5 U.S.C. 5514

may be collected by offset if such collection is authorized under

common law or other applicable statutory authority.

Sec. 608.821 Collection by offset.

(a) Collection of a debt by administrative [or salary] offset shall

be accomplished in accordance with the provisions of these regulations,

of 4 CFR 102.3, and 5 CFR part 550, subpart K. It is not necessary for

the debt to be reduced to judgment or to be undisputed for offset to be

used.

(b) The Chairman, or designee of the Chairman, may determine that

it is feasible to collect a debt to the United States by offset against

funds payable to the debtor.

determined on a case-by-case basis. This determination shall be made by

considering all relevant factors, including the following:

(1) The degree to which the offset can be accomplished in

accordance with law. This determination should take into consideration

relevant statutory, regulatory, and contractual requirements;

(2) The degree to which the FCA is certain that its determination

of the existence and amount of the debt is correct;

(3) The practicality of collecting the debt by offset. The cost, in

time and money, of collecting the debt by offset and the amount of

money which can reasonably be expected to be recovered through offset

will be relevant to this determination; and

(4) Whether the use of offset will substantially interfere with or

defeat the purpose of a program authorizing payments against which the

offset is contemplated. For example, under a grant program in which

payments are made in advance of the grantee's performance, the

imposition of offset against such a payment may be inappropriate.

(d) The collection of a debt by offset may not be feasible when

there are circumstances which would indicate that the likelihood of

collection by offset is less than probable.

(e) The offset will be effected 31 days after the debtor receives a

Notice of Intent to Collect by Administrative Offset (or Notice of

Intent to Collect by Salary Offset if the offset is a salary offset),

or upon the expiration of a stay of offset, unless the FCA determines

under Sec. 608.824 that immediate action is necessary.

(f) If the debtor owes more than one debt, amounts recovered

through offset may be applied to them in any order. Applicable statutes

of limitation would be considered before applying the amounts recovered

to any debts owed.

Sec. 608.822 Notice requirements before offset.

(a) Except as provided in Sec. 608.824, the FCA will provide the

debtor with 30 calendar days' written notice that unpaid debt amounts

shall be collected by administrative [or salary] offset (Notice of

Intent to Collect by Administrative [or Salary] Offset) before the FCA

imposes offset against any money that is to be paid to the debtor.

(b) The Notice of Intent to Collect by Administrative [or Salary]

Offset shall be delivered to the debtor by hand or by mail and shall

provide the following information:

(1) The amount of the debt, the date it was incurred, and the facts

upon which the determination of indebtedness was made;

(2) In the case of an administrative offset, the payment due date,

which shall be 30 calendar days from the date of mailing or hand

delivery of the Notice;

(3) In the case of a salary offset: (i) The FCA'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 is

paid in full; and

(ii) The amount, frequency, proposed beginning date, and duration

of the intended deductions;

(4) The right of the debtor to inspect and copy the records of the

FCA related to the claim or to receive copies if personal inspection is

impractical. The debtor shall be informed that the debtor shall be

assessed for the cost of copying the documents in accordance with

Sec. 608.807;

(5) The right of the debtor to obtain a review of, and to request a

hearing, on the FCA's determination of indebtedness, the propriety of

collecting the debt by offset, and, in the case of salary offset, the

propriety of the proposed repayment schedule (i.e., the percentage of

disposable pay to be deducted each pay period). The debtor shall be

informed that to obtain a review, the debtor shall deliver a written

request for a review to the FCA official named in the Notice, within 15

calendar days after the debtor's receipt of the Notice. In the case of

a salary offset, the debtor shall also be informed that the review

shall be conducted by an official arranged for by the FCA who shall be

a hearing official not under the control of the Chairman of the Farm

Credit Administration, or an administrative law judge;

(6) That the filing of a petition for hearing within 15 calendar

days after receipt of the Notice will stay the commencement of

collection proceedings;

(7) That a final decision on the hearing (if one is requested) will

be issued at the earliest practical date, but not later than 60 days

after the filing of the written request for review unless the employee

requests, and the hearing official grants, a delay in the proceedings;

(8) The right of the debtor to offer to enter into a written

agreement with the FCA to repay the amount of the claim. The debtor

shall be informed that the acceptance of such an agreement is

discretionary with the FCA;

(9) That charges for interest, penalties, and administrative costs

shall be assessed against the debtor, in accordance with 31 U.S.C.

3717, if payment is not received by the payment due date. The debtor

shall be informed that such assessments must be made unless excused in

accordance with the Federal Claims Collection Standards (4 CFR parts

103 and 104);

(10) The amount of accrued interest and the amount of any other

penalties or administrative costs which may have been added to the

principal debt;

(11) That if the debtor has not entered into an agreement with the

FCA to pay the debt, has not requested the FCA to review the debt, or

has not paid the debt prior to the date on which the offset is to be

imposed, the FCA intends to collect the debt by administrative [or

salary] offset or by requesting other Federal agencies for assistance

in collecting the debt by offset. The debtor shall be informed that the

offset shall be imposed against any funds that might become available

to the debtor, until the principal debt and all accumulated interest

and other charges are paid in full;

(12) The date on which the offset will be imposed, which shall be

31 calendar days from the date of mailing or hand delivery of the

Notice. The debtor shall be informed that the FCA reserves the right to

impose an offset prior to this date if the FCA determines that

immediate action is necessary;

(13) That any knowingly false or frivolous statements,

representations, or evidence may subject the debtor to:

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

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

authority;

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

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

authority; and, with regard to employees,

(iii) 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 regulation;

(14) The name and address of the FCA official to whom the debtor

shall send all correspondence relating to the debt or the offset;

(15) Any other rights and remedies available to the debtor 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) Other information, as may be appropriate.

provided to the debtor in connection with the same debt or under some

other statutory or regulatory authority, the FCA is not required to

duplicate those requirements before effecting offset.

Sec. 608.823 Right to review of claim.

(a) If the debtor disputes the claim, the debtor may request a

review of the FCA's determination of the existence of the debt, the

amount of the debt, the propriety of collecting the debt by offset, and

in the case of salary offset, the propriety of the proposed repayment

schedule. If only part of the claim is disputed, the undisputed portion

should be paid by the payment due date.

(b) To obtain a review, the debtor shall submit a written request

for review to the FCA official named in the Notice of Intent to Collect

by Administrative [or Salary] Offset within 15 calendar days after

receipt of the notice. The debtor's written request for review shall

state the basis on which the claim is disputed and shall specify

whether the debtor requests an oral hearing or a review of the written

record of the claim. If an oral hearing is requested, the debtor shall

explain in the request why the matter cannot be resolved by a review of

the documentary evidence alone.

FCA has received the request for review. The FCA shall conduct its

review of the claim in accordance with Sec. 608.810.

(d) The FCA's review of the claim, under this section, shall

include providing the debtor with a reasonable opportunity for an oral

hearing if:

(1) An applicable statute authorizes or requires the FCA to

consider waiver of the indebtedness, the debtor requests waiver of the

indebtedness, and the waiver determination turns on an issue of

credibility or veracity; or

(2) The debtor requests reconsideration of the debt and the FCA

determines that the question of the indebtedness cannot be resolved by

reviewing the documentary evidence; for example, when the validity of

the debt turns on an issue of credibility or veracity.

(e) A debtor waives the right to a hearing and will have his or her

debt offset in accordance with the proposed offset schedule if the

debtor:

(1) Fails to file a written request for review within the timeframe

set forth in paragraph (b) of this section, unless the FCA determines

that the delay was the result of circumstances beyond his or her

control; or

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

notified unless the hearing official determines that the failure to

appear was due to circumstances beyond the employee's control.

(f) Upon completion of its review of the claim, the FCA shall

notify the debtor whether the FCA's determination of the existence or

amount of the debt has been sustained, amended, or canceled. The

notification shall include a copy of the written decision issued by the

hearing official, pursuant to Sec. 608.810(e). If the FCA's

determination is sustained, this notification shall contain a provision

which states that the FCA intends to collect the debt by offset or by

requesting other Federal agencies for assistance in collecting the

debt.

(g) When the procedural requirements of this section have been

provided to the debtor in connection with the same debt or under some

other statutory or regulatory authority, the FCA is not required to

duplicate those requirements before effecting offset.

Sec. 608.824 Waiver of procedural requirements.

(a) The FCA may impose offset against a payment to be made to a

debtor prior to the completion of the procedures required by this part,

if:

(1) Failure to impose the offset would substantially prejudice the

Government's ability to collect the debt; and

(2) The timing of the payment against which the offset will be

imposed does not reasonably permit the completion of those procedures.

(b) The procedures required by this part shall be complied with

promptly after the offset is imposed. Amounts recovered by offset,

which are later found not to be owed to the Government, shall be

promptly refunded to the debtor.

Sec. 608.825 Coordinating offset with other Federal agencies.

(a)(1) Any creditor agency which requests the FCA to impose an

offset against amounts owed to the debtor shall submit to the FCA a

claim certification which meets the requirements of this paragraph. The

FCA shall submit the same certification to any agency that the FCA

requests to effect an offset.

(2) The claim certification shall be in writing. It shall certify

the debtor owes the debt and that all of the applicable requirements of

31 U.S.C. 3716 and 4 CFR part 102 have been met. If the intended offset

is to be a salary offset, a claim certification shall instead certify

that the debtor owes the debt and that the applicable requirements of 5

U.S.C. 5514 and 5 CFR part 550, subpart K, have been met.

(3) A certification that the debtor owes the debt shall state the

amount of the debt, the factual basis supporting the determination of

indebtedness, and the date on which payment of the debt was due. A

certification that the requirements of 31 U.S.C. 3716 and 4 CFR part

102 have been met shall include a statement that the debtor has been

sent a notice of Intent to Collect by Administrative Offset at least 31

calendar days prior to the date of the intended offset or a statement

that pursuant to 4 CFR 102.3(b)(5) said Notice was not required to be

sent. A certification that the requirements of 5 U.S.C. 5514 and 5 CFR

part 550, subpart K, have been met shall include a statement that the

debtor has been sent a Notice of Intent to Collect by Salary Offset at

least 31 calendar days prior to the date of the intended offset or a

statement that pursuant to 4 CFR 102.3(b)(5) said Notice was not

required to be sent.

(b)(1) The FCA shall not effect an offset requested by another

Federal agency without first obtaining the claim certification required

by paragraph (a) of this section. If the FCA receives an incomplete

claim certification, the FCA shall return the claim certification with

notice that a claim certification which complies with the requirements

of paragraph (a) of this section must be submitted to the FCA before

the FCA will consider effecting an offset.

(2) The FCA may rely on the information contained in the claim

certification provided by a requesting creditor agency. The FCA is not

authorized to review a creditor agency's determination of indebtedness.

with the debtor for the repayment of the claim. Only the creditor

agency may agree to compromise, suspend, or terminate collection of the

claim.

(d) The FCA may decline, for good cause, a request by another

agency to effect an offset. Good cause includes that the offset might

disrupt, directly or indirectly, essential FCA operations. The refusal

and the reasons shall be sent in writing to the creditor agency.

Sec. 608.826 Stay of offset.

(a)(1) When a creditor agency receives a debtor's request for

inspection of agency records, the offset is stayed for 10 calendar days

beyond the date set for the record inspection.

(2) When a creditor agency receives a debtor's offer to enter into

a repayment agreement, the offset is stayed until the debtor is

notified as to whether the proposed agreement is acceptable.

(3) When a review is conducted, the offset is stayed until the

creditor agency issues a final written decision.

(b) When offset is stayed, the amount of the debt and the amount of

any accrued interest or other charges will be withheld from payments to

the debtor. The withheld amounts shall not be applied against the debt

until the stay expires. If withheld funds are later determined not to

be subject to offset, they will be promptly refunded to the debtor.

FCA will immediately notify an offsetting agency to withhold the

payment pending termination of the stay.

Sec. 608.827 Offset against amounts payable from Civil Service

Retirement and Disability Fund.

The FCA may request that monies payable to a debtor from the Civil

Service Retirement and Disability Fund be administratively offset to

collect debts owed to the FCA by the debtor. The FCA must certify that

the debtor owes the debt, the amount of the debt, and that the FCA has

complied with the requirements set forth in this part, 4 CFR 102.3, and

the Office of Personnel Management regulations. The request shall be

submitted to the official designated in the Office of Personnel

Management regulations to receive the request.

Subpart C--Offset Against Salary

Sec. 608.835 Purpose.

The purpose of this subpart is to implement section 5 of the Debt

Collection Act of 1982 (Pub. L. 97-365)(5 U.S.C. 5514), which

authorizes the collection of debts owed by Federal employees to the

Federal Government by means of salary offsets. These regulations

provide procedures for the collection of a debt owed to the Government

by the imposition of a salary offset against amounts payable to a

Federal employee as salary. These regulations are consistent with the

regulations on salary offset published by the Office of Personnel

Management, codified in 5 CFR part 550, subpart K. Since salary offset

is a type of administrative offset, this subpart supplements subpart B.

Sec. 608.836 Applicability of regulations.

(a) These regulations apply to the following cases:

(1) Where the FCA is owed a debt by an individual currently

employed by another agency;

(2) Where the FCA is owed a debt by an individual who is currently

employed by the FCA; or

(3) Where the FCA currently employs an individual who owes a debt

to another Federal agency. Upon receipt of proper certification from

the creditor agency, the FCA will offset the debtor-employee's salary

in accordance with these regulations.

(b) These regulations do not apply to the following:

(1) Debts or claims rising under the Internal Revenue Code of 1986,

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).

(2) 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.

(3) A claim which has been outstanding for more than 10 years after

the creditor 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

charged with the responsibility for discovery and collection of such

debts.

Sec. 608.837 Definitions.

In this subpart, the following definitions shall apply:

(a) Agency means:

(1) An executive agency as defined by 5 U.S.C. 105, including the

United States Postal Service and the United States Postal Rate

Commission;

(2) A military department as defined in 5 U.S.C. 102;

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

defined in 28 U.S.C. 610, the District Court for the Northern Mariana

Islands, and the Judicial Panel on Multi-district Litigation;

(4) An agency of the legislative branch, including the United

States Senate and the United States House of Representatives; or

(5) Other independent establishments that are entities of the

Federal Government.

(b) Disposable pay means, for an officially established pay

interval, 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. The FCA shall allow the

deductions described in 5 CFR 581.105 (b) through (f).

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

Forces of the United States.

(d) Waiver means the cancellation, remission, forgiveness, or

nonrecovery of a debt allegedly owed by an employee to the FCA or

another 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. 608.838 Waiver requests and claims to the General Accounting

Office.

(a) The regulations contained in this subpart do not preclude an

employee from requesting a waiver of an overpayment under 5 U.S.C. 5584

or 8346(b), 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.

(b) These regulations also do not preclude an employee from

requesting a waiver pursuant to other statutory provisions pertaining

to the particular debts being collected.

Sec. 608.839 Procedures for salary offset.

(a) The Chairman, or designee of the Chairman, shall determine the

amount of an employee's disposable pay and the amount to be deducted

from the employee's disposable pay at regular pay intervals.

(b) Deductions shall begin within three official pay periods

following the date of mailing or delivery of the Notice of Intent to

Collect by Salary Offset.

(c)(1) If the amount of the debt is equal to or is less than 15

percent of the employee's disposable pay, such debt should be collected

in one lump-sum deduction.

(2) If the amount of the debt is not collected in one lump-sum

deduction, the debt shall be collected in installment deductions over a

period of time 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 pay period will not exceed 15

percent of the employee's disposable pay for that period, unless the

employee has agreed in writing to the deduction of a greater amount.

(3) A 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) Whenever an employee subject to salary offset is separated from

the FCA and the balance of the debt cannot be liquidated by offset of

the final salary check pursuant to 31 U.S.C. 3716, the FCA may offset

any later payments of any kind against the balance of the debt.

(d) In instances where two or more creditor agencies are seeking

salary offsets against current employees of the FCA or where two or

more debts are owed to a single creditor agency, the FCA, at its

discretion, may determine whether one or more debts should be offset

simultaneously within the 15-percent limitation. Debts owed to the FCA

should generally take precedence over debts owed to other agencies.

Sec. 608.840 Refunds.

(a) In instances where the FCA is the creditor agency, it 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 owed to the

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

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

refund.

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

this section shall not bear interest.

Sec. 608.841 Requesting current paying agency to offset salary.

(a) To request a paying agency to impose a salary offset against

amounts owed to the debtor, the FCA shall provide the paying agency

with a claim certification which meets the requirements set forth in

Sec. 608.825(a). The FCA shall also provide the paying agency with a

repayment schedule determined under the provisions of Sec. 608.839 or

in accordance with a repayment agreement entered into with the debtor.

(b) If the employee separates from the paying agency before the

debt is paid in full, the paying agency shall certify the total amount

collected on the debt. A copy of this certification shall be sent to

the employee and a copy shall be sent to the FCA. If the paying agency

is aware that the employee is entitled to payments from the Civil

Service Retirement and Disability Fund, or other similar payments, it

must provide written notification to the agency responsible for making

such payments that the debtor owes a debt (including the amount) and

that the provisions of this section have been fully complied with.

However, the FCA must submit a properly certified claim to the agency

responsible for making such payments before the collection can be made.

not required to repeat the due process procedures set forth in 5 U.S.C.

5514 and this part to resume the collection. The FCA shall, however,

review the debt upon receiving the former paying agency's notice of the

employee's transfer to make sure the collection is resumed by the new

paying agency.

(d) If a special review is conducted pursuant to Sec. 608.811 and

results in a revised offset or repayment schedule, the FCA shall

provide a new claim certification to the paying agency.

Sec. 608.842 Responsibility of the FCA as the paying agency.

(a) When the FCA receives a claim certification from a creditor

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

established pay interval. The FCA shall send the debtor written notice

which provides:

(1) That the FCA has received a valid claim certification from the

creditor agency;

(2) The date on which salary offset will begin;

(3) The amount of the debt; and

(4) The amount of such deductions.

(b) If, after the creditor agency has submitted the claim

certification to the FCA, the employee transfers to a different agency

before the debt is collected in full, the FCA must certify the total

amount collected on the debt. The FCA shall send a copy of this

certification to the creditor agency and a copy to the employee. If the

FCA is aware that the employee is entitled to payments from the Civil

Service Retirement Fund and Disability Fund, or other similar payments,

it shall provide written notification to the agency responsible for

making such payments that the debtor owes a debt (including the

amount).

Sec. 608.843 Nonwaiver of rights by payments.

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

being collected under this subpart shall not be construed as a waiver

of any rights the employee 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.

Dated: March 10, 1994.

Curtis M. Anderson,

Secretary, Farm Credit Administration Board.

[FR Doc. 94-6562 Filed 3-18-94; 8:45 am]

BILLING CODE 6705-01-P

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.