M29-1, Part II

Advance Manual Change No. 2-85 May

[Chapter 12. Other indebtedness]{.underline}

A. [Change:]{.underline} M29-1, Part II, Chapter 12. This change
incorporates\
of the Insurance Terminal System, Target System and\
700 in the maintenance and reconciliation of\
indebtedness accounts.

B. [Procedure]{.underline}: Page 12-1 and 12-2, delete subparagraph
12.02 and substitute the attached replacement subparagraph 12.02.

Page 12-2, amend subparagraph 12.O3a(1) SF 1081 SF 1097.

Page 12-2, amend subparagraph 12.03c SF 1081 to read

C. New or Revised

[Insurance Forms]{.underline}: None

ROBERT W. CAREY

Assistant Director for Insurance

[DISTRIBUTION]{.underline}

335/29 92\
310/290 51\
310/291 111\
310/Library 1\
203/SDA 2\
CO/311D 2

a\. Notices of finance indebtedness are delivered to the Miscellaneous
Accounts and Service Unit (MASU). Notifications are usually received on
VA Form 4-4619, Collection Due Code Sheets.

b\. The MASU clerk will attempt to identify the insurance file number by
performing a BIRLS inquiry using either the Insurance Terminal System
(ITS) or the Target System. Finance indebtedness notifications which
cannot be identified by an insurance file number or for which insurance
is inactive, will be considered as uncollectible and returned to the
appropriate Regional Office.

c\. When a notice of finance indebtedness is identified with an in-force
insurance record, the MASU clerk will have a VA Form 29-4878, Deduction
Authorization-Finance Card and a VA Form 29-5896a, Life Input Card,
keypunched by the Analysis and Control Division, DPC. Upon receipt of
these documents in MASU, the clerk will use the VA Form 29-5896a to
insert the other indebtedness indicator on the master record. The VA
Forms 29-4878 will be filed in the active 29-4878 file by insurance
number.

d\. An annual reconciliation of finance indebtedness accounts will be
accomplished by using the October 700 Run which generates the INDEBT
RPO. The INDEBT RPO\'s are also used to reconcile other off-tape
indebtedness. The VA Form 29-4878\'s will be matched against the INDEBT
RPO\'s and processed as follows:

\(1\) For all in-force insurance records, the MASU clerk should access
the Target System (M01 screen) to determine if the amount of the
indebtedness agrees with the amount shown on the VA Form 29-4878. If
they do not agree, the amount shown on VA Form 29-4878 will be adjusted
to agree with the amount shown on the M01 screen.

\(2\) If the M01 screen indicates that the finance indebtedness has been
paid, the clerk will withdraw the VA Form 29-4878 from the active file
for disposal. If no other off-tape indebtedness exists, a Transaction
Type 080 input will be prepared to remove the other indebtedness
indicator from the master record.

\(3\) If no Reason Code INDEBT RPO was generated, view the ITS screen
IO10 and IO40, and the Target screen MO1 to determine that both the
insurance and indebtedness are still active. If both are active, insert
the other indebtedness indicator on the master record.

\(4\) If the insurance record is inactive or no record in ITS, the
indebtedness will be considered as uncollectible. The VA Form 29-4878
will be annotated uncollectible and routed for filing in the insurance
folder if it contains evidence of collection activity. If there was no
such activity, the VA Form 29-4878 will be disposed.

e\. When notice of liquidation of finance indebtedness is reported by a
Regional Office, the clerk will withdraw the VA Form 29-4878 from the
active file and do the following:

\(1\) Screen the off-tape lien file, ITS screen I090 and the insurance
folder to determine whether there is also an outstanding off-tape lien
or loan, service indebtedness and/or notice of levy from the Internal
Revenue Service. If no such other indebtedness exists, a Transaction
Type 080 input will be prepared to remove the other indebtedness
indicator from the master record.

\(2\) The VA Form 29-4878 will be filed in the insurance folder if it
contains evidence of collection activity. If there was no such
collection activity, the VA Form 29-4878 will be disposed.

M29-1, Part II

Advance Manual Change No. 2-85 May 3, 1985

[Chapter 12. Other Indebtedness]{.underline}

A. [Change:]{.underline} M29-1, Part II, Chapter 12. This change
incorporates the use\
of the Insurance Terminal System, Target System and ADP Run\
700 in the maintenance and reconciliation of finance\
indebtedness accounts.

B. [Procedure]{.underline}: Page 12-1 and 12-2, delete subparagraph
12.02 and substitute the attached replacement subparagraph 12.02.

Page 12-2, amend subparagraph 12.03a(1) SF 1081 to read

SF 1097.

Page 12-2, amend subparagraph 12.03c SF 1081 to read SF 1097.

C. New or Revised

[Insurance Forms]{.underline}: None

ROBERT W. CAREY

Assistant Director for Insurance

[DISTRIBUTION]{.underline}:

335/29 92\
310/290 51\
310/291 111\
310/Library 1\
203/SDA 2\
CO/311D 2

May 15, 1972 M29-1, Part II\
Change 7

CONTENTS

CHAPTER 12. OTHER INDEBTEDNESS

PARAGRAPH PAGE\
SUBCHAPTER **1. FINANCE** AND SERVICE DEPARTMENT INDEBTEDNESS\
12.01 General 12-1\
12.02 Finance Indebtedness 12-1\
12.03 Processing Refunds **to** Regional Offices 12-2\
12.04 Service 12-3\
12.05 Processing Refunds to Service Departments 12-3\
SUBCHAPTER 2. TAX LEVIES\
12.06 General 12-4\
12.07 Preliminary Processing 12-4\
12.08 Levy **Not** Established 12-4\
12.09 Establishing Levies 12-5

12.10 Processing TD Form 2876, Request for VA\
Insurance Policy Dividend Information 12-7

12-i

May 15,1972 M-29,Part II II\
Change 7

\[CHAPTER 12. OTHER INDEBTEDNESS

SUBCHAPTER 1. FINANCE AND SERVICE DEPARTMENT INDEBTEDNESS

12.01 GENERAL

a\. Conditions under which finance indebtedness and service department
indebtedness arise and the rules for recovery of such indebtedness are
outlined in part I, chapter 9.

b\. Finance indebtedness includes overpayments and illegal payments, not
in connection with insurance,

which were made to a veteran or his dependents under laws administered
by the VA. These indebtednesses are maintained in the regional offices
and are reported to the VA centers on a quarterly basis.

c\. Service department indebtedness includes allotment payments which
were not supported by deductions from the insured\'s service pay.

12.02 FINANCE INDEBTEDNESS

a\. Notices of finance indebtedness will be processed as follows:

\(1\) VA Form 4-4619, Collection Due Code Sheet, is received from the
regional ice and delivered to

the **In** e insurance file number will be inserted on all VA Forms
4-4619 as they are identified by the index clerk. Wh all the forms have
been indexed, they will be delivered to the scellaneous Accounts and
Service unit.

\(2\) The VA **F** 9, which were not identified by an insurance e
number, will be withdrawn and

considered as uncollectible. Miscellaneous Accounts clerk will request
an RPO (Record Printout) for those VA Forms 4-4619 that have be
identified by an insurance file n

\(3\) When the RPO\'s are received the insurance is found **to** be
nonparticipating, the clerk will withdraw the VA Form 4-4619. The
remaining rms will be delivered the Key Punch activity, DPC (data
processing center), for preparation of s 29-4878, Dedu ion
Authorization-Finance, and the VA Forms 29-5896a, Life Input Card, to
insert the 0th Indebtedness dicator on the master record.

\(4\) The *N/R* or *Uncollectible,* VA Forms 619, and an adding-machine
tape for the reject items will be returned to the appropriate regional
office.

\(5\) The VA forms 29-4878 will be filed in e active Form 29-4878 file
by insurance number.

b\. Annual reconciliation of VA Form 9-4878 will be as lows:

\(1\) Prior to the reconciliation in September of each year, new VA
Forms 29-4878 will be prepared to reflect the new balance or any
regional off ice change, and the file listed.

\(2\) The file of VA **Form**s 29-4878 for NSLI accounts will be sent to
the EAM (Electronic Accounting Machine) Section for processing as
outlined below:

\(a\) The VA Forms 29-4878 will be reproduced into VA Forms 29-5896a.

l\. The rejected VA Forms 29-5896a will be used to remove the matching
VA Forms 9-4878. The listing will be amended by entering the notation,
*Uncollectible,* next to each rejected item.

[2.]{.underline} The VA forms 29-4878 and the rejected VA Forms 29-5896a
will be routed for filing the insurance

in the insurance folder if they contain evidence of deductions from
insurance disbursements for finance indebtedness . Otherwise, the VA
Forms 29-4878 will be disposed of.

12-7

M29-1,Part ll May 15,1972

Change 7

\(b\) Listing of VA **Forms** 29-4878 will be in claim number order by
regional office **and** in triplicate as follows:

From Card\
Data Columns

Claim Number prefix (C) Emit\
Claim Number 25-32\
**First Name** 39-48\
Middle Initial 49\
**Last** Name 50-66\
File Number prefix (V) Emit **1\
**FV Number 9-16\
DO Number **1-2\
**Appropriation Code 7-8\
Amount of Indebtedness 33-38\
Station Number 3-6

\(c\) The triplicate copy of the regional office listing will be
retained for control purposes. The original and duplicate copy will be
forwarded to the appropriate regional office for processing and return
to the insurance office.

\(d\) When notice of liquidation of finance indebtedness is reported by
a regional office, either in an individual **letter** or in the annual
reconciliation listing, the clerk will withdraw the VA **Form** 29-4878
from the active file for disposal.

I. The off-tape lien file and insurance folder will be screened to
determine whether there is also an outstanding off-tape lien, service
department indebtedness and/or notice of levy from the Internal Revenue
Service. If no such other indebtedness exists, VA Form 29-5896a or VA
Form 298530, Life Miscellaneous, transaction type 080, will be prepared
to remove the Other Indebtedness indicator from the master record.

[2]{.underline}. The VA Form 29-4878 will be filed in the insurance
folder if it contains evidence of deductions from insurance
disbursements for finance indebtedness; otherwise, the VA Form 29-4878
will be disposed of.

12.03 PROCESSING REFUNDS TO REGIONAL OFFICES

**a.** When amounts are collected for finance indebtedness due the
regional office, the Policy Service Clerk will request the Miscellaneous
Accounts and Service **unit to** furnish them the claim number,
appropriation code, regional office number and the amount of the finance
indebtedness. When the information is received the following forms will
be prepared:

41

\(1\) **SF 1097,** Voucher and Schedule of Withdrawals and Credits,
showing all pertinent information including the insured\'s name and
appropriation.

\(2\) VA Form 29-5895a, Pending Transaction Input Card, or VA Form
29-8526, Pending Transaction, transaction type 098, to debit account 17
and credit account 52.

\(3\) VA Form 29-5800, Notice of Dividend Disposition, to notify the
insured of the action taken.

b\. All related material will be sent to the Voucher Audit unit for
processing.

c\. Upon receipt of the **SF 1097** in **the** Miscellaneous Accounts
and Service unit, the clerk will post the amount being transferred to
the regional office on the finance indebtedness card and reduce the
amount of the indebtedness accordingly.

.12-1

January **30,** 1974

M29-I, Part II

Change II

12.04 SERVICE DEPARTMENT INDEBTEDNESS

a\. Notices of service department indebtedness will be honored only if
the amount of the indebtedness is \$5 or more, the insurance account is
active and premiums are paid by other than an allotment.

b\. When a service department requests assistance in recovering
allotment payments which were not supported by deductions from the
insured\'s service pay, request an RP0 and take the following action:

\(1\) If the insured is paying premiums by deduction from service pay,
the request for recovery will be returned to the finance center of the
appropriate service with a dictated letter. The letter will advise the
service of the facts involved and will request that the department
collect the indebtedness from the insured\'s service pay.

\(2\) In all other cases, if the indebtedness is less than \$5, or if
the insurance is inactive and no dividend is due, the request for
collection will be returned with a letter of explanation.

\(3\) When returning a collection notice in accordance with subparagraph
(1) or (2) above, the letter should include a statement that a charge
for the indebtedness has *not* been placed against the insurance
account.

\(4\) When a service department indebtedness is accepted for collection,
the insured will be notified of the action. The other indebtedness
indicator will be established on the master record. When these actions
have been completed, the case will be recharged to the Miscellaneous
Accounts and Service Unit where the following action will be taken:

\(a\) A flashcard will be prepared showing the insured\'s name, file and
policy number, branch of service and the amount of indebtedness. (For
ready identification the card used for this purpose should be of an
opposite corner cut.) The flashcard will be filed in the Finance
Indebtedness punched card file.

\(b\) At the time of the annual reconciliation of Finance Indebtedness
accounts, a review will be made of the service department indebtedness
cases and action will be taken in accordance with the following:

1\. On inactive insurance accounts, the request for collection, together
with any pertinent information on reduction in the amount of the
indebtedness, will be returned to the service department unless the
insured has made some repayment provision.

[2]{.underline}. When review of the insurance folder shows that the
policyholder has denied the indebtedness, and there is no evidence of
subsequent confirmation of the indebtedness by the service department,
the request for collection will be returned with any pertinent
information.

[3]{.underline}. When a collection notice is returned to the service
department for any of the above reasons, the flashcard will be
appropriately noted and filed in the insurance folder. The other
indebtedness indicator will be deleted from the master record.

12.05 PROCESSING REFUNDS **TO SERVICE** DEPARTMENTS

a\. Prepare VA Form 4-706, Notice of Refund and Refund Work Sheet, for
refund of any amount to the appropriate allotment office for a service
department indebtedness. The following example illustrates the manner in
which the address will be shown on the VA Form 4.706:

Example: Government Insurance Allotment Division

Finance Center, U.S. Army

Indianapolis, Indiana 46216

SS #16266602 J.J. Doe

b\. Notify the insured of action taken.

12-3

January 30, 1974 M29-1, Part 11\
Change 11

\(3\) Dividends will be used to pay premiums in advance under the
dividend *premium* option.

\(4\) The current dividend will not become due and payable under the
*cash* or *deposit* option within 30 days from the date the TD Form 668A
is received. In a case of this type, furnish the anniversary date of the
policy for inclusion in the letter to the District Director of the
Internal Revenue Service.

\(5\) The entire amount of dividend will be applied to repay premium,
insurance overpayment or veteran\'s benefit indebtedness.

\(6\) No dividend will be payable because the policy is lapsed.

\(7\) If evidence of payment is presented by the insured within 90 days,
delete the pending diary.

b\. The Finance and Data Processing Division will return all copies of
the TD Form 668A with a dictated letter to the District Director,
Internal Revenue Service.

12.09 ESTABLISHING LEVIES

If it is determined that the \[levy\] may be \[processed\], the Finance
and Data Processing Division will be so advised and they will return
part \[31 of the TD Form 668A to the District Director, Internal Revenue
Service. Processing the levy will be accomplished as follows:

a\. Levy **on Loan** Value. Where the levy is received on the loan value
of a policy which is not lapsed, or within the grace period of an unpaid
premium, action to honor the levy will be taken as follows:

\(1\) Preliminary Action

\(a\) A dictated letter will be prepared to inform the insured that the
notice of levy has been received and that under the Federal Tax Lien Act
of 1966, the VA is required to abide by the levy. The letter will also
advise the insured that, unless he submits proof within 90 days from the
date of the letter that the delinquent tax has been satisfied, a loan
will be established against his policy and the amount payable will be
sent to the Internal Revenue Service to apply on the unpaid tax. In
addition, the letter will include the following facts:

[1]{.underline}. Amount of loan (maximum loan value if required) that
will be established as of the end of the 90-day period;

[2]{.underline}. Interest on the loan will be charged at the rate of 5
percent a year;

[3]{.underline}. If there is an existing loan and/or lien, the amount
that will be payable to the Internal Revenue Service after the present
loan and/or lien, plus interest, are deducted;

[4]{.underline}. If unpaid at the time the policy matures, the amount of
the loan, plus interest, will be deducted from the amount payable; and

[5]{.underline}. At any time the loan indebtedness equals or exceeds the
cash value, the policy will be canceled.

\(b\) A copy of the letter to the insured will be sent to the Internal
Revenue Service, addressed to the Revenue Officer at the address shown
on TD Form 668A.

\(c\) VA Form 29-5895a, or 29-8526, transaction type 008, will be
prepared to insert the diary message INT REV LEVY and to freeze the
record so that the proceeds of the policy may not be disposed of before
the end of the 90-day period.

\(d\) VA Form 29-5896a, or 29-8530, transaction type 080, will be
prepared to insert the Other Indebtedness indicator on the master
record.

\(e\) Parts 2 and 3 of TD Form 668A will be returned in the insurance
folder.

M29-1, Part II January 30, 1974 \_\_\_\_

Change II

\(2\) **Final Action.** At the end of the 90-day period, if the
delinquent tax has not been satisfied, the Internal Revenue Service will
follow-up on the notice of levy. Upon receipt of the follow-up notice,
action will be taken in accordance with the following:

\(a\) When prior to the end of the 90-day period, the insured fails to
pay a premium, and more than 31 days have expired since the due date of
the premium in default, the cash value has been used to purchase
extended term insurance under the automatic provision of the policy and
there is no loan value on which the levy may apply, the Internal Revenue
Service will be so advised.

\(b\) If the policy **is** not lapsed, or is lapsed but the grace period
has not expired prior to the end of the 90-day period after service of
the levy on the VA, the levy will be honored in the amount which the
insured could receive on such 90th day as a loan on his policy (cash
loan value less premium in de fault). The following action will be
taken:

[l]{.underline}. Necessary input documents will be prepared to establish
the loan clerically (maximum amount if required);

[2]{.underline}. VA Form 4-706, will be prepared for payment to the
Internal Revenue Service.

[3]{.underline}. VA Form 29-1547, Application for Policy Loan, will be
partially prepared for record purposes, as follows:

a\. In appropriate spaces, enter insured\'s name, file number, policy
number and amount of loan.

[b]{.underline}. In space for address, show Internal Revenue Service and
the address given on the TD Form 668A.

c\. In space for additional instructions, enter the notation, *Loan
automatically made under IRS levy. See copy of TD Form 668-A attached.*

[4]{.underline}. The VA Form 29-1547 will be stapled to part 2 of TD
Form 668A and filed in the insurance folder.

[5]{.underline}. The folder with all forms attached will be routed to
the Voucher Audit Unit, Finance and Data Processing Division, for review
of all actions and vouchering of amounts payable. The folder with part 3
TD Form 668A will be returned to the Insurance Division.

[6]{.underline}. A dictated letter will then be prepared to advise the
insured of the action taken and the amount and effective date of the
loan. The letter will repeat the following information which was
contained in the first letter:

[a]{.underline}. Interest at the rate of 5 percent a year will be
charged and, if not paid by the anniversary date, will be added to the
loan principal;

[b]{.underline}. When the policy matures, any unpaid indebtedness will
be deducted from the amount payable; and

c\. At any time the total amount of the loan indebtedness equals or
exceeds the cash value, the policy will be canceled.

7\. Part 3 (taxpayer\'s copy) of the TD Form 668A will be enclosed in
the letter to the insured.

b\. Levies **on Amounts Other Than Loan Value.** When a levy is against
a dividend or an amount due the insured, other than the loan value, take
the following action:

\(l\) VA Form 4-706 will be prepared for payment to the Internal Revenue
Service.

\(2\) When the amount of a pending transaction is disposed of, VA Form
29-5895a, or 29-8526, transaction type 098, will be prepared to delete
the pending transaction from the master record. Control account 52 will
be credited as the amount will be disposed of off tape.

12-6

12-5

January 30,1974 **M29-1,Part II\
Change 11**

\(3\) Where the current dividend will be due and payable within 30 days
from the date the TD Form 668A is received, VA Form 29-5896a or 29.8530
will be prepared, using transaction type 080, to insert the Other
Indebtedness indicator on the master record.

\(a\) At the time the dividend becomes payable, VA Form 4-706 will be
prepared for payment to the Internal Revenue Service.

\(b\) VA Form 29-5896a or 29-8530 will be prepared, transaction type
080, to remove the Other Indebtedness indicator.

12-6a

May 12,1980 M29-1, Part II\
Change 16

\(4\) Part 2 of TD Form 668A will be filed in the insurance folder.

\(5\) The folder, with all forms attached, will be routed to the Voucher
Audit \[activity\] , Finance \[activity\], for review of all actions and
vouchering of amounts payable. The folder, with part 3 of TD Form 668A
will be returned to the Insurance Division. A dictated letter will be
prepared to advise the insured of the action taken. Part 3 of TD Form
668A will be enclosed.

12.10 PROCESSING TD FORM 2876, REQUEST FOR VA INSURANCE POLICY DIVIDEND
INFORMATION

a\. TD Form 2876 will be used when the District Director of the Internal
Revenue Service does not know the debtor\'s insurance file and policy
numbers, or the anniversary date of the debtor\'s policy(ies), or where
the insurance records are located.

\(1\) If the District Director knows where the debtor\'s records are
located, he \[or she\] will mail the TD Form 2876 direct to the
appropriate VA center.

\(2\) If he \[or she\] does not know the debtor\'s insurance file and
policy numbers, or where the debtor\'s insurance records are located, he
\[or she\] will mail TD Form 2876 in an envelope marked D0 NOT 0PEN IN
**MAIL** R00M, to:

Office 0perations Service \[(032A1)1

Veterans Administration

Washington, D.C. 20420

\(3\) Upon indexing and location of the records, the TD Form 2876 will
be referred to the appropriate VA center.

b\. Upon receipt of the TD Form 2876 in the insurance Division, a record
printout will be obtained and reviewed to determine the status of the
insurance and whether any dividends will be due and payable in cash or
placed on deposit on the next anniversary date of the policy(ies). Based
on this determination, entries will be made on the TD Form 2876, below
the caption, *To Be Completed by Veterans Administration,* as follows:

\(1\) If the debtor has one or more active participating policies on
which dividends will be due and payable in cash or placed on deposit,
enter in the Remarks block an appropriate notation *Dividends payable in
cash, or Dividends placed. on deposit.* Also, complete the blocks for
Policy **No.,** Anniversary Date of Policy and Dividend Payments Issued
From.

\(2\) If the debtor has one or more active participating policies on
which dividends will be applied to pay premiums in advance, or held as a
dividend credit, enter in the Remarks block the notation, *No dividends
to be paid in cash or placed on deposit.* Complete all other blocks
except the one for Anniversary Date of Policy.

\(3\) If the debtor has one or more active nonparticipating (H, RH, \[
\] J, JR or JS) policies, enter in the Remarks block the notation, *Non
participating policy(ies).* Complete the Policy No. block but do not
complete blocks for Anniversary Date of Policy and Dividend Payments
Issued From.

\(4\) if the debtor has both active participating and nonparticipating
policies, use an appropriate combination of the entries outlined in
subparagraphs {l), (2) and (3) above.

\(5\) If the debtor has one or more inactive policies, enter
\"policy(ies) [(numbers)]{.underline} not in force\" in the Remarks

block.

c\. After being endorsed, TD Form 2876 will be returned to the address
on the reverse side of the form.

12-2

M29-1, **Part II January** 30,1974

Change 11

c\. Prepare VA Form 29-5895a, or 29-8526, transaction type 098, to
delete the pending transaction from the master record. Credit account 52
if the entire amount is disposed of off tape, either as payment of off
tape lien indebtedness, or as a VA Form 4-706 refund. If any part is
disposed of on tape, credit account 39.

d\. Prepare VA Form 29-5895a, or 29-8526, transaction type 008, to
insert a pending transaction for any amount to be refunded by the
system.

e\. If a dividend repays the entire indebtedness, prepare VA Form
29-5896a or 29-8530, transaction type 080, to remove the 0ther
Indebtedness indicator from the master record.

f\. Send the material to the Voucher Audit Unit, for review of all
actions taken and vouchering of refunds. After vouchering, the input
documents will be sent to the Data Control Unit, and the insurance
folder will be returned to the file.

SUBCHAPTER 2. TAX LEVIES

12.06 GENERAL

a\. The law authorizes the Internal Revenue Service to levy upon the
property of a taxpayer who owes delinquent taxes. This makes the rights
to NSLI (National Service Life Insurance) and USGLI (U.S. Government
Life Insurance) subject to levy.

b\. The rules for honoring tax levies against Government life insurance
policies will be followed as outlined in

part I, chapter 9.

12.07 PRELIMINARY PROCESSING

a\. \[If the levy is to be served against the loan value of a policy,
the VA will receive\] parts 2 and 3 of TD Form 668A, Notice of Levy, \[
1 from Internal Revenue Service \[ \]. Part I of the \[notice has been
used by Internal Revenue Service to notify the insured of the levy. Upon
receipt of the notice of levy, the Finance and Data Processing Division
will forward part 2 of the notice to the\] Insurance Division \[for
processing and will retain part 3 pending action by insurance
personnel.\]

b\. \[If the levy is to be served against the dividends of a policy that
are payable to the insured, the VA will receive 3 parts of the notice of
levy. Upon receipt, the Finance and Data Processing Division will sign
and record the date and time of receipt on each part of the notice. Part
l will be returned to Internal Revenue Service as soon as possible after
the entries have been made. Part 2 will be forwarded to the Insurance
Division for processing and, if appropriate, notifying the insured. Part
3 will be retained pending action by insurance personnel.

c\. Upon receipt of the notice of levy in the Policy Service Section,
the insurance folder and an RP0 will be obtained and reviewed to
determine if the levy may be processed from any amounts becoming due on
any policies of the insured.\]

12.08 LEVY NOT ESTABLISHED

a\. If the indebtedness cannot be recovered, parts 2 and 3 of TD Form
668A will be returned to the Finance and Data Processing Division with a
memorandum stating the reason recovery cannot be effected, such as:

\(1\) The levy was received more than 31 days after the due date of an
unpaid premium. In such cases, the cash value has been used to purchase
extended term insurance under the automatic provision of the policy and
there is no cash loan on which the levy may apply.

\(2\) Dividends will be held as a credit to prevent lapse, as provided
by law.

12-4