Custom Federal Regulations Service™

**This is supplemental material**

**for Book A of your set of**

**Federal Regulations**

Title 38, Parts 0, 1, 2, 12,

14-16, 18--20, 25-26, 39-45, 48

*General*

**Veterans Benefits Administration**

Supplement No. 66

Covering period of *Federal Register* issues

through November 25, 2004

Copyright © 2004 Jonathan Publishing

**Need Assistance?**

Printing for all supplements is performed by the United States
Government

Printing Office. Distribution is the responsibility of the

VA Forms and Publications Depot. Accordingly:

Questions concerning **[missing supplements]{.smallcaps}**, need for
**[additional books]{.smallcaps}**, and other **[distribution
list]{.smallcaps}** issues for this loose-leaf service should be
directed to:

Department of Veterans Affairs

Veterans Benefits Administration

Directives, Forms and Records Staff

Mail Code: 20S5

810 Vermont Avenue, N.W.

Washington DC 20420

Telephone: 202/273-7080

Fax: 202/275-5947

Questions concerning the **[filing instructions]{.smallcaps}** for this
loose-leaf service,

or the reporting of **[substantive errors]{.smallcaps}** in the text,

may be directed to:

Jonathan Publishing

855 Yorks Crossing

Driftwood TX 78619

Telephone: 512/858-1225

Fax: 512/858-1230

E-mail: garyknight@ev1.net

Copyright © 2004 Jonathan Publishing

# GENERAL INSTRUCTIONS

Custom Federal Regulations Service™

**Supplemental Materials for *Book A***

**Code of Federal Regulations**

**Title 38, Parts 0, 1, 2, 12, 14-16, 18--20, 25-26, 39-45, 48**

***General***

**Veterans Benefits Administration**

**Supplement No. 66**

25 November 2004

Covering the period of Federal Register issues

through November 25, 2004

When **Book A** was originally prepared, it was current through final
regulations published in the *Federal Register* of 21 April 1992. These
supple­mental materials are designed to keep your regulations up to date.
You should file the attached pages immediately, and record the fact that
you did so on the *Supplement Filing Record* which begins on page A-8 of
Book A, *General*.

> **To ensure accuracy and timeliness of your materials,**
>
> **it is important that you follow these simple procedures:**
>
> 1\. Always file your supplemental materials immediately upon receipt.
>
> 2\. Before filing, always check the Supplement Filing Record (page
> A-8) to be sure that all prior supplements have been filed. If you are
> missing any supple­ments, contact the Veterans Benefits Administration
> at the address listed on page A-2.
>
> 3\. After filing, enter the relevant information on the Supplement
> Filing Record sheet (page A-8)---the date filed, name/initials of
> filer, and date through which the *Federal Register* is covered.
>
> 4\. If as a result of a failure to file, or an undelivered supplement,
> you have more than one supplement to file at a time, be certain to
> file them in chronological order, lower number first.
>
> 5\. Always retain the filing instructions (simply insert them at the
> back of the book) as a backup record of filing and for reference in
> case of a filing error.
>
> 6\. Be certain that you *permanently discard* any pages indicated for
> removal in the filing instructions in order to avoid confusion later.

To execute the filing instructions, simply remove *and throw away* the
pages listed under *Remove These Old Pages,* and replace them in each
case with the corres­pond­ing pages from this supplement listed under *Add
These New Pages*. Occasionally new pages will be added without removal
of any old material (reflecting new regulations), and occasionally old
pages will be removed with­out addition of any new material (reflecting
rescinded regulations)---in these cases the word *None* will appear in
the appropriate column.

> **FILING INSTRUCTIONS**

**Book A, Supplement No. 66**

**November 25, 2004**

*Remove these Add these Section(s)*

*[old pages]{.underline} [new pages]{.underline} [Affected]{.underline}*

**Do not file this supplement until you confirm that**

**all prior supplements have been filed**

##  A-17 to A-20 A-17 to A-20 Index to Book A

1.[index]{.smallcaps}-3 to 1. [index]{.smallcaps} --8
1.[index]{.smallcaps}-3 to 1. [index]{.smallcaps} --8 Index to Part 1

**1.9-1 to 1.9-2 1.9-1 to 1.9-2 Auth. cite.**

1.893-1 to 1.994-2 1.893-1 to [1.995-1]{.underline} §§1.900--1.995

2.[index]{.smallcaps}-1 to 2. [index]{.smallcaps} --2
2.[index]{.smallcaps}-1 to 2. [index]{.smallcaps} --2 Auth. cite.

**2.1-1 to 2.1-2 2.1-1 to 2.1-2 Auth. cite.**

**2.4-1 to 2.7-1 2.4-1 to 2.7-1 §2.6**

**Be sure to complete the**

***Supplement Filing Record* (page A-8)**

**when you have finished filing this material.**

> **HIGHLIGHTS**

**Book A, Supplement No. 66**

**November 25, 2004**

***Supplement* Highlights *references***: Where substantive changes are
made in the text of regulations, the paragraphs of *Highlights* sections
are cited at the end of the relevant section of text. Thus, if you are
reading §3.263, you will see a note at the end of that section which
reads: "Supplement *Highlights* references---6(2)." This means that
paragraph 2 of the *Highlights* section in Supplement No. 6 contains
information about the changes made in §3.263. By keeping and filing the
*Highlights* sections, you will have a reference source explaining all
substantive changes in the text of the regulations.

***Supplement frequency***: This Book A (*General*) was originally
supplemented twice a year, in April and October. Beginning 1 August
1995, supplements will be issued *every month* during which a final rule
addition or modification is made to the parts of Title 38 covered by
this book. Supplements will be numbered consecutively as issued.

**Modifications in this supplement include the following:**

1\. On 25 October 2004, the VA published a final rule, effective 24
November 2004, to revise regulations concerning the collection,
compromise, suspension, termination, and referral of debts owed to VA in
order to clarify and simplify debt collection standards and reflect
changes to Federal debt collection procedures under the Debt Collection
Improvement Act of 1996; to amend regulations pertaining to the
administration of regional office Committees on Waivers and Compromises;
to amend provisions pertaining to debt collection and to the Chief
Financial Officer in the delegations of authority regulations; and to
make other nonsubstantive changes for purposes of clarification.
Changes:

Removed, revised, and added new sections from §1.900 through §1.995; and

In §2.6, revised paragraphs (c), (d), and (e).

###  Use of Official Mail in the Location and Recovery of Missing Children

1.700 Purpose 1.700-1

1.701 Contact person for missing children official mail program 1.701-1

1.702 Policy 1.702-1

1.703 Cost and percentage estimates 1.703-1

1.704 \[Reserved\]

1.705 Restrictions on use of missing children information 1.705-1

**Homeless Claimants**

1.710 Homeless claimants: Delivery of benefit payments and
correspondence 1.710-1

**Appeals from Decisions of Contracting Officers**

1.770--1776 \[Removed\]

**Appeals from Decisions of Contracting Officers under the**

**Contract Disputes Act of 1978**

1.780 Board of Contract Appeals---jurisdiction 1.780-1

1.781 Organization and address of the Board 1.781-1

1.782 Policy and procedure 1.782-1

1.783 Rules of the Board 1.783-1

**Part-time Career Employment Program**

1.891 Purpose of program 1.891-1

1.892 Review of positions 1.892-1

1.893 Establishing and converting time positions 1.893-1

1.894 Annual goals and timetables 1.894-1

1.895 Review and evaluation 1.895-1

1.896 Publicizing vacancies 1.896-1

1.897 Exceptions 1.897-1

**Standards for Collection, Compromise, Suspension or Termination**

**of Collection Effort, and Referral of Civil Claims for Money or
Property**

1.900 Prescription of standards 1.900-1

1.901 No private rights created 1.901-1

1.902 Antitrust, fraud, and tax and interagency claims 1.902-1

1.903 Settlement, waiver, or compromise under other statutory

or regulatory authority 1.903-1

1.904 Form of payment 1.904-1

1.905 Subdivision of claims not authorized 1.905-1

1.906 Required administrative proceedings 1.906-1

1.907 Definitions 1.907-1

1.910 Aggressive collection action 1.910-1

1.911 Collection of debts owed by reason of participation in a

benefits program 1.911-1

1.911a Collection of non-benefit debts 1.911a-1

1.912 Collection by offset 1.912-1

1.912a Collection by offset---from VA benefit payments 1.912a-1

1.913 Liquidation of collateral 1.913-1

1.914 Collection in installments 1.914-1

1.915 Interest, administrative costs, and penalties 1.915-1

1.916 Disclosure of debt information to consumer reporting agencies
(CRA) 1.916-1

1.917 Contracting for collection services 1.917-1

1.918 Use and disclosure of mailing addresses 1.918-1

1.919 Administrative offset against amounts payable from Civil Service

Retirement and Disability Fund, Federal Employees Retirement

System (FERS), final salary check, and lump sum leave payments 1.919-1

1.920 Referral of VA debts 1.920-1

1.921 Analysis of costs 1.921-1

1.922 Exemptions 1.922-1

1.923 Administrative wage garnishment 1.923-1

1.924 Suspension or revocation of eligibility for federal loans, loan
insurance,

loan guarantees, licenses, permits, or privileges 1.924-1

1.929 Reduction of debt through performance of work-study services
1.929-1

1.930 Scope and application 1.930-1

1.931 Bases for compromise 1.931-1

1.932 Enforcement policy 1.932-1

1.933 Joint and several liability 1.933-1

1.934 Further review of compromise offers 1.934-1

1.935 Consideration of tax consequences to the Government 1.935-1

1.936 Mutual releases of the debtor and VA 1.936-1

1.940 Scope and application 1.940-1

1.941 Suspension of collection activity 1.941-1

1.942 Termination of collection activity 1.942-1

1.943 Exception to termination 1.943-1

1.944 Discharge of indebtedness; reporting requirements 1.944-1

1.950 Prompt referral 1.950-1

1.951 Claims Collection Litigation Report (CCLR) 1.951-1

1.952 Preservation of evidence 1.952-1

1.953 Minimum amount of referrals to the Department of Justice 1.953-1

1.955 Regional office Committees on Waivers and Compromises 1.955-1

1.956 Jurisdiction 1.956-1

1.957 Committee authority 1.957-1

1.958 Finality of decisions 1.958-1

1.959 Records and certificates 1.959-1

1.960 Legal and technical assistance 1.960-1

1.961 Releases 1.961-1

1.962 Waiver of overpayments 1.962-1

1.963 Waiver; other than loan guaranty 1.963-1

1.963a Waiver; erroneous payment of pay and allowances 1.963a-1

1.964 Waiver; loan guaranty 1.964-1

1.965 Application of standard 1.965-1

1.966 Scope of waiver decisions 1.966-1

1.967 Refunds 1.967-1

1.969 Revision of waiver decisions 1.969-1

1.970 Standards for compromise 1.970-1

1.980 Scope 1.980-1

1.981 Definitions 1.981-1

1.982 Salary offsets of debts involving benefits under the laws

administered by VA 1.982-1

1.983 Notice requirements before salary offsets of debts not involving

benefits under laws administered by VA 1.983-1

1.984 Request for a hearing 1.984-1

1.985 Form, notice of, and conduct of hearing 1.985-1

1.986 Result if employee fails to meet deadlines 1.986-1

1.987 Review by the hearing official or administrative law judge 1.987-1

1.988 Written decision following a hearing requested under §1.984
1.988-1

1.989 Review of VA records related to the debt 1.989-1

1.990 Written agreement to repay debt as alternative to salary offset
1.990-1

1.991 Procedures for salary offset: when deductions may begin 1.991-1

1.992 Procedures for salary offset 1.992-1

1.993 Non-waiver of rights 1.993-1

1.994 Refunds 1.994-1

1.995 Requesting recovery through centralized administrative offset
1.995-1

**Part 2**

**Delegations of Authority**

2.1 General provisions 2.1-1

2.2 Delegation of authority to employees to issue subpoenas, etc. 2.2-1

2.3 Delegation of authority to employees to take affidavits, to
administer

oaths, etc. 2.3-1

2.4 Delegation of authority to order paid advertising for use in
recruitment 2.4-1

2.5 Delegation of authority to certify copies of documents, records,

or papers in Department of Veterans Affairs files 2.5-1

2.6 Secretary's delegations of authority to certain officials (38 U.S.C.
512) 2.6-1

2.7 Delegation of authority to provide relief on account of
administrative error 2.7-1

2.8 Delegation of authority to authorize allowances for Department of

Veterans Affairs employees who are notaries public 2.8-1

2.9---2.49 \[Reserved\]

2.50 Administration, staff office, and field facility heads are
authorized to

designate employees to certify copies of records and papers in the

custody of the Department of Veterans Affairs 2.50-1

2.51 Delegation of authority to certain employees to exercise the power
of the

Secretary to waive stated procedural (nonsubstantive) requirements of

the loan guaranty regulations 2.51-1

2.52 Delegation of authority to certain employees to exercise certain
powers

and functions of the Secretary with respect to the guaranty or insurance

of loans. The authority hereby delegated to these employees may, with

the approval of the Under Secretary for Benefits, be redelegated 2.52-1

2.53 Delegation of authority to certain employees to exercise certain
powers

and functions of the Secretary with respect to assisting eligible
veterans

to acquire specially adapted housing 2.53-1

2.54 Delegation of authority to certain employees to exercise the power
of the

Secretary to waive procedural (nonsubstantive) requirements of the

direct loan regulations 2.54-1

2.55 Delegation of authority to certain employees to exercise certain
powers

and functions of the Secretary with respect to the making of direct
loans.

The authority hereby delegated to these employees may, with the

approval of the Under Secretary for Benefits, be redelegated 2.55-1

2.56 Directors of Department of Veterans Affairs medical centers
authorized to

appoint boards of medical officers, consisting of at least three
qualified

physicians, one of whom must be qualified in treatment of mental

disorders, to determine whether members of uniformed services who are

being furnished medical care in our hospitals are mentally capable of

managing their own affairs 2.56-1

2.57 Chief Attorneys authorized to release funds from Personal Funds of
Patients

for the needs of veterans and their dependents including amounts fixed

by statute or valid administrative regulations as the cost of current

maintenance of veterans in public institutions other than Department of

Veterans Affairs institutions 2.57-1

**National Cemeteries**

Advisory Committee on Cemeteries and Memorials 1.601-1

Appropriate markers for graves already marked at private expense 1.631-1

Definitions 1.600-1

Disinterments from national cemeteries 1.621-1

Eligibility for burial 1.620-1

Findings concerning commission of a capital crime where a person has not
been

convicted due to death or flight to avoid prosecution 1.618-1

Gifts and donations 1.603-1

Group memorial monuments 1.633-1

Headstone and marker, application required 1.632-1

Headstones and markers 1.630-1

Monetary allowance in lieu of a Government-furnished

outer burial receptacle 1.629-1

Names for national cemetery activities 1.602-1

Prohibition of interment or memorialization of persons who have been
convicted of

Federal or State capital crimes 1.617-1

**Parking Fees at VA Medical Facilities**

Applicability and Scope 1.302-1

Definitions 1.301-1

Policy 1.303-1

Purpose 1.300-1

**Part-time Career Employment Program**

Annual goals and timetables 1.894-1

Exceptions 1.897-1

Purpose of program 1.891-1

Review and evaluation 1.895-1

Review of positions 1.892-1

Time positions, establishing and converting 1.893-1

Vacancies, publicizing 1.896-1

**Program Evaluation**

Evaluation of studies relating to health effects of dioxin and

radiation exposure 1.17-1

Guidelines for establishing presumptions of service connection for
former

prisoners of war 1.18-1

Standards for program evaluation 1.15-1

**Quarters for Department of Veterans Affairs Employees Overseas**

Quarters for Department of Veterans Affairs employees in

Government-owned or rented buildings overseas 1.11-1

**Referrals to GAO, Department of Justice, or IRS**

Claims Collection Litigation Report (CCLR) 1.951-1

Minimum amount of referrals to the Department of Justice 1.953-1

Preservation of evidence 1.952-1

Prompt referral 1.950-1

**Referrals of Information Regarding Criminal Violations**

Employee's duty to report 1.201-1

Information to be reported to the Office of Inspector General 1.204-1

Information to be reported to VA Police 1.203-1

Notification to the Attorney General or United States Attorney's Office
1.205-1

Purpose 1.200-1

**Regional Office Committees on Waivers and Compromises**

Application of standard 1.965-1

Committee authority 1.957-1

Finality of decisions 1.958-1

Jurisdiction 1.956-1

Legal and technical assistance 1.960-1

Records and certificates 1.959-1

Refunds 1.967-1

Regional office Committees on Waivers and Compromises 1.955-1

Releases 1.961-1

Revision of waiver decisions 1.969-1

Scope of waiver decisions 1.966-1

Standards for compromise 1.970-1

Waiver of overpayments 1.962-1

Waiver; erroneous payment of pay and allowances 1.963a-1

Waiver; loan guaranty 1.964-1

Waiver; other than loan guaranty 1.963-1

**Release of Information from Department of Veterans Affairs Claimant
Records**

Addresses of claimants 1.518-1

Administrative review 1.527-1

Confidentiality of information and patient records prepared or

obtained under the sickle cell anemia program 1.513a-1

Confidentiality of social data 1.520-1

Copies of records and papers 1.526-1

Determination of the question as to whether disclosure will be

prejudicial to the mental or physical health of claimant 1.522-1

Disclosure in cases where claimants are charged with or

convicted of criminal offenses 1.508-1

Disclosure of amount of monetary benefits 1.502-1

Disclosure of claimant records in connection with Judicial

proceedings generally 1.511-1

Disclosure of information contained in Armed Forces service and

related medical records in Department of Veterans Affairs custody
1.513-1

Disclosure of information to undertaker concerning burial of a

deceased veteran 1.516-1

Disclosure of information to a veteran or his or her duly

authorized representative as to matters concerning the veteran alone
1.503-1

Disclosure of information to a widow, child, or other claimant 1.504-1

Disclosure of loan guaranty information 1.512-1

Disclosure of records to Federal Government departments, state

unemployment compensation agencies, and the Office of

Servicemembers' Group Life Insurance 1.506-1

Disclosure of vocational rehabilitation and education information to

educational institutions cooperating with the Department of

Veterans Affairs 1.517-1

Disclosure to commanding officers of State soldiers' homes 1.515-1

Disclosure to courts in proceedings in the nature of an inquest 1.509-1

Disclosure to insurance companies cooperating with the Department

of Justice in the defense of insurance suits against the United States
1.510-1

Disclosure to private physicians and hospitals other than Department

of Veterans Affairs 1.514-1

Disclosure to private psychologists 1.514a-1

Disclosures to members of Congress 1.507-1

Genealogy 1.505-1

General 1.500-1

Inspection of records by or disclosure of information to recognized

representatives of organizations and recognized attorneys 1.525-1

Lists of names and addresses 1.519-1

Persons authorized to represent claimants 1.524-1

Release of information by the Secretary 1.501-1

Special restrictions concerning social security records 1.521-1

**Release of Information from Department of Veterans**

**Affairs Records other than Claimant Records**

Administrative review 1.557-1

Exemptions from public access to agency records 1.554-1

Fees 1.555-1

General 1.550-1

Predisclosure notification procedures for confidential

commercial information 1.554a-1

Public access to information that affects the public when not

published in the *Federal Register* as constructive notice 1.552-1

Public access to other reasonably described records 1.553-1

Requests for other reasonably described records 1.556-1

Time limits for Department of Veterans Affairs response to

requests for records 1.553a-1

**Release of Information from Department of Veterans Affairs (VA)
Records Relating to Drug Abuse, Alcoholism or Alcohol Abuse, Infection
with the Human Immunodeficiency Virus (HIV), or Sickle Cell Anemia**

Applicability 1.461-1

Confidentiality restrictions 1.462-1

Criminal penalty for violations 1.463-1

Definitions 1.460-1

Incompetent and deceased patients 1.465-1

Minor patients 1.464-1

Patient access and restrictions on use 1.469-1

Relationship to Federal statutes protecting research subjects against

compulsory disclosure of their identity 1.468-1

Restrictions on the use of identification cards and public signs 1.467-1

Security for records 1.466-1

**Safeguarding Personal Information in Department of Veterans Affairs
Records**

Access to records 1.577-1

Administrative review 1.580-1

Amendment of records 1.579-1

Exemptions 1.582-1

General policies, conditions of disclosure, accounting of certain

disclosures, and definitions 1.576-1

Social security numbers in veterans' benefits matters 1.575-1

**Salary Offset Provisions**

Definitions 1.981-1

Form, notice of, and conduct of hearing 1.985-1

Non-waiver of rights 1.993-1

Notice requirements before salary offsets of debts not involving

benefits under laws administered by VA 1.983-1

Procedures for salary offset 1.992-1

Procedures for salary offset: when deductions may begin 1.991-1

Refunds 1.994-1

Request for a hearing 1.984-1

Requesting recovery through centralized administrative offset 1.995-1

Result if employee fails to meet deadlines 1.986-1

Review by hearing official or administrative law judge 1.987-1

Review of VA records related to the debt 1.989-1

Salary offsets of debts involving benefits under the laws

administered by VA 1.982-1

Scope 1.980-1

Written agreement to repay debt as alternative to salary offset 1.990-1

Written decision following a hearing requested under §1.984 1.988-1

**Security and Law Enforcement at VA Facilities**

Security and law enforcement at VA facilities 1.218-1

**Standards for Collection, Compromise, Suspension or Termination**

**of Collection Effort, and Referral of Civil Claims for Money or
Property**

Antitrust, fraud, and tax and interagency claims 1.902-1

Definitions 1.907-1

Form of payment 1.904-1

No private rights created 1.901-1

Prescription of standards 1.900-1

Required administrative proceedings 1.906-1

Settlement, waiver, or compromise under other statutory

or regulatory authority 1.903-1

Subdivision of claims not authorized 1.905-1

**Standards for Collection of Claims**

Administrative offset against amounts payable from Civil Service

Retirement and Disability Fund, Federal Employees Retirement

System (FERS), final salary check, and lump sum leave payments 1.919-1

Administrative wage garnishment 1.923-1

Aggressive collection action 1.910-1

Analysis of costs 1.921-1

Collection by offset 1.912-1

Collection by offset---from VA benefit payments 1.912a-1

Collection in installments 1.914-1

Collection of debts owed by reason of participation in a

benefits program 1.911-1

Collection of non-benefit debts 1.911a-1

Contracting for collection services 1.917-1

Disclosure of debt information to consumer reporting agencies (CRA)
1.916-1

Exemptions 1.922-1

Interest, administrative costs, and penalties 1.915-1

Liquidation of collateral 1.913-1

Reduction of debt through performance of work-study services 1.929-1

Referral of VA debts 1.920-1

Suspension or revocation of eligibility for federal loans, loan
insurance,

loan guarantees, licenses, permits, or privileges 1.924-1

Use and disclosure of mailing addresses 1.918-1

**Standards for Compromise of Claims**

Bases for compromise 1.931-1

Consideration of tax consequences to the Government 1.935-1

Enforcement policy 1.932-1

Further review of compromise offers 1.934-1

Joint and several liability 1.933-1

Mutual releases of the debtor and VA 1.936-1

Scope and application 1.930-1

**Standards for Suspending or Terminating Collection**

Discharge of indebtedness; reporting requirements 1.944-1

Exception to termination 1.943-1

Scope and application 1.940-1

Suspension of collection activity 1.941-1

Termination of collection activity 1.942-1

**Use of Official Mail in the Location and Recovery of Missing
Children**

Contact person for missing children official mail program 1.701-1

Cost and percentage estimates 1.703-1

Policy 1.702-1

Purpose 1.700-1

Restrictions on use of missing children information 1.705-1

**United States Flag for Burial Purposes**

Eligibility for and disposition of the United States flag for burial
purposes 1.10-1

*End of Section Title Index*

**Part 1 --- General Provisions**

Authority: 38 U.S.C. 501, except as otherwise noted.

**Department of Veterans Affairs Official Seal and Distinguishing Flag**

**§1.9 Description, use, and display of VA Seal and Flag.**

\(a\) *General.* This section describes the official seal and
distinguishing flag of the of the Department of Veterans Affairs, and
prescribes the rules for their custody and use.

\(b\) *Definitions.*

\(1\) *VA* means all organizational units of the Department of Veterans
Affairs.

\(2\) *Embossed seal* means an image of the official seal made on paper
or other medium by using an embosser with a negative and positive die to
create a raised impression.

\(3\) *Official seal* means the original(s) of the VA seal showing the
exact form, content, and colors thereof.

\(4\) *Replica* means a copy of the official seal displaying the
identical form, content, and colors thereof.

\(5\) *Reproduction* means a copy of the official seal displaying the
identical form and content, reproduced in only one color.

\(6\) *Secretary* means the Secretary of Veterans Affairs.

\(7\) *Deputy Secretary* means the Deputy Secretary of Veterans Affairs.

\(c\) *Custody of official seal and distinguishing flags.* The Secretary
or designee shall:

\(1\) Have custody of:

\(i\) The official seal and prototypes thereof, and masters, molds,
dies, and other means of producing replicas, reproductions, and
embossing seals, and

\(ii\) Production, inventory, and loan records relating to items
specified in paragraph (c)(1)(i) of this section, and

\(2\) Have custody of distinguishing flags, and be responsible for
production, inventory, and loan records thereof.

\(d\) *Official Seal.*

\(1\) Description of official seal. The Department of Veterans Affairs
prescribes as its official seal, of which judicial notice shall be taken
pursuant to 38 U.S.C. 202, the imprint illustrated below:

\(i\) The official seal includes an American eagle clutching a cord in
its talons. The cord binds a 13-star U.S. flag and a 50-star U.S. flag.
In the field over the eagle is a pentagon formation of stars, with one
point down. The words Department of Veterans Affairs and United States
of America surround the eagle, stars, and flags. A rope motif makes up
the outermost ring of the seal.

\(ii\) The eagle represents the eternal vigilance of all our nation's
veterans. The stars represent the five branches of military service. The
crossed flags represent our nation's history. The gold cord that binds
the two flags, which is shown clutched in the eagle's talons is symbolic
of those who have fallen in the defense of liberty. Each of the various
individual items placed together in the seal is a salute to the past,
present, and future.

\(iii\) The colors used in the configuration are gold, brown, blue,
white, silver, yellow, black, and red.

\(iv\) The colors are derived from the American flag and from nature. By
invoking this symbolism, the color scheme represents the Nation's
commitment to its veterans.

**§1.893 Establishing and converting part-time positions.**

Position management and other internal reviews may indicate that
positions may be either converted from full-time or initially
established as part-time positions. Criteria listed in §1.892 may be
used during these reviews. If a decision is made to convert to or to
establish a part-time position, regular position management and
classification procedures will be followed. (Authority: 5 U.S.C. 3402)

\[44 FR 55172, Sept. 25, 1979, as amended at 61 FR 38571, July 25,
1996\]

**§1.894 Annual goals and timetables.**

A department-wide plan for promoting part-time employment opportunities
will be developed annually. This plan will establish annual goals and
set interim and final deadlines for achieving these goals. This plan
will be applicable throughout the agency, but may be supplemented by
field facilities. (Authority: 5 U.S.C. 3402)

\[44 FR 55172, Sept. 25, 1979, as amended at 61 FR 38571, July 25,
1996\]

**§1.895 Review and evaluation.**

The part-time career employment program will be reviewed through regular
employment reports to determine levels of part-time employment. This
program will also be designated an item of special interest to be
reviewed during personnel management reviews. (Authority: 5 U.S.C. 3402)

\[44 FR 55172, Sept. 25, 1979, as amended at 61 FR 38571, July 25,
1996\]

**§1.896 Publicizing vacancies.**

When applicants from outside the Federal service are desired, part-time
vacancies may be publicized through various recruiting means, such as:

\(a\) Federal Job Information Centers.

\(b\) State Employment offices.

\(c\) VA Recruiting Bulletins. (Authority: 5 U.S.C. 3402)

\[44 FR 55172, Sept. 25, 1979, as amended at 61 FR 38571, July 25,
1996\]

**§1.897 Exceptions.**

The Secretary of Veterans Affairs, or designees, may except positions
from inclusion in this program as necessary to carry out the mission of
the Department. (Authority: 5 U.S.C. 3402)

\[44 FR 55172, Sept. 25, 1979, as amended at 61 FR 38571, July 25,
1996\]

*Next Section is §1.900*

**Standards for Collection, Compromise,**

**Suspension or Termination of Collection Effort, and**

**Referral of Civil Claims for Money or Property**

**Authority**: Sections 1.900 through 1.953 are issued under the
authority of 31 U.S.C. 3711 through 3720E; 38 U.S.C. 501, and as noted
in specific sections.

**Source**: Sections 1.900 to 1.906 appear at 32 FR 2613,

Feb. 8, 1967, unless otherwise noted.

**Supplement *Highlights* reference for §§1.900--1.995**: 66(1), unless
otherwise indicated.

**§1.900 Prescription of standards.**

\(a\) The standards contained in §§1.900 through 1.953 are issued
pursuant to the Federal Claims Collection Standards, issued by the
Department of the Treasury (Treasury) and the Department of Justice
(DOJ) in parts 900 through 904 of 31 CFR, as well as other debt
collection authority issued by Treasury in part 285 of 31 CFR, and apply
to the collection, compromise, termination, and suspension of debts owed
to VA, and the referral of such debts to Treasury (or other Federal
agencies designated by Treasury) for offset and collection action and to
DOJ for litigation, unless otherwise stated in this part or in other
statutory or regulatory authority, or by contract.

\(b\) Standards and policies regarding the classification of debt for
accounting purposes (for example, write-off of uncollectible debt) are
contained in the Office of Management and Budget's Circular A-129
(Revised), "Policies for Federal Credit Programs and Non-Tax
Receivables." (Authority: 31 U.S.C. 3711; 38 U.S.C. 501).

\[32 FR 2613, Feb. 8, 1967, as amended at 52 FR 42104, Nov. 3, 1987; 69
FR 62191, Oct. 28, 2004\]

**§1.901 No private rights created.**

Sections 1.900 through 1.953 do not create any right or benefit,
substantive or procedural, enforceable at law or in equity by a party
against the United States, its agencies, its officers, or any other
person, nor shall the failure of VA to comply with any of the provisions
of §§1.900 through 1.953 be available to any debtor as a defense.
(Authority: 31 U.S.C. 3711; 38 U.S.C. 501).

\[52 FR 42105, Nov. 3, 1987, as amended at 69 FR 62191, Oct. 25, 2004\]

**§1.902 Antitrust, fraud, and tax and interagency claims.**

\(a\) The standards in §§1.900 through 1.953 relating to compromise,
suspension, and termination of collection activity do not apply to any
debt based in whole or in part on conduct in violation of the antitrust
laws or to any debt involving fraud, the presentation of a false claim,
or misrepresentation on the part of the debtor or any party having an
interest in the claim. Only the Department of Justice (DOJ) has the
authority to compromise, suspend, or terminate collection activity on
such claims. The standards in §§1.900 through 1.953 relating to the
administrative collection of claims do apply, but only to the extent
authorized by DOJ in a particular case. Upon identification of a claim
based in whole or in part on conduct in violation of the antitrust laws
or any claim involving fraud, the presentation of a false claim, or
misrepresentation on the part of the debtor or any party having an
interest in the claim, VA shall promptly refer the case to DOJ. At its
discretion, DOJ may return the claim to VA for further handling in
accordance with the standards in §§1.900 through 1.953.

\(b\) Sections 1.900 through 1.953 do not apply to tax debts.

\(c\) Sections 1.900 through 1.953 do not apply to claims between
Federal agencies.

\(d\) Federal agencies should attempt to resolve interagency claims by
negotiation in accordance with Executive Order 12146 (3 CFR, 1980 Comp.,
pp. 409-412). (Authority: 31 U.S.C. 3711; 38 U.S.C. 501)

\[52 FR 42105, Nov. 3, 1987, as amended at 69 FR 62192, Oct. 25, 2004\]

**§1.903 Settlement, waiver, or compromise under other statutory or
regulatory authority.**

Nothing in §§1.900 through 1.953 precludes VA settlement, waiver,
compromise, or other disposition of any claim under statutes and
implementing regulations other than subchapter II of chapter 37 of Title
31 of the United States Code (Claims of the United States Government)
and the standards in Title 31 CFR parts 900 through 904. See, for
example, the Federal Medical Care Recovery Act (42 U.S.C. 2651, *et
seq*.) and applicable regulations, 28 CFR part 43. In such cases, the
laws and regulations that are specifically applicable to claims
collection activities of VA generally take precedence over 31 CFR parts
900 through 904. (Authority: 31 U.S.C. 3711; 38 U.S.C. 501).

\[32 FR 2613, Feb. 8, 1967, as amended at 52 FR 42105, Nov. 3, 1987; 69
FR 62192, Oct. 25, 2004\]

**§1.904 Form of payment.**

Claims may be paid in the form of money or, when a contractual basis
exists, VA may demand the return of specific property or the performance
of specific services. (Authority: 31 U.S.C. 3711; 38 U.S.C. 501).

\[32 FR 2613, Feb. 8, 1967, as amended at 69 FR 62192, Oct. 25, 2004\]

**§1.905 Subdivision of claims not authorized.**

Debts may not be subdivided to avoid the monetary ceiling established by
31 U.S.C. 3711(a)(2). A debtor's liability arising from a particular
transaction or contract shall be considered as a single debt in
determining whether the debt is one of less than \$100,000 (excluding
interest, penalties, and administrative costs) or such higher amount as
the Attorney General shall from time to time prescribe for purposes of
compromise, suspension, or termination of collection activity.
(Authority: 31 U.S.C. 3711; 38 U.S.C. 501).

\[52 FR 42105, Nov. 3, 1987, as amended at 69 FR 62192, Oct. 25, 2004\]

**§1.906 Required administrative proceedings.**

\(a\) In applying §§1.900 through 1.953, VA is not required to omit,
foreclose, or duplicate administrative proceedings required by contract
or other laws or regulations.

\(b\) Nothing contained in §§1.900 through 1.953 is intended to
foreclose the right of any debtor to an administrative proceeding,
including appeals, waivers, and hearings provided by statute, contract,
or VA regulation (see 38 U.S.C. 3720(a)(4) and 5302 and 42 U.S.C.
2651-2653). (Authority: 38 U.S.C. 501, 3720(a)(4), 5302; 42 U.S.C. 2651
through 2653).

\[32 FR 2613, Feb. 8, 1967, as amended at 69 FR 62192, Oct. 25, 2004\]

**§1.907 Definitions.**

\(a\) The definitions and construction found in the Federal Claims
Collection Standards in 31 CFR 900.2(a) through (d), and the definitions
in the provisions on administrative wage garnishment in 31 CFR 285.11(c)
shall apply to §§1.900 through 1.953, except as otherwise stated.

\(b\) As used in §§1.900 through 1.953, *referral for litigation* means
referral to the Department of Justice for appropriate legal actions,
except in those specified instances where a case is referred to a VA
Regional Counsel for legal action.

\(c\) As used in §§1.900 through 1.953, *VA benefit program* means
medical care, home loan, and benefits payment programs administered by
VA under Title 38 of the United States Code, except as otherwise stated.

\(d\) As used in §§1.900 through 1.953, *Treasury* means the United
States Department of the Treasury. (Authority: 31 U.S.C. 3701, 3711; 38
U.S.C. 501, 5316).

\[52 FR 42105, Nov. 3, 1987, as amended at 61 FR 7216, Feb. 27, 1996; 69
FR 62192, Oct. 25, 2004\]

Next Section is §1.910

**Standards for Collection of Claims**

**Source**: Sections 1.910 to 1.921 appear at 32 FR 2613, Feb. 8, 1967,
unless otherwise noted.

**§1.910 Aggressive collection action.**

\(a\) VA will take aggressive collection action on a timely basis, with
effective follow-up, to collect all claims for money or property arising
from its activities.

\(b\) In accordance with 31 U.S.C. 3711(g) and the procedures set forth
at 31 CFR 285.12, VA shall transfer to Treasury any non-tax debt or
claim that has been delinquent for a period of 180 days or more so that
Treasury may take appropriate action to collect the debt or terminate
collection action. This requirement does not apply to any debt that:

\(1\) Is in litigation or foreclosure;

\(2\) Will be disposed of under an approved asset sale program;

\(3\) Has been referred to a private collection contractor for a period
of time acceptable to the Secretary of the Treasury;

\(4\) Is at a debt collection center for a period of time acceptable to
the Secretary of the Treasury;

\(5\) Will be collected under internal offset procedures within 3 years
after the debt first became delinquent; or

\(6\) Is exempt from this requirement based on a determination by the
Secretary of the Treasury that exemption for a certain class of debt is
in the best interest of the United States. VA may request that the
Secretary of the Treasury exempt specific classes of debts.

\(c\) In accordance with 31 U.S.C. 3716(c)(6) and the procedures set
forth in 31 CFR part 285, VA shall notify Treasury of all past due,
legally enforceable non-tax debt that is over 180 days delinquent for
purposes of administrative offset, including tax refund offset and
federal salary offset. (Procedures for referral to Treasury for tax
refund offset are found at 31 CFR 285.2 and procedures for referral to
Treasury for federal salary offset are found at 38 CFR 1.995 and 31 CFR
285.7.) (Authority: 31 U.S.C. 1311, 1316; 38 U.S.C. 501, 5314; 31 CFR
part 285).

\[32 FR 21613, Feb. 8, 1967, as amended at 69 FR 62192, Oct. 25, 2004\]

**§1.911 Collection of debts owed by reason of participation in a
benefits program.**

\(a\) *Scope*. This section applies to the collection of debts resulting
from an individual's participation in a VA benefit or home loan program.
It does not apply to VA's other debt collection activities. Standards
for the demand for payment of all other debts owed to VA are set forth
in §1.911a. School liability debts are governed by §21.4009 of this
title.

\(b\) *Written demands*. When VA has determined that a debt exists by
reason of an administrative decision or by operation of law, VA shall
promptly demand, in writing, payment of the debt. VA shall notify the
debtor of his or her rights and remedies and the consequences of failure
to cooperate with collection efforts. Generally, one demand letter is
sufficient, but subsequent demand letters may be issued as needed.

\(c\) *Rights and remedies.* Subject to limitations referred to in this
paragraph, the debtor has the right to informally dispute the existence
or amount of the debt, to request waiver of collection of the debt, to a
hearing on the waiver request, and to appeal the Department of Veterans
Affairs decision underlying the debt. These rights can be exercised
separately or simultaneously. Except as provided in §1.912a (collection
by offset), the exercise of any of these rights will not stay any
collection proceeding.

\(1\) *Informal dispute.* This means that the debtor writes to the
Department of Veterans Affairs and questions whether he or she owes the
debt or whether the amount is accurate. The Department of Veterans
Affairs will, as expeditiously as possible, review the accuracy of the
debt determination. If the resolution is adverse to the debtor, he or
she may also request waiver of collection as indicated in paragraphs
(c)(2) and (3) of this section.

\(2\) *Request for waiver; hearing on request.* The debtor has the right
to request waiver of collection, in accordance with §1.963 or §1.964,
and the right to a hearing on the request. Requests for waivers must be
filed in writing. A waiver request must be filed within the time limit
set forth in 38 U.S.C. 5302. If waiver is granted, in whole or in part,
the debtor has a right to refund of amounts already collected up to the
amount waived.

\(3\) *Appeal*. In accordance with parts 19 and 20 of this title, the
debtor may appeal the decision underlying the debt.

\(d\) *Notification.* The Department of Veterans Affairs shall notify
the debtor in writing of the following:

\(1\) The exact amount of the debt;

\(2\) The specific reasons for the debt, in simple and concise language;

\(3\) The rights and remedies described in paragraph (c) of this
section, including a brief explanation of the concept of, and
requirements for, waiver;

\(4\) That collection may be made by offset from current or future VA
benefit payments (see §1.912a). In addition, the debtor shall be advised
of any policies with respect to the use of credit bureaus, debt
collection centers, and collection agencies; any other remedies to
enforce payment of the debt, including administrative wage garnishment,
Federal salary offset, tax refund offset, and litigation; and the
requirement that any debt delinquent for more than 180 days be
transferred to Treasury for administrative offset or collection.

\(5\) That interest and administrative costs may be assessed in
accordance with §1.915, as appropriate;

\(6\) That the debtor shall have the opportunity to inspect and copy
records; and

\(7\) That the debtor shall have the opportunity to enter into a
repayment agreement.

\(e\) *Sufficiency of notification.* Notification is sufficient when
sent by ordinary mail directed to the debtor's last known address and
not returned as undeliverable by postal authorities.

\(f\) *Further explanation.* Further explanation may be found for:

\(1\) Appellate rights, in parts 19 and 20 of this title;

\(2\) Notification of any decision affecting the payment of benefits or
granting relief, in §3.103(e);

\(3\) Right to appeal a waiver decision, in §1.958;

\(4\) Refund to a successful waiver applicant of money already
collected, in §1.967; and

\(5\) The assessment of interest and administrative costs, in §1.915.
(Authority: 38 U.S.C. 501, 5302, 5314).

\[48 FR 1055, Jan. 10, 1983; 48 FR 6336, Feb. 11, 1983. Redesignated and
amended at 52 FR 42105, Nov. 3, 1987; 54 FR 34980, Aug. 23, 1989; 69 FR
62193, Oct. 25,2004\]

Next Section is §1.911a

**§1.911a Collection of non-benefit debts.**

\(a\) This section is written in accordance with 31 CFR 901.2 and
applies to the demand for payment of all debts, except those debts
arising out of participation in a VA benefit or home loan program.
Procedures for the demand for payment of VA benefit or home loan program
debts are set forth in §1.911.

\(b\) Written demand as described in paragraph (c) of this section shall
be made promptly upon a debtor of VA in terms that inform the debtor of
the consequences of failing to cooperate with VA to resolve the debt.
Generally, one demand letter is sufficient, but subsequent letters may
be issued. In determining the timing of the demand letter, VA should
give due regard to the need to refer debts promptly to the Department of
Justice for litigation, in accordance with §§1.950 through 1.953. When
necessary to protect VA's interest (for example, to prevent the running
of a statute of limitations), written demand may be preceded by other
appropriate actions under 38 CFR 1.900 through 1.953, including
immediate referral for litigation.

\(c\) The written demand letter shall inform the debtor of:

\(1\) The basis for the indebtedness and any rights the debtor may have
to seek review within VA, including the right to request waiver;

\(2\) The applicable standards for imposing any interest or other late
payment charges;

\(3\) The date by which payment should be made to avoid interest and
other late payment charges and enforced collection, which generally
should not be more than 30 days from the date that the demand letter is
mailed;

\(4\) The name, address, and phone number of a contact person or office
within the agency;

\(5\) The opportunity to inspect and copy VA records related to the
debt; and

\(6\) The opportunity to make a written agreement to repay the debt.

\(d\) In addition to the items listed in paragraph (c) of this section,
VA should include in the demand letter VA's willingness to discuss
alternative methods of payment and its policies with respect to the use
of credit bureaus, debt collection centers, and collection agencies. The
letter should also indicate the agency's remedies to enforce payment of
the debt (including assessment of interest, administrative costs and
penalties, administrative garnishment, Federal salary offset, tax refund
offset, administrative offset, and litigation) and the requirement that
any debt delinquent for more than 180 days be transferred to Treasury
for collection.

\(e\) VA should respond promptly to communications from debtors and
should advise debtors who dispute debts, or request waiver, to furnish
available evidence to support their contentions.

\(f\) Prior to referring a debt for litigation, VA should advise each
debtor determined to be liable for the debt that, unless the debt can be
collected administratively, litigation may be initiated. This
notification may be given as part of a demand letter under paragraph (c)
of this section or in a separate letter.

\(g\) When VA learns that a bankruptcy petition has been filed with
respect to a debtor, before proceeding with further collection action,
VA should immediately seek legal advice from either VA's General Counsel
or Regional Counsel concerning the impact of the Bankruptcy Code on any
pending or contemplated collection activities. Unless VA determines that
the automatic stay imposed at the time of filing pursuant to 11 U.S.C.
362 has been lifted or is no longer in effect, in most cases collection
activity against the debtor should stop immediately.

\(1\) After VA seeks legal advice, a proof of claim should be filed in
most cases with the bankruptcy court or the Trustee. VA should refer to
the provisions of 11 U.S.C. 106 relating to the consequences on
sovereign immunity of filing a proof of claim.

\(2\) If VA is a secured creditor, it may seek relief from the automatic
stay regarding its security, subject to the provisions and requirements
of 11 U.S.C. 362.

\(3\) Offset is prohibited in most cases by the automatic stay. However,
VA should seek legal advice from VA's General Counsel or Regional
Counsel to determine whether payments to the debtor and payments of
other agencies available for offset may be frozen by VA until relief
from the automatic stay can be obtained from the bankruptcy court. VA
also should seek legal advice from VA's General Counsel or Regional
Counsel to determine whether recoupment is available. (Authority: 31
U.S.C. 3711; 38 U.S.C. 501).

\[69 FR 62193, Oct. 25, 2004\]

*Next Section is §1.912*

**§1.912 Collection by offset.**

\(a\) *Authority and scope*. In accordance with the procedures set forth
in 31 CFR 901.3, as well as 31 CFR part 285, VA shall collect debts by
administrative offset from payments made by VA to a debtor indebted to
VA. Also in accordance with 31 CFR 901.3(b), as well as 31 CFR part 285,
VA shall refer past due, legally enforceable non-tax debts which are
over 180 days delinquent to Treasury for collection by centralized
administrative offset (further procedures are set forth in paragraph (g)
of this section). This section does not pertain to offset from either VA
benefit payments made under the authority of 38 U.S.C. 5314 or from
current salary, but does apply to offset from all other VA payments,
including an employee's final salary check and lump-sum leave payment.
Procedures for offset from benefit payments are found in §1.912a.
Procedures for offset from current Federal salary are found in §§1.980
through 1.995. NOTE: VA cannot offset, or refer for the purpose of
offset, either under the authority of this section or under any other
authority found in §§1.900 through 1.953 and §§1.980 through 1.995, any
VA home loan program debt described in 38 U.S.C. 3726 unless the
requirements set forth in that section have been met.

\(b\) *Notification.* Prior to initiation of administrative offset, if
not provided in the initial notice of indebtedness, VA is required to
provide the debtor with written notice of:

\(1\) The nature and amount of the debt;

\(2\) VA's intention to pursue collection by offset procedures from the
specified VA payment, the date of commencement of offset, and the exact
amount to be offset;

\(3\) The opportunity to inspect and copy VA records pertaining to the
debt;

\(4\) The right to contest either the existence or amount of the debt or
the proposed offset schedule, or if applicable, to request a waiver of
collection of the debt, or to request a hearing on any of these matters;

\(5\) That commencement of offset will begin, unless the debtor makes a
written request for the administrative relief discussed in paragraph
(b)(4) of this section within 30 days of the date of this notice; and

\(6\) The opportunity to enter into a written agreement with VA to repay
the debt in lieu of offset.

\(c\) *Deferral of offset.*

\(1\) If the debtor, within 30 days of the date of the notification
required by paragraph (b) of this section, disputes in writing the
existence or amount of the debt or the amount of the scheduled offset,
offset shall not commence until the dispute is reviewed and a decision
is rendered by VA adverse to the debtor.

\(2\) If the debtor, within 30 days of the date of the required
notification by VA, requests in writing the waiver of collection of the
debt in accordance with §1.963, §1.963a, or §1.964, offset shall not
commence until VA has made an initial decision to deny the waiver
request.

\(3\) If the debtor, within 30 days of the required notification by VA,
requests in writing a hearing on the issues found in paragraphs (c)(1)
and (2) of this section, offset shall not commence until a decision is
rendered by VA on the issue which is the basis of the hearing.

\(d\) *Exceptions.*

\(1\) Offset may commence prior to either resolution of a dispute or
decision on a waiver request as discussed in paragraph (c) of this
section, if collection of the debt would be jeopardized by deferral of
offset (for example, if VA first learns of the debt when there is
insufficient time before a final payment would be made to the debtor to
allow for prior notice and opportunity for review or waiver
consideration). In such a case, notification pursuant to paragraph (b)
of this section shall be made at the time offset begins or as soon
thereafter as possible. VA shall promptly refund any money that has been
collected that is ultimately found not to have been owed to the
Government.

\(2\) If the United States has obtained a judgment against the debtor,
offset may commence without the notification required by paragraph (b)
of this section. However, a waiver request filed in accordance with the
time limits and other requirements of §1.963, §1.963a, or §1.964 will be
considered, even if filed after a judgment has been obtained against the
debtor. If waiver is granted, in whole or in part, refund of amounts
already collected will be made in accordance with §1.967.

\(3\) The procedures set forth in paragraph (b) of this section may be
omitted when the debt arises under a contract that provides for notice
and other procedural protections.

\(4\) Offset may commence without the notification required by paragraph
(b) of this section when the offset is in the nature of a recoupment. As
defined in 31 CFR 900.2(d), recoupment is a special method for adjusting
debts arising under the same transaction or occurrence.

\(e\) *Hearing.*

\(1\) After a debtor requests a hearing, VA shall notify the debtor of
the form of the hearing to be provided; i.e., whether the hearing will
either be oral or paper. If an oral hearing is determined to be proper
by the hearing official, the notice shall set forth the date, time, and
location of the hearing. If the hearing is to be a paper review, the
debtor shall be notified that he or she should submit his or her
position and arguments in writing to the hearing official by a specified
date, after which the record shall be closed. This date shall give the
debtor reasonable time to submit this information.

\(2\) Unless otherwise required by law, an oral hearing under this
paragraph is not required to be a formal evidentiary type of hearing.

\(3\) A debtor who requests a hearing shall be provided an oral hearing
if VA determines that the matter cannot be resolved by review of
documentary evidence. Whenever an issue of credibility or veracity is
involved, an oral hearing will always be provided the debtor. For
example, the credibility or veracity of a debtor is always an issue
whenever the debtor requests a waiver of collection of the debt. Thus, a
hearing held in conjunction with a waiver request will always be an oral
hearing. If a determination is made to provide an oral hearing, the
hearing official may offer the debtor the opportunity for a hearing by
telephone conference call. If this offer is rejected or if the hearing
official declines to offer a telephone conference call, the debtor shall
be provided an oral hearing permitting the personal appearance of the
debtor, his or her personal representative, and witnesses. Witnesses
shall testify under oath or affirmation.

\(4\) In all other cases where a debtor requests a hearing, a paper
hearing shall be provided. The debtor shall be provided an opportunity
to submit material for the record. A paper hearing shall consist of a
review of the written evidence of record by the designated hearing
official.

\(f\) *Statutes of limitation; multiple debts*. When collecting multiple
debts by administrative offset, VA shall apply the recovered amounts to
those debts in accordance with the best interests of the United States,
as determined by the facts and circumstances of the particular case,
paying special attention to applicable statutes of limitation. In
accordance with 31 CFR 901.3(a)(4), VA may not initiate offset to
collect a debt more than 10 years after VA's right to collect the debt
first accrued (with certain exceptions as specified in 31 CFR
901.3(a)(4)).

\(g\) *Centralized administrative offset*.

\(1\) When VA refers delinquent debts to Treasury for centralized
administrative offset in accordance with 31 CFR part 285, VA must
certify that:

\(i\) The debts are past due and legally enforceable; and

\(ii\) VA has complied with all due process requirements under 31 U.S.C.
3716(a) and paragraphs (b) and (c) of this section.

\(2\) Payments that are prohibited by law from being offset are exempt
from centralized administrative offset.

\(h\) *Computer Matching and Privacy Act waiver*. In accordance with 31
U.S.C. 3716(f), the Secretary of the Treasury may waive the provisions
of the Computer Matching and Privacy Protection Act of 1988 concerning
matching agreements and post-match notification and verification (5
U.S.C. 552a(o) and (p)) for centralized administrative offset upon
receipt of a certification from a creditor agency that the due process
requirements enumerated in 31 U.S.C. 3716(a) and paragraphs (b) and (c)
of this section have been met. The certification of a debt in accordance
with paragraph (g) of this section will satisfy this requirement. If
such a waiver is granted, only the Data Integrity Board of the
Department of the Treasury is required to oversee any matching
activities, in accordance with 31 U.S.C. 3716(g).

\(i\) *Requests by creditor agencies for offset*. Unless the offset
would not be in VA's best interest, or would otherwise be contrary to
law, VA will comply with requests by creditor agencies to offset VA
payments (except for current salary or benefit payments) made to a
person indebted to the creditor agency. However, before VA may initiate
offset, the creditor agency must certify in writing to VA that the
debtor has been provided:

\(1\) Written notice of the type and amount of the debt and the intent
of the creditor agency to use administrative offset to collect the debt;

\(2\) The opportunity to inspect and copy agency records related to the
debt;

\(3\) The opportunity for review within the agency of the determination
of the indebtedness; and

\(4\) The opportunity to make a written agreement to repay the debt.
(Authority: 31 U.S.C. 3711; 38 U.S.C. 501).

\[52 FR 42105, Nov. 3, 1987, as amended at 54 FR 34980, Aug. 23, 1989;
69 FR 62194, Oct. 25, 2004\]

*Next Section is §1.912a*

**§1.912a Collection by offset---from VA benefit payments.**

\(a\) *Authority and scope*. VA shall collect debts governed by §1.911
of this part by offset against any current or future VA benefit payments
to the debtor. Unless paragraphs (c) or (d) of this section apply,
offset shall commence promptly after notification to the debtor as
provided in paragraph (b) of this section. Certain military service
debts shall be collected by offset against current or future
compensation or pension benefit payments to the debtor under authority
of 38 U.S.C. 5301(c), as provided in paragraph (e) of this section.

\(b\) *Notification.* Unless paragraph (d) of this section applies,
offset shall not commence until the debtor has been notified in writing
of the matters described in §l.911(c) and (d) and paragraph (c) of this
section.

\(c\) *Deferral of offset.*

\(1\) If the debtor, within thirty days of the date of the notification
required by paragraph (b) of this section, disputes, in writing, the
existence or amount of the debt in accordance with §l.911(c)(1), offset
shall not commence until the dispute is reviewed as provided in
§l.911(c)(1) and unless the resolution is adverse to the debtor.

\(2\) If the debtor, within thirty days of the date of notification
required by paragraph (b) of this section, requests, in writing, waiver
of collection in accordance with §1.963 or §1.964, as applicable, offset
shall not commence until the Department of Veterans Affairs has made an
initial decision on waiver.

\(3\) If the debtor, within thirty days of the notification required by
paragraph (b) of this section, requests, in writing, a hearing on the
waiver request, no decision shall be made on the waiver request until
after the hearing has been held.

\(4\) VA will pursue collection action once an adverse initial decision
is reached on the debtor's request for waiver and/or the debtor's
informal dispute (as described in §1.911(c)(1)) concerning the existence
or amount of the debt, even if the debtor subsequently pursues appellate
relief in accordance with parts 19 and 20 of this title.

\(d\) *Exceptions*. Offset may commence prior to the resolution of a
dispute or a decision on a waiver request if collection of the debt
would be jeopardized by deferral of offset. In such case, notification
pursuant to §1.911(d) shall be made at the time offset begins or as soon
thereafter as possible.

\(e\) *Offset of military service debts*.

\(1\) In accordance with 38 U.S.C. 5301(c), VA shall collect by offset
from any current or future compensation or pension benefits payable to a
veteran under laws administered by VA, the uncollected portion of the
amount of any indebtedness associated with the veteran's participation
in a plan prescribed in subchapter I or II of 10 U.S.C. chapter 73.

\(2\) Offsets of a veteran's compensation or pension benefit payments to
recoup indebtedness to the military services as described in paragraph
(e)(1) of this section shall only be made by VA when the military
service owed the debt has:

\(i\) Determined the amount of the indebtedness of the veteran;

\(ii\) Certified to VA that due process in accordance with the
procedures prescribed in 31 U.S.C. 3716 have been provided to the
veteran; and

\(iii\) Requested collection of the total debt amount due.

\(3\) Offset from any compensation or pension benefits under the
authority of 38 U.S.C. 5301(c) shall not exceed 15% of the net monthly
compensation or pension benefit payment. The net monthly compensation or
pension benefit payment is defined as the authorized monthly
compensation or pension benefit payment less all current deductions.
(Authority: 38 U.S.C. 5301(c) and 5314)

\[48 FR 1055, Jan. 10, 1983, as amended at 52 FR 42106, Nov. 3, 1987; 57
FR 47263, Oct. 15, 1992; 69 FR 62194, Oct. 25, 2004\]

*Next Section is §1.913*

**§1.913 Liquidation of collateral.**

\(a\) VA should liquidate security or collateral through the exercise of
a power of sale in the security instrument or a nonjudicial foreclosure,
and apply the proceeds to the applicable debt, if the debtor fails to
pay the debt within 180 days after demand and if such action is in the
best interest of the United States. Collection from other sources,
including liquidation of security or collateral, is not a prerequisite
to requiring payment by a surety, insurer, or guarantor, unless such
action is expressly required by statute or contract.

\(b\) When VA learns that a bankruptcy petition has been filed with
respect to a debtor, VA should seek legal advice from VA's General
Counsel or Regional Counsel concerning the impact of the Bankruptcy
Code, including, but not limited to, 11 U.S.C. 362, to determine the
applicability of the automatic stay and the procedures for obtaining
relief from such stay prior to proceeding under paragraph (a) of this
section. (Authority: 31 U.S.C. 3711; 38 U.S.C. 501).

\[52 FR 42106, Nov. 3. 1987, redesignated and amended at 69 FR 62195,
Oct. 25, 2004\]

**§1.914 Collection in installments.**

\(a\) Whenever feasible, VA shall collect the total amount of a debt in
one lump sum. If a debtor is financially unable to pay a debt in one
lump sum, VA may accept payment in regular installments. VA should
obtain financial statements from debtors who represent that they are
unable to pay in one lump sum and independently verify such
representations whenever possible. If VA agrees to accept payments in
regular installments, VA should obtain a legally enforceable written
agreement from the debtor that specifies all of the terms of the
arrangement and contains a provision accelerating the debt in the event
of default.

\(b\) The size and frequency of installment payments should bear a
reasonable relation to the size of the debt and the debtor's ability to
pay. If possible, the installment payments should be sufficient in size
and frequency to liquidate the debt in 3 years or less.

\(c\) Security for deferred payments should be obtained in appropriate
cases. However, VA may accept installment payments if the debtor refuses
to execute a written agreement or to give security. (Authority: 31
U.S.C. 3711; 38 U.S.C. 501).

\[52 FR 42106, Nov. 3, 1987, redesignated and amended at 69 FR 62195,
Oct. 25, 2004\]

**§1.915 Interest, administrative costs, and penalties.**

\(a\) Except as otherwise provided by statute, contract, or other
regulation to the contrary, and subject to 38 U.S.C. 3485(e) and 5302,
VA shall assess:

\(1\) Interest on all indebtedness to the United States arising out of
participation in a VA benefit, medical care, or home loan program under
authority of Title 38, U.S. Code.

\(2\) Interest and administrative costs of collection on such debts
described in paragraph (a)(1) of this section where repayment has become
delinquent (as defined in 31 CFR 900.2(b)), and

\(3\) Interest, administrative costs, and penalties in accordance with
31 CFR 901.9 on all debts other than those described in paragraph (a)(1)
of this section.

\(b\) Every party entering into an agreement with the Department of
Veterans Affairs for repayment of indebtedness in installments shall be
advised of the interest charges to be added to the debt. All debtors
being provided notice of indebtedness, including those entering into
repayment agreements, shall be advised that upon the debt becoming
delinquent, or in the case of repayment of already delinquent debts,
interest and the administrative costs of collection will be added to the
principal amount of the debt.

\(c\) The rate of interest charged by VA shall be based on the rate
established annually by the Secretary of the Treasury in accordance with
31 U.S.C. 3717 and shall be adjusted annually by VA on the first day of
the calendar year. Once the rate of interest has been determined for a
particular debt, the rate shall remain in effect throughout the duration
of repayment of that debt. When a debtor defaults on a repayment
agreement and seeks to enter into a new agreement, VA may require
payment of interest at a new rate that reflects the current value of
funds to the Treasury at the time the new agreement is executed.
Interest shall not be compounded, that is, interest shall not be charged
on accrued interest and administrative costs required by this section.
If, however, a debtor defaults on a previous repayment agreement,
interest and administrative costs that accrued but were not collected
under the defaulted agreement shall be added to the principal under the
new agreement.

\(d\) Interest on amounts covered by this section shall accrue from the
date the initial notice of the debt is mailed to the debtor.
Notification shall be considered sufficient when effected by ordinary
mail, addressed to the last known address, and such notice is not
returned as undeliverable by postal authorities.

\(e\) Interest under this section shall not be charged if the debt is
paid in full within 30 days of mailing of the initial notice described
in paragraph (b) of this section. Once interest begins to accrue, and
after expiration of the time period for payment of the debt in full to
avoid assessment of interest and administrative costs, any amount
received toward the payment of such debt shall be first applied to
payment of outstanding administrative cost charges and then to accrued
interest or costs, and then to principal, unless a different rule is
prescribed by statute, contract, or other regulation.

\(f\) All or any part of the interest and administrative costs assessed
under this section are subject to consideration for waiver under section
5302 of title 38 U.S.C., and appropriate administrative procedures.

\(1\) In general, interest and administrative costs may be waived only
when the principal of the debt on which they are assessed is waived by a
Committee on Waivers and Compromises. However, VA may forbear collection
of interest and administrative costs, exclusive of collection of the
principal of the debt on which they are assessed, as well as terminate
further assessment of interest and administrative costs when the
collection of such interest and costs are determined to be not in the
government's best interest. Collection of interest and administrative
costs shall not be considered to be in the best interest of the
government when the amount of assessed interest and administrative cost
is so large that there is a reasonable certainty that the original debt
will never be repaid. The determination to forbear collection of
interest and administrative cost, exclusive of collection of the
principal of the debt, shall be made by the Chief of the Fiscal activity
at the station responsible for the collection of the debt. Such a
determination is not within the jurisdiction of a Committee on Waivers
and Compromises.

\(2\) \[Reserved\]

\(g\) Administrative costs assessed under this section shall be the
average costs of collection of similar debts, or actual collection costs
as may be accurately determined in the particular case. No
administrative costs of collection will be assessed under this section
in any cases where the indebtedness is paid in full prior to the 30-day
period specified in paragraph (e) of this section, or in any case where
a repayment plan is proposed by the debtor and accepted by VA within
that 30-day period, unless such repayment agreement becomes delinquent
(as defined in 31 CFR 900.2(b)). (Authority: 31 U.S.C. 3717; 38 U.S.C.
501, 5302, 5315).

\[46 FR 62057, Dec. 22, 1981, as amended at 52 FR 42107, Nov. 3, 1987;
redesignated and amended at 69 FR 62195, Oct. 25, 2004\]

**§1.916 Disclosure of debt information to consumer reporting agencies
(CRA).**

\(a\) The Department of Veterans Affairs may disclose all information
determined to be necessary, including the name, address, Department of
Veterans Affairs file number, Social Security number, and date of birth,
to consumer reporting agencies for the purpose of:

\(1\) Obtaining the location of an individual indebted to the United
States as a result of participation in any benefits program administered
by VA or indebted in any other manner to VA;

\(2\) Obtaining a consumer report in order to assess an individuals
ability to repay a debt when such individual has failed to respond to
the Department's demand for repayment or when such individual has
notified the Department that he/she will not repay the indebtedness; or

\(3\) Obtaining the location of an individual in order to conduct
program evaluation studies as required by 38 U.S.C. 527 or any other
law.

\(b\) Information disclosed by the Department of Veterans Affairs under
paragraph (a) of this section to consumer reporting agencies shall
neither expressly nor implicitly indicate that an individual is indebted
to the United States nor shall such information be recorded by consumer
reporting agencies in a manner that reflects adversely upon the
individual. Prior to disclosing this information, the Department of
Veterans Affairs shall ascertain that consumer reporting agencies with
which it contracts are able to comply with this requirement. The
Department of Veterans Affairs shall also make reasonable efforts to
insure compliance by its contractor with this requirement.

\(c\) Subject to the conditions set forth in paragraph (d) of this
section, information concerning individuals may be disclosed to consumer
reporting agencies for inclusion in consumer reports pertaining to the
individual, or for the purpose of locating the individual. Disclosure of
the fact of indebtedness will be made if the individual fails to respond
in accordance with written demands for repayment, or refuses to repay a
debt to the United States. In making any disclosure under this section,
VA will provide consumer reporting agencies with sufficient information
to identify the individual, including the individual's name, address, if
known, date of birth, VA file number, and Social Security number.

\(d\) (1) Prior to releasing information under paragraph (c) of this
section, the Department of Veterans Affairs will send a notice to the
individual. This notice will inform the individual that:

\(i\) The Department of Veterans Affairs has determined that he or she
is indebted to the Department of Veterans Affairs;

\(ii\) The debt is presently delinquent; and

\(iii\) The fact of delinquency may be reported to consumer reporting
agencies after 30 days have elapsed from the date of the notice.

\(2\) (i) In accordance with §1.911 and §1.911a, VA shall notify each
individual of the right to dispute the existence and amount of the debt
and to request a waiver of the debt, if applicable.

\(ii\) If the Department of Veterans Affairs has not previously notified
the individual of the rights described in paragraph (d)(2)(i) of this
section, the Department of Veterans Affairs will include this
information in the notice described in paragraph (d)(1) of this section.
The individual shall be afforded a minimum of 30 days from the date of
the notice to respond to it before information is reported to consumer
reporting agencies.

\(3\) The Department of Veterans Affairs will defer reporting
information to a consumer reporting agency if the individual disputes
the existence or amount of any debt or requests waiver of the debt
within the time limits set forth in paragraph (d)(2)(ii) of this
section. The Department of Veterans Affairs will review any dispute and
notify the individual of its findings. If the original decision is
determined to be correct, or if the individual's request for waiver is
denied, the Department of Veterans Affairs may report the fact of
delinquency to a consumer reporting agency. However, the individual
shall be afforded 30 days from date of the notice of the agency's
determination to repay the debt.

\(4\) Nothing in this section affects an individual's right to appeal an
agency decision to the Board of Veterans Appeals. However, information
concerning the debt may be disclosed while an appeal is pending before
the Board of Veterans Appeals.

\(5\) Upon request, the Department of Veterans Affairs will notify an
individual:

\(i\) Whether information concerning a debt has been reported to
consumer reporting agencies;

\(ii\) Of the name and address of each consumer reporting agency to
which information has been released; and

\(iii\) Of the specific information released.

A notice of the right to request this information will be sent with the
notice described in paragraph (d)(1) of this section.

\(e\) Subsequent to disclosure of information to consumer reporting
agencies as described in paragraph (c) of this section, the Department
of Veterans Affairs shall:

\(1\) Notify on a monthly basis each consumer reporting agency concerned
of any substantial change in the status or amount of indebtedness.

\(2\) Promptly verify any and all information disclosed if so requested
by the consumer reporting agency concerned.

\(f\) In the absence of a different rule prescribed by statute,
contract, or other regulation, an indebtedness is considered delinquent
if not paid by the individual by the date due specified in the notice of
indebtedness, unless satisfactory arrangements are made by such date.

\(g\) Notification shall be considered sufficient when effected by
ordinary mail, addressed to the last known address, and such notice is
not returned as undeliverable by postal authorities.

\(h\) The Privacy Act (5 U.S.C. 552a) does not apply to any contract
between the Department of Veterans Affairs and a consumer reporting
agency, nor does it apply to a consumer reporting agency and its
employees. See 38 U.S.C. 5701(i). This paragraph does not relieve the
Department of Veterans Affairs of its obligation to comply with the
Privacy Act.

\(i\) The term *consumer reporting agency* means any person or agency
which, for monetary fees, dues, or on a cooperative nonprofit basis,
regularly engages in whole or in part in the practice of assembling or
evaluating consumer credit information or other information on consumers
for the purpose of furnishing consumer reports to third parties or to
other consumer reporting agencies. The term *consumer reporting agency*
shall also mean any person or agency which serves as a marketing agent
under arrangements enabling third parties to obtain such information
from consumer reporting agencies, or which obtain such information for
the purpose of furnishing it to consumer reporting agencies. (Authority:
31 U.S.C. 3711(e); 38 U.S.C. 501, 5701(g) and (i)).

\[46 FR 62058, Dec. 22, 1981, as amended at 52 FR 42107, Nov. 3, 1987;
redesignated and amended at 69 FR 62195, Oct. 25, 2004\]

**§1.917 Contracting for collection services.**

\(a\) VA has authority to contract for collection services to recover
delinquent debts, provided that:

\(1\) The authority to resolve disputes, compromise claims, suspend or
terminate collection and refer the matter for litigation shall be
retained by VA;

\(2\) The contractor shall be subject to 38 U.S.C. 5701, and to the
Privacy Act of 1974, as amended, to the extent specified in 5 U.S.C.
552a(m), and to applicable Federal and State laws and regulations
pertaining to debt collection practices, such as the Fair Debt
Collection Practices Act, 15 U.S.C. 1692, *et seq.*

\(3\) The contractor shall be required to strictly account for all
amounts collected;

\(4\) Upon returning an account to VA for subsequent referral to the
Department of Justice for litigation, the contractor must agree to
provide any data contained in its files relating to §1.951.

\(b\) In accordance with 31 U.S.C. 3718(d), or as otherwise permitted by
law, collection service contracts may be funded in the following manner:

\(1\) VA may fund a collection service contract on a fixed-fee basis
(i.e., payment of a fixed fee determined without regard to the amount
actually collected under the contract). Payment of the fee under this
type of contract must be charged to available appropriations;

\(2\) VA may also fund a collection service contract on a contingent-fee
basis (i.e., by including a provision in the contract permitting the
contractor to deduct its fee from amounts collected under the contract).
The fee should be based upon a percentage of the amount collected,
consistent with prevailing commercial practice;

\(3\) VA may enter into a contract under paragraph (b)(1) of this
section only if and to the extent that funding for the contract is
provided for in advance by an appropriation act or other legislation,
except that this requirement does not apply to the use of a revolving
fund authorized by statute;

\(4\) Except as authorized under paragraphs (b)(2) and (b)(5) of this
section, or unless otherwise specifically provided by law, VA shall
deposit all amounts recovered under collection service contracts for
Loan Guaranty debts into the Loan Guaranty Revolving Fund, and for all
other debts in the Treasury as miscellaneous receipts pursuant to 31
U.S.C. 3302.

\(5\) For benefit overpayments recovered under collection service
contract, VA, pursuant to 31 U.S.C. 3302, shall deposit:

\(i\) Amounts equal to the original overpayments in the appropriations
account from which the overpayments were made, and

\(ii\) Amount of interest or administrative costs in the Treasury as
miscellaneous receipts. (Authority: 31 U.S.C. 3718)

\(c\) VA shall use government-wide debt collection contracts to obtain
debt collection services provided by private collection contractors.
However, VA may refer debts to private collection contractors pursuant
to a contract between VA and a private collection contractor only if
such debts are not subject to the requirement to transfer debts to
Treasury for debt collection. See 31 U.S.C. 3711(g), 31 CFR 285.12(e),
and 38 CFR 1.910.

\(d\) VA may enter into contracts for locating and recovering assets of
the United States, such as unclaimed assets.

\(e\) VA may enter into contracts for debtor asset and income search
reports. In accordance with 31 U.S.C. 3718(d), such contracts may
provide that the fee a contractor charges the agency for such services
may be payable from the amounts recovered, unless otherwise prohibited
by statute. (Authority: 31 U.S.C. 3718; 38 U.S.C. 501).

\[52 FR 42107, Nov. 3, 1987; redesignated and amended at 69 FR 62195,
Oct. 25, 2004\]

**§1.918 Use and disclosure of mailing addresses.**

\(a\) When attempting to locate a debtor in order to compromise or
collect a debt in accordance with §§1.900 through 1.953, VA may send a
request to the Secretary of the Treasury, or his/her designee, in order
to obtain the debtor's most current mailing address from the records of
the Internal Revenue Service.

\(b\) VA is authorized to use mailing addresses obtained under paragraph
(a) of this section to enforce collection of a delinquent debt and may
disclose such mailing addresses to other agencies and to collection
agencies for collection purposes.

\(c\) VA will insure that procedures established under this section
comply with the Privacy Act (5 U.S.C. 552a) and the provisions of 26
U.S.C. 6103(p)(4) and applicable regulations of the Internal Revenue
Service. (Authority: 31 U.S.C. 3711; 38 U.S.C. 501)

\[52 FR 42108, Nov. 3, 1987; redesignated and amended at 69 FR 62196,
Oct. 25, 2004\]

**§1.919 Administrative offset against amounts payable from Civil
Service Retirement and Disability Fund, Federal Employees Retirement
System (FERS), final salary check, and lump sum leave payments.**

\(a\) Unless otherwise prohibited by law or regulation, and in
accordance with 31 CFR 901.3(d), VA may request that money which is due
and payable to a debtor from either the Civil Service Retirement and
Disability Fund or FERS be administratively offset in reasonable amounts
in order to collect, in one full payment or a minimal number of
payments, debts that are owed to VA by the debtor. Such requests shall
be made to the appropriate officials at the Office of Personnel
Management (OPM) in accordance with such regulations prescribed by the
Director of OPM. (See 5 CFR 831.1801 through 831.1808). In addition, VA
may also offset against a Federal employee's final salary check and lump
sum leave payment. See §1.912 for procedures for offset against a final
salary check and lump sum leave payment.

\(b\) When making a request to the Office of Personnel Management for
administrative offset under paragraph (a) of this section, VA shall
include a written certification that:

\(1\) The debtor owes VA a debt, including the amount of the debt;

\(2\) VA has complied with the applicable statutes, regulations, and
procedures of the Office of Personnel Management; and

\(3\) VA has complied with §§1.911, 1.911a, 1.912, 1.912a, and 31 CFR
901.3, to the extent applicable, including any required hearing or
review.

\(c\) Once VA decides to request administrative offset from the Civil
Service Retirement and Disability Fund or Federal Employees Retirement
System (FERS) under paragraph (a) of this section, it shall make the
request as soon as possible after completion of the applicable
procedures in order that the Office of Personnel Management may identify
the debtor's account in anticipation of the time when the debtor
requests or becomes eligible to receive payments from the Fund or FERS.
This will satisfy any requirement that offset be initiated prior to
expiration of the applicable statutes of limitations. At such time as
the debtor makes a claim for payments from the Fund or FERS, if at least
a year has elapsed since the offset request was originally made, the
debtor should be permitted to offer a satisfactory repayment plan in
lieu of offset upon establishing that such offset will create financial
hardship.

\(d\) If VA collects all or part of the debt by other means before
deductions are made or completed in accordance with paragraph (a) of
this section, VA shall promptly act to modify or terminate its request
for offset under paragraph (a) of this section.

\(e\) The Office of Personnel Management is neither required nor
authorized by this section to review the merits of VA's determination
with respect to the amount and validity of the debt waiver under 5
U.S.C. 5584 or 38 U.S.C. 5302, or providing or not providing an oral
hearing. (Authority: 5 U.S.C. 8461; 31 U.S.C. 3711, 3716; 38 U.S.C. 501)

\[52 FR 42108, Nov. 3, 1987; redesignated and amended at 69 FR 62196,
Oct. 25, 2004\]

**§1.920 Referral of VA debts.**

\(a\) When authorized, VA may refer an uncollectible debt to another
Federal or State agency for the purpose of collection action. Collection
action may include the offsetting of the debt from any current or future
payment, except salary (see paragraph (e) of this section), made by such
Federal or State agency to the person indebted to VA.

\(b\) VA must certify in writing that the individual owes the debt, the
amount and basis of the debt, the date on which payment became due, and
the date VA's right to collect the debt first accrued.

\(c\) This certification will also state that VA provided the debtor
with written notice of:

\(1\) The nature and amount of the debt;

\(2\) VA's intention to pursue collection by offset procedures;

\(3\) The opportunity to inspect and copy VA records pertaining to the
debt;

\(4\) The right to contest both the existence and amount of the debt and
to request a waiver of collection of the debt (if applicable), as well
as the right to a hearing on both matters;

\(5\) The opportunity to enter into a written agreement with VA for the
repayment of the debt; and

\(6\) Other applicable notices required by §§1.911, 1.911a, 1.912, and
1.912a.

\(d\) The written certification required by paragraphs (b) and (c) of
this section will also contain (for all debts) a listing of all actions
taken by both VA and the debtor subsequent to the notice, as well as the
dates of such actions.

\(e\) The referral by VA of a VA debt to another agency for the purpose
of salary offset shall be done in accordance with 38 CFR 1.980 through
1.995 and regulations prescribed by the Director of the Office of
Personnel Management (OPM) in 5 CFR part 550, subpart K. (Authority: 31
U.S.C. 3711; 38 U.S.C. 501).

\[52 FR 42108, Nov. 3, 1987; redesignated and amended at 69 FR 62196,
Oct. 25, 2004\]

**§1.921 Analysis of costs.**

VA collection procedures should provide for periodic comparison of costs
incurred and amounts collected. Data on costs and corresponding recovery
rates for debts of different types and in various dollar ranges should
be used to compare the cost effectiveness of alternative collection
techniques, establish guidelines with respect to points at which costs
of further collection efforts are likely to exceed recoveries, assist in
evaluating offers in compromise, and establish minimum debt amounts
below which collection efforts need not be taken. (Authority: 31 U.S.C.
3711-3719; 38 U.S.C. 501).

\[52 FR 42109, Nov. 3, 1987; redesignated and amended at 69 FR 62196,
Oct. 25, 2004\]

**§1.922 Exemptions.**

\(a\) Sections 1.900 through 1.953, to the extent they reflect remedies
or procedures prescribed by the Debt Collection Act of 1982 and the Debt
Collection Improvement Act of 1996, such as administrative offset, use
of credit bureaus, contracting for collection agencies, and interest and
related charges, do not apply to debts arising under, or payments made
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*.), except to
the extent provided under 42 U.S.C. 404 and 31 U.S.C. 3716(c); or the
tariff laws of the United States. These remedies and procedures,
however, may be authorized with respect to debts that are exempt from
the Debt Collection Act of 1982 and the DCIA of 1996, to the extent that
they are authorized under some other statute or the common law.

\(b\) This section should not be construed as prohibiting the use of
§§1.900 through 1.953 when collecting debts owed by persons employed by
agencies administering the laws cited in paragraph (a) of this section
unless the debt arose under those laws. (Authority: 31 U.S.C. 3711; 38
U.S.C. 501).

\[52 FR 42109, Nov. 3, 1987; redesignated and amended at 69 FR 62196,
Oct. 25, 2004\]

**§1.923 Administrative wage garnishment.**

\(a\) In accordance with the procedures set forth in 31 U.S.C. 3720D and
31 CFR 285.11, VA or Treasury may request that a non-Federal employer
garnish the disposable pay of an individual to collect delinquent
non-tax debt owed to VA. VA may pursue wage garnishment independently in
accordance with this section or VA or Treasury may pursue garnishment
after VA refers a debt to Treasury in accordance with §1.910 of this
part and 31 CFR 285.12. For the purposes of this section, any reference
to Treasury also includes any private collection agency under contract
to Treasury.

\(b\) At least 30 days prior to the initiation of garnishment
proceedings, VA or Treasury shall send a written notice, as described in
31 CFR 285.11(e), by first class mail to the debtor's last known
address. This notice shall inform the debtor of:

\(1\) The nature and amount of the debt;

\(2\) The intention of VA or Treasury to initiate proceedings to collect
the debt through deductions from the debtor's pay until the debt and all
accumulated interest, and other late payment charges, are paid in full,
and;

\(3\) An explanation of the debtor's rights, including the opportunity:

\(i\) To inspect and copy VA records pertaining to the debt;

\(ii\) To enter into a written repayment agreement with VA or Treasury
under terms agreeable to VA or Treasury, and;

\(iii\) To a hearing in accordance with 31 CFR 285.11(f) and paragraph
(c) of this section concerning the existence or amount of the debt or
the terms of the proposed repayment schedule under the garnishment
order. However, the debtor is not entitled to a hearing concerning the
terms of the proposed repayment schedule if these terms have been
established by written agreement under paragraph (b)(3)(ii) of this
section.

\(c\) Any hearing conducted as part of the administrative wage
garnishment process shall be conducted by the designated hearing
official in accordance with the procedures set forth in 31 CFR
285.11(f). This hearing official may be any VA Board of Contract Appeals
Administrative Judge or Hearing Examiner, or any other VA hearing
official. This hearing official may also conduct administrative wage
garnishment hearings for other Federal agencies.

\(1\) The hearing may be oral or written as determined by the designated
hearing official. The hearing official shall provide the debtor with a
reasonable opportunity for an oral hearing when the hearing official
determines that the issue in dispute cannot be resolved by review of
documentary evidence, for example, when the validity of the claim turns
on the issue of credibility or veracity. The hearing official shall
establish the time and place of any oral hearing. At the debtor's
option, an oral hearing may be conducted either in person or by
telephone conference call. A hearing is not required to be a formal,
evidentiary-type hearing, but witnesses who testify in oral hearings
must do so under oath or affirmation. While it is not necessary to
produce a transcript of the hearing, the hearing official must maintain
a summary record of the proceedings. All travel expenses incurred by the
debtor in connection with an in-person hearing shall be borne by the
debtor. VA or Treasury shall be responsible for all telephone expenses.
In the absence of good cause shown, a debtor who fails to appear at a
hearing will be deemed as not having timely filed a request for a
hearing.

\(2\) If the hearing official determines that an oral hearing is not
necessary, then he/she shall afford the debtor a "paper hearing." In a
"paper hearing," the hearing official will decide the issues in dispute
based upon a review of the written record.

\(3\) If the debtor's written request for a hearing is received by
either VA or Treasury within 15 business days following the mailing of
the notice described in paragraph (b) of this section, then VA or
Treasury shall not issue a withholding order as described in paragraph
(d) of this section until the debtor is afforded the requested hearing
and a decision rendered. If the debtor's written request for a hearing
is not received within 15 business days following the mailing of the
notice described in paragraph (b) of this section, then the hearing
official shall provide a hearing to the debtor, but will not delay
issuance of a withholding order as described in paragraph (d) of this
section, unless the hearing official determines that the delay in filing
was caused by factors beyond the debtor's control.

\(4\) The hearing official shall notify the debtor of:

\(i\) The date and time of a telephone conference hearing;

\(ii\) The date, time, and location of an in-person oral hearing, or;

\(iii\) The deadline for the submission of evidence for a written
hearing.

\(5\) Except as provided in paragraph (c)(6)of this section, VA or
Treasury shall have the burden of going forward to prove the existence
or amount of the debt, after which the debtor must show, by a
preponderance of the evidence, that no debt exists or that the amount of
the debt is incorrect. In general, this means that the debtor must show
that it is more likely than not that a debt does not exist or that the
amount of the debt is incorrect. The debtor may also present evidence
that terms of the repayment agreement are unlawful, would cause a
financial hardship, or that collection of the debt may not be pursued
due to operation of law.

\(6\) If the debtor has previously contested the existence and/or amount
of the debt in accordance with §1.911(c)(1) or §1.911a(c)(1) and VA
subsequently rendered a decision upholding the existence or amount of
the debt, then such decision shall be incorporated by reference and
become the basis of the hearing official's decision on such matters.

\(7\) The hearing official shall issue a written decision as soon as
practicable, but not later than 60 days after the date on which the
request for such hearing was received by VA or Treasury. The decision
will be the final action for the purposes of judicial review under the
Administrative Procedure Act (5 U.S.C. 701, *et seq*.). The decision
shall include:

\(i\) A summary of the facts presented;

\(ii\) The hearing official's findings, analysis, and conclusions, and;

\(iii\) The terms of the repayment schedule, if applicable.

\(d\) In accordance with 31 CFR 285.11(g) and (h), VA or Treasury shall
send a Treasury-approved withholding order and certification form by
first class mail to the debtor's employer within 30 days after the
debtor fails to make a timely request for a hearing. If a timely request
for a hearing has been filed by the debtor, then VA or Treasury shall
send a withholding order and certification form by first class mail to
the debtor's employer within 30 days after a final decision is made to
proceed with the garnishment. The employer shall complete and return the
certification form as described in 31 CFR 285.11(h).

\(e\) After receipt of the garnishment order, the employer shall
withhold the amount of garnishment as described in 31 CFR 285.11(i) from
all disposable pay payable to the applicable debtor during each pay
period.

\(f\) A debtor whose wages are subject to a wage withholding order under
31 CFR 285.11 may request a review, under the procedures set forth in 31
CFR 285.11(k), of the amount garnished. A request for review shall only
be considered after garnishment has been initiated. The request must be
based on materially changed circumstances such as disability, divorce,
or catastrophic illness which result in financial hardship that limit
the debtor's ability to provide food, housing, clothing, transportation,
and medical care for himself/herself and his/her dependents. (Authority:
31 U.S.C. 3720D; 38 U.S.C. 501; 31 CFR 285.11).

\[69 FR 62196, Oct. 25, 2004\]

**§1.924 Suspension or revocation of eligibility for federal loans, loan
insurance, loan**

> **guarantees, licenses, permits, or privileges.**

\(a\) In accordance with 31 U.S.C. 3720B and the procedures set forth in
31 CFR 285.13 and §901.6, a person owing an outstanding non-tax debt
that is in delinquent status shall not be eligible for Federal financial
assistance unless exempted under paragraph (d) of this section or waived
under paragraph (e) of this section.

\(b\) Federal financial assistance or financial assistance means any
Federal loan (other than a disaster loan), loan insurance, or loan
guarantee.

\(c\) For the purposes of this section only, a debt is in a delinquent
status if the debt has not been paid within 90 days of the payment due
date or by the end of any grace period provided by statute, regulation,
contract, or agreement. The payment due date is the date specified in
the initial written demand for payment. Further guidance concerning the
delinquent status of a debt may be found at 31 CFR 285.13(d).

\(d\) Upon the written request and recommendation of the Secretary of
Veterans Affairs, the Secretary of the Treasury may grant exemptions
from the provisions of this section. The standards for exemptions
granted for classes of debts are set forth in 31 CFR 285.13(f).

\(e\) (1) VA's Chief Financial Officer or Deputy Chief Financial Officer
may waive the provisions of paragraph (a) of this section only on a
person-by-person basis.

\(2\) The Chief Financial Officer or Deputy Chief Financial Officer
should balance the following factors when deciding whether to grant a
waiver:

\(i\) Whether the denial of the financial assistance to the person would
tend to interfere substantially with or defeat the purposes of the
financial assistance program or otherwise would not be in the best
interests of the Federal government; and

\(ii\) Whether the granting of the financial assistance to the person is
contrary to the government's goal of reducing losses by requiring proper
screening of potential borrowers.

\(3\) When balancing the factors described in paragraph (e)(2)(i) and
(e)(2)(ii) of this section, the Chief Financial Officer or Deputy Chief
Financial Officer should consider:

\(i\) The age, amount, and cause(s) of the delinquency and the
likelihood that the person will resolve the delinquent debt; and

\(ii\) The amount of the total debt, delinquent or otherwise, owed by
the person and the person's credit history with respect to repayment of
debt.

\(4\) A centralized record shall be retained of the number and type of
waivers granted under this section.

\(f\) In non-bankruptcy cases, in seeking the collection of statutory
penalties, forfeitures, or other similar types of claims, VA may suspend
or revoke any license, permit, or other privilege granted a debtor when
the debtor inexcusably or willfully fails to pay such a debt. The debtor
should be advised in VA's written demand for payment of VA's ability to
suspend or revoke licenses, permits, or privileges. VA may suspend or
disqualify any lender, contractor, or broker who is engaged in making,
guaranteeing, insuring, acquiring, or participating in loans from doing
further business with VA or engaging in programs sponsored by VA if such
lender, contractor, or broker fails to pay its debts to the Government
within a reasonable time, or if such lender, contractor, or broker has
been suspended, debarred, or disqualified from participation in a
program or activity by another Federal agency. The failure of any surety
to honor its obligations in accordance with 31 U.S.C. 9305 should be
reported to Treasury.

\(g\) In bankruptcy cases, before advising the debtor of the intention
to suspend or revoke licenses, permits, or privileges, VA should seek
legal advice from VA's General Counsel or Regional Counsel concerning
the impact of the Bankruptcy Code, particularly 11 U.S.C. 362 and 525,
which may restrict such action. (Authority: 31 U.S.C. 3720B; 38 U.S.C.
501).

\[69 FR 62196, Oct. 25, 2004\]

Next Section is §1.929

**§1.929 Reduction of debt through performance of work-study services.**

\(a\) *Scope*.

\(1\) Subject to the provisions of this section VA may allow an
individual to reduce an indebtedness to the United States through offset
of benefits to which the individual becomes entitled by performance of
work-study services under 38 U.S.C. 3485 and 3537 when the debt arose by
virtue of the individual's participation in a benefits program provided
under any of the following:

\(i\) 38 U.S.C. chapter 30;

\(ii\) 38 U.S.C. chapter 31;

\(iii\) 38 U.S.C. chapter 32;

\(iv\) 38 U.S.C. chapter 34;

\(v\) 38 U.S.C. chapter 35;

\(vi\) 38 U.S.C. chapter 36 (other than an education loan provided under
subpart F, part 21 of this title); or

\(vii\) 10 U.S.C. chapter 1606 (other than an indebtedness arising from
a refund penalty imposed under 10 U.S.C. 16135).

\(2\) This section shall not apply in any case in which the individual
has a pending request for waiver of the debt under §§1.950 through
1.970. (Authority: 38 U.S.C. 3485(e)(1); Pub. L. 102-16)

\(b\) *Selection criteria*.

\(1\) If there are more candidates for a work-study allowance than there
are work-study positions available in the area in which the services are
to be performed, VA will give priority to the candidates who are
pursuing a program of education or rehabilitation.

\(2\) Only after all candidates in the area described in paragraph
(b)(1) of this section either have been given work-study contracts or
have withdrawn their request for contracts will VA offer contracts to
those who are not pursuing a program of education or rehabilitation and
who wish to reduce their indebtedness through performance of work-study
services.

\(3\) VA shall not offer a contract to an individual who is receiving
compensation from another source for the work-study services the
individual wishes to perform.

\(4\) VA shall not offer a contract to an individual if VA determines
that the debt can be collected through other means such as collection in
a lump sum, collection in installments as provided in §1.917 or
compromise as provided in §1.918. (Authority: 38 U.S.C. 3485(e); Pub. L.
102-16)

\(c\) *Utilization*. The work-study services to be performed under a
debt- liquidation contract will be limited as follows:

\(1\) If the individual is concurrently receiving educational assistance
in a program administered by VA, work-study services are limited to
those allowed in the educational program under which the individual is
receiving benefits.

\(2\) If the individual is not concurrently receiving educational
assistance in a program administered by VA, the individual may perform
only those work-study services and activities which are or were open to
those students receiving a work-study allowance while pursuing a program
of education pursuant to the chapter under which the debt was incurred.
(Authority: 38 U.S.C. 3485(e); Pub. L. 102-16)

\(d\) *Contract to perform services*.

\(1\) The work-study services performed to reduce indebtedness shall be
performed pursuant to a contract between the individual and VA.

\(2\) The individual shall perform the work-study services required by
the contract at the place or places designated by VA.

\(3\) The number of hours of services to be performed under the contract
must be sufficient to enable the individual to become entitled to a sum
large enough to liquidate the debt by offset.

\(4\) The number of weeks in the contract will not exceed the lesser of:

> \(i\) The number of weeks of services the individual needs to perform
> to liquidate his or her debt; or
>
> \(ii\) 52.

\(5\) In determining the number of hours per week and the number of
weeks under paragraphs (d)(3) and (d)(4) of this section necessary to
liquidate the debt, VA will use the amount of the account receivable,
including all accrued interest, administrative costs and marshall fees
outstanding on the date the contract is offered to the individual and
all accrued interest, administrative costs and marshall fees VA
estimates will have become outstanding on the debt on the date the debt
is to be liquidated.

\(6\) The contract will automatically terminate after the total amount
of the individual's indebtedness described in paragraph (d)(5) of this
section has been recouped, waived, or otherwise liquidated. An
individual performing work-study services under a contract to liquidate
a debt is released from the contract if the debt is liquidated by other
means.

\(7\) The contract to perform work-study services for the purpose of
liquidating indebtedness will be terminated if:

\(i\) The individual is liquidating his or her debt under this section
while receiving either an educational assistance allowance for further
pursuit of a program of education or a subsistence allowance for further
pursuit of a program of rehabilitation;

\(ii\) The individual terminates or reduces the rate of pursuit of his
or her program of education or rehabilitation; and

\(iii\) The termination or reduction causes an account receivable as a
debt owed by the individual.

\(8\) VA may terminate the contract at any time the individual fails to
perform the services required by the contract in a satisfactory manner.
(Authority: 38 U.S.C. 3485(e), 7104(a); Pub. L. 102-16)

\(e\) *Reduction of indebtedness*.

\(1\) In return for the individual's agreement to perform hours of
services totaling not more than 40 times the number of weeks in the
contract, VA will reduce the eligible person's outstanding indebtedness
by an amount equal to the higher of:

\(i\) The hourly minimum wage in effect under section 6(a) of the Fair
Labor Standards Act of 1938 times the number of hours the individual
works; or

\(ii\) The hourly minimum wage under comparable law of the State in
which the services are performed times the number of hours the
individual works.

\(2\) VA will reduce the individual's debt by the amount of the money
earned for the performance of work-study services after the completion
of each 50 hours of services (or in the case of any remaining hours
required by the contract, the amount for those hours). (Authority: 38
U.S.C. 3485(e); Pub. L. 102-16)

\(f\) *Suspension of collections by offset*. Notwithstanding the
provisions of §1.912a, during the period covered by the work-study
debt-liquidation contract with the individual, VA will ordinarily
suspend the collection by offset of a debt described in paragraph (a)(1)
of this section. However, the individual may voluntarily permit VA to
collect part of the debt through offset against other benefits payable
while the individual is performing work-study services. If the contract
is terminated before its scheduled completion date, and the debt has not
been liquidated, collection through offset against other benefits
payable will resume on the date the contract terminates. (Authority: 38
U.S.C. 3485(e); Pub. L. 102-16)

\(g\) *Payment for additional hours*.

\(1\) If an individual, without fault on his or her part, performs
work-study services for which payment may not be authorized, including
services performed after termination of the contract, VA will pay the
individual at the applicable hourly minimum wage for such services as
the Director of the VA field station of jurisdiction determines were
satisfactorily performed.

\(2\) The Director of the VA field station of jurisdiction shall
determine whether the individual was without fault. In making this
decision he or she shall consider all evidence of record and any
additional evidence which the individual wishes to submit. (Authority:
38 U.S.C. 3485(e); Pub. L. 102-16)

\[62 FR 15401, Apr. 1, 1997\]

**Supplement *Highlights* reference**: 21(2)

#### Standards for Compromise of Claims

**Source**: Sections 1.930 to 1.937 appear at 32 FR 2614,

Feb. 8, 1967, unless otherwise noted.

**§1.930 Scope and application.**

\(a\) The standards set forth in §§1.930 through 1.936 of this part
apply to the compromise of debts pursuant to 31 U.S.C. 3711. VA may
exercise such compromise authority when the amount of the debt due,
exclusive of interest, penalties, and administrative costs, does not
exceed \$100,000 or any higher amount authorized by the Attorney
General.

\(b\) Unless otherwise provided by law, when the principal balance of a
debt, exclusive of interest, penalties, and administrative costs,
exceeds \$100,000 or any higher amount authorized by the Attorney
General, the authority to accept the compromise rests with the
Department of Justice (DOJ). If VA receives an offer to compromise any
debt in excess of \$100,000, VA should evaluate the compromise offer
using the same factors as set forth in §1.931 of this part. If VA
believes the offer has merit, it shall refer the debt to the Civil
Division or other appropriate division in DOJ using a Claims Collection
Litigation Report (CCLR). The referral shall include appropriate
financial information and a recommendation for the acceptance of the
compromise offer. DOJ approval is not required if VA decides to reject a
compromise offer.

\(c\) The \$100,000 limit in paragraph (b) of this section does not
apply to debts that arise out of participation in a VA loan program
under Chapter 37 of Title 38 of the U.S. Code. VA has unlimited
authority to compromise debts arising out of participation in a Chapter
37 loan program, regardless of the amount of the debt. (Authority: 31
U.S.C. 3711; 38 U.S.C 501, 3720).

\[52 FR 42109, Nov. 3, 1987; as amended at 57 FR 47263, Oct. 15, 1992;
69 FR 62198, Oct. 25, 2004\]

**§1.931 Bases for compromise.**

\(a\) VA may compromise a debt if it cannot collect the full amount
because:

\(1\) The debtor is unable to pay the full amount in a reasonable time,
as verified through credit reports or other financial information;

\(2\) VA is unable to collect the debt in full within a reasonable time
by enforced collection proceedings;

\(3\) The cost of collecting the debt does not justify the enforced
collection of the full amount; or

\(4\) There is significant doubt concerning VA's ability to prove its
case in court.

\(b\) In determining the debtor's inability to pay, VA will consider
relevant factors such as the following:

\(1\) Age and health of the debtor;

\(2\) Present and potential income;

\(3\) Inheritance prospects;

\(4\) The possibility that assets have been concealed or improperly
transferred by the debtor; and

\(5\) The availability of assets or income that may be realized by
enforced collection proceedings.

\(c\) VA will verify the debtor's claim of inability to pay by using a
credit report and other financial information as provided in paragraph
(g) of this section. VA should consider the applicable exemptions
available to the debtor under State and Federal law in determining the
ability to enforce collection. VA also may consider uncertainty as to
the price that collateral or other property will bring at a forced sale
in determining the ability to enforce collection. A compromise effected
under this section should be for an amount that bears a reasonable
relation to the amount that can be recovered by enforced collection
procedures, with regard to the exemptions available to the debtor and
the time that collection will take.

\(d\) If there is significant doubt concerning VA's ability to prove its
case in court for the full amount claimed, either because of the legal
issues involved or because of a bona fide dispute as to the facts, then
the amount accepted in compromise of such cases should fairly reflect
the probabilities of successful prosecution to judgment, with due regard
given to the availability of witnesses and other evidentiary support for
VA's claim. In determining the risks involved in litigation, VA will
consider the probable amount of court costs and attorney fees pursuant
to the Equal Access to Justice Act, 28 U.S.C. 2412, that may be imposed
against the Government if it is unsuccessful in litigation.

\(e\) VA may compromise a debt if the cost of collecting the debt does
not justify the enforced collection of the full amount. The amount
accepted in compromise in such cases may reflect an appropriate discount
for the administrative and litigative costs of collection, with
consideration given to the time it will take to effect collection.
Collection costs may be a substantial factor in the settlement of small
debts. In determining whether the cost of collecting justifies enforced
collection of the full amount, VA will consider whether continued
collection of the debt, regardless of cost, is necessary to further an
enforcement principle.

\(f\) VA generally will not accept compromises payable in installments.
If, however, payment of a compromise in installments is necessary, VA
will obtain a legally enforceable written agreement providing that, in
the event of default, the full original principal balance of the debt
prior to compromise, less sums paid thereon, is reinstated. Whenever
possible, VA will also obtain security for repayment.

\(g\) To assess the merits of a compromise offer based in whole or in
part on the debtor's inability to pay the full amount of a debt within a
reasonable time, VA will obtain a current financial statement from the
debtor showing the debtor's assets, liabilities, income, and expenses.
Agencies also may obtain credit reports or other financial information
to assess compromise offers. (Authority: 31 U.S.C. 3711; 38 U.S.C. 501,
3720).

\[52 FR 42109, Nov. 3, 1987, as amended at 69 FR 62198, Oct. 25, 2004\]

**§1.932 Enforcement policy.**

VA may compromise statutory penalties, forfeitures, or claims
established as an aid to enforcement and to compel compliance, if VA's
enforcement policy in terms of deterrence and securing compliance,
present and future, will be adequately served by VA's acceptance of the
sum to be agreed upon. (Authority: 31 U.S.C. 3711; 38 U.S.C. 501, 3720).

\[52 FR 42110, Nov. 3, 1987, as amended at 69 FR 62198, Oct. 25, 2004\]

**§1.933 Joint and several liability.**

\(a\) When two or more debtors are jointly and severally liable, VA will
pursue collection activity against all debtors, as appropriate. VA will
not attempt to allocate the burden of payment between the debtors but
should proceed to liquidate the indebtedness as quickly as possible.

\(b\) VA will ensure that a compromise agreement with one debtor does
not release VA's claim against the remaining debtors. The amount of a
compromise with one debtor shall not be considered a precedent or
binding in determining the amount that will be required from other
debtors jointly and severally liable on the claim. (Authority: 31 U.S.C.
3711; 38 U.S.C. 501, 3720).

\[32 FR 2613, Feb. 8, 1967, as amended at 69 FR 62198, Oct. 25, 2004\]

**§1.934 Further review of compromise offers.**

If VA is uncertain whether to accept a firm, written, substantive
compromise offer on a debt that is within its delegated compromise
authority, it may refer the offer to VA General Counsel or Regional
Counsel or to the Civil Division or other appropriate division in the
Department of Justice (DOJ), using a Claims Collection Litigation Report
(CCLR) accompanied by supporting data and particulars concerning the
debt. DOJ may act upon such an offer or return it to the agency with
instructions or advice. (Authority: 31 U.S.C. 3711; 38 U.S.C. 501,
3720).

\[52 FR 42110, Nov. 3, 1987, as amended at 69 FR 62198, Oct. 25, 2004\]

**§1.935 Consideration of tax consequences to the Government.**

In negotiating a compromise, VA will consider the tax consequences to
the Government. In particular, VA will consider requiring a waiver of
tax-loss-carry-forward and tax-loss-carry-back rights of the debtor.
(Authority: 31 U.S.C. 3711; 38 U.S.C. 501, 3720).

\[52 FR 42110, Nov. 3, 1987, as amended at 69 FR 62198, Oct. 25, 2004\]

**§1.936 Mutual releases of the debtor and VA.**

In all appropriate instances, a compromise that is accepted by VA shall
be implemented by means of a mutual release, in which the debtor is
released from further non-tax liability on the compromised debt in
consideration of payment in full of the compromise amount, and VA and
its officials, past and present, are released and discharged from any
and all claims and causes of action that the debtor may have arising
from the same transaction. In the event a mutual release is not executed
when a debt is compromised, unless prohibited by law, the debtor is
still deemed to have waived any and all claims and causes of action
against VA and its officials related to the transaction giving rise to
the compromised debt. (Authority: 31 U.S.C. 3711; 38 U.S.C. 501, 3720).

\[32 FR 2614, Feb. 8, 1967. Redesignated at 52 FR 42110, Nov. 3, 1987.
Amended at 57 FR 47264, Oct. 15, 1992\]

Next Section is §1.940

**Standards for Suspending or Terminating Collection**

**Source**: Sections 1.940 to 1.943 appear at 32 FR 2615,

Feb. 8, 1967, unless otherwise noted.

**§1.940 Scope and application.**

\(a\) The standards set forth in §§1.940 through 1.944 apply to the
suspension or termination of collection activity pursuant to 31 U.S.C.
3711 on debts that do not exceed \$100,000, or such other amount as the
Attorney General may direct, exclusive of interest, penalties, and
administrative costs, after deducting the amount of partial payments or
collections, if any. Prior to referring a debt to the Department of
Justice (DOJ) for litigation, VA may suspend or terminate collection
under this part with respect to the debt.

\(b\) If, after deducting the amount of any partial payments or
collections, the principal amount of a debt exceeds \$100,000, or such
other amount as the Attorney General may direct, exclusive of interest,
penalties, and administrative costs, the authority to suspend or
terminate rests solely with DOJ. If VA believes that suspension or
termination of any debt in excess of \$100,000 may be appropriate, it
shall refer the debt to the Civil Division or other appropriate division
in DOJ, using the Claims Collection Litigation Report (CCLR). The
referral should specify the reasons for VA's recommendation. If, prior
to referral to DOJ, VA determines that a debt is plainly erroneous or
clearly without legal merit, VA may terminate collection activity
regardless of the amount involved without obtaining DOJ concurrence.
(Authority: 31 U.S.C. 3711; 38 U.S.C. 501).

\[52 FR 42110, Nov. 3, 1987, as amended at 57 FR 47264, Oct. 15, 1992;
69 FR 62199, Oct. 25, 2004\]

**§1.941 Suspension of collection activity.**

\(a\) VA may suspend collection activity on a debt when:

\(1\) It cannot locate the debtor;

\(2\) The debtor's financial condition is expected to improve; or

\(3\) The debtor has requested a waiver or review of the debt.

\(b\) Based on the current financial condition of the debtor, VA may
suspend collection activity on a debt when the debtor's future prospects
justify retention of the debt for periodic review and collection
activity and:

\(1\) The applicable statute of limitations has not expired; or

\(2\) Future collection can be effected by administrative offset,
notwithstanding the expiration of the applicable statute of limitations
for litigation of claims, and with due regard to the 10-year limitation
for administrative offset prescribed by 31 U.S.C. 3716(e)(1); or

\(3\) The debtor agrees to pay interest on the amount of the debt on
which collection will be suspended, and such suspension is likely to
enhance the debtor's ability to pay the full amount of the principal of
the debt with interest at a later date.

\(c\) Collection action may also be suspended, in accordance with
§§1.911, 1.911a, 1.912, and 1.912a, pending VA action on requests for
administrative review of the existence or amount of the debt or a
request for waiver of collection of the debt. However, collection action
will be resumed once VA issues an initial decision on the administrative
review or waiver request.

\(d\) When VA learns that a bankruptcy petition has been filed with
respect to a debtor, in most cases the collection activity on a debt
must be suspended, pursuant to the provisions of 11 U.S.C. 362, 1201,
and 1301, unless VA can clearly establish that the automatic stay does
not apply, has been lifted, or is no longer in effect. VA shall seek
legal advice immediately from either the VA General Counsel or Regional
Counsel and, if legally permitted, take the necessary steps to ensure
that no funds or money are paid by VA to the debtor until relief from
the automatic stay is obtained. (Authority: 31 U.S.C. 3711; 38 U.S.C.
501).

\[52 FR 42110, Nov. 3, 1987, as amended at 69 FR 62199, Oct. 25, 2004\]

**§1.942 Termination of collection activity.**

Termination of collection activity involves a final determination.
Collection activity may be terminated on cases previously suspended. The
Department of Veterans Affairs may terminate collection activity and
consider closing the agency file on a claim which meets any one of the
following standards:

\(a\) *Inability to collect any substantial amount.* Collection action
may be terminated on a claim when it becomes clear that VA cannot
collect or enforce collection of any significant amount from the debtor,
having due regard for the judicial remedies available to the agency, the
debtor's future financial prospects, and the exemptions available to the
debtor under State and Federal law. In determining the debtor's
inability to pay, the following factors, among others, shall be
considered: Age and health of the debtor, present and potential income,
inheritance prospects, the possibility that assets have been concealed
or improperly transferred by the debtor, the availability of assets or
income which may be realized by means of enforced collection
proceedings.

\(b\) *Inability to locate debtor.* The debtor cannot be located, no
security remains to be liquidated, the applicable statute of limitations
has run, and the prospects of collecting by offset are too remote.

\(c\) *Death of debtor.* The debtor is determined to be deceased and the
Government has no prospect of collection from his/her estate.

\(d\) *Cost will exceed recovery.* The cost of further collection effort
is likely to exceed the amount recoverable.

\(e\) *Claim legally without merit.* Collection action should be
terminated on a claim whenever it is determined that the claim is
legally without merit.

\(f\) *Claim cannot be substantiated by evidence.* VA will terminate
collection action on once asserted claims because of lack of evidence or
unavailability of witnesses only in cases where efforts to induce
voluntary payment are unsuccessful.

\(g\) *Discharge in bankruptcy*. Generally, VA shall terminate
collection activity on a debt that has been discharged in bankruptcy,
regardless of the amount. VA may continue collection activity, subject
to the provisions of the Bankruptcy Code, for any payments provided
under a plan of reorganization. Offset and recoupment rights may survive
the discharge of the debtor in bankruptcy and, under some circumstances,
claims also may survive the discharge.

\(h\) Before terminating collection activity, VA should have pursued all
appropriate means of collection and determined, based upon the results
of the collection activity, that the debt is uncollectible. Termination
of collection activity ceases active collection of the debt. The
termination of collection activity does not preclude VA from retaining a
record of the account for purposes of:

\(1\) Selling the debt, if the Secretary of the Treasury determines that
such sale is in the best interests of the United States;

\(2\) Pursuing collection at a subsequent date in the event there is a
change in the debtor's status or a new collection tool becomes
available;

\(3\) Offsetting against future income or assets not available at the
time of termination of collection activity; or

\(4\) Screening future applicants for prior indebtedness. (Authority: 31
U.S.C. 3711; 38 U.S.C. 501).

\[32 FR 2615, Feb. 8, 1967, as amended at 52 FR 42111, Nov. 3, 1987; 69
FR 62200, Oct. 25, 2004\]

**§1.943 Exception to termination.**

When a significant enforcement policy is involved, or recovery of a
judgment is a prerequisite to the imposition of administrative
sanctions, VA may refer debts for litigation even though termination of
collection activity may otherwise be appropriate. (Authority: 31 U.S.C.
3711; 38 U.S.C. 501).

\[52 FR 42111, Nov. 3, 1987, as amended at 69 FR 62200, Oct. 25, 2004\]

**§1.944 Discharge of indebtedness; reporting requirements.**

\(a\) Before discharging a delinquent debt (also referred to as a close
out of the debt), VA shall take all appropriate steps to collect the
debt in accordance with 31 U.S.C. 3711(g), including, as applicable,
administrative offset, tax refund offset, Federal salary offset,
referral to Treasury or Treasury-designated debt collection centers or
private collection contractors, credit bureau reporting, wage
garnishment, litigation, and foreclosure. Discharge of indebtedness is
distinct from termination or suspension of collection activity under
§§1.940 through 1.943 and is governed by the Internal Revenue Code (see
26 U.S.C. 6050P). When collection action on a debt is suspended or
terminated, the debt remains delinquent and further collection action
may be pursued at a later date in accordance with the standards set
forth in §§1.900 through 1.953. When VA discharges a debt in full or in
part, further collection action is prohibited. Therefore, VA should make
the determination that collection action is no longer warranted before
discharging a debt. Before discharging a debt, VA must terminate debt
collection action.

\(b\) Upon discharge of an indebtedness, VA must report the discharge to
the Internal Revenue Service (IRS) in accordance with the requirements
of 26 U.S.C. 6050P and 26 CFR 1.6050P-1. VA may request Treasury or
Treasury-designated debt collection centers to file such a discharge
report to the IRS on VA's behalf.

\(c\) When discharging a debt, VA must request that any liens of record
securing the debt be released.

\(d\) 31 U.S.C. 3711(i)(2) requires agencies to sell a delinquent nontax
debt upon termination of collection action if the Secretary of the
Treasury determines such a sale is in the best interests of the United
States. Since the discharge of a debt precludes any further collection
action (including the sale of a delinquent debt), VA may not discharge a
debt until the requirements of §3711(i)(2) have been met. (Authority: 31
U.S.C. 3711; 38 U.S.C. 501).

\[69 FR 62200, Oct. 25, 2004\]

Next Section is §1.950

**Referrals to G.A.O., Department of Justice or I.R.S.**

**Source**: Sections 1.950 to 1.954 appear at 52 FR 42111, 42112, Nov.
3, 1987,

unless otherwise noted.

**§1.950 Prompt referral.**

\(a\) VA shall promptly refer debts to Department of Justice (DOJ) for
litigation where aggressive collection activity has been taken in
accordance with §§1.900 through 1.953, and such debts cannot be
compromised, or on which collection activity cannot be suspended or
terminated, in accordance with §§1.930 through 1.936 and §§1.940 through
1.944. Debts for which the principal amount is over \$1,000,000, or such
other amount as the Attorney General may direct, exclusive of interest
and other late payment charges, shall be referred to the Civil Division
or other division responsible for litigating such debts at DOJ. Debts
for which the principal amount is \$1,000,000, or less, or such other
amount as the Attorney General may direct, exclusive of interest or
penalties, shall be referred to DOJ's Nationwide Central Intake Facility
as required by the Claims Collection Litigation Report (CCLR)
instructions. Debts should be referred as early as possible, consistent
with aggressive agency collection activity and the observance of the
standards contained in §§1.900 through 1.953, and, in any event, well
within the period for initiating timely lawsuits against the debtors. VA
shall make every effort to refer delinquent debts to DOJ for litigation
within 1 year of the date such debts last became delinquent. In the case
of guaranteed or insured loans, VA should make every effort to refer
these delinquent debts to DOJ for litigation within 1 year from the date
the loan was presented to VA for payment or reinsurance.

\(b\) DOJ has exclusive jurisdiction over the debts referred to it
pursuant to this section. VA shall immediately terminate the use of any
administrative collection activities to collect a debt at the time of
the referral of that debt to DOJ. VA should advise DOJ of the collection
activities that have been utilized to date, and their result. VA shall
refrain from having any contact with the debtor and shall direct all
debtor inquiries concerning the debt to DOJ. VA shall immediately notify
DOJ of any payments credited to the debtor's account after referral of a
debt under this section. DOJ shall notify VA, in a timely manner, of any
payments it receives from the debtor. (Authority: 31 U.S.C. 3711; 38
U.S.C. 501).

\[52 FR 42111, Nov. 3, 1987, as amended at 69 FR 62200, Oct. 25, 2004\]

**§1.951 Claims Collection Litigation Report (CCLR).**

\(a\) Unless excepted by the Department of Justice (DOJ), VA shall
complete the CCLR, accompanied by a signed Certificate of Indebtedness,
to refer all administratively uncollectible claims to DOJ for
litigation. VA shall complete all of the sections of the CCLR
appropriate to each claim as required by the CCLR instructions and
furnish such other information as may be required in specific cases.

\(b\) VA shall indicate clearly on the CCLR the actions it wishes DOJ to
take with respect to the referred claim.

\(c\) VA shall also use the CCLR to refer claims to DOJ to obtain
approval of any proposals to compromise the claims or to suspend or
terminate agency collection activity. (Authority: 31 U.S.C. 3711; 38
U.S.C. 501).

\[52 FR 42111, Nov. 3, 1987, as amended at 69 FR 62200, Oct. 25, 2004\]

**§1.952 Preservation of evidence.**

VA must take care to preserve all files and records that may be needed
by the Department of Justice (DOJ) to prove its claims in court. VA
ordinarily should include certified copies of the documents that form
the basis for the claim when referring such claims to DOJ for
litigation. VA shall provide originals of such documents immediately
upon request by DOJ. (Authority: 31 U.S.C. 3711; 38 U.S.C. 501).

\[52 FR 42111, Nov. 3, 1987, as amended at 69 FR 62200, Oct. 25, 2004\]

**§1.953 Minimum amount of referrals to the Department of Justice.**

\(a\) Except as otherwise provided in paragraphs (b) and (c) of this
section, VA shall not refer for litigation claims of less than \$2,500,
exclusive of interest, penalties, and administrative costs, or such
other minimum amount as the Attorney General shall from time to time
prescribe. The Department of Justice (DOJ) shall promptly notify
referring agencies if the Attorney General changes this minimum amount.

\(b\) VA shall not refer claims of less than the minimum amount
prescribed by the Attorney General unless:

\(1\) Litigation to collect such smaller claims is important to ensure
compliance with VA's policies or programs;

\(2\) The claim is being referred solely for the purpose of securing a
judgment against the debtor, which will be filed as a lien against the
debtor's property pursuant to 28 U.S.C. 3201 and returned to VA for
enforcement; or

\(3\) The debtor has the clear ability to pay the claim and the
Government effectively can enforce payment, with due regard for the
exemptions available to the debtor under State and Federal law and the
judicial remedies available to the Government.

\(c\) VA should consult with the Financial Litigation Staff of the
Executive Office for United States Attorneys, in DOJ, prior to referring
claims valued at less than the minimum amount. (Authority: 31 U.S.C.
3711; 38 U.S.C. 501).

\[52 FR 42111, Nov. 3, 1987, as amended at 69 FR 62200, Oct. 25, 2004\]

Next Section is §1.955

**Regional Office Committees on Waivers and Compromises**

**Authority**: Sections 1.955 to 1.970 issued under 5 U.S.C. 5584; 31
U.S.C. 3711;

38 U.S.C. 501, 3685, 3720, 5302; 4 CFR Parts 91 and 92.

**§1.955 Regional office Committees on Waivers and Compromises.**

\(a\) *Delegation of authority and establishment.*

\(1\) Sections 1.955, *et seq*. are issued to implement the authority
for waiver consideration found in 38 U.S.C. 5302 and 5 U.S.C. 5584 and
the compromise authority found 38 U.S.C. 3720(a) and 31 U.S.C. 3711. The
duties, delegations of authority, and all actions required of the
Committees on Waivers and Compromises are to be accomplished under the
direction of, and authority vested in, the Director of the regional
office. Delegations of authority and limitations for waiver actions
under 5 U.S.C. 5584 are set forth in §1.963a of this part.

\(2\) There is established in each regional office, a Committee on
Waivers and Compromises to perform the duties and assume the
responsibilities delegated by §§1.956 and 1.957. The term *regional
office,* as used in §1.955, *et seq.*, includes VA Medical and Regional
Office Centers and VA Centers where such are established.

\(b\) *Selection*. The Director shall designate the employees to serve
as Chairperson, members, and alternates. Except upon specific
authorization of the Under Secretary for Benefits, when workload
warrants a full-time committee, such designation will be part-time
additional duty upon call of the Chairperson.

\(c\) *Control and staff*. The administrative control of each Committee
on Waivers and Compromises is the responsibility of the station's Fiscal
Officer. However, the station Director has the authority to reassign the
administrative control function to another station activity, rather than
the Fiscal Officer, whenever the Director determines that such
reassignment is appropriate. The quality control of the professional and
clerical staff of the Committee is the responsibility of the
Chairperson.

\(d\) *Overall control*. The Assistant Secretary for Management is
delegated complete management authority, including planning, policy
formulation, control, coordination, supervision, and evaluation of
Committee operations.

\(e\) *Committee composition.*

\(1\) The Committee shall consist of a Chairperson and Alternate
Chairperson and as many Committee members and alternate members as the
Director may appoint. Members and alternates shall be selected so that
in each of the debt claim areas (i.e., compensation, pension, education,
insurance, loan guaranty, etc.) there are members and alternates with
special competence and familiarity with the program area.

\(2\) When a claim is properly referred to the Committee for either
waiver consideration or the consideration of a compromise offer, the
Chairperson shall designate a panel from the available Committee members
to consider the waiver request or compromise offer. If the debt for
which the waiver request or compromise offer is made is \$20,000 or less
(exclusive or interest and administrative costs), the Chairperson will
assign one Committee member as the panel. This one Committee member
should have experience in the program area where the debt is located.
The single panel member's decision shall stand as the decision of the
Committee. If the debt for which the waiver request or compromise offer
is made is more than \$20,000 (exclusive of interest and administrative
costs), the Chairperson shall assign two Committee members. One of the
two members should be knowledgeable in the program area where the debt
arose. If the two member panel cannot reach a unanimous decision, the
Chairperson shall assign a third member of the Committee to the panel,
or assign the case to three new members, and the majority vote shall
determine the Committee decision.

\(3\) The assignment of a one or two member panel as described in
paragraph (e)(2) of this section is applicable if the debtor files a
Notice of Disagreement with a Committee decision to deny waiver. That
is, if the Notice of Disagreement is filed with a decision by a one
member panel to deny waiver of collection of a debt of \$20,000 or less,
then the Notice of Disagreement should also be assigned to one panel
member. Likewise, a Notice of Disagreement filed with a decision by a
two or three member panel to deny waiver of collection of a debt of more
than \$20,000 should also be assigned to a Committee panel of two
members (three if these two members cannot agree). However, a
Chairperson must assign the Notice of Disagreement to a different one,
two, or three member panel than the panel that made the original
Committee decision that is now the subject of the Notice of
Disagreement. (Authority: 5 U.S.C. 5584, 31 U.S.C. 3711, 38 U.S.C.
3720(a), 5302.)

\[44 FR 59905, Oct. 17, 1979, as amended at 48 FR 1056, Jan. 10, 1983;
52 FR 42112, Nov. 3, 1987; 54 FR 40871, Oct. 4, 1989; 57 FR 47264, Oct.
15, 1992; 60 FR 53276, Oct. 13, 1995; 66 FR 44053, Aug. 22, 2001; 69 FR
62201, Oct. 25, 2004\]

**Supplement *Highlights* references**: 9(2), 66(1).

**§1.956 Jurisdiction.**

\(a\) The regional office Committees are authorized, except as to
determinations under §2.6(e)(4)(i) of this chapter where applicable to
consider and determine as limited in §§1.955, *et seq.*, settlement,
compromise and/or waiver concerning the following debts and
overpayments;

\(1\) Arising out of operations of the Veterans Benefits Administration:

\(i\) Overpayment or erroneous payments of pension, compensation,
dependency and indemnity compensation, burial allowances, plot
allowance, subsistence allowance, education (includes debts from work
study and education loan defaults as well as from other overpayments of
educational assistance benefits) or insurance benefits, clothing
allowance and automobile or other conveyance and adaptive equipment
allowances.

\(ii\) Debts arising out of the loan program under 38 U.S.C. Ch. 37
after liquidation of security, if any.

\(iii\) Such other debts as may be specifically designated by the Chief
Benefits Director.

\(2\) Arising out of operations of the Veterans Health Services and
Research Administration:

\(i\) Debts resulting from services furnished in error (§17.101(a) of
this chapter).

\(ii\) Debts resulting from services furnished in a medical emergency
(§17.101(b) of this chapter).

\(iii\) Other claims arising in connection with transactions of the
Veterans Health Administration (§17.103(c) of this chapter).

\(iv\) Fiscal officers at VA medical facilities are authorized to waive
veterans' debts arising from medical care copayments (§17.105(c) of this
chapter).

\(3\) Claims for erroneous payments of pay and allowances, and erroneous
payments of travel, transportation, and relocation expenses and
allowances, made to or on behalf of employees (5 U.S.C. 5584).

\(b\) The Under Secretary for Benefits may, at his or her discretion,
assume original jurisdiction and establish an ad hoc Board to determine
a particular issue arising within this section.

\[39 FR 26400, July 19, 1974, as amended at 44 FR 59905, Oct. 17, 1979;
60 FR 53276, Oct. 13, 1995; 66 FR 44053, Aug. 22, 2001; 69 FR 62201,
Oct. 25, 2004\]

**Supplement *Highlights* references**: 9(2), 66(1).

**§1.957 Committee authority.**

\(a\) *Regional office committee.* On matters covered in §1.956, the
regional office Committee is authorized to determine the following
issues:

\(1\) *Waivers*. A decision may be rendered to grant or deny waiver of
collection of a debt in the following debt categories:

\(i\) Loan guaranty program (38 U.S.C. 5302(b)). Committees may consider
waiver of the indebtedness of a veteran or spouse resulting from: (A)
The payment of a claim under the guaranty or insurance of loans, (B) the
liquidation of direct loans, (C) the liquidation of loans acquired under
§36.4318, and (D) the liquidation of vendee accounts. The phrase
*veteran or spouse* includes a veteran-borrower, veteran-transferee, a
veteran-purchaser on a vendee account, a former spouse or surviving
spouse of a veteran.

\(ii\) Other than loan guaranty program. (38 U.S.C. 5302(a))

\(iii\) Services erroneously furnished (§17.101(a)).

\(2\) *Compromises*:

\(i\) L*oan program debts (38 U.S.C. 3720(a))*. Accept or reject a
compromise offer irrespective of the amount of the debt (loan program
matters under 38 U.S.C. chapter 37 are unlimited as to amount).

\(ii\) *Other than loan program debts (31 U.S.C. 3711)*.

\(A\) Accept or reject a compromise offer on a debt which exceeds
\$1,000 but which is not over \$100,000 (both amounts exclusive of
interest and other late payment charges).

\(B\) Accept or reject a compromise offer on a debt of a \$1,000 or
less, exclusive of interest and other late payment charges, which is not
disposed of by the Chief, Fiscal activity, pursuant to paragraph (b) of
this section.

\(C\) Reject a compromise offer on a debt which exceeds \$100,000,
exclusive of interest and other late payment charges.

\(D\) Recommend approval of a compromise offer on a debt which exceeds
\$100,000, exclusive of interest and other late payment charges. The
authority to accept a compromise offer on such a debt rests solely
within the jurisdiction of the Department of Justice. The Committee
should evaluate a compromise offer on a debt in excess of \$100,000,
using the factors set forth in §§1.930 through 1.938. If the Committee
believes that the compromise offer is advantageous to the government,
then the Committee members shall so state this conclusion in a written
memorandum of recommendation of approval to the Chairperson. This
recommendation, along with a Claims Collection Litigation Report (CCLR)
completed in accordance with §1.951, will be referred to VA Central
Office, Office of Financial Management (047G7), for submission to the
Department of Justice for final approval.

\(b\) *Chief of Fiscal activity*. The Chief of the Fiscal activity at
both VBA and VHA offices has the authority, as to debts within his/her
jurisdiction, to:

\(1\) On other than loan program debts under 38 U.S.C. chapter 37,
accept compromise offers of 50% or more of a total debt not in excess of
\$1,000, exclusive of interest and other late payment charges,
regardless of whether or not there has been a prior denial of waiver.

\(2\) On other than loan program debts under 38 U.S.C. Chapter 37,
reject any offer of compromise of a total debt not in excess of \$1,000,
exclusive of interest and other late payment charges, regardless of
whether or not there has been a prior denial of waiver.

\(3\) On other than loan guaranty program debts under 38 U.S.C. chapter
37, reject any offer of compromise of a total debt not in excess of
\$1,000, exclusive of interest, regardless of whether or not there has
been a prior denial of waiver. (Authority: 31 U.S.C. 3711 and 38 U.S.C.
3720(a)).

\[44 FR 59906, Oct. 17, 1979, as amended at 51 FR 38803, Sept. 25, 1985;
52 FR 42112, Nov. 3, 1987; 57 FR 47264, Oct. 15, 1992; 60 FR 53276, Oct.
13, 1995; 69 FR 62201, Oct. 25, 2004\]

**Supplement *Highlights* references**: 9(2), 66(1).

**§1.958 Finality of decisions.**

A decision by the regional office Committee, operating within the scope
of its authority, denying waiver of all or part of a debt arising out of
participation in a VA benefit or home loan program, is subject to appeal
in accordance with 38 CFR parts 19 and 20. A denial of waiver of an
erroneous payment of pay and allowances is subject to appeal in
accordance with §1.963a(a). There is no right of appeal from a decision
rejecting a compromise offer. (Authority: 38 U.S.C. 501 and 7104).

\[44 FR 59906, Oct. 17, 1979, as amended at 69 FR 62201, Oct. 25, 2004\]

**§1.959 Records and certificates.**

The Chairperson of the Committee shall execute or certify any documents
pertaining to its proceedings. He/she will be responsible for
maintaining needed records of the transactions of the Committee and
preparation of any administrative or other reports which may be
required. (Authority: 38 U.S.C. 501(a))

\[44 FR 59906, Oct. 17, 1979\]

**§1.960 Legal and technical assistance.**

Legal questions involving a determination under §2.6(e)(4) of this
chapter will be referred to the Regional Counsel for action in
accordance with delegations of the General Counsel, unless there is an
existence a General Counsel's opinion or an approved Regional Counsel's
opinion dispositive of the controlling legal principle. As to matters
not controlled by §2.6(e)(4) of this chapter, the Chairperson of the
regional office Committee or at his/her instance, a member, may seek and
obtain advice from the Regional Counsel on legal matters within his/her
jurisdiction and from other division chiefs in their areas of
responsibility, on any matter properly before the Committee. Guidance
may also be requested from the Central Office staff. (Authority: 38
U.S.C. 501(a))

\[44 FR 59906, Oct. 17, 1979, as amended at 61 FR 7216, Feb. 27, 1996\]

**§1.961 Releases.**

On matters within its jurisdiction, the Committee may authorize the
release of any right, title, claim, lien or demand, however acquired,
against any person obligated on a loan guaranteed, insured, or made by
the Department of Veterans Affairs under the provisions of 38 U.S.C. ch.
37, or on an acquired loan, or on a vendee account.

\[39 FR 26400, July 19, 1974\]

**§1.962 Waiver of overpayments.**

There shall be no collection of an overpayment, or any interest thereon,
which results from participation in a benefit program administered under
any law by VA when it is determined by a regional office Committee on
Waivers and Compromises that collection would be against equity and good
conscience. For the purpose of this regulation, the term *overpayment*
refers only to those benefit payments made to a designated living payee
or beneficiary in excess of the amount due or to which such payee or
beneficiary is entitled. The death of an indebted payee, either prior to
a request for waiver of the indebtedness or during Committee
consideration of the waiver request, shall not preclude waiver
consideration. There shall be no waiver consideration of an indebtedness
that results from the receipt of a benefit payment by a non-payee who
has no claim or entitlement to such payment.

\(a\) Waiver consideration is applicable in an indebtedness resulting
from work study and education loan default, as well as indebtedness of a
veteran-borrower, veteran transferee, or indebted spouse of either,
arising out of participation in the loan program administered under 38
U.S.C. ch. 37. Also subject to waiver consideration is an indebtedness
which is the result of VA hospitalization, domiciliary care, or
treatment of a veteran, either furnished in error or on the basis of
tentative eligibility.

\(b\) In any case where there is an indication of fraud or
misrepresentation of a material fact on the part of the debtor or any
other party having an interest in the claim, action on a request for
waiver will be deferred pending appropriate disposition of the matter.
However, the existence of a prima facie case of fraud shall,
nevertheless, entitle a claimant to an opportunity to make a rebuttal
with countervailing evidence; similarly, the misrepresentation must be
more than non-willful or mere inadvertence. The Committee may act on a
request for waiver concerning such debts, after the Inspector General or
the Regional Counsel has determined that prosecution is not indicated,
or the Department of Justice has notified VA that the alleged fraud or
misrepresentation does not warrant action by that department, or the
Department of Justice or the appropriate United States Attorney,
specifically authorized action on the request for waiver. (Authority: 38
U.S.C. 501(a))

\[39 FR 26400, July 19, 1974, as amended at 44 FR 59906, Oct. 17, 1979;
50 FR 38803, Sept. 25, 1985; 52 FR 42112, Nov. 3, 1987; 61 FR 7216, Feb.
27, 1996\]

**§1.963 Waiver; other than loan guaranty.**

\(a\) *General.* Recovery of overpayments of any benefits made under
laws administered by the VA shall be waived if there is no indication of
fraud, misrepresentation, or bad faith on the part of the person or
persons having an interest in obtaining the waiver and recovery of the
indebtedness from the payee who received such benefits would be against
equity and good conscience.

\(b\) *Application.* A request for waiver of an indebtedness under this
section shall only be considered:

\(1\) If made within 2 years following the date of a notice of
indebtedness issued on or before March 31, 1983, by the Department of
Veterans Affairs to the debtor, or

\(2\) Except as otherwise provided herein, if made within 180 days
following the date of a notice of indebtedness issued on or after April
1, 1983, by the Department of Veterans Affairs to the debtor. The 180
day period may be extended if the individual requesting waiver
demonstrated to the Chairperson of the Committee on Waivers and
Compromises that, as a result of an error by either the Department of
Veterans Affairs or the postal authorities, or due to other
circumstances beyond the debtor's control, there was a delay in such
individual's receipt of the notification of indebtedness beyond the time
customarily required for mailing (including forwarding). If the
requester does substantiate that there was such a delay in the receipt
of the notice of indebtedness, the Chairperson shall direct that the 180
day period be computed from the date of the requester's actual receipt
of the notice of indebtedness. (Authority: 38 U.S.C. 5302(a) and (c))

\[39 FR 26400, July 19, 1974, as amended at 44 FR 59906, Oct. 17, 1979;
48 FR 27400, June 15, 1983; 50 FR 38803, Sept. 25, 1985; 58 FR 3840,
Jan. 12, 1993\]

**Supplement *Highlights* Reference**: 2(2)

*Next Section is §1.963a*

**§1.963a Waiver; erroneous payments of pay and allowances.**

\(a\) The provisions applicable to VA (including refunds) concerning
waiver actions relating to erroneous payments to VA employees of pay and
allowances, and travel, transportation, and relocation expenses and
allowances, are set forth in 5 U.S.C. 5584. The members of Committees on
Waivers and Compromises assigned to waiver actions under §1.955 of this
part are delegated all authority granted the Secretary under 5 U.S.C.
5584 to deny waiver or to grant waiver in whole or in part of any debt
regardless of the amount of the indebtedness. Committee members also
have exclusive authority to consider and render a decision on the appeal
of a waiver denial or the granting of a partial waiver. However, the
Chairperson of the Committee must assign the appeal to a different
Committee member or members than the member or members who made the
original decision that is now the subject of the appeal. The following
are the only provisions of §§1.955 through 1.970 of this part applicable
to waiver actions concerning erroneous payments of pay and allowances,
and travel, transportation, and relocation expenses and allowances,
under 5 U.S.C. 5584: §§1.955(a) through (e)(2), 1.956(a)(introductory
text) and (a)(3), 1.959, 1.960, 1.963a, and 1.967(c).

\(b\) Waiver may be granted under this section and 5 U.S.C. 5584 when
collection would be against equity and good conscience and not in the
best interest of the United States. Generally, these criteria will be
met by a finding that the erroneous payment occurred through
administrative error and that there is no indication of fraud,
misrepresentation, fault, or lack of good faith on the part of the
employee or other person having an interest in obtaining a waiver of the
claim, and waiver would not otherwise be inequitable. Generally, waiver
is precluded when an employee receives a significant unexplained
increase in pay or allowances, or otherwise knows, or reasonably should
know, that an erroneous payment has occurred, and fails to make
inquiries or bring the matter to the attention of the appropriate
officials. Waiver under this standard will depend upon the facts
existing in each case.

\(c\) An application for waiver must be received within 3 years
immediately following the date on which the erroneous payment was
discovered. (Authority: 5 U.S.C. 5584; 38 U.S.C. 501).

\[39 FR 26400, July 19, 1974, as amended at 44 FR 59906, Oct. 17, 1979;
48 FR 27400, June 15, 1983; 52 FR 42113, Nov. 3, 1987; 60 FR 53276, Oct.
13, 1995; 69 FR 62202, Oct. 25, 2004\]

**Supplement *Highlights* references**: 9(2), 66(1).

*Next Section is §1.964*

**§1.964 Waiver; loan guaranty.**

\(a\) *General.* Any indebtedness of a veteran or the indebtedness of
the spouse shall be waived only when the following factors are
determined to exist:

\(1\) Following default there was a loss of the property which
constituted security for the loan guaranteed, insured or made under
chapter 37 of title 38, United States Code;

\(2\) There is no indication of fraud, misrepresentation, or bad faith
on the part of the person or persons having an interest in obtaining the
waiver; and

\(3\) Collection of such indebtedness would be against equity and good
conscience.

\(b\) *Spouse.* The waiver of a veteran's indebtedness shall inure to
the spouse of such veteran insofar as concerns said indebtedness, unless
the obligation of the spouse is specifically excepted. However, the
waiver of the indebtedness of the veteran's spouse shall not inure to
the benefit of the veteran unless specifically provided for in the
waiver decision.

\(c\) *Surviving spouse or former spouse.* A surviving spouse of a
veteran or the former spouse of a veteran may be granted a waiver of the
indebtedness provided the requirements of paragraph (a) of this section
are met.

\(d\) *Preservation of Government rights.* In cases in which it is
determined that waiver may be granted, the action will take such form
(covenant not to sue, or otherwise) as will preserve the rights of the
Government against obligors other than the veteran or the spouse.

\(e\) *Application.* A request for waiver of an indebtedness under this
section shall be made within one year after the date on which the debtor
receives, by Certified Mail--Return Receipt Requested, written notice
from VA of the indebtedness. If written notice of indebtedness is sent
by means other than Certified Mail--Return Receipt Requested, then there
is no time limit for filing a request for waiver of indebtedness under
this section. (Authority: 38 U.S.C. 5302(b)).

\(f\) *Exclusion.* Except as otherwise provided in this section, the
indebtedness of a nonveteran obligor under the loan program is excluded
from waiver. (Authority: 38 U.S.C. 5302(b) and (c))

\[39 FR 26400, July 19, 1974, as amended at 44 FR 59907, Oct. 17, 1979;
57 FR 33875, July 31, 1992; 58 FR 3840, Jan. 12, 1993\]

**Supplement *Highlights* reference**: 2(2)

**§1.965 Application of standard.**

\(a\) The standard *Equity and Good Conscience*, will be applied when
the facts and circumstances in a particular case indicate a need for
reasonableness and moderation in the exercise of the Government's
rights. The decision reached should not be unduly favorable or adverse
to either side. The phrase *equity and good conscience* means arriving
at a fair decision between the obligor and the Government. In making
this determination, consideration will be given to the following
elements, which are not intended to be all inclusive:

\(1\) *Fault of debtor.* Where actions of the debtor contribute to
creation of the debt.

\(2\) *Balancing of faults.* Weighing fault of debtor against Department
of Veterans Affairs fault.

\(3\) *Undue hardship.* Whether collection would deprive debtor or
family of basic necessities.

\(4\) *Defeat the purpose.* Whether withholding of benefits or recovery
would nullify the objective for which benefits were intended.

\(5\) *Unjust enrichment.* Failure to make restitution would result in
unfair gain to the debtor.

\(6\) *Changing position to one's detriment.* Reliance on Department of
Veterans Affairs benefits results in relinquishment of a valuable right
or incurrence of a legal obligation.

\(b\) In applying this single standard for all areas of indebtedness,
the following elements will be considered, any indication of which, if
found, will preclude the granting of waiver:

\(1\) *Fraud or misrepresentation of a material fact* (see §1.962(b)).

\(2\) *Bad faith.* This term generally describes unfair or deceptive
dealing by one who seeks to gain thereby at another's expense. Thus, a
debtor's conduct in connection with a debt arising from participation in
a VA benefits/services program exhibits bad faith if such conduct,
although not undertaken with actual fraudulent intent, is undertaken
with intent to seek an unfair advantage, with knowledge of the likely
consequences, and results in a loss to the government.

\[39 FR 26400, July 19, 1974; 58 FR 3841, Jan. 12, 1993; 58 FR 7296,
Feb. 5, 1993; 69 FR 62202, Oct. 25, 2004\]

**Supplement *Highlights* references**: 2(2), 66(1).

**§1.966 Scope of waiver decisions.**

\(a\) Decisions will be based on the evidence of record. A hearing may
be held at the request of the claimant or his/her representative. No
expenses incurred by a claimant, his representative, or any witness
incident to a hearing will be paid by the Department of Veterans
Affairs.

\(b\) A regional office Committee may:

\(1\) Waive recovery as to certain persons and decline to waive as to
other persons whose claims are based on the same veteran's service.

\(2\) Waive or decline to waive recovery from specific benefits or
sources, except that:

\(i\) There shall be no waiver of recovery out of insurance of an
indebtedness secured thereby; i.e., an insurance overpayment to an
insured. However, recovery may be waived of any or all of such
indebtedness out of benefits other than insurance then or thereafter
payable to the insured. (Authority: 38 U.S.C. 501, 5302).

\[39 FR 26400, July 19, 1974, as amended at 44 FR 59907, Oct. 17, 1979;
48 FR 1056, Jan. 10, 1983; 69 FR 62202, Oct. 25, 2004\]

**§1.967 Refunds.**

\(a\) Except as provided in paragraph (c) of this section, any portion
of an indebtedness resulting from participation in benefits programs
administered by the Department of Veterans Affairs which has been
recovered by the U.S. Government from the debtor may be considered for
waiver, provided the debtor requests waiver in accordance with the time
limits of §1.963(b). If collection of an indebtedness is waived as to
the debtor, such portions of the indebtedness previously collected by
the Department of Veterans Affairs will be refunded. In the event that
waiver of collection is granted for either an education, loan guaranty,
or direct loan debt, there will be a reduction in the debtor's
entitlement to future benefits in the program in which the debt
originated.

\(b\) The Department of Veterans Affairs may not waive collection of the
indebtedness of an educational institution found liable under 38 U.S.C.
3685. Waiver of collection of educational benefit overpayments from all
or a portion of the eligible persons attending an educational
institution which has been found liable under 38 U.S.C. 3685 shall not
relieve the institution of its assessed liability. (See 38 CFR
21.4009(f)).

\(c\) The regulatory provisions concerning refunds of indebtedness
collected by the Department of Veterans Affairs arising from erroneous
payments of pay and allowances and travel, transportation, and
relocation expenses and allowances are set forth in 4 CFR Parts 91 and
92.

\(d\) Refund of the entire amount collected may not be made when only a
part of the debt is waived or when collection of the balance of a loan
guaranty indebtedness by the Department of Veterans Affairs from
obligors, other than a husband or wife of the person requesting waiver,
will be adversely affected. Only where the amount collected exceeds the
balance of the indebtedness still in existence will a refund be made in
the amount of the difference between the two. Otherwise, refunds will be
made in accordance with paragraph (a) of this section. (Authority: 38
U.S.C. 3685, 5302; 5 U.S.C. 5584)

\[48 FR 1056, Jan. 10, 1983, as amended at 60 FR 53276, Oct. 13, 1995\]

**Supplement *Highlights* reference**: 9(2)

**§1.968** \[Reserved\]

**§1.969 Revision of waiver decisions.**

\(a\) *Jurisdiction.* A decision involving waiver may be reversed or
modified on the basis of new and material evidence, fraud, a change in
law or interpretation of law specifically stated in a Department of
Veterans Affairs issue, or clear and unmistakable error shown by the
evidence in file at the time the prior decision was rendered by the same
or any other regional office Committee.

\(b\) *Finality of decisions.* Except as provided in paragraph (a) of
this section, a decision involving waiver rendered by the Committee
having jurisdiction is final, subject to the provisions of:

\(1\) Sections 3.104(a), 19.153 and 19.154 of this chapter as to
finality of decisions;

\(2\) Section 3.105(a) and (b) of this chapter as to revision of
decisions, except that the Central Office staff may postaudit or make an
administrative review of any decision of a regional office Committee;

\(3\) Sections 3.103, 19.113 and 19.114 of this chapter as to notice of
disagreement and the right of appeal;

\(4\) Section 19.124 of this chapter as to the filing of administrative
appeals and the time limits for filing such appeals.

\(c\) *Difference of opinion.* Where reversal or amendment of a decision
involving waiver is authorized under §3.105(b) of this chapter because
of a difference of opinion, the effective date of waiver will be
governed by the principle contained in §3.400(h) of this chapter.
(Authority: 38 U.S.C. 501(a))

\[44 FR 59907, Oct. 17, 1979\]

**§1.970 Standards for compromise.**

Decisions of the Committee respecting acceptance or rejection of a
compromise offer shall be in conformity with the standards in §§1.930
through 1.936. In loan guaranty cases the offer of a veteran or other
obligor to effect a compromise must relate to an indebtedness
established after the liquidation of the security, if any, and shall be
reviewed by the Committee. An offer to effect a compromise may be
accepted if it is deemed advantageous to the Government. A decision on
an offer of compromise may be revised or modified on the basis of any
information which would warrant a change in the original decision.
(Authority: 31 U.S.C. 3711; 38 U.S.C. 501, 3720).

\[44 FR 59907, Oct. 17, 1979, as amended at 69 FR 62202, Oct. 25, 2004\]

*Next Section is §1.980*

**Salary Offset Provisions**

**Source**: 52 FR 1905, Jan. 16, 1987, unless otherwise noted.

**§1.980 Scope.**

\(a\) In accordance with 5 CFR part 550, subpart K, the provisions set
forth in §§1.980 through 1.995 implement VA's authority for the use of
salary offset to satisfy certain debts owed to VA.

\(b\) These regulations apply to offsets from the salaries of current
employees of VA, or any other agency, who owe debts to VA. Offsets by VA
from salaries of current VA employees who owe debts to other agencies
shall be processed in accordance with procedures set forth in 5 CFR part
550, subpart K.

\(c\) These regulations do not apply to debts or claims arising under
the Internal Revenue Code of 1954, as amended, the Social Security Act,
the tariff laws of the United States, or to any case where collection of
a debt by salary offset is explicitly provided for (e.g., travel
advances in 5 U.S.C. 5705 and employee training expenses in 5 U.S.C.
4108) or prohibited by another statute.

\(d\) These regulations do not preclude an employee from requesting
waiver of an overpayment under 38 U.S.C. 5302, 5 U.S.C. 5584, or any
other similar provision of law, or in any way questioning the amount or
validity of a debt not involving benefits under the laws administered by
VA by submitting a subsequent claim to the General Accounting Office in
accordance with procedures prescribed by that office.

\(e\) These regulations do not apply to any adjustment to pay arising
out of an employee's election of coverage or a change in coverage under
a Federal benefits program requiring periodic deductions from pay if the
amount to be recovered was accumulated over four pay periods or less.

\(f\) These regulations do not apply to a routine intra-agency
adjustment of pay that is made to correct an overpayment of pay
attributable to clerical or administrative errors or delays in
processing pay documents, if the overpayment occurred within the four
pay periods preceding the adjustment and, at the time of such
adjustment, or as soon thereafter as practicable, the individual is
provided written notice of the nature and amount of the adjustment and a
point of contact for contesting such adjustment.

\(g\) These regulations do not apply to any adjustment to collect a debt
amounting to \$50 or less, if at the time of such adjustment, or as soon
thereafter as practicable, the individual is provided with written
notice of the nature and amount of the adjustment and a point of contact
for contesting such adjustment.

\(h\) These regulations do not preclude the compromise, suspension, or
termination of collection action under the Federal Claims Collection
Standards (FCCS) (31 CFR parts 900-904) and VA regulations 38 CFR 1.930
through 1.944.

\(i\) The procedures and requirements of these regulations do not apply
to salary offset used to recoup a Federal employee's debt where a
judgment has been obtained against the employee for the debt.
(Authority: 5 U.S.C. 5514)

\[52 FR 1905, Jan. 16, 1987; 52 FR 23824, June 25, 1987, as amended at
54 FR 34980, Aug. 23, 1989; 69 FR 62202, Oct. 25, 2004\]

**§1.981 Definitions.**

\(a\) *Agency* means:

\(1\) An executive agency as defined in 5 U.S.C. 105, including the U.S.
Postal Service, and the U.S. Postal Rate Commission, and

\(2\) 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 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.

\(b\) *Debt* means an amount owed to the United States from sources
which include loans insured or guaranteed by the United States and all
other amounts due the United States from fees, leases, rents, royalties,
services, sales of real or personal property, overpayments, penalties,
damages, interest, fines and forfeitures (except those arising under the
Uniform Code of Military Justice), and all other similar sources.

\(c\) *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. Excluded
from this definition are deductions described in 5 CFR 581.105(b)
through (f).

\(d\) *Employee* means a current employee of VA or other Federal agency
including a current member of the Armed Forces or a Reserve of the Armed
Forces (Reserves).

\(e\) *Salary offset* means an attempt 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.

\(f\) *Waiver* means the cancellation, remission, forgiveness, or
non-recovery of a debt owed by an employee to VA or another Federal
agency as permitted or required by 5 U.S.C. 5584 or 38 U.S.C. 5302, or
other similar statutes.

\(g\) *Extreme hardship to an employee* means an employee's inability to
provide himself or herself and his or her dependents with the
necessities of life such as food, housing, clothing, transportation, and
medical care. (Authority: 5 U.S.C. 5514)

\[52 FR 1905, Jan. 16, 1987; 52 FR 23824, June 25, 1987\]

**§1.982 Salary offsets of debts involving benefits under the laws
administered by VA.**

\(a\) VA will not collect a debt involving benefits under the laws
administered by VA by salary offset unless the Secretary or appropriate
designee first provides the employee with a minimum of 30 calendar days
written notice.

\(b\) If the employee has not previously appealed the amount or
existence of the debt under 38 CFR parts 19 and 20 and the time for
pursuing such an appeal has not expired (§20.302), the Secretary or
appropriate designee will provide the employee with written notice of
the debt. The written notice will state that the employee may appeal the
amount and existence of the debt in accordance with the procedures set
forth in 38 CFR parts 19 and 20 and will contain the determination and
information required by §1.983(b)(1) through (5), (7), (9), (10), and
(12) though (14). The notice will also state that the employee may
request a hearing on the offset schedule under the procedures set forth
in §1.984 and such a request will stay the commencement of salary
offset.

\(c\) If the employee previously appealed the amount or existence of the
debt and the Board of Veterans Appeals decided the appeal on the merits
or if the employee failed to pursue an appeal within the time provided
by regulations, the Secretary or designee shall provide the employee
with written notice prior to collecting the debt by salary offset. The
notice will state:

\(1\) The determinations and information required by §1.983(b)(1)-(5),
(7), and (12)-(14);

\(2\) That the employee's appeal of the existence or amount of the debt
was determined on the merits or that the employee failed to pursue an
appeal within the time provided, and VA's decision is final except as
otherwise provided in agency regulations;

\(3\) That the employee may request a waiver of the debt pursuant to 38
CFR 1.911(c)(2) subject to the time limits of 38 U.S.C. 5302.

\(4\) That the employee may request an oral or paper hearing on the
offset schedule and receive a decision within 60 days of such request
under the procedures and time limit set forth in §1.984 and that such a
request will stay the commencement of salary offset.

\(d\) If the employee has appealed the existence or amount of the debt
and the Board of Veterans Appeals has not decided the appeal on the
merits, collection of the debt by salary offset will be suspended until
the appeal is decided or the employee ceases to pursue the appeal.
(Authority: 5 U.S.C. 5514)

\[52 FR 1905, Jan. 16, 1987, as amended at 69 FR 62202, Oct. 15, 2004\]

**§1.983 Notice requirements before salary offsets of debts not
involving benefits under laws administered by VA.**

\(a\) For a debt not involving benefits under the laws administered by
VA, the Secretary or designee will review the records relating to the
debt to assure that it is owed prior to providing the employee with a
notice of the debt.

\(b\) Except as provided in §1.980(e), salary offset of debts not
involving benefits under the laws administered by VA will not be made
unless the Secretary or designee first provides the employee with a
minimum of 30 calendar days written notice. This notice will state:

\(1\) The Secretary or designee's determination that a debt is owed;

\(2\) The amount of the debt owed and the facts giving rise to the debt;

\(3\) The Secretary or designee'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 and associated costs are paid in
full;

\(4\) The amount, frequency, approximate beginning date, and duration of
the intended deductions;

\(5\) An explanation of VA's requirements concerning interest,
administrative costs, and penalties;

\(6\) The employee's right to inspect and copy VA records relating to
the debt or, if the employee or his or her representative cannot
personally inspect the records, to request and receive a copy of such
records;

\(7\) The employee's right to enter into a written agreement with the
Secretary or designee for a repayment schedule differing from that
proposed by the Secretary or designee, so long as the terms of the
repayment schedule proposed by the employee are agreeable to the
Secretary or designee;

\(8\) The VA employee's right to request an oral or paper hearing on the
Secretary or appropriate designee's determination of the existence or
amount of the debt, or the percentage of disposable pay to be deducted
each pay period, so long as a request is filed by the employee as
prescribed by the Secretary. A VA Board of Contract Appeals
Administrative Judge or Hearing Examiner shall conduct such a hearing
for any VA employee. A VA Board of Contract Appeals Administrative Judge
or Hearing Examiner, or any other VA hearing official, may also conduct
an oral or paper hearing at the request of a non-VA employee on the
determination by an appropriately designated official of the employing
agency of the existence or amount of the debt, or the percentage of
disposable pay to be deducted each pay period, so long as a hearing
request is filed by the non-VA employee as prescribed by the employing
agency.

\(9\) The method and time period for requesting a hearing;

\(10\) That the timely filing of a request for a hearing (oral or paper)
will stay the commencement of salary offset;

\(11\) That a final decision after the hearing will be issued at the
earliest practical date, but no later than 60 calendar days after the
filing of the request for the hearing, unless the employee requests and
the hearing officer grants a delay in the proceedings;

\(12\) That any knowingly false or frivolous statements,
representations, or evidence may subject the employee to:

\(i\) Disciplinary procedures appropriate under 5 U.S.C. ch. 75, 5 CFR
part 752, or any other applicable statutes or regulations;

\(ii\) Penalties under the False Claims Act, 31 U.S.C. 3729--3731, or
any other applicable statutory authority; or

\(iii\) Criminal penalties under 18 U.S.C. 286, 287, 1001, and 1002 or
any other applicable statutory authority.

\(13\) The employee's right, if applicable, to request waiver under 5
U.S.C. 5584 and 38 CFR 1.963a and any other rights and remedies
available to the employee under statutes or regulations governing the
program for which the collection is being made; and

\(14\) Unless there are applicable contractual or statutory provisions
to the contrary, that 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. (Authority: 5 U.S.C. 5514)

\[52 FR 1905, Jan. 16, 1987, as amended at 69 FR 62202, Oct. 25, 2004\]

**§1.984 Request for a hearing.**

\(a\) Except as provided in paragraph (b) of this section and in §1.982,
an employee wishing a hearing on the existence or amount of the debt or
on the proposed offset schedule must send such a request to the office
which sent the notice of the debt. The employee must also specify
whether an oral or paper hearing is requested. If an oral hearing is
requested, the request should explain why the matter cannot be resolved
by review of the documentary evidence. The request must be received by
the office which sent the notice of the debt not later than 30 calendar
days from the date of the notice.

\(b\) If the employee files a request for a hearing after the expiration
of the 30-day period provided for in paragraph (a) of this section, VA
may accept the request if the employee shows that the delay was because
of circumstances beyond his or her control or because of failure to
receive the written notice of the filing deadline (unless the employee
has actual notice of the filing deadline). (Authority: 5 U.S.C. 5514)

\[52 FR 1905, Jan. 16, 1987, as amended at 69 FR 62203, Oct. 25, 2004\]

**§1.985 Form, notice of, and conduct of hearing.**

\(a\) After an employee requests a hearing, the hearing official or
administrative law judge 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 for the hearing. If the hearing
will be paper, the employee shall be notified that he or she should
submit his or her position and arguments in writing to the hearing
official or administrative law judge by a specified date after which the
record shall be closed. This date shall give the employee reasonable
time to submit this information.

\(b\) An employee who requests an oral hearing shall be provided an oral
hearing if the hearing official or administrative law judge determines
that the matter cannot be resolved by review of documentary evidence,
for example, when an issue of credibility or veracity is involved. If a
determination is made to provide an oral hearing, the hearing official
or administrative law judge may offer the employee the opportunity for a
hearing by telephone conference call. If this offer is rejected or if
the hearing official or administrative law judge declines to offer a
telephone conference call hearing, the employee shall be provided an
oral hearing permitting the personal appearance of the employee, his or
her personal representative, and witnesses. A record or transcript of
every oral hearing shall be made. Witnesses shall testify under oath or
affirmation. VA shall not be responsible for the payment of any expenses
incident to attendance at the hearing which are incurred by either the
employee, his or her representative or Counsel, or witnesses.

\(c\) In all other cases where an employee requests a hearing, a paper
hearing shall be provided. A paper hearing shall consist of a review of
the written evidence of record by the administrative law judge or
hearing official.

\(d\) In any hearing under this section, the administrative law judge or
hearing official may exclude from consideration evidence or testimony
which is irrelevant, immaterial, or unduly repetitious. (Authority: 5
U.S.C. 5514).

**§1.986 Result if employee fails to meet deadlines.**

An employee waives the right to a hearing, and will have his or her
disposable pay offset in accordance with the offset schedule, if the
employee:

\(a\) Fails to file a request for a hearing as prescribed in §§1.982,
1.984, or 19.1 through 19.200, whichever is applicable, unless such
failure is excused as provided in §1.984(b); or

\(b\) Fails to appear at an oral hearing of which he or she had been
notified unless the administrative law judge or hearing official
determines that failure to appear was due to circumstances beyond the
employee's control. (Authority: 5 U.S.C. 5514)

**§1.987 Review by the hearing official or administrative law judge.**

\(a\) The hearing official or administrative law judge shall uphold VA's
determination of the existence and amount of the debt unless determined
to be erroneous by a preponderance of the evidence.

\(b\) The hearing official or administrative law judge shall uphold VA's
offset schedule unless the schedule would result in extreme hardship to
the employee. (Authority: 5 U.S.C. 5514)

\[52 FR 1905, Jan. 16, 1987; 52 FR 23824, June 25, 1987\]

**§1.988 Written decision following a hearing requested under §1.984.**

\(a\) The hearing official or administrative law judge must issue a
written decision not later than 60 days after the employee files a
request for the hearing.

\(b\) Written decisions provided after a hearing requested under §1.984
will include:

\(1\) A statement of the facts presented to support the nature and
origin of the alleged debt;

\(2\) The hearing official or administrative law judge's analysis,
findings and conclusions concerning as applicable:

\(i\) The employee's or VA's grounds;

\(ii\) The amount and validity of the alleged debt; and

\(iii\) The repayment schedule.

\(c\) The decision in a case where a paper hearing was provided shall be
based upon a review of the written record. The decision in a case where
an oral hearing was provided shall be based upon the hearing and the
written record. (Authority: 5 U.S.C. 5514)

**§1.989 Review of VA records related to the debt.**

\(a\) *Notification by employee.* An employee who intends to inspect or
copy VA records related to the debt as permitted by a notice provided
under §1.983 must send a letter to the office which sent the notice of
the debt stating his or her intention. The letter must be received by
that office within 30 calendar days of the date of the notice.

\(b\) *VA response.* In response to timely notice submitted by the
debtor as described in paragraph (a) of this section, VA will notify the
employee of the location and time when the employee may inspect and copy
records related to the debt. (Authority: 5 U.S.C. 5514)

\[52 FR 1905, Jan. 16, 1987, as amended at 69 FR 62203, Oct. 25, 2004\]

**§1.990 Written agreement to repay debt as alternative to salary
offset.**

\(a\) *Notification by employee.* The employee may propose, in response
to a notice under §1.983, a written agreement to repay the debt as an
alternative to salary offset. Any employee who wishes to do this must
submit a proposed written agreement to repay the debt which is received
by the office which sent the notice of the debt within 30 calendar days
of the date of the notice.

\(b\) *VA response.* In response to timely notice by the debtor as
described in paragraph (a) of this section, VA will notify the employee
whether the employee's proposed written agreement for repayment is
acceptable. It is within VA's discretion to accept a repayment agreement
instead of proceeding by offset. In making this determination, VA will
balance its interest in collecting the debt against the hardship to the
employee. VA will accept a repayment agreement instead of offset only if
the employee is able to establish that offset would result in extreme
hardship. (Authority: 5 U.S.C. 5514)

\[52 FR 1905, Jan. 16, 1987, as amended at 69 FR 62203, Oct. 25, 2004\]

**§1.991 Procedures for salary offset: when deductions may begin.**

\(a\) Deductions to liquidate an employee's debt will be by the method
and in the amount stated in the notice to collect from the employee's
current pay as modified by a written decision issued under §1.982 or
§1.988, or parts 19 and 20 or by written agreement between the employee
and the VA under §1.990.

\(b\) If the employee filed a request for a hearing as provided by
§1.984 before the expiration of the period provided for in that section,
deductions will not begin until after the hearing official or
administrative law judge has provided the employee with a hearing, and
has rendered a final written decision.

\(c\) If the employee failed to file a timely request for a hearing,
deductions will begin on the date specified in the notice of intention
to offset, unless a hearing is granted pursuant to §1.984(b).

\(d\) If an employee retires, resigns, or his or her employment ends
before collection of the amount of the indebtedness is completed, the
remaining indebtedness will be collected according to procedures for
administrative offset (*see* 5 CFR 831.1801 through 831.1808, 31 CFR
901.3, and 38 CFR 1.912).

\[52 FR 1905, Jan. 16, 1987, as amended at 69 FR 62203, Oct. 25, 2004\]

**§1.992 Procedures for salary offset.**

\(a\) *Types of collection.* A debt will be collected in a lump-sum or
in installments. Collection will be in a lumpsum unless the employee is
financially unable to pay in one lump-sum, or if the amount of the debt
exceeds 15 percent of the employee's disposable pay. In these cases,
deduction will be by installments.

\(b\) *Installment deductions.*

\(1\) A debt to be collected in installments will be deducted at
officially established pay intervals from an employee's current pay
account unless the employee and the Secretary agree to alternative
arrangements for repayment. The alternative arrangement must be in
writing and signed by both the employee and Secretary or designee.

\(2\) Installment deductions will be made over a period not greater than
the anticipated period of employment. The size and frequency of
installment deductions will bear a reasonable relation to the size of
the debt and the employee's ability to pay. However, the amount deducted
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. If possible, the installment
payment will be sufficient in size and frequency to liquidate the debt
in three years. Installment payments of less than \$25 per pay period or
\$50 a month will be acceptable only in the most unusual circumstances.

\(c\) Imposition of interest, penalties, and administrative costs.
Interest, penalties, and administrative costs shall be charged in
accordance with 31 CFR 901.9 and 38 CFR 1.915. (Authority: 5 U.S.C.
5514; 38 U.S.C. 501).

\[52 FR 1905, Jan. 16, 1987, as amended at 54 FR 34980, Aug. 23, 1989;
69 FR 62203, Oct. 25, 2004\]

**§1.993 Non-waiver of rights.**

So long as there are not statutory or contractual provisions to the
contrary, an employee's involuntary payment (of all or a portion of a
debt) under these regulations will not be interpreted as a waiver of any
rights that the employee may have under 5 U.S.C. 5514. (Authority: 5
U.S.C. 5514)

**§1.994 Refunds.**

VA will refund promptly to the appropriate individual amounts offset
under these regulations when:

\(a\) A debt is waived or otherwise found not owed the United States
(unless expressly prohibited by statute or regulation); or

\(b\) VA is directed by an administrative or judicial order to refund
amounts deducted from the employee's current pay. (Authority: 5 U.S.C.
5514)

**§1.995 Requesting recovery through centralized administrative
offset.**

\(a\) Under 31 U.S.C. 3716, VA and other creditor agencies must notify
Treasury of all debts over 180 days delinquent so that recovery of such
debts may be made by centralized administrative offset. This includes
those debts that VA and other agencies seek from the pay account of an
employee of another Federal agency via salary offset. Treasury and other
disbursing officials will match payments, including Federal salary
payments, against these debts. Where a match occurs, and all the
requirements for offset have been met, the payment will be offset to
satisfy the debt in whole or part.

\(b\) Prior to submitting a debt to Treasury for the purpose of
collection by offset, including salary offset, VA shall provide written
certification to Treasury that:

\(1\) The debt is past due and legally enforceable in the amount
submitted to Treasury and that VA will ensure that any subsequent
collections are credited to the debt and that Treasury shall be notified
of such;

\(2\) Except in the case of a judgment debt or as otherwise allowed by
law, the debt is referred to Treasury for offset within 10 years after
VA's right of action accrues;

\(3\) VA has complied with the provisions of 31 U.S.C. 3716 and 38 CFR
1.912 and 1.912a including, but not limited to, those provisions
requiring that VA provide the debtor with applicable notices and
opportunities for a review of the debt; and

\(4\) VA has complied with the provisions of 5 U.S.C. 5514 (salary
offset) and 38 CFR 1.980 through 1.994 including, but not limited to,
those provisions requiring that VA provide the debtor with applicable
notices and opportunities for a hearing.

\(c\) Specific procedures for notifying Treasury of debts for purposes
of collection by centralized administrative offset are contained in the
31 CFR 285.7. VA and other creditor agencies may notify Treasury of
debts that have been delinquent for 180 days or less, including debts
that VA and other creditor agencies seek to recover from the pay of an
employee via salary offset. (Authority: 31 U.S.C. 3716; 38 U.S.C. 501).

\[69 FR 62203, Oct. 25, 2004\]

End of Part 1

**Part 2 --- Delegations of Authority**

**Authority**: 5 U.S.C. 302, 552a; 38 U.S.C. 501, 512, 515, 1729, 1729A,

5711; 44 U.S.C. 3702, and as noted in specific sections.

**--- Section Title Index ---**

(*Note*: This index is not part of the *Code of Federal Regulations*. It
was created

by Jonathan Publishing especially for this looseleaf service)

This index is organized differently than those of other Parts because of
the nature of the subject matter. There are three divisions in this
index:

\(1\) Delegations *from*;

\(2\) Delegations *to*:

\(3\) *Subject* of delegation.

Each section is alphabetical. Thus, if you are looking for delegations
from a particular office or position, use the first index. If you are
seeking information about recipients of delegation authority, use the
second index. If you know the subject of the delegation, use the third
index. References are to sections.

**Delegations From**

Under Secretary for Benefits 2.8(b)

Chief Medical Director 2.8(b)

Deputy Secretary 2.8(b)

Director, Office of Data Management and Telecommunications 2.8(b)

Directors---hospitals, domicilaries, and centers 2.8(b)

Directors, Regional Offices 2.8(b)

General Counsel 2.8(b)

Secretary:

Affidavits, oaths, affirmations 2.3

Claims---collection, compromise, settlement, or waiver of 2.6

Collection of civil claims 2.6

Discrimination complaints 2.6

Federal Claims Collection Act 2.6

Federal Medical Care Recovery Act 2.6

Federal Tort Claims Act 2.6

Finance and Information Resources Management, Office of 2.6

Freedom of Information Act 2.6

Insurance 2.6

Investigations, conduct of 2.6

Military Personnel and Civilian Employees' Claim Act 2.6

National Cemetery System 2.6

Philippine Regional Office 2.6

Privacy Act 2.6

Veterans Benefits Administration 2.6

Veterans Health Services and Research Administration 2.6

**Delegations To**

Administrative heads:

Advertising, to order paid 2.4

Collection of civil claims 2.6(d)

Assistant General Counsel:

Certify copies of documents, records, or papers 2.5(a)

Assistant Secretaries, to order paid advertising 2.4

Assistant Secretary for Finance and Information Resources Management
2.6(c)

Associate Director for Operations, Income Verification Match Center:

Subpoenas, to issue 2.2(b)

Board of Contract Appeals (Chairman)

Advertising, paid (to order) 2.4

Certify copies of decisions, orders, or subpoenas 2.5(c)

Discrimination complaints 2.6(j)

Board of Veterans Appeals (Chairman or Vice-Chairman):

Advertising, paid (to order) 2.4

Certify copies of decisions, orders, or subpoenas 2.5(c)

Subpoenas, to issue 2.2(b)

Under Secretary for Benefits 2.6(b)(1)

Chief Medical Director 2.6(a)

Compensation and Pension Service:

Under Secretary for Benefits:

Veterans Benefits Administration, generally 2.6

Deputy Assistant General Counsel:

Certify copies of documents, records, or papers 2.5(a)

Deputy Assistant Secretaries, to order paid advertising 2.4

Deputy General Counsel:

Certify copies of documents, records, or papers 2.5(a)

Subpoenas, to issue 2.2(b)

Director, DVA Regional Office, Philippines 2.6

Director, Income Verification Match Center:

Subpoenas, to issue 2.2(b)

Director, National Cemetery System 2.6(f)

Director, Office of Small and Disadvantaged Business Utilization

To order paid advertising 2.4

Employees, certain:

Administer oaths 2.3

Affidavits 2.3

Subpoenas 2.2

Employment Discrimination Complaint Adjudication, Office of 2.6(i)

**Part 2 --- Delegations of Authority**

**Authority**: 5 U.S.C. 302, 552a; 38 U.S.C. 501, 512, 515, 1729, 1729A,
5711;

44 U.S.C. 3702, and as noted in specific sections.

**§2.1 General provisions.**

In addition to the delegations of authority in this part, numerous
delegations of authority are set forth throughout this title.
(Authority: 38 U.S.C. 512)

\[64 FR 47111, Aug. 30, 1999\]

**Supplement *Highlights* references**: 36(1)

Reserved

**§2.4 Delegation of authority to order paid advertising for use in
recruitment.**

Paid advertisements may be used in recruitment for VA competitive and
excepted service positions. Authority to order such advertisements is
hereby delegated to Administrative Heads, Assistant Secretaries, Other
Key Officials (the General Counsel; the Inspector General; the Chairman,
Board of Veterans' Appeals; the Chairman, Board of Contract Appeals; and
the Director, Office of Small and Disadvantaged Business Utilization),
Deputy Assistant Secretaries, to the deputies of such officials, to the
Deputy Assistant Secretary and Associate Deputy Assistant Secretary for
Human Resources Management, and to field facility Directors. (Authority:
5 U.S.C. 302(b)(2); 44 U.S.C. 3702)

\[32 FR 7127, May 11, 1967, as amended at 49 FR 30692, Aug. 1, 1984; 54
FR 34980, Aug. 23, 1989; 61 FR 20134, May 6, 1996\]

**Supplement *Highlights* reference**: 14(1)

**§2.5 Delegation of authority to certify copies of documents, records,
or papers in Department of Veterans Affairs files.**

\(a\) Persons occupying or acting for the following positions in the
Office of the General Counsel are authorized to certify copies of public
documents, records, or papers belonging to or in the files of the
Department of Veterans Affairs for the purposes of 38 U.S.C. 302:
General Counsel, Deputy General Counsel, Assistant General Counsel,
Deputy Assistant General Counsel, and the Regional Counsel for Puerto
Rico.

\(b\) The person occupying or acting in the position of Chairman of the
Department of Veterans Affairs Board of Contract Appeals is authorized
to certify copies of decisions, orders, subpoenas, and other documents,
records, or papers issued by, belonging to, or in the files of the
Boards for the purposes of 38 U.S.C. 302.

\(c\) The person occupying or acting in the position of Chairman, Board
of Veterans Appeals, is authorized to certify copies of decisions,
orders, subpoenas, and other documents, records, or papers issued by,
belonging to, or in the files of the Board for the purposes of 38 U.S.C.
302. (Authority: 38 U.S.C. 501(a))

\[46 FR 18978, Mar. 27, 1981, as amended at 49 FR 30692, Aug. 1, 1984;
60 FR 48029, Sept. 18, 1995; 61 FR 7216, Feb. 27, 1996\]

**Supplement *Highlights* reference**: 8(1)

**§2.6 Secretary's delegations of authority to certain officials (38
U.S.C. 512).**

Employees occupying or acting in the positions designated below are
delegated authority as indicated:

\(a\) *Veterans Health Administration.* The Under Secretary for Health
is delegated authority:

\(1\) To act on all matters assigned to the Veterans Health
Administration by statute (38 U.S.C. ch. 73) and by regulation, except
such matters as require the personal attention or action of the
Secretary.

\(2\) To revise, exceed, delete, increase, or decrease fees contained in
Department of Veterans Affairs Veterans Health Services and Research
Administration Manual M-1, part I, appendix A (following agreement
therefor as provided in the contract with the intermediary involved), in
an approved State fee schedule, and to add additional fees when found to
be necessary, provided such fees are not in excess of those customarily
charged the general public, in the community concerned, for the same
service.

\(3\) To designate the Deputy Under Secretary for Health, or other
physician of the Veterans Health Administration, and authority is hereby
delegated such designee to perform the functions prescribed in paragraph
(a)(2) of this section.

\(4\) To revise, exceed, delete, increase or decrease dental fees
established in Department of Veterans Affairs Veterans Health Services
and Research Administration Manual M-4, chapter 6, and any amendments
thereto, and to add additional fees when found to be necessary,
provided: such fees are not in excess of those customarily charged the
general public, in the community concerned, for the same service.

\(5\) To designate the Assistant Chief Medical Director for Dentistry,
and authority is hereby delegated such designee, to perform the
functions prescribed in paragraph (a)(4) of this section.

\(6\) To supervise programs for grants to the Republic of the
Philippines and medical care for Commonwealth Army veterans and
Philippine Scouts in Veterans Memorial Medical Center, Manila, pursuant
to the provisions of 38 U.S.C. ch. 17, subch. IV.

\(7\) To designate the Deputy Under Secretary for Health of the Veterans
Health Administration and authority is hereby delegated such designee to
designate a Department of Veterans Affairs full-time physician or
nonmedical Director to serve *as an ex officio member* on advisory
bodies to State Comprehensive Health Planning agencies and to individual
Regional Medical Programs in those areas in which there is located one
or more Department of Veterans Affairs hospitals or other health
facilities, who shall serve on such advisory group as the representative
of the Department of Veterans Affairs health facilities located in that
area.

\(8\) To authorize Directors of Department of Veterans Affairs property
and facilities under the charge and control of the Department of
Veterans Affairs to appoint police officers with the power to enforce
Federal laws and Department of Veterans Affairs regulations, to
investigate violations of those laws and to arrest for crimes committed
on Department of Veterans Affairs property to the full extent provided
by Department policies and procedures. (Authority: 38 U.S.C. 501 and
512.)

\(9\) To develop and establish minimum safety and quality standards for
adaptive equipment provided under chapter 39 of title 38, United States
Code, or to appoint a designee to perform these functions.

\(b\) *Veterans Benefits Administration*.

\(1\) *General.* The Under Secretary for Benefits is delegated authority
to act on all matters assigned to the Veterans Benefits Administration
except as provided in §1.771 of this chapter and to authorize
supervisory or adjudicative personnel within his/her jurisdiction to
perform such functions as may be assigned.

\(2\) *Philippines.* The Director, Department of Veterans Affairs
Regional Office, Manila, Philippines, is delegated authority to exercise
such authorities as are delegated to directors of regional offices in
the United States, which are appropriate to the administration in the
Republic of the Philippines of the laws administered by the Department
of Veterans Affairs.

\(c\) *Office of Management*.

\(1\) The Assistant Secretary for Management (Chief Financial Officer)
is delegated authority to act on all matters assigned to his/her office,
and to authorize supervisory personnel within his/her jurisdiction to
perform such functions as may be assigned. Appropriate written
notification will be furnished other Federal agencies concerning such
authorizations.

\(2\) The Assistant Secretary for Management (Chief Financial Officer)
is delegated authority under 31 U.S.C. 1553(c)(1), to approve, in a
fixed appropriation account to which the period of availability for
obligation has expired, obligational increases related to contract
changes when such transaction will cause cumulative obligational
increase for contract changes during a fiscal year to exceed \$4 million
but not more than \$25 million; for this responsibility the Assistant
Secretary for Management (Chief Financial Officer) shall act as a member
of the Office of the Secretary and shall report to and consult with the
Secretary on these matters.

\(d\) *Assistant Secretary for Management (Chief Financial Officer);
administration heads and staff office directors*. The Assistant
Secretary for Management (Chief Financial Officer) is delegated
authority to take appropriate action (other than provided for in
paragraphs (e)(3) and (e)(4) of this section) in connection with the
collection of civil claims by VA for money or property, as authorized in
§1.900, *et seq*. The Assistant Secretary for Management (Chief
Financial Officer) may redelegate such authority as he/she deems
appropriate to administration heads and staff office directors.
(Authority: 38 U.S.C. 501, 512).

\(e\) *General Counsel.*

\(1\) \[Removed and reserved\]

\(2\) Under the provisions of 38 U.S.C. 515(b), the General Counsel,
Deputy General Counsel, Assistant General Counsel and Regional Counsel
or those authorized to act for them are authorized to consider,
ascertain, adjust, determine, and settle tort claims cognizable
thereunder and to execute an appropriate voucher and other necessary
instruments in connection with the final disposition of such claims.

\(3\) Under the provisions of "The Federal Medical Care Recovery Act,"
42 U.S.C. 2651, *et seq.* (as implemented by part 43, title 28, Code of
Federal Regulations), authority is delegated to the General Counsel,
Deputy General Counsel, Assistant General Counsel (Professional Staff
Group I), Deputy Assistant General Counsel of said staff group, and
Regional Counsels or those authorized to act for them, to collect in
full, compromise, settle, or waive any claim and execute the release
thereof; however, claims in excess of \$100,000 may be compromised,
settled, or waived only with the prior approval of the Department of
Justice.

\(4\) Under the Federal Claims Collection Act of 1966, 31 U.S.C. 3711,
*et seq.,* authority is delegated to the General Counsel, Deputy General
Counsel, Assistant General Counsel, Deputy Assistant General Counsel and
Regional Counsel, or those authorized to act for them, to:

\(i\) Make appropriate determinations with respect to the litigative
probabilities of a claim (§1.932 of this chapter), the legal merits of a
claim (§1.942(e) of this chapter), and any other legal considerations of
a claim.

\(ii\) Collect in full a claim involving damage to or loss of government
property under the jurisdiction of the Department of Veterans Affairs
resulting from negligence or other legal wrong of a person (other than
an employee of the Government while acting within the scope of his or
her employment) and to compromise, suspend, or terminate any such claim
not exceeding \$100,000.

\(iii\) Collect a claim in full from an individual or legal entity who
is liable for the cost of hospital, medical, surgical, or dental care
and treatment of a person, and to compromise, suspend, or terminate any
such claim not exceeding \$100,000. (Authority: 31 U.S.C. 3711(a)(2); 38
U.S.C. 501, 512)

\(iv\) The delegations of authority set forth in paragraphs (e)(4)(ii)
and (iii) of this section do not apply to the handling of any claim as
to which there is an indication of fraud, the presentation of a false
claim or misrepresentation on the part of the debtor or any other party
having an interest in the claim, or to any claim based in whole or in
part on conduct in violation of the antitrust laws. Such cases will be
considered by the General Counsel, who will make the determination in
all instances as to whether the case warrants referral to the Department
of Justice. The delegations of authority are applicable to those claims
where the Department of Justice determines that action based upon the
alleged fraud, false claim, or misrepresentation is not warranted.

\(5\) Pursuant to the provisions of the Military Personnel and Civilian
Employees' Claim Act of 1964, 31 U.S.C. 3721, as amended, the General
Counsel, Deputy General Counsel, Assistant General Counsel (Professional
Staff Group III), Deputy Assistant General Counsel of said staff group,
and Regional Counsel or those authorized to act for them are authorized
to settle and pay a claim for not more than \$40,000 made by a civilian
officer or employee of the Department of Veterans Affairs for damage to,
or loss of, personal property incident to his or her service. (Pub. L.
97-226)

\(6\) Under the provisions of 38 U.S.C. 7316(e), authority is delegated
to the General Counsel, Deputy General Counsel, and the Assistant
General Counsel (Professional Staff Group I) to hold harmless or provide
liability insurance for any person to whom the immunity provisions of
section 7316 apply, for damage for personal injury or death, or for
property damage, negligently caused by such person while furnishing
medical care or treatment in the exercise of his or her duties in or for
the Veterans Health Administration, if such person is assigned to a
foreign country, detailed to State or political division thereof, or is
acting under any other circumstances which would preclude the remedies
of an injured third person against the United States, provided by
sections 1346(b) and 2672 of title 28, United States Code, for such
damage or injury.

\(7\) The General Counsel, Deputy General Counsel, and those authorized
to act for them, are authorized to conduct investigations, examine
witnesses, take affidavits, administer oaths and affirmations, and
certify copies of public or private documents on all matters within the
jurisdiction of the General Counsel. Pursuant to the provisions of
§2.2(c), the General Counsel, Deputy General Counsel, and those
authorized to act for them, are authorized to countersign VA Form 4505.

\(8\) The General Counsel, or the Deputy General Counsel acting as or
for the General Counsel, is authorized to designate, in accordance with
established standards, those legal opinions of the General Counsel which
will be considered precedent opinions involving veterans' benefits under
laws administered by the Department of Veterans Affairs. (Authority: 38
U.S.C. 501, 512)

\(9\) Under the provisions of 38 U.S.C. 1729(c)(1), authority is
delegated to the General Counsel, Deputy General Counsel, Assistant
General Counsel (Professional Staff Group I), Deputy Assistant General
Counsel of said staff group, and Regional Counsel, or those authorized
to act for them, to collect in full, compromise, settle, or waive any
claim and execute the release thereof; however, claims in excess of
\$100,000 may only be compromised, settled, or waived with the prior
approval of the General Counsel, Deputy General Counsel, Assistant
General Counsel (Professional Staff Group I), or Deputy Assistant
General Counsel of said staff group, or those authorized to act for
them. (Authority: 38 U.S.C. 501, 512, 1729(c)(1))

\(10\) The General Counsel and the Deputy General Counsel are authorized
to make final Departmental decisions on appeals under the Freedom of
Information Act, the Privacy Act, 38 U.S.C. 5701 and 5705. (Authority:
38 U.S.C. 512)

\(11\) All authority delegated in this paragraph to Regional Counsels
will be exercised by them under the supervision of and in accordance
with instructions issued by the General Counsel.

\(f\) *National Cemetery Administration.* Under Secretary for Memorial
Affairs is delegated authority:

\(1\) To act on all matters assigned to the National Cemetery
Administration by statute (38 U.S.C. chapter 24) and by regulation
except where specifically requiring the personal attention or action of
the Secretary and to authorize supervisory personnel within the
jurisdiction of the Under Secretary for Memorial Affairs to perform such
functions as may be assigned.

\(2\) To designate, as deemed necessary, Superintendents of National
Cemeteries as special investigators under 38 U.S.C. 901, however, such
law enforcement authority is limited to enforcement of rules and
regulations governing conduct on property under the charge and control
of the Department of Veterans Affairs, as those rules and regulations
apply to the cemetery over which the individual Superintendent exercises
control and jurisdiction. Such designation will not authorize the
carrying of firearms by any Superintendent.

\(3\) To accept donations of a minor nature, such as, individual trees
for planting in burial areas and privately purchased grave markers.

\(4\) To name features in national cemeteries, such as, roads, walks,
and special structures.

\(5\) To establish policies and specifications for inscriptions on
Government headstones, markers, and private monuments. (Authority: 38
U.S.C. 501(a), 512, 3703(c)(1), 3719(f))

\(g\) *Inspector General.*

\(1\) The Secretary delegates to the Inspector General, the authority,
as head of the Department of Veterans Affairs, to make written requests
under the Privacy Act of 1974, 5 U.S.C. 552a(b)(7), for the transfer of
records or copies of records maintained by other agencies which are
necessary to carry out an authorized law enforcement activity of the
Office of Inspector General. This delegation is made pursuant to 38
U.S.C. 512. The Inspector General may redelegate the foregoing authority
within the Office of Inspector General, but the delegation may only be
to an official of sufficient rank to ensure that the request for the
records has been the subject of a high level evaluation of the need for
the information.

\(2\) The Inspector General delegates the authority under the Inspector
General Act of 1978, and redelegates the authority under paragraph (a)
of this section, to request Privacy Act protected records from Federal
agencies pursuant to subsection (b)(7) of the Privacy Act to each of the
following Office of Inspector General officials:

\(i\) Deputy Inspector General,

\(ii\) Assistant Inspector General for Investigations,

\(iii\) Deputy Assistant Inspector General for Investigations,

\(iv\) Chief of Operations, and

\(v\) Special Agents in Charge of Field Offices of Investigations.

These officials may not redelegate this authority. (Authority: 5 U.S.C.
552a)

\(h\) *Delegations to Office Resolution Management Officials (ORM).*

\(1\) The Deputy Assistant Secretary for Resolution Management is
delegated authority to supervise and control the operation of the
administrative EEO Discrimination Complaint Processing System within the
Department.

\(2\) The Deputy Assistant Secretary for Resolution Management, the
Chief Operating Officer, and all Regional EEO Officers/Field Managers
are delegated authority to make procedural agency decisions to either
accept or dismiss, in whole or in part, EEO discrimination complaints
based upon race, color, national origin, sex, religion, age, disability,
or reprisal filed by employees, former employees, or applicants for
employment.

\(3\) The Deputy Assistant Secretary for Resolution Management, the
Chief Operating Officer, and the Chief, Policy and Compliance are
delegated authority to make agency decisions on all breach of settlement
claims raised by employees, former employees, and applicants for
employment.

\(4\) The Deputy Assistant Secretary for Resolution Management, the
Chief Operating Officer, and the Chief, Policy and Compliance are
delegated authority to consider and resolve all claims raised by
employees, former employees, and applicants for employment that allege
dissatisfaction with the processing of a previously filed EEO
discrimination complaint.

\(5\) The Deputy Assistant Secretary for Resolution Management, the
Chief Operating Officer, and the Chief, Policy and Compliance are
delegated authority to monitor compliance by Department organizational
components with orders and decisions of the OEDCA and the EEOC.

\(i\) *Delegations to officials of the Office of Employment
Discrimination Complaint Adjudication (OEDCA).*

\(1\) The Director and Associate Director, OEDCA, are delegated
authority to make procedural decisions to dismiss, in whole or in part,
any EEO discrimination complaint filed by any employee, former employee,
or applicant for employment that may be pending before OEDCA, where
administrative complaint processing efficiency may be best served by
doing so.

\(2\) The Director and Associate Director, OEDCA, are delegated
authority to dismiss, in whole or in part any EEO discrimination
complaint based upon race, color, religion, sex, national origin, age,
disability, or reprisal filed by any ORM employee, former employee, or
applicant for employment.

\(3\) The Director and Associate Director, OEDCA, are delegated
authority to make the agency decision on all breach of settlement claims
raised by ORM employees, former employees, and applicants for
employment.

\(4\) The Director and Associate Director, OEDCA, are delegated
authority to consider and resolve all claims raised by ORM employees,
former employees, and applicants for employment that allege
dissatisfaction with the processing of a previously filed EEO
discrimination complaint.

\(5\) The Director and Associate Director, OEDCA, are delegated
authority to make procedural agency decisions to either accept or
dismiss, in whole or in part, EEO discrimination complaints filed by
employees, former employees, or applicants for employment where the ORM
must recuse itself from a case due to an actual, apparent, or potential
conflict of interest.

\(j\) *Delegation to the Chairman, Board of Contract Appeals*. In cases
where OEDCA has recused itself from a case due to an actual, apparent,
or potential conflict of interest, the Chairman, Board of Contract
Appeals, is delegated authority to make procedural agency decisions to
dismiss, in whole or in part, EEO discrimination complaints filed by
agency employees, former employees, and applicants for employment; to
make substantive final agency decisions where complainants do not
request an EEOC hearing; and to take agency action following a decision
by an EEOC Administrative Judge.

\(k\) *Processing complaints involving certain officials*. A complaint
alleging that the Secretary or the Deputy Secretary personally made a
decision directly related to matters in dispute, or are otherwise
personally involved in such matters, will be referred for procedural
acceptability review, investigation, and substantive decisionmaking to
another Federal agency (e.g., The Department of Justice) pursuant to a
cost reimbursement agreement. Referral will not be made when the action
complained of relates merely to ministerial involvement in such matters
(e.g., ministerial approval of selection recommendations submitted to
the Secretary by the Under Secretary for Health, the Under Secretary for
Benefits, the Under Secretary for Memorial Affairs, assistant
secretaries, or staff office heads).

\(l\) *Assistant to the Secretary, Office of Regulation Policy and
Management*. The Assistant to the Secretary for Regulation Policy and
Management (ASRPM) is delegated authority:

\(1\) To act on all matters assigned to the Office of Regulation Policy
and Management, except such matters as require the personal attention or
action of the Secretary or the Secretary's Regulatory Policy Council.

\(2\) To manage and coordinate the Department's rulemaking activities,
including the revision and reorganization of regulations.

\(3\) To serve as the Regulatory Policy Officer for the Department's
rulemaking activities in accordance with Executive Order 12866.
(Authority: 38 U.S.C. 501, 512)

\[25 FR 11095, Nov. 23, 1960, as amended at 58 FR 32442, June 10, 1993;
58 FR 39152, July 22, 1993; 61 FR 7216, Feb. 27, 1996; 61 FR 26107, May
24, 1996; 61 FR 27784, June 3, 1996; 61 FR 56449, Nov. 1, 1996; 63 FR
11122, Mar. 6, 1998; 64 FR 30244, June 7, 1999; 64 FR 47111, Aug. 30,
1999; 66 FR 44053, Aug. 22, 2001; 67 FR 3434, Jan. 24, 2002; 68 FR
25504, May 13, 2003; 69 FR 62203, Oct. 25, 2004\]

**Editorial note:** For *Federal Register* citations affecting §2.6, see
the List of CFR Sections Affected in the *Finding Aids* section of the
*Code of Federal Regulations*.

**Supplement *Highlights* references**: 3(3, 5, 6), 15(2, 5), 18(1),
26(2), 34(2), 36(1), 47(2), 56(1), 66(1).

**§2.7 Delegation of authority to provide relief on account of
administrative error.**

\(a\) Section 503(a) of title 38 U.S.C., provides that if the Secretary
determines that benefits administered by the Department of Veterans
Affairs have not been provided by reason of administrative error on the
part of the Federal Government or any of its employees, the Secretary is
authorized to provide such relief on account of such error as the
Secretary determines equitable, including the payment of moneys to any
person whom he determines equitably entitled thereto.

\(b\) Section 503(b) of title 38 U.S.C., provides that if the Secretary
determines that any veteran, surviving spouse, child of a veteran, or
other person, has suffered loss, as a consequence of reliance upon a
determination by the Department of Veterans Affairs of eligibility or
entitlement to benefits, without knowledge that it was erroneously made,
the Secretary is authorized to provide such relief as the Secretary
determines equitable, including the payment of moneys to any person
equitably entitled thereto. The Secretary is also required to submit an
annual report to the Congress, containing a brief summary of each
recommendation for relief and its disposition. Preparation of the report
shall be the responsibility of the General Counsel.

\(c\) The authority to grant the equitable relief, referred to in
paragraphs (a) and (b) of this section, has not been delegated and is
reserved to the Secretary. Recommendation for the correction of
administrative error and for appropriate equitable relief therefrom will
be submitted to the Secretary, through the General Counsel. Such
recommendation may be initiated by the head of the administration having
responsibility for the benefit, or of any concerned staff office, or by
the Chairman, Board of Veterans Appeals. When a recommendation for
relief under paragraph (a) or (b) of this section is initiated by the
head of a staff office, or the Chairman, Board of Veterans Appeals, the
views of the head of the administration having responsibility for the
benefit will be obtained and transmitted with the recommendation of the
initiating office. (Authority: 38 U.S.C. 503, 512)

\[37 FR 22864, Oct. 26, 1972, as amended at 49 FR 30693, Aug. 1, 1984;
54 FR 34981, Aug. 23, 1989; 68 FR 25504, May 13, 2003\]