U n i t e d S t a t e s G o v e r n m e n t

M e m o r a n d u m

FORM G-ll5f(t-92)

R a i l r o a d R e t i r e m e n t B o a r d

L-2001-09 

July 18,2001

TO Thomas M. M cCarthy 

D ebt Recovery M anager

FROM Steven A. Bartl 

G eneral Coun

SUBJECT : O verpaym ent Recovery Issue - A ssessm ent of Interest

This is in response to your request for a legal opinion with re s p e c t to a 

reco m m en d atio n m a d e in a draft audit report p re p a re d by th e Office of 

Inspector G eneral (OIG). The OIG questions the p ra c tic e of th e D ebt 

R ecovery Division (DRD) regarding the assessm ent of interest in th e c a s e 

of a n ov erp ay m en t. Specifically, DRD currently assesses interest on th e 

outstanding b a la n c e of a n overpaym ent from the d a te th a t a d e b to r is 

notified th a t his/her request for waiver is denied. If th e d e b to r files a timely 

a p p e a l of DRD’s denial of w aiver of recovery with th e Bureau of Hearings 

a n d A ppeals, DRD rem oves any interest assessed from th e den ial d a te .

The OIG reco m m en d s th at DRD c h a n g e this p rac tic e a n d not assess 

interest until the expiration of the 60-day period for requesting a n a p p e a l 

of th e denial decision regardless of w hether or not a n a p p e a l is filed with 

Hearings a n d A ppeals.

The draft au d it report notes that section 200.7(b)(2) of th e B oard's 

regulations provides that:

. . . interest shall a c c ru e from the d a te that a den ial of w aiver 

of recovery is m ailed or hand-delivered to th e d e b to r or, if 

w aiver has not b e e n requested, upon the expiration of th e 

tim e within which to request w aiv er. . .
For th e reasons explained below , it is our opinion th a t DRD's current 

p rac tic e is correct. Section 200.7 of the Board's regulations provides for 

th e assessm ent or w aiver of interest, penalties, a n d adm inistrative costs 

with resp ec t to collection of certain debts. Section 200.7(g)(1) provides 

th at th e Board shall w aive the collection of interest u n d er certain 

circum stances, including, w hen, in any c a se w here a decision with 

resp ect to w avier of recovery of an overpaym ent m ust b e m a d e :

(B) The d e b t is paid within thirty days after th e d a te on w hich 

notice w as m ailed to the d eb to r th at his or her req u est for 

w aiver of recovery has b e e n wholly or partially d e n ie d if th e 

d e b to r req u ested w aiver of recovery within th e p rescrib ed tim e 

limit: how ever, regardless of w hen the d e b t is p aid , no interest 

m ay b e c h a rg e d for any period prior to th e e n d of th e period 

within which the d eb to r m ay request w aiver of reco v ery or, if 

such request is m a d e , for any period prior to th e d a te on w hich 

notice w as m ailed to th e d eb to r th at his or her req u est for 

w aiver of recovery has b e e n wholly or partially d e n ie d . 20 CFR 

200.7(g) (1) (I) (B).

The first portion of section 200.7(g)(l)(ii)(B) q u o ted a b o v e m akes it c le a r 

th at th e Board's regulations th at prohibit assessing interest prior to th e 

expiration of th e period to request w aiver of recovery pertain only to th e 

initial period for requesting waiver. O n ce th at period has expired, interest 

acc ru e s. Specifically, w hen a d e b to r exercises h er/h er right to req u est 

w aiver of recovery upon receip t of a notice of o v erp ay m en t, no interest is 

c h a rg e d until a decision is issued.

M PD adabo:cm w

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