[Federal Register Volume 65, Number 116 (Thursday, June 15, 2000)]
[Rules and Regulations]
[Pages 37485-37493]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-15173]



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NATIONAL FOUNDATION ON THE ARTS AND THE HUMANITIES

45 CFR Part 1150

RIN 3135-AA01


Collection of Claims

AGENCY: National Endowment for the Arts.

ACTION: Interim rule with request for comments.

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SUMMARY: The National Endowment for the Arts (Endowment) is issuing 
interim regulations governing the collection of debts owed to it and 
other Federal agencies. These regulations describe actions that the 
Endowment may take to collect such debts. These regulations also 
provide that the Endowment will enter into a cross-servicing agreement 
with the U.S. Department of the Treasury (Treasury) under which the 
Treasury will take authorized action to collect amounts owed to the 
Endowment. The Endowment requests comments on these regulations.

DATES: These regulations are effective on June 15, 2000. Written 
comments on these regulations must be received by July 17, 2000.

ADDRESSES: Interested persons should submit written comments concerning 
these regulations to Hope O'Keeffe; Acting General Counsel; National 
Endowment for the Arts; 1100 Pennsylvania Avenue, N.W.; Washington, DC 
20506. Written comments may also be sent to Ms. O'Keeffe by telefax at 
(202) 682-5572 or by electronic mail at <a href="/cdn-cgi/l/email-protection#d0bfbbb5b5b6b6b5b890b1a2a4a3feb5beb4bfa7feb7bfa6"><span class="__cf_email__" data-cfemail="1c737779797a7a79745c7d6e686f32797278736b327b736a">[email protected]</span></a>.

FOR FURTHER INFORMATION CONTACT: Hope O'Keeffe, (202) 682-5418.

SUPPLEMENTARY INFORMATION: Under these regulations, the Endowment may 
collect debts owed to it through a number of actions, including the 
following: making offsets against amounts, including salary payments, 
owed to the debtor by the Endowment or other Federal agencies; making 
offsets against tax refunds owed to the debtor by the Internal Revenue 
Service (IRS); referring the debt to a private collection contractor; 
and referring the matter to the U.S. Department of Justice (DOJ) for 
initiation of a judicial proceeding against the debtor. In addition, 
these regulations describe the actions necessary for the Endowment to 
take collection actions on behalf of another Federal agency. These 
actions could include making offsets against the salary of an Endowment 
employee or any other amounts owed by the Endowment to the debtor. 
These regulations also provide that the Endowment will enter into a 
cross-servicing agreement with the Treasury to take all of the above-
listed actions to collect debts for the Endowment.
    These regulations implement the requirements of the Federal Claims 
Collection Act of 1966 (Public Law 89-508, 80 Stat. 308) as amended by 
the Debt Collection Act of 1982 (Public Law 97-365, 96 Stat. 1749) and 
the Debt Collection Improvement Act of 1996 (Public Law 104-134, 110 
Stat. 1321). These regulations are issued in conformity with the 
Federal Claims Collection Standards (4 CFR Chapter II). Revised Federal 
Claims Collection Standards have been proposed jointly by the DOJ and 
the Treasury. The Endowment will amend these regulations, as necessary, 
after the revised Federal Claims Collection Standards have been issued 
as final regulations. The regulations in this part are also issued in 
conformity with the guidelines of the Office of Personnel Management 
(OPM) on offsets against Federal employee salaries (5 CFR part 550, 
subpart K).

Effective Date and Request for Comments

    The Endowment has determined that these interim regulations pertain 
to agency practice and procedure and are interpretative in nature. The 
procedures contained in these regulations for salary offset, tax refund 
offset, and administrative offset are mandated by law and by 
regulations promulgated by OPM, the IRS, and jointly by the DOJ and the 
Treasury. Therefore, under 5 U.S.C. 553 (b)-(d), these regulations are 
not subject to the Administrative Procedure Act (APA) and the 
requirements of the APA for a notice and comment period and a delayed 
effective date. Nonetheless, the Endowment requests comments on these 
regulations from the public and will take all comments into 
consideration before promulgating the final regulations.

Regulatory Impact

Executive Order 12866, Regulatory Planning and Review

    These interim regulations are not classified as a significant rule 
under Executive Order 12866 because they will not result in (1) An 
annual effect on the economy of $100 million or more; (2) a major 
increase in costs or prices for consumers, individual industries, 
geographic regions, or Federal, State, or local government agencies; or 
(3) significant adverse effects on competition, employment, investment, 
productivity, innovation, or the ability of United States-based 
enterprises to compete with foreign-based enterprises in domestic or 
foreign markets. Accordingly, no regulatory impact assessment is 
required, and these regulations have not been submitted to the Office 
of Management and Budget (OMB) for review.

Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires that 
a regulation that has a significant economic impact on a substantial 
number of small entities, small businesses, or small organizations 
include an initial regulatory flexibility analysis describing the 
regulation's impact on small entities. Such an analysis need not be 
undertaken if the agency certifies, under 5 U.S.C. 605(b), that the 
regulation will not have a significant economic impact on a substantial 
number of small entities. The Endowment has considered the impact of 
these interim regulations under the Regulatory Flexibility Act and 
certifies that these interim regulations are not likely to have a 
significant economic impact on a substantial number of small entities.

Paperwork Reduction Act

    The Endowment certifies that these regulations do not require 
additional reporting under the criteria of the Paperwork Reduction Act 
(44 U.S.C. 3501 et seq).

Unfunded Mandates Reform Act of 1995

    Assessment statements in accordance with the Unfunded Mandates 
Reform Act of 1995 (2 U.S.C. 1531 et seq.) are not required for 
regulations that incorporate requirements specifically set forth in 
law. As explained in the preamble, these regulations implement specific 
statutory requirements. In addition, these regulations do not include a 
Federal mandate that may result in the expenditure by the private 
sector or by State, local, and tribal governments (in the aggregate) of 
$100 million or more in any one year. Therefore, a statement under 2 
U.S.C. 1532 is not required.

Submission to Congress and the General Accounting Office

    Under 5 U.S.C. 801(a)(1)(A), the Endowment submitted a report 
containing these interim regulations and other required information to 
the U.S. Senate, the U.S. House of

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Representatives, and the Comptroller General of the United States 
before publication of these regulations in today's Federal Register. 
These regulations are not a ``major rule'' as defined at 5 U.S.C. 
804(2).

List of Subjects in 45 CFR part 1150

    Administrative practice and procedure, Claims, Debt collection, 
Government employees, Grants administration, Income taxes, Penalties, 
Wages.
    For the reasons set out in this preamble, the Endowment amends 
Title 45, Code of Federal Regulations, chapter X by revising part 1150 
to read as follows:

PART 1150--COLLECTION OF CLAIMS

Subpart A--General Provisions
Sec.
1150.1   What definitions apply to the regulations in this part?
1150.2   What is the Endowment's authority to issue these 
regulations?
1150.3   What other regulations also apply to the Endowment's debt 
collection efforts?
1150.4   What types of claims are excluded from these regulations?
1150.5   What notice will I be provided if I owe a debt to the 
Endowment?
1150.6   What opportunity do I have to obtain a review of my debt 
within the Endowment?
1150.7   What interest, penalty charges, and administrative costs 
will I have to pay on a debt owed to the Endowment?
1150.8   Will failure to pay my debt affect my eligibility for 
Endowment programs?
1150.9   How can I resolve the Endowment's claim through a voluntary 
repayment agreement?
1150.10   What is the extent of the Chairperson's authority to 
compromise debts owed to the Endowment, or to suspend or terminate 
collection action on such debts?
1150.11   How does subdividing or joining debts owed to the 
Endowment affect the Chairperson's compromise, suspension, or 
termination authority?
1150.12   How will the Endowment use credit reporting agencies to 
collect its claims?
1150.13   How will the Endowment contract for collection services?
1150.14   When will the Endowment refer claims to the DOJ?
1150.15   Will the Endowment use a cross-servicing agreement with 
the Treasury to collect its claims?
1150.16   May I use the Endowment's failure to comply with these 
regulations as a defense?
Subpart B--Salary Offset
1150.20   What debts are included or excluded from coverage of these 
regulations on salary offset?
1150.21   May I ask the Endowment to waive an overpayment that 
otherwise would be collected by offsetting my salary as a Federal 
employee?
1150.22   What are the Endowment's procedures for salary offset?
1150.23   How will the Endowment coordinate salary offsets with 
other agencies?
1150.24   Under what conditions will the Endowment make a refund of 
amounts collected by salary offset?
1150.25   Will the collection of a claim by salary offset act as a 
waiver of my rights to dispute the claimed debt?
Subpart C--Tax Refund Offset
1150.30   Which debts can the Endowment refer to the Treasury for 
collection by offsetting tax refunds?
1150.31   What are the Endowment's procedures for collecting debts 
by tax refund offset?
Subpart D--Administrative Offset
1150.40   Under what circumstances will the Endowment collect 
amounts that I owe to the Endowment (or some other Federal agency) 
by offsetting the debt against payments that the Endowment (or some 
other Federal agency) owes me?
1150.41   How will the Endowment request that my debt to the 
Endowment be collected by offset against some payment that another 
Federal agency owes me?
1150.42   What procedures will the Endowment use to collect amounts 
I owe to a Federal agency by offsetting a payment that the Endowment 
would otherwise make to me?
1150.43   When may the Endowment make an offset in an expedited 
manner?
1150.44   Can a judgment I have obtained against the United States 
be used to satisfy a debt that I owe to the Endowment?

    Authority: 31 U.S.C. 3711, 3716-3718, 3720A; 5 U.S.C. 5514

Subpart A--General Provisions


Sec. 1150.1  What definitions apply to the regulations in this part?

    As used in this part:
    (a) Administrative offset means the withholding of funds payable by 
the United States (including funds payable by the United States on 
behalf of a State government) to any person, or the withholding of 
funds held by the United States for any person, in order to satisfy a 
debt owed to the United States.
    (b) Agency means a department, agency, court, court administrative 
office, or instrumentality in the executive, judicial, or legislative 
branch of government, including a government corporation.
    (c) Chairperson means the Chairperson of the Endowment, or his or 
her designee.
    (d) Creditor agency means the agency to which the debt is owed.
    (e) Day means calendar day. To count days, include the last day of 
the period unless it is a Saturday, a Sunday, or a Federal legal 
holiday.
    (f) Debt and claim are deemed synonymous and interchangeable. These 
terms mean money owed by a person to the United States for any reason, 
including loans made or guaranteed by the United States, fees, leases, 
rents, royalties, services, sales of real or personal property, 
overpayments, damages, interests, penalties, fines, forfeitures, and 
all other similar sources. For the purpose of administrative offset 
under 31 U.S.C. 3716 and subpart D of these regulations, the terms debt 
and claim also include money or property owed by a person to a State, 
the District of Columbia, American Samoa, Guam, the United States 
Virgin Islands, the Commonwealth of the Northern Marina Islands, or the 
Commonwealth of Puerto Rico.
    (g) Debtor means a person who owes a debt. Uses of the terms ``I,'' 
``you,'' ``me,'' and similar references to the reader of the 
regulations in this part are meant to apply to debtors as defined in 
this paragraph (g).
    (h) Delinquent debt means a debt that has not been paid within the 
time limit prescribed by the Endowment.
    (i) Disposable pay means the part of an employee's pay that remains 
after deductions that are required to be withheld by law have been 
made.
    (j) Employee means a current employee of an agency, including a 
current member of the Armed Forces or Reserve of the Armed Forces of 
the United States.
    (k) Endowment means the National Endowment for the Arts.
    (l) Federal Claims Collection Standards means the standards 
currently published at 4 CFR Chapter II. The DOJ and the Treasury have 
proposed a revision that would move the Federal Claims Collection 
Standards to 31 CFR parts 900-904. The Endowment will amend these 
regulations, as necessary, after the revised Federal Claims Collection 
Standards have been issued as final regulations.
    (m) Paying agency means the agency that employs the individual who 
owes a debt to the United States. In some cases, the Endowment may be 
both the creditor agency and the paying agency.
    (n) Payroll office means the office in the paying agency that is 
primarily responsible for payroll records and the coordination of pay 
matters with the appropriate personnel office.
    (o) Person includes a natural person or persons, profit or non-
profit corporation, partnership, association, trust, estate, 
consortium, state or local government, or other entity that is capable 
of owing a debt to the United

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States; however, agencies of the United States are excluded.
    (p) Private collection contractor means a private debt collector 
under contract with an agency to collect a non-tax debt owed to the 
United States.
    (q) Salary offset means a payroll procedure 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.
    (r) Tax refund offset means the reduction of a tax refund by the 
amount of a past-due legally enforceable debt owed to the Endowment or 
any other Federal agency.


Sec. 1150.2  What is the Endowment's authority to issue these 
regulations?

    The Endowment is issuing the regulations in this part under 31 
U.S.C. 3711, 3716-3718, and 3720A. These sections reflect the Federal 
Claims Collection Act of 1966, as amended by the Debt Collection Act of 
1982 and the Debt Collection Improvement Act of 1996. The Endowment is 
also issuing the regulations in this part in conformity with the 
Federal Claims Collection Standards, which prescribe standards for the 
handling of the Federal government's claims for money or property. The 
Endowment is further issuing the regulations in this part in conformity 
with 5 U.S.C. 5514 and the salary offset regulations published by the 
OPM at 5 CFR part 550, subpart K.


Sec. 1150.3  What other regulations also apply to the Endowment's debt 
collection efforts?

    All provisions of the Federal Claims Collection Standards also 
apply to the regulations in this part. This part supplements the 
Federal Claims Collection Standards by prescribing procedures and 
directives necessary and appropriate for operations of the Endowment.


Sec. 1150.4  What types of claims are excluded from these regulations?

    (a) The regulations in this part do not apply to any claim as to 
which there is an indication of fraud or misrepresentation, as 
described in the Federal Claims Collection Standards, unless returned 
to the Endowment by the DOJ for handling.
    (b) The regulations in this subpart, subpart B, and subpart D do 
not apply to debts arising 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.); and the tariff laws of the United States.
    (c) Remedies and procedures described in this part may be 
authorized with respect to claims that are exempt from the Debt 
Collection Act of 1982 and the Debt Collection Improvement Act of 1996, 
to the extent that they are authorized under some other statute or the 
common law.


Sec. 1150.5  What notice will I be provided if I owe a debt to the 
Endowment?

    (a) When the Chairperson determines that you owe a debt to the 
Endowment, he or she will send you a written notice (Notice). The 
Notice will be hand-delivered or sent to you by certified mail, return 
receipt requested at the most current address known to the Endowment. 
The Notice will inform you of the following:
    (1) The amount, nature, and basis of the debt;
    (2) That a designated Endowment official has reviewed the claim and 
determined that it is valid;
    (3) That payment of the debt is due as of the date of the Notice, 
and that the debt will be considered delinquent if you do not pay it 
within 30 days of the date of the Notice;
    (4) The Endowment's policy concerning interest, penalty charges, 
and administrative costs (see Sec. 1150.7), including a statement that 
such assessments must be made against you unless excused in accordance 
with the Federal Claims Collection Standards and this part;
    (5) That you have the right to inspect and copy Endowment records 
pertaining to your debt, or to receive copies of those records if 
personal inspection is impractical;
    (6) That you have the opportunity to enter into an agreement, in 
writing and signed by both you and the Chairperson, for voluntary 
repayment of the debt (see Sec. 1150.9); and
    (7) The address, telephone number, and name of the Endowment 
official available to discuss the debt.
    (b) Notice of possible collection actions. The Notice provided by 
the Chairperson under paragraph (a) of this section will also advise 
you that, if your debt (including any interest, penalty charges, and 
administrative costs) is not paid within 60 days of the date of the 
Notice, or you do not enter into a voluntary repayment agreement within 
60 days of the date of the Notice, then the Endowment may enforce 
collection of the debt by any or all of the following methods:
    (1) By referral to a credit reporting agency (see Sec. 1150.12), a 
collection agency (see Sec. 1150.13), or the DOJ (see Sec. 1150.14);
    (2) By transferring any debt delinquent for more than 180 days to 
the Treasury for collection under a cross-servicing agreement with the 
Treasury (see Sec. 1150.15);
    (3) If you are an Endowment employee, by deducting money from your 
disposable pay account (in the amount and with the frequency, 
approximate beginning date, and duration specified by the Endowment) 
until the debt (and all accumulated interest, penalty charges, and 
administrative costs) is paid in full (see subpart B). Such proceedings 
are governed by 5 U.S.C. 5514;
    (4) If you are an employee of a Federal agency other than the 
Endowment, by initiating certification procedures to implement a salary 
offset by that Federal agency (see subpart B). Such proceedings are 
governed by 5 U.S.C. 5514;
    (5) By referring the debt to the Treasury for offset against any 
refund of overpayment of tax (see subpart C);
    (6) By administrative offset (see subpart D); or
    (7) By liquidation of security or collateral. When the Endowment 
holds security or collateral that may be liquidated and the proceeds 
applied to your debt through the exercise of a power of sale in the 
security instrument or a nonjudicial foreclosure, such procedures may 
be followed unless the cost of disposing of the collateral will be 
disproportionate to its value or special circumstances require judicial 
foreclosure.
    (c) Notice of opportunity for review. The Notice provided by the 
Chairperson under paragraph (a) of this section will also advise you of 
the opportunity to obtain a review within the Endowment concerning the 
existence or amount of the debt, the proposed schedule for offset of 
Federal employee salary payments, or whether the debt is past due or 
legally enforceable. The Notice shall also advise you of the following:
    (1) The name, address, and telephone number of an officer or 
employee of the Endowment whom you may contact concerning procedures 
for requesting a review;
    (2) The method and time period for requesting a review;
    (3) That the filing of a request for a review on or before the 60th 
day following the date of the Notice will stay the commencement of 
collection proceedings;
    (4) The name and address of the officer or employee of the 
Endowment to whom you should send the request for a review;
    (5) That a final decision on the review (if one is requested) will 
be issued at the earliest practical date, but not later than 60 days 
after the receipt of the request for a review, unless you request, and 
the review official grants, a delay in the proceedings;

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    (6) That any knowingly false or frivolous statements, 
representations, or evidence may subject you to:
    (i) Disciplinary procedures appropriate under 5 U.S.C. Chapter 75, 
5 CFR part 752, or any other applicable statute or regulations;
    (ii) Penalties under the False Claims Act (31 U.S.C. 3729-3733) or 
any other applicable statutory authority; and
    (iii) Criminal penalties under 18 U.S.C. 286, 287, 1001, and 1002, 
or any other applicable statutory authority;
    (7) Any other rights available to you to dispute the validity of 
the debt or to have recovery of the debt waived, or remedies available 
to you under statutes or regulations governing the program for which 
the collection is being made; and
    (8) That unless there are applicable contractual or statutory 
provisions to the contrary, amounts paid on or deducted for the debt 
that are later waived or found not owed will be promptly refunded to 
you.
    (d) The Endowment will respond promptly to communications from you.


Sec. 1150.6  What opportunity do I have to obtain a review of my debt 
within the Endowment?

    (a) Request for review. If you desire a review within the Endowment 
concerning the existence or amount of your debt, the proposed schedule 
for offset of Federal employee salary payments, or whether the debt is 
past due or legally enforceable, you must send such a request to the 
officer or employee of the Endowment designated in the Notice (see 
Sec. 1150.5(c)(4)).
    (1) Your request for review must carry your signature and fully 
identify and explain with reasonable specificity all the facts and 
evidence that support your position. Your request for review should be 
accompanied by available evidence to support your contentions.
    (2) Your request for review must be received by the designated 
officer or employee of the Endowment on or before the 60th day 
following the date of the Notice. Timely filing will stay the 
commencement of collection procedures. If you file a request for a 
review after the 60-day period provided for in this section, the 
Endowment will accept the request if you can show that the delay was 
the result of circumstances beyond your control or because you did not 
receive notice of the filing deadline (unless you had actual notice of 
the filing deadline).
    (b) Inspection of Endowment records related to the debt. (1) In 
accordance with Sec. 1150.5, if you want to inspect or copy Endowment 
records related to the debt, you must send a letter to the Endowment 
official designated in the Notice stating your intention. Your letter 
must be received within 30 days of the date of the Notice.
    (2) In response to the timely request described in paragraph (b)(1) 
of this section, the designated Endowment official will notify you of 
the location and time when you may inspect and copy records related to 
the debt.
    (3) If personal inspection of Endowment records related to the debt 
is impractical, reasonable arrangements will be made to send you copies 
of those records.
    (c) Review official. The Chairperson shall designate an officer or 
employee of the Endowment (who was not involved in the determination of 
the debt) as the review official. When required by law or regulation, 
the Endowment may request an administrative law judge to conduct the 
review, or may obtain a review official who is an official, employee, 
or agent of the United States, but who is not under the supervision or 
control of the Chairperson. However, unless the review is conducted by 
an official or employee of the Endowment, any unresolved dispute you 
have regarding whether all or part of the debt is past due or legally 
enforceable (for purposes of collection by tax refund offset under 
Sec. 1150.31) must be referred to the Chairperson for ultimate 
administrative disposition, and the Chairperson must notify you of his 
or her determination.
    (d) Review procedure. After you request a review, the review 
official will notify you of the form of the review to be provided. The 
review official shall determine whether an oral hearing is required, or 
if a review of the written record is sufficient, in accordance with the 
Federal Claims Collection Standards. In either case, the review 
official shall conduct the review in accordance with the Federal Claims 
Collection Standards. If the review will include an oral hearing, the 
notice sent to you by the review official will set forth the date, 
time, and location of the hearing.
    (e) Date of decision. The review official will issue a written 
decision, based upon either the written record or documentary evidence 
and information developed at an oral hearing, as soon as practical, but 
not later than 60 days after the date on which the Endowment received 
your request for a review, unless you request, and the review official 
grants, a delay in the proceedings.
    (f) Content of review decision. The review official will prepare a 
written decision that includes:
    (1) A statement of the facts presented to support the origin, 
nature, and amount of the debt;
    (2) The review official's findings, analysis, and conclusions; and
    (3) The terms of any repayment schedule, if applicable.
    (g) Interest, penalty charge, and administrative cost accrual 
during review period. Interest, penalty charges, and administrative 
costs authorized by law will continue to accrue during the review 
period.


Sec. 1150.7  What interest, penalty charges, and administrative costs 
will I have to pay on a debt owed to the Endowment?

    (a) Interest. (1) The Endowment will assess interest on all 
delinquent debts unless prohibited by statute, regulation, or contract.
    (2) Interest begins to accrue on all debts from the date that the 
debt becomes delinquent. The Endowment will not recover interest if you 
pay the debt within 30 days of the date on which interest begins to 
accrue. The Endowment shall assess interest at the rate established 
annually by the Secretary of the Treasury under 31 U.S.C. 3717, unless 
a different rate is either necessary to protect the interests of the 
Endowment or established by a contract, repayment agreement, or 
statute. The Endowment will notify you of the basis for its finding 
when a different rate is necessary to protect the interests of the 
Endowment.
    (3) The Chairperson may extend the 30-day period for payment 
without interest where he or she determines that such action is in the 
best interest of the Endowment. A decision to extend or not to extend 
the payment period is final and is not subject to further review.
    (b) Penalty. The Endowment will assess a penalty charge, not to 
exceed 6 percent a year, on any portion of a debt that is delinquent 
for more than 90 days.
    (c) Administrative costs. The Endowment will assess charges to 
cover administrative costs incurred as a result of your failure to pay 
a debt before it becomes delinquent. Administrative costs include the 
additional costs incurred in processing and handling the debt because 
it became delinquent, such as costs incurred in obtaining a credit 
report or in using a private collection contractor, or service fees 
charged by a Federal agency for collection activities undertaken on 
behalf of the Endowment.
    (d) Allocation of payments. A partial or installment payment by a 
debtor will be applied first to outstanding penalty assessments, second 
to administrative costs, third to accrued interest, and fourth to the 
outstanding debt principal.
    (e) Additional authority. The Endowment may assess interest, 
penalty charges, and administrative costs on

[[Page 37489]]

debts that are not subject to 31 U.S.C. 3717 to the extent authorized 
under common law or other applicable statutory authority.
    (f) Waiver. (1) The Chairperson may (without regard to the amount 
of the debt) waive collection of all or part of accrued interest, 
penalty charges, or administrative costs, if he or she determines that 
collection of these charges would be against equity and good conscience 
or not in the best interest of the Endowment.
    (2) A decision to waive interest, penalty charges, or 
administrative costs may be made at any time before a debt is paid. 
However, where these charges have been collected before the waiver 
decision, they will not be refunded. The Chairperson's decision to 
waive or not waive collection of these charges is final and is not 
subject to further review.


Sec. 1150.8  Will failure to pay my debt affect my eligibility for 
Endowment programs?

    In the event that you fail to pay your debt to the Endowment within 
a reasonable period of time after the date of the Notice of debt, the 
General Counsel of the Endowment shall place your name on the 
Endowment's list of debarred, suspended, and ineligible contractors, 
grantees, and other participants in programs sponsored by the 
Endowment. You will be advised of this action.


Sec. 1150.9  How can I resolve the Endowment's claim through a 
voluntary repayment agreement?

    In response to a Notice of debt, you may propose to the Endowment 
that you be allowed to repay the debt through a voluntary repayment 
agreement in lieu of the Endowment taking other collection actions 
under this part.
    (a) Your request to enter into a voluntary repayment agreement 
must:
    (1) Be in writing;
    (2) Admit the existence of the debt; and
    (3) Either propose payment of the debt (together with interest, 
penalty charges, and administrative costs) in a lump sum, or set forth 
a proposed repayment schedule.
    (b) The Endowment will collect claims in full or one lump sum 
whenever feasible. However, if you are unable to pay your debt in one 
lump sum, the Endowment may accept payment in regular installments that 
bear a reasonable relationship to the size of the debt and your ability 
to pay.
    (c) The Endowment will consider a request to enter into a voluntary 
repayment agreement in accordance with the Federal Claims Collection 
Standards. The Chairperson may request additional information from you, 
including financial statements if you request to make payments in 
installments, in order to make a determination of whether to accept a 
voluntary repayment agreement. It is within the Chairperson's 
discretion to accept a repayment agreement instead of proceeding with 
other collection actions under this part, and to set the necessary 
terms of any voluntary repayment agreement. No repayment agreement will 
be binding on the Endowment unless it is in writing and signed by both 
you and the Chairperson. At the Endowment's option, you may be required 
to enter into a confess-judgment note or bond of indemnity with surety 
as part of an agreement to make payments in installments. 
Notwithstanding the provisions of this section, any reduction or 
compromise of a claim will be governed by 31 U.S.C. 3711.


Sec. 1150.10  What is the extent of the Chairperson's authority to 
compromise debts owed to the Endowment, or to suspend or terminate 
collection action on such debts?

    (a) The Chairperson may exercise his or her authority to 
compromise, or to suspend or terminate collection action on, those 
debts owed to the Endowment and not exceeding $100,000, excluding 
interest, in conformity with the Federal Claims Collection Act of 1966, 
as amended; the Federal Claims Collection Standards issued thereunder; 
and this part, except where standards are established by other statutes 
or authorized regulations issued pursuant to them.
    (b) The portion of a debt owed to the Endowment that is unrecovered 
as the result of a compromise shall be reported to the Internal Revenue 
Service (IRS) as income to the debtor.


Sec. 1150.11  How does subdividing or joining debts owed to the 
Endowment affect the Chairperson's compromise, suspension, or 
termination authority?

    A debtor's liability arising from a particular transaction or 
contract will be considered as a single claim in determining whether 
the claim is one of not more than $100,000, excluding interest, for the 
purpose of compromise or suspension or termination of collection 
action. Such a claim may not be subdivided to avoid the monetary 
ceiling established by the Federal Claims Collection Act of 1966, as 
amended. Joining two or more claims in a demand upon a debtor for 
payment of more than $100,000 does not preclude compromise or 
suspension or termination of collection action with regard to any one 
claim not exceeding $100,000, excluding interest.


Sec. 1150.12  How will the Endowment use credit reporting agencies to 
collect its claims?

    (a) The Endowment may report delinquent debts to appropriate credit 
reporting agencies by providing the following information:
    (1) A statement that the debt is valid and overdue;
    (2) The name, address, taxpayer identification number, and any 
other information necessary to establish the identity of the debtor;
    (3) The amount, status, and history of the debt; and
    (4) The program or pertinent activity under which the debt arose.
    (b) Before disclosing debt information to a credit reporting 
agency, the Endowment will:
    (1) Take reasonable action to locate the debtor if a current 
address is not available;
    (2) Provide the notice required under Sec. 1150.5 if a current 
address is available; and
    (3) Obtain satisfactory assurances from the credit reporting agency 
that it complies with the Fair Credit Reporting Act (15 U.S.C. 1681 et 
seq.) and other Federal laws governing the provision of credit 
information.
    (c) At the time debt information is submitted to a credit reporting 
agency, the Endowment will provide a written statement to the reporting 
agency that all required actions have been taken. In addition, the 
Endowment will, thereafter, ensure that the credit reporting agency is 
promptly informed of any substantive change in the conditions or amount 
of the debt, and promptly verify or correct information relevant to the 
debt.
    (d) If a debtor disputes the validity of the debt, the credit 
reporting agency will refer the matter to the appropriate Endowment 
official. The credit reporting agency will exclude the debt from its 
reports until the Endowment certifies in writing that the debt is 
valid.
    (e) The Endowment may disclose to a commercial credit bureau 
information concerning a commercial debt, including the following:
    (1) Information necessary to establish the name, address, and 
employer identification number of the commercial debtor;
    (2) The amount, status, and history of the debt; and
    (3) The program or pertinent activity under which the debt arose.

[[Page 37490]]

Sec. 1150.13  How will the Endowment contract for collection services?

    The Endowment will use the services of a private collection 
contractor where it determines that such use is in the best interest of 
the Endowment. When the Endowment determines that there is a need to 
contract for collection services, it will:
    (a) Retain sole authority to:
    (1) Resolve any dispute with the debtor regarding the validity of 
the debt;
    (2) Compromise the debt;
    (3) Suspend or terminate collection action;
    (4) Refer the debt to the DOJ for litigation; and
    (5) Take any other action under this part which does not result in 
full collection of the debt;
    (b) Require the contractor to comply with the Privacy Act of 1974, 
as amended, to the extent specified in 5 U.S.C. 552a(m); with the Fair 
Debt Collection Practices Act (15 U.S.C. 1692-1692o) and other 
applicable Federal and State laws pertaining to debt collection 
practices; and with the applicable regulations of the Endowment in this 
chapter;
    (c) Require the contractor to account accurately and fully for all 
amounts collected; and
    (d) Require the contractor to provide to the Endowment, upon 
request, all data and reports contained in its files related to its 
collection actions on a debt.


Sec. 1150.14  When will the Endowment refer claims to the DOJ?

    The Chairperson will refer to the DOJ for litigation claims on 
which aggressive collection actions have been taken but which could not 
be collected, compromised, suspended, or terminated. Referrals will be 
made as early as possible, consistent with aggressive Endowment 
collection action, and within the period for bringing a timely suit 
against the debtor.


Sec. 1150.15  Will the Endowment use a cross-servicing agreement with 
the Treasury to collect its claims?

    (a) The Endowment will enter into a cross-servicing agreement that 
authorizes the Treasury to take the collection actions described in 
this part on behalf of the Endowment. These debt collection services 
will be provided to the Endowment in accordance with 31 U.S.C. Chapter 
37.
    (b) The Endowment shall transfer to the Treasury any past due, 
legally enforceable, non-tax debt that has been delinquent for a period 
of 180 days or more so that the Secretary of the Treasury may take 
appropriate action in accordance with 31 U.S.C. 3716, 5 U.S.C. 5514, 
the Federal Claims Collection Standards, 5 CFR 550.1108, and 31 CFR 
part 285. The categories of debts described in 31 U.S.C. 3711(g)(2) are 
excluded from transfer under this paragraph (b).


Sec. 1150.16  May I use the Endowment's failure to comply with these 
regulations as a defense?

    No. The failure of the Endowment to comply with any standard 
prescribed in the Federal Claims Collection Standards or these 
regulations shall not be available to any debtor as a defense.

Subpart B--Salary Offset


Sec. 1150.20  What debts are included or excluded from coverage of 
these regulations on salary offset?

    (a) The regulations in this subpart provide Endowment procedures 
for the collection by salary offset of a Federal employee's pay to 
satisfy certain debts owed to the Endowment or to other Federal 
agencies.
    (b) The regulations in this subpart do not apply to any case where 
collection of a debt by salary offset is explicitly provided for or 
prohibited by another statute.
    (c) Nothing in the regulations in this subpart precludes the 
compromise, suspension, or termination of collection actions under the 
Federal Claims Collection Act of 1966, as amended, or the Federal 
Claims Collection Standards.
    (d) A levy pursuant to the Internal Revenue Code takes precedence 
over a salary offset under this subpart, as provided in 5 U.S.C. 
5514(d).
    (e) This subpart does not apply to any adjustment to pay arising 
out of your 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 or fewer pay periods.


Sec. 1150.21  May I ask the Endowment to waive an overpayment that 
otherwise would be collected by offsetting my salary as a Federal 
employee?

    Yes. The regulations in this subpart do not preclude you from 
requesting waiver of an overpayment under 5 U.S.C. 5584 or 8346(b), 10 
U.S.C. 2774, 32 U.S.C. 716, or other statutory provisions pertaining to 
the particular debts being collected.


Sec. 1150.22  What are the Endowment's procedures for salary offset?

    (a) The Endowment will coordinate salary deductions under this 
subpart as appropriate.
    (b) If you are an Endowment employee, the Endowment's payroll 
office will determine the amount of your disposable pay and will 
implement the salary offset.
    (c) Deductions will begin within three official pay periods 
following receipt by the Endowment's payroll office of certification of 
debt from the creditor agency.
    (d) Types of collection.
    (1) Lump-sum offset. If the amount of the debt is equal to or less 
than 15 percent of disposable pay, the debt generally will be collected 
through one lump-sum offset.
    (2) Installment deductions. 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 your ability to pay. However, the 
amount deducted from any period will not exceed 15 percent of the 
disposable pay from which the deduction is made unless you have agreed 
in writing to the deduction of a greater amount. If possible, 
installment payments will be sufficient in size and frequency to 
liquidate the debt in three years or less.
    (3) Deductions from final check. A deduction exceeding the 15 
percent of disposable pay limitation may be made from any final salary 
payment under 31 U.S.C. 3716 and the Federal Claims Collection 
Standards, in order to liquidate the debt, whether the employee is 
being separated voluntarily or involuntarily.
    (4) Deductions from other sources. If an employee subject to salary 
offset is separated from the Endowment, and the balance of the debt 
cannot be liquidated by offset of the final salary check, then the 
Endowment may offset later payments of any kind against the balance of 
the debt, as allowed by 31 U.S.C. 3716 and the Federal Claims 
Collection Standards.
    (e) Multiple debts. In instances where two or more creditor 
agencies are seeking salary offsets, or where two or more debts are 
owed to a single creditor agency, the Endowment's payroll office may, 
at its discretion, determine whether one or more debts should be offset 
simultaneously within the 15 percent limitation.


Sec. 1150.23  How will the Endowment coordinate salary offsets with 
other agencies?

    (a) Responsibilities of the Endowment as the creditor agency. Upon 
completion of the procedures established in this subpart and pursuant 
to 5 U.S.C. 5514,

[[Page 37491]]

the Endowment must submit a claim to a paying agency.
    (1) In its claim, the Endowment must certify, in writing, the 
following:
    (i) That the employee owes the debt;
    (ii) The amount and basis of the debt;
    (iii) The date the Endowment's right to collect the debt first 
accrued; and
    (iv) That the Endowment's regulations in this subpart have been 
approved by OPM under 5 CFR part 550, subpart K.
    (2) If the collection must be made in installments, the Endowment's 
claim will also advise the paying agency of the amount or percentage of 
disposable pay to be collected in each installment. The Endowment may 
also advise the paying agency of the number of installments to be 
collected and the date of the first installment, if that date is other 
than the next officially established pay period.
    (3) The Endowment shall also include in its claim:
    (i) The employee's written consent to the salary offset;
    (ii) The employee's signed statement acknowledging receipt of the 
procedures required by 5 U.S.C. 5514; or
    (iii) Information regarding the completion of procedures required 
by 5 U.S.C. 5514, including the actions taken and the dates of those 
actions.
    (4) If the employee is in the process of separating and has not 
received a final salary check or other final payment(s) from the paying 
agency, the Endowment must submit its claim to the paying agency for 
collection under 31 U.S.C. 3716. The paying agency will (under its 
regulations adopted under 5 U.S.C. 5514 and 5 CFR part 550, subpart K), 
certify the total amount of its collection on the debt and notify the 
employee and the Endowment. If the paying agency's collection does not 
fully satisfy the debt, and the paying agency is aware that the debtor 
is entitled to payments from the Civil Service Retirement and 
Disability Fund or other similar payments that may be due the debtor 
employee from other Federal government sources, then (under its 
regulations adopted under 5 U.S.C. 5514 and 5 CFR part 550, subpart K), 
the paying agency will provide written notice of the outstanding debt 
to the agency responsible for making the other payments to the debtor 
employee. The written notice will state that the employee owes a debt, 
the amount of the debt, and that the provisions of this section have 
been fully complied with. However, the Endowment must submit a properly 
certified claim under this paragraph (a)(4) to the agency responsible 
for making the payments before the collection can be made.
    (5) Separated employee. If the employee is already separated and 
all payments due from his or her former paying agency have been paid, 
the Endowment may request, unless otherwise prohibited, that money due 
and payable to the employee from the Civil Service Retirement and 
Disability Fund or other similar funds be administratively offset to 
collect the debt.
    (6) Employee transfer. When an employee transfers from one paying 
agency to another paying agency, the Endowment will not repeat the due 
process procedures described in 5 U.S.C. 5514 and this subpart to 
resume the collection. The Endowment will submit a properly certified 
claim to the new paying agency and will subsequently review the debt to 
ensure that the collection is resumed by the new paying agency.
    (b) Responsibilities of the Endowment as the paying agency. (1) 
Complete claim. When the Endowment receives a certified claim from a 
creditor agency (under the creditor agency's regulations adopted under 
5 U.S.C. 5514 and 5 CFR part 550, subpart K), deductions should be 
scheduled to begin within three officially established pay intervals. 
Before deductions can begin, the employee will receive a written notice 
from the Endowment including:
    (i) A statement that the Endowment has received a certified claim 
from the creditor agency;
    (ii) The amount of the claim;
    (iii) The date salary offset deductions will begin; and
    (iv) The amount of such deductions.
    (2) Incomplete claim. When the Endowment receives an incomplete 
certification of debt from a creditor agency, the Endowment will return 
the claim with a notice that the creditor agency must comply with the 
procedures required under 5 U.S.C. 5514 and 5 CFR part 550, subpart K, 
and must properly certify a claim to the Endowment before the Endowment 
will take action to collect from the employee's current pay account.
    (3) The Endowment is not authorized to review the merits of the 
creditor agency's determination with respect to the amount or validity 
of the debt certified by the creditor agency.
    (4) Employees who transfer from the Endowment to another paying 
agency. If, after the creditor agency has submitted the claim to the 
Endowment, the employee transfers from the Endowment to a different 
paying agency before the debt is collected in full, the Endowment will 
certify the total amount collected on the debt and notify the employee 
and the creditor agency in writing. The notification to the creditor 
agency will include information on the employee's transfer.


Sec. 1150.24  Under what conditions will the Endowment make a refund of 
amounts collected by salary offset?

    (a) If the Endowment is the creditor agency, it will promptly 
refund any amount deducted under the authority of 5 U.S.C. 5514, when:
    (1) The debt is waived or all or part of the funds deducted are 
otherwise found not to be owed (unless expressly prohibited by statute 
or regulation); or
    (2) An administrative or judicial order directs the Endowment to 
make a refund.
    (b) Unless required or permitted by law or contract, refunds under 
this section will not bear interest.


Sec. 1150.25  Will the collection of a claim by salary offset act as a 
waiver of my rights to dispute the claimed debt?

    Your involuntary payment of all or any portion of a debt under this 
subpart will not be construed as a waiver of any rights that you may 
have under 5 U.S.C. 5514 or other provisions of a law or written 
contract, unless there are statutory or contractual provisions to the 
contrary.

Subpart C--Tax Refund Offset


Sec. 1150.30  Which debts can the Endowment refer to the Treasury for 
collection by offsetting tax refunds?

    (a) The regulations in this subpart implement 31 U.S.C. 3720A, 
which authorizes the Treasury to reduce a tax refund by the amount of a 
past-due, legally enforceable debt owed to a Federal agency.
    (b) For purposes of this section, a past-due, legally enforceable 
debt referable to the Treasury for tax refund offset is a debt that is 
owed to the Endowment and:
    (1) Is at least $25.00;
    (2) Except in the case of a judgment debt, has been delinquent for 
at least three months and will not have been delinquent more than 10 
years at the time the offset is made;
    (3) Cannot currently be collected under the salary offset 
provisions of 5 U.S.C. 5514;
    (4) Is ineligible for administrative offset under 31 U.S.C. 3716(a) 
by reason of 31 U.S.C. 3716(c)(2) or cannot be collected by 
administrative offset under 31 U.S.C. 3716(a) by the Endowment against 
amounts payable to the debtor by the Endowment;
    (5) With respect to which the Endowment has
    (i) given the debtor at least 60 days to present evidence that all 
or part of the debt is not past due or legally enforceable,

[[Page 37492]]

    (ii) considered evidence presented by the debtor, and
    (iii) determined that an amount of the debt is past due and legally 
enforceable;
    (6) Has been disclosed by the Endowment to a credit reporting 
agency as authorized by 31 U.S.C. 3711(e) and Sec. 1150.12 of this 
part, unless the credit reporting agency would be prohibited from 
reporting information concerning the debt by reason of 15 U.S.C. 1681c;
    (7) With respect to which the Endowment has notified or has made a 
reasonable attempt to notify the debtor that:
    (i) The debt is past due, and
    (ii) Unless repaid within 60 days of the date of the Notice, the 
debt may be referred to the Treasury for offset against any refund of 
overpayment of tax; and
    (8) All other requirements of 31 U.S.C. 3720A and the Treasury 
regulations relating to the eligibility of a debt for tax return offset 
(31 CFR 285.2) have been satisfied.


Sec. 1150.31  What are the Endowment's procedures for collecting debts 
by tax refund offset?

    (a) The Chairperson will be the point of contact with the Treasury 
for administrative matters regarding the offset program.
    (b) The Endowment will ensure that the procedures prescribed by the 
Treasury are followed in developing information about past-due debts 
and submitting the debts to the Treasury.
    (c) The Endowment will submit to the Treasury a notification of a 
taxpayer's liability for past-due legally enforceable debt. This 
notification will contain the following:
    (1) The name and taxpayer identification number of the debtor;
    (2) The amount of the past-due and legally enforceable debt;
    (3) The date on which the original debt became past due; and
    (4) A statement certifying that, with respect to each debt 
reported, all of the requirements of Sec. 1150.30(b) have been 
satisfied.
    (d) For purposes of this section, notice that collection of the 
debt is affected by a bankruptcy proceeding involving the debtor will 
bar referral of the debt to the Treasury.
    (e) The Endowment shall promptly notify the Treasury to correct 
data when it:
    (1) Determines that an error has been made with respect to a debt 
that has been referred;
    (2) Receives or credits a payment on the debt; or
    (3) Receives notice that the person owing the debt has filed for 
bankruptcy under Title 11 of the United States Code or has been 
adjudicated bankrupt and the debt has been discharged.
    (f) When advising debtors of an intent to refer a debt to the 
Treasury for offset, the Endowment will also advise debtors of remedial 
actions available to defer the offset or prevent it from taking place.

Subpart D--Administrative Offset


Sec. 1150.40  Under what circumstances will the Endowment collect 
amounts that I owe to the Endowment (or some other Federal agency) by 
offsetting the debt against payments that the Endowment (or some other 
Federal agency) owes me?

    (a) The regulations in this subpart apply to the collection of any 
debts you owe to the Endowment, or to any request from another Federal 
agency that the Endowment collect a debt you owe by offsetting your 
debt against a payment the Endowment owes you. Administrative offset is 
authorized under Section 5 of the Federal Claims Collection Act of 
1966, as amended (31 U.S.C. 3716). The Endowment shall carry out 
administrative offset in accordance with the provisions of the Federal 
Claims Collection Standards; the regulations in this subpart are 
intended only to supplement the provisions of the Federal Claims 
Collection Standards.
    (b) The Chairperson, after attempting to collect a debt you owe to 
the Endowment under Section 3(a) of the Federal Claims Collection Act 
of 1966, as amended (31 U.S.C. 3711(a)), may collect the debt by 
administrative offset, subject to the following:
    (1) The debt you owe is certain in amount; and
    (2) It is in the best interest of the Endowment to collect your 
debt by administrative offset because of the decreased costs of 
collection and acceleration in the payment of the debt.
    (c) No collection by administrative offset will be made on any debt 
that has been outstanding for more than 10 years unless facts material 
to the Endowment or a federal agency's right to collect the debt were 
not known, and reasonably could not have been known, by the official or 
officials responsible for discovering and collecting the debt.
    (d) The regulations in this subpart do not apply to:
    (1) A case in which administrative offset of the type of debt 
involved is explicitly prohibited by statute; or
    (2) Debts owed to the Endowment by Federal agencies.


Sec. 1150.41  How will the Endowment request that my debt to the 
Endowment be collected by offset against some payment that another 
Federal agency owes me?

    The Chairperson may request that funds due and payable to you by 
another Federal agency instead be paid to the Endowment to satisfy a 
debt you owe to the Endowment. In requesting administrative offset, the 
Endowment will certify in writing to the Federal agency that is holding 
funds for you:
    (a) That you owe the debt;
    (b) The amount and basis of the debt; and
    (c) That the Endowment has complied with the requirements of 31 
U.S.C. 3716, its own administrative offset regulations in this subpart, 
and the applicable provisions of the Federal Claims Collection 
Standards with respect to providing you with due process.


Sec. 1150.42  What procedures will the Endowment use to collect amounts 
I owe to a Federal agency by offsetting a payment that the Endowment 
would otherwise make to me?

    (a) Any Federal agency may request that the Endowment 
administratively offset funds due and payable to you in order to 
collect a debt you owe to that agency. The Endowment will initiate the 
requested offset only upon:
    (1) Receipt of written certification from the creditor agency 
stating:
    (i) That you owe the debt;
    (ii) The amount and basis of the debt;
    (iii) That the agency has prescribed regulations for the exercise 
of administrative offset; and
    (iv) That the agency has complied with its own administrative 
offset regulations and with the applicable provisions of the Federal 
Claims Collection Standards, including providing you with any required 
hearing or review; and
    (2) A determination by the Chairperson that offsetting funds 
payable to you by the Endowment in order to collect a debt owed by you 
would be in the best interest of the United States as determined by the 
facts and circumstances of the particular case, and that such an offset 
would not otherwise be contrary to law.
    (b) Multiple debts. In instances where two or more creditor 
agencies are seeking administrative offsets, or where two or more debts 
are owed to a single creditor agency, the Endowment may, in its 
discretion, allocate the amount it owes to you to the creditor agencies 
in accordance with the best interest of the United States as determined 
by the facts and circumstances of the particular case, paying special 
attention to applicable statutes of limitations.


Sec. 1150.43  When may the Endowment make an offset in an expedited 
manner?

    The Endowment may effect an administrative offset against a payment 
to be made to you before completion of the procedures required by 
Secs. 1150.41

[[Page 37493]]

and 1150.42 if failure to take the offset would substantially 
jeopardize the Endowment's ability to collect the debt and the time 
before the payment is to be made does not reasonably permit the 
completion of those procedures. An expedited offset will be followed 
promptly by the completion of those procedures. Amounts recovered by 
offset, but later found not to be owed to the Endowment, will be 
promptly refunded.


Sec. 1150.44  Can a judgment I have obtained against the United States 
be used to satisfy a debt that I owe to the Endowment?

    Collection by offset against a judgment obtained by a debtor 
against the United States will be accomplished in accordance with 31 
U.S.C. 3728.

    Dated: June 12, 2000.
Hope O'Keeffe,
Acting General Counsel.
[FR Doc. 00-15173 Filed 6-14-00; 8:45 am]
BILLING CODE 7537-01-P


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