REPORT TO CONGRESS: RECEIVABLES AND DEBT COLLECTION ACTIVITIES OF 1 FEDERAL AGENCIES

FISCAL YEAR 2003 REPORT TO THE CONGRESS

U.S. GOVERNMENT RECEIVABLES AND

DEBT COLLECTION ACTIVITIES

OF

FEDERAL AGENCIES

I - EXECUTIVE SUMMARY ................................................................................................................ 2

A - LEGISLATIVE REQUIREMENT TO REPORT .......................................................................................... 2

B - SCOPE OF REPORT ........................................................................................................................... 2

C - ACCOMPLISHMENTS AND SUCCESSES ............................................................................................... 2

II - GOVERNMENT DEBT PORTFOLIO, COLLECTIONS AND WRITE-OFFS........................... 3

A - FISCAL YEAR END DATA................................................................................................................. 3

1. Receivables and Delinquent Debt .......................................................................................... 3

2. Collections and Write-offs, and Interest, Penalties and Costs ................................................ 5

3. Analysis of Mandatory Referral to Treasury Under the DCIA............................................... 6

B - KEY TRENDS ................................................................................................................................... 7

III - GOVERNMENT-WIDE COLLECTION ACTIVITIES............................................................... 8

A - USE OF PRIVATE COLLECTION AGENCIES (PCAS)............................................................................. 8

1. Description ............................................................................................................................ 8

2. Referrals................................................................................................................................ 9

3. Collections............................................................................................................................. 9

B - TREASURY OFFSET PROGRAM (TOP) ............................................................................................. 10

1. Description .......................................................................................................................... 10

2. Referrals.............................................................................................................................. 11

3. Collections........................................................................................................................... 11

C - CROSS-SERVICING AT FMS............................................................................................................ 13

1. Description .......................................................................................................................... 13

2. Referrals.............................................................................................................................. 13

3. Collections........................................................................................................................... 14

D – HHS’ DEBT COLLECTION CENTER ................................................................................................ 14

1. Description .......................................................................................................................... 14

2. Referrals to PSC .................................................................................................................. 15

3. Collections............................................................................................................................ 15

4. Health Profession Debt......................................................................................................... 16

E - LITIGATION AT THE DEPARTMENT OF JUSTICE (DOJ) ...................................................................... 16

1. Description .......................................................................................................................... 16

2. Referrals.............................................................................................................................. 17

3. Collections........................................................................................................................... 17

F - DEBT CHECK – BARRING DELINQUENT DEBTORS............................................................................ 18

IV – SPECIFIC AGENCY ACTIVITIES............................................................................................ 19

A - EDUCATION STUDENT LOANS ........................................................................................................ 19

B - SBA AND HUD LOAN ASSET SALES .............................................................................................. 20

APPENDIX I: FEDERAL RECEIVABLES AND DELINQUENT DEBT......................................... 21

APPENDIX II: SOURCES OF DATA................................................................................................. 22
REPORT TO CONGRESS: RECEIVABLES AND DEBT COLLECTION ACTIVITIES OF 2 FEDERAL AGENCIES 

I - EXECUTIVE SUMMARY 

A - LEGISLATIVE REQUIREMENT TO REPORT 

The Debt Collection Act of 1982 as amended by the Debt Collection Improvement Act of 

1996 (DCIA) directs the Secretary of the Treasury (Secretary) to report to Congress 

annually on the management of debt collection activities by the head of each Federal 

agency. This report includes information that the agency heads provide to the Secretary 

on the status of loans and accounts receivable that each manages. 

See 31 U.S.C. § 3719.

B - SCOPE OF REPORT 

This report summarizes the information provided by Federal agencies concerning their 

receivables as reported to the Department of the Treasury (Treasury) and as contained in 

Treasury’s Report on Receivables Due from the Public (TROR). It includes information 

about total receivables, collections on receivables, delinquencies, collections on 

delinquencies, and write-offs. It also summarizes key Government-wide actions to collect 

delinquent debt, a specific concern that led to the passage of the DCIA. Additionally, this 

report highlights several special and/or unique collection activities and accomplishments 

by certain Federal agencies. 

C - ACCOMPLISHMENTS AND SUCCESSES 

• Through September 30, 2003, $18.2 billion has been collected to pay delinquent debts 

through the Treasury Offset Program (TOP) and Cross-Servicing Program (CrossServicing) since the enactment of DCIA in April 1996. 

• The Federal Government collected $119.6 billion in fiscal year (FY) 2003 on all of its 

nontax receivables, up more than $1 billion from the $118.5 billion collected in FY 

2002. 

• In FY 2003, the Department of Justice (DOJ) collected $3.1 billion in cash recoveries 

on delinquent debts owed to Federal agencies through its financial litigation program. 

DOJ has collected a total of $12.8 billion through civil litigation in the last five fiscal 

years. 

• In FY 2003, private collection agencies (PCAs) under contract with the Department 

of Education (Education), the Department of Health and Human Services (HHS) and 

Treasury had referrals of $14.4 billion in delinquent Federal debt, which resulted in 

$546.8 million in collections. 

• In FY 2003, the Department of Housing and Urban Development (HUD) and the 

Small Business Administration (SBA) completed loan asset sales of performing and 

non-performing loans totaling $1.65 billion in unpaid principal balances. These sales 

generated $954 million in gross proceeds. 
REPORT TO CONGRESS: RECEIVABLES AND DEBT COLLECTION ACTIVITIES OF 3 FEDERAL AGENCIES 

• Total collections by Treasury’s Financial Management Service (FMS) on delinquent 

debts through TOP and Cross-Servicing were $3.1 billion in FY 2003. Annual 

collections through these programs have averaged over $3.0 billion during the last 

three years. 

II - GOVERNMENT DEBT PORTFOLIO, COLLECTIONS AND 

WRITE-OFFS 

TOTAL RECEIVABLES TOTAL DELINQUENT DEBT

$350 $80

$53.3 $58.0 $56.2 

$63.0 $70.1 $270.6 $282.0 $289.5 $315.0 $312.3 

$70 $300 

Dollars in Billions 

$60 

$50 

$40 

$30 

Dollars in Billions 

$20 

$250 

$200 

$150 

$100 

$50 

$0 

$10 

$0 

1999 2000 2001 2002 2003 

Fiscal Year 

1999 2000 2001 2002 2003 

Fiscal Year 

A - FISCAL YEAR END DATA 

1. Receivables and Delinquent Debt 

• The two agencies with the largest total receivables at the end of FY 2003 are 

Education ($108.4 billion) and the Department of Agriculture (USDA) ($100.7 

billion). Receivables from these two agencies comprise 67 percent of the 

Government’s total receivables (Education 35 percent; and USDA 32 percent). 

• Two types of Education receivables accounted for almost all of its receivables: 

Federal Direct Loans ($87.7 billion), and Defaulted Guaranteed Loans ($20.4 billion). 

• Four program areas of the USDA accounted for over $97 billion of its receivables: 

Rural Development & Farm Service Agency ($35.7 billion); Rural Utilities Service 

($32.2 billion); Commodity Credit Corporation ($20.8 billion); and Rural 

Development ($8.5 billion). 

• At the end of FY 2003, Federal loan programs (direct and guaranteed) comprised 87.4 

percent of total receivables and 65.2 percent of total delinquencies. Federal loan 

programs are authorized when private sector credit is unavailable or inadequate, and a 

Federal objective is to be achieved. Accordingly, Federal loan receivables occur in 

programs that serve the public interest and are of relatively high risk. As these 

receivables increase, delinquencies will correspondingly increase. 
REPORT TO CONGRESS: RECEIVABLES AND DEBT COLLECTION ACTIVITIES OF 4 FEDERAL AGENCIES 

Type of 

Receivable 

Total 

Receivables 

as of 

(in billions) 

Percentage of 

Total 

Receivables 

Delinquencies 

as of 9/30/03 

(in billions) 

Delinquencies as 

a Percentage of 

Total 

Receivables 

Direct Loan $223.3 71.5 $26.7 8.5 

Administrative* $49.7 15.9 $19.0 6.1 

Defaulted 

Guaranteed 

Loan 

$39.5 12.6 $24.3 7.8 

Gov't Totals **$312.3 100 **$70.1 22.4 

9/30/03 

*Includes fines, penalties and overpayments, etc. 

**Numbers do not total due to rounding 

• As the chart above indicates, direct loans were 71.5 percent of the Government’s 

receivables, and direct loan delinquencies were 8.5 percent of total receivables. 

Defaulted guaranteed loans were 12.6 percent of the Government’s receivables, and 

represented 7.8 percent of the delinquencies as a percentage of total receivables, only 

slightly less than direct loan delinquencies. 

• At the end of FY 2003, $53.4 billion (76.2 percent) of the Government’s delinquent 

debts were distributed among five agencies: Education, USDA, HHS, the Federal 

Communications Commission (FCC) and the Department of Defense (DOD). 

• Total delinquencies increased by $7.1 billion over the last fiscal year. Debts less than 

180 days delinquent increased by $6.2 billion to a total of $14.8 billion. Debts more 

than 180 days delinquent increased by $0.9 billion to a total of $55.3 billion. 

DEBTS > 180 

DAYS 

DELINQUENT 

FY 2000 FY 2001 FY 2002 FY 2003 

Time 

Delinquent 

Dollar 

amount 

of debts 

(in 

billions) 

Ratio of 

debts> 

180 days 

to all 

debts 

(percent) 

Dollar 

amount 

of debts 

(in 

billions) 

Ratio of 

debts> 

180 days 

to all 

debts 

(percent) 

Dollar 

amount 

of debts 

(in 

billions) 

Ratio of 

debts> 

180 days 

to all 

debts 

(percent) 

Dollar 

amount 

of debts 

(in 

billions) 

Ratio of 

debts> 

180 days to 

all debts 

(percent) 

181-365 5.7 15 5.6 13.5 5.5 10.1 5.9 10.7 

1-2 years 11.4 29.9 11.1 26.8 13.0 23.9 12.1 21.9 

2-6 years 11.7 30.7 14.7 35.5 18.5 34.0 14.6 26.4 

6-10 years 4.9 12.9 7 16.9 7.8 14.3 12.4 22.4 

Over 10 years 4.4 11.5 3 7.2 9.6 17.6 10.4 18.8 

Total >180 38.1 41.4 54.4 55.3 
REPORT TO CONGRESS: RECEIVABLES AND DEBT COLLECTION ACTIVITIES OF 

FEDERAL AGENCIES 5 

• The increase in delinquencies at the end of FY 2003 can be attributed to an increase 

of $9.7 billion in delinquencies reported by Education over the previous fiscal year, 

with $8.5 billion of that increase occurring from debts less than 180 days delinquent. 

The combined delinquencies of all agencies other than Education at the end of FY 

2003 totaled $37.9 billion, $2.6 billion less than at the end of FY 2002. 

• Education's direct loan receivables increased in total delinquencies by $11.1 billion, 

and receivables 180 days or less delinquent increased by $8.5 billion over the 

previous year. Education's defaulted guaranteed loan delinquencies fell by $1.4 

billion during the same period. 

• As evident in the preceding table, from the end of FY 2001 to the end of FY 2002 a 

significant increase in debts more than 180 days delinquent was reported. This 

increase was primarily due to Education's reclassification of $14.3 billion in 

receivables [formerly classified as written-off/currently not collectible (CNC)] in FY 

2002. This reclassification resulted in an increase of Education's debts (more than 

180 days delinquent) by $10.2 billion during FY 2002. 

2. Collections and Write-offs; Interest, Penalties and Costs 

• Total collections on TOTAL COLLECTIONS ON RECEIVABLES 

$94.2 $99.4 

$109.7 $118.5 $119.6 receivables in FY 2003 $140 

increased by $1.1 billion $120 

over FY 2002 collections. $100 

$80 

• Agencies that reported $60 

significant increases in $40 

collections were Education $20 (an increase of $4.4 billion), 

and USDA (an increase of $0 

1999 2000 2001 2002 2003 

$2.4 billion). Fiscal Year 

• Total write-offs increased by TOTAL WRITE-OFFS 

$400 million in FY 2003, a 6 $10 

percent increase over FY 2002 

write-offs. Agencies reporting $8

significant changes from the $6 previous fiscal year were Export -

Import Bank (+$526 million), HHS $4 (+$410 million), HUD (+$249 

million), Federal Deposit Insurance $2 

Corporation (+$356 million), 

USDA (-$619 million), and SBA $0 

(-$540 million). 1999 2000 2001 2002 2003 

$7.1 

$6.2 

$8.5 

$6.8 

$7.2 

Fiscal Year 

Dollars in Billions Dollars in Billions 
REPORT TO CONGRESS: RECEIVABLES AND DEBT COLLECTION ACTIVITIES OF 

FEDERAL AGENCIES 6 

Agencies charge interest, penalties, and administrative costs on receivables in accordance 

with applicable loan documents and statutory requirements. See 31 U.S.C. 3717. Of the 

$312.3 billion in receivables at the end of FY 2003, $9 billion represents unpaid interest, 

penalties and administrative costs. 

3. Analysis of Mandatory Referral to Treasury Under the DCIA 

• The DCIA specifically mandates that Federal agencies, unless exempted, transfer 

nontax debts more than 180 days delinquent to Treasury for collection through TOP 

and/or Cross-Servicing. 

• Each year, an analysis is done to determine the dollar amount of delinquent debts 

eligible for referral to TOP and Cross-Servicing in the upcoming fiscal year. In 

FY 2002, this analysis was incorporated as part of the agencies’ reporting in the 

TROR. In the analysis, delinquent debts reported as CNC are added to debts reported 

as more than 180 days but less than 10 years delinquent to determine the starting 

amount for calculating the amounts eligible for referral. 

Debts Eligible for Referral to TOP and Cross-Servicing (in billions) 

As of 

9/30/00 

As of 

9/30/01 

As of 

9/30/02 

As of 

9/30/03 

Total CNC* and Debt > 180 Days 

Delinquent but < 10 Years Delinquent $61.8 $63.3 $64.0 $67.8 

Eligible to Refer for Offset $31.3 $33.5 $31.3 $33.4 

Eligible to Refer for Cross-Servicing $6.9 $8.2 $8.5 $10.1 

*“CNC” – delinquent debts written off but not closed out (see Appendix I). 

• Certain debts are not eligible for referral to Treasury for either TOP or CrossServicing because of various exemptions permitted under the DCIA or otherwise 

required by law. Debts exempt from both TOP and Cross-Servicing include those in 

appeals or forbearance; debts referred to DOJ for litigation; debts in foreclosure or in 

bankruptcy; and foreign sovereign debts. Additional exemptions from CrossServicing include debts at PCAs, debts being collected by internal offset, and debts 

exempted from Cross-Servicing by Treasury. 

• At the end of FY 2003, debts eligible for referral to TOP increased by $2.1 billion 

(6.7 percent) over the FY 2002 figure. Debts eligible for Cross-Servicing increased 

by $1.6 billion (18.8 percent) over the same period. The table on page 7 details the 

referral eligibility amounts reported by selected agencies, and the changes in these 

referral eligibility amounts from those reported by the agencies at the end of FY 

2002. 
REPORT TO CONGRESS: RECEIVABLES AND DEBT COLLECTION ACTIVITIES OF 

FEDERAL AGENCIES 7 

TOP Eligibility 

(in millions) 

Cross-Servicing 

Eligibility (in millions) 

Agency 

FY 2003 

Change 

from 

FY 2002 FY 2003 

Change 

from 

FY 2002 

Education $20,475 $332 $470 ($ 96) 

HHS $5,361 ($212) $4,989 $915 

USDA $1,656 $276 $506 $142 

SBA $1,106 ($393) $1,083 ($416) 

SEC $900 $662 $900 $662 

DOD $733 $287 $513 $144 

DOT $555 $413 $493 $417 

FCC $469 $392 $467 $389 

GSA $27 ($419) $ 9 ($437) 

Other $2,105 $672 $622 ($192) 

Totals $33,387 $2,010 $10,052 $1,528 

B - KEY TRENDS 

• Although total receivables decreased slightly in FY 2003, the Federal Government’s 

portfolio has generally grown steadily over the past few years due to increases in 

Education’s receivables. In FY 2003, Education’s receivables rose $3.2 billion from 

the previous year to $108.4 billion, as compared to $69.8 billion at the end of FY 

2000. Education’s receivables represented 34.7 percent of the Government’s total 

receivables at the end of FY 2003, up from 24.8 percent at the end of FY 2000. 

• Education's direct loan receivables increased from $59.7 billion at the end of FY 2000 

to $87.7 billion at the end of FY 2003. The increase in direct loan receivables was 

almost entirely due to new receivables added each fiscal year. Education's defaulted 

guaranteed loan receivables rose from $9.7 billion at the end of FY 2000 to $20.4 

billion at the end of FY 2003. The increase in this portion of Education's receivables 

can be attributed to a reclassification of $11.9 billion of defaulted guaranteed loan 

receivables in FY 2002, that were formerly classified as written-off/CNC. 

• While Education's receivables have increased substantially over the last few fiscal 

years, total nontax receivables of agencies other than Education have shown a 

declining trend. Non-Education receivables totaled $203.9 billion at the end of FY 

2003, down 3.9 percent from the $212.2 billion reported at the end of FY 2000. It is 

this trend that resulted in the overall decrease in total receivables at the end of FY 

2003 as compared to FY 2002. 

• Similar trends exist with respect to delinquencies. Education’s total delinquencies 

have increased from $18.7 billion at the end of FY 2000 to $32.2 billion at the end of 

FY 2003. The key factor in the increase of Education's total delinquencies during this 
REPORT TO CONGRESS: RECEIVABLES AND DEBT COLLECTION ACTIVITIES OF 

FEDERAL AGENCIES 8 

period was the reclassification in FY 2002 of $14.3 billion in receivables formerly 

classified as written-off/CNC. During the same period, non-Education delinquencies 

have decreased 3.6 percent from $39.3 billion to $37.9 billion. 

• USDA’s receivables have shown a declining trend over the last several years, but 

delinquencies have not reflected any consistent trend. Receivables and delinquencies 

totaled $104.7 billion and $6.3 billion, respectively, at the end of FY 2000; $103.1 

billion and $6.2 billion, respectively, at the end of FY 2001; $102 billion and $6.9 

billion, respectively, at the end of FY 2002; and $100.7 billion and $6.6 billion, 

respectively, at the end of FY 2003. 

Governmentwide FY 2000 FY 2001 FY 2002 FY 2003 

Debts >180 days delinquent 

(in billions) $38.1 $41.4 $54.4 $55.3 

As a % of total receivables 13.5 14.4 17.3 17.7 

• Over the last four fiscal years, debts more than 180 days delinquent have increased 

both in dollar amount and as a percentage of total receivables. However, the rate of 

increase slowed significantly from the end of FY 2002 to the end of FY 2003. It is 

premature to assess any trend to the lessening of the rate of increase. 

Detailed data for 12 specific agencies for FY 2003 can be found on the Federal 

Receivables and Delinquent Debt table in Appendix I. 

III - GOVERNMENT-WIDE COLLECTION ACTIVITIES 

A - USE OF PRIVATE COLLECTION AGENCIES (PCAS) 

1. Description 

• Education, Treasury, and HHS have each established contracts with PCAs to collect 

debts owed to the Federal Government. In addition to collecting debts, PCAs also help 

Federal agencies establish repayment agreements and resolve debts administratively 

(e.g., by determining if a debtor is bankrupt, disabled or deceased). 

• Education uses PCAs to collect its portfolio of defaulted student loan debts. Education 

relies heavily on PCAs and refers every eligible debt to one of its twelve PCAs as 

quickly as possible. Education’s PCAs also implement Education’s use of administrative 

wage garnishment as a debt collection tool. 

• Treasury’s PCA contract is administered by FMS and is used as part of its CrossServicing program. Debts that are not collected or resolved within 30 days after transfer 

to FMS for Cross-Servicing are referred to a PCA for collection action. FMS's PCAs 

have also begun using administrative wage garnishment as an effective collection tool. 
REPORT TO CONGRESS: RECEIVABLES AND DEBT COLLECTION ACTIVITIES OF 

FEDERAL AGENCIES 9 

• HHS’ PCA contract is administered by its Program Support Center (PSC), which 

provides centralized debt collection services for HHS’ agencies and bureaus, and several 

other Federal agencies. PSC refers debts to its PCA if payment in full is not made or a 

repayment agreement has not been established within 45 days after the PSC receives the 

debt for collection action. 

2. Referrals 

• In FY 2003, $14.4 billion 

in Federal debts were 

referred to PCAs for 

collection action. This 

represents an 8.5 percent 

decrease in referrals from 

the previous fiscal year. 

3. Collections 

• Total PCA collections 

were $546.8 million in 

FY 2003, a 23.4 percent 

increase over FY 2002 

collections. Total PCA 

collections have 

increased in each of the 

last three fiscal years. *Includes collections by administrative wage garnishment 

Referrals to PCAs 

(in millions) 

Agency FY 2000 FY 2001 FY 2002 FY 2003 

HHS $317 $378 $339 $65 

FMS $2,613 $3,645 $4,775 $3,631 

Education $9,100 $8,700 $10,588 $10,679 

Totals $12,030 $12,723 $15,702 $14,375 

Collections by PCAs 

(in millions) 

Agency FY2000 FY2001 FY2002 FY2003 

HHS $7. 5 $16.6 $13.8 $9.5 

FMS* $21.8 $27.8 $42.9 $73.3 

Education* $322 $351 $386 $464 

Totals $351.3 $395.4 $443 $546.8 
REPORT TO CONGRESS: RECEIVABLES AND DEBT COLLECTION ACTIVITIES OF 

FEDERAL AGENCIES 10 

B - TREASURY OFFSET PROGRAM (TOP) 

1. Description 

TOP is a debt collection program that encompasses both "offsets" and "continuous 

levies." 

Offset 

• Offset is a program whereby Federal payments are reduced or "offset" to satisfy a 

person's overdue Federal nontax debt, child support obligation, or state income tax debt. 

A payee's name and taxpayer identification number are matched against a Treasury/FMS 

database of delinquent debtors for automated offset of funds. Offset funds are then used 

to satisfy payment of the delinquent debt to the extent allowed by law. 

• For FY 2003, payment types subject to offset included Office of Personnel Management 

retirement payments, Internal Revenue Service (IRS) tax refunds, vendor payments 

(including vendor payments disbursed by DOD), Federal employee travel payments, 

Federal salary payments, and Social Security benefit payments. 

• Offset of Federal salary payments through TOP has been implemented in partnership 

with USDA’s National Finance Center, the Department of the Interior, the U.S. Postal 

Service and DOD's Defense Finance and Accounting Service. TOP provides a more 

efficient process than the non-centralized salary offset process currently used by some 

Federal agencies. FMS plans to implement salary offset with the General Services 

Administration (one of the four payroll providers selected as part of the E-Payroll 

inititative) in FY 2004. 

• In January 2000, FMS began collecting state income tax debts by offsetting Federal 

income tax refunds, as authorized by the 1998 Internal Revenue Service Restructuring 

and Reform Act. In FY 2003, the number of states and territories participating in this 

process was 31, along with the District of Columbia. 

Continuous Tax Levy 

• In July 2000, FMS initiated Continuous Tax Levy, a program whereby delinquent 

Federal income tax debts are collected by levying nontax payments, as authorized by 

the Taxpayer Relief Act of 1997. Continuous Tax Levy includes levy of vendor, 

Federal employee salary, Office of Personnel Management retirement, and Social 

Security benefit payments. Continuous Tax Levy is accomplished through a process 

almost identical to that of offset, which is matching of delinquent debtor data with 

payment record data. This automated collection of the debt at the time of payment 

occurs after the delinquent taxpayer has been afforded due process, in accordance 

with the Internal Revenue Code. 
REPORT TO CONGRESS: RECEIVABLES AND DEBT COLLECTION ACTIVITIES OF 

FEDERAL AGENCIES 11 

2. Referrals 

TOTAL DEBT REFERRALS TO THE TREASURY OFFSET PROGRAM 

$23.28 

$47.15 

$26.84 

$52.73 

$0.39 

$54.69 

$28.78 

$68.37 

$2.37 

$82.53 

$31.02 

$71.20 

$3.21 

$81.16 

$31.58 

$75.12 

$4.13 

$80.44 

($30.00) 

$20.00 

$70.00 

$120.00 

$170.00 

$220.00 

Dollars in Billions 

Federal Tax N/A $54.69 $82.53 $81.16 $80.44 

State Income Tax N/A $0.39 $2.37 $3.21 $4.13 

Child Support $47.15 $52.73 $68.37 $71.20 $75.12 

Federal Nontax Debt $23.28 $26.84 $28.78 $31.02 $31.58 

Sep. 1999 Sep. 2000 Sep. 2001 Sep. 2002 Sep. 2003 

$70.4 

$134.66 

$182.05 $186.59 $191.27 

• As of September 30, 2003, the largest component of TOP’s delinquent debtor database 

was $80.44 billion in Federal income tax debts, available for matching to identify 

potential levies. However, only $15.03 billion of these tax debts has been "turned on," 

that is, due process has been completed and payments are subject to continuous levy. 

• Efforts by states, HHS’ Office of Child Support Enforcement (OCSE), and FMS to refer 

more delinquent child support obligations to TOP have resulted in referrals of $75.12 

billion as of September 30, 2003, a 59 percent increase in referrals from September 30, 

1999. 

• Referrals of nontax debts increased to $31.58 billion as of September 30, 2003, a 36 

percent increase in referrals from September 30, 1999. As of September 30, 2003, 

94.9 percent of the nontax debts eligible for mandatory referral to TOP have been 

referred. (See page 6 for a discussion on nontax debts eligible for referral to TOP.) 

• Referrals of state income tax debts rose to $4.13 billion at the end of FY 2003, an 

increase of $1.76 billion (74 percent) from the end of FY 2001. 

3. Collections 

• Total collections through TOP were $2.99 billion in FY 2003. Since enactment of the 

DCIA in April 1996, $17.8 billion has been collected through TOP. The chart below 

summarizes collections through TOP for the last five fiscal years. 
REPORT TO CONGRESS: RECEIVABLES AND DEBT COLLECTION ACTIVITIES OF 

FEDERAL AGENCIES 12 

Collections Through TOP In Millions of Dollars 

Type of Collection FY 1999 FY 2000 FY 2001 FY 2002 FY 2003 

Administrative Offset* $6 $17 $25 $84 $88 

Tax Refund Offset – 

Child Support (excluding 

tax rebates) 

$1,343 $1,389 $1,377 $1,463 $1,428 

Tax Refund Offset – 

Federal Nontax Debt 

(excluding tax rebates) 

$1,259 $1,167 $1,147 $1,048 $1,025 

Tax Refund Offset – 

State Income Tax Debt 

(excluding tax rebates) 

N/A $23 $79 $119 $152 

Tax Refund Offset – Tax 

Rebates*** N/A N/A $471 N/A $207 

Continuous Tax Levy N/A $0.1 $16 $60 $89 

Total Collected $2,608 $2,597** $3,117** $2,769 $2,990** 

*Collection of Federal nontax debts and child support debts by offsetting Federal nontax 

payments. 

**Numbers in column do not equal total due to rounding. 

***Tax rebate offsets for FY 2003 are for offsets of advance child tax credit payments. 

• Total collections through TOP increased in FY 2003 by $221 million over total 

collections in FY 2002. The primary reason for the increase in total collections was 

the $207 million collected as a result of offsets of advance child tax credit payments 

(tax rebates). 

• In FY 2003, administrative offset collections were $88 million, an increase over the 

$84 million collected in FY 2002. FY 2002 was the first full year that included 

offsets of Social Security payments to collect nontax debts. 

• Total tax refund offset collections (not including tax rebates) in FY 2003 for child 

support debts ($1.428 billion), and Federal nontax debts ($1.025 billion) were slightly 

less than the amounts collected in these categories in FY 2002. 

• Total collections of state income tax debts by offsetting Federal tax refunds increased by 

$33 million over the $119 million collected in FY 2002. 

• Collections under Continuous Tax Levy totaled $89 million in FY 2003, a 48 percent 

increase over the $60 million collected in FY 2002. The IRS maintains control over 

which Federal tax debts can be collected through the levy process. 
REPORT TO CONGRESS: RECEIVABLES AND DEBT COLLECTION ACTIVITIES OF 

FEDERAL AGENCIES 13 

C - CROSS-SERVICING AT FMS 

1. Description 

• Cross-Servicing is the process whereby agencies refer Federal nontax debts more than 

180 days delinquent to FMS for collection. Treasury applies a variety of collection 

tools once agencies refer their debts. Collection tools include Treasury demand 

letters, telephone calls to debtors, referral of debts to TOP, credit bureau reporting, 

use of PCAs, and referral of debts to DOJ for litigation. 

• Administrative wage garnishment (AWG) became available to Federal agencies 

through Cross-Servicing in FY 2001. Six agencies currently utilize AWG through the 

program. FMS continues to encourage Federal agencies to authorize the use of this 

debt collection tool through Cross-Servicing. 

2. Referrals 

• The calculation of the 

amount of debts 

eligible for referral is 

CROSS-SERVICING REFERRALS

described in this 

report in Section II 

A-3, above. The 

calculation of CrossServicing referrals 

excludes those debts 

no longer actively 

collected at FMS. 

• As of September 30, 

2003, 78 percent of 

$7.9 

$2.9 

$4.6 $5.1 

$7.9 

$0.0 

$2.0 

$4.0 

$6.0 

$8.0 

$10.0 

Dollars in 

Billions 

Referred by End of 

FY 

$2.9 $4.6 $5.1 $7.9 $7.9 

FY 1999 FY 2000 FY 2001 FY 2002 FY 2003 

all eligible debts were submitted to FMS for cross-servicing. (See page 6 for a 

discussion on nontax debts eligible for referral to Cross-Servicing.) The low 

percentage is due to reporting errors on the TROR and agency noncompliance with 

statutory debt referral requirements. Efforts are underway by FMS to identify, 

educate and assist those agencies that are not currently meeting their debt collection 

referral and/or reporting responsibilities. 
REPORT TO CONGRESS: RECEIVABLES AND DEBT COLLECTION ACTIVITIES OF 

FEDERAL AGENCIES 14 

3. Collections 

• Since the inception of the CROSS SERVICING & PRIVATE COLLECTION 

$10.9 $18.6 $0.0 

$50.0 

$100.0 

$150.0 

TOP $8.4 $10.4 $18.5 $25.7 

PCA $21.8 $27.8 $42.9 $73.3 

FMS $10.9 $18.6 $24.2 $35.2 

FY 2000 FY 2001 FY 2002 FY 2003 

Cross-Servicing program, 

FMS and the PCAs have 

brought in $352.2 million 

in collections. 

• In FY 2003, FMS and its 

PCAs collected $134.1 

million*, an increase of 

$48.5 million (57 percent) 

over FY 2002 collections. 

(*Number does not equal 

graph totals due to rounding.) 

• In each of the three 

categories of collections (referrals to TOP, collections by PCAs and collections at 

FMS's Debt Management Operations Center) there were increases in FY 2003 over 

the previous fiscal year. TOP collections through Cross-Servicing rose by 39 percent, 

PCA collections increased by 71 percent, and collections at the Debt Management 

Operations Center rose by 45 percent. 

• In addition to collecting debts, PCAs under contract with FMS also helped resolve 

delinquent debts by identifying debts that are not collectible due to reasons such as 

bankruptcy or death. In FY 2003, PCAs resolved debts valued at $88.1 million. 

Since the inception of the Cross-Servicing program in 1998, PCAs have resolved 

debts valued at over $250 million. 

D – HHS’ DEBT COLLECTION CENTER 

1. Description 

• The Program Support Center (PSC), established in 1995, is an operating division 

within HHS that collects debts on a fee-for-service basis for 10 different agencies 

within HHS and 10 agencies outside of HHS. 

• In January 1999, Treasury granted a three-year debt collection center designation to 

the PSC to collect three types of HHS debts: Health Profession debts, Unfiled Cost 

Report debts, and Medicare Secondary Payer debts. 

• In May 2002, the PSC's designation as a debt collection center was renewed and 

revised by Treasury. The current debt collection center designation covers HHS debts 

less than 180 days delinquent, HHS debts exempt from mandatory transfer to 

Treasury (i.e., Health Profession debts and Unfiled Cost Report debts), and grant Dollars in Millions 

$25.7 

AGENCY (PCA) COLLECTIONS 

$18.5 $73.3 

$21.8 

$8.4 $27.8 

$10.4 

$24.2 

$42.9 

$35.2 
REPORT TO CONGRESS: RECEIVABLES AND DEBT COLLECTION ACTIVITIES OF 

FEDERAL AGENCIES 15 

audit and program disallowances owed to HHS and other agencies for a period of 180 

days following the completion of any appeals. 

• The PSC uses all appropriate and available debt collection tools to collect debts 

referred for collection, including: demand letters and telephone calls, internal offsets, 

credit bureau reporting, referrals to TOP, referrals to PCAs, and litigation. In 

addition, PSC applies special debt collection tools available to certain debt types. For 

example, PSC uses denial of Medicare/Medicaid participation and publication of 

debtor information in collecting Health Profession debts, where appropriate. 

• The PSC also serves as HHS' conduit for referrals of delinquent debts to FMS for 

both TOP and Cross-Servicing. 

2. Referrals to the PSC PSC Receivables 

• Debt referrals to the PSC 

decreased significantly last 

year due to the change in debt 

collection center designation 

in 2002. This change resulted 

in Medicare Secondary Payer 

debts being referred to FMS 

for Cross-Servicing rather than 

the PSC. 

$0.00 

$0.50 

$1.00 

$1.50 

$2.00 

$2.50 

$3.00 

Dollars in billions 

Receivables $2.22 $2.15 $2.34 $2.17 $1.42 

FY 

1999 

FY 

2000 

FY 

2001 

FY 

2002 

FY 

2003 

$2.34 

$2.22 $2.15 $2.17 

$1.42 

• PSC receivables do not 

include amounts referred to FMS for Cross-Servicing. PSC referrals of HHS 

delinquent debts to FMS for Cross-Servicing totaled $4.3 billion at the end of FY 

2003. 

3. Collections 

• Since the inception of its 

debt collection program 

in 1995, the PSC has 

brought in over $2.2 

billion in collections. 

• Collections over the last 

five years evidence a 

general trend toward 

increased collections. A 

PSC Collections 

$0.0 

$200.0 

$400.0 

$600.0 

Dollars in Millions 

Total Collected $190.4 $216.9 $442.5 $403.5 $545.5 

FY 

1999 

FY 

2000 

FY 

2001 

FY 

2002 

FY 

2003 

$442.5 

$403.5 

$545.5 

$190.4 

$216.9 

sharp increase began in 

FY 2001 primarily due 

to increases in administrative (grant audit and program disallowance) debt 

collections.
REPORT TO CONGRESS: RECEIVABLES AND DEBT COLLECTION ACTIVITIES OF 

FEDERAL AGENCIES 16 

4. Health Profession Debt 

Health Profession Debt 

• Over the last five years, 

PSC has been especially 

effective in collecting 

Health Profession debts. 

During this time, debts 

more than 180 days 

delinquent have 

decreased by 20 percent, 

while annual collections 

have increased by 56 

percent. 

$356.8 $351.2 

$413.5 $440.2 $433.4 

$51.3 $54.6 $64.5 $70.0 $79.8 

$0.0 

$100.0 

$200.0 

$300.0 

$400.0 

$500.0 

Dollars in millions 

Delinquencies 

> 180 days 

$440.2 $433.4 $413.5 $356.8 $351.2 

Collections $51.3 $54.6 $64.5 $70.0 $79.8 

FY 1999 FY 2000 FY 2001 FY 2002 FY 2003 

E - LITIGATION AT THE DEPARTMENT OF JUSTICE (DOJ) 

1. Description 

• DOJ serves as the Federal Government’s “collector of last resort.” When a Federal 

agency cannot collect a debt administratively using debt collection tools such as those 

available under the DCIA, the agency may refer the debt to DOJ to pursue enforced 

collection through the courts. FMS’s Cross-Servicing program also has the option to 

refer agency debts to DOJ. 

• With judicial oversight, DOJ enforces collection by seizing bank, stock and similar 

accounts from debtors. In some cases, DOJ seizes and sells debtor-owned real estate 

and other property to enforce collection. DOJ also may garnish a higher percentage 

of the debtors’ wages than AWG allows. The courts can assist in establishing and 

enforcing payment arrangements for some debtors. 

• DOJ incorporates administrative debt collection tools, such as TOP, into the array of 

litigation tools available to enforce the collection of debts. 

• DOJ supplements its litigation resources by contracting with private counsel in 16 

judicial districts, and it plans to expand this program to additional districts in the 

future. 
REPORT TO CONGRESS: RECEIVABLES AND DEBT COLLECTION ACTIVITIES OF 

FEDERAL AGENCIES 17 

2. Referrals 

• Federal creditor agencies determine 

when to refer debts to DOJ. Both the 

numbers of debts referred and their 

value vary greatly from year to year 

for this reason. The decline in 

referrals to DOJ between 1999 and 

2002 can be attributed to the 

increased use of AWG by 

Education, and the low volume of 

referrals from other federal agencies. 

It is not clear if the increase in the 

number of referrals in FY 2003 

represents a reversal of the previous 

trend. 

Fiscal 

Year 

Total Civil 

Referrals - new 

debts opened 

Value of New 

Debts 

(in billions) 

1999 88,228 $2.8 

2000 50,572 $5.6 

2001 24,357 $5.4 

2002 8,443 $3.0 

2003 11,557 $2.1 

• Debt referrals vary greatly in amount, complexity and collectibility. Referrals include 

loans with clear debtor liability as well as multi-jurisdictional fraud cases which 

require extensive and lengthy investigation over a period of years to be resolved. 

3. Collections 

CASH COLLECTIONS FROM CIVIL LITIGATION 

AT DOJ 

• The amount DOJ collects in $4.0 any fiscal year includes 

recoveries for debt referred 

in prior fiscal years. $3.0 

• DOJ has collected $12.8 $2.0 

billion from civil litigation 

over the last five fiscal $1.0 

years. 

$0.0 

• DOJ has placed a greater FY FY FY FY FY 

emphasis on using its own 1999 2000 2001 2002 2003 

litigation resources in 

recent years to pursue those who defraud America’s taxpayers. Much of the increase 

in the amounts collected by DOJ in recent years reflects the success of these efforts. 

• More than 75 percent of the funds DOJ collects are received as electronic fund transfers. 

DOJ also accepts credit card payments and payments in foreign currency. In FY 2001, 

DOJ implemented a new program called EZPay that debits debtor bank accounts on a 

schedule authorized by the debtor. In FY 2003, over $500,000 was collected through 

EZPay. 

Dollars in Billions 

$3.1 $2.9 $3.1 

$2.2 

$1.5 
REPORT TO CONGRESS: RECEIVABLES AND DEBT COLLECTION ACTIVITIES OF 

FEDERAL AGENCIES 18 

F - DEBT CHECK – BARRING DELINQUENT DEBTORS 

• Federal agencies are required to deny loans, loan insurance, and loan guarantees to 

entities that owe delinquent non-tax debt to the Federal government pursuant to 31 

U.S.C. § 3720B and 31 C.F.R. § 285.13. Executive Order 13019 extends this bar to 

delinquent child support debtors whose debts have been referred to TOP for 

administrative offset. 

• Debt Check is a new initiative under the FMS debt program that is being employed to 

electronically identify delinquent debtors and potentially bar them from receiving 

federal loans, loan insurance, or loan guaranties. Initial roll out of Debt Check began 

in February 2003 with the Small Business Administration, and additional agencies 

will participate in the near future. 

Presently, at least three options exist for agencies and outside lenders to collect information 

on applicants: credit bureau reports, the Credit Alert Interactive Voice Response System 

(CAIVRS) managed by HUD, and the General Services Administration (GSA) sponsored 

web site listing those people or vendors barred from Federal procurement activities. Debt 

Check will complement these and other systems, serving as an additional source of debt 

information. 
REPORT TO CONGRESS: RECEIVABLES AND DEBT COLLECTION ACTIVITIES OF 

FEDERAL AGENCIES 19 

IV – SPECIFIC AGENCY ACTIVITIES 

A - EDUCATION STUDENT LOANS 

• Since November 1998, Treasury has exempted student loan debts collected by 

Education from the mandatory transfer to Treasury for Cross-Servicing, based on 

Education’s demonstrated expertise in collecting student loan debts. The Office of 

Postsecondary Education debt collection activities are centralized in the Borrower 

Services-Collections (BSC). BSC services Education's defaulted student loans (loans 

delinquent more than 270 days). Use of the full range of debt collection tools 

outlined in Education’s own statutes and the DCIA is authorized once the loan 

reaches default status. 

• Total student loan receivables (principal and interest) serviced by BSC have increased 

from $11.9 billion at FY 2000 year-end to $15.9 billion at FY 2003 year-end. Total 

delinquencies (principal and interest) have increased from $10.5 billion at FY 2000 

year-end to $13.3 billion at FY 2003 year-end; and collections have increased from 

$1.26 billion in FY 2000 to $1.62 billion in FY 2003. 

Education’s Use of Debt Collection Tools 

(in millions) 

Collection Tools FY 2000 

Collections 

FY 2001 

Collections 

FY 2002 

Collections 

FY 2003 

Collections 

Private Collection 

Agency $228 $229 $260 $322 

Litigation (DOJ) $25 $30 $30 $27 

Internal Offset $5 $3 $3 $2 

AWG (at agency and 

PCAs) $110 $134 $136 $150 

Treasury Offset $431 $450 $368 $398 

Other at Agency $65 $64 $170 $428 

Total Loan 

Consolidations (at 

agency and at PCAs) 

$389 $464 $365 $290 

• Recoveries from TOP increased 8.1 percent from $368 million in FY 2002 to $398 

million in FY 2003. Education still relies heavily on PCAs and refers every eligible 

debt as quickly as practicable to one of its twelve PCAs. Education effectively uses 

AWG to collect debts, primarily through its PCAs, which collected $142 million of 

the $150 million collected through AWG in FY 2003. Education also uses loan 

consolidations and loan rehabilitations to further reduce delinquencies by moving 

debts back into current repayment status. 
REPORT TO CONGRESS: RECEIVABLES AND DEBT COLLECTION ACTIVITIES OF 

FEDERAL AGENCIES 20 

• Collections by PCAs and by AWG have steadily increased over the last four years. 

Regarding PCAs, Education also tracks collection costs as a percent of collections. 

These costs have shown a declining trend from 18.6 percent in FY 1999 to 16 percent 

in FY 2003. This decline is the direct result of reduced negotiated rates in the FY 

2000 PCA contracts and increased usage of lower cost PCA recovery tools such as 

rehabilitation and consolidation. 

• PCAs rehabilitated $359 million in delinquent loans in FY 2003. This accounts for 

the substantial increase in collections in the "other at agency" category this fiscal year 

(see chart on previous page). Student loan statutes allow borrowers to rehabilitate if 

they make 12 consecutive on-time monthly payments, which is the preferred method 

for borrowers to cure defaults (other than paying the debt in full). 

• Education has successfully implemented a matching program with HHS and the 

National Directory of New Hire Database that, for FY 2003, resulted in the capture of 

new debtor location information on over one million accounts. Use of the New Hire 

Database led to an additional $429 million in student loan recoveries. 

B - SBA AND HUD LOAN ASSET SALES 

Fiscal 

Year 

Small Business 

Administration 

Dept. of Housing and Urban 

Development 

Unpaid 

Principal 

Balance 

Gross 

Proceeds 

Unpaid 

Principal 

Balance 

Gross 

Proceeds 

2000 $1.2 billion $530 million $480 million $467 million 

2001 $2.4 billion $1.6 billion $623 million $432 million 

2002 $1.27 billion $871 million $502 million $291 million 

2003 $651 million $444 million $1 billion $510 million 

TOTALS $5.5 billion $3.4 billion $2.6 billion $1.7 billion 

• SBA and HUD have established Loan Asset Sales programs to sell performing and 

non-performing loans to the public. SBA’s asset sales program has included the sale 

of direct loans and defaulted guaranteed loans. HUD’s Federal Housing 

Administration is taking action to sell HUD’s entire inventory of single family and 

multifamily mortgage notes held by the Secretary of HUD. 

• Over the last four fiscal years, SBA and HUD have sold over $8 billion in loan assets 

and collected more than $5 billion in gross proceeds from these sales. 
REPORT TO CONGRESS: RECEIVABLES AND DEBT COLLECTION ACTIVITIES OF 

FEDERAL AGENCIES 21 

APPENDIX I: FEDERAL RECEIVABLES AND DELINQUENT DEBT 

The table below presents the ending balances, collections, write-offs, delinquencies, and 

delinquencies greater than 180 days for the credit agencies with the highest ending 

balances at the end of FY 2003. The table groups all other agencies into a single category. 

At the end of FY 2003, 94 percent of the receivables belonged to the 12 agencies listed in 

the table below. 

$16,465 $1,115 $32,166 $21,178 

$25,425 $ 750 $6,613 $6,034 

$2,590 $919 $2,540 $1,676 

$7,596 $265 $763 $587 

$2,513 $612 $2,651 $2,546 

$776 $36 $555 $545 

$16,111 $1,399 $4,260 $3,932 

$7,289 $356 $4,542 $3,995 

$5,907 $44 $5,771 $5,559 

$4,348 $14 $2,291 $2,270 

$1,442 $629 $1,780 $1,521 

$2,664 $216 $1,109 $826 

$26,364 $831 $5,020 $4,604 

Amounts reported as write-offs represent the dollar amount of uncollectible receivables 

written off during FY 2003. 

“Currently Not Collectible” (CNC) represents the dollar amount of all debts that have 

been written off by the agency but not yet closed out. Debts classified as CNC for any 

reporting period continue to be reported in that category in subsequent reporting periods 

until closed out or collected. 

1

 Does not include delinquencies reported as Currently Not Collectible. 

Federal Receivables and Delinquent Debt 

as of September 30, 2003 

(in millions) 

Agency Ending 

Balance 

Collections Writeoffs Delinquencies Delinquencies 

> 1801

 Currently 

Not 

Collectible 

Education $108,449 

$100,731 

$13,599 

$12,986 

$11,082 

$8,627 

$8,557 

$8,222 

$6,612 

$6,587 

$6,136 

$3,338 

$17,379 

$440 

USDA $599 

SSA $6,842 

HUD $213 

EXIM $0 

AID $0 

HHS $3,369 

DOD $214 

FCC $44 

Energy $0 

SBA $2,885 

VA $0 

All Other $310 

Gov’t 

Total $312,305 $119,490 $7,780 $70,061 $55,273 $14,916 
REPORT TO CONGRESS: RECEIVABLES AND DEBT COLLECTION ACTIVITIES OF 

FEDERAL AGENCIES 22 

APPENDIX II: SOURCES OF DATA 

Data contained in this report were obtained from the following sources: 

Part II – Government Debt Portfolio, Collection and Write-offs and 

Appendix I 

Source – Treasury Report on Receivables Due From the Public – Fourth Quarter 

2003, as reported by Federal agencies to the Department of the Treasury. 

Part III – Government-Wide Collection Activities 

A – Use of Private Collection Agencies 

Sources – Department of Education, Borrower Services-Collections 

Department of the Treasury, Financial Management Service 

Department of Health and Human Services, Program Support Center 

B & C – Treasury Offset Program and Cross-Servicing 

Source – Department of the Treasury, Financial Management Service 

D – HHS’ Debt Collection Center 

Source – Department of Health and Human Services, Program Support Center 

E – Litigation at the Department of Justice 

Source – Department of Justice, Office of Debt Collection Management 

Part IV – Specific Agency Activities 

A – Education Student Loans 

Source - Department of Education, Borrower Services-Collections 

B – SBA and HUD Loan Asset Sales 

Sources – U.S. Small Business Administration 

Department of Housing and Urban Development