Wednesday, 

November 22, 2000 

Part II 

Department of the 

Treasury 

Department of 

Justice 

General Accounting 

Office 

31 CFR Chapter IX and Parts 900, et al. 

4 CFR Chapter II 

Federal Claims Collection Standards; 

Federal Claims Collection Standards, 

Removal of Obsolete Chapter; Final Rules 
70390 Federal Register / Vol. 65, No. 226 / Wednesday, November 22, 2000 / Rules and Regulations 

DEPARTMENT OF THE TREASURY 

DEPARTMENT OF JUSTICE 

31 CFR Chapter IX and Parts 900, 901, 

902, 903, and 904 

[A.G. Order No. 2325–2000] 

RIN 1510–AA57 and 1105–AA31 

Federal Claims Collection Standards 

AGENCIES: Department of the Treasury; 

Department of Justice. 

ACTION: Final rule. 

SUMMARY: The final rule revises the 

Federal Claims Collection Standards 

issued by the Department of Justice and 

the General Accounting Office on March 

9, 1984. The revised Federal Claims 

Collection Standards clarify and 

simplify Federal debt collection 

procedures and reflect changes under 

the Debt Collection Improvement Act of 

1996 and the General Accounting Office 

Act of 1996. 

DATES: This rule is effective December 

22, 2000. 

FOR FURTHER INFORMATION CONTACT: 

Gerry Isenberg, Financial Program 

Specialist, Debt Management Services, 

Financial Management Service, 

Department of the Treasury, at (202) 

874–0540; Ronda Kent or Ellen 

Neubauer, Senior Attorneys, Financial 

Management Service, Department of the 

Treasury, at (202) 874–6680; or John W. 

Showalter, Assistant Director, 

Commercial Litigation Branch, Civil 

Division, Department of Justice, at (202) 

307–0244. This document is available 

for downloading from the Financial 

Management Service website at: http:// 

www.fms.treas.gov/debt. 

SUPPLEMENTARY INFORMATION: 

Background 

The Federal Claims Collection 

Standards (FCCS) provide Governmentwide debt collection procedures and 

policies. This final rule revises the 

FCCS issued by the Department of 

Justice (DOJ) and the General 

Accounting Office on March 9, 1984. 

The revised FCCS reflect legislative 

changes to Federal debt collection 

procedures enacted under the Debt 

Collection Improvement Act of 1996 

(DCIA), Public Law 104–134, 110 Stat. 

1321, 1358 (Apr. 26, 1996), as part of the 

Omnibus Consolidated Rescissions and 

Appropriations Act of 1996. Detailed 

rules governing several of these new 

DCIA debt collection procedures have 

been published in the Federal Register. 

See, e.g., Transfer of Debts to Treasury 

for Collection (64 FR 22906, Apr. 28, 

1999); Administrative Wage 

Garnishment (63 FR 25136, May 6, 

1998); Offset of Federal Benefit 

Payments to Collect Past-Due, Legally 

Enforceable Nontax Debt (63 FR 711204, 

Dec. 23, 1998); and Barring Delinquent 

Debtors From Obtaining Federal Loans 

or Loan Insurance or Guarantees (63 FR 

67754, Dec. 8, 1998). The Financial 

Management Service (FMS) of the 

Department of the Treasury (Treasury) 

will publish other detailed rules 

governing debt collection tools 

authorized by the DCIA, including 

additional centralized administrative 

offset rules, to be codified under 31 CFR 

part 285. 

The revised FCCS provide agencies 

with greater latitude to adopt agencyspecific regulations, tailored to the legal 

and policy requirements applicable to 

the various types of Federal debt, to 

maximize the effectiveness of Federal 

debt collection procedures. 

The Secretary of the Treasury has 

been added as a co-promulgator of the 

FCCS in accordance with section 

31001(g)(1)(C) of the DCIA. The 

Comptroller General has been removed 

as a co-promulgator in accordance with 

section 115(g) of the General 

Accounting Office Act of 1996, Public 

Law 104–316, 110 Stat. 3826 (Oct. 19, 

1996). Treasury and DOJ are publishing 

the revised FCCS as a joint final rule 

under new chapter IX, Title 31, Code of 

Federal Regulations. The revised FCCS 

supersede the current FCCS codified at 

4 CFR parts 101–105. On December 31, 

1997, Treasury and DOJ requested 

public comment on a proposed revision 

of the FCCS. This final rule is being 

promulgated after consideration of the 

comments received. A final rule 

removing the current FCCS from Title 4 

of the Code of Federal Regulations is 

being published elsewhere in this issue 

of the Federal Register. 

Discussion of Comments 

In response to the Notice of Proposed 

Rulemaking (NPRM) concerning 

revisions to the FCCS (62 FR 68476, 

Dec. 31, 1997), Treasury and DOJ 

received comments from various 

Federal agencies, a private law firm, a 

private collection agency, and a private 

citizen. Several agency commenters 

recommended changes pertinent to the 

requirements of specific agency 

programs. Since the FCCS focus on 

Government-wide debt collection 

procedures and policy, suggested 

changes pertinent only to specific 

agencies were not incorporated into the 

final rule. Nevertheless, the final rule 

provides sufficient flexibility for 

agencies to adopt agency-specific 

regulations tailored to the legal and 

policy requirements of their particular 

programs. 

Other commenters requested 

clarification of the applicability of the 

FCCS rules regarding debt collection 

and compromise when specific agency 

statutory or regulatory authorities 

address those activities. As noted in 

§ 900.1 (Prescription of Standards) of 

the revised FCCS, the FCCS apply 

unless agency-specific statutory or 

regulatory provisions specifically 

govern particular debt collection 

activities. Consequently, the FCCS 

govern when an agency has been given 

only general debt collection authority to 

manage debt obligations arising under 

its particular programs. See, e.g., 42 

U.S.C. 3211(4) (generally authorizing 

the Secretary of Commerce to collect 

obligations arising under the Economic 

Opportunity Program; therefore, the 

FCCS apply). 

A few commenters recommended that 

the FCCS be reconciled with specific 

provisions of Treasury’s ‘‘Report on 

Receivables Due from the Public.’’ 

Treasury’s ‘‘Report on Receivables’’ has 

been revised for several reasons, one of 

which is to ensure consistency with the 

FCCS and the DCIA. Information 

concerning the revised ‘‘Report on 

Receivables’’ is available from FMS’s 

website at http://www.fms.treas.gov. 

Several of the commenters suggested 

technical revisions to the proposed rule; 

pertinent or necessary technical 

suggestions were incorporated into the 

final rule. A review of the substantive 

comments received in response to the 

FCCS NPRM is provided in the 

following ‘‘Comment Analysis,’’ which 

includes a discussion of Treasury and 

DOJ’s determination whether to 

incorporate specific suggestions into the 

final rule. The Comment Analysis is 

organized by reference to the paragraphs 

in the NPRM that were the subject of 

public comment. 

Comment Analysis 

NPRM § 900.1—Prescription of 

Standards 

One commenter recommended that 

Treasury publish an updated ‘‘Managing 

Federal Receivables,’’ a supplement to 

the Treasury Financial Manual, to 

ensure consistency with the FCCS and 

the DCIA. NPRM § 900.1(a) references 

the ‘‘Managing Federal Receivables’’ 

publication as a source for agencies to 

locate additional guidance on debt 

collection issues. Treasury will update 

this publication consistent with the 

final rule and the DCIA. The guidance 

in the current edition of ‘‘Managing 

Federal Receivables’’ applies to the 
Federal Register / Vol. 65, No. 226 / Wednesday, November 22, 2000 / Rules and Regulations 70391 

extent that it is not inconsistent with the 

final rule and the DCIA. 

The final rule does not incorporate 

one commenter’s suggestion to prescribe 

a standard under the FCCS for the 

‘‘write-off’’ of debts (i.e., removal of the 

debt from the agency’s accounting 

records), consistent with ‘‘Managing 

Federal Receivables’’ guidance. The 

DCIA gives the Office of Management 

and Budget (OMB) the responsibility to 

review the standards and policies of 

Federal agencies regarding the ‘‘writeoff’’ of delinquent debts, which is an 

accounting process. See 31 U.S.C. 3711 

note. OMB Circular A–129, ‘‘Policies for 

Federal Credit Programs and Nontax 

Receivables,’’ is being revised to 

incorporate new policy guidelines for 

writing off uncollectible Federal debt. 

One commenter’s recommendation to 

delete the reference in NPRM § 900.1(a) 

to OMB Circular A–129 was not 

adopted. OMB Circular A–129 

continues to provide valuable guidance 

and applies to the extent not 

inconsistent with the final rule and 

DCIA requirements. OMB Circular A– 

129 is being revised to incorporate new 

policy guidelines consistent with the 

final rule and the DCIA. 

NPRM § 900.2—Definitions and 

Construction 

Several commenters suggested that 

the definition of a ‘‘delinquent’’ debt 

under NPRM § 900.2(b) is too vague and 

that the date of delinquency should be 

more clearly defined. Under NPRM 

§ 900.2(b), a debt is delinquent ‘‘if it has 

not been paid by the date specified in 

the agency’s initial written demand for 

payment or applicable agreement or 

instrument (including a postdelinquency payment agreement), 

unless other satisfactory payment 

arrangements have been made.’’ The 

final rule has not been amended to 

incorporate this comment. The 

‘‘delinquency’’ definition applies to all 

agency programs and obligations owed 

to the United States. Agency-specific 

regulations may further clarify the 

definition of ‘‘delinquency’’ as 

applicable to specific agency program 

requirements and particular types of 

debt. See Treasury’s final rule, Barring 

Delinquent Debtors From Obtaining 

Federal Loans or Loan Insurance or 

Guarantees (63 FR 67754, Dec. 8, 1998), 

for an example of the term ‘‘delinquent’’ 

being defined for a specific, limited 

purpose. 

NPRM § 900.3—Antitrust, Fraud, and 

Tax and Interagency Claims Excluded 

One commenter suggested amending 

NPRM § 900.3(a) to provide that the 

exclusion from the application of the 

FCCS to debts involving fraud (whereby 

DOJ retains authority over such debts) 

applies only to debts known to involve 

fraud at the time a debt is transferred to, 

or processed by, a private collection 

agency. No change has been made to the 

final rule to incorporate this comment 

since only DOJ has the authority to 

compromise, suspend, or terminate 

collection action on such claims. 

Accordingly, DOJ retains sole authority 

under the final rule over activity on all 

debts involving fraud. Private collection 

agencies that become aware of 

fraudulent activity on the part of the 

debtor (or any third party) at any time 

must cease collection activity and 

promptly return the debt back to the 

referring agency for coordination with 

DOJ. 

NPRM § 901.1—Aggressive Agency 

Collection Activity 

Comments involving the provisions 

under NPRM § 901.1 related to the DCIA 

requirement that agencies transfer to 

Treasury nontax debts that have been 

delinquent for more than 180 days are 

outside the scope of the FCCS. A final 

rule, published by Treasury (64 FR 

22906, Apr. 28, 1999), provides 

guidance regarding the DCIA transfer of 

debt requirement. See also 31 U.S.C. 

3711(g). 

One commenter suggested that the 

final rule be amended to clarify whether 

the 180-day delinquency period begins 

before or after the 30-day period within 

which a debtor may pay a debt without 

penalties or interest. See NPRM 

§ 901.10(g). No change has been made to 

the final rule to incorporate this 

comment. The 180-day delinquency 

period begins to run on the date a debt 

becomes delinquent, that is, when the 

debt is not paid on the date due or the 

date as specified in accordance with 

§ 900.2(b) of the NPRM and final rule. 

A debt is delinquent notwithstanding 

any statutory or regulatory grace period 

for the assessment or payment of 

interest, administrative costs, or 

penalties. 

NPRM § 901.2—Demand for Payment 

One commenter recommended that 

the final rule clarify that the provision 

under NPRM § 901.2(a) providing that 

‘‘[g]enerally, one demand letter should 

suffice’’ does not prohibit agencies from 

sending progressively stronger demand 

letters. No change is necessary to the 

final rule to incorporate this comment. 

NPRM § 901.2(a) does not prohibit 

agencies from sending more than one 

demand letter. 

In accordance with one commenter’s 

suggestion, § 901.2(b)(3) of the final rule 

has been amended to clarify that the 

term ‘‘late charges’’ refers to interest, 

penalties, and administrative costs. 

The final rule does not adopt one 

commenter’s suggestion to delete the 

requirement under NPRM § 901.2(d) 

that agency demand letters discuss 

alternative methods of payment. The 

NPRM did not include such a 

requirement. Contrary to the 

commenter’s concern, NPRM § 901.2(d) 

does not limit agency discretion; it 

merely provides that a demand letter 

should inform a debtor of the agency’s 

‘‘willingness to consider’’ alternative 

methods of payment to satisfy the debt. 

Many debt collection tools require 

agencies to give debtors the opportunity 

to enter into a written agreement with 

the head of an agency to repay the debt. 

See, e.g., 31 U.S.C. 3716(a)(4) 

(administrative offset authority); 31 

U.S.C. 3720A (tax refund offset); 31 

U.S.C. 3720D (wage garnishment); see 

also NPRM § 901.9 (establishing 

standards for the collection of 

delinquent debts in installment 

payments). 

A related comment, recommending 

that agencies be given the flexibility to 

include only those provisions of 

demand letters listed in NPRM 

§ 901.2(d) ‘‘as appropriate to the 

circumstances,’’ has not been 

incorporated into the final rule. Section 

901.2(d), as proposed, does not restrict 

an agency’s discretion to tailor its use of 

particular debt collection tools in 

specific cases. NPRM § 901.2(d) 

provides only that an agency should 

provide notice to a debtor in a demand 

letter of its willingness to discuss 

alternative methods of payment, the 

agency’s remedies to enforce payment of 

the debt, information concerning the 

requirement that debts over 180 days 

delinquent be transferred to Treasury 

(see discussion involving NPRM § 901.1 

above), and applicable waiver 

consideration information. Demand 

letters also must satisfy the other 

requirements of NPRM § 901.2, 

including, but not limited to, providing 

notice to the debtor of the basis of the 

indebtedness and the opportunity 

available to the debtor for a review 

within the agency. 

Another commenter suggested 

deleting the second reference to 

‘‘collection agencies’’ under NPRM 

§ 901.2(d) to avoid duplication. The 

final rule has not been amended to 

incorporate this suggested technical 

amendment. The first reference to 

‘‘collection agencies’’ relates to an 

agency’s policy with regard to the use of 

this debt collection tool. The second 

reference refers to the enforcement 

action that will be taken regarding the 
70392 Federal Register / Vol. 65, No. 226 / Wednesday, November 22, 2000 / Rules and Regulations 

specific debt referenced in the demand 

letter. 

One commenter suggested deleting 

the requirement under NPRM § 901.2(g) 

that agencies advise litigation counsel 

for the Government that a debtor has 

been given notice that litigation may be 

initiated unless the debt can be 

collected administratively. The 

commenter incorrectly interprets this 

provision as requiring agencies to advise 

litigation counsel at the time the 

agency’s notice is given to the debtor, 

rather than at the time the debt is 

referred to DOJ for litigation. No change 

has been made to the final rule to 

incorporate this comment. 

NPRM § 901.3—Collection by 

Administrative Offset 

The administrative offset section has 

been redrafted in the final rule to 

emphasize that disbursing official offset, 

which is renamed as centralized 

administrative offset in the final rule, is 

the primary administrative offset 

collection tool, consistent with the 

DCIA. See 31 U.S.C. 3716(c)(6) 

(requiring Federal agencies to notify the 

Secretary of the Treasury of all debts 

over 180 days delinquent for purposes 

of conducting centralized administrative 

offset). 

Consistent with this approach, the 

final rule provides that the nondisbursing official administrative offset 

process, which is renamed as noncentralized administrative offset in the 

final rule, is a backup procedure to be 

used by creditor agencies on an ad hoc 

case-by-case basis when centralized 

administrative offset is otherwise not 

available or appropriate. For example, 

agencies should utilize the ad hoc noncentralized offset process to offset 

payments that have not been 

incorporated into the centralized 

administrative offset process. In any 

event, an agency’s collection by the noncentralized administrative offset process 

shall not provide the grounds to 

invalidate any offset on the basis that 

centralized offset was not used. 

In addition, NPRM § 901.4 

(authorizing creditor agencies to request 

the Office of Personnel Management 

(OPM) to conduct administrative offsets) 

has been merged into revised § 901.3 of 

the final rule since the procedure 

described in NPRM § 901.4 is a form of 

non-centralized administrative offset. 

Revised § 901.3(d) of the final rule refers 

to OPM offsets of Civil Service 

Retirement and Disability Fund (Fund) 

payments. The Fund includes payments 

made under the Federal Employee 

Retirement System. 

One commenter suggested that NPRM 

§ 901.3(a)(5) is overly restrictive in that 

it permits administrative offset only 

after the debtor has been given written 

notice of the type and amount of debt, 

the intent to collect the debt by offset, 

an opportunity to inspect and copy 

agency records pertaining to the debt, an 

opportunity for review of indebtedness, 

and an opportunity to make a written 

repayment agreement. No change has 

been made to the final rule to 

incorporate this comment. NPRM 

§ 901.3(a)(5) and the final rule track the 

statutory due process requirements 

under 31 U.S.C. 3716(a). 

Another commenter noted that NPRM 

§ 901.3(a)(5) provides that agency 

regulations must specify that 

administrative offset can be initiated 

only after the debtor has ‘‘received’’ 

written notice of the due process 

requirements under 31 U.S.C. 3716(a). 

The commenter suggested that an 

agency would have no way of verifying 

that a debtor has actually received the 

notice required by NPRM § 901.3(a)(5). 

Revised § 901.3(b)(4)(ii) of the final rule 

has been changed to clarify that the 

required due process notice must be 

‘‘sent’’ to the debtor. This is consistent 

with constitutional and statutory due 

process requirements, provided that 

creditor agencies ensure that reasonable 

steps are taken to send the notice to the 

debtor’s last known address. See, e.g., 

Setlech v. United States, 816 F. Supp. 

161 (E.D.N.Y. 1993) (mailing of tax 

refund offset notice on behalf of 

Department of Education to debtor’s last 

known address satisfied due process 

even though debtor did not receive 

notice prior to offset; notice was 

reasonably calculated to apprise debtor 

of impending action); see also United 

States v. 51 Pieces of Real Property, 17 

F.3d 1306, 1316 (10th Cir. 1996)(due 

process does not require actual receipt 

of notice provided Government acts 

reasonably in selecting means likely to 

inform the persons affected). 

Another commenter suggested that all 

references under NPRM §§ 901.3(a) and 

901.4(d) to pre-administrative offset 

‘‘oral hearings’’ be deleted since the 

statutory authority for administrative 

offset under 31 U.S.C. 3716(a)(3) only 

provides the debtor with an 

‘‘opportunity for a review’’ within the 

agency. No change has been made to 

revised § 901.3(e) of the final rule to 

incorporate this comment because oral 

hearings may be required in those 

instances where the determination of 

indebtedness cannot be made by a 

review of the written record. An oral 

hearing is not required when the 

question of indebtedness can be 

resolved by a review of the written 

record. See revised § 901.3(e) of the final 

rule. 

A second commenter suggested 

deleting the provision under NPRM 

§ 901.3(a)(7)(i)(A) requiring an oral 

hearing under certain circumstances 

when a waiver statute authorizes or 

requires an agency to consider waiver of 

the indebtedness. This provision has 

been deleted from revised § 901.3 of the 

final rule since oral hearing 

requirements involving waiver requests 

are governed by specific statutory and 

regulatory waiver authorities, rather 

than the FCCS. 

One commenter suggested revising 

NPRM § 901.3(b)(1) to provide that the 

administrative offset of a reimbursement 

payment could substantially interfere 

with, or defeat the purposes of, the 

program giving rise to the payment. The 

final rule was not changed to 

incorporate this comment. Under the 

DCIA, the Secretary of Treasury 

determines whether a particular type of 

payment should be exempt from 

administrative offset. See 31 U.S.C. 

3716(c)(3)(B). Therefore, exemption is 

not addressed in this rule. 

One commenter suggested that NPRM 

§ 901.3(c)(5) be revised to clarify its 

application to non-Treasury disbursing 

officials, such as the Department of 

Agriculture’s Commodity Credit 

Corporation. No change to the final rule 

is necessary. The debtor/payee 

notification requirements under revised 

§ 901.3(b)(3) of the final rule apply to 

both Treasury and non-Treasury 

disbursing officials conducting 

centralized administrative offsets. As 

required by the DCIA, Treasury 

disbursing officials and non-Treasury 

disbursing officials, such as officials of 

the Department of Defense, United 

States Postal Service, any other 

Government corporation, or any 

Treasury-designated United States 

disbursing office, are required to 

conduct administrative offsets. See 31 

U.S.C. 3716(c)(1)(A). 

Another commenter recommended 

adding a provision to NPRM 

§ 901.3(c)(5) requiring disbursing 

officials to notify payment and creditor 

agencies once an administrative offset of 

a payment has been made. This 

comment is beyond the scope of the 

final rule. Detailed regulations involving 

various types of DCIA administrative 

offset procedures are codified under 31 

CFR part 285. 

NPRM § 901.4—Administrative Offset 

Against Amounts Payable From Civil 

Service Retirement and Disability Fund 

and the Federal Employee Retirement 

System 

NPRM § 901.4 addresses ad hoc noncentralized administrative offsets 

conducted by OPM to satisfy debts that 
Federal Register / Vol. 65, No. 226 / Wednesday, November 22, 2000 / Rules and Regulations 70393 

have not been referred for centralized 

administrative offset. Under the final 

rule, this provision has been merged 

into § 901.3 since the procedure 

described under NPRM § 901.4 is a type 

of non-centralized administrative offset 

that should be utilized when centralized 

administrative offset is not available or 

appropriate. Accordingly, NPRM 

§§ 901.5, 901.6, 901.7, 901.8, 901.9, 

901.10, 901.11, 901.12, 901.13 have 

been redesignated in the final rule as 

§§ 901.4, 901.5, 901.6, 901.7, 901.8, 

901.9, 901.10, 901.11, 901.12, 

respectively. This change properly 

emphasizes the requirement for 

centralized administrative offset under 

the DCIA. See, e.g., 31 U.S.C. 3716(c)(6) 

(mandating that Federal agencies notify 

the Secretary of the Treasury of all debts 

over 180 days delinquent for purposes 

of centralized administrative offset). 

NPRM § 901.5—Reporting Debts 

The final rule does not incorporate 

one commenter’s suggestion to delete 

the requirement under NPRM § 901.5(a) 

that agencies develop and implement 

procedures for reporting delinquent 

debts to credit bureaus. The commenter 

stated that this provision is not 

necessary because Treasury and 

Treasury-designated debt collection 

centers, not creditor agencies, will be 

responsible for reporting debts that have 

been transferred to Treasury or 

Treasury-designated debt collection 

centers, as required by the DCIA and 

NPRM § 901.1(e). Creditor agencies are 

reminded that the DCIA mandates credit 

bureau reporting for delinquent debts 

(see 31 U.S.C. 3711(e)), and that debts 

should be reported early in the debt 

collection process. Nevertheless, 

agencies could develop procedures, 

consistent with this rule, to provide that 

credit bureau reporting will be handled 

by Treasury or Treasury-designated debt 

collection centers for transferred debts. 

Another commenter suggested that 

the mandatory language of NPRM 

§ 901.5(a) requiring agencies to develop 

credit bureau reporting procedures 

should not apply to an agency whose 

statutory authority provides that the 

agency ‘‘may,’’ but is not required to, 

report delinquent debts to credit 

bureaus. No change is necessary to 

address this concern because § 900.1 of 

the final rule specifically provides that 

the FCCS govern an agency’s debt 

collection activity ‘‘unless specific 

agency statutes or regulations apply to 

such activities.’’ 

Section 901.4(b) of the final rule has 

not been amended to incorporate a 

commenter’s suggestion to mandate that 

agencies report delinquent debts to the 

Department of Housing and Urban 

Development’s Credit Alert Interactive 

Voice Response System (CAIVRS). 

Agencies are strongly encouraged to 

report to CAIVRS when feasible. 

Reporting will assist agencies in 

complying fully with the DCIA 

provision, codified at 31 U.S.C. 3720B, 

barring delinquent debtors from 

obtaining Federal financial assistance. 

Agencies can utilize CAIVRS to 

determine whether a loan applicant is 

delinquent on obligations owed the 

United States. However, because 

reporting to CAIVRS may not be feasible 

in every case, reporting, while strongly 

encouraged, is not mandatory. 

NPRM § 901.6—Contracting for Private 

Collection Contractors and To Locate 

and Recover Unclaimed Assets 

NPRM § 901.6(b) has been revised to 

clarify that Federal agencies may refer 

debts to private collection contractors 

pursuant to a contract between the 

agency and the private collection 

contractor only if such debts are not 

subject to the DCIA requirement to 

transfer debts to Treasury for debt 

collection services, e.g., debts are less 

than 180 days delinquent. See 31 U.S.C. 

3711(g); 31 CFR 285.12(e). Agencies also 

may refer debts to a private collection 

contractor listed on FMS’s schedule of 

private collection contractors provided 

they do so in accordance with 

procedures established by FMS. 

The final rule does not incorporate 

one commenter’s recommendation that 

NPRM § 901.6(a)(1) be amended to 

allow agencies to authorize private 

collection contractors to compromise, 

suspend, or terminate collection 

activity, and refer for litigation debts 

less than a specific threshold amount. 

Federal law requires agencies to retain 

the authority ‘‘to resolve a dispute, 

compromise a debt, end collection 

action, and refer a matter to the 

Attorney General to bring a civil 

action.’’ 31 U.S.C. 3718(a)(1). Nothing in 

§ 901.5(a)(1) of the final rule prohibits 

agencies from establishing agencyspecific compromise review procedures 

within the scope of 31 U.S.C. 3718(a)(1). 

For example, agencies could set 

parameters within which private 

collection contractors could 

compromise debt. 

Another commenter suggested that 

the final rule clarify that private 

collection contractors collecting debts 

on behalf of creditor agencies are 

authorized to invoke certain agency 

rights, including cross-default on 

obligations, set-off, and certain 

Governmental defenses. No change has 

been made to incorporate this comment 

which is beyond the scope of the final 

rule. Private collection contractors 

should contact the creditor agency 

before invoking any rights with respect 

to the agency’s debt. 

One commenter suggested that NPRM 

§ 901.6 be amended to clarify that 

agencies are authorized to contract for 

debtor asset and income search reports. 

Such reports could be used by DOJ 

litigation attorneys and other agencies to 

determine whether, and to what extent, 

debtors have assets which could be 

pursued to satisfy delinquent 

obligations. Section 901.5(e) has been 

added to the final rule to incorporate 

this comment. 

The final rule also provides that 

debtor asset and income search report 

contracts, private collection contractors 

contracts, and contracts to locate and 

recover unclaimed assets of the United 

States may be paid for out of amounts 

collected, consistent with 31 U.S.C. 

3718(d), unless otherwise prohibited by 

law. 

The final rule does not incorporate 

one commenter’s suggestion to amend 

NPRM § 901.6 to limit the time a debt 

may remain with a private collection 

contractor to a 180-day period, after 

which the debt should be referred to 

DOJ for enforced collection. The time 

period that a debt is at a private 

collection contractor is more 

appropriately a matter of contract 

between the private collection 

contractor and the Federal agency; the 

setting of a regulatory time limit would 

not further the goal of the FCCS to 

provide agencies with greater flexibility. 

In addition, debts are referred to DOJ 

after a private collection contractor has 

been unable to collect the debt, and only 

when it is appropriate to do so. See part 

904 (Referrals to Department of Justice). 

NPRM § 901.9—Collection by 

Installments 

One commenter suggested amending 

NPRM § 901.9(a) to allow agencies to 

accept installment payments without 

independent verification of the debtor’s 

inability to pay. The commenter stated 

that the change would give agencies 

more flexibility in cases involving very 

small debts. The final rule does not 

incorporate this suggestion because the 

FCCS only require such verification 

‘‘whenever possible.’’ 

One commenter suggested amending 

NPRM § 901.9 to clarify the application 

of installment payments to satisfy 

multiple debts as provided in the 1984 

FCCS (4 CFR 102.11(b)). The application 

of installment payments under such 

circumstances varies depending on the 

type of debt. Agencies may address this 

issue in agency-specific regulations. In 

addition, further guidance will be 

issued in the Treasury Financial Manual 
70394 Federal Register / Vol. 65, No. 226 / Wednesday, November 22, 2000 / Rules and Regulations 

supplement ‘‘Managing Federal 

Receivables.’’ 

NPRM § 901.10—Interest, Penalties, and 

Administrative Costs 

One commenter suggested that the 

final rule clarify whether NPRM 

§ 901.10(a) applies to Social Security 

Administration debts. Section 204(f)(1) 

of the Social Security Act (Act) governs 

the charging of interest, penalties, and 

administrative costs for social security 

debts. The Act provides that the Social 

Security Administration ‘‘may,’’ but is 

not required to, charge interest, 

penalties, and administrative costs. No 

change to the final rule is required since 

the FCCS do not apply when specific 

statutes or regulations govern particular 

agency debt collection activities. See 

NPRM § 900.1 (Prescription of 

Standards). 

Several commenters suggested that 

the final rule provide a more precise 

standard for the ‘‘date of delinquency’’ 

that triggers the charging of interest, 

penalties, and administrative costs 

under NPRM § 901.10. One commenter 

recommended defining the ‘‘date of 

delinquency’’ as the ‘‘day after the due 

date contained in the initial demand 

letter.’’ A second commenter suggested 

retaining the current standard under 4 

CFR 102.13(b) of the FCCS (‘‘Interest 

shall accrue from the date on which 

notice of the debt and the interest 

requirements is first mailed or handdelivered to the debtor.’’). The final rule 

has not been changed to incorporate 

these comments. Consistent with the 

intent of the FCCS to provide 

Government-wide debt collection 

standards, the NPRM § 900.2(b) general 

definition of ‘‘delinquency’’ is broad 

enough to apply to all Federal agency 

programs that give rise to delinquent 

debts. Federal agencies should 

promulgate debt collection regulations 

tailored to specific agency program 

requirements. Nothing in the FCCS 

prohibits an agency from specifying 

that, for purposes of a particular type of 

debt, ‘‘date of delinquency’’ is the date 

on which notice of the debt and the 

accrual of interest is first mailed or 

hand-delivered to the debtor, or some 

other appropriate standard. 

NPRM § 902.2—Bases for Compromise 

As suggested by one commenter, the 

final rule amends NPRM § 902.2(g) to 

clarify that, when evaluating a 

compromise proposal, agencies need 

only obtain a current financial statement 

from a debtor to assess the merits of a 

proposal that is based on the debtor’s 

inability to pay. 

NPRM § 902.6—Consideration of Tax 

Consequences to the Government 

In response to one commenter’s 

suggestion that NPRM § 902.6 be 

amended to require agencies to report 

discharges of indebtedness to the 

Internal Revenue Service (IRS), new 

§ 903.5 (Discharge of indebtedness; 

reporting requirements) has been added 

to the final rule. Section 903.5(a) of the 

final rule requires agencies to make a 

determination that further collection 

action is not warranted before making a 

determination to discharge a debt (also 

referred to as ‘‘close out’’ for Federal 

government accounting purposes). 

Specifically, § 903.5(a) of the final rule 

requires an agency to take all 

appropriate steps to collect a debt in 

accordance with 31 U.S.C. 3711(g), as 

appropriate. It also provides that 

agencies may not discharge a debt until 

the requirements of 31 U.S.C. 3711(i) 

(sale of debt) have been met. After a 

debt has been reported to the IRS as 

discharged, the Federal government may 

not take any further legal action to 

collect such debt, including the filing or 

continuation of judgment liens. The IRS 

is responsible for the collection of taxes 

due, if any, when the discharge is 

reported as income to the debtor. 

Before discharging a debt, agencies 

must terminate debt collection action. 

The FCCS contain provisions related to 

the termination of debt collection action 

at § 903.3 of the final rule. Policies and 

standards with respect to write-off, an 

accounting process outside the scope of 

the FCCS, are found in OMB Circular 

A–129, ‘‘Policies for Federal Credit 

Programs and Nontax Receivables,’’ 

which is being revised to incorporate 

new write-off policy guidelines. 

Section 903.5(c) provides that 

agencies must report a discharge of 

indebtedness in accordance with the 

requirements of 26 U.S.C. 6050P and 26 

CFR 1.6050P–1. Discharge of 

indebtedness is reported on IRS Form 

1099-C. An agency may request 

Treasury or Treasury-designated debt 

collection centers to file such a 

discharge report to the IRS on the 

agency’s behalf. A cross reference to 

§ 903.5 has been added to § 902.6 in the 

final rule. 

NPRM § 902.7—Mutual Releases of 

Debtor and the Government 

In response to one commenter’s 

suggestion, NPRM § 902.7 has been 

revised to emphasize the mutuality of 

the debtor and Government releases. 

Additional language has been added in 

the final rule to NPRM § 902.7 to clarify 

the impact of a compromise on potential 

related claims against the Government 

when a mutual release has not been 

executed. Specifically, unless 

prohibited by law, when a debt is 

compromised but a mutual release has 

not been executed, the debtor is deemed 

to have waived any claims and causes 

of action against the Government or its 

officials arising from the same 

transaction related to the compromised 

debt. 

NPRM § 903.2—Suspension of 

Collection Activity 

The final rule does not incorporate 

one commenter’s suggestion that NPRM 

§ 903.2(c)(2) be amended to give 

agencies the flexibility to suspend 

collection activity for groups or 

categories of debtors. NPRM 

§ 903.2(c)(2) addresses a request for 

waiver or administrative review of a 

debt when a statute does not mandate 

suspension of collection activity during 

the pendency of such requests. The 

determination of whether to suspend 

collection activity in these cases should 

be reviewed on a case-by-case basis. A 

case-by-case standard is appropriate 

because it ensures that agencies review 

individual cases to confirm that waiver 

or indebtedness reconsideration 

requests are not frivolous or made 

primarily for the purpose of delaying 

collection. Nothing in the FCCS prohibit 

suspension of collection activity by the 

agency for groups or categories of 

debtors when appropriate. 

[NEW] § 903.5—Discharge of 

Indebtedness; Reporting requirements 

See the discussion related to NPRM 

§ 902.6, above, for an analysis of new 

§ 903.5 of the final rule (Discharge of 

indebtedness; reporting requirements). 

NPRM § 904.1—Prompt Referral 

One commenter suggested amending 

NPRM § 904.1 to provide that debts 

arising from audit exceptions taken by 

the General Accounting Office (GAO) be 

reviewed by GAO prior to referral to 

DOJ. No change has been made to 

incorporate this comment because the 

Comptroller General’s role in the 

Federal debt collection process has been 

eliminated. Although the opinions and 

legal interpretations of the Comptroller 

General often provide helpful guidance 

on audit exception matters and related 

issues, they are not binding upon 

departments, agencies, or officers of the 

executive branch. See e.g., Bowsher v. 

Synar, 478 U.S. 714, 727–32 (1986). 

NPRM § 904.3—Preservation of 

Evidence 

NPRM § 904.3 requires agencies to 

provide original documents 

immediately upon request by DOJ. The 
Federal Register / Vol. 65, No. 226 / Wednesday, November 22, 2000 / Rules and Regulations 70395 

final rule does not incorporate one 

commenter’s suggestion to amend 

NPRM § 904.3 to authorize agencies to 

certify copies of essential documents 

related to a debt referred to DOJ instead 

of providing original documents in 

certain types of cases, such as in debts 

for fire suppression costs. The essential 

purpose behind NPRM § 904.3 is to 

require agencies to ‘‘take care to 

preserve all files and records that may 

be needed by the Department of Justice’’ 

to prove debts in court. The amendment 

of § 904.3 to incorporate the 

commenter’s concern would not further 

this intent. 

NPRM § 904.4—Minimum Amount of 

Referrals to the Department of Justice 

One commenter suggested reducing 

the threshold amount of debts 

(exclusive of interest, penalties, and 

administrative costs) to be referred to 

DOJ for litigation from $2,500 to $1,500. 

No change has been made to the final 

rule to incorporate this comment. The 

DOJ may waive the minimum threshold 

amount in appropriate cases, including 

cases which are referred by DOJ to 

private counsel under 31 U.S.C. 3718. 

Regulatory Analysis 

Executive Order 12866 

The Department of the Treasury and 

the Department of Justice have 

determined that this regulation is not a 

significant regulatory action as defined 

in Executive Order 12866 and, 

accordingly, this regulation has not been 

reviewed by the Office of Management 

and Budget. 

Regulatory Flexibility Act 

It is hereby certified that this 

regulation will not have a significant 

economic impact on a substantial 

number of small entities because the 

regulation either (1) results in greater 

flexibility for Federal agencies to 

streamline their own debt collection 

regulations, or (2) reflects the statutory 

language contained in the DCIA. 

Accordingly, a Regulatory Flexibility 

Analysis is not required. 

Executive Order 13132 

This regulation will not have a 

substantial direct effect on the states, on 

the relationship between the national 

government and the states, or on 

distribution of power and 

responsibilities among the various 

levels of government. Therefore, in 

accordance with Executive Order 13132, 

it is determined that this regulation does 

not have sufficient federalism 

implications to warrant the preparation 

of a Federalism Assessment. 

Unfunded Mandates Reform Act of 1995 

This regulation will not result in the 

expenditure by state, local and tribal 

governments, in the aggregate, or by the 

private sector, of $100 million or more 

in any one year, and it will not 

significantly or uniquely affect small 

governments. Therefore, no actions were 

deemed necessary under the provisions 

of the Unfunded Mandates Reform Act 

of 1995. 

Small Business Regulatory Enforcement 

Fairness Act of 1996 

This rule is not a major rule as 

defined by section 251 of the Small 

Business Regulatory Enforcement Act. 5 

U.S.C. 804. This rule will not result in 

an annual effect on the economy of $100 

million or more; a major increase in 

costs or prices; or significant adverse 

effects on competition, employment, 

investment, productivity, innovation, or 

on the ability of United States-based 

companies to compete with foreignbased companies in domestic or export 

markets. 

List of Subjects 

31 CFR Part 900 

Antitrust, Claims, Fraud. 

31 CFR Part 901 

Administrative practice and 

procedure, Claims, Federal employees, 

Penalties, Privacy. 

31 CFR Part 902 

Claims. 

31 CFR Part 903 

Claims. 

31 CFR Part 904 

Claims. 

Authority and Issuance 

For the reasons set out in the 

preamble, chapter IX, consisting of parts 

900 through 904, is established in title 

31 of the Code of Federal Regulations to 

read as follows: 

CHAPTER IX—FEDERAL CLAIMS 

COLLECTION STANDARDS (DEPARTMENT 

OF THE TREASURY—DEPARTMENT OF 

JUSTICE) 

Part 

900 Scope of standards 

901 Standards for the administrative 

collection of claims 

902 Standards for the compromise of claims 

903 Standards for suspending or 

terminating collection activity 

904 Referrals to the Department of Justice 

PART 900—SCOPE OF STANDARDS 

Sec. 

900.1 Prescription of standards. 

900.2 Definitions and construction. 

900.3 Antitrust, fraud, and tax and 

interagency claims excluded. 

900.4 Compromise, waiver, or disposition 

under other statutes not precluded. 

900.5 Form of payment. 

900.6 Subdivision of claims not authorized. 

900.7 Required administrative proceedings. 

900.8 No private rights created. 

Authority: 31 U.S.C. 3711. 

§ 900.1 Prescription of standards. 

(a) The Secretary of the Treasury and 

the Attorney General of the United 

States are issuing the regulations in 

parts 900–904 of this chapter under the 

authority contained in 31 U.S.C. 

3711(d)(2). The regulations in this 

chapter prescribe standards for Federal 

agency use in the administrative 

collection, offset, compromise, and the 

suspension or termination of collection 

activity for civil claims for money, 

funds, or property, as defined by 31 

U.S.C. 3701(b), unless specific Federal 

agency statutes or regulations apply to 

such activities or, as provided for by 

Title 11 of the United States Code, when 

the claims involve bankruptcy. Federal 

agencies include agencies of the 

executive, legislative, and judicial 

branches of the Government, including 

Government corporations. The 

regulations in this chapter also prescribe 

standards for referring debts to the 

Department of Justice for litigation. 

Additional guidance is contained in the 

Office of Management and Budget’s 

Circular A–129 (Revised), ‘‘Policies for 

Federal Credit Programs and Non-Tax 

Receivables,’’ the Department of the 

Treasury’s ‘‘Managing Federal 

Receivables,’’ and other publications 

concerning debt collection and debt 

management. These publications are 

available from the Debt Management 

Services, Financial Management 

Service, Department of the Treasury, 

401 14th Street SW., Room 151, 

Washington, DC 20227. 

(b) Additional rules governing 

centralized administrative offset and the 

transfer of delinquent debt to the 

Department of the Treasury (Treasury) 

or Treasury-designated debt collection 

centers for collection (cross-servicing) 

under the Debt Collection Improvement 

Act of 1996, Public Law 104–134, 110 

Stat. 1321, 1358 (April 26, 1996), are 

issued in separate regulations by 

Treasury. Rules governing the use of 

certain debt collection tools created 

under the Debt Collection Improvement 

Act of 1996, such as administrative 

wage garnishment, also are issued in 

separate regulations by Treasury. See 

generally 31 CFR part 285. 

(c) Agencies are not limited to the 

remedies contained in parts 900–904 of 
70396 Federal Register / Vol. 65, No. 226 / Wednesday, November 22, 2000 / Rules and Regulations 

this chapter and are encouraged to use 

all authorized remedies, including 

alternative dispute resolution and 

arbitration, to collect civil claims, to the 

extent that such remedies are not 

inconsistent with the Federal Claims 

Collection Act, as amended, Public Law 

89–508, 80 Stat. 308 (July 19, 1966), the 

Debt Collection Act of 1982, Public Law 

97–365, 96 Stat. 1749 (October 25, 

1982), the Debt Collection Improvement 

Act of 1996, or other relevant statutes. 

The regulations in this chapter are not 

intended to impair agencies’ common 

law rights to collect debts. 

(d) Standards and policies regarding 

the classification of debt for accounting 

purposes (for example, write off of 

uncollectible debt) are contained in the 

Office of Management and Budget’s 

Circular A–129 (Revised), ‘‘Policies for 

Federal Credit Programs and Non-Tax 

Receivables.’’ 

§ 900.2 Definitions and construction. 

(a) For the purposes of the standards 

in this chapter, the terms ‘‘claim’’ and 

‘‘debt’’ are synonymous and 

interchangeable. They refer to an 

amount of money, funds, or property 

that has been determined by an agency 

official to be due the United States from 

any person, organization, or entity, 

except another Federal agency. For the 

purposes of administrative offset under 

31 U.S.C. 3716, the terms ‘‘claim’’ and 

‘‘debt’’ include an amount of money, 

funds, or property owed by a person to 

a State (including past-due support 

being enforced by a State), the District 

of Columbia, American Samoa, Guam, 

the United States Virgin Islands, the 

Commonwealth of the Northern Mariana 

Islands, or the Commonwealth of Puerto 

Rico. 

(b) A debt is ‘‘delinquent’’ if it has not 

been paid by the date specified in the 

agency’s initial written demand for 

payment or applicable agreement or 

instrument (including a postdelinquency payment agreement), 

unless other satisfactory payment 

arrangements have been made. 

(c) In parts 900–904 of this chapter, 

words in the plural form shall include 

the singular and vice versa, and words 

signifying the masculine gender shall 

include the feminine and vice versa. 

The terms ‘‘includes’’ and ‘‘including’’ 

do not exclude matters not listed but do 

include matters that are in the same 

general class. 

(d) Recoupment is a special method 

for adjusting debts arising under the 

same transaction or occurrence. For 

example, obligations arising under the 

same contract generally are subject to 

recoupment. 

(e) For purposes of the standards in 

this chapter, unless otherwise stated, 

‘‘Secretary’’ means the Secretary of the 

Treasury or the Secretary’s delegate. 

§ 900.3 Antitrust, fraud, and tax and 

interagency claims excluded. 

(a) The standards in parts 900–904 of 

this chapter relating to compromise, 

suspension, and termination of 

collection activity do not apply to any 

debt based in whole or in part on 

conduct in violation of the antitrust 

laws or to any debt involving fraud, the 

presentation of a false claim, or 

misrepresentation on the part of the 

debtor or any party having an interest in 

the claim. Only the Department of 

Justice has the authority to compromise, 

suspend, or terminate collection activity 

on such claims. The standards in parts 

900–904 of this chapter relating to the 

administrative collection of claims do 

apply, but only to the extent authorized 

by the Department of Justice in a 

particular case. Upon identification of a 

claim based in whole or in part on 

conduct in violation of the antitrust 

laws or any claim involving fraud, the 

presentation of a false claim, or 

misrepresentation on the part of the 

debtor or any party having an interest in 

the claim, agencies shall promptly refer 

the case to the Department of Justice for 

action. At its discretion, the Department 

of Justice may return the claim to the 

forwarding agency for further handling 

in accordance with the standards in 

parts 900–904 of this chapter. 

(b) Parts 900–904 of this chapter do 

not apply to tax debts. 

(c) Parts 900–904 of this chapter do 

not apply to claims between Federal 

agencies. Federal agencies should 

attempt to resolve interagency claims by 

negotiation in accordance with 

Executive Order 12146 (3 CFR, 1980 

Comp., pp. 409–412). 

§ 900.4 Compromise, waiver, or 

disposition under other statutes not 

precluded. 

Nothing in parts 900–904 of this 

chapter precludes agency disposition of 

any claim under statutes and 

implementing regulations other than 

subchapter II of chapter 37 of Title 31 

of the United States Code (Claims of the 

United States Government) and the 

standards in this chapter. See, e.g., the 

Federal Medical Care Recovery Act, 

Public Law 87–693, 76 Stat. 593 

(September 25, 1962) (codified at 42 

U.S.C. 2651 et seq.), and applicable 

regulations, 28 CFR part 43. In such 

cases, the laws and regulations that are 

specifically applicable to claims 

collection activities of a particular 

agency generally take precedence over 

parts 900–904 of this chapter. 

§ 900.5 Form of payment. 

Claims may be paid in the form of 

money or, when a contractual basis 

exists, the Government may demand the 

return of specific property or the 

performance of specific services. 

§ 900.6 Subdivision of claims not 

authorized. 

Debts may not be subdivided to avoid 

the monetary ceiling established by 31 

U.S.C. 3711(a)(2). A debtor’s liability 

arising from a particular transaction or 

contract shall be considered a single 

debt in determining whether the debt is 

one of less than $100,000 (excluding 

interest, penalties, and administrative 

costs) or such higher amount as the 

Attorney General shall from time to time 

prescribe for purposes of compromise or 

suspension or termination of collection 

activity. 

§ 900.7 Required administrative 

proceedings. 

Agencies are not required to omit, 

foreclose, or duplicate administrative 

proceedings required by contract or 

other laws or regulations. 

§ 900.8 No private rights created. 

The standards in this chapter do not 

create any right or benefit, substantive 

or procedural, enforceable at law or in 

equity by a party against the United 

States, its agencies, its officers, or any 

other person, nor shall the failure of an 

agency to comply with any of the 

provisions of parts 900–904 of this 

chapter be available to any debtor as a 

defense. 

PART 901—STANDARDS FOR THE 

ADMINISTRATIVE COLLECTION OF 

CLAIMS 

Sec.


901.1 Aggressive agency collection activity.


901.2 Demand for payment.


901.3 Collection by administrative offset.


901.4 Reporting debts.


901.5 Contracting with private collection


contractors and with entities that locate 

and recover unclaimed assets. 

901.6 Suspension or revocation of 

eligibility for loans and loan guaranties, 

licenses, permits, or privileges. 

901.7 Liquidation of collateral. 

901.8 Collection in installments. 

901.9 Interest, penalties, and administrative 

costs. 

901.10 Analysis of costs. 

901.11 Use and disclosure of mailing 

addresses. 

901.12 Exemptions. 

Authority: 31 U.S.C. 3701, 3711, 3716, 

3717, 3718, and 3720B. 
Federal Register / Vol. 65, No. 226 / Wednesday, November 22, 2000 / Rules and Regulations 70397 

§ 901.1 Aggressive agency collection 

activity. 

(a) Federal agencies shall aggressively 

collect all debts arising out of activities 

of, or referred or transferred for 

collection services to, that agency. 

Collection activities shall be undertaken 

promptly with follow-up action taken as 

necessary. Nothing contained in parts 

900–904 of this chapter requires the 

Department of Justice, Treasury, or other 

Treasury-designated debt collection 

centers, to duplicate collection activities 

previously undertaken by other agencies 

or to perform collection activities that 

other agencies should have undertaken. 

(b) Debts referred or transferred to 

Treasury, or Treasury-designated debt 

collection centers under the authority of 

31 U.S.C. 3711(g), shall be serviced, 

collected, or compromised, or the 

collection action will be suspended or 

terminated, in accordance with the 

statutory requirements and authorities 

applicable to the collection of such 

debts. 

(c) Agencies shall cooperate with one 

another in their debt collection 

activities. 

(d) Agencies should consider referring 

debts that are less than 180 days 

delinquent to Treasury or to Treasurydesignated ‘‘debt collection centers’’ to 

accomplish efficient, cost effective debt 

collection. Treasury is a debt collection 

center, is authorized to designate other 

Federal agencies as debt collection 

centers based on their performance in 

collecting delinquent debts, and may 

withdraw such designations. Referrals 

to debt collection centers shall be at the 

discretion of, and for a time period 

acceptable to, the Secretary. Referrals 

may be for servicing, collection, 

compromise, suspension, or termination 

of collection action. 

(e) Agencies shall transfer to the 

Secretary any debt that has been 

delinquent for a period of 180 days or 

more so that the Secretary may take 

appropriate action to collect the debt or 

terminate collection action. See 31 CFR 

285.12 (Transfer of Debts to Treasury for 

Collection). This requirement does not 

apply to any debt that: 

(1) Is in litigation or foreclosure; 

(2) Will be disposed of under an 

approved asset sale program; 

(3) Has been referred to a private 

collection contractor for a period of time 

acceptable to the Secretary; 

(4) Is at a debt collection center for a 

period of time acceptable to the 

Secretary (see paragraph (d) of this 

section); 

(5) Will be collected under internal 

offset procedures within three years 

after the debt first became delinquent; or 

(6) Is exempt from this requirement 

based on a determination by the 

Secretary that exemption for a certain 

class of debt is in the best interest of the 

United States. Agencies may request 

that the Secretary exempt specific 

classes of debts. 

(f) Agencies operating Treasurydesignated debt collection centers are 

authorized to charge a fee for services 

rendered regarding referred or 

transferred debts. The fee may be paid 

out of amounts collected and may be 

added to the debt as an administrative 

cost (see § 901.10). 

§ 901.2 Demand for payment. 

(a) Written demand as described in 

paragraph (b) of this section shall be 

made promptly upon a debtor of the 

United States in terms that inform the 

debtor of the consequences of failing to 

cooperate with the agency to resolve the 

debt. The specific content, timing, and 

number of demand letters shall depend 

upon the type and amount of the debt 

and the debtor’s response, if any, to the 

agency’s letters or telephone calls. 

Generally, one demand letter should 

suffice. In determining the timing of the 

demand letter(s), agencies should give 

due regard to the need to refer debts 

promptly to the Department of Justice 

for litigation, in accordance with § 904.1 

of this chapter or otherwise. When 

necessary to protect the Government’s 

interest (for example, to prevent the 

running of a statute of limitations), 

written demand may be preceded by 

other appropriate actions under parts 

900–904 of this chapter, including 

immediate referral for litigation. 

(b) Demand letters shall inform the 

debtor of: 

(1) The basis for the indebtedness and 

the rights, if any, the debtor may have 

to seek review within the agency; 

(2) The applicable standards for 

imposing any interest, penalties, or 

administrative costs; 

(3) The date by which payment 

should be made to avoid late charges 

(i.e. interest, penalties, and 

administrative costs) and enforced 

collection, which generally should not 

be more than 30 days from the date that 

the demand letter is mailed or handdelivered; and 

(4) The name, address, and phone 

number of a contact person or office 

within the agency. 

(c) Agencies should exercise care to 

ensure that demand letters are mailed or 

hand-delivered on the same day that 

they are dated. There is no prescribed 

format for demand letters. Agencies 

should utilize demand letters and 

procedures that will lead to the earliest 

practicable determination of whether 

the debt can be resolved 

administratively or must be referred for 

litigation. 

(d) Agencies should include in 

demand letters such items as the 

agency’s willingness to discuss 

alternative methods of payment; its 

policies with respect to the use of credit 

bureaus, debt collection centers, and 

collection agencies; the agency’s 

remedies to enforce payment of the debt 

(including assessment of interest, 

administrative costs and penalties, 

administrative garnishment, the use of 

collection agencies, Federal salary 

offset, tax refund offset, administrative 

offset, and litigation); the requirement 

that any debt delinquent for more than 

180 days be transferred to the 

Department of the Treasury for 

collection; and, depending on 

applicable statutory authority, the 

debtor’s entitlement to consideration of 

a waiver. 

(e) Agencies should respond promptly 

to communications from debtors, within 

30 days whenever feasible, and should 

advise debtors who dispute debts to 

furnish available evidence to support 

their contentions. 

(f) Prior to the initiation of the 

demand process or at any time during 

or after completion of the demand 

process, if an agency determines to 

pursue, or is required to pursue, offset, 

the procedures applicable to offset 

should be followed (see § 901.3). The 

availability of funds or money for debt 

satisfaction by offset and the agency’s 

determination to pursue collection by 

offset shall release the agency from the 

necessity of further compliance with 

paragraphs (a), (b), (c), and (d) of this 

section. 

(g) Prior to referring a debt for 

litigation, agencies should advise each 

person determined to be liable for the 

debt that, unless the debt can be 

collected administratively, litigation 

may be initiated. This notification 

should comply with Executive Order 

12988 (3 CFR, 1996 Comp., pp. 157– 

163) and may be given as part of a 

demand letter under paragraph (b) of 

this section or in a separate document. 

Litigation counsel for the Government 

should be advised that this notice has 

been given. 

(h) When an agency learns that a 

bankruptcy petition has been filed with 

respect to a debtor, before proceeding 

with further collection action, the 

agency should immediately seek legal 

advice from its agency counsel 

concerning the impact of the 

Bankruptcy Code on any pending or 

contemplated collection activities. 

Unless the agency determines that the 

automatic stay imposed at the time of 
70398 Federal Register / Vol. 65, No. 226 / Wednesday, November 22, 2000 / Rules and Regulations 

filing pursuant to 11 U.S.C. 362 has 

been lifted or is no longer in effect, in 

most cases collection activity against the 

debtor should stop immediately. 

(1) After seeking legal advice, a proof 

of claim should be filed in most cases 

with the bankruptcy court or the 

Trustee. Agencies should refer to the 

provisions of 11 U.S.C. 106 relating to 

the consequences on sovereign 

immunity of filing a proof of claim. 

(2) If the agency is a secured creditor, 

it may seek relief from the automatic 

stay regarding its security, subject to the 

provisions and requirements of 11 

U.S.C. 362. 

(3) Offset is stayed in most cases by 

the automatic stay. However, agencies 

should seek legal advice from their 

agency counsel to determine whether 

their payments to the debtor and 

payments of other agencies available for 

offset may be frozen by the agency until 

relief from the automatic stay can be 

obtained from the bankruptcy court. 

Agencies also should seek legal advice 

from their agency counsel to determine 

whether recoupment is available. 

§ 901.3 Collection by administrative offset. 

(a) Scope. (1) The term 

‘‘administrative offset’’ has the meaning 

provided in 31 U.S.C. 3701(a)(1). 

(2) This section does not apply to: 

(i) Debts arising under the Social 

Security Act, except as provided in 42 

U.S.C. 404; 

(ii) Payments made under the Social 

Security Act, except as provided for in 

31 U.S.C. 3716(c) (see 31 CFR 285.4, 

Federal Benefit Offset); 

(iii) Debts arising under, or payments 

made under, the Internal Revenue Code 

(see 31 CFR 285.2, Tax Refund Offset) 

or the tariff laws of the United States; 

(iv) Offsets against Federal salaries to 

the extent these standards are 

inconsistent with regulations published 

to implement such offsets under 5 

U.S.C. 5514 and 31 U.S.C. 3716 (see 5 

CFR part 550, subpart K, and 31 CFR 

285.7, Federal Salary Offset); 

(v) Offsets under 31 U.S.C. 3728 

against a judgment obtained by a debtor 

against the United States; 

(vi) Offsets or recoupments under 

common law, State law, or Federal 

statutes specifically prohibiting offsets 

or recoupments of particular types of 

debts; or 

(vii) Offsets in the course of judicial 

proceedings, including bankruptcy. 

(3) Unless otherwise provided for by 

contract or law, debts or payments that 

are not subject to administrative offset 

under 31 U.S.C. 3716 may be collected 

by administrative offset under the 

common law or other applicable 

statutory authority. 

(4) Unless otherwise provided by law, 

administrative offset of payments under 

the authority of 31 U.S.C. 3716 to collect 

a debt may not be conducted more than 

10 years after the Government’s right to 

collect the debt first accrued, unless 

facts material to the Government’s right 

to collect the debt were not known and 

could not reasonably have been known 

by the official or officials of the 

Government who were charged with the 

responsibility to discover and collect 

such debts. This limitation does not 

apply to debts reduced to a judgment. 

(5) In bankruptcy cases, agencies 

should seek legal advice from their 

agency counsel concerning the impact 

of the Bankruptcy Code, particularly 11 

U.S.C. 106, 362, and 553, on pending or 

contemplated collections by offset. 

(b) Mandatory centralized 

administrative offset. (1) Creditor 

agencies are required to refer past due, 

legally enforceable nontax debts which 

are over 180 days delinquent to the 

Secretary for collection by centralized 

administrative offset. Debts which are 

less than 180 days delinquent also may 

be referred to the Secretary for this 

purpose. See § 901.3(b)(5) for debt 

certification requirements. 

(2) The names and taxpayer 

identifying numbers (TINs) of debtors 

who owe debts referred to the Secretary 

as described in paragraph (b)(1) of this 

section shall be compared to the names 

and TINs on payments to be made by 

Federal disbursing officials. Federal 

disbursing officials include disbursing 

officials of Treasury, the Department of 

Defense, the United States Postal 

Service, other Government corporations, 

and disbursing officials of the United 

States designated by the Secretary. 

When the name and TIN of a debtor 

match the name and TIN of a payee and 

all other requirements for offset have 

been met, the payment will be offset to 

satisfy the debt. 

(3) Federal disbursing officials will 

notify the debtor/payee in writing that 

an offset has occurred to satisfy, in part 

or in full, a past due, legally enforceable 

delinquent debt. The notice shall 

include a description of the type and 

amount of the payment from which the 

offset was taken, the amount of offset 

that was taken, the identity of the 

creditor agency requesting the offset, 

and a contact point within the creditor 

agency who will respond to questions 

regarding the offset. 

(4)(i) Before referring a delinquent 

debt to the Secretary for administrative 

offset, agencies must have prescribed 

administrative offset regulations 

consistent with this section or have 

adopted this section without change by 

cross-reference. 

(ii) Such regulations shall provide 

that offsets may be initiated only after 

the debtor: 

(A) Has been sent written notice of the 

type and amount of the debt, the 

intention of the agency to use 

administrative offset to collect the debt, 

and an explanation of the debtor’s rights 

under 31 U.S.C. 3716; and 

(B) The debtor has been given: 

(1) The opportunity to inspect and 

copy agency records related to the debt; 

(2) The opportunity for a review 

within the agency of the determination 

of indebtedness; and 

(3) The opportunity to make a written 

agreement to repay the debt. 

(iii) Agency regulations may provide 

for the omission of the procedures set 

forth in paragraph (a)(4)(ii) of this 

section when: 

(A) The offset is in the nature of a 

recoupment; 

(B) The debt arises under a contract as 

set forth in Cecile Industries, Inc. v. 

Cheney, 995 F.2d 1052 (Fed. Cir. 1993) 

(notice and other procedural protections 

set forth in 31 U.S.C. 3716(a) do not 

supplant or restrict established 

procedures for contractual offsets 

accommodated by the Contracts 

Disputes Act); or 

(C) In the case of non-centralized 

administrative offsets conducted under 

paragraph (c) of this section, the agency 

first learns of the existence of the 

amount owed by the debtor when there 

is insufficient time before payment 

would be made to the debtor/payee to 

allow for prior notice and an 

opportunity for review. When prior 

notice and an opportunity for review are 

omitted, the agency shall give the debtor 

such notice and an opportunity for 

review as soon as practicable and shall 

promptly refund any money ultimately 

found not to have been owed to the 

Government. 

(iv) When an agency previously has 

given a debtor any of the required notice 

and review opportunities with respect 

to a particular debt (see, e.g., § 901.2), 

the agency need not duplicate such 

notice and review opportunities before 

administrative offset may be initiated. 

(5) Agencies referring delinquent 

debts to the Secretary must certify, in a 

form acceptable to the Secretary, that: 

(i) The debt(s) is (are) past due and 

legally enforceable; and 

(ii) The agency has complied with all 

due process requirements under 31 

U.S.C. 3716(a) and the agency’s 

regulations. 

(6) Payments that are prohibited by 

law from being offset are exempt from 

centralized administrative offset. The 

Secretary shall exempt payments under 

means-tested programs from centralized 
Federal Register / Vol. 65, No. 226 / Wednesday, November 22, 2000 / Rules and Regulations 70399 

administrative offset when requested in 

writing by the head of the payment 

certifying or authorizing agency. Also, 

the Secretary may exempt other classes 

of payments from centralized offset 

upon the written request of the head of 

the payment certifying or authorizing 

agency. 

(7) Benefit payments made under the 

Social Security Act (42 U.S.C. 301 et 

seq.), part B of the Black Lung Benefits 

Act (30 U.S.C. 921 et seq.), and any law 

administered by the Railroad Retirement 

Board (other than tier 2 benefits), may 

be offset only in accordance with 

Treasury regulations, issued in 

consultation with the Social Security 

Administration, the Railroad Retirement 

Board, and the Office of Management 

and Budget. See 31 CFR 285.4. 

(8) In accordance with 31 U.S.C. 

3716(f), the Secretary may waive the 

provisions of the Computer Matching 

and Privacy Protection Act of 1988 

concerning matching agreements and 

post-match notification and verification 

(5 U.S.C. 552a(o) and (p)) for centralized 

administrative offset upon receipt of a 

certification from a creditor agency that 

the due process requirements 

enumerated in 31 U.S.C. 3716(a) have 

been met. The certification of a debt in 

accordance with paragraph (b)(5) of this 

section will satisfy this requirement. If 

such a waiver is granted, only the Data 

Integrity Board of the Department of the 

Treasury is required to oversee any 

matching activities, in accordance with 

31 U.S.C. 3716(g). This waiver authority 

does not apply to offsets conducted 

under paragraphs (c) and (d) of this 

section. 

(c) Non-centralized administrative 

offset. (1) Generally, non-centralized 

administrative offsets are ad hoc caseby-case offsets that an agency conducts, 

at the agency’s discretion, internally or 

in cooperation with the agency 

certifying or authorizing payments to 

the debtor. Unless otherwise prohibited 

by law, when centralized administrative 

offset is not available or appropriate, 

past due, legally enforceable nontax 

delinquent debts may be collected 

through non-centralized administrative 

offset. In these cases, a creditor agency 

may make a request directly to a 

payment authorizing agency to offset a 

payment due a debtor to collect a 

delinquent debt. For example, it may be 

appropriate for a creditor agency to 

request that the Office of Personnel 

Management (OPM) offset a Federal 

employee’s lump sum payment upon 

leaving Government service to satisfy an 

unpaid advance. 

(2) Before requesting a payment 

authorizing agency to conduct a noncentralized administrative offset, 

agencies must adopt regulations 

providing that such offsets may occur 

only after: 

(i) The debtor has been provided due 

process as set forth in paragraph (b)(4) 

of this section; and 

(ii) The payment authorizing agency 

has received written certification from 

the creditor agency that the debtor owes 

the past due, legally enforceable 

delinquent debt in the amount stated, 

and that the creditor agency has fully 

complied with its regulations 

concerning administrative offset. 

(3) Payment authorizing agencies 

shall comply with offset requests by 

creditor agencies to collect debts owed 

to the United States, unless the offset 

would not be in the best interests of the 

United States with respect to the 

program of the payment authorizing 

agency, or would otherwise be contrary 

to law. Appropriate use should be made 

of the cooperative efforts of other 

agencies in effecting collection by 

administrative offset. 

(4) When collecting multiple debts by 

non-centralized administrative offset, 

agencies should apply the recovered 

amounts to those debts in accordance 

with the best interests of the United 

States, as determined by the facts and 

circumstances of the particular case, 

particularly the applicable statute of 

limitations. 

(d) Requests to OPM to offset a 

debtor’s anticipated or future benefit 

payments under the Civil Service 

Retirement and Disability Fund. Upon 

providing OPM written certification that 

a debtor has been afforded the 

procedures provided in paragraph (b)(4) 

of this section, creditor agencies may 

request OPM to offset a debtor’s 

anticipated or future benefit payments 

under the Civil Service Retirement and 

Disability Fund (Fund) in accordance 

with regulations codified at 5 CFR 

831.1801–831.1808. Upon receipt of 

such a request, OPM will identify and 

‘‘flag’’ a debtor’s account in anticipation 

of the time when the debtor requests, or 

becomes eligible to receive, payments 

from the Fund. This will satisfy any 

requirement that offset be initiated prior 

to the expiration of the time limitations 

referenced in paragraph (a)(4) of this 

section. 

(e) Review requirements. (1) For 

purposes of this section, whenever an 

agency is required to afford a debtor a 

review within the agency, the agency 

shall provide the debtor with a 

reasonable opportunity for an oral 

hearing when the debtor requests 

reconsideration of the debt and the 

agency determines that the question of 

the indebtedness cannot be resolved by 

review of the documentary evidence, for 

example, when the validity of the debt 

turns on an issue of credibility or 

veracity. 

(2) Unless otherwise required by law, 

an oral hearing under this section is not 

required to be a formal evidentiary 

hearing, although the agency should 

carefully document all significant 

matters discussed at the hearing. 

(3) This section does not require an 

oral hearing with respect to debt 

collection systems in which a 

determination of indebtedness rarely 

involves issues of credibility or veracity 

and the agency has determined that 

review of the written record is 

ordinarily an adequate means to correct 

prior mistakes. 

(4) In those cases when an oral 

hearing is not required by this section, 

an agency shall accord the debtor a 

‘‘paper hearing,’’ that is, a determination 

of the request for reconsideration based 

upon a review of the written record. 

§ 901.4 Reporting debts. 

(a) Agencies shall develop and 

implement procedures for reporting 

delinquent debts to credit bureaus and 

other automated databases. Agencies 

also may develop procedures to report 

non-delinquent debts to credit bureaus. 

See 31 U.S.C. 3711(e). 

(1) In developing procedures for 

reporting debts to credit bureaus, 

agencies shall comply with the 

Bankruptcy Code and the Privacy Act of 

1974, 5 U.S.C. 552a, as amended. The 

provisions of the Privacy Act do not 

apply to credit bureaus. 

(2) Agency procedures for reporting 

delinquent consumer debts to credit 

bureaus shall be consistent with the due 

process and other requirements 

contained in 31 U.S.C. 3711(e). When an 

agency has given a debtor any of the 

required notice and review 

opportunities with respect to a 

particular debt, the agency need not 

duplicate such notice and review 

opportunities before reporting that 

delinquent consumer debt to credit 

bureaus. 

(b) Agencies should report delinquent 

debts to the Department of Housing and 

Urban Development’s Credit Alert 

Interactive Voice Response System 

(CAIVRS). For information about the 

CAIVRS program, agencies should 

contact the Director of Information 

Resources Management Policy and 

Management Division, Office of 

Information Technology, Department of 

Housing and Urban Development, 451 

7th Street, SW., Washington, DC 20410. 
70400 Federal Register / Vol. 65, No. 226 / Wednesday, November 22, 2000 / Rules and Regulations 

§ 901.5 Contracting with private collection 

contractors and with entities that locate and 

recover unclaimed assets. 

(a) Subject to the provisions of 

paragraph (b) of this section, Federal 

agencies may contract with private 

collection contractors, as defined in 31 

U.S.C. 3701(f), to recover delinquent 

debts provided that: 

(1) Agencies retain the authority to 

resolve disputes, compromise debts, 

suspend or terminate collection activity, 

and refer debts for litigation; 

(2) The private collection contractor is 

not allowed to offer the debtor, as an 

incentive for payment, the opportunity 

to pay the debt less the private 

collection contractor’s fee unless the 

agency has granted such authority prior 

to the offer; 

(3) The contract provides that the 

private collection contractor is subject 

to the Privacy Act of 1974 to the extent 

specified in 5 U.S.C. 552a(m), and to 

applicable Federal and state laws and 

regulations pertaining to debt collection 

practices, including but not limited to 

the Fair Debt Collection Practices Act, 

15 U.S.C. 1692; and 

(4) The private collection contractor is 

required to account for all amounts 

collected. 

(b) Agencies shall use governmentwide debt collection contracts to obtain 

debt collection services provided by 

private collection contractors. However, 

agencies may refer debts to private 

collection contractors pursuant to a 

contract between the agency and the 

private collection contractor only if 

such debts are not subject to the 

requirement to transfer debts to 

Treasury for debt collection. See 31 

U.S.C. 3711(g); 31 CFR 285.12(e). 

(c) Agencies may fund private 

collection contractor contracts in 

accordance with 31 U.S.C. 3718(d), or as 

otherwise permitted by law. 

(d) Agencies may enter into contracts 

for locating and recovering assets of the 

United States, such as unclaimed assets. 

Agencies must establish procedures that 

are acceptable to the Secretary before 

entering into contracts to recover assets 

of the United States held by a state 

government or a financial institution. 

(e) Agencies may enter into contracts 

for debtor asset and income search 

reports. In accordance with 31 U.S.C. 

3718(d), such contracts may provide 

that the fee a contractor charges the 

agency for such services may be payable 

from the amounts recovered, unless 

otherwise prohibited by statute. 

§ 901.6 Suspension or revocation of 

eligibility for loans and loan guaranties, 

licenses, permits, or privileges. 

(a) Unless waived by the head of the 

agency, agencies are not permitted to 

extend financial assistance in the form 

of a loan, loan guarantee, or loan 

insurance to any person delinquent on 

a nontax debt owed to a Federal agency. 

This prohibition does not apply to 

disaster loans. The authority to waive 

the application of this section may be 

delegated to the Chief Financial Officer 

and redelegated only to the Deputy 

Chief Financial Officer of the agency. 

Agencies may extend credit after the 

delinquency has been resolved. The 

Secretary may exempt classes of debts 

from this prohibition and has prescribed 

standards defining when a 

‘‘delinquency’’ is ‘‘resolved’’ for 

purposes of this prohibition. See 31 CFR 

285.13 (Barring Delinquent Debtors 

From Obtaining Federal Loans or Loan 

Insurance or Guarantees). 

(b) In non-bankruptcy cases, agencies 

seeking the collection of statutory 

penalties, forfeitures, or other types of 

claims should consider the suspension 

or revocation of licenses, permits, or 

other privileges for any inexcusable or 

willful failure of a debtor to pay such a 

debt in accordance with the agency’s 

regulations or governing procedures. 

The debtor should be advised in the 

agency’s written demand for payment of 

the agency’s ability to suspend or revoke 

licenses, permits, or privileges. Any 

agency making, guaranteeing, insuring, 

acquiring, or participating in, loans 

should consider suspending or 

disqualifying any lender, contractor, or 

broker from doing further business with 

the agency or engaging in programs 

sponsored by the agency if such lender, 

contractor, or broker fails to pay its 

debts to the Government within a 

reasonable time or if such lender, 

contractor, or broker has been 

suspended, debarred, or disqualified 

from participation in a program or 

activity by another Federal agency. The 

failure of any surety to honor its 

obligations in accordance with 31 U.S.C. 

9305 should be reported to the Treasury. 

The Treasury will forward to all 

interested agencies notification that a 

surety’s certificate of authority to do 

business with the Government has been 

revoked by the Treasury. 

(c) The suspension or revocation of 

licenses, permits, or privileges also 

should extend to Federal programs or 

activities that are administered by the 

states on behalf of the Federal 

Government, to the extent that they 

affect the Federal Government’s ability 

to collect money or funds owed by 

debtors. Therefore, states that manage 

Federal activities, pursuant to approval 

from the agencies, should ensure that 

appropriate steps are taken to safeguard 

against issuing licenses, permits, or 

privileges to debtors who fail to pay 

their debts to the Federal Government. 

(d) In bankruptcy cases, before 

advising the debtor of an agency’s 

intention to suspend or revoke licenses, 

permits, or privileges, agencies should 

seek legal advice from their agency 

counsel concerning the impact of the 

Bankruptcy Code, particularly 11 U.S.C. 

362 and 525, which may restrict such 

action. 

§ 901.7 Liquidation of collateral. 

(a) Agencies should liquidate security 

or collateral through the exercise of a 

power of sale in the security instrument 

or a nonjudicial foreclosure, and apply 

the proceeds to the applicable debt(s), if 

the debtor fails to pay the debt(s) within 

a reasonable time after demand and if 

such action is in the best interest of the 

United States. Collection from other 

sources, including liquidation of 

security or collateral, is not a 

prerequisite to requiring payment by a 

surety, insurer, or guarantor unless such 

action is expressly required by statute or 

contract. 

(b) When an agency learns that a 

bankruptcy petition has been filed with 

respect to a debtor, the agency should 

seek legal advice from its agency 

counsel concerning the impact of the 

Bankruptcy Code, including, but not 

limited to, 11 U.S.C. 362, to determine 

the applicability of the automatic stay 

and the procedures for obtaining relief 

from such stay prior to proceeding 

under paragraph (a) of this section. 

§ 901.8 Collection in installments. 

(a) Whenever feasible, agencies shall 

collect the total amount of a debt in one 

lump sum. If a debtor is financially 

unable to pay a debt in one lump sum, 

agencies may accept payment in regular 

installments. Agencies should obtain 

financial statements from debtors who 

represent that they are unable to pay in 

one lump sum and independently verify 

such representations whenever possible 

(see § 902.2(g) of this chapter). Agencies 

that agree to accept payments in regular 

installments should obtain a legally 

enforceable written agreement from the 

debtor that specifies all of the terms of 

the arrangement and that contains a 

provision accelerating the debt in the 

event of default. 

(b) The size and frequency of 

installment payments should bear a 

reasonable relation to the size of the 

debt and the debtor’s ability to pay. If 

possible, the installment payments 

should be sufficient in size and 

frequency to liquidate the debt in three 

years or less. 

(c) Security for deferred payments 

should be obtained in appropriate cases. 
Federal Register / Vol. 65, No. 226 / Wednesday, November 22, 2000 / Rules and Regulations 70401 

Agencies may accept installment 

payments notwithstanding the refusal of 

the debtor to execute a written 

agreement or to give security, at the 

agency’s option. 

§ 901.9 Interest, penalties, and 

administrative costs. 

(a) Except as provided in paragraphs 

(g), (h), and (i) of this section, agencies 

shall charge interest, penalties, and 

administrative costs on debts owed to 

the United States pursuant to 31 U.S.C. 

3717. An agency shall mail or handdeliver a written notice to the debtor, at 

the debtor’s most recent address 

available to the agency, explaining the 

agency’s requirements concerning these 

charges except where these 

requirements are included in a 

contractual or repayment agreement. 

These charges shall continue to accrue 

until the debt is paid in full or 

otherwise resolved through 

compromise, termination, or waiver of 

the charges. 

(b) Agencies shall charge interest on 

debts owed the United States as follows: 

(1) Interest shall accrue from the date 

of delinquency, or as otherwise 

provided by law. 

(2) Unless otherwise established in a 

contract, repayment agreement, or by 

statute, the rate of interest charged shall 

be the rate established annually by the 

Secretary in accordance with 31 U.S.C. 

3717. Pursuant to 31 U.S.C. 3717, an 

agency may charge a higher rate of 

interest if it reasonably determines that 

a higher rate is necessary to protect the 

rights of the United States. The agency 

should document the reason(s) for its 

determination that the higher rate is 

necessary. 

(3) The rate of interest, as initially 

charged, shall remain fixed for the 

duration of the indebtedness. When a 

debtor defaults on a repayment 

agreement and seeks to enter into a new 

agreement, the agency may require 

payment of interest at a new rate that 

reflects the current value of funds to the 

Treasury at the time the new agreement 

is executed. Interest shall not be 

compounded, that is, interest shall not 

be charged on interest, penalties, or 

administrative costs required by this 

section. If, however, a debtor defaults on 

a previous repayment agreement, 

charges that accrued but were not 

collected under the defaulted agreement 

shall be added to the principal under 

the new repayment agreement. 

(c) Agencies shall assess 

administrative costs incurred for 

processing and handling delinquent 

debts. The calculation of administrative 

costs should be based on actual costs 

incurred or upon estimated costs as 

determined by the assessing agency. 

(d) Unless otherwise established in a 

contract, repayment agreement, or by 

statute, agencies shall charge a penalty, 

pursuant to 31 U.S.C. 3717(e)(2), not to 

exceed six percent a year on the amount 

due on a debt that is delinquent for 

more than 90 days. This charge shall 

accrue from the date of delinquency. 

(e) Agencies may increase an 

‘‘administrative debt’’ by the cost of 

living adjustment in lieu of charging 

interest and penalties under this 

section. ‘‘Administrative debt’’ includes, 

but is not limited to, a debt based on 

fines, penalties, and overpayments, but 

does not include a debt based on the 

extension of Government credit, such as 

those arising from loans and loan 

guaranties. The cost of living adjustment 

is the percentage by which the 

Consumer Price Index for the month of 

June of the calendar year preceding the 

adjustment exceeds the Consumer Price 

Index for the month of June of the 

calendar year in which the debt was 

determined or last adjusted. Increases to 

administrative debts shall be computed 

annually. Agencies should use this 

alternative only when there is a 

legitimate reason to do so, such as when 

calculating interest and penalties on a 

debt would be extremely difficult 

because of the age of the debt. 

(f) When a debt is paid in partial or 

installment payments, amounts received 

by the agency shall be applied first to 

outstanding penalties, second to 

administrative charges, third to interest, 

and last to principal. 

(g) Agencies shall waive the collection 

of interest and administrative charges 

imposed pursuant to this section on the 

portion of the debt that is paid within 

30 days after the date on which interest 

began to accrue. Agencies may extend 

this 30-day period on a case-by-case 

basis. In addition, agencies may waive 

interest, penalties, and administrative 

costs charged under this section, in 

whole or in part, without regard to the 

amount of the debt, either under the 

criteria set forth in these standards for 

the compromise of debts, or if the 

agency determines that collection of 

these charges is against equity and good 

conscience or is not in the best interest 

of the United States. 

(h) Agencies shall set forth in their 

regulations the circumstances under 

which interest and related charges will 

not be imposed for periods during 

which collection activity has been 

suspended pending agency review. 

(i) Agencies are authorized to impose 

interest and related charges on debts not 

subject to 31 U.S.C. 3717, in accordance 

with the common law. 

§ 901.10 Analysis of costs. 

Agency collection procedures should 

provide for periodic comparison of costs 

incurred and amounts collected. Data on 

costs and corresponding recovery rates 

for debts of different types and in 

various dollar ranges should be used to 

compare the cost effectiveness of 

alternative collection techniques, 

establish guidelines with respect to 

points at which costs of further 

collection efforts are likely to exceed 

recoveries, assist in evaluating offers in 

compromise, and establish minimum 

debt amounts below which collection 

efforts need not be taken. 

§ 901.11 Use and disclosure of mailing 

addresses. 

(a) When attempting to locate a debtor 

in order to collect or compromise a debt 

under parts 900–904 of this chapter or 

other authority, agencies may send a 

request to the Secretary (or designee) to 

obtain a debtor’s mailing address from 

the records of the Internal Revenue 

Service. 

(b) Agencies are authorized to use 

mailing addresses obtained under 

paragraph (a) of this section to enforce 

collection of a delinquent debt and may 

disclose such mailing addresses to other 

agencies and to collection agencies for 

collection purposes. 

§ 901.12 Exemptions. 

(a) The preceding sections of this part, 

to the extent they reflect remedies or 

procedures prescribed by the Debt 

Collection Act of 1982 and the Debt 

Collection Improvement Act of 1996, 

such as administrative offset, use of 

credit bureaus, contracting for collection 

agencies, and interest and related 

charges, do not apply to debts arising 

under, or payments made under, the 

Internal Revenue Code of 1986, as 

amended (26 U.S.C. 1 et seq.); the Social 

Security Act (42 U.S.C. 301 et seq.), 

except to the extent provided under 42 

U.S.C. 404 and 31 U.S.C. 3716(c); or the 

tariff laws of the United States. These 

remedies and procedures, however, may 

be authorized with respect to debts that 

are exempt from the Debt Collection Act 

of 1982 and the Debt Collection 

Improvement Act of 1996, to the extent 

that they are authorized under some 

other statute or the common law. 

(b) This section should not be 

construed as prohibiting the use of these 

authorities or requirements when 

collecting debts owed by persons 

employed by agencies administering the 

laws cited in paragraph (a) of this 

section unless the debt arose under 

those laws. 
70402 Federal Register / Vol. 65, No. 226 / Wednesday, November 22, 2000 / Rules and Regulations 

PART 902—STANDARDS FOR THE 

COMPROMISE OF CLAIMS 

Sec.


902.1 Scope and application.


902.2 Bases for compromise.


902.3 Enforcement policy.


902.4 Joint and several liability.


902.5 Further review of compromise offers.


902.6 Consideration of tax consequences to


the Government. 

902.7 Mutual releases of the debtor and the 

Government. 

Authority: 31 U.S.C. 3711. 

§ 902.1 Scope and application. 

(a) The standards set forth in this part 

apply to the compromise of debts 

pursuant to 31 U.S.C. 3711. An agency 

may exercise such compromise 

authority for debts arising out of 

activities of, or referred or transferred 

for collection services to, that agency 

when the amount of the debt then due, 

exclusive of interest, penalties, and 

administrative costs, does not exceed 

$100,000 or any higher amount 

authorized by the Attorney General. 

Agency heads may designate officials 

within their respective agencies to 

exercise the authorities in this section. 

(b) Unless otherwise provided by law, 

when the principal balance of a debt, 

exclusive of interest, penalties, and 

administrative costs, exceeds $100,000 

or any higher amount authorized by the 

Attorney General, the authority to 

accept the compromise rests with the 

Department of Justice. The agency 

should evaluate the compromise offer, 

using the factors set forth in this part. 

If an offer to compromise any debt in 

excess of $100,000 is acceptable to the 

agency, the agency shall refer the debt 

to the Civil Division or other 

appropriate litigating division in the 

Department of Justice using a Claims 

Collection Litigation Report (CCLR). 

Agencies may obtain the CCLR from the 

Department of Justice’s National Central 

Intake Facility. The referral shall 

include appropriate financial 

information and a recommendation for 

the acceptance of the compromise offer. 

Justice Department approval is not 

required if the agency rejects a 

compromise offer. 

§ 902.2 Bases for compromise. 

(a) Agencies may compromise a debt 

if the Government cannot collect the full 

amount because: 

(1) The debtor is unable to pay the full 

amount in a reasonable time, as verified 

through credit reports or other financial 

information; 

(2) The Government is unable to 

collect the debt in full within a 

reasonable time by enforced collection 

proceedings; 

(3) The cost of collecting the debt 

does not justify the enforced collection 

of the full amount; or 

(4) There is significant doubt 

concerning the Government’s ability to 

prove its case in court. 

(b) In determining the debtor’s 

inability to pay, agencies should 

consider relevant factors such as the 

following: 

(1) Age and health of the debtor; 

(2) Present and potential income; 

(3) Inheritance prospects; 

(4) The possibility that assets have 

been concealed or improperly 

transferred by the debtor; and 

(5) The availability of assets or 

income that may be realized by enforced 

collection proceedings. 

(c) Agencies should verify the debtor’s 

claim of inability to pay by using a 

credit report and other financial 

information as provided in paragraph (g) 

of this section. Agencies should 

consider the applicable exemptions 

available to the debtor under state and 

Federal law in determining the 

Government’s ability to enforce 

collection. Agencies also may consider 

uncertainty as to the price that collateral 

or other property will bring at a forced 

sale in determining the Government’s 

ability to enforce collection. A 

compromise effected under this section 

should be for an amount that bears a 

reasonable relation to the amount that 

can be recovered by enforced collection 

procedures, with regard to the 

exemptions available to the debtor and 

the time that collection will take. 

(d) If there is significant doubt 

concerning the Government’s ability to 

prove its case in court for the full 

amount claimed, either because of the 

legal issues involved or because of a 

bona fide dispute as to the facts, then 

the amount accepted in compromise of 

such cases should fairly reflect the 

probabilities of successful prosecution 

to judgment, with due regard given to 

the availability of witnesses and other 

evidentiary support for the 

Government’s claim. In determining the 

litigative risks involved, agencies 

should consider the probable amount of 

court costs and attorney fees pursuant to 

the Equal Access to Justice Act, 28 

U.S.C. 2412, that may be imposed 

against the Government if it is 

unsuccessful in litigation. 

(e) Agencies may compromise a debt 

if the cost of collecting the debt does not 

justify the enforced collection of the full 

amount. The amount accepted in 

compromise in such cases may reflect 

an appropriate discount for the 

administrative and litigative costs of 

collection, with consideration given to 

the time it will take to effect collection. 

Collection costs may be a substantial 

factor in the settlement of small debts. 

In determining whether the cost of 

collecting justifies enforced collection of 

the full amount, agencies should 

consider whether continued collection 

of the debt, regardless of cost, is 

necessary to further an enforcement 

principle, such as the Government’s 

willingness to pursue aggressively 

defaulting and uncooperative debtors. 

(f) Agencies generally should not 

accept compromises payable in 

installments. This is not an 

advantageous form of compromise in 

terms of time and administrative 

expense. If, however, payment of a 

compromise in installments is 

necessary, agencies should obtain a 

legally enforceable written agreement 

providing that, in the event of default, 

the full original principal balance of the 

debt prior to compromise, less sums 

paid thereon, is reinstated. Whenever 

possible, agencies also should obtain 

security for repayment in the manner set 

forth in part 901 of this chapter. 

(g) To assess the merits of a 

compromise offer based in whole or in 

part on the debtor’s inability to pay the 

full amount of a debt within a 

reasonable time, agencies should obtain 

a current financial statement from the 

debtor, executed under penalty of 

perjury, showing the debtor’s assets, 

liabilities, income and expenses. 

Agencies also may obtain credit reports 

or other financial information to assess 

compromise offers. Agencies may use 

their own financial information form or 

may request suitable forms from the 

Department of Justice or the local 

United States Attorney’s Office. 

§ 902.3 Enforcement policy. 

Pursuant to this part, agencies may 

compromise statutory penalties, 

forfeitures, or claims established as an 

aid to enforcement and to compel 

compliance, if the agency’s enforcement 

policy in terms of deterrence and 

securing compliance, present and 

future, will be adequately served by the 

agency’s acceptance of the sum to be 

agreed upon. 

§ 902.4 Joint and several liability. 

(a) When two or more debtors are 

jointly and severally liable, agencies 

should pursue collection activity against 

all debtors, as appropriate. Agencies 

should not attempt to allocate the 

burden of payment between the debtors 

but should proceed to liquidate the 

indebtedness as quickly as possible. 

(b) Agencies should ensure that a 

compromise agreement with one debtor 

does not release the agency’s claim 

against the remaining debtors. The 
Federal Register / Vol. 65, No. 226 / Wednesday, November 22, 2000 / Rules and Regulations 70403 

amount of a compromise with one 

debtor shall not be considered a 

precedent or binding in determining the 

amount that will be required from other 

debtors jointly and severally liable on 

the claim. 

§ 902.5 Further review of compromise 

offers. 

If an agency is uncertain whether to 

accept a firm, written, substantive 

compromise offer on a debt that is 

within the agency’s delegated 

compromise authority, it may refer the 

offer to the Civil Division or other 

appropriate litigating division in the 

Department of Justice, using a CCLR 

accompanied by supporting data and 

particulars concerning the debt. The 

Department of Justice may act upon 

such an offer or return it to the agency 

with instructions or advice. 

§ 902.6 Consideration of tax 

consequences to the Government. 

In negotiating a compromise, agencies 

should consider the tax consequences to 

the Government. In particular, agencies 

should consider requiring a waiver of 

tax-loss-carry-forward and tax-losscarry-back rights of the debtor. For 

information on discharge of 

indebtedness reporting requirements see 

§ 903.5 of this chapter. 

§ 902.7 Mutual releases of the debtor and 

the Government. 

In all appropriate instances, a 

compromise that is accepted by an 

agency should be implemented by 

means of a mutual release, in which the 

debtor is released from further non-tax 

liability on the compromised debt in 

consideration of payment in full of the 

compromise amount and the 

Government and its officials, past and 

present, are released and discharged 

from any and all claims and causes of 

action arising from the same transaction 

that the debtor may have. In the event 

a mutual release is not executed when 

a debt is compromised, unless 

prohibited by law, the debtor is still 

deemed to have waived any and all 

claims and causes of action against the 

Government and its officials related to 

the transaction giving rise to the 

compromised debt. 

PART 903—STANDARDS FOR 

SUSPENDING OR TERMINATING 

COLLECTION ACTIVITY 

Sec.


903.1 Scope and application.


903.2 Suspension of collection activity.


903.3 Termination of collection activity.


903.4 Exception to termination.


903.5 Discharge of indebtedness; reporting


requirements. 

Authority: 31 U.S.C. 3711. 

§ 903.1 Scope and application. 

(a) The standards set forth in this part 

apply to the suspension or termination 

of collection activity pursuant to 31 

U.S.C. 3711 on debts that do not exceed 

$100,000, or such other amount as the 

Attorney General may direct, exclusive 

of interest, penalties, and administrative 

costs, after deducting the amount of 

partial payments or collections, if any. 

Prior to referring a debt to the 

Department of Justice for litigation, 

agencies may suspend or terminate 

collection under this part with respect 

to debts arising out of activities of, or 

referred or transferred for collection 

services to, that agency. 

(b) If, after deducting the amount of 

any partial payments or collections, the 

principal amount of a debt exceeds 

$100,000, or such other amount as the 

Attorney General may direct, exclusive 

of interest, penalties, and administrative 

costs, the authority to suspend or 

terminate rests solely with the 

Department of Justice. If the agency 

believes that suspension or termination 

of any debt in excess of $100,000 may 

be appropriate, the agency shall refer 

the debt to the Civil Division or other 

appropriate litigating division in the 

Department of Justice, using the CCLR. 

The referral should specify the reasons 

for the agency’s recommendation. If, 

prior to referral to the Department of 

Justice, an agency determines that a debt 

is plainly erroneous or clearly without 

legal merit, the agency may terminate 

collection activity regardless of the 

amount involved without obtaining 

Department of Justice concurrence. 

§ 903.2 Suspension of collection activity. 

(a) Agencies may suspend collection 

activity on a debt when: 

(1) The agency cannot locate the 

debtor; 

(2) The debtor’s financial condition is 

expected to improve; or 

(3) The debtor has requested a waiver 

or review of the debt. 

(b) Based on the current financial 

condition of the debtor, agencies may 

suspend collection activity on a debt 

when the debtor’s future prospects 

justify retention of the debt for periodic 

review and collection activity and: 

(1) The applicable statute of 

limitations has not expired; or 

(2) Future collection can be effected 

by administrative offset, 

notwithstanding the expiration of the 

applicable statute of limitations for 

litigation of claims, with due regard to 

the 10-year limitation for administrative 

offset prescribed by 31 U.S.C. 

3716(e)(1); or 

(3) The debtor agrees to pay interest 

on the amount of the debt on which 

collection will be suspended, and such 

suspension is likely to enhance the 

debtor’s ability to pay the full amount 

of the principal of the debt with interest 

at a later date. 

(c)(1) Agencies shall suspend 

collection activity during the time 

required for consideration of the 

debtor’s request for waiver or 

administrative review of the debt if the 

statute under which the request is 

sought prohibits the agency from 

collecting the debt during that time. 

(2) If the statute under which the 

request is sought does not prohibit 

collection activity pending 

consideration of the request, agencies 

may use discretion, on a case-by-case 

basis, to suspend collection. Further, an 

agency ordinarily should suspend 

collection action upon a request for 

waiver or review if the agency is 

prohibited by statute or regulation from 

issuing a refund of amounts collected 

prior to agency consideration of the 

debtor’s request. However, an agency 

should not suspend collection when the 

agency determines that the request for 

waiver or review is frivolous or was 

made primarily to delay collection. 

(d) When an agency learns that a 

bankruptcy petition has been filed with 

respect to a debtor, in most cases the 

collection activity on a debt must be 

suspended, pursuant to the provisions 

of 11 U.S.C. 362, 1201, and 1301, unless 

the agency can clearly establish that the 

automatic stay has been lifted or is no 

longer in effect. Agencies should seek 

legal advice immediately from their 

agency counsel and, if legally permitted, 

take the necessary legal steps to ensure 

that no funds or money are paid by the 

agency to the debtor until relief from the 

automatic stay is obtained. 

§ 903.3 Termination of collection activity. 

(a) Agencies may terminate collection 

activity when: 

(1) The agency is unable to collect any 

substantial amount through its own 

efforts or through the efforts of others; 

(2) The agency is unable to locate the 

debtor; 

(3) Costs of collection are anticipated 

to exceed the amount recoverable; 

(4) The debt is legally without merit 

or enforcement of the debt is barred by 

any applicable statute of limitations; 

(5) The debt cannot be substantiated; 

or 

(6) The debt against the debtor has 

been discharged in bankruptcy. 

(b) Before terminating collection 

activity, the agency should have 

pursued all appropriate means of 

collection and determined, based upon 
70404 Federal Register / Vol. 65, No. 226 / Wednesday, November 22, 2000 / Rules and Regulations 

the results of the collection activity, that 

the debt is uncollectible. Termination of 

collection activity ceases active 

collection of the debt. The termination 

of collection activity does not preclude 

the agency from retaining a record of the 

account for purposes of: 

(1) Selling the debt, if the Secretary 

determines that such sale is in the best 

interests of the United States; 

(2) Pursuing collection at a 

subsequent date in the event there is a 

change in the debtor’s status or a new 

collection tool becomes available; 

(3) Offsetting against future income or 

assets not available at the time of 

termination of collection activity; or 

(4) Screening future applicants for 

prior indebtedness. 

(c) Generally, agencies shall terminate 

collection activity on a debt that has 

been discharged in bankruptcy, 

regardless of the amount. Agencies may 

continue collection activity, however, 

subject to the provisions of the 

Bankruptcy Code, for any payments 

provided under a plan of reorganization. 

Offset and recoupment rights may 

survive the discharge of the debtor in 

bankruptcy and, under some 

circumstances, claims also may survive 

the discharge. For example, the claims 

of an agency that it is a known creditor 

of a debtor may survive a discharge if 

the agency did not receive formal notice 

of the proceedings. Agencies should 

seek legal advice from their agency 

counsel if they believe they have claims 

or offsets that may survive the discharge 

of a debtor. 

§ 903.4 Exception to termination. 

When a significant enforcement 

policy is involved, or recovery of a 

judgment is a prerequisite to the 

imposition of administrative sanctions, 

agencies may refer debts for litigation 

even though termination of collection 

activity may otherwise be appropriate. 

§ 903.5 Discharge of indebtedness; 

reporting requirements. 

(a) Before discharging a delinquent 

debt (also referred to as a close out of 

the debt), agencies shall take all 

appropriate steps to collect the debt in 

accordance with 31 U.S.C. 3711(g), 

including, as applicable, administrative 

offset, tax refund offset, Federal salary 

offset, referral to Treasury, Treasurydesignated debt collection centers or 

private collection contractors, credit 

bureau reporting, wage garnishment, 

litigation, and foreclosure. Discharge of 

indebtedness is distinct from 

termination or suspension of collection 

activity under part 903 of this title and 

is governed by the Internal Revenue 

Code. When collection action on a debt 

is suspended or terminated, the debt 

remains delinquent and further 

collection action may be pursued at a 

later date in accordance with the 

standards set forth in this chapter. 

When an agency discharges a debt in 

full or in part, further collection action 

is prohibited. Therefore, agencies 

should make the determination that 

collection action is no longer warranted 

before discharging a debt. Before 

discharging a debt, agencies must 

terminate debt collection action. 

(b) Section 3711(i), title 31, United 

States Code, requires agencies to sell a 

delinquent nontax debt upon 

termination of collection action if the 

Secretary determines such a sale is in 

the best interests of the United States. 

Since the discharge of a debt precludes 

any further collection action (including 

the sale of a delinquent debt), agencies 

may not discharge a debt until the 

requirements of 31 U.S.C. 3711(i) have 

been met. 

(c) Upon discharge of an 

indebtedness, agencies must report the 

discharge to the IRS in accordance with 

the requirements of 26 U.S.C. 6050P and 

26 CFR 1.6050P–1. An agency may 

request Treasury or Treasury-designated 

debt collection centers to file such a 

discharge report to the IRS on the 

agency’s behalf. 

(d) When discharging a debt, agencies 

must request that litigation counsel 

release any liens of record securing the 

debt. 

PART 904—REFERRALS TO THE 

DEPARTMENT OF JUSTICE 

Sec.


904.1 Prompt referral.


904.2 Claims Collection Litigation Report.


904.3 Preservation of evidence.


904.4 Minimum amount of referrals to the


Department of Justice. 

Authority: 31 U.S.C. 3711. 

§ 904.1 Prompt referral. 

(a) Agencies shall promptly refer to 

the Department of Justice for litigation 

debts on which aggressive collection 

activity has been taken in accordance 

with part 901 of this chapter and that 

cannot be compromised, or on which 

collection activity cannot be suspended 

or terminated, in accordance with parts 

902 and 903 of this chapter. Agencies 

may refer those debts arising out of 

activities of, or referred or transferred 

for collection services to, that agency. 

Debts for which the principal amount is 

over $1,000,000, or such other amount 

as the Attorney General may direct, 

exclusive of interest and penalties, shall 

be referred to the Civil Division or other 

division responsible for litigating such 

debts at the Department of Justice, 

Washington, D.C. Debts for which the 

principal amount is $1,000,000, or less, 

or such other amount as the Attorney 

General may direct, exclusive of interest 

or penalties, shall be referred to the 

Department of Justice’s Nationwide 

Central Intake Facility as required by 

the CCLR instructions. Debts should be 

referred as early as possible, consistent 

with aggressive agency collection 

activity and the observance of the 

standards contained in parts 900–904 of 

this chapter, and, in any event, well 

within the period for initiating timely 

lawsuits against the debtors. Agencies 

shall make every effort to refer 

delinquent debts to the Department of 

Justice for litigation within one year of 

the date such debts last became 

delinquent. In the case of guaranteed or 

insured loans, agencies should make 

every effort to refer these delinquent 

debts to the Department of Justice for 

litigation within one year from the date 

the loan was presented to the agency for 

payment or re-insurance. 

(b) The Department of Justice has 

exclusive jurisdiction over the debts 

referred to it pursuant to this section. 

The referring agency shall immediately 

terminate the use of any administrative 

collection activities to collect a debt at 

the time of the referral of that debt to the 

Department of Justice. The agency 

should advise the Department of Justice 

of the collection activities which have 

been utilized to date, and their result. 

The referring agency shall refrain from 

having any contact with the debtor and 

shall direct all debtor inquiries 

concerning the debt to the Department 

of Justice. The referring agency shall 

immediately notify the Department of 

Justice of any payments credited by the 

agency to the debtor’s account after 

referral of a debt under this section. The 

Department of Justice shall notify the 

referring agency, in a timely manner, of 

any payments it receives from the 

debtor. 

§ 904.2 Claims Collection Litigation 

Report. 

(a) Unless excepted by the 

Department of Justice, agencies shall 

complete the CCLR (see § 902.1(b) of 

this chapter), accompanied by a signed 

Certificate of Indebtedness, to refer all 

administratively uncollectible claims to 

the Department of Justice for litigation. 

Referring agencies shall complete all of 

the sections of the CCLR appropriate to 

each claim as required by the CCLR 

instructions and furnish such other 

information as may be required in 

specific cases. 

(b) Agencies shall indicate clearly on 

the CCLR the actions they wish the 

Department of Justice to take with 
Federal Register / Vol. 65, No. 226 / Wednesday, November 22, 2000 / Rules and Regulations 70405 

respect to the referred claim. The CCLR 

permits the agency to indicate 

specifically any of a number of litigative 

activities which the Department of 

Justice may pursue, including enforced 

collection, judgment lien only, renew 

judgment lien only, renew judgment 

lien and enforce collection, program 

enforcement, foreclosure only, and 

foreclosure and deficiency judgment. 

(c) Agencies also shall use the CCLR 

to refer claims to the Department of 

Justice to obtain approval of any 

proposals to compromise the claims or 

to suspend or terminate agency 

collection activity. 

§ 904.3 Preservation of evidence. 

Referring agencies must take care to 

preserve all files and records that may 

be needed by the Department of Justice 

to prove their claims in court. Agencies 

ordinarily should include certified 

copies of the documents that form the 

basis for the claim in the packages 

referring their claims to the Department 

of Justice for litigation. Agencies shall 

provide originals of such documents 

immediately upon request by the 

Department of Justice. 

§ 904.4 Minimum amount of referrals to the 

Department of Justice. 

(a) Agencies shall not refer for 

litigation claims of less than $2,500, 

exclusive of interest, penalties, and 

administrative costs, or such other 

amount as the Attorney General shall 

from time to time prescribe. The 

Department of Justice shall promptly 

notify referring agencies if the Attorney 

General changes this minimum amount. 

(b) Agencies shall not refer claims of 

less than the minimum amount unless: 

(1) Litigation to collect such smaller 

claims is important to ensure 

compliance with the agency’s policies 

or programs; 

(2) The claim is being referred solely 

for the purpose of securing a judgment 

against the debtor, which will be filed 

as a lien against the debtor’s property 

pursuant to 28 U.S.C. 3201 and returned 

to the referring agency for enforcement; 

or 

(3) The debtor has the clear ability to 

pay the claim and the Government 

effectively can enforce payment, with 

due regard for the exemptions available 

to the debtor under state and Federal 

law and the judicial remedies available 

to the Government. 

(c) Agencies should consult with the 

Financial Litigation Staff of the 

Executive Office for United States 

Attorneys in the Department of Justice 

prior to referring claims valued at less 

than the minimum amount. 

Dated: November 6, 2000. 

Lawrence H. Summers, 

Secretary of the Treasury. 

Dated: September 21, 2000. 

Janet Reno, 

Attorney General of the United States. 

[FR Doc. 00–29284 Filed 11–21–00; 8:45 am] 

BILLING CODE 4810–35–P; 4410–26–P 

GENERAL ACCOUNTING OFFICE 

DEPARTMENT OF JUSTICE 

4 CFR Chapter II 

[A.G. Order No. 2326–2000] 

Federal Claims Collection Standards; 

Removal of Obsolete Chapter 

AGENCIES: General Accounting Office; 

Department of Justice. 

ACTION: Final rule. 

SUMMARY: This final rule removes from 

Title 4 of the Code of Federal 

Regulations the Federal Claims 

Collection Standards (FCCS), which 

were issued jointly by the Department of 

Justice and the General Accounting 

Office (GAO). The GAO no longer has 

the statutory authority to issue or 

maintain the FCCS. 

DATES: This rule is effective December 

22, 2000. 

FOR FURTHER INFORMATION CONTACT: Tom 

Armstrong, General Accounting Office, 

(202) 512–8257; or Kathleen A. 

Haggerty, Department of Justice, (202) 

514–5343. 

SUPPLEMENTARY INFORMATION: The FCCS 

were promulgated jointly by the 

Department of Justice and GAO on 

March 9, 1984. 49 FR 8889. The 

Comptroller General was removed as a 

co-promulgator of the FCCS by section 

115(g) of the General Accounting Office 

Act of 1996, Public Law 104–316, 110 

Stat. 3826 (Oct. 19, 1996). Consequently, 

the FCCS are being removed from Title 

4 of the Code of Federal Regulations. 

The Secretary of the Treasury was 

added as a co-promulgator of the FCCS 

with the Department of Justice under 

section 31001(g)(1)(C) of the Debt 

Collection Improvement Act of 1996, 

Public Law 104–134, 110 Stat. 1321, 

1321–358 (Apr. 26, 1996), as part of the 

Omnibus Consolidated Rescissions and 

Appropriations Act of 1996. The revised 

FCCS, to be published in Title 31 of the 

Code of Federal Regulations, will be 

administered jointly by the Department 

of Justice and the Department of the 

Treasury. A final rule establishing a 

revised FCCS is being published 

elsewhere in this issue of the Federal 

Register. 

Regulatory Analysis 

Administrative Procedure Act 

(5 U.S.C. 553) 

This rule is a rule of agency 

organization and is therefore exempt 

from the notice requirement of 5 U.S.C. 

553(b), and is made effective upon 

issuance. 

Regulatory Flexibility Act 

It is hereby certified that this 

regulation will not have a significant 

economic impact on a substantial 

number of small entities. Accordingly, a 

Regulatory Flexibility Analysis is not 

required. 

Executive Order 13132 

This regulation will not have a 

substantial direct effect on the states, on 

the relationship between the national 

government and the states, or on 

distribution of power and 

responsibilities among the various 

levels of government. Therefore, in 

accordance with Executive Order 13132, 

it is determined that this regulation does 

not have sufficient federalism 

implications to warrant the preparation 

of a Federalism Assessment. 

Unfunded Mandates Reform Act of 1995 

This regulation will not result in the 

expenditure by state, local, and tribal 

governments, in the aggregate, or by the 

private sector, of $100 million or more 

in any one year, and it will not 

significantly or uniquely affect small 

governments. Therefore, no actions were 

deemed necessary under the provisions 

of the Unfunded Mandates Reform Act 

of 1995. 

Small Business Regulatory Enforcement 

Fairness Act of 1996 

This rule is not a major rule as 

defined by section 251 of the Small 

Business Regulatory Enforcement Act. 5 

U.S.C. 804. This rule will not result in 

an annual effect on the economy of $100 

million or more; a major increase in 

costs or prices; or significant adverse 

effects on competition, employment, 

investment, productivity, innovation, or 

on the ability of United States-based 

companies to compete with foreignbased companies in domestic or export 

markets. 

Executive Order 12866 

This action has been drafted and 

reviewed in accordance with Executive 

Order 12866, ‘‘Regulatory Planning and 

Review,’’ section 1(b), Principles of 

Regulation. This rule is limited to 

agency organization and management as 

described by Executive Order 12866 

section 3(d)(3) and, therefore, is not a