10404 Federal Register / Vol. 72, No. 45 / Thursday, March 8, 2007 / Rules and Regulations 

(Catalog of Federal Domestic Assistance No. 

83.100, ‘‘Flood Insurance.’’) 

Dated: February 28, 2007. 

David I. Maurstad, 

Director, Mitigation Division, Federal 

Emergency Management Agency, Department 

of Homeland Security. 

[FR Doc. E7–4157 Filed 3–7–07; 8:45 am] 

BILLING CODE 9110–12–P 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Office of the Secretary 

45 CFR Part 30 

RIN 0991–AB18 

Claims Collection 

AGENCY: Department of Health and 

Human Services. 

ACTION: Final rule. 

SUMMARY: This final rule amends the 

Department of Health and Human 

Services’ (HHS) regulations to 

implement the provisions of the Debt 

Collection Improvement Act of 1996 

(DCIA), as implemented by the 

Department of Justice (Justice) and the 

Department of the Treasury (Treasury) 

as the Federal Claims Collection 

Standards (FCCS). This final rule 

implements the final rule promulgated 

by Justice and Treasury, and amends the 

process by which HHS can 

administratively collect, offset, 

compromise, suspend and terminate 

collection activity for civil claims for 

money, funds, or property, and the rules 

and process by which HHS can refer 

civil claims to Treasury, Treasurydesignated debt collection centers, or 

Justice for collection by further 

administrative action or litigation, as 

applicable. 

DATES: Effective Date: March 8, 2007. 

FOR FURTHER INFORMATION CONTACT: 

Jeffrey S. Davis, Associate General 

Counsel, General Law Division, Office 

of the General Counsel, Department of 

Health and Human Services, Room 4760 

Cohen Building, 330 Independence 

Avenue SW., Washington, DC 20201. 

SUPPLEMENTARY INFORMATION: 

Background 

The Debt Collection Act of 1982 

(DCA), Public Law No. 97–365, was 

implemented on a government-wide 

basis by the FCCS, set forth at 4 CFR 

part 101 et seq., issued by Justice and 

the General Accounting Office on March 

9, 1984. See 49 FR 8889 (1984). HHS 

implemented the FCCS at 45 CFR part 

30. As mandated by the DCIA, Justice 

and Treasury jointly promulgated the 

revised FCCS at 31 CFR parts 900–904 

to reflect the legislative changes to the 

Federal debt collection procedures 

enacted by the DCIA. The revised FCCS 

superseded the current FCCS, and 

removed the Comptroller General as 

promulgator of the FCCS. HHS is 

required to implement regulations, 

consistent with the DCIA and the 

regulations promulgated by Justice and 

Treasury. The following changes to the 

Department’s current debt collection 

regulation are incorporated in the 

proposed regulation to reflect the DCIA 

and the implementing final rule: 

1. Demand Letter. One demand 

should be sufficient. It will include the 

applicable standards for imposing any 

interest, penalties, or administrative 

costs; use of collection agencies, Federal 

salary offset, tax refund offset, 

administrative offset, and litigation; any 

rights the debtor may have to seek 

review of the Department’s 

determination of the debt and to enter 

into a reasonable repayment agreement; 

and information regarding the 

Department’s remedies to enforce 

payment of the debt. 

2. Mutual Releases. HHS and debtors 

will exchange mutual releases of nontax liabilities, in all appropriate 

instances, when a claim is 

compromised. 

3. Increase in Amounts. The principal 

claim amount that HHS is authorized to 

compromise or to suspend or terminate 

collection activity thereon, without 

concurrence by Justice, is increased 

from $20,000 to $100,000. In addition, 

the minimum amount of a claim that 

may be referred to Justice for litigation 

is increased from $600 to $2,500. 

4. Transferring or Referring 

Delinquent Debt. There are new debt 

collection procedures for transferring or 

referring delinquent debt to Treasury or 

a Treasury-designated debt collection 

center for collection. 

5. Centralized Administrative Offset. 

There are new debt collection 

procedures for mandatory, centralized 

administrative offset by disbursing 

officials. 

6. Mandatory Credit Bureau 

Reporting. There are new debt 

collection procedures for mandatory 

credit bureau reporting. 

7. Prohibition Against Federal 

Financial Assistance. There are new 

debt collection procedures prohibiting 

Federal financial assistance in the form 

of loans, loan guarantees, or loan 

insurance to debtors, unless waived by 

the Secretary. Disaster loans are exempt 

from this prohibition. 

8. Army Hold-up List. The use of the 

Army hold-up list to report indebted 

contractors to the Department of the 

Army has been discontinued. 

Additionally, we note that the current 

HHS claims collection regulations at 45 

CFR 30.13(d) provided: ‘‘[u]nless 

specifically authorized by statute, 

regulation or written agreement, or 

unless the debts arise from, or involve, 

fraud or criminal activity, the Secretary 

will not charge interest on debts arising 

from payments to beneficiaries under 

Titles II, XVI, and XVIII of the Social 

Security Act.’’ This rule will not change 

this Departmental practice. For debts 

arising from payments to beneficiaries 

under Titles XVI and XVIII of the Social 

Security Act (Title II is now 

administered by the Social Security 

Administration), the Secretary will not 

assess interest unless specifically 

required to do so by statute, regulation 

or written agreement, or unless the 

debts arise from, or involve, fraud or 

criminal activity. 

To the extent any provision of this 

rule is inconsistent with a more specific 

provision (e.g., certain provisions in 45 

CFR parts 31, 32, and 33 and 42 CFR 

parts 401 and 405), the more specific 

provision shall apply. 

Basic Provisions 

In accordance with the requirements 

of the DCIA and the implementing 

regulations promulgated by Justice and 

Treasury at 31 CFR parts 900–904, this 

final rule establishes the procedures for 

the administrative collection, offset, 

compromise, suspension and 

termination of collection activity for 

civil claims for money, funds, or 

property, as defined by 31 U.S.C. 

3701(b), and the process by which HHS 

can refer civil claims to Treasury, 

Treasury-designated debt collection 

centers, or Justice for collection by 

further administrative action or 

litigation, as applicable. The rule does 

not apply to claims between Federal 

agencies. The rule affects HHS’s debtors. 

This rule revises the current Department 

regulation in accordance with the 

substantive and procedural 

requirements of the DCIA and the 

implementing final rule. 

(Authority: 31 U.S.C. 3711.) 

Public Comments 

We received the following comments 

on the proposed rule. 

Comment: One commenter asserted 

that the mandatory demand letter 

statements required by § 30.11 of the 

proposed rule potentially conflicted 

with validation disclosures of § 809 of 

the Fair Debt Collection Practices Act 

(FDCPA) that private collection 

contractors are required to deliver in 

their initial demand letters. 


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Response: We do not agree that the 

requirements of § 30.11 of the final rule 

conflict with the FDCPA and have made 

no changes to the final rule based on 

this comment. Section 30.11(b)(1) 

provides a listing of the information that 

must be included in a demand letter. 

The specific clauses that concerned the 

commenter are found in § 30.11(b)(2) 

which provides the listing of the 

information which should be included 

in a demand letter, including the 

statements of fact that: (1) A debtor 

delinquent on a debt is ineligible for 

Government loans, loan guarantees, or 

loan insurance until the debtor resolves 

the debt; (2) when seeking to collect 

statutory penalties, forfeiture or other 

similar types of claims, the debtor’s 

licenses, permits, or other privileges 

may be suspended or revoked if failure 

to pay the debt is inexcusable or willful; 

and (3) knowingly making false 

statements or bringing frivolous actions 

may subject the debtor to civil or 

criminal penalties under 31 U.S.C. 

3729–3731, 18 U.S.C. 286, 287, 1001, 

and 1002, or any other applicable 

statutory authority, and, if the debtor is 

a Federal employee, to disciplinary 

action under 5 CFR part 752 or other 

applicable authority. 

Comment: One commenter noted that 

in the Medicare Secondary Payer (MSP) 

context, the Centers for Medicare & 

Medicaid Services (CMS) currently 

utilizes two demand letters and 

requested either the section 30.11(b) 

statement, ‘‘[g]enerally one demand 

letter should suffice * * *’’ be deleted 

or recognize that in the MSP context 

two demand letters are generally 

appropriate. 

Response: We are making no changes 

to the final rule based on this comment. 

Under the FCCS, agencies are permitted 

to use more than one demand letter to 

meet the requirements at 31 CFR 901.2. 

Therefore, there is no need to change 

the current language of § 30.11(b) to 

accommodate the use of more than one 

demand letter. 

Comment: One commenter stated that 

in the MSP context, initial demand 

letters and intent to refer letters are not 

often directed to the appropriate, 

responsible party. As a result, the entity 

bearing responsibility for the debt may 

not have an opportunity to respond 

prior to the referral of the debt to 

Treasury for collection. The commenter 

recommended HHS: 

(1) Amend proposed § 30.11(a)(2) to 

state that demand letters ‘‘shall be sent 

by first class mail to the debtor’s last 

known address, as confirmed through 

reasonable efforts’’; 

(2) Add a new sentence stating that if 

a letter is returned as undeliverable, the 

Secretary shall take reasonable steps to 

determine the appropriate address of the 

alleged debtor and send a second letter; 

and 

(3) Add a new provision stating that 

the Secretary shall provide alleged 

debtors (generally employers, insurers 

or third party administrators) with the 

opportunity to designate a central agent 

(at a specific location) to receive MSP 

demand letters. 

Response: We are making no changes 

to the final rule based on this comment. 

As to the first two suggestions, CMS 

uses the most recent address 

information in its system specific to a 

particular debt. As to the third 

suggestion, the final rule would not 

prohibit an employer, insurer, or third 

party administrator from reaching an 

agreement with CMS on a designated 

agent for the receipt of MSP demand 

letters to the extent that CMS systems 

can handle the request and the specific 

debtor information can be appropriately 

matched. Employers, insurers, and third 

party administrators should have 

internal procedures which ensure 

correct internal routing of such letters if 

the letter is received at any address of 

the entity. 

Comment: In another comment 

relating to MSP debts, a commenter 

urged HHS to amend proposed 

§ 30.11(b)(1) to state that the written 

demand for payment ‘‘shall include 

sufficient information to allow the 

recipient to identify the specific debt 

involved.’’ The commenter noted in the 

MSP context, sufficient information 

includes: beneficiary name, HIC 

number, basis for Medicare eligibility, 

policy number, services included in the 

claim, dates of service, provider type, 

amount due, and member name/ 

company. 

Response: We are making no changes 

to the final rule based on this comment. 

The current CMS process is adequate 

because most of the information listed is 

already included in the demand letter 

package. The demand package contains 

sufficient information to allow the 

recipient to identify the specific debt 

involved. The intent to refer letter 

package includes the initial demand 

letter (including attachments) when it is 

issued. However, the content of the 

initial demand letter is dependent on 

the debtor responding to CMS’s 

requests, if any, for additional 

information. Finally, CMS has no 

control over what information Treasury 

includes in its first letter to the debtor 

and the information Treasury instructs 

the private collection agency to include 

in its collection letter. 

Comment: One commenter requested 

HHS to modify proposed § 30.11 to add 

new text (modeled directly on the FCCS 

at 31 CFR 901.2(e)) that reads ‘‘the 

Secretary 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.’’

Response: We have made this change 

requested by the commenter and have 

added a new 30.11(f) providing: 

Communications from debtors. The 

Secretary should respond promptly to 

communications from debtor, within 30 

days where feasible, and should advise 

debtors who dispute debts to furnish 

available evidence to support their 

contentions. 

Comment: One commenter noted that 

§ 30.11(b)(1)(ii) would require that 

demand letters state ‘‘[t]he date by 

which payment should be made to 

avoid late charges and enforced 

collection, which generally shall be no 

later than 30 days from the date the 

demand letter is mailed.’’ The 

commenter sought confirmation that the 

proposed regulation will not (1) Require 

CMS to shorten the period allowed by 

the MSP statute for entities to respond 

to demands for payment before the 

imposition of interest or (2) prohibit the 

Secretary from exercising discretion to 

waive interest, where appropriate. 

Response: We are making no changes 

to the final rule based on this comment. 

We confirm that the regulation does not 

require CMS to shorten the period 

allowed by the MSP statute for MSP 

debtors to respond to demands for 

payment before the imposition of 

interest, or prohibit the Secretary from 

exercising discretion to waive interest, 

where appropriate (see § 30.18(g), 

Waiver). Proposed § 30.11(b)(1)(ii) is not 

intended to alter any existing CMS 

policies and procedures on when 

entities must respond to demands for 

payment to avoid interest in the MSP 

context (currently, 60 days), nor is it 

intended to limit the Secretary from 

waiving interest where appropriate and 

where consistent with government-wide 

and agency-specific debt collection 

standards. The language in proposed 

30.11(b)(1)(ii) states payment ‘‘should’’

be made ‘‘generally’’ no later than 30 

days to avoid late charges and enforced 

collection. Based on this language, CMS 

may exercise discretion in extending the 

time frame for entities to respond for 

specific types of debt such as MSP 

debts. 

Comment: Proposed § 30.10(c)(1) 

states that ‘‘[t]he Secretary shall transfer 

debts 180 days or more delinquent to 

the Treasury in accordance with the 

requirements of 31 CFR 285.12.’’ A 

commenter requested that the regulation 


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be amended, consistent with the 

Treasury regulations, to make clear that 

debt is not required to be transferred to 

Treasury unless and until a final agency 

determination has been made. 

Accordingly, the commenter requested 

that HHS amend section 30.10 to read: 

‘‘(c) The Secretary shall transfer debts 

180 days or more delinquent to 

Treasury, where appropriate, in 

accordance with the requirements of 31 

CFR 285.12 when there is a final agency 

determination that the debt, in the 

amount stated, is due and there are no 

legal bars to collection action.’’ The 

commenter believed that premature 

referral of debt would not only violate 

the terms of the Treasury regulation, but 

also undermine efficient administration 

of debt collection since alleged MSP 

debtors, whom the commenter 

incorrectly asserted do not receive final 

agency determinations prior to referral, 

generally seek reconsideration at the 

Treasury level. The commenter 

contended that this adds an unnecessary 

level of complication to the debt 

collection process and typically results 

in claims being sent back to CMS for 

further review and verification of the 

validity of the debt. 

Response: We are making no changes 

to the final rule based on this comment. 

It is implicit in the regulatory language 

that, before transfer to Treasury, there 

will have been a final agency 

determination that the debt, in the 

amount stated, is due. 

Comment: One commenter urged HHS 

to modify the proposed regulation to 

clearly state the specific process with 

which CMS must comply before 

transferring MSP debt to Treasury for 

administrative offset and/or other crossservicing. The commenter believed that 

the proposed regulations do not include 

all of the criteria set forth in the 

Treasury regulations as prerequisites to 

transfer, and recommended that HHS 

amend proposed § 30.12(b)(2) to state: 

‘‘When referring delinquent debt to the 

Secretary of the Treasury for centralized 

administrative offset or other debt 

collection activity, the appropriate 

agency official must certify, in written 

form acceptable to the Secretary of the 

Treasury, that (i) The debt is valid, past 

due and legally enforceable; and (ii) the 

Department has complied with all due 

process requirements under 31 U.S.C. 

3716(a) and paragraph (c)(2) of this 

section and all prerequisites to a 

particular collection action under the 

laws, regulations or policies applicable 

to the agency (unless the Secretary of 

the Treasury has agreed to comply with 

such requirements on the Department’s 

behalf).’’

Response: We are making three 

changes to the final rule based on this 

comment. First, we are changing the 

definition of ‘‘Legally enforceable’’ in 

§ 30.2 to add on to the end ‘‘(for 

example, the debt is not the subject of 

a pending administrative review 

required by statute or regulation and 

collection action during the review 

process is prohibited.)’’ Second, we are 

adding ‘‘legally enforceable’’ before the 

word ‘‘debts’’ in 30.10(c)(1). While we 

believe the requirement that the debt 

not be transferred, under mandatory 

transfer, if it is the subject of a pending 

administrative review required by 

statute or regulation and collection 

action during the review process is 

prohibited was clear, as previously 

drafted, since this is a requirement of 31 

CFR 285.12(c)(3)(i) and 30.10(c)(1) 

specified that transfers to Treasury 

would be made in accordance with the 

requirements of 31 CFR 285.12, the 

regulation is more complete with this 

clarification. Related to the part of the 

comment that 30.10(c)(2) did not 

include all of the criteria set forth in the 

Treasury regulations as prerequisites to 

transfer, we are also amending 

30.10(c)(2) to include ‘‘in accordance 

with the requirements of 31 CFR 

285.12.’’ Therefore, the requirements of 

Treasury’s regulations are clearly 

included. 

Comment: One commenter suggested 

that the Claims Collection regulations be 

amended to state that the Secretary may, 

where appropriate, in the MSP debt 

context, explore the use of alternative 

dispute resolution to resolve disputed 

debt. 

Response: We are making no changes 

to the final rule based on this comment 

because we believe that CMS’s current 

regulations and processes provide 

adequate opportunity for the debtor to 

dispute a debt. 

Comment: One commenter 

recommended that HHS define the term 

‘‘valid debt’’ under § 30.2 to mean debt 

where the government has a reasonable 

expectation of being able to prove the 

existence of the debt in court, based on 

the legal issues and the facts. 

Response: We are making no changes 

to the Final Rule based on this 

comment. We do not agree that it is 

necessary to define ‘‘valid debt.’’

Comment: One commenter noted the 

proposed Claims Collection regulations 

state that the term ‘‘legally enforceable’’

means ‘‘there has been a final agency 

determination that the debt, in the 

amount stated, is due and there are no 

legal bars to collection action.’’

Proposed § 30.2, Definitions. The 

commenter requested HHS amend the 

proposed regulations to expressly state 

that, when an alleged debtor has 

disputed a debt, the appropriate agency 

official may not refer the debt to 

Treasury unless and until a written 

determination explaining the basis for 

the decision has been issued (and a 

copy provided to the alleged debtor) 

concerning the validity of the alleged 

debt. 

Response: We are making no changes 

to the final rule based on this comment. 

First, in response to a previously 

discussed comment, we are changing 

the definition of ‘‘Legally enforceable’’

in § 30.2 to add on to the end ‘‘(for 

example, the debt is not the subject of 

a pending administrative review 

required by statute or regulation and 

collection action during the review 

process is prohibited.)’’ Also, a final 

determination that a debt, in the amount 

stated, is due and there are no legal bars 

to collection action does not require 

issuing a formal written determination, 

separate from and in addition to the 

demand letter, explaining the basis for 

such decision. Also, the regulations 

provide, in the definition of a debt 

(§ 30.2, Definitions) that an appropriate 

official of the Federal Government 

determined an amount of funds or other 

property is owed to the Government. 

Such a determination, therefore, is 

needed before a demand letter would be 

sent and before the debt would be 

referred to Treasury for collection. 

Comment: One commenter noted that 

proposed section 30.12(b) states that 

when referring delinquent debts to the 

Secretary of Treasury for centralized 

administrative offset, the Department 

must certify that the Department has 

complied with all due process 

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

and § 30.12(c)(2) of the proposed rule. 

31 U.S.C. 3716(a)(3) states that the head 

of an administrative agency may collect 

by offset only after, among other things, 

giving the debtor ‘‘an opportunity for a 

review within the agency of the decision 

of the agency related to the claim.’’ The 

commenter noted that the proposed 

HHS regulations state that where review 

is required, the Secretary must afford 

the alleged debtor an oral or paper 

hearing. See Proposed § 30.12(e). The 

commenter supported this provision of 

the regulation, but noted the need for 

clarification regarding the specific due 

process rights that will be afforded to 

employers/unions and health plans/ 

insurers disputing alleged MSP debt. 

The commenter noted that CMS has 

published proposed Medicare claims 

appeal regulations which expressly 

allow beneficiaries and providers/ 

suppliers to appeal Medicare contractor 

determinations that they owe the 

government monies under the MSP 


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statute, but has not provided any 

specific due process appeal rights to 

employers/unions or health plans/ 

insurers in similar circumstances. See 

67 FR 69311, 69317–20 (Nov. 15, 2003). 

The commenter asserted that, as a 

matter of law, employers/unions and 

health plans/insurers are entitled to 

independent review of an alleged MSP 

debt determination by a Medicare 

contractor prior to referral of the debt to 

Treasury for offset. The commenter 

strongly urged HHS to identify the 

specific due process rights to be 

afforded such entities challenging the 

existence of MSP debt, particularly the 

nature of any associated appeal rights. 

The commenter noted that the FCCS 

encourages agencies to use ‘‘all 

authorized remedies, including 

alternative dispute resolution,’’ for 

claims collection, 31 CFR 900.1(c), and 

requested HHS to amend the Claims 

Collection regulation to state that the 

Secretary may, in appropriate 

circumstances, explore the use of 

alternative dispute resolution 

mechanisms to resolve disputed debt. 

While the commenter does not request 

that CMS be required to use such 

alternative dispute resolution 

mechanisms, the commenter believes 

CMS should be granted the flexibility 

through regulation to develop creative 

and cost-effective ways of resolving 

disputed claims short of transfer to 

Treasury (and without incurring the 

significant costs associated with use of 

private collection agencies). 

Response: We are making no changes 

to the final rule based on this comment. 

We believe that current CMS procedures 

provide adequate opportunity for the 

non-beneficiary or non-provider/ 

supplier MSP debtor (e.g., employers/ 

unions or health plans/insurers) to 

dispute a debt. Employers, insurers, 

third party administrators, plans, or 

other plan sponsors that are issued a 

demand letter are provided adequate 

notice of the debt and an opportunity to 

rebut the debt prior to CMS referring the 

MSP debt to Treasury. 

Comment: One commenter stated that 

it is aware of numerous situations in 

which offset of a claim occurred after 

CMS had determined that monies were 

not in fact due with respect to the 

particular claim. Accordingly, the 

commenter recommended HHS amend 

the Claims Collection regulations to 

include the following language adapted 

from 31 CFR 285.12 of the Treasury 

regulations: ‘‘Once a debt is referred to 

Treasury, the Secretary must promptly 

notify Treasury of any change in the 

status of the debt, including any 

decision that the debt is not in fact 

owed.’’

Response: We are making no changes 

to the final rule based on this comment. 

As noted by the commenter, Treasury’s 

current regulations already provide for 

notification to Treasury of changes in 

the status of the legal enforceability of 

a debt. Since 30.10(c) states that the 

transfer of debts be in accordance with 

31 CFR 285.12, and 31 CFR 285.12(i) 

includes this notification of status 

requirement, it is unnecessary to restate 

that requirement here. 

Comment: One commenter noted that 

proposed § 30.18 requires the 

Department to assess administrative 

costs incurred for processing and 

handling delinquent debts and, 

‘‘[u]nless otherwise established by 

contract, repayment agreement, or 

statute,’’ to impose a penalty of six 

percent a year on the amount due on a 

debt that is delinquent for more than 90 

days. The commenter asserted that the 

mandatory imposition of administrative 

costs and penalties is not appropriate 

for MSP debt since the interest and 

penalty provision of the Debt Collection 

Improvement Act, 31 U.S.C. 3717, does 

not (with limited exceptions not here 

relevant) apply to ‘‘a claim or debt 

under, or an amount payable under 

* * * the Social Security Act,’’ 31 

U.S.C. 3701(d). Accordingly, commenter 

requested that HHS amend § 30.18 to 

incorporate language from the current 

HHS Claims Collection regulations 

which states: ‘‘[t]he Secretary will 

charge administrative costs or late 

payment penalties on debts arising 

under the Social Security Act where 

authorized by statute, regulations, or 

written agreement.’’ See 45 CFR 

30.13(d)(2). 

Response: We are making no changes 

to the final rule based on this comment. 

The proposed regulation did not change 

the current CMS process for assessing 

administrative fees. As to comments on 

MSP debts not being subject to the 

interest and penalties provisions of the 

DCIA, the MSP provisions of the 

Medicare statute (section 1862(b) of the 

Social Security Act) and implementing 

regulations (42 CFR 411.24(m)) provide 

CMS separate, independent authority 

for assessing interest on delinquent MSP 

debts. 

Comment: One commenter noted that 

proposed § 30.24(b) states ‘‘[t]he 

Secretary will ensure that a compromise 

agreement with one debtor does not 

release the Department’s claim against 

the remaining debtors.’’ The commenter 

requested that given the unique nature 

of MSP claims, HHS delete or modify 

the text of the proposed regulation to 

expressly authorize the Secretary to 

release all potential debtors, where 

appropriate with respect to a particular 

debt. The commenter expressed a belief 

that historically, MSP settlements with 

the government have released claims 

against all potential debtors. The 

commenter urged HHS to amend the 

regulations to allow the Secretary to 

retain the flexibility to execute similar 

agreements in the future. The 

commenter believed that such 

comprehensive settlements are 

particularly appropriate in the MSP 

context where it is not cost-effective to 

adjudicate claims twice and health 

plans/insurers will have significantly 

less incentive to enter into MSP 

settlement agreements if potential 

claims against their group health plan 

customers are not released. 

Response: The proposed regulation is 

intended to govern situations where 

agency (in this case, CMS) regulations 

are silent or fail to govern a specific debt 

situation. The proposed language in 

§ 30.24(b) would not prohibit the 

Secretary from executing a compromise 

of selected debts where an insurer is 

negotiating on its own behalf and on 

behalf of others as authorized. However, 

HHS will insert the word 

‘‘automatically’’ before the word 

‘‘release’’ to make clear that some action 

could take place which would release 

all parties. 

Comment: A commenter requested 

that HHS amend proposed 

§ 30.11(b)(2)(vi) to provide that ‘‘[a]ny 

amounts collected and ultimately found 

not to have been owed by the debtor 

will be refunded promptly.’’ The 

commenter explained the proposed 

modification is fair and appropriate 

where monies are not in fact due. In 

addition, the commenter requested that 

HHS modify the proposed regulation to 

require individual agencies, including 

CMS, to establish clearly publicized 

processes for debtors to request 

reimbursement of disputed amounts 

that were paid in order to avoid the 

imposition of interest or were taken by 

offset and specific timelines for prompt 

adjudication of the amounts in dispute. 

Response: We are making no changes 

to the final rule based on this comment. 

Applicable statutes and regulations do 

not mandate that the above quoted 

language be included in demand letters, 

nor do they mandate a specific time 

frame or published process for debtors 

to request reimbursement of disputed 

amounts or for refunding amounts 

previously collected. HHS will revisit 

this suggestion if it is problematic in 

practice. 

Comment: One commenter stated that, 

when a debt is contested at the 

Treasury/private collection agency 

level, Treasury will often seek input 

from CMS concerning the validity of the 


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underlying debt. The commenter 

submitted that when this occurs, it is 

appropriate for Treasury to suspend all 

collection efforts, including offset. 

Accordingly, the commenter requested 

that HHS add a provision to the 

regulation authorizing suspension of all 

collection activities by Treasury or a 

private collection agency when Treasury 

seeks guidance from HHS regarding the 

validity of a particular debt in dispute. 

Response: We are making no changes 

to the final rule based on this comment. 

This comment addresses current 

Treasury procedures and is outside the 

scope of the Claims Collection 

regulations. 

Comment: One commenter supported 

HHS’s proposed modifications of the 

regulations which would authorize HHS 

to compromise, suspend or terminate 

collection activity on a debt under 

$100,000 in principal amount without 

the concurrence of Justice. See Proposed 

§§ 30.21 and 30.28. The commenter also 

supports amendments set forth in 

proposed § 30.36 which raise the 

minimum amount of debt necessary for 

referral for litigation. 

Response: No response to this 

comment is necessary. 

Comment: One commenter supported 

proposed § 30.22(a)(3)(i) which 

authorizes the Secretary to compromise 

a debt where the cost of collecting the 

debt does not justify the enforced 

collection of the full amount, but 

requested that the regulation be 

amended to state that ‘‘[t]he amount 

accepted in compromise of such cases 

may reflect an appropriate discount for 

the administrative and litigation costs of 

collection, with consideration given to 

the time it will take to effect collection 

and the age of the delinquent debt.’’

Likewise, the commenter requested that 

proposed § 30.19 be amended to direct 

that the age of delinquent debt be 

considered in developing data on costs 

and corresponding recovery rates to be 

used (among other things) in 

establishing guidelines with respect to 

points at which costs of further 

collection efforts are likely to exceed 

recoveries. The commenter believed the 

age of alleged MSP debt directly affects 

the demand letter processing and 

collection costs for both the government 

and the alleged debtors and should be 

expressly considered in establishing 

collection guidelines. The commenter 

requested that HHS amend the Claims 

Collection regulation to expressly 

recognize that it is appropriate for 

agencies to (1) Take the age of a debt 

into account when determining what 

documentation must be provided by the 

alleged debtor to mount a defense, and 

(2) exercise flexibility in determining 

whether additional collection efforts are 

appropriate or justified concerning old 

debt. 

Response: We are making no changes 

to the final rule based on this comment. 

We do not agree that it is necessary or 

appropriate to specifically require 

consideration of the age of the 

delinquent debt as a factor in pursuing 

or compromising a debt. 

Comment: There were several 

comments related to the rule’s impact 

on state collection activities when states 

seek to collect debts due under a 

program authorized under the Social 

Security Act for which Federal funds 

were provided (i.e., Temporary 

Assistance to Needy Families (TANF), 

State Children’s Health Insurance 

Program (SCHIP) and Medicaid). Certain 

commenters explained the difficulties 

and increased burdens on states in 

following the proposed rule. For 

example, one commenter offered that 

the particular state would need to 

change its computer system and the 

current way it did business. Other 

commenters explained the benefits of 

interpreting the rule to allow TANF 

debts to be collected pursuant to the 

rule and strongly recommended the rule 

be interpreted to include state debts and 

authorize states to submit TANF debts 

to the Treasury Offset Program. 

Response: We are making no changes 

to the final rule based on these 

comments, but draw the commenters’

attention to several points. In the TANF 

program, there is no direct Federal share 

in recipient overpayments because 

TANF is a block grant program. 

Therefore, these regulations would not 

affect state collection activities with 

respect to recipient families. In 

addition, states are not subject to the 

FCCS when seeking to collect state 

overpayments made to providers in the 

Medicaid and SCHIP programs. Because 

we do not believe that this regulation 

imposes any new requirement related to 

state collection activities in the 

referenced Social Security Act programs 

that are related to overpayments or other 

debts to or on behalf of individual 

recipients, we do not find any burden 

on states related to such collection 

activities. 

Comment: One commenter 

recommended that many mandates in 

the regulation be made permissive (i.e., 

changing ‘‘shall’’ to ‘‘may’’ in certain 

places in the regulation text) so as not 

to mandate certain state action. 

Response: We are making no changes 

to the final rule based on this comment 

because, as explained in the response to 

the previous comments (directly above), 

the HHS regulation does not place these 

mandates on states. 

Comment: One commenter asked 

whether states administering TANF, 

SCHIP or Medicaid should refer cases to 

the HHS Office of the Inspector General. 

Response: The proposed rule was not 

intended to change the current way 

states refer to law enforcement entities 

claims that are suspected to involve 

fraud, false information, or 

misrepresentation on the part of the 

debtor. States should continue to refer 

such claims to the appropriate 

governmental entity pursuant to 

applicable Federal and State laws and 

agency guidance. 

Other Changes Made to the Final Rule 

We have also changed § 30.18(b)(2), 

regarding the percentage of interest to be 

charged on debts. The NPRM 

requirement that the Department 

document in writing the reasons for 

charging a higher rate was omitted and 

the following language was added: ‘‘Any 

such higher rate of interest charged will 

be based on Treasury’s quarterly rate 

certification to the U.S. Public Health 

Service for delinquencies in the 

National Research Services Awards and 

the National Health Services Corps 

Scholarship Program. The Department 

publishes this rate in the Federal 

Register quarterly.’’

Federalism 

We have analyzed this final rule in 

accordance with the principles set forth 

in Executive Order (EO) 13132 

(Federalism). We have determined that 

the rule does not contain policies that 

have substantial direct effects on the 

States, on the relationship between 

National Government and the States, or 

on the distribution of power and 

responsibilities among the various 

levels of government. Accordingly, we 

have concluded that the rule does not 

contain policies that have federalism 

implications as defined in the EO and, 

consequently, a federalism summary 

impact statement is not required. 

Analysis of Impacts 

For purposes of the Paperwork 

Reduction Act, 44 U.S.C. chapter 35, 

this proposed rule will impose no new 

reporting or recordkeeping requirements 

on any member of the public. 

Economic Impact 

We have examined the impact of this 

rule as required by EO 12866 

(Regulatory Planning and Review), the 

Regulatory Flexibility Act (RFA) 

(September 19, 1980; Pub. L. No. 96–

354); the Unfunded Mandates Reform 

Act of 1995 (UMRA, Pub. L. No. 104–

4); and the Truth in Regulating Act of 

2000 (5 U.S.C. 801 note). EO 12866 


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Federal Register / Vol. 72, No. 45 / Thursday, March 8, 2007 / Rules and Regulations 10409 

directs agencies to assess all costs and 

benefits of available regulatory 

alternatives and, if regulation is 

necessary, to select regulatory 

approaches that maximize the benefits 

(including potential economic, 

environmental, public health and safety 

effects, distributive impacts, and 

equity). A regulatory impact analysis 

(RIA) must be prepared for major rules 

with economically significant effects 

($100 million or more in 1 year). We 

have determined that the rule is 

consistent with the principles set forth 

in EO 12866, and we find that the rule 

would not have an effect on the 

economy that exceeds $100 million in 

any one year. In addition, this rule is 

not a major rule as defined at 5 U.S.C. 

804(2). In accordance with the 

provisions of the EO 12866, the rule was 

reviewed by the Office of Management 

and Budget. 

Under the RFA, 5 U.S.C. 605(b), if a 

rule has a significant impact on a 

substantial number of small entities, an 

agency must analyze regulatory options 

that would minimize any significant 

impact of the rule on small entities. The 

agency has considered the effect that 

this rule would have on small entities. 

I hereby certify, under 5 U.S.C. 605(b), 

that the rule will not have a significant 

economic impact on a substantial 

number of small entities, including 

small businesses, small organizations 

and small local governments. Therefore, 

a regulatory flexibility analysis is not 

required by 5 U.S.C. 603. Section 202 of 

the UMRA also requires that agencies 

assess anticipated costs and benefits 

before issuing any rule that may result 

in expenditure in any one year by State, 

local, or tribal governments, in the 

aggregate, or by the private sector, of 

$100 million. As noted above, we find 

that the rule would not have an effect 

of this magnitude on the economy. 

Therefore, no further analysis is 

required under the UMRA. 

Plain Language 

EO 12866 and the President’s 

memorandum of June 1, 1998, require 

all rules to be written in plain language. 

We believe we have done so. 

List of Subjects in 45 CFR Part 30 

Administrative practice and 

procedure, Claims, Debts, Appeals, 

Government employees, Privacy. 

xxxxxxxxxxxxxxxxxxxxxxxxxx 

■ HHS revises 45 CFR part 30 to read as 

follows: 

PART 30—CLAIMS COLLECTION 

Subpart A—General Provisions 

Sec. 

30.1 Purpose, authority, and scope. 

30.2 Definitions. 

30.3 Antitrust, fraud, exception in the 

account of an accountable official, and 

interagency claims excluded. 

30.4 Compromise, waiver, or disposition 

under other statutes not precluded. 

30.5 Other administrative remedies. 

30.6 Form of payment. 

30.7 Subdivision of claims. 

30.8 Required administrative proceedings. 

30.9 No private rights created. 

Subpart B—Standards for the 

Administrative Collection of Debts 

30.10 Collection activities. 

30.11 Demand for payment. 

30.12 Administrative offset. 

30.13 Debt reporting and the use of credit 

reporting agencies. 

30.14 Contracting with private collection 

contractors and with entities that locate 

and recover unclaimed assets. 

30.15 Suspension or revocation of 

eligibility for loans and loan guarantees, 

licenses, permits or privileges. 

30.16 Liquidation of collateral. 

30.17 Collection in installments. 

30.18 Interest, penalties, and administrative 

costs. 

30.19 Review of cost effectiveness of 

collection. 

30.20 Taxpayer information. 

Subpart C—Debt Compromise 

30.21 Scope and application. 

30.22 Basis for compromise. 

30.23 Enforcement policy. 

30.24 Joint and several liability. 

30.25 Further review of compromise offers. 

30.26 Consideration of tax consequences to 

the Government. 

30.27 Mutual release of the debtor and the 

Government. 

Subpart D—Suspending and Terminating 

Collection Activities 

30.28 Scope and application. 

30.29 Suspension of collection activity. 

30.30 Termination of collection activity. 

30.31 Exception to termination. 

30.32 Discharge of indebtedness; reporting 

requirements. 

Subpart E—Referrals to the Department of 

Justice 

30.33 Prompt referral. 

30.34 Claims Collection Litigation Report. 

30.35 Preservation of evidence. 

30.36 Minimum amount of referrals. 

Authority: 31 U.S.C. 3711(d). 

Subpart A—General Provisions 

§ 30.1 Purpose, authority, and scope. 

(a) Purpose. This part prescribes the 

standards and procedures for the 

Department’s use in the administrative 

collection, offset, compromise, and 

suspension or termination of collection 

activity for claims for funds or property, 

as defined by 31 U.S.C. 3701(b) and this 

part. Covered activities include the 

collection of debts in any amount; the 

compromise and suspension or 

termination of collection activity of 

debts that do not exceed $100,000, or 

such higher amount as the Attorney 

General may prescribe, exclusive of 

interest, penalties, and administrative 

costs; and the referral of debts to the 

Department of the Treasury (Treasury), 

the Treasury-designated debt collection 

centers, or the Department of Justice 

(Justice) for collection by further 

administrative action or litigation, as 

applicable. 

(b) Authority. The Secretary is issuing 

the regulations in this part under the 

authority contained in 31 U.S.C. 

3711(d). The standards and procedures 

prescribed in this part are authorized 

under the Federal Claims Collection 

Act, as amended, Public Law No. 89–

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

Debt Collection Act of 1982, Public Law 

No. 97–365, 96 Stat. 1749 (October 25, 

1982), the Debt Collection Improvement 

Act of 1996, Public Law No. 104–134, 

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

and the Federal Claims Collection 

Standards at 31 CFR parts 900 through 

904. 

(c) Scope. (1) The standards and 

procedures prescribed in this part apply 

to all officers and employees of the 

Department, including officers and 

employees of the various Operating 

Divisions and Regional Offices of the 

Department, charged with the collection 

and disposition of debts owed to the 

United States. 

(2) The standards and procedures set 

forth in this part will be applied except 

where specifically excluded herein or 

where a statute, regulation or contract 

prescribes different standards or 

procedures. 

(3) Regulations governing the use of 

certain debt collection procedures 

created under the Debt Collection 

Improvement Act of 1996, including tax 

refund offset, administrative wage 

garnishment, and Federal salary offset, 

are contained in parts 31 through 33 of 

this chapter. 

§ 30.2. Definitions. 

In this part—

Administrative offset means 

withholding funds payable by the 

United States to, or held by the United 

States for, a person to satisfy a debt. 

Agency means a department, agency, 

court, court administrative office, or 

instrumentality in the executive, 

judicial, or legislative branch of the 

Government, including Government 

corporations. 

Appropriate official means the 

Department official who, by statute or 

delegation of authority, determines the 

existence and amount of debt. 


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Business day means Monday through 

Friday. For purposes of computation, 

the last day of the period will be 

included unless it is a Federal holiday, 

in which case the next business day 

following the holiday will be considered 

the last day of the period. 

Claim see the definition for the term 

‘‘debt.’’ The terms ‘‘claim’’ and ‘‘debt’’

are synonymous and interchangeable. 

Creditor agency means an agency to 

which a debt is owed, including a debt 

collection center acting on behalf of a 

creditor agency. 

Day means calendar day. For 

purposes of computation, the last day of 

the period will be included unless it is 

a Saturday, Sunday, or a Federal 

holiday, in which case the next business 

day will be considered the last day of 

the period. 

Debt or claim means an amount of 

funds or other property determined by 

an appropriate official of the Federal 

Government to be owed to the United 

States from any person, organization, or 

entity, except another Federal agency. 

For the purpose of administrative offset, 

the term includes an amount owed by 

an individual to 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. Debts include, but are not limited 

to, amounts owed pursuant to: Loans 

insured or guaranteed by the United 

States; fees; leases; rents; royalties; 

services; sales of real or personal 

property; Federal salary overpayments; 

overpayments to program beneficiaries, 

contractors, providers, suppliers, and 

grantees; audit disallowance 

determinations; civil penalties and 

assessments; theft or loss; interest; fines 

and forfeitures (except those arising 

under the Uniform Code of Military 

Justice); and all other similar sources. 

Debt collection center means the 

Department of the Treasury, or other 

Federal agency, subagency, unit, or 

division designated by the Secretary of 

the Treasury to collect debts owed to the 

United States. 

Debtor means an individual, 

organization, association, partnership, 

corporation, or State or local 

government or subdivision indebted to 

the Government, or the person or entity 

with legal responsibility for assuming 

the debtor’s obligation. 

Debts arising under the Social 

Security Act are overpayments to, or 

contributions, reimbursements, 

penalties or assessments owed by, any 

entity, individual, or State under the 

Social Security Act. Such amounts 

include amounts owed to the Medicare 

program under section 1862(b) of the 

Social Security Act. Salary 

overpayments and other debts that 

result from the administration of the 

provisions of the Social Security Act are 

not deemed to ‘‘arise under’’ the Social 

Security Act for purposes of this part. 

Delinquent debt means a debt which 

the debtor does not pay or otherwise 

resolve by the date specified in the 

initial demand for payment, or in an 

applicable written repayment agreement 

or other instrument, including a postdelinquency repayment agreement. 

Department means the Department of 

Health and Human Services, and its 

Operating Divisions and Regional 

Offices. 

Disbursing official means an officer or 

employee who has authority to disburse 

public money pursuant to 31 U.S.C. 

3321 or another law. 

Disposable pay means that part of the 

debtor’s current basic, special, 

incentive, retired, and retainer pay, or 

other authorized pay, remaining after 

deduction of amounts required by law 

to be withheld. For purposes of 

calculating disposable pay, legally 

required deductions that must be 

applied first include: Tax levies 

pursuant to the Internal Revenue Code 

(title 26, United States Code); properly 

withheld taxes, FICA, Medicare; health 

and life insurance premiums; and 

retirement contributions. Amounts 

deducted under garnishment orders, 

including child support garnishment 

orders, are not legally required 

deductions for calculating disposable 

pay. 

Evidence of service means 

information retained by the Department 

indicating the nature of the document to 

which it pertains, the date of mailing of 

the document, and the address and 

name of the debtor to whom it is being 

sent. A copy of the dated and signed 

written notice provided to the debtor 

pursuant to this part may be considered 

evidence of service for purposes of this 

part. Evidence of service may be 

retained electronically so long as the 

manner of retention is sufficient for 

evidentiary purposes. 

FMS means the Financial 

Management Service, a bureau of the 

Department of the Treasury. 

Hearing means a review of the 

documentary evidence to confirm the 

existence or amount of a debt or the 

terms of a repayment schedule. If the 

Secretary determines that the issues in 

dispute cannot be resolved by such a 

review, such as when the validity of the 

claim turns on the issue of credibility or 

veracity, the Secretary may provide an 

oral hearing. (See 45 CFR 33.6(c)(2) for 

oral hearing procedures that may be 

provided by the Secretary). 

IRS means the Internal Revenue 

Service, a bureau of the Department of 

the Treasury. 

Late charges means interest, penalties, 

and administrative costs required or 

permitted to be assessed on delinquent 

debts. 

Legally enforceable means that there 

has been a final agency determination 

that the debt, in the amount stated, is 

due and there are no legal bars to 

collection action. 

Local government means a political 

subdivision, instrumentality, or 

authority of any 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, or an Indian tribe, band or nation. 

Operating Division means each 

separate component, agency, subagency, 

and unit within the Department of 

Health and Human Services, including, 

but not limited to, the Administration 

for Children and Families, the 

Administration on Aging, the Centers 

for Disease Control and Prevention, the 

Centers for Medicare & Medicaid 

Services, the Food and Drug 

Administration, the National Institutes 

of Health, Substance Abuse and Mental 

Health Services Administration, Indian 

Health Service, Health Resources and 

Services Administration, Agency for 

Toxic Substances and Disease Registry, 

Agency for Healthcare Research and 

Quality, and the Office of the Secretary. 

OPM means the Office of Personnel 

Management. 

Payment authorizing agency means an 

agency that transmits a voucher to a 

disbursing official for the disbursement 

of public money. 

Payments made under the Social 

Security Act means payments by this 

Department or other agencies to 

beneficiaries, providers, intermediaries, 

physicians, suppliers, carriers, States, or 

other contractors or grantees under a 

Social Security Act program, including: 

Title I (Grants to States for Old-Age 

Assistance for the Aged); Title II 

(Federal Old-Age, Survivors, and 

Disability Insurance Benefits); Title III 

(Grants to States for Unemployment 

Compensation Administration); Title IV 

(Grants to States for Aid and Services to 

Needy Families with Children and for 

Child-Welfare Services); Title V 

(Maternal and Child Health Services 

Block Grant); Title IX (Miscellaneous 

Provisions Relating to Employment 

Security); Title X (Grants to States for 

Aid to the Blind); Title XI, Part B (Peer 

Review of the Utilization and Quality of 

Health Care Services); Title XII 

(Advances to State Unemployment 

Funds); Title XIV (Grants to States for 


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Federal Register / Vol. 72, No. 45 / Thursday, March 8, 2007 / Rules and Regulations 10411 

Aid to Permanently and Totally 

Disabled); Title XVI (Grants to States for 

Aid to the Aged, Blind, and Disabled); 

Title XVII (Grants for Planning 

Comprehensive Action to Combat 

Mental Retardation); Title XVIII (Health 

Insurance for the Aged and Disabled); 

Title XIX (Grants to States for Medical 

Assistance Programs); Title XX (Block 

Grants to States for Social Services); and 

Title XXI (State Children’s Health 

Insurance Program). Federal employee 

salaries and other payments made by 

the Department or other agencies in the 

course of administering the provisions 

of the Social Security Act are not 

deemed to be ‘‘payable under’’ the 

Social Security Act for purposes of this 

part. 

Private collection contractors means 

private debt collection under contract 

with the Department to collect a nontax 

debt or claim owed to the Department. 

The term includes private debt 

collectors, collection agencies, and 

commercial attorneys. 

Salary offset means an administrative 

offset to collect a debt owed by a 

Federal employee through deductions at 

one or more officially established pay 

intervals from the current pay account 

of the employee without his or her 

consent. 

Secretary means the Secretary of 

Health and Human Services, or the 

Secretary’s designee. 

Taxpayer identification number 

means the identifying number described 

under section 6109 of the Internal 

Revenue Code of 1986 (26 U.S.C. 6109). 

For an individual, the taxpayer 

identifying number is the individual’s 

Social Security Number. 

Tax refund offset means withholding 

or reducing a tax refund payment by an 

amount necessary to satisfy a debt. 

§ 30.3 Antitrust, fraud, exception in the 

account of an accountable official, and 

interagency claims excluded. 

(a) Claims involving antitrust 

violations or fraud. (1) The standards in 

this part 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 antitrust laws, or 

to any debt involving fraud, 

presentation of a false claim, or 

misrepresentation on the part of the 

debtor or any party having an interest in 

the claim, unless the Department of 

Justice returns a referred claim to the 

Department for further handling in 

accordance with parts 31 CFR 900 

through 904 and this part. 

(2) Upon identification of a debt 

suspected of involving an antitrust 

violation or fraud, a false claim, 

misrepresentation, or other criminal 

activity or misconduct, the Secretary 

shall refer the debt to the Office of the 

Inspector General for review. 

(3) Upon the determination of the 

Office of the Inspector General that a 

claim is based in whole or in part on 

conduct in violation of the antitrust 

laws, or involves fraud, the presentation 

of a false claim, or misrepresentation on 

the part of the debtor or any party 

having an interest in the claim, the 

Secretary shall promptly refer the case 

to the Department of Justice for action. 

(b) Exception in the account of an 

accountable official. The standards in 

this part do not apply to compromise of 

an exception in the account of an 

accountable official. 

(c) Interagency claims. This part does 

not apply to claims between Federal 

agencies. The Department will attempt 

to resolve interagency claims by 

negotiation in accordance with 

EO 12146. 

§ 30.4 Compromise, waiver, or disposition 

under other statutes not precluded. 

Nothing in this part precludes the 

Department from disposing of any claim 

under statutes and implementing 

regulations other than subchapter II of 

chapter 37 of Title 31 of the United 

States Code and the Federal Claims 

Collection Standards, 31 CFR parts 900 

through 904. Any statute and 

implementing regulation specifically 

applicable to the claims collection 

activities of the Department will take 

precedence over this part. 

§ 30.5 Other administrative remedies. 

The remedies and sanctions available 

under this part for collecting debts are 

not intended to be exclusive. Nothing 

contained in this part precludes using 

any other administrative remedy which 

may be available for collecting debts 

owed to the Department, such as 

converting the method of payment 

under a grant from an advancement to 

a reimbursement method or revoking a 

grantee’s letter-of-credit. 

§ 30.6 Form of payment. 

Claims may be paid in the form of 

money or, when a contractual basis 

exists, the Department may demand the 

return of specific property or the 

performance of specific services. 

§ 30.7 Subdivision of claims. 

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, 

exclusive of interest, penalties and 

administrative costs, does not exceed 

$100,000, or such higher amount as 

prescribed by the Attorney General for 

purposes of compromise, or suspension 

or termination of collection activity. 

§ 30.8 Required administrative 

proceedings. 

This part does not supersede, or 

require omission or duplication of 

administrative proceedings required by 

contract, or other laws or regulations. 

See for example, 42 CFR part 50 (Public 

Health Service), 45 CFR part 16 

(Departmental Grant Appeals Board), 

and 48 CFR part 33 (Federal Acquisition 

Regulation) and part 333 (HHS 

Acquisition Regulation). 

§ 30.9 No private rights created. 

The standards in this part do not 

create any right or benefit, substantive 

or procedural, enforceable at law or in 

equity by a party against the United 

States, the Department, its officers, or 

any other person, nor shall the failure of 

the Department to comply with any of 

the provisions of this part be available 

to any debtor as a defense. 

Subpart B—Standards for the 

Administrative Collection of Debts 

§ 30.10 Collection activities. 

(a) General rule. The Secretary shall 

aggressively and timely collect all debts 

arising out of activities of, or referred or 

transferred for collection actions to, the 

Department. Normally, an initial written 

demand for payment shall be made no 

later than 30 days after a determination 

by an appropriate official that a debt 

exists. 

(b) Cooperation with other agencies. 

The Department shall cooperate with 

other agencies in their debt collection 

activities. 

(c) Transfer of delinquent debts. (1) 

Mandatory transfer. The Department 

shall transfer legally enforceable debts 

180 days or more delinquent to Treasury 

in accordance with the requirements of 

31 CFR 285.12. This requirement does 

not apply to any debt that: 

(i) Is in litigation or foreclosure; 

(ii) Will be disposed of under an 

approved asset sale program within one 

year of becoming eligible for sale; 

(iii) Has been referred to a private 

collection contractor for a period of time 

acceptable to the Secretary of the 

Treasury; 

(iv) Is at a debt collection center for 

a period of time acceptable to the 

Secretary of the Treasury (see paragraph 

(c)(2) of this section); 

(v) Will be collected under internal 

offset procedures within three years 

after the debt first became delinquent; or 

(vi) Is exempt from this requirement 

based on a determination by the 


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Secretary of the Treasury that 

exemption for a certain class of debt is 

in the best interest of the United States. 

(2) Permissive transfer. The Secretary 

may refer debts less than 180 days 

delinquent, including debts referred to 

the Department by another agency, to 

the Treasury in accordance with the 

requirements of 31 CFR 285.12, or with 

the consent of the Treasury, to a 

Treasury-designated debt collection 

center to accomplish efficient, cost 

effective debt collection. Referrals to 

debt collection centers shall be at the 

discretion of, and for a time period 

acceptable to, the Secretary of the 

Treasury. Referrals may be for servicing, 

collection, compromise, suspension, or 

termination of collection action. 

§ 30.11 Demand for payment. 

(a) Written demand for payment. (1) 

Written demand, as described in 

paragraph (b) of this section, shall be 

made promptly upon a debtor in terms 

that inform the debtor of the 

consequences of failing to cooperate 

with the Department to resolve the debt. 

(2) Normally, the demand letter will 

be sent no later than 30 days after the 

appropriate official determines that the 

debt exists. The demand letter shall be 

sent by first class mail to the debtor’s 

last known address. 

(3) When necessary to protect the 

Government’s interest, for example to 

prevent the running of a statute of 

limitations, the written demand for 

payment may be preceded by other 

appropriate action under this part, 

including immediate referral to Justice 

for litigation. 

(b) Demand letters. 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 Department’s 

letters or telephone calls. Generally, one 

demand letter should suffice; however, 

more may be used. 

(1) The written demand for payment 

shall include the following information: 

(i) The nature and amount of the debt, 

including the basis for the indebtedness; 

(ii) The date by which payment 

should be made to avoid late charges 

and enforced collection, which 

generally shall be no later than 30 days 

from the date the demand letter is 

mailed; 

(iii) The applicable standards for 

imposing any interest, penalties, or 

administrative costs (see § 30.18); 

(iv) The rights, if any, the debtor may 

have to: 

(A) Seek review of the Department’s 

determination of the debt, and for 

purposes of administrative wage 

garnishment or salary offset, to request 

a hearing (see 45 CFR parts 32 and 33); 

and 

(B) Enter into a reasonable repayment 

agreement. 

(v) An explanation of how the debtor 

may exercise any of the rights described 

in paragraph (b)(1)(iv) of this section; 

(vi) The name, address, and phone 

number of a contact person or office 

within the Department to address any 

debt-related matters; and 

(vii) The Department’s remedies to 

enforce payment of the debt, which may 

include: 

(A) Garnishing the debtor’s wages 

through administrative wage 

garnishment; 

(B) Offsetting any Federal payments 

due the debtor, including income tax 

refunds, salary, certain benefit payments 

such as Social Security, retirement, and 

travel reimbursements and advances; 

(C) Referring the debt to a private 

collection contractor; 

(D) Reporting the debt to a credit 

bureau or other automated database; 

(E) Referring the debt to Justice for 

litigation; and 

(F) Referring the debt to Treasury for 

any of the collection actions described 

in paragraphs (b)(1)(vii)(A) through (E) 

of this section, advising the debtor that 

such referral is mandatory if the debt is 

180 or more days delinquent. 

(2) The written demand for payment 

should also include the following 

information: 

(i) The debtor’s right to inspect and 

copy all records of the Department 

pertaining to the debt, or if the debtor 

or the debtor’s representative cannot 

personally inspect the records, to 

request and receive copies of such 

records; 

(ii) The Department’s willingness to 

discuss with the debtor alternative 

methods of payment; 

(iii) A debtor delinquent on a debt is 

ineligible for Government loans, loan 

guarantees, or loan insurance until the 

debtor resolves the debt; 

(iv) When seeking to collect statutory 

penalties, forfeiture or other similar 

types of claim, the debtor’s licenses, 

permits, or other privileges may be 

suspended or revoked if failure to pay 

the debt is inexcusable or willful. Such 

suspension or revocation shall extend to 

programs or activities 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; 

(v) Knowingly making false 

statements or bringing frivolous actions 

may subject the debtor to civil or 

criminal penalties under 31 U.S.C. 

3729–3731, 18 U.S.C. 286, 287, 1001, 

and 1002, or any other applicable 

statutory authority, and, if the debtor is 

a Federal employee, to disciplinary 

action under 5 CFR part 752 or other 

applicable authority; 

(vi) Any amounts collected and 

ultimately found not to have been owed 

by the debtor will be refunded; 

(vii) For salary offset, up to 15% of 

the debtor’s current disposable pay may 

be deducted every pay period until the 

debt is paid in full; and 

(viii) Dependent upon applicable 

statutory authority, the debtor may be 

entitled to consideration for a waiver. 

(c) The Secretary will retain evidence 

of service indicating the date of mailing 

of the demand letter. The evidence of 

service, which may include a certificate 

of service, may be retained 

electronically so long as the manner of 

retention is sufficient for evidentiary 

purposes. 

(d) Prior to, during, or after the 

completion of the demand process, if 

the Secretary determines to pursue, or is 

required to pursue offset, the procedures 

applicable to offset should be followed 

(see § 30.12). The availability of funds 

for debt satisfaction by offset and the 

Secretary’s determination to pursue 

collection by offset shall release the 

Secretary from the necessity of further 

compliance with paragraphs (a), (b), and 

(c) of this section. 

(e) Finding debtors. The Secretary will 

use every reasonable effort to locate 

debtors, using such sources as telephone 

directories, city directories, postmasters, 

drivers license records, automobile title 

and license records in State and local 

government agencies, the IRS, credit 

reporting agencies and skip locator 

services. Referral of a confess-judgment 

note to the appropriate United States 

Attorney’s Office for entry of judgment 

will not be delayed because the debtor 

cannot be located. 

(f) Communications from debtors. The 

Secretary should respond promptly to 

communications from debtor, within 30 

days where feasible, and should advise 

debtors who dispute debts to furnish 

available evidence to support their 

contentions. 

(g) Exception. This section does not 

require duplication of any notice 

already contained in a written 

agreement, letter or other document 

signed by, or provided to, the debtor. 

§ 30.12 Administrative offset. 

(a) Scope. (1) Administrative offset is 

the withholding of funds payable by the 

United States to, or held by the United 

States for, a person to satisfy a debt. 

(2) This section does not apply to: 


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(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), and implementing 

regulation at 31 CFR 285.4; 

(iii) Debts arising under, or payments 

made under, the Internal Revenue Code 

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; 31 CFR 285.7; 

and part 33 of this chapter); 

(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 for 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, 

collection by administrative offset under 

the authority of 31 U.S.C. 3716 may not 

be conducted more than 10 years after 

the Department’s right to collect the 

debt first accrued, unless facts material 

to the Department’s right to collect the 

debt were not known and could not 

reasonably have been known by the 

Secretary. This limitation does not 

apply to debts reduced to judgment. 

(5) Where there is reason to believe 

that a bankruptcy petition has been filed 

with respect to a debtor, the Office of 

the General Counsel should be 

contacted for legal advice concerning 

the impact of the Bankruptcy Code, 

particularly 11 U.S.C. 106, 362 and 553, 

on pending or contemplated collections 

by offset. 

(b) Centralized administrative offset. 

(1) Except as provided in the exceptions 

listed in § 30.10(c)(1), legally 

enforceable debts which are 180 days 

delinquent shall be referred to the 

Secretary of the Treasury for collection 

by centralized administrative offset 

pursuant to and in accordance with 31 

CFR 901.3(b). Debts which are less than 

180 days delinquent, including debts 

referred to the Department by another 

agency, also may be referred to the 

Secretary of the Treasury for collection 

by centralized administrative offset. 

(2) When referring delinquent debts to 

the Secretary of the Treasury for 

centralized administrative offset, the 

Department must certify, in a form 

acceptable to the Secretary of the 

Treasury, that: 

(i) The debt is past due and legally 

enforceable; and 

(ii) The Department has complied 

with all due process requirements under 

31 U.S.C. 3716(a) and paragraph (c)(2) of 

this section. 

(3) Payments that are prohibited by 

law from being offset are exempt from 

centralized administrative offset. The 

Secretary of the Treasury shall exempt 

payments under means-tested programs 

from centralized administrative offset 

when requested in writing by the head 

of the payment certifying or authorizing 

agency. Also, the Secretary of the 

Treasury may exempt other classes of 

payments from centralized offset upon 

the written request of the head of the 

payment certifying or authorizing 

agency. 

(c) Non-centralized administrative 

offset. (1) Unless otherwise prohibited 

by law, when centralized administrative 

offset under paragraph (b) of this section 

is not available or appropriate, the 

Secretary may collect a delinquent debt 

by conducting non-centralized 

administrative offset internally or in 

cooperation with the agency certifying 

or authorizing payments to the debtor. 

(2) Except as provided in paragraph 

(c)(3) of this section, administrative 

offset may be initiated only after: 

(i) The debtor has been sent written 

notice of the type and amount of the 

debt, the intention of the Department to 

initiate administrative offset to collect 

the debt, and an explanation of the 

debtor’s rights under 31 U.S.C. 3716; 

and 

(ii) The debtor has been given: 

(A) The opportunity to inspect and 

copy Department records related to the 

debt; 

(B) The opportunity for a review 

within the Department of the 

determination of indebtedness; and 

(C) The opportunity to make a written 

agreement to repay the debt. 

(3) The due process requirements 

under paragraph (c)(2) of this section 

may be omitted when: 

(i) Offset is in the nature of a 

recoupment, i.e., the debt and the 

payment to be offset arise out of the 

same transaction or occurrence; 

(ii) 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 

covered by the Contracts Disputes Act); 

or 

(iii) In the case of non-centralized 

administrative offset conducted under 

paragraph (c)(1) of this section, the 

Department 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 Secretary shall give the 

debtor such notice and an opportunity 

for review as soon as practical and shall 

promptly refund any money ultimately 

found not to have been owed to the 

Government. 

(4) When the debtor previously has 

been given any of the required notice 

and review opportunities with respect 

to a particular debt, such as under 

§ 30.11 of this part, the Department need 

not duplicate such notice and review 

opportunities before administrative 

offset may be initiated. 

(5) Before requesting that a payment 

authorizing agency to conduct noncentralized administrative offset, the 

Department shall: 

(i) Provide the debtor with due 

process as set forth in paragraph (c)(2) 

of this section; and 

(ii) Provide the payment authorizing 

agency written certification that the 

debtor owes the past due, legally 

enforceable delinquent debt in the 

amount stated, and that the Department 

has fully complied with this section. 

(6) When a creditor agency requests 

that the Department, as the payment 

authorizing agency, conduct noncentralized administrative offset, the 

Secretary shall comply with the request, 

unless the offset would not be in the 

best interest of the United States with 

respect to the program of the 

Department, 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, including salary 

offset. 

(7) When collecting multiple debts by 

non-centralized administrative offset, 

the Department will 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 and the 

Federal Employee Retirement System. 

Upon providing OPM written 

certification that a debtor has been 


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afforded the procedures provided in 

paragraph (c)(2) of this section, the 

Department 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 5 CFR part 831, 

subpart R, or under the Federal 

Employee Retirement System (FERS) in 

accordance with 5 CFR part 845, subpart 

D. 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 or under FERS. This will satisfy 

any requirement that offset be initiated 

prior to the expiration of the time 

limitations referenced in 31 CFR 

901.3(b)(4). 

(e) Review requirements. (1) For 

purposes of this section, whenever the 

Secretary is required to afford a debtor 

a review within the Department, the 

debtor shall be provided with a 

reasonable opportunity for an oral 

hearing when the debtor requests 

reconsideration of the debt and the 

Secretary 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 Department will 

carefully document all significant 

matters discussed at the hearing. 

(3) An oral hearing is not required 

with respect to debt collection systems 

where determinations of indebtedness 

rarely involve issues of credibility or 

veracity, and the Secretary has 

determined that a review of the written 

record is adequate to correct prior 

mistakes. 

(4) In those cases when an oral 

hearing is not required by this section, 

the Secretary shall accord the debtor a 

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

of the request for reconsideration based 

upon a review of the written record. 

§ 30.13 Debt reporting and use of credit 

reporting agencies. 

(a) Reporting delinquent debts. (1) 

The Secretary will report delinquent 

debts over $100 to credit bureaus or 

other automated databases. Debts arising 

under the Social Security Act are 

excluded from paragraph (a). 

(2) Debts owed by individuals will be 

reported to consumer reporting agencies 

pursuant to 5 U.S.C. 552a(b)(12). 

(3) Once a debt has been referred to 

Treasury for collection, any subsequent 

reporting to or updating of a credit 

bureau or other automated database may 

be handled by the Treasury. 

(4) Where there is reason to believe 

that a bankruptcy petition has been filed 

with respect to a debtor, the Office of 

the General Counsel should be 

contacted for legal advice concerning 

the impact of the Bankruptcy Code, 

particularly with respect to the 

applicability of the automatic stay, 11 

U.S.C. 362, and the procedures for 

obtaining relief from such stay prior to 

proceeding under paragraph (a) of this 

section. 

(5) If the debtor has not received prior 

written notice under § 30.11(b), before 

reporting a delinquent debt under this 

section, the Secretary shall provide the 

debtor at least 60 days written notice of 

the amount and nature of the debt; that 

the debt is delinquent and the 

Department intends to report the debt to 

a credit bureau (including the specific 

information that will be disclosed); that 

the debtor has the right to dispute the 

accuracy and validity of the information 

being disclosed; and, if a previous 

opportunity was not provided, that the 

debtor may request review within the 

Department of the debt or rescheduling 

of payment. The Secretary may disclose 

only the individual’s name, address, 

and social security number and the 

nature, amount, status and history of the 

debt. 

(b) Use of credit reporting agencies. 

The Secretary may also use credit 

reporting agencies to obtain credit 

reports to evaluate the financial status of 

loan applicants, potential contractors 

and grantees; to determine a debtor’s 

ability to repay a debt; and to locate 

debtors. In the case of an individual, the 

Secretary may disclose, as a routine use 

under 5 U.S.C 552a(b)(3), only the 

individual’s name, address, and Social 

Security number and the purpose for 

which the information will be used. 

§ 30.14 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, the 

Secretary may contract with private 

collection contractors to recover 

delinquent debts, provided that: 

(1) The Secretary retains the authority 

to resolve disputes, compromise debts, 

suspend or terminate collection action, 

and refer debts to Justice 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 

Secretary 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) The Secretary shall use 

government-wide debt collection 

contracts to obtain debt collection 

services provided by private collection 

contractors. However, the Secretary may 

refer debts to private collection 

contractors pursuant to a contract 

between the Department and the private 

collection contractor only if such debts 

are not subject to the requirement to 

transfer debts to the Department of the 

Treasury for debt collection under 31 

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

(c) Debts arising under the Social 

Security Act (which can be collected by 

private collection contractors only by 

Treasury after the debt has been referred 

to Treasury for collection) are excluded 

from this section. 

(d) The Secretary may fund private 

collection contractor contracts in 

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

otherwise permitted by law. A contract 

under paragraph (a) of this section may 

provide that the fee a private collection 

contractor charges the Department for 

collecting the debt is payable from the 

amounts collected. 

(e) The Department may enter into 

contracts for locating and recovering 

assets of the United States including 

unclaimed assets. However, before 

entering into a contract to recover assets 

of the United States that may be held by 

a State government or financial 

institution, the Department must 

establish procedures that are acceptable 

to the Secretary of Treasury. 

(f) The Secretary 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 Department for such services may be 

payable from the amounts recovered, 

unless otherwise prohibited by statute. 

§ 30.15 Suspension or revocation of 

eligibility for loans and loan guarantees, 

licenses, permits, or privileges. 

(a)(1) Unless waived by the Secretary, 

financial assistance in the form of loans, 

loan guarantees, or loan insurance shall 

not be extended to any person 

delinquent on a non-tax debt owed to 

the United States. This prohibition does 

not apply to disaster loans. Grants, 


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cooperative agreements, and contracts 

are not considered to be loans. 

(2) The authority to waive the 

application of this section may be 

delegated to the Chief Financial Officer 

and re-delegated only to the Deputy 

Chief Financial Officer. 

(3) States that manage Federal 

activities, pursuant to approval from the 

Secretary, should ensure that 

appropriate steps are taken to safeguard 

against issuing licences, permits, or 

other privileges to debtors who fail to 

pay their debts to the Federal 

Government. 

(b) The Secretary will report to 

Treasury any surety that fails to honor 

its obligations under 31 U.S.C. 9305. 

(c) In non-bankruptcy cases, when 

seeking to collect statutory penalties, 

forfeitures, or other types of claims, the 

Secretary may suspend or revoke 

licenses, permits, or other privileges of 

a delinquent debtor if the failure to pay 

the debt is found to be inexcusable or 

willful. Such suspension or revocation 

will extend to programs or activities 

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. 

(d) Where there is reason to believe 

that a bankruptcy petition has been filed 

with respect to a debtor, before taking 

any action to suspend or revoke under 

paragraph (c) of this section, the Office 

of the General Counsel should be 

contacted for legal advice concerning 

the impact of the Bankruptcy Code, 

particularly 11 U.S.C. 362 and 525, 

which may restrict such action. 

§ 30.16 Liquidation of collateral. 

(a)(1) The Secretary will liquidate 

security or collateral through the 

exercise of a power of sale in the 

security instrument or a non-judicial 

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 interests of the United States. 

(2) 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. 

(3) The Secretary will give the debtor 

reasonable notice of the sale and an 

accounting of any surplus proceeds and 

will comply with other requirements 

under law or contract. 

(b) Where there is reason to believe 

that a bankruptcy petition has been filed 

with respect to a debtor, the Office of 

the General Counsel should be 

contacted for legal advice concerning 

the impact of the Bankruptcy Code, 

particularly with respect to the 

applicability of the automatic stay, 11 

U.S.C. 362, and the procedures for 

obtaining relief from such stay prior to 

proceeding under paragraph (a) of this 

section. 

§ 30.17 Collection in installments. 

(a) Whenever feasible, the total 

amount of a debt shall be collected in 

one lump sum payment. If a debtor is 

financially unable to pay a debt in one 

lump sum, either by funds or 

administrative offset, the Secretary may 

accept payment in regular installments. 

The Secretary will obtain financial 

statements from debtors who represent 

that they are unable to pay in one lump 

sum and independently verify such 

representations as described in 

§ 30.22(a)(1). 

(b)(1) When the Secretary agrees to 

accept payments in regular installments, 

a legally enforceable written agreement 

should be obtained from the debtor that 

specifies all the terms and conditions of 

the agreement, and that includes a 

provision accelerating the debt in the 

event of a default. 

(2) The size and frequency of the 

payments should reasonably relate to 

the size of the debt and the debtor’s 

ability to pay. Whenever feasible, the 

installment agreement will provide for 

full payment of the debt, including 

interest and charges, in three years or 

less. 

(3) In appropriate cases, the 

agreement should include a provision 

identifying security obtained from the 

debtor for the deferred payments. 

§ 30.18 Interest, penalties, and 

administrative costs. 

(a) Generally. Except as provided in 

paragraphs (g), (h), and (i) of this 

section, the Department shall charge 

interest, penalties, and administrative 

costs on delinquent debts owed to the 

United States. 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) Interest. The Department shall 

charge interest on delinquent debts 

owed the United States as follows: 

(1) Interest shall accrue from the date 

of delinquency, or as otherwise 

provided by law. For debts not paid by 

the date specified in the written demand 

for payment made under § 30.11, the 

date of delinquency is the date of 

mailing of the notice. The date of 

delinquency for an installment payment 

is the due date specified in the payment 

agreement. 

(2) Unless a different rate is 

prescribed by statute, contract, or a 

repayment agreement, the rate of 

interest charged shall be the rate 

established annually by the Secretary of 

the Treasury pursuant to 31 U.S.C. 3717. 

The Department may charge a higher 

rate if necessary to protect the rights of 

the United States and the Secretary has 

determined and documented a higher 

rate for delinquent debt is required to 

protect the Government’s interests. Any 

such higher rate of interest charged will 

be based on Treasury’s quarterly rate 

certification to the U.S. Public Health 

Service for delinquencies in the 

National Research Services Awards and 

the National Health Services Corps 

Scholarship Program. The Department 

publishes this rate in the Federal 

Register quarterly. 

(3) Unless prescribed by statute or 

contract, 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 Department may require 

payment of interest at a new rate that 

reflects the Treasury rate in effect 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, unless 

prescribed by statute or contract. If, 

however, the 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) Administrative costs. The 

Department shall assess administrative 

costs incurred for processing and 

handling delinquent debts. The 

calculation of administrative costs 

should be based on actual costs incurred 

or a valid estimate of the actual costs. 

Calculation of administrative costs shall 

include all direct (personnel, supplies, 

etc.) and indirect collection costs, 

including the cost of providing a 

hearing or any other form of 

administrative review requested by a 

debtor, and any costs charged by a 

collection agency under § 30.14. These 

charges will be assessed monthly, or per 

payment period, throughout the period 

that the debt is overdue. Such costs may 

also be in addition to other 

administrative costs if collection is 

being made for another Federal agency 

or unit. 

(d) Penalty. Unless otherwise 

established by contract, repayment 

agreement, or statute, the Secretary will 

charge a penalty of six percent a year on 

the amount due on a debt that is 


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delinquent for more than 90 days. This 

charge shall accrue from the date of 

delinquency. 

(e) Cost of living adjustment. 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, 

an administrative debt may be increased 

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. 

Such increases to administrative debts 

shall be computed annually. 

(f) Priority. When a debt is paid in 

partial or installment payments, 

amounts received shall be applied first 

to outstanding penalties, second to 

administrative charges, third to interest, 

and last to principal. 

(g) Waiver. (1) The Secretary 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. The Secretary may extend this 

30-day period on a case-by-case basis if 

the Secretary determines that such 

action is in the best interest of the 

Government, or otherwise warranted by 

equity and good conscience. 

(2) The Secretary also may waive 

interest, penalties, and administrative 

charges charged under this section, in 

whole or in part, without regard to the 

amount of the debt, based on: 

(i) The criteria set forth at § 30.22(a)(1) 

through (4) for the compromise of debts; 

or 

(ii) A determination by the Secretary 

that collection of these charges is: 

(A) Against equity and good 

conscience; or 

(B) Not in the best interest of the 

United States. 

(h) Review. (1) Except as provided in 

paragraph (h)(2) of this section, 

administrative review of a debt will not 

suspend the assessment of interest, 

penalties, and administrative costs. 

While agency review of a debt is 

pending, the debtor either may pay the 

debt or be liable for interest and related 

charges on the uncollected debt. When 

agency review results in a final 

determination that any amount was 

properly a debt and the debtor chose to 

retain the amount in dispute, the 

Secretary shall collect from the debtor 

the amount determined to be due, plus 

interest, penalties and administrative 

costs on such debt amount, as 

calculated under this section, starting 

from the date the debtor was first made 

aware of the debt and ending when the 

debt is repaid. 

(2) Exception. Interest, penalties, and 

administrative cost charges will not be 

imposed on a debt for periods during 

which collection activity has been 

suspended under § 30.29(c)(1) pending 

agency review or consideration of 

waiver if statute prohibits collection of 

the debt during this period. 

(i) Common law or other statutory 

authority. The Department may impose 

and waive interest and related charges 

on debts not subject to 31 U.S.C. 3717 

in accordance with the common law or 

other statutory authority. 

§ 30.19 Review of cost effectiveness of 

collection. 

Periodically, the Secretary will 

compare costs incurred and amounts 

collected. Data on costs and 

corresponding recovery rates for debts 

of different types and in various dollar 

ranges will 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. 

§ 30.20 Taxpayer information. 

(a) When attempting to locate a debtor 

in order to collect or compromise a debt 

under this part or any other authority, 

the Secretary may send a request to 

Treasury in accordance with 31 CFR 

901.11 to obtain a debtor’s mailing 

address from the records of the IRS. 

(b) Mailing addresses obtained under 

paragraph (a) of this section may be 

used to enforce collection of a 

delinquent debt and may be disclosed to 

other agencies and to collection 

agencies for collection purposes. 

Subpart C—Debt Compromise 

§ 30.21 Scope and application. 

(a) Scope. The standards set forth in 

this subpart apply to the compromise of 

debts pursuant to 31 U.S.C. 3711. The 

Secretary may exercise such 

compromise authority for debts arising 

out of activities of, or referred or 

transferred for collection services to, the 

Department 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. 

(b) Application. 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 a compromise rests 

with Justice. The Secretary shall 

evaluate the compromise offer, using the 

factors set forth in this subpart. If an 

offer to compromise any debt in excess 

of $100,000 is acceptable to the 

Department, the Secretary shall refer the 

debt to the Civil Division or other 

appropriate litigating division in Justice 

using a Claims Collection Litigation 

Report (CCLR), which may be obtained 

from Justice’s National Central Intake 

Facility. The referral shall include 

appropriate financial information and a 

recommendation for the acceptance of 

the compromise offer. Justice approval 

is not required if the Secretary rejects a 

compromise offer. 

§ 30.22 Bases for compromise. 

(a) Compromise. The Secretary may 

compromise a debt if the full amount 

cannot be collected based upon inability 

to pay, inability to collect the full debt, 

cost of collection, or doubt debt can be 

proven in court. 

(1) Inability to pay. The debtor is 

unable to pay the full amount in a 

reasonable time, as verified through 

credit reports or other financial 

information. In determining a debtor’s 

inability to pay the full amount of the 

debt within a reasonable time, the 

Secretary will obtain and verify the 

debtor’s claim of inability to pay by 

using credit reports or a current 

financial Statement from the debtor, 

executed under penalty of perjury, 

showing the debtor’s assets, liabilities, 

income, and expenses. The Secretary 

may use a Departmental financial 

information form or may request 

suitable forms from Justice or the local 

United States Attorney’s Office. The 

Secretary also may consider other 

relevant factors such as: 

(i) Age and health of the debtor; 

(ii) Present and potential income; 

(iii) Inheritance prospects; 

(iv) The possibility that assets have 

been concealed or improperly 

transferred by the debtor; and 

(v) The availability of assets or 

income that may be realized by enforced 

collection proceedings. 

(2) Inability to collect full debt. The 

Government is unable to collect the debt 

in full within a reasonable time by 

enforced collection proceedings. 


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(i) In determining the Government’s 

ability to enforce collection, the 

Secretary will consider the applicable 

exemptions available to the debtor 

under State and Federal law, and may 

also consider uncertainty as to the price 

the collateral or other property will 

bring at a forced sale. 

(ii) 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. 

(3) Cost of collection. The cost of 

collecting the debt does not justify the 

enforced collection of the full amount. 

(i) The Secretary 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 of such cases 

may reflect an appropriate discount for 

the administrative and litigation 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. 

(ii) In determining whether the costs 

of collection justify enforced collection 

of the full amount, the Secretary will 

consider whether continued collection 

of the debt, regardless of cost, is 

necessary to further an enforcement 

principal, such as the Government’s 

willingness to pursue aggressively 

defaulting and uncooperative debtors. 

(4) Doubt debt can be proven in court. 

There is significant doubt concerning 

the Government’s ability to prove its 

case in court. 

(i) 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 to the 

availability of witnesses and other 

evidentiary support for the 

Government’s claim. 

(ii) In determining the litigation risks 

involved, the Secretary will consider the 

probable amount of court costs and 

attorney fees pursuant to the Equal 

Access to Justice Act, 28 U.S.C. 2412, 

that may be imposed against the 

Government if it is unsuccessful in 

litigation. 

(b) Installments. The Secretary 

generally will 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, the Secretary shall, except in 

the case of compromises based on 

paragraph (a)(4) of this section, 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. The Office of 

the General Counsel should be 

consulted concerning the 

appropriateness of including such a 

requirement in the case of compromises 

based on paragraph (a)(4) of this section. 

Whenever possible, the Secretary will 

obtain security for repayment in the 

manner set forth in subpart B of this 

part. 

§ 30.23 Enforcement policy. 

The Secretary may compromise 

statutory penalties, forfeitures, or claims 

established as an aid to enforcement and 

to compel compliance if the 

Department’s enforcement policy, in 

terms of deterrence and securing 

compliance, present and future, will be 

adequately served by the Secretary’s 

acceptance of the sum to be agreed 

upon. 

§ 30.24 Joint and several liability. 

(a) When two or more debtors are 

jointly and severally liable, the 

Secretary will pursue collection against 

all debtors, as appropriate. The 

Secretary will not attempt to allocate the 

burden of payment between the debtors 

but will proceed to liquidate the 

indebtedness as quickly as possible. 

(b) The Secretary will ensure that a 

compromise agreement with one debtor 

does not automatically release the 

Department’s claim against the 

remaining debtor(s). The amount of a 

compromise with one debtor shall not 

be considered a precedent or binding in 

determining the amount that will be 

required from other debtors jointly and 

severally liable on the claim. 

§ 30.25 Further review of compromise 

offers. 

If the Secretary is uncertain whether 

to accept a firm, written, substantive 

compromise offer on a debt that is 

within the Secretary’s delegated 

compromise authority, the Secretary 

may refer the offer to the Civil Division 

or other appropriate litigating division 

in Justice, using a CCLR accompanied 

by supporting data and particulars 

concerning the debt. Justice may act 

upon such an offer or return it to the 

Secretary with instructions or advice. 

§ 30.26 Consideration of tax 

consequences to the Government. 

In negotiating a compromise, the 

Secretary will consider the tax 

consequences to the Government. In 

particular, the Secretary will consider 

requiring a waiver of tax-loss-carryforward and tax-loss-carry-back rights of 

the debtor. For information on discharge 

of indebtedness reporting requirements 

see § 30.32. 

§ 30.27 Mutual release of the debtor and 

the Government. 

In all appropriate instances, a 

compromise that is accepted by the 

Secretary will be implemented by 

means of a mutual release. The terms of 

such mutual release shall provide that 

the debtor is released from further nontax 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. 

Subpart D—Suspending and 

Terminating Collection Activities 

§ 30.28 Scope and application. 

(a) Scope. The standards set forth in 

this subpart 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 Justice for litigation, 

the Secretary may suspend or terminate 

collection under this subpart with 

respect to debts arising out of activities 

of, or referred or transferred for 

collection services to, the Department. 

(b) Application. (1) If, after deducting 

the amount of partial payments or 

collections, the principal amount of the 

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 

Justice. 

(2) If the Secretary believes that 

suspension or termination of any debt in 

excess of $100,000 may be appropriate, 


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the Secretary shall refer the debt to the 

Civil Division or other appropriate 

litigating division in Justice, using the 

CCLR. The referral will specify the 

reasons for the Secretary’s 

recommendation. If, prior to referral to 

Justice, the Secretary determines that a 

debt is plainly erroneous or clearly 

without merit, the Secretary may 

terminate collection activity regardless 

of the amount involved without 

obtaining Justice concurrence. 

§ 30.29 Suspension of collection activity. 

(a) Generally. The Secretary may 

suspend collection activity on a debt 

when: 

(1) The Department 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) Financial condition. Based on the 

current financial condition of a debtor, 

the Secretary 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; 

(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) Waiver or review. (1) The Secretary 

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 Secretary from 

collecting the debt during that time. 

(2) If the statute under which the 

waiver or administrative review request 

is sought does not prohibit collection 

activity pending consideration of the 

request, the Secretary may use 

discretion, on a case-by-case basis, to 

suspend collection. Collection action 

ordinarily will be suspended upon a 

request for waiver or review if the 

Secretary is prohibited by statute or 

regulation from issuing a refund of 

amounts collected prior to agency 

consideration of the debtor’s request. 

However, collection will not be 

suspended when the Secretary 

determines that the request for waiver or 

review is frivolous or was made 

primarily to delay collection. 

(d) Bankruptcy. Upon learning that a 

bankruptcy petition has been filed with 

respect to a debtor, in most cases the 

Secretary must suspend collection 

activity on the debt, pursuant to the 

provisions of 11 U.S.C. 362, 1201, and 

1301, unless the Secretary can clearly 

establish that the automatic stay has 

been lifted or is no longer in effect. The 

Office of the General Counsel should be 

contacted immediately for legal advice, 

and the Secretary will take the 

necessary legal steps to ensure that no 

funds or money are paid by the 

Department to the debtor until relief 

from the automatic stay is obtained. 

§ 30.30 Termination of collection activity. 

(a) The Secretary may terminate 

collection activity when: 

(1) The Department is unable to 

collect any substantial amount through 

its own efforts or through the efforts of 

others; 

(2) The Department 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)(1) Collection activity will not be 

terminated before the Secretary has 

pursued all appropriate means of 

collection and determined, based upon 

the results of the collection activity, that 

the debt is uncollectible. 

(2) Termination of collection activity 

ceases active collection of the debt. The 

termination of collection activity does 

not preclude the Secretary from 

retaining a record of the account for 

purposes of: 

(i) Selling the debt, if the Secretary of 

the Treasury determines that such sale 

is in the best interest of the United 

States; 

(ii) 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; 

(iii) Offsetting against future income 

or assets not available at the time of 

termination of collection activity; or 

(iv) Screening future applicants for 

prior indebtedness. 

(c) Generally, the Secretary shall 

terminate collection activity on a debt 

that has been discharged in bankruptcy, 

regardless of the amount. The Secretary 

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, when the 

Department is a known creditor of a 

debtor the claims of the Department 

may survive a discharge if the 

Department did not receive formal 

notice of the bankruptcy proceedings. 

When the Department believes that it 

has claims or offsets that may have 

survived the discharge of the debtor, the 

Office of the General Counsel should be 

contacted for legal advice. 

§ 30.31 Exception to termination. 

When a significant enforcement 

policy is involved, or recovery of a 

judgment is a prerequisite to the 

imposition of administrative sanctions, 

the Secretary may refer debts to Justice 

for litigation even though termination of 

collection activity may otherwise be 

appropriate. 

§ 30.32 Discharge of indebtedness; 

reporting requirements. 

(a)(1) Before discharging a delinquent 

debt, also referred to as close out of the 

debt, the Secretary shall take all 

appropriate steps to collect the debt in 

accordance with 31 U.S.C. 3711(g)(9), 

and parts 30 through 33 of this chapter, 

including, as applicable, administrative 

offset; tax refund offset; Federal salary 

offset; credit bureau reporting; 

administrative wage garnishment; 

litigation; foreclosure; and referral to 

Treasury, Treasury-designated debt 

collection centers, or private collection 

contractors. 

(2) Discharge of indebtedness is 

distinct from termination or suspension 

of collection activity under this subpart, 

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 part and 31 

CFR parts 900 through 904. 

(3) When the Department discharges a 

debt in full or in part, further collection 

action is prohibited. Therefore, before 

discharging a debt, the Secretary must: 

(i) Make the determination that 

collection action is no longer warranted; 

and 

(ii) Terminate debt collection action. 

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

3711(i), the Secretary shall use 

competitive procedures to sell a 

delinquent debt upon termination of 

collection action if the Secretary of the 


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Treasury determines such a sale is in 

the best interests of the United States. 

Since the discharge of a debt precludes 

any further collection action, including 

the sale of a delinquent debt, the 

Secretary may not discharge a debt until 

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

have been meet. 

(c) Upon discharge of an 

indebtedness, the Secretary must report 

the discharge to the IRS in accordance 

with the requirements of 26 U.S.C. 

6050P and 26 CFR 1.6050P–1. The 

Secretary may request that Treasury or 

Treasury-designated debt collection 

centers file such a discharge report to 

the IRS on the Department’s behalf. 

(d) When discharging a debt, the 

Secretary must request that litigation 

counsel release any liens of record 

securing the debt. 

Subpart E—Referrals to the 

Department of Justice 

§ 30.33 Prompt referral. 

(a)(1) The Secretary promptly shall 

refer to Justice for litigation debts on 

which aggressive collection activity has 

been taken in accordance with subpart 

B of this part, and that cannot be 

compromised, or on which collection 

activity cannot be suspended or 

terminated, in accordance with subpart 

D of this part. 

(2) The Secretary may refer to Justice 

for litigation those debts arising out of 

activities of, or referred or transferred 

for collection services to, the 

Department. 

(b)(1) Debts for which the principal 

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

other amount as the Attorney General 

may direct, exclusive of interest, 

penalties, and administrative costs shall 

be referred to the Civil Division or other 

division responsible for litigating such 

debts at the Department of Justice, 

Washington DC. 

(2) 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, 

penalties, and administrative costs shall 

be referred to the Nationwide Central 

Intake Facility at Justice as required by 

the CCLR instructions. 

(c)(1) Consistent with aggressive 

agency collection activity and the 

standards contained in this part and 31 

CFR parts 900 through 904, debts shall 

be referred to Justice as early as 

possible, and, in any event, well within 

the period for initiating timely lawsuits 

against the debtors. 

(2) The Secretary shall make every 

effort to refer delinquent debts to Justice 

for litigation within one year of the date 

such debts last became delinquent. In 

the case of guaranteed or insured loans, 

the Secretary will make every effort to 

refer these delinquent debts to Justice 

for litigation within one year from the 

date the loan was presented to the 

Department for payment or reinsurance. 

(d) Justice has exclusive jurisdiction 

over debts referred to it pursuant to this 

subpart. Upon referral of a debt to 

Justice, the Secretary shall: 

(1) Immediately terminate the use of 

any administrative collection activities 

to collect the debt; 

(2) Advise Justice of the collection 

activities utilized to date, and their 

result; and 

(3) Refrain from having any contact 

with the debtor and direct all debtor 

inquiries concerning the debt to Justice. 

(e) After referral of a debt under this 

subpart, the Secretary shall immediately 

notify the Department of Justice of any 

payments credited by the Department to 

the debtor’s account. Pursuant to 31 

CFR 904.1(b), after referral of the debt 

under this subpart, Justice shall notify 

the Secretary of any payment received 

from the debtor. 

§ 30.34 Claims Collection Litigation 

Report. 

(a)(1) Unless excepted by Justice, the 

Secretary will complete the CCLR, 

accompanied by a signed Certificate of 

Indebtedness, to refer all 

administratively uncollectible claims to 

the Department of Justice for litigation. 

(2) The Secretary shall complete all of 

the sections of the CCLR appropriate to 

each debt as required by the CCLR 

instructions, and furnish such other 

information as may be required in 

specific cases. 

(b) The Secretary shall indicate 

clearly on the CCLR the actions that the 

Department wishes Justice to take with 

respect to the referred debt. The 

Secretary may indicate specifically any 

of a number of litigation activities 

which Justice may pursue, including 

enforced collection, judgement lien 

only, renew judgement lien only, renew 

judgement lien and enforced collection, 

program enforcement, foreclosure only, 

and foreclosure and deficiency 

judgment. 

(c) The Secretary also shall use the 

CCLR to refer a debt to Justice for the 

purpose of obtaining approval of a 

proposal to compromise the debt, or to 

suspend or terminate administrative 

collection activity of the debt. 

§ 30.35 Preservation of evidence. 

The Secretary will maintain and 

preserve all files and records that may 

be needed by Justice to prove the 

Department’s claim in court. When 

referring debts to Justice for litigation, 

certified copies of the documents that 

form the basis for the claim should be 

provided along with the CCLR. Upon its 

request, the original documents will be 

provided to Justice. 

§ 30.36 Minimum amount of referrals. 

(a) Except as in paragraph (b) of this 

section, claims of less than $2,500 

exclusive of interest, penalties, and 

administrative costs, or such other 

amount as the Attorney General may 

prescribe, shall not be referred for 

litigation. 

(b) The Secretary shall not refer 

claims of less than the minimum 

amount unless: 

(1) Litigation to collect such smaller 

amount is important to ensure 

compliance with the policies and 

programs of the Department; 

(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 Department 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) The Secretary should consult with 

the Financial Litigation Staff of the 

Executive Office for United States 

Attorneys in Justice prior to referring 

claims valued at less than the minimum 

amount. 

Dated: November 27, 2006. 

Michael O. Leavitt, 

Secretary. 

Editorial Note: This document was 

received at the Office of the Federal Register 

on March 2, 2007. 

[FR Doc. E7–4002 Filed 3–7–07; 8:45 am] 

BILLING CODE 4150–26–P 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Office of the Secretary 

45 CFR Part 33 

RIN 0991–AB19 

Salary Offset 

AGENCY: Department of Health and 

Human Services. 

ACTION: Final rule. 

SUMMARY: The Department of Health and 

Human Services (HHS) adds specific 

rules concerning involuntary salary 


pwalker on PROD1PC71 with RULES