Transmittal Letter No. 668 Volume I 

To: Heads of Government Departments, Agencies, and Others Concerned 

1. Purpose 

This transmittal letter releases new I TFM 4-4000, Debt Management Services Collection of 

Delinquent Nontax Debt. This chapter describes how the U.S. Department of the Treasury’s 

Financial Management Service (FMS) provides delinquent nontax debt collection services for 

Federal agencies. It describes: 

 Federal agencies’ responsibilities to transfer eligible delinquent debts to FMS for 

collection action; 

 FMS’s responsibilities to provide delinquent debt collection services for Federal agencies; 

AND 

 Fees charged by FMS for delinquent debt collection services. 

2. Page Changes 

 Remove Insert

Table of Contents for Volume I (T/L 664) Table of Contents for Volume I 

Table of Contents for Part 4 (T/L 664) Table of Contents for Part 4 

 I TFM 4-4000 

3. Effective Date 

This transmittal letter is effective immediately. 
2 

4. Inquiries 

Direct questions concerning this transmittal letter to: 

Debt Management Services 

Financial Management Service 

Department of the Treasury 

401 14th Street, SW., Room 446 

Washington, DC 20227 

Telephone: 202-874-3810 

Email: debt-tfm@fms.treas.gov 

Date: October 18, 2011 David A. Lebryk 

 Commissioner 
VOL I 4-4000 

T/L 668 1 October 2011 

Part 4–Chapter 4000 

Debt Management Services 

Collection of Delinquent Nontax Debt 

This Treasury Financial Manual (TFM) chapter describes how the 

U.S. Department of the Treasury’s Financial Management Service 

(FMS) provides delinquent nontax debt collection services for 

Federal agencies. It describes: 

 Federal agencies’ responsibilities to transfer eligible 

delinquent debts to FMS for collection action; 

 FMS’s responsibilities to provide delinquent debt collection 

services for Federal agencies; 

AND 

 Fees charged by FMS for delinquent debt collection services. 

Section 4010—Background 

Federal agencies are required to 

aggressively pursue collection action on 

all debts arising out of their activities. 

Debts owed to the United States can arise 

from various Federal Government 

programs and actions, including loan and 

loan guarantee programs; overpayments 

to beneficiaries, Federal employees, or 

contractors; or penalties and fines owed 

from violations of law, etc. Each Federal 

agency should establish and implement 

effective collection strategies that suit its 

needs. Collection strategies must meet all 

statutory and regulatory requirements, and 

should include use of all authorized and 

appropriate debt collection tools. One 

such tool is the referral of nontax debts to 

FMS for debt collection services. 

The Debt Collection Improvement 

Act of 1996 (DCIA) generally requires 

Federal agencies to transfer any nontax 

debt delinquent over 180 days to FMS 

for debt collection services. After 

transfer, FMS must take appropriate 

action to service, collect, compromise, or 

suspend or terminate collection action on 

the debt (commonly referred to as 

“Cross-Servicing”). 

FMS has been providing delinquent 

debt collection services to Federal 

agencies since the enactment of the 

DCIA in 1996. Before publication of this 

TFM chapter, FMS and Federal agencies 

entered into Letters of Agreement 

describing their respective roles and 

responsibilities. This TFM chapter 

replaces and supersedes all existing 

Letters of Agreement. To the extent that 

this TFM chapter changes current 

processes, FMS will work with each 

Federal agency to implement the 

provisions of this TFM chapter. 

Section 4015—Scope 

There are two provisions requiring 

Federal agencies to submit debts to FMS 

for collection: 

 31 U.S.C. § 3711(g) requires 

Federal agencies to transfer any 

nontax debt delinquent over 180 

days to FMS for general debt 

collection services; 

AND 

 31 U.S.C. § 3716(c)(6) requires 

Federal agencies to notify FMS 

of all nontax debts delinquent 

over 180 days for purposes of 

administrative offset. 

The provisions of this TFM chapter: 

 Apply to all Federal agencies that 

are required or authorized to 

transfer debts to FMS per 31 

U.S.C. § 3711(g); 

AND 

 Govern the collection of debts 

required to be, or that have been, 

transferred to FMS per 31 U.S.C. 

§ 3711(g). 

Upon timely referral of a debt to FMS 

per 31 U.S.C. § 3711(g), the Federal 

agency also complies with the 

requirement to notify FMS of delinquent 

debts for administrative offset purposes, 

per 31 U.S.C. § 3716(c)(6), if the Federal 

agency authorizes FMS in the agency 

profile form to fulfill this requirement on 

its behalf. 
4-4000 VOL I 

October 2011 2 T/L 668 

Section 4020—Definitions 

The following terms are defined for 

the purposes of this TFM chapter. 

Agency or Federal Agency—A 

department, agency or subagency, court, 

court administrative office, or 

instrumentality in the executive, judicial, 

or legislative branch of the Federal 

Government, including government 

corporations. 

Agency Profile Form—The 

document(s) the creditor agency 

completes to provide information to 

FMS about the creditor agency’s debt 

collection program, including, among 

other things, relevant statutory and 

regulatory authorities, general 

descriptions of each type of debt arising 

out of the creditor agency’s operations, 

and contact information for the creditor 

agency’s personnel who are available to 

assist FMS with questions related to the 

transferred debt. The agency profile form 

is an FMS document that FMS sends to 

Federal agencies for completion. 

Creditor Agency—Any Federal agency 

that is owed a delinquent nontax debt. 

Debt—Has the same definition as set 

forth in 31 U.S.C. § 3701(b). Debt 

includes any amount of money, funds, or 

property that has been determined by an 

agency official of the Federal 

Government to be owed to the United 

States by a person. As used in this TFM 

chapter, debt does not include a debt 

arising under the Internal Revenue Code 

of 1986. 

Debtor—A person who owes a debt to 

the United States. 

Eligible Debt—A debt that is valid, 

legally enforceable, and has no legal bars 

to collection. 

Internal Offset—Withholding of funds 

payable to the debtor by the creditor 

agency to satisfy a debt owed by the 

debtor to the creditor agency. 

Nonexempt Debt—An eligible debt that 

has been delinquent for 180 days. 

Nonexempt debts do not include debts 

that, as further set forth by 31 CFR 

§ 285.12(d), are in litigation, foreclosure, 

or forbearance; are being collected by 

internal offset; or, have been scheduled 

for sale. 

Person—An individual, corporation, 

partnership, association, organization, 

State or local government, or any other 

type of entity, other than a Federal 

agency. 

Recall—As set forth in 

subsection 4035.60, Recall and Return 

Transferred Debt, the notification by the 

creditor agency to FMS that FMS must 

cease its debt collection efforts for a 

particular debt and that the 

responsibilities for servicing, collecting, 

or compromising the debt, or for 

suspending or terminating collection 

action on the debt, have been transferred 

back to the creditor agency.

Return—As set forth in 

subsection 4040.50, Return Transferred 

Debt, the notification by FMS to the 

creditor agency that FMS has ceased 

collection efforts on behalf of the 

creditor agency and that the 

responsibilities for servicing, collecting, 

or compromising the debt, or for 

suspending or terminating collection 

action on the debt, have been transferred 

back to the creditor agency. 

The Freedom of Information Act—

The Freedom of Information Act (5 

U.S.C. § 552), as amended. 

The Privacy Act—The Privacy Act of 

1974 (5 U.S.C. § 552a), as amended. 

Treasury Offset Program (TOP)—

The centralized offset program 

administered by FMS to collect 

delinquent debts owed to Federal 

agencies and States by withholding 

payments owed to debtors by Federal 

agencies and States, per 26 U.S.C. 

§ 6402(d), 31 U.S.C. § 3716, 31 U.S.C. 

§ 3720A, and other applicable laws. 

Transfer—The referral of the 

responsibilities for servicing, collecting, 

or compromising a delinquent debt, or 

for suspending or terminating collection 

action on a delinquent debt, from the 

creditor agency to FMS. For accounting 

and reporting purposes, however, the 

debt remains on the books and records of 

the creditor agency. 

Section 4025—General Rule 

Creditor agencies must transfer all 

nonexempt debts that are delinquent 

more than 180 days to FMS for debt 

collection services. FMS strongly 

encourages creditor agencies to transfer 

all eligible delinquent debts to FMS for 

debt collection services before they are 

delinquent 180 days. FMS provides 

delinquent debt collection services to 

creditor agencies in compliance with 

applicable law. Creditor agencies are 

strongly encouraged to use all available 

debt collection tools. 

Section 4030—Authority 

4030.10—FMS Authority to 

Service Debts and Promulgate 

Regulations 

This TFM chapter is issued under the 

authority of Section 31001(m)(1) of the 

Debt Collection Improvement Act of 

1996, Public Law 104-134, 110 Stat. 

1321-358 (1996), codified at 31 U.S.C. § 

3711(g), and corresponding regulations 

codified at 31 CFR § 285.12. FMS, as a 

designated debt collection center, is 

responsible for collecting and otherwise 

servicing transferred debts. FMS is also 

responsible for promulgating regulations 

governing the roles and responsibilities 

of FMS and creditor agencies regarding 

the collection of delinquent Federal 

nontax debt. 

4030.20—FMS Authority to 

Charge Fees 

Per 31 U.S.C. § 3711(g)(6), FMS is 

authorized to charge fees to creditor 

agencies to cover FMS’s costs of 

servicing transferred debts. Per 31 

U.S.C. § 3717(e), creditor agencies are 

generally required to charge debtors for 

the costs of collection, including the fees 

charged by FMS for the servicing of 

such debts. For a further discussion of 

fees and costs, see Section 4045, Fees 

and Costs. 
VOL I 4-4000 

T/L 668 3 October 2011 

4030.30—FMS Authority to 

Compromise Debts and/or Collect 

Debts in Installments 

Per 31 U.S.C. §§ 3711(g)(1)(B), 

3711(g)(4), and 3711(g)(5), and the 

authority delegated to FMS by the 

Department of Justice, FMS is 

authorized to take appropriate action to 

collect or compromise transferred debts. 

With regard to debts that have been 

transferred to FMS for debt collection 

services, FMS has the same authority 

available to the head of the creditor 

agency to compromise transferred debts 

or collect transferred debts in 

installments. 

In addition, the Department of 

Justice has delegated to FMS the 

authority to compromise debts with a 

principal balance of up to $500,000. 

FMS may accept proposed compromises 

of debts with a principal balance of over 

$500,000 only with the approval of the 

Department of Justice. 

FMS may collect and/or compromise 

debts in accordance with applicable 

Federal law, including the Federal 

Claims Collection Standards (31 CFR 

Parts 900-904). Prior to transferring 

debts, the creditor agency must provide 

to FMS a detailed description of any 

agency or debt-specific laws, policies, 

and procedures that govern the 

compromise and/or collection of its 

debts. See subsection 4035.10, Complete 

an Agency Profile Form. 

4030.40—FMS Authority to 

Suspend and/or Terminate 

Collection Action 

Per 31 U.S.C. §§ 3711(g)(1)(B), 

3711(g)(4), and 3711(g)(5), and the 

authority delegated to FMS by the 

Department of Justice, FMS is 

authorized to terminate collection action 

on transferred debts with a principal 

balance of up to $500,000. FMS may 

approve the termination of collection 

action for debts with a principal balance 

of over $500,000 only with the approval 

of the Department of Justice. 

Per subsection 4035.20, Certify 

Debt, when a creditor agency transfers a 

debt to FMS, the creditor agency 

certifies that the debt is valid, legally 

enforceable, and that all requisite due 

process has been completed. FMS may, 

but is not obligated to, suspend 

collection activity if FMS determines 

that the creditor agency’s certification is 

incomplete, inaccurate, or unreliable, or 

if FMS determines that facts have 

changed since the creditor agency 

certified the debt and the debt is no 

longer valid and/or legally enforceable. 

In addition, FMS may suspend and/or 

terminate collection action in accordance 

with applicable Federal law, including 

the Federal Claims Collection Standards 

(31 CFR Parts 900-904). 

Section 4035—Creditor Agency 

Responsibilities 

4035.10—Complete an Agency 

Profile Form 

Each creditor agency must identify 

the programs for which FMS’s debt 

collection services are required or 

desirable. For each such program, before 

transferring debts to FMS, the creditor 

agency must complete an agency profile 

form. Creditor agencies may combine 

programs with the same requirements on 

one agency profile form. Creditor 

agencies must update this form as 

necessary to reflect program changes. 

The agency profile form must be in the 

medium or media that FMS directs. 

The creditor agency must, in the 

agency profile form, advise FMS of any 

statutory or regulatory provisions that 

uniquely affect its collection activities. 

The creditor agency should also describe 

any relevant policies it has with regard to 

the collection of its transferred debts. 

If the head of the creditor agency 

does not have full authority with regard 

to the compromise of its debts and/or the 

collection of its debts in installments (or 

if there is a legal prohibition on the 

delegation of this authority to FMS), the 

creditor agency must fully describe such 

limitations in the agency profile form, 

including citations to specific legal 

authorities. The creditor agency also 

must describe thoroughly the specialized 

process through which these debts can 

be compromised and/or collected in 

installments, including the relevant 

factors that would be considered through 

this specialized process. For these debts, 

the creditor agency must approve or 

disapprove any compromise agreements 

proposed by FMS within 10 business 

days of such a request, or within such 

other time period as allowed by FMS. 

4035.20—Certify Debt 

The creditor agency must execute 

an annual written agreement with FMS 

certifying, among other things, that, at 

the time of the transfer of any debts: 

 The debts are delinquent. 

 The debts are valid. 

 The debts are legally enforceable 

in the amount stated. 

 There are no legal bars to 

collection. 

AND 

 The creditor agency has 

completed all requisite due 

process. 

For the purpose of this certification 

requirement, the term “transferring 

debts” includes the transfer to FMS of 

any information or documentation 

related to a debt; any documentation or 

information related to a debtor; and any 

updates, changes, corrections, or 

modifications made to any debts or 

debtor information previously 

transferred to FMS. 

The creditor agency must ensure that 

any person authorized to transfer a debt 

to FMS for the creditor agency 

understands that, by transferring the 

debt, he or she is making a certification 

to FMS under penalty of perjury. The 

creditor agency must ensure that only 

appropriate persons are authorized to 

transfer debts to FMS. 
4-4000 VOL I 

October 2011 4 T/L 668 

4035.30—Comply With Relevant 

Laws and Authorize Use of All 

Appropriate Debt Collection Tools 

The creditor agency must comply 

with all relevant statutes and regulations, 

and must advise FMS of any statutory or 

regulatory provisions that uniquely affect 

the creditor agency’s debt collection 

activities. In the agency profile form, 

creditor agencies must authorize FMS to 

use all collection tools listed in 

subsection 4040.10, Collect and 

Compromise Transferred Debt, or 

provide a specific explanation of why a 

collection tool is not legally authorized. 

Alternatively, if, in consultation with 

FMS, the creditor agency determines 

that the use of a particular collection tool 

is not in the best interest of the 

Government, then the creditor agency 

must provide to FMS a written 

explanation of its determination. FMS, in 

its discretion, will make the final 

determination regarding whether the use 

of a collection tool is not in the best 

interest of the Government. 

Creditor agencies must establish 

regulations and/or procedures with 

regard to: 

 Collection of delinquent debt, 

generally; 

 Collection of delinquent debt 

through administrative offset 

(including salary offset) and tax 

refund offset; 

 Reporting delinquent debt to 

credit bureaus; 

 Collection of delinquent debt 

through administrative wage 

garnishment; 

 Responding to debt disputes and 

credit bureau disputes; 

 Responding to requests for 

additional information and, if 

applicable, requests to accept 

proposed compromise or 

installment agreements; 

AND 

 Collection of delinquent debt 

through any other debt collection 

tools for which regulations and/or 

established procedures are 

required. 

Creditor agencies should consult 

with their counsel for assistance with 

establishing regulations and/or 

procedures. 

4035.40—Transfer Eligible Debts 

to FMS; Provide Debt and Debtor 

Information to FMS 

Creditor agencies must transfer all 

nonexempt debts that are delinquent 

more than 180 days to FMS for debt 

collection services, and are strongly 

encouraged to transfer all eligible debts 

sooner. After transfer, the creditor 

agency should cease all collection 

activity and communication with the 

debtor and must refer all inquiries from 

the debtor to FMS. The creditor agency 

remains solely responsible at all times 

for ensuring the continued validity and 

enforceability of the debt. 

Before transferring a debt to FMS, 

the creditor agency must make written 

demand on the debtor for payment and 

must provide the debtor with all required 

due process. 

At the time of transfer, the creditor 

agency must provide FMS, in the 

medium or media that FMS directs, the 

following information: 

 Name of the debtor; 

 Address of the debtor, if 

available; 

 Taxpayer identification number, 

if available; 

 Principal balance of the debt; 

 Date on which the debt became 

delinquent; 

 Applicable statute of limitations 

for pursuing litigation, if 

available; 

AND

 Any other information FMS 

requires to be included in the 

transfer file. 

In addition, at the time of transfer or 

as soon thereafter as practicable, the 

creditor agency must provide FMS with 

accurate, appropriate information, in the 

medium or media that FMS directs, to 

facilitate the performance of FMS’s debt 

collection operations and to support the 

validity of the debt, including, if 

applicable: 

 Copies of signed promissory 

notes; 

 Copies of citations and/or 

notifications of fines or penalties; 

 Copies of initial demand letters 

establishing debts; 

 Copies of due-process notices; 

AND 

 Any other supporting documentation, as appropriate or as 

may be requested by FMS. 

The creditor agency must, at the time 

of transfer and from time to time as it 

receives updated information, provide 

FMS with information about a debtor, in 

a timely manner, including: 

 Updated addresses; 

 Taxpayer identification numbers; 

AND 

 Other information needed to 

collect debts. 

The creditor agency must reply 

within 10 business days to any request 

by FMS for information regarding a 

transferred debt or debtor, including 

requests for: 

 Relevant documentation or 

accounting records. 

 Information needed to respond to 

inquiries resulting from the 

Government’s collection efforts. 

Such inquiries may be from 

Congress, inspectors general, 

requestors under the Freedom of 

Information Act or the Privacy 

Act, or other relevant parties. 

AND 

 Information needed to respond to 

a dispute (whether received from 

the debtor or another source). 

The creditor agency must promptly 

conduct all required reviews and 

hearings or must authorize FMS to do so 

on its behalf pursuant to a written 

agreement. 
VOL I 4-4000 

T/L 668 5 October 2011 

The creditor agency must promptly 

notify FMS about any litigation resulting 

from FMS’s collection efforts or 

impacting the Government’s debt 

collection authorities. The creditor 

agency also must assist FMS in 

defending litigation, resulting from 

FMS’s collection efforts. In addition, 

with regard to FMS’s efforts to collect 

debt through litigation, the creditor 

agency must, upon request, assist FMS 

by providing supporting documentation, 

live witnesses, and other litigation 

support. 

4035.50—Maintain Records 

The creditor agency must maintain 

timely and accurate delinquent debt 

records, including updated information 

such as debtor information and debt 

balances. The creditor agency remains 

the owner of the debt throughout the 

debt collection process. 

Per subsection 4040.30, Modify 

Records, FMS will, if appropriate, 

update and/or modify its delinquent debt 

and debtor records with information 

obtained from its skiptracing and assetlocation services. The creditor agency 

must notify FMS as soon as it learns that 

any such updates or modifications to 

such records are incorrect. 

4035.60—Recall and Return 

Transferred Debt 

The creditor agency must recall a 

transferred debt if: 

 The debtor has filed for 

bankruptcy and the automatic 

stay is in effect. 

 The debt is not enforceable. 

 The debt is not delinquent. 

 The debt is not valid or has been 

paid in full. 

 The creditor agency discovers 

that it incorrectly certified the 

debt. 

OR 

 The creditor agency discovers 

any other reason that would 

render its certification invalid. 

Upon the recall of a debt in 

accordance with this section or the return 

of a debt by FMS in accordance with 

subsection 4040.50, Return Transferred 

Debt, the creditor agency must service, 

collect, or compromise the debt, or must 

suspend or terminate collection action on 

the debt. If the creditor agency 

determines that termination of collection 

action is authorized and appropriate, it 

should consider whether administrative 

offset per 31 U.S.C. § 3716 might still be 

appropriate. 

The creditor agency may transfer 

previously returned or recalled debts 

back to FMS for servicing, if 

appropriate. 

Section 4040—FMS 

Responsibilities 

4040.10—Collect and 

Compromise Transferred Debt 

FMS, or its private collection 

contractor in accordance with FMS’s 

contract requirements, will take 

appropriate action to collect and/or 

compromise transferred debts per 

applicable statutory and regulatory 

requirements. FMS, or its private 

collection contractor, will take one or 

more of the following actions, if 

authorized by the creditor agency in the 

agency profile form, as FMS deems 

appropriate: 

 Send demand letters; 

 Call the debtor; 

 Refer the debt to TOP; 

 Enter into repayment agreements; 

 Enter into compromise 

agreements; 

 Refer the debt to private 

collection contractors; 

 Report the debt to credit bureaus; 

 Gather information about the 

debtor, including purchasing 

credit reports to assist in the 

collection effort and using 

skiptracing and asset-location 

services; 

 Administratively garnish wages 

after: 

 Locating the debtor’s 

employer; 

 Sending any required dueprocess notice to the debtor; 

 Issuing the garnishment 

order to the employer; 

AND 

 Taking necessary steps to 

enforce the order against the 

employer, including, if 

necessary, initiating litigation; 

 Refer the debt to the Department 

of Justice for litigation; 

 Report compromised debt to the 

Internal Revenue Service on the 

appropriate Form 1099-C, if 

instructed to do so by the creditor 

agency; 

AND 

 Take any additional steps 

necessary to enforce recovery. 

4040.20—Maintain and Update 

Records 

FMS will make available to the 

creditor agency sufficient information 

for the creditor agency to update its 

delinquent debt records, maintain 

accurate debt balance information, 

reconcile its debt information, and run 

status reports on all collection activities. 

FMS will provide the creditor agency 

with a complete accounting of all fees 

charged (per Section 4045, Fees and 

Costs), if requested by the creditor 

agency. 

As appropriate, FMS will provide 

the creditor agency with access to 

other relevant information regarding 

transferred debts. 

4040.30—Modify Records 

FMS will, if appropriate, update 

and/or modify its delinquent debt and 

debtor records with information obtained 

from its skiptracing and asset-location 

services. This information may include, 

among other things, contact information 
4-4000 VOL I 

October 2011 6 T/L 668 

for the debtor (including mailing 

addresses, physical addresses, phone 

numbers, and email addresses), 

alternative debtor names (including 

alternative spellings, maiden names, 

married names, nicknames, and other 

aliases), taxpayer identification numbers, 

and employer information. 

4040.40—Respond to Disputes 

and Inquiries 

FMS, or its private collection 

contractor in accordance with FMS’s 

contract requirements, will respond to all 

debtor inquiries during the time period 

that FMS is servicing the debt. As 

necessary, FMS will consult with the 

creditor agency to assist with its 

responses. 

If a debtor (or someone on the 

debtor’s behalf) disputes the validity or 

enforceability of a debt, FMS may, if 

appropriate, submit such disputes to the 

creditor agency for resolution. Disputes 

may be based on assertions that the debt 

is not owed, that the debt was repaid, 

that the automatic stay in bankruptcy 

precludes collection, that the debt was 

discharged in bankruptcy, or a variety of 

other bases. 

FMS will provide the information 

necessary for the creditor agency to 

respond to inquiries resulting from the 

Government’s collection efforts. Such 

inquiries may be from Congress, 

inspectors general, requestors under the 

Freedom of Information Act or the 

Privacy Act, or other relevant parties. 

FMS will assist the creditor agency 

in defending litigation resulting from the 

Government’s collection efforts. 

4040.50—Return Transferred Debt 

FMS may, but is not required to, 

return a debt to the creditor agency if 

FMS determines that one or more of the 

following factors is met: 

 The balance of the debt, as 

reported to FMS by the creditor 

agency, is $0. 

 FMS has been unable to locate 

the debtor. 

 FMS has been unsuccessful in its 

debt collection efforts. 

 The creditor agency has requested 

the debt be returned, and FMS, in 

its discretion, believes that return 

is appropriate. 

 The creditor agency’s certification 

is incomplete, inaccurate, or 

unreliable, including because: 

 The debtor has filed for 

bankruptcy and the automatic 

stay is in effect. 

OR 

 The debt is invalid or 

unenforceable. 

 Facts have changed since the 

creditor agency certified the debt, 

and the debt is no longer valid 

and/or legally enforceable. 

 The debtor (if an individual) is 

deceased. 

 The debtor (if an entity) is no 

longer in business and has 

dissolved in accordance with 

applicable law. 

 The debtor has an inability to pay. 

OR 

 FMS determines that return is 

appropriate. 

A return based on a circumstance 

above is not a final determination by 

FMS that such a circumstance exists. 

The creditor agency must make the final 

determination about whether the 

circumstance exists. 

4040.60—Suspend and/or 

Terminate Collection Action 

FMS may suspend collection action 

on its own initiative or, if appropriate, at 

the request of the creditor agency. 

If appropriate, upon return of a 

transferred debt with a principal balance 

of up to $500,000, FMS may approve 

the termination of collection action. 

Return of a debt, by itself, does not 

constitute FMS’s approval to terminate 

collection action. However, unless 

otherwise specified, if FMS returns a 

debt with a principal balance of up to 

$500,000 for any of the following 

reasons, FMS will be deemed to have 

granted its approval to terminate 

collection action: 

 FMS has been unable to locate 

the debtor. 

 FMS has been unsuccessful in its 

debt collection efforts. 

 FMS has discovered that the 

debtor (if an individual) is 

deceased, unless a claim may be 

filed against the decedent’s estate. 

OR 

 The debtor (if an entity) is no 

longer in business and has 

dissolved in accordance with 

applicable law. 

The creditor agency is responsible 

for determining whether it is appropriate 

to terminate collection action. 

4040.70—Credit Collections to the 

Creditor Agency 

FMS will credit collections (less the 

fees charged to the creditor agency, per 

Section 4045, Fees and Costs) to the 

appropriate Agency Location Code via 

the Intra-governmental Payment and 

Collection System (IPAC). 

If FMS’s collection efforts result in a 

collection of funds greater than the total 

amount of debt owed by a debtor or 

result in a collection of funds in violation 

of law, the creditor agency is responsible 

for refunding such erroneous collections, 

if such a refund is appropriate. If FMS is 

aware that an erroneous collection may 

have occurred, FMS will notify the 

creditor agency of the possible erroneous 

collection. 

Section 4045—Fees and Costs 

4045.10—Fees Charged to the 

Creditor Agency 

4045.10a—FMS Fees 

The creditor agency must pay fees to 

FMS. The fees are set forth in the Debt 

Management Services Fee Schedule, 
VOL I 4-4000 

T/L 668 7 October 2011 

which FMS will make available to 

creditor agencies. Fees are based on all 

collections received after the transfer of 

the debt from the creditor agency to 

FMS (and before the debt has been 

returned to or recalled by the creditor 

agency), other than collections generated 

by the creditor agency through internal 

offset. 

4045.10b—Other Fees 

In addition to the fees described in 

subsection 4045.10a, FMS Fees, the 

creditor agency must pay other fees and 

charges due to FMS for debt collectionrelated costs, including fees charged by 

private collection contractors, the 

Department of Justice, or the Internal 

Revenue Service. These fees are set forth 

in the Debt Management Services Fee 

Schedule. 

4045.10c—Refund of Fees 

FMS will retain its fees from 

amounts collected on behalf of the 

creditor agency, regardless of whether 

the collection on which the fee is based 

was, or is required to be, returned by the 

creditor agency to the debtor. 

Notwithstanding, FMS will refund to 

the creditor agency any fees (if such fees 

are more than $10): 

 If FMS, through no fault of the 

creditor agency, collects an 

amount greater than the debt 

balance and charged fees on such 

overcollections; 

OR 

 If FMS erroneously charged the 

creditor agency a fee, regardless 

of whether FMS or the creditor 

agency caused the error. 

4045.20—Costs Charged to the 

Debtor 

Unless prohibited or otherwise 

provided for by law, the creditor agency, 

pursuant to 31 U.S.C. § 3717, must 

charge the debtor for the costs of 

processing and handling the transferred 

debts, including any fees the creditor 

agency is charged by FMS. 

The creditor agency must credit each 

debt with all payments made by a debtor 

on account of a debt, including payments 

for fees paid by the creditor agency to 

FMS. 
4-4000 VOL I 

October 2011 8 T/L 668 

Contacts 

Direct inquiries concerning this TFM chapter to: 

Debt Management Services 

Financial Management Service 

Department of the Treasury 

401 14th Street, SW., Room 446 

Washington, DC 20227 

Telephone: 202-874-3810 

Email: debt-tfm@fms.treas.gov 
Volume I

T/L 668 i October 2011 

TREASURY FINANCIAL MANUAL 

TABLE OF CONTENTS 

Part Chapter Title 

1 INTRODUCTION 

1000 Purpose and Plan of the Treasury Financial Manual (TFM) 

2000 Financial Operations Startup Procedures for New Federal Entities 

2 CENTRAL ACCOUNTING AND REPORTING 

1000 Introduction 

1500 Description of Accounts Relating to Financial Operations 

2000 Warrant and Nonexpenditure Transfer (NET) Transactions 

2500 Expenditure Transactions Between Appropriation, Fund, and Receipt Accounts 

3100 Instructions for Disbursing Officers’ Reports 

3200 Foreign Currency Accounting and Reporting 

3300 Statement of Transactions (FMS 224) Reporting by Agencies for Which the Treasury 

Disburses 

3400 Accounting for and Reporting on Cash and Investments Held Outside 

of the U.S. Treasury 

3500 Daily Transmittal for Internal Revenue Service 

3900 Reconciliation to Financial Management Service (FMS) Accounting Results 

4100 Debt Management Reports 

4200 Agency Reporting on Unexpended Balances of Appropriations and Funds 

(Federal Agencies’ Centralized Trial-Balance System II, FMS Form 2108: Year-End 

Closing Statement) 

4300 Reporting Instructions for Accounts Invested in Department of the 

Treasury Securities 

4500 Grants, Loans, Credits, and Contingent Liabilities Involving Foreigners 

4600 Treasury Reporting Instructions for Credit Reform Legislation 

4700 Agency Reporting Requirements for the Financial Report of the United States 

Government

5000 Accounting and Reporting on Monetary Assets (Non Operating Cash Items) 

Held by U.S. Treasury Offices 

 5100 Reconciling Fund Balance With Treasury Accounts 

3 PAYROLLS, DEDUCTIONS, AND WITHHOLDINGS 

1000 Introduction 

2000 Payroll Vouchers 

3000 Payments to the Office of Personnel Management for Health Benefits, Group Life 

Insurance, and Civil Service Retirement 

4000 Federal Income, Social Security, and Medicare Taxes 

5000 Withholding of District of Columbia, State, City, and County Income or 

Employment Taxes 
Volume I

October 2011 ii T/L 668

Part Chapter Title 

4 DISBURSING 

1000 Introduction 

1100 Delegations and Designations of Authority for Disbursing-Related Functions 

1500 Treasury’s Electronic Funds Transfer (EFT) Requirement 

2000 Payment Issue Disbursing Procedures 

 2100 Submitting Required Improper Payments Information for Publication on the 

 PaymentAccuracy.gov Web Site 

3000 Third-Party Draft Procedures for Imprest Fund Disbursing Activities 

4000 Debt Management Services Collection of Delinquent Nontax Debt 

4500 Government Purchase Cards 

5000 Requisitioning, Preparing, and Issuing Treasury Checks 

6000 Checking Accounts With the U.S. Treasury 

7000 Cancellations, Deposits, and Claims for Checks Drawn on the U.S. Treasury 

7100 Check Reclamations 

8000 Designated Depositary Checking Accounts 

9000 Foreign Exchange 

10000 Delegation of Disbursing Authority 

5 DEPOSIT REGULATIONS 

1000 Introduction 

2000 Checks and Cash Received in Collections 

4000 Making Deposits 

4100 Requirements for Using Depositaries To Hold Public Money 

4500 Deposits to Treasury Through the Fedwire Deposit System 

4600 Treasury Automated Lockbox Network 

4700 Plastic Card Collection Network 

5000 Uncollected and Lost Checks 

6000 Disposition of Foreign Currency and Checks Drawn on Foreign Banks 

6 OTHER FISCAL MATTERS 

1000 Introduction 

2000 Cash Advances Under Federal Grant and Other Programs 

3000 Payments of Unclaimed Moneys and Refund of Moneys Erroneously Received and 

Covered 

3100 Certifying Payments and Recording Corresponding Intragovernmental Receivables in 

the Federal Government’s Judgment Fund 

4000 Intra-Governmental Payment and Collection (IPAC) System 

5100 Recovering Unclaimed Federal Financial Assets 

6000 Payment Procedures Upon Expiration of an Appropriation or a Continuing 

 Resolution 

7000 Reporting Integrated Funding Transactions of Federal Assistance Programs 

8000 Cash Management 

8500 Cash Forecasting Requirements 

9000 Securing Government Deposits in Federal Agency Accounts
Volume I

T/L 668 i October 2011 

PART 4 - DISBURSING 

 Table of Contents 

Chapter Section Title 

1000 INTRODUCTION 

1010 Scope and Applicability 

1015 Authority 

1020 Compliance With Executive Order 13224 (Blocking Property and Prohibiting 

Transactions With Persons Who Commit, Threaten To Commit, or Support Terrorism) 

and Foreign Assets Control Regulations

1025 Changes in Disbursing Services 

1030 Contacting Treasury’s RFCs 

Contacts 

Appendix 

Treasury’s Regional Financial Centers 

1100 DELEGATIONS AND DESIGNATIONS OF AUTHORITY FOR 

DISBURSING-RELATED FUNCTIONS 

1110 Scope and Applicability 

1115 Authority 

1120 Definitions of Terms 

1125 General Form Instructions for Delegations and Designations (FMS 2958 and 210 Series) 

1130 Head of Agency Delegation (FMS 2958) 

1135 Delegations of Designation Authority (FMS 2958) 

1140 Designation of Certifying Officer (FMS 210CO) 

1145 Designation of SPS Data Entry Operators (FMS 210DEO) 

1150 Designation of Designated Agent To Receive and Deliver Checks (FMS 210DA) 

Contacts 

Appendices 

1. FMS 2958: Delegation of Authority 

2. FMS 210CO: Designation for Certifying Officer 

3. FMS 210DEO: Designation for SPS Data Entry Operator 

4. FMS 210DA: Designation for Agent To Receive & Deliver Checks 

5. SF 1195: Recommendation for Designation and Revocation of Agent To Receive and 

Deliver Checks and Savings Bonds 
Volume I Part 4 

October 2011 ii T/L 668

1500 TREASURY’S ELECTRONIC FUNDS TRANSFER (EFT) 

REQUIREMENT 

1510 Disbursements – General Guidelines 

1515 Authority 

1520 Agency Process – New Benefit Recipients 

1525 Agency Process – Existing Benefit Recipients 

1530 Vendor Payments 

1535 Miscellaneous and Salary Payments 

1540 Agency Waivers 

1545 Agency Compliance 

1550 EFT Payment Mechanisms 

1555 Payments to Prepaid Cards 

 Contacts 

2000 PAYMENT ISSUE DISBURSING PROCEDURES 

2010 Scope and Applicability 

2015 Authority 

2020 Control Over Disbursements 

2025 Basic Disbursement Requirements 

2030 Standard Form Vouchers 

2035 Information To Be Furnished on Vouchers 

2040 Certification and Approval of Vouchers 

2045 Payments From Basic Vouchers 

2050 Payments From Treasury Electronic Certification System Voucher and Schedule of Payments 

2055 Payments From Paper SF 1166, Voucher and Schedule of Payments 

2060 Payments From SF 1166-EDP, Voucher and Schedule of Payments 

2065 Foreign Currency Payments 

2070 Furnishing of Enclosures or Inserts With Treasury Checks 

2075 Restricted Delivery of Checks 

2080 Designating Agents to Receive Salary Checks 

Contacts 

Appendices 

1. SF 1166: Voucher and Schedule of Payments 

 SF 1167: Voucher and Schedule of Payments (Continuation Sheet) 

SF 1166-EDP: Print Layout SF 1166-EDP Voucher and Schedule of Payments 

(Computer-generated) 

2. SF 1166: Voucher and Schedule of Payments 

Explanation of Items To Be Reported on SF 1166 Scheduled for Payment in Foreign 

Currency 

SF 1166: Voucher and Schedule of Payments 

Explanation of Items To Be Reported on SF 1166 Scheduled for Payment When the 

Precise Equivalent To Be Paid in Foreign Currency Is Not Known 

SF 1166: Voucher and Schedule of Payments 

Explanation of Items To Be Reported on SF 1166 Scheduled for Payment to a Payee in an 

Excess or Near-Excess Currency Country When Payment Must Be Made in U.S. Dollars 

SF 1166: Voucher and Schedule of Payments 

Explanation of Items To Be Reported on SF 1166 Scheduled for Payment When the 

Amount Payable in Foreign Currency is Limited by Law 

3. Insert Specifications, Packing, and Shipping Instructions for Tabulating Cards 

4. List of Restricted Countries Designated in 31 CFR Part 211 

5. List of Foreign Assets Control Regulations Referenced in 31 CFR Part 211 
Part 4 Volume I 

T/L 668 iii October 2011 

2100 SUBMITTING REQUIRED IMPROPER PAYMENTS INFORMATION 

FOR PUBLICATION ON THE PAYMENTACCURACY.GOV WEB SITE 

2110 Background and Introduction 

2115 Authority 

2120 Definition of Terms 

2125 Agencies and Programs Subject to the Requirements 

2130 PaymentAccuracy.gov Web Site – Agency Submission Requirements 

2135 How does the PaymentAccuracy.gov Web site collect information on suspected 

 incidents of waste, fraud, and abuse? 

2140 What are the timelines for agencies to submit required improper payments 

 information to FMS for publication on the PaymentAccuracy.gov Web site? 

2145 How does certain Agency Head Quarterly High-Dollar Report information get posted on 

the PaymentAccuracy.gov Web site? 

Contacts 

Appendices 

1. Linking to the PaymentAccuracy.gov Web Site 

 2. Timelines for Agencies To Submit Required Improper Payments Information 

 for Publication on the PaymentAccuracy.gov Web Site 

3000 THIRD-PARTY DRAFT PROCEDURES FOR IMPREST FUND 

DISBURSING ACTIVITIES 

3010 Background 

3015 Authority 

3020 Third-Party Drafts 

Contacts 

4000 DEBT MANAGEMENT SERVICES COLLECTION OF DELINQUENT 

NONTAX DEBT 

 4010 Background 

 4015 Scope 

 4020 Definitions 

 4025 General Rule 

 4030 Authority 

 4035 Creditor Agency Responsibilities 

 4040 FMS Responsibilities 

 4045 Fees and Costs 

 Contacts

4500 GOVERNMENT PURCHASE CARDS 

4510 Authority 

4515 Policy and Use 

4520 Definition of Terms 

4525 Agency Procedures 

4530 Refund of Contractual Costs 

4535 Review and Approval of Billing Statement for Payment 

4540 Electronic Commerce 

Contacts 
Volume I Part 4 

October 2011 iv T/L 668

5000 REQUISITIONING, PREPARING, AND ISSUING TREASURY CHECKS 

5010 General 

5015 Submission of Disbursing Officers’ Signature Specimens and Designation 

of Assistants 

5020 Specifications and Characteristics of Treasury Checks 

5025 Requisitioning Treasury Checks 

5030 Safekeeping and Control of Blank Check Stock 

5035 Drawing and Inscribing Treasury Checks 

Contacts 

Appendices 

1. GPO Form 2431: Print Order 

2. Packaging Units and Shipping Weights 

3. Definition of Secure Room 

6000 CHECKING ACCOUNTS WITH THE U.S. TREASURY 

6010 Scope and Applicability 

6015 Checking Account Symbol Maintenance 

6020 Check-Issue Reporting 

6025 Reporting of Documents by Disbursing Offices 

6030 Spoiled Checks 

6035 Control Checks 

6040 Voided Checks 

6045 Checking Account Reconciliation Reports and Adjustments by FMS 

6050 Check-Issue Adjustments by Disbursing Offices 

 Contacts 

Appendices 

1. SF 1179: Month End Check Issue Summary 

2. FMS 5206: Advice of Check Issue Discrepancy 

3. OF 1017-G: Journal Voucher 

4. CRRER252: Notification of Check Issue Correction – Disbursing Office Requested 

7000 CANCELLATIONS, DEPOSITS, AND CLAIMS FOR CHECKS DRAWN 

ON THE U.S. TREASURY 

7010 Scope and Applicability 

7015 Authority 

7020 Definition of Terms 

7025 Limited Payability Cancellation 

7030 Available Check Cancellation Processing 

7035 Accounting and Reporting Requirements for Available Check Cancellations 

7040 Determining the Status of Checks 

7045 Nonreceipt and Nonentitlement Claims Processing 

7050 Accounting and Reporting Requirements 

7055 Processing Check Forgery Claims 

7060 FMS 3864: The Agency Recertification Follow-Up 

7065 Miscellaneous Claims 

7070 Handwriting Analysis of Checks Older Than 1 Year for Which UCCs 

Have Not Been Requested Timely 
Part 4 Volume I 

T/L 668 v October 2011 

 Contacts 

Appendices 

1. Stop Reason Codes 

2. SF 1081: Voucher and Schedule of Withdrawals and Credits 

3. Return Codes 

4. SF 1098: Schedule of Canceled or Undelivered Checks 

5. Check Status Codes 

6. FMS 3858: Claims Document (consisting of FMS 1133 and instructions) 

7. Status Codes/Messages Provided to the FPA or NTDO 

8. OF 1017-G: Journal Voucher 

9. FMS 224: Statement of Transactions 

10. Claims Disposition Notice 

11. FMS 3864: Agency Recertification Follow-Up 

12. Holder-In-Due-Course Cover Letter 

13. Affidavit and Indemnity Agreement for Lost U.S. Treasury Check 

7100 CHECK RECLAMATIONS 

7110 Scope and Applicability 

7115 Authority 

7120 Definition of Terms 

7125 Check Reclamations 

7130 Interest, Penalty Charges, and Administrative Fees 

7135 Collection Action 

7140 Electronic Transmission of Partial Credits 

7145 Abandoned Reclamations 

7150 Reporting to the IRS on IRS Form 1099-C: Cancellation of Debt 

 Contacts 

Appendices 

1. Abandonment Notice to Agencies 

2. Agency Receivables for IRS Form 1099-C Reporting 

3. Corrected Agency Receivables for IRS Form 1099-C Reporting 

8000 DESIGNATED DEPOSITARY CHECKING ACCOUNTS 

8010 Introduction 

8020 Checks, Check Issue Records, and Deposit Information 

8030 Voided and Spoiled Checks 

8040 Check Issue Adjustments by Disbursing Offices 

8050 Cancellation of Depositary Checks 

8060 Undeliverable Checks Drawn on Designated Depositaries 

8070 Claims on Account of Nonreceipt, Loss, Theft, Destruction, Mutilation, or Forgery 

of Depositary Checks 

8080 Periodic Transfer of Proceeds of Uncurrent Checks 

8085 Monthly Depositary Bank Statement 

8090 Closing of the Bank Accounts 

8095 Inquiries 

Appendix 

Forms Prescribed for Designated Depositary Checking Accounts 
Volume I Part 4 

October 2011 vi T/L 668

9000 FOREIGN EXCHANGE 

9010 Background 

9015 Authority 

9020 Instructions Contained in Other Treasury Financial Manual Chapters 

9025 Definition of Terms 

9030 Designated Depositaries 

9035 Foreign Exchange Transactions for Official Purposes 

9040 Cashing Checks and Other Instruments in Foreign Countries for Accommodation 

Purposes 

9045 Acquisition of Foreign Exchange 

9050 Rate of Exchange for Expenditures and Accommodation Exchanges 

9055 Collections and Interest on Deposits 

9060 Disbursements 

9065 Gains and Deficiencies 

 Contacts 

10000 DELEGATION OF DISBURSING AUTHORITY 

10010 Authority 

10015 Standards for Delegating Disbursing Authority 

10020 Delegated Disbursing Authority Document 

10025 Authorities of Treasury's CDO 

10030 Responsibilities and Liabilities of an Agency With 

Delegated Disbursing Authority 

10035 Oversight Requirements 

10040 Termination of Delegated Disbursing Authority 

 Contacts