I

104TH CONGRESS

2D SESSION H. R. 3809

To improve the ability of the United States Government to collect debts

owed to it, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

JULY 12, 1996

Mr. PALLONE (for himself, Mr. WYNN, Mr. KLUG, Mr. CANADY of Florida,

and Mr. PORTER) introduced the following bill; which was referred to the

Committee on the Judiciary, and in addition to the Committee on Ways

and Means, for a period to be subsequently determined by the Speaker,

in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned

A BILL

To improve the ability of the United States Government

to collect debts owed to it, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Debt Collection Act

5 Amendments of 1995’’.

6 SEC. 2. IMPROVED DEBT COLLECTION PRACTICES.

7 (a) USE OF CONTRACTORS SPECIALIZING IN DEBT

8 COLLECTION.—Section 3718(a) of title 31, United States
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1 Code, is amended by striking ‘‘Under conditions’’ and all

2 that follows through ‘‘make’’ and inserting ‘‘The head of

3 an executive or legislative agency shall make’’.

4 (b) SALARY OFFSET.—Subsection (a)(1) of section

5 5514 of title 5, United States Code, is amended by strik6 ing ‘‘may be collected’’ and inserting ‘‘shall be collected’’.

7 (c) DISCLOSURE TO CONSUMER REPORTING AGEN8 CIES.—Subsection (f)(1) of section 3711 of title 31, Unit9 ed States Code, is amended by striking ‘‘may disclose’’

10 and inserting ‘‘shall disclose’’.

11 (d) ADMINISTRATIVE OFFSETS.—Subsection (a) of

12 section 3716 of title 31, United States Code, is amended

13 by striking ‘‘may’’ the first place it appears and inserting

14 ‘‘shall’’.

15 (e) REPORT TO THE INTERNAL REVENUE SERVICE

16 OF DEBTS PAID IN FULL.—Subchapter II of chapter 37

17 of title 31, United States Code, is amended by adding at

18 the end the following new section:

19 ‘‘§ 3720B. Report to the Internal Revenue Service of

20 Debts Paid in Full

21 ‘‘The head of a Federal agency shall report any debt

22 that has been paid in full to the Internal Revenue Service

23 promptly after the agency has determined that the debt

24 has been paid in full.’’.
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1 (f) DISCLOSURE BY INTERNAL REVENUE SERVICE

2 OF ADDRESS INFORMATION.—Section 6103(m)(2)(A) of

3 the Internal Revenue Code of 1986 is amended by insert4 ing before the period ‘‘, or any other law granting a Fed5 eral agency the authority to collect or compromise a Fed6 eral claim against the taxpayer’’.

7 (g) AUDITS AND REPORT OF AUDIT.—

8 (1) AUDITS OF FEDERAL AGENCIES.—The

9 Comptroller General of the United States shall an10 nually conduct audits of each Federal agency to de11 termine—

12 (A) the amount of debt owed to the agen13 cy;

14 (B) the amount of debt owed to the agency

15 that is delinquent; and

16 (C) any action taken by the agency to re17 cover the delinquent debt.

18 (2) REPORTS TO CONGRESS.—The Comptroller

19 General shall submit annually to the Congress a re20 port containing the information obtained through

21 the audits prepared pursuant to paragraph (1).

22 (h) EXTENSION OF PILOT DEBT COLLECTION

23 PROJECT.—
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1 (1) EXTENSION OF PILOT PROJECT.—Section 5

2 of Public Law 99–578 (31 U.S.C. 3718 note) is re3 pealed.

4 (2) ADDITIONAL REPORTING REQUIREMENTS.—

5 Section 3718(c) of title 31, United States Code, is

6 amended—

7 (A) in paragraph (2), by striking ‘‘and’’ at

8 the end thereof; and

9 (B) in paragraph (3)—

10 (i) in subparagraph (C), by striking

11 the period and adding at the end ‘‘; and’’;

12 and

13 (ii) by adding after subparagraph (C)

14 the following new subparagraph:

15 ‘‘(D) the total cost of the pilot program es16 tablished by Public Law 99–578 (100 Stat.

17 3305) as well as the total amount of debt recov18 ered under that pilot program.’’.

19 (3) USE OF RECOVERED FUNDS TO REDUCE

20 BUDGET DEFICIT.—Section 3718 of title 31, United

21 States Code, is amended by adding at the end the

22 following new subsection:

23 ‘‘(h) Except as provided by subsection (d), any

24 amount recovered through a contract entered into under

25 subsection (b) shall be used to reduce the budget deficit
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1 of the United States. Notwithstanding the preceding sen2 tence, a percentage (which is hereafter specified by law)

3 of the amount recovered through such a contract shall be

4 paid to the agency on whose behalf such amount was re5 covered for use by such agency in collecting indebtedness

6 owed to such agency.’’

7 SEC. 3. IMPROVED LOAN ORIGINATION PROCEDURES.

8 (a) IMPROVED PRESCREENING PROCEDURES.—

9 (1) Chapter 97 of title 31, United States Code,

10 is amended by adding at the end the following new

11 section:

12 ‘‘§ 9704. Improved prescreening procedures

13 ‘‘The head of a Federal agency may not make a loan

14 to a loan applicant until the applicant has been

15 prescreened to determine if the applicant is creditworthy.

16 The determination of creditworthiness shall include an

17 evaluation of the ability and willingness of the applicant

18 to repay the debt, the agency’s level of acceptable risk,

19 other agency or Federal Government obligations that

20 could jeopardize or be jeopardized by the loan under con21 sideration, and the existence of other debts owed by the

22 loan applicant to the Federal Government, including a tax

23 delinquent account with the Internal Revenue Service.’’.
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1 (2) Section 6103(m)(2)(A) of the Internal Rev2 enue Code of 1986 is amended by striking ‘‘the Sec3 retary may’’ and inserting ‘‘the Secretary shall’’.

4 (b) DENIAL OF CREDIT TO APPLICANTS WITH DE5 LINQUENT DEBTS.—Chapter 97 of title 31, United States

6 Code, as amended by subsection (a), is further amended

7 by adding at the end the following new section:

8 ‘‘§ 9705. Denial of credit to applicants with delin9 quent debts

10 ‘‘The head of a Federal agency may not make a loan

11 to a loan applicant who owes a delinquent debt to the Fed12 eral Government, including the Internal Revenue Serv13 ice.’’.

14 SEC. 4. USE OF ADMINISTRATIVE CHARGES TO IMPROVE

15 CREDIT MANAGEMENT TECHNIQUES.

16 Section 3717 of title 31, United States Code, is

17 amended by adding at the end the following new sub18 section:

19 ‘‘(i) The Secretary shall deposit in a special fund any

20 amounts received by a Federal agency to cover the cost

21 of processing and handling delinquent claims under sub22 section (e). The Secretary shall, without further appro23 priation and upon request by the agency, disburse money

24 from such fund to the agency solely for the use of improv25 ing credit management techniques, except that the access
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1 of each agency to funds in the special account shall be

2 limited to the amount that the agency received to cover

3 the cost of processing and handling delinquent claims

4 under subsection (e).’’.

5 SEC. 5. TECHNICAL AMENDMENTS.

6 (a) CHAPTER 37 AMENDMENTS.—The table of sec7 tions at the beginning of chapter 37 of title 31, United

8 States Code, is amended by inserting after the item relat9 ing to section 3720A the following new item:

‘‘3720B. Report to the Internal Revenue Service of debts paid in full.’’.

10 (b) CHAPTER 97 AMENDMENTS.—The table of sec11 tions at the beginning of chapter 97 of title 31, United

12 States Code, is amended by adding at the end the follow13 ing new items:

‘‘9704. Improved prescreening procedures.

‘‘9705. Denial of credit to applicants with delinquent debts.’’.

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