Source: https://www.federalregister.gov/documents/2004/10/25/04-23754/standards-for-collection-compromise-suspension-or-termination-of-collection-effort-and-referral-of
Timestamp: 2018-12-13 22:09:52
Document Index: 702315888

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62188-62204 (17 pages)
04-23754
https://www.federalregister.gov/d/04-23754 https://www.federalregister.gov/d/04-23754
The preamble to the proposed rule did contain an explanation that encompassed the proposed change to add paragraph (c)(4) to 38 CFR 1.912a, since it is one of the changes that was proposed to ensure that our debt collection regulations are consistent with statutory mandates and clearly written (68 FR 74893, 74894). DAV is correct that there is no statutory change to 38 U.S.C. 5301(c) or 5314 that pertains to the addition of this provision. However, we believe that DAV is incorrect in stating that our proposed new paragraph violates section 5314(b).Start Printed Page 62189
Nothing in section 5314(b) requires VA to suspend administrative offset pending a final decision by the Board of Veterans' Appeals (BVA). The requirements of 38 U.S.C. 5314(b) are to be met by “reasonable efforts to notify” the person in compliance with § 5314(b)(1) and (b)(3) and by a determination described in section 5314(b)(2). Under section 5314(b)(2), the Secretary is merely required to make “a determination” with respect to a dispute of the existence or amount of the debt or with respect to a request for waiver, or to determine that the time required to make such a determination before making deductions would jeopardize the Secretary's ability to recover the full amount of such indebtedness through deduction from such payments.
The requirement in 38 U.S.C. 5314(b)(1) for VA to notify the debtor of the right to dispute the existence and amount of the debt, or the right to request waiver, through “prescribed administrative processes” does not, as DAV argues, apply to both an initial decision at the regional office level and an appellate decision by BVA. VA has consistently under section 5314 taken the position that collection action may begin after an initial adverse determination on the validity and amount of the debt or an initial adverse determination on the waiver request. A reading of the current regulations supports this position. For example, the last sentence in 38 CFR 1.911(c) states: “Except as provided in § 1.912a (collection by offset), the exercise of any of these rights will not stay any collection proceeding.” Furthermore, § 1.912a(c)(1) states that “* * * offset shall not commence until the dispute is reviewed as provided in § 1.911a(c)(1) [sic] [§ 1.911(c)(1); this final rule corrects the inadvertent failure to reflect the redesignation of § 1.911a as § 1.911 (52 FR 42105)(November 3, 1987)] and unless the resolution is adverse to the debtor.” The procedure provided in § 1.911(c)(1) is an informal dispute only. VA's regulations further provide in § 1.912a(c)(2) that “* * *offset shall not commence until the Department of Veterans Affairs has made an initial decision on waiver.” Thus, VA's current regulations in 38 CFR 1.911 and 1.912a already authorize VA to begin collection from benefit payments after an adverse informal decision on the existence or amount of a benefit program debt or an initial adverse decision on a request for waiver of such debt. Similarly, we have consistently taken the position under section 5314(b)(2) that if VA finds that delay to make a determination on such a dispute or request would jeopardize collection by offset, VA is authorized to begin collection. Nothing in either the current § 1.911 or § 1.912a requires VA to suspend collection action until a final decision is rendered by BVA. VA's regulations are also consistent with Treasury's regulations for offset, which do not require the exhaustion of all administrative remedies prior to collection by offset (see 31 CFR 901.3(b)(4) and 901.3(c)(2)(i)). New paragraph (c)(4) in § 1.912a is merely intended to clarify our regulations by reflecting an already existing practice.
DAV also has several questions and concerns about VA's proposed new regulation (38 CFR 1.923) on administrative wage garnishment (AWG). This proposed regulation is based on Treasury's AWG regulation (31 CFR 285.11) and is authorized by 31 U.S.C. 3720D and 38 U.S.C. 501. New § 1.923 provides AWG procedures, including procedures for hearings. Since we have decided that only VA debts that have been referred to Treasury's cross-servicing program will be subject to AWG, our regulation describes certain responsibilities of both Treasury and VA for many of the AWG procedures. It should be noted that VA is not required to refer a debt to Treasury unless the debt is more than 180 days delinquent. Thus, any debt that eventually becomes subject to AWG will be more than 180 days delinquent.
DAV states that VA's proposed regulation lacks the clarity of Treasury's regulation. DAV finds that VA's proposed regulation requires the reader to shift back and forth between our regulation and Treasury's. DAV feels that VA debtors will probably not be familiar with Treasury's regulation. While both statements may be true, it is not unusual for VA's debt collection regulations to refer to Treasury's regulations, which are intended as guidance for executive agencies to follow in developing agency-specific Start Printed Page 62190regulations. For the reasons discussed below, we believe that the references serve a useful purpose and should be retained.
DAV objects to the fact that proposed § 1.923(b)(3) requires the debtor to be notified of the right to request a hearing, rather than notified simply of the right to a hearing. DAV believes that small differences in language, such as this, are not inconsequential and can lead to misunderstandings. We agree with DAV's position and in this final rule we are making a change from proposed § 1.923(b)(3) accordingly.
Treasury's regulation provides, at 31 CFR 285.11(f)(3)(i), that “the agency shall provide the debtor with a reasonable opportunity for an oral hearing when the agency determines that the issue in dispute cannot be resolved by review of the documentary evidence, for example, when the validity of the claim turns on the issue of credibility or veracity.” DAV states that proposed § 1.923(c) appears to leave the decision of whether to afford an oral hearing more completely to the discretion of the hearing official than does the Treasury regulation. VA's version provides, in DAV's view, no guidance as to when an issue in dispute cannot be resolved by review of the documentary evidence and must be resolved by an oral hearing.
In proposed § 1.923(c), we believe the reference to 31 CFR 285.11(f) provides sufficient guidance for the hearing official to determine whether an oral or paper hearing would be accorded the debtor. VA's proposed language does not give more discretion to the hearing official in determining the type of hearing than as provided for in Treasury's regulation. However, in order to provide more specific guidance on this issue, we are in this final rule adding the phrase “for example, when the validity of the claim turns on the issue of credibility or veracity” to the end of the second sentence of proposed § 1.923(c)(1). This language is taken directly from 31 CFR 285.11(f)(3)(i).
DAV next states that the specific hearing procedures prescribed in proposed § 1.923(c)(1) conflict with VA hearing procedures and the associated rights of VA claimants. Specifically, in VA's administrative proceedings, a claimant has the right to request a hearing at any stage in the process, and according to DAV, the term “hearing” means an oral hearing. DAV argues that the right to an oral hearing is one of the basic elements of due process imposed by 38 CFR part 3. DAV asserts that the rules applicable to BVA also make it clear that the term “hearing” pertains to oral hearings. Notwithstanding the Treasury rule, DAV believes that it is fundamentally unfair that the decision on whether to afford an oral hearing is at the discretion of the hearing official. If VA has the latitude to make its own rules on these hearing procedures, DAV believes VA has the latitude to offer an oral hearing for all debtors that desire one. DAV also feels the oral hearing should be recorded and preferably transcribed, since any decision under § 1.923 will be subject to appellate review where testimonial evidence will be pertinent. Our proposed § 1.923(c)(1) provides that the hearing official must maintain a summary record of the proceedings, but is not required to produce a transcript of the hearing. The Treasury regulation at 31 CFR 285.11(f)(9) only requires a summary record and we believe this to be sufficient.
In publishing § 1.923, VA has no intention of depriving veterans and other VA benefit claimants of any rights they are entitled to under title 38 of the U.S. Code or under 38 CFR part 3. However, § 1.923 is intended to authorize AWG for all debts owed VA, not just those debts that are the result of participation in a benefits program under title 38. Our reference to 38 CFR 1.911(c)(1) in § 1.923(c)(6) is intended to distinguish these rights (of veterans and other benefit claimants) from the rights of debtors whose debts are not resulting from participation in a VA benefit program. The intent is to recognize the right to dispute the existence and amount of a benefit debt in accordance with § 1.911(c)(1) and to allow any existing VA regional office or BVA decision to be incorporated by reference and become the basis of the hearing official's decision. Thus, a veteran and any other claimant as defined in 38 U.S.C. 5100 would retain any rights under VA statute and regulations if he or she disputed the existence and amount of a benefit debt that eventually became subject to AWG. The AWG regulations do not confer on veterans or other claimants an additional opportunity to challenge the debt or to request a waiver, as these rights were available to them at the initial notification of indebtedness.
DAV states that § 1.923(c)(5), which is modeled on § 285.11(f)(8), violates existing law and cites 38 U.S.C. 5107 and Gilbert v. Derwinski, 1 Vet. App. 49, 54 (1990), as authority for their position. Section 1.923(c)(5) states that VA or Treasury shall have the burden of going forward to prove the existence or amount of the debt, after which the debtor must show, by a preponderance of the evidence, that no debt exists or the amount of the debt is incorrect. DAV cites the fact that a more liberal burden of proof applies to veterans and other claimants under VA law because a veteran need only demonstrate that there is an approximate balance of positive and negative evidence in order to prevail.
As stated above, § 1.923 is intended to authorize AWG for all debts owed VA, not just those debts that are the result of participation in a benefits program under title 38 of the U.S. Code. The burden of proof described in § 1.923(c)(5) is applicable to all debts owed VA. However, a debtor can dispute the existence and amount of a debt arising out of participation in a VA benefits program in accordance with § 1.911(c)(1) and appeal any adverse decision under 38 CFR parts 19 and 20. Under such procedures, the debtor would be under the more liberal burden of proof. Prior decisions rendered under procedures set forth in 38 CFR applicable to the benefit would become the basis of the hearing official's decision, as stated in our earlier discussion of § 1.923(c)(6). In all probability, by the time a debt reaches the AWG process, veterans and other claimants would have already had the opportunity to exercise any rights under the benefit debt process and the debt would be merely a debt owed to the Federal government.
Finally, Treasury's 31 CFR 285.11 states that the hearing official's decision will be the final agency action for the purposes of judicial review under the Administrative Procedure Act (APA). VA's proposed § 1.923(c)(7) merely restates the same thing. DAV correctly points out that VA's administrative adjudicative processes for VA benefits are not subject to the APA. DAV states that § 1.923(c)(7) needs to be revised; otherwise this proposed rule would Start Printed Page 62191remove BVA from the process, and in so doing, would preclude review by the U.S. Court of Appeals for Veterans Claims.
In addition to the changes discussed above as a result of comments we received, we are making in the final rule changes from the proposed rule by adding or revising authority citations; removing redundant language or unnecessary cross-references; in the instruction for § 1.919, redesignated as § 1.915, correcting an inadvertent error by revising the amendments to paragraph (f)(2) to reflect that we are removing paragraph (f)(2) and its authority citation and reserving paragraph (f)(2); removing a reference in proposed new § 1.923 to a now-obsolete Treasury form number and referring instead to “a Treasury-approved” form; adding language to § 1.907, Definitions, to promote clarity in understanding the provisions of §§ 1.900 through 1.953; and making other nonsubstantive changes for purposes of clarity or of a technical nature. The Regulatory Flexibility Act paragraph in this preamble also reflects correcting changes.
This final rule makes a nonsubstantive clarifying change to the second sentence of proposed § 1.963a(b), which stated that, “[g]enerally,” collection of an overpayment of employees” pay, expenses, and allowances will be “against equity and good conscience” if the overpayment occurred through administrative error and that there is no indication of fraud, misrepresentation, fault, or lack of good faith on the part of the employee or other person having an interest in obtaining a waiver. The qualifying term “[g]enerally” reflects that VA Committees on Waivers and Compromises retain discretion to determine that collection would not be against equity and good conscience in some instances involving overpayments due to administrative error without fault on the part of the employee, such as in cases where the windfall to the employee or the burden to the government by reason of the overpayment would be inequitably large or where VA promptly advised the claimant of a potential overpayment and the possibility of collection. In this final rule, we have added the phrase “and waiver would not otherwise be inequitable” to the second sentence of § 1.963a(b) in order to reiterate and clarify that the determination ultimately turns on the equities of each case, as provided in the preceding sentence. This change does not alter the meaning of the proposed rule.
Authority: Sections 1.900 through 1.953 are issued under the authority of 31 U.S.C. 3711 through 3720E; 38 U.S.C. 501, and as noted in specific sections.
(a) The standards contained in §§ 1.900 through 1.953 are issued pursuant to the Federal Claims Collection Standards, issued by the Department of the Treasury (Treasury) and the Department of Justice (DOJ) in parts 900 through 904 of 31 CFR, as well as other debt collection authority issued by Treasury in part 285 of 31 CFR, and apply to the collection, compromise, termination, and suspension of debts owed to VA, and the referral of such debts to Treasury (or other Federal agencies designated by Treasury) for offset and collection action and to DOJ for litigation, unless otherwise stated in this part or in other statutory or regulatory authority, or by contract.
Sections 1.900 through 1.953 do not create any right or benefit, substantive or procedural, enforceable at law or in equity by a party against the United States, its agencies, its officers, or any Start Printed Page 62192other person, nor shall the failure of VA to comply with any of the provisions of §§ 1.900 through 1.953 be available to any debtor as a defense.
(a) The standards in §§ 1.900 through 1.953 relating to compromise, suspension, and termination of collection activity do not apply to any debt based in whole or in part on conduct in violation of the antitrust laws or to any debt involving fraud, the presentation of a false claim, or misrepresentation on the part of the debtor or any party having an interest in the claim. Only the Department of Justice (DOJ) has the authority to compromise, suspend, or terminate collection activity on such claims. The standards in §§ 1.900 through 1.953 relating to the administrative collection of claims do apply, but only to the extent authorized by DOJ in a particular case. Upon identification of a claim based in whole or in part on conduct in violation of the antitrust laws or any claim involving fraud, the presentation of a false claim, or misrepresentation on the part of the debtor or any party having an interest in the claim, VA shall promptly refer the case to DOJ. At its discretion, DOJ may return the claim to VA for further handling in accordance with the standards in §§ 1.900 through 1.953.
Nothing in §§ 1.900 through 1.953 precludes VA settlement, waiver, compromise, or other disposition of any claim under statutes and implementing regulations other than subchapter II of chapter 37 of Title 31 of the United States Code (Claims of the United States Government) and the standards in Title 31 CFR parts 900 through 904. See, for example, the Federal Medical Care Recovery Act (42 U.S.C. 2651 et seq.) and applicable regulations, 28 CFR part 43. In such cases, the laws and regulations that are specifically applicable to claims collection activities of VA generally take precedence over 31 CFR parts 900 through 904.
(a) The definitions and construction found in the Federal Claims Collection Standards in 31 CFR 900.2(a) through (d), and the definitions in the provisions on administrative wage garnishment in 31 CFR 285.11(c) shall apply to §§ 1.900 through 1.953, except as otherwise stated.
(b) As used in §§ 1.900 through 1.953, referral for litigation means referral to the Department of Justice for appropriate legal actions, except in those specified instances where a case is referred to a VA Regional Counsel for legal action.
(c) As used in §§ 1.900 through 1.953, VA benefit program means medical care, home loan, and benefits payment programs administered by VA under Title 38 of the United States Code, except as otherwise stated.
(d) As used in §§ 1.900 through 1.953, Treasury means the United States Department of the Treasury.
(c) In accordance with 31 U.S.C. 3716(c)(6) and the procedures set forth in 31 CFR part 285, VA shall notify Treasury of all past due, legally enforceable non-tax debt that is over 180 days delinquent for purposes of Start Printed Page 62193administrative offset, including tax refund offset and federal salary offset. (Procedures for referral to Treasury for tax refund offset are found at 31 CFR 285.2 and procedures for referral to Treasury for federal salary offset are found at 38 CFR 1.995 and 31 CFR 285.7.)
A. Revising paragraphs (a), (b), (c)(3), (d)(4), (d)(5), (f)(1), and (f)(5), and the authority citation at the end of the section (f)(5).
(4) That collection may be made by offset from current or future VA benefit payments (see § 1.912a). In addition, the debtor shall be advised of any policies with respect to the use of credit bureaus, debt collection centers, and collection agencies; any other remedies to enforce payment of the debt, including administrative wage garnishment, Federal salary offset, tax refund offset, and litigation; and the requirement that any debt delinquent for more than 180 days be transferred to Treasury for administrative offset or collection.
(a) This section is written in accordance with 31 CFR 901.2 and applies to the demand for payment of all debts, except those debts arising out of participation in a VA benefit or home loan program. Procedures for the demand for payment of VA benefit or home loan program debts are set forth in § 1.911.
(b) Written demand as described in paragraph (c) of this section shall be made promptly upon a debtor of VA in terms that inform the debtor of the consequences of failing to cooperate with VA to resolve the debt. Generally, one demand letter is sufficient, but subsequent letters may be issued. In determining the timing of the demand letter, VA should give due regard to the need to refer debts promptly to the Department of Justice for litigation, in accordance with §§ 1.950 through 1.953. When necessary to protect VA's interest (for example, to prevent the running of a statute of limitations), written demand may be preceded by other appropriate actions under 38 CFR 1.900 through 1.953, including immediate referral for litigation.
(3) Offset is prohibited in most cases by the automatic stay. However, VA should seek legal advice from VA's General Counsel or Regional Counsel to determine whether payments to the debtor and payments of other agencies available for offset may be frozen by VA until relief from the automatic stay can Start Printed Page 62194be obtained from the bankruptcy court. VA also should seek legal advice from VA's General Counsel or Regional Counsel to determine whether recoupment is available.
(a) Authority and scope. In accordance with the procedures set forth in 31 CFR 901.3, as well as 31 CFR part 285, VA shall collect debts by administrative offset from payments made by VA to a debtor indebted to VA. Also in accordance with 31 CFR 901.3(b), as well as 31 CFR part 285, VA shall refer past due, legally enforceable non-tax debts which are over 180 days delinquent to Treasury for collection by centralized administrative offset (further procedures are set forth in paragraph (g) of this section). This section does not pertain to offset from either VA benefit payments made under the authority of 38 U.S.C. 5314 or from current salary, but does apply to offset from all other VA payments, including an employee's final salary check and lump-sum leave payment. Procedures for offset from benefit payments are found in § 1.912a. Procedures for offset from current Federal salary are found in §§ 1.980 through 1.995. NOTE: VA cannot offset, or refer for the purpose of offset, either under the authority of this section or under any other authority found in §§ 1.900 through 1.953 and §§ 1.980 through 1.995, any VA home loan program debt described in 38 U.S.C. 3726 unless the requirements set forth in that section have been met.
16. Section 1.912a is amended by:
A. In paragraph (b), removing “§ 1.911a(c) and (d)” and adding, in its place, “§ 1.911(c) and (d)”.
B. In paragraph (c)(1), removing “§ 1.911a(c)(1)” and adding, in its place, “§ 1.911(c)(1)”.
C. In paragraph (d), removing “§ 1.911a(d)” and adding, in its place, “§ 1.911(d)”.
(4) VA will pursue collection action once an adverse initial decision is reached on the debtor's request for waiver and/or the debtor's informal dispute (as described in § 1.911(c)(1)) concerning the existence or amount of the debt, even if the debtor subsequently Start Printed Page 62195pursues appellate relief in accordance with parts 19 and 20 of this title.
§§ 1.913, 1.914, and 1.915
18. Section 1.916 is redesignated as new § 1.913 and is revised to read as follows:
19. Section 1.917 is redesignated as new § 1.914 and is revised to read as follows:
21. Section 1.919 is redesignated as new § 1.915 and is amended by:
A. Revising paragraphs (a) and (c).
24. Section 1.922 is redesignated as new § 1.916 and is amended by:
25. Section 1.923 is redesignated as new § 1.917 and is amended by:
(b) In accordance with 31 U.S.C. 3718(d), or as otherwise permitted by Start Printed Page 62196law, collection service contracts may be funded in the following manner:
26. Section 1.924 is redesignated as § 1.918 and is amended by revising paragraphs (a) and (b) and the authority citation at the end of the section to read as follows:
27. Section 1.925 is redesignated as § 1.919 and is amended by revising paragraphs (a) and (b)(3) and the authority citation at the end of the section to read as follows:
(a) Unless otherwise prohibited by law or regulation, and in accordance with 31 CFR 901.3(d), VA may request that money which is due and payable to a debtor from either the Civil Service Retirement and Disability Fund or FERS be administratively offset in reasonable amounts in order to collect, in one full payment or a minimal number of payments, debts that are owed to VA by the debtor. Such requests shall be made to the appropriate officials at the Office of Personnel Management (OPM) in accordance with such regulations prescribed by the Director of OPM. (See 5 CFR 831.1801 through 831.1808). In addition, VA may also offset against a Federal employee's final salary check and lump sum leave payment. See § 1.912 for procedures for offset against a final salary check and lump sum leave payment.
(3) VA has complied with §§ 1.911, 1.911a, 1.912, 1.912a, and 31 CFR 901.3, to the extent applicable, including any required hearing or review.
28. Section 1.926 is redesignated as § 1.920 and amended by revising paragraphs (a), (c)(6), and (e), and the authority citation at the end of the section, to read as follows:
29. Section 1.927 is redesignated as new § 1.921 and is revised to read as follows:
30. Section 1.928 is redesignated as new § 1.922 and is revised to read as follows:
31. New § 1.923 is added to read as follows:
(a) In accordance with the procedures set forth in 31 U.S.C. 3720D and 31 CFR 285.11, VA or Treasury may request that a non-Federal employer garnish the disposable pay of an individual to collect delinquent non-tax debt owed to VA. VA may pursue wage garnishment independently in accordance with this section or VA or Treasury may pursue garnishment after VA refers a debt to Treasury in accordance with § 1.910 of this part and 31 CFR 285.12. For the purposes of this section, any reference to Treasury also includes any private collection agency under contract to Treasury.
(b) At least 30 days prior to the initiation of garnishment proceedings, Start Printed Page 62197VA or Treasury shall send a written notice, as described in 31 CFR 285.11(e), by first class mail to the debtor's last known address. This notice shall inform the debtor of:
(6) If the debtor has previously contested the existence and/or amount of the debt in accordance with § 1.911(c)(1) or § 1.911a(c)(1) and VA subsequently rendered a decision upholding the existence or amount of the debt, then such decision shall be incorporated by reference and become the basis of the hearing official's decision on such matters.
32. New § 1.924 is added to read as follows:
(a) In accordance with 31 U.S.C. 3720B and the procedures set forth in 31 CFR 285.13 and § 901.6, a person owing an outstanding non-tax debt that is in delinquent status shall not be eligible for Federal financial assistance unless Start Printed Page 62198exempted under paragraph (d) of this section or waived under paragraph (e) of this section.
(a) The standards set forth in §§ 1.930 through 1.936 of this part apply to the compromise of debts pursuant to 31 U.S.C. 3711. VA may exercise such compromise authority when the amount of the debt due, exclusive of interest, penalties, and administrative costs, does not exceed $100,000 or any higher amount authorized by the Attorney General.
(b) Unless otherwise provided by law, when the principal balance of a debt, exclusive of interest, penalties, and administrative costs, exceeds $100,000 or any higher amount authorized by the Attorney General, the authority to accept the compromise rests with the Department of Justice (DOJ). If VA receives an offer to compromise any debt in excess of $100,000, VA should evaluate the compromise offer using the same factors as set forth in § 1.931 of this part. If VA believes the offer has merit, it shall refer the debt to the Civil Division or other appropriate division in DOJ using a Claims Collection Litigation Report (CCLR). The referral shall include appropriate financial information and a recommendation for the acceptance of the compromise offer. DOJ approval is not required if VA decides to reject a compromise offer.
(d) If there is significant doubt concerning VA'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 Start Printed Page 62199should fairly reflect the probabilities of successful prosecution to judgment, with due regard given to the availability of witnesses and other evidentiary support for VA's claim. In determining the risks involved in litigation, VA 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.
§§ 1.937 and 1.938
(a) The standards set forth in §§ 1.940 through 1.944 apply to the suspension or termination of collection activity pursuant to 31 U.S.C. 3711 on debts that do not exceed $100,000, or such other amount as the Attorney General may direct, exclusive of interest, penalties, and administrative costs, after deducting the amount of partial payments or collections, if any. Prior to referring a debt to the Department of Justice (DOJ) for litigation, VA may suspend or terminate collection under this part with respect to the debt.
(1) The applicable statute of limitations has not expired; or Start Printed Page 62200
(a) Before discharging a delinquent debt (also referred to as a close out of the debt), VA shall take all appropriate steps to collect the debt in accordance with 31 U.S.C. 3711(g), including, as applicable, administrative offset, tax refund offset, Federal salary offset, referral to Treasury or Treasury-designated debt collection centers or private collection contractors, credit bureau reporting, wage garnishment, litigation, and foreclosure. Discharge of indebtedness is distinct from termination or suspension of collection activity under §§ 1.940 through 1.943 and is governed by the Internal Revenue Code (see 26 U.S.C. 6050P). 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 §§ 1.900 through 1.953. When VA discharges a debt in full or in part, further collection action is prohibited. Therefore, VA should make the determination that collection action is no longer warranted before discharging a debt. Before discharging a debt, VA must terminate debt collection action.
(d) 31 U.S.C. 3711(i)(2) requires agencies to sell a delinquent nontax debt upon termination of collection action if the Secretary of the 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), VA may not discharge a debt until the requirements of § 3711(i)(2) have been met.
Authority citation preceding [Removed]
(a) VA shall promptly refer debts to Department of Justice (DOJ) for litigation where aggressive collection activity has been taken in accordance with §§ 1.900 through 1.953, and such debts cannot be compromised, or on which collection activity cannot be suspended or terminated, in accordance with §§ 1.930 through 1.936 and §§ 1.940 through 1.944. Debts for which the principal amount is over $1,000,000, or such other amount as the Attorney General may direct, exclusive of interest and other late payment charges, shall be referred to the Civil Division or other division responsible for litigating such debts at DOJ. Debts for which the principal amount is $1,000,000, or less, or such other amount as the Attorney General may direct, exclusive of interest or penalties, shall be referred to DOJ's Nationwide Central Intake Facility as required by the Claims Collection Litigation Report (CCLR) instructions. Debts should be referred as early as possible, consistent with aggressive agency collection activity and the observance of the standards contained in §§ 1.900 through 1.953, and, in any event, well within the period for initiating timely lawsuits against the debtors. VA shall make every effort to refer delinquent debts to DOJ for litigation within 1 year of the date such debts last became delinquent. In the case of guaranteed or insured loans, VA should make every effort to refer these delinquent debts to DOJ for litigation within 1 year from the date the loan was Start Printed Page 62201presented to VA for payment or reinsurance.
42. Section 1.955 is amended by revising paragraphs (b) through (d) to read as follows:
(i) Debts resulting from services furnished in error (§ 17.101(a) of this chapter).
(iv) Fiscal officers at VA medical facilities are authorized to waive veterans' debts arising from medical care copayments (§ 17.105(c) of this chapter).
A decision by the regional office Committee, operating within the scope of its authority, denying waiver of all or part of a debt arising out of participation Start Printed Page 62202in a VA benefit or home loan program, is subject to appeal in accordance with 38 CFR parts 19 and 20. A denial of waiver of an erroneous payment of pay and allowances is subject to appeal in accordance with § 1.963a(a). There is no right of appeal from a decision rejecting a compromise offer.
(a) The provisions applicable to VA (including refunds) concerning waiver actions relating to erroneous payments to VA employees of pay and allowances, and travel, transportation, and relocation expenses and allowances, are set forth in 5 U.S.C. 5584. The members of Committees on Waivers and Compromises assigned to waiver actions under § 1.955 of this part are delegated all authority granted the Secretary under 5 U.S.C. 5584 to deny waiver or to grant waiver in whole or in part of any debt regardless of the amount of the indebtedness. Committee members also have exclusive authority to consider and render a decision on the appeal of a waiver denial or the granting of a partial waiver. However, the Chairperson of the Committee must assign the appeal to a different Committee member or members than the member or members who made the original decision that is now the subject of the appeal. The following are the only provisions of §§ 1.955 through 1.970 of this part applicable to waiver actions concerning erroneous payments of pay and allowances, and travel, transportation, and relocation expenses and allowances, under 5 U.S.C. 5584: §§ 1.955(a) through (e)(2), 1.956(a)(introductory text) and (a)(3), 1.959, 1.960, 1.963a, and 1.967(c).
48. Section 1.966 is amended by adding an authority citation at the end of the section to read as follows:
§ 1.966
49. Section 1.970 is amended by removing “§§ 1.900 through 1.937” and adding, in its place, “§§ 1.930 through 1.936” and by revising the authority citation at the end of the section to read as follows:
50. Section 1.980 is amended by:
51. Section 1.982 is amended by revising paragraphs (a), (b), and (c)(3) to read as follows:
(b) If the employee has not previously appealed the amount or existence of the debt under 38 CFR parts 19 and 20 and the time for pursuing such an appeal has not expired (§ 20.302), the Secretary or appropriate designee will provide the employee with written notice of the debt. The written notice will state that the employee may appeal the amount and existence of the debt in accordance with the procedures set forth in 38 CFR parts 19 and 20 and will contain the determination and information required by § 1.983(b)(1) through (5), (7), (9), (10), and (12) though (14). The notice will also state that the employee may request a hearing on the offset schedule under the procedures set forth in § 1.984 and such a request will stay the commencement of salary offset.
52. Section 1.983 is amended by revising paragraphs (b)(8) and (b)(13) to read as follows:
(8) The VA employee's right to request an oral or paper hearing on the Start Printed Page 62203Secretary or appropriate designee's determination of the existence or amount of the debt, or the percentage of disposable pay to be deducted each pay period, so long as a request is filed by the employee as prescribed by the Secretary. A VA Board of Contract Appeals Administrative Judge or Hearing Examiner shall conduct such a hearing for any VA employee. A VA Board of Contract Appeals Administrative Judge or Hearing Examiner, or any other VA hearing official, may also conduct an oral or paper hearing at the request of a non-VA employee on the determination by an appropriately designated official of the employing agency of the existence or amount of the debt, or the percentage of disposable pay to be deducted each pay period, so long as a hearing request is filed by the non-VA employee as prescribed by the employing agency.
53. Section 1.984 is amended by:
54. In § 1.989, paragraph (a) is amended by removing “20 calendar days” and adding, in its place, “30 calendar days”.
55. In § 1.990, paragraph (a) is amended by removing “20 calendar days” and adding, in its place, “30 calendar days”.
56. Section 1.991 is amended by:
A. In paragraph (a), removing “§§ 1.982, 19.1 through 19.200 or § 1.988” and adding, in its place “§ 1.982 or § 1.988, or parts 19 and 20”.
57. Section 1.992 is amended by revising paragraph (c) and the authority citation following paragraph (c) to read as follows:
58. Section 1.995 is added to read as follows:
(d) Assistant Secretary for Management (Chief Financial Officer); administration heads and staff office directors. The Assistant Secretary for Management (Chief Financial Officer) is delegated authority to take appropriate action (other than provided for in paragraphs (e)(3) and (e)(4) of this section) in connection with the collection of civil claims by VA for money or property, as authorized in § 1.900, et seq. The Assistant Secretary for Management (Chief Financial Officer) may redelegate such authority as he/she deems appropriate to administration heads and staff office directors.