[Federal Register: December 10, 2003 (Volume 68, Number 237)]
[Rules and Regulations]
[Page 68740-68750]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr10de03-7]
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GENERAL SERVICES ADMINISTRATION
41 CFR Part 105-55
[GSPMR Amendment 2003-01; GSPMR Case 2003-105-1]
RIN 3090-AH84
General Services Administration Property Management Regulations;
Collection of Claims Owed the United States
AGENCY: Office of Finance, General Services Administration (GSA).
ACTION: Final rule.
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SUMMARY: The General Services Administration (GSA) is amending and
reissuing its regulations concerning the procedures used to collect
debts owed to GSA by incorporating applicable provisions as required by
the Debt Collection Improvement Act of 1996 (DCIA) and the Federal
Claims Collection Standards.
DATES: Effective date: December 10, 2003.
FOR FURTHER INFORMATION CONTACT: The Regulatory Secretariat, Room 4035,
GS Building, Washington, DC, 20405, at (202) 501-4755 for information
pertaining to status or publication schedules. For clarification of
content, contact Mr. Michael J. Kosar, Office of the Chief Financial
Officer Room 3121, 1800 F Street, NW., telephone (202) 501-2029; electronic mail mike.kosar@gsa.gov. Please cite GSPMR Amendment 2003-
01, GSPMR case 2003-105-1.
SUPPLEMENTARY INFORMATION:
A. Background
GSA is amending and reissuing its debt collection procedures to
incorporate changes presented in the amended Federal Claims Collection
Standards (FCCS) issued jointly on November 22, 2000, by the Department
of the Treasury (Treasury) and the Department of Justice (DOJ), under
the Debt Collection Improvement Act of 1996 (DCIA). GSA currently has
rules for collecting unpaid debts through three offset methods:
administrative, salary, and tax refund. These rules were adopted with
then existing provisions of the Debt Collection Act of 1982, the FCCS
of 1966, and other authorities governing the collection of Federal
debts.
Discussion of Comments. GSA received no comments in response to its
proposed rule concerning Collection of Claims Owed the United States
published in the Federal Register at 68 FR 41274, July 11, 2003.
B. Executive Order 12866
GSA has determined this regulation is not a significant regulatory
action as defined in Executive Order 12866 and, accordingly, this
regulation has not been reviewed by the Office of Management and
Budget.
C. Regulatory Flexibility Act
It is hereby certified that this regulation will not have a
significant economic impact on a substantial number of small entities
because the regulation either (1) results in greater flexibility for
GSA to streamline debt collection regulations, or (2) reflects the
statutory language contained in the DCIA. Accordingly, a Regulatory
Flexibility Analysis is not required.
D. Executive Order 13132
This regulation will not have a substantial direct effect on the
states, on the relationship between the national government and the
states, or on distribution of power and responsibilities among the
various levels of government. Therefore, in accordance with Executive
Order 13132, it is determined that this regulation does not have
sufficient federalism implications to warrant the preparation of a
Federalism Assessment.
E. Unfunded Mandates Reform Act of 1995
This regulation will not result in the expenditure by state, local
and tribal governments, in the aggregate, or by the private sector, of
$100 million or more in any one (1) year, and it will not significantly
or uniquely affect small governments. Therefore, no actions were deemed
necessary under the provisions of the Unfunded Mandates Reform Act of
1995.
F. Small Business Regulatory Enforcement Fairness Act of 1996
This rule is not a major rule as defined by section 251 of the
Small Business Regulatory Enforcement Act, 5 U.S.C. 804. This rule will
not result in an annual effect on the economy of $100 million or more;
a major increase in costs or prices; or significant adverse effects on
competition, employment, investment, productivity, innovation, or on
the ability of United States-based companies to compete with foreign-
based companies in domestic or export markets.
G. Paperwork Reduction Act
This rule does not contain information collection requirements that
require approval by the Office of Management and Budget under the
[[Page 68741]]
Paperwork Reduction Act, 44 U.S.C. 3507 et seq.
List of Subjects in 41 CFR Part 105-55
Claims owed the United States, Antitrust, Fraud, Taxes, Interagency
claims, Offset, Payments, Administrative practice and procedure, Credit
bureaus, Compromise, Suspension, Termination and discharge of debts,
Hearing and appeals procedures, Debts.
Dated: December 2, 2003.
Stephen A. Perry,
Administrator of General Services.
0
For the reasons set forth in the preamble, GSA amends 41 CFR chapter
105 as follows:
CHAPTER 105--[AMENDED]
0
1. Revise part 105-55 to read as follows:
PART 105-55--COLLECTION OF CLAIMS OWED THE UNITED STATES
Sec.
105-55.001 Prescription of standards.
105-55.002 Definitions.
105-55.003 Antitrust, fraud, tax, interagency claims, and claims
over $100,000 excluded.
105-55.004 Compromise, waiver, or disposition under other statutes
not precluded.
105-55.005 Form of payment.
105-55.006 Subdivision of claims not authorized.
105-55.007 Required administrative proceedings.
105-55.008 No private rights created.
105-55.009 Aggressive agency collection activity.
105-55.010 Demand for payment.
105-55.011 Collection by administrative offset.
105-55.012 Contracting with private collection contractors and with
entities that locate and recover unclaimed assets.
105-55.013 Suspension or revocation of eligibility for loans and
loan guaranties, licenses, permits, or privileges.
105-55.014 Liquidation of collateral.
105-55.015 Collection in installments.
105-55.016 Interest, penalties, and administrative costs.
105-55.017 Use and disclosure of mailing addresses.
105-55.018 Exemptions.
105-55.019 Compromise of claims.
105-55.020 Bases for compromise.
105-55.021 Enforcement policy.
105-55.022 Joint and several liability.
105-55.023 Further review of compromise offers.
105-55.024 Consideration of tax consequences to the Government.
105-55.025 Mutual releases of the debtor and the Government.
105-55.026 Suspending or terminating collection activity.
105-55.027 Suspension of collection activity.
105-55.028 Termination of collection activity.
105-55.029 Exception to termination.
105-55.030 Discharge of indebtedness; reporting requirements.
105-55.031 Prompt referral to the Department of Justice.
105-55.032 Claims Collection Litigation Report.
105-55.033 Preservation of evidence.
105-55.034 Minimum amount of referrals to the Department of Justice.
Authority: 5 U.S.C. 552-553; 31 U.S.C. 321, 3701, 3711, 3716,
3717, 3718, 3719, 3720B, 3720D; 31 CFR parts 900-904.
Sec. 105-55.001 Prescription of standards.
(a) The Secretary of the Treasury and the Attorney General of the
United States issued regulations for collecting debts owed the United
States under the authority contained in 31 U.S.C. 3711(d)(2). The
regulations in this part prescribe standards for the General Services
Administration (GSA) use in the administrative collection, offset,
compromise, and the suspension or termination of collection activity
for civil claims for money, funds, or property, as defined by 31 U.S.C.
3701(b), unless specific GSA statutes or regulations apply to such
activities or, as provided for by Title 11 of the United States Code,
when the claims involve bankruptcy. The regulations in this part also
prescribe standards for referring debts to the Department of Justice
for litigation. Additional guidance is contained in the Office of
Management and Budget's Circular A-129 (Revised), ``Policies for
Federal Credit Programs and Non-Tax Receivables,'' the Department of
the Treasury's ``Managing Federal Receivables,'' and other publications
concerning debt collection and debt management.
(b) GSA is not limited to the remedies contained in this part and
will use all authorized remedies, including alternative dispute
resolution and arbitration, to collect civil claims, to the extent such
remedies are not inconsistent with the Federal Claims Collection Act,
as amended, Chapter 37 of Title 31, United States Code; the Debt
Collection Act of 1982, 5 U.S.C. 5514; the Debt Collection Improvement
Act of 1996, 31 U.S.C. 3701 et seq., or other relevant statutes. The
regulations in this part are not intended to impair GSA's common law
rights to collect debts.
(c) Standards and policies regarding the classification of debt for
accounting purposes (for example, write off of uncollectible debt) are
contained in the Office of Management and Budget's Circular A-129
(Revised), ``Policies for Federal Credit Programs and Non-Tax
Receivables.''
Sec. 105-55.002 Definitions.
(a) Administrative offset, as defined in 31 U.S.C. 3701(a)(1),
means withholding funds payable by the United States (including funds
payable by the United States on behalf of a State government) to, or
held by the United States for, a person to satisfy a claim.
(b) Compromise means the reduction of a debt as provided in
Sec. Sec. 105-55.019 and 105-55.020.
(c) Debt collection center means the Department of the Treasury or
other Government agency or division designated by the Secretary of the
Treasury with authority to collect debts on behalf of creditor agencies
in accordance with 31 U.S.C. 3711(g).
(d) Debtor means an individual, organization, association,
corporation, partnership, or a State or local government indebted to
the United States or a person or entity with legal responsibility for
assuming the debtor's obligation.
(e) Delinquent or past-due non-tax debt means any non-tax debt that
has not been paid by the date specified in GSA's initial written demand
for payment or applicable agreement or instrument (including a post-
delinquency payment agreement), unless other satisfactory payment
arrangements have been made.
(f) For the purposes of the standards in this part, unless
otherwise stated, the term Administrator refers to the Administrator of
General Services or the Administrator's delegate.
(g) For the purposes of the standards in this part, the terms claim
and debt are synonymous and interchangeable. They refer to an amount of
money, funds, or property that has been determined by GSA to be due the
United States from any person, organization, or entity, except another
Federal agency, from sources which include loans insured or guaranteed
by the United States and all other amounts due the United States from
fees, leases, rents, royalties, services, sales of real or personal
property, overpayments, penalties, damages, interest, fines and
forfeitures and all other similar sources, including debt administered
by a third party as an agent for the Federal Government. For the
purposes of administrative offset under 31 U.S.C. 3716, the terms claim
and debt include an amount of money, funds, or property owed by a
person to a State (including past-due support being enforced by a
State), the District of Columbia, American Samoa, Guam, the United
States Virgin Islands, the Commonwealth of the Northern Mariana
Islands, or the Commonwealth of Puerto Rico.
[[Page 68742]]
(h) For the purposes of the standards in this part, unless
otherwise stated, the terms GSA and Agency are synonymous and
interchangeable.
(i) For the purposes of the standards in this part, unless
otherwise stated, Secretary means the Secretary of the Treasury or the
Secretary's delegate.
(j) For the standards in this part, Federal agencies include
agencies of the executive, legislative, and judicial branches of the
Government, including Government corporations.
(k) Hearing means a review of the documentary evidence concerning
the existence and/or amount of a debt, and/or the terms of a repayment
schedule, provided such repayment schedule is established other than by
a written agreement entered into pursuant to this part. If the hearing
official determines the issues in dispute cannot be resolved solely by
review of the written record, such as when the validity of the debt
turns on the issue of credibility or veracity, an oral hearing may be
provided.
(l) Hearing official means a Board Judge of the GSA Board of
Contract Appeals.
(m) In this part, words in the plural form shall include the
singular and vice versa, and words signifying the masculine gender
shall include the feminine and vice versa. The terms includes and
including do not exclude matters not listed but do include matters that
are in the same general class.
(n) Reconsideration means a request by the employee to have a
secondary review by GSA of the existence and/or amount of the debt,
and/or the proposed offset schedule.
(o) Recoupment is a special method for adjusting debts arising
under the same transaction or occurrence. For example, obligations
arising under the same contract generally are subject to recoupment.
(p) Taxpayer identifying number means the identifying number
described under section 6109 of the Internal Revenue Code of 1986 (26
U.S.C. 6109). For an individual, the taxpayer identifying number is the
individual's social security number.
(q) Waiver means the cancellation, remission, forgiveness, or non-
recovery of a debt or debt-related charge as permitted or required by
law.
Sec. 105-55.003 Antitrust, fraud, tax, interagency claims, and claims
over $100,000 excluded.
(a) The standards in this part relating to compromise, suspension,
and termination of collection activity do not apply to any debt based
in whole or in part on conduct in violation of 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. The standards of this part relating to the
administrative collection of claims do apply, but only to the extent
authorized by the Department of Justice (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, the General
Services Administration (GSA) will promptly refer the case to the GSA
Office of Inspector General (OIG). The OIG has the responsibility for
investigating or referring the matter, where appropriate, to DOJ for
action. At its discretion, DOJ may return the claim to GSA for further
handling in accordance with the standards of this part.
(b) This part does not apply to tax debts.
(c) This part does not apply to claims between GSA and other
Federal agencies.
(d) This part does not apply to claims over $100,000.
Sec. 105-55.004 Compromise, waiver, or disposition under other
statutes not precluded.
Nothing in this part precludes the General Services Administration
(GSA) disposition of any claim under statutes and implementing
regulations other than subchapter II of chapter 37 of Title 31 of the
United States Code (Claims of the United States Government) and the
standards in this part. See, e.g., the Federal Medical Care Recovery
Act, 42 U.S.C. 2651-2653, and applicable regulations, 28 CFR part 43.
In such cases, the laws and regulations specifically applicable to
claims collection activities of GSA generally take precedence.
Sec. 105-55.005 Form of payment.
Claims may be paid in the form of money or, when a contractual
basis exists, the General Services Administration may demand the return
of specific property or the performance of specific services.
Sec. 105-55.006 Subdivision of claims not authorized.
Debts will not be subdivided to avoid the monetary ceiling
established by 31 U.S.C. 3711(a)(2). A debtor's liability arising from
a particular transaction or contract shall be considered a single debt
in determining whether the debt is one of less than $100,000 (excluding
interest, penalties, and administrative costs) or such higher amount as
the Attorney General shall from time to time prescribe for purposes of
compromise, suspension or termination of collection activity.
Sec. 105-55.007 Required administrative proceedings.
The General Services Administration is not required to omit,
foreclose, or duplicate administrative proceedings required by contract
or other laws or regulations.
Sec. 105-55.008 No private rights created.
The standards in this part do not create any right or benefit,
substantive or procedural, enforceable at law or in equity by a party
against the United States, its agencies, its officers, or any other
person, nor shall the failure of the General Services Administration to
comply with any of the provisions of this part be available to any
debtor as a defense.
Sec. 105-55.009 Aggressive agency collection activity.
(a) The General Services Administration (GSA) will aggressively
collect all debts arising out of activities of, or referred or
transferred for collection services to, GSA. Collection activities will
be undertaken promptly, including letters, telephone calls, electronic
mail (e-mail), and Internet inquiries, with follow-up action taken as
necessary.
(b) Debts referred or transferred to Treasury, or Treasury-
designated debt collection centers under the authority of 31 U.S.C.
3711(g), will be serviced, collected, or compromised, or the collection
action will be suspended or terminated, in accordance with the
statutory requirements and authorities applicable to the collection of
such debts.
(c) GSA will cooperate with other agencies in their debt collection
activities.
(d) GSA will consider referring debts that are less than 180 days
delinquent to Treasury or to Treasury-designated ``debt collection
centers'' to accomplish efficient, cost effective debt collection.
Treasury is a debt collection center, is authorized to designate other
Federal agencies as debt collection centers based on their performance
in collecting delinquent debts, and may withdraw such designations.
Referrals to debt collection centers shall be at the discretion of, and
for a time period acceptable to, the Secretary. Referrals may be for
servicing, collection, compromise, suspension, or termination of
collection action.
(e) GSA will transfer to the Secretary any debt that has been
delinquent for a
[[Page 68743]]
period of 180 days or more so the Secretary may take appropriate action
to collect the debt or terminate collection action. See 31 CFR 285.12
(Transfer of Debts to Treasury for Collection). This requirement does
not apply to any debt that--
(1) Is in litigation or foreclosure;
(2) Will be disposed of under an approved asset sale program;
(3) Has been referred to a private collection contractor for a
period of time acceptable to the Secretary;
(4) Is at a debt collection center for a period of time acceptable
to the Secretary (see paragraph (d) of this section);
(5) Will be collected under internal offset procedures within three
years after the debt first became delinquent;
(6) Is exempt from this requirement based on a determination by the
Secretary that exemption for a certain class of debt is in the best
interest of the United States. GSA may request the Secretary to exempt
specific classes of debts;
(7) Is in bankruptcy (see Sec. 105-55.010(h));
(8) Involves a deceased debtor;
(9) Is owed to GSA by a foreign government; or
(10) Is in an administrative appeals process, until the process is
complete and the amount due is set.
(f) Agencies operating Treasury-designated debt collection centers
are authorized to charge a fee for services rendered regarding referred
or transferred debts. The fee may be paid out of amounts collected and
will be added to the debt as an administrative cost (see Sec. 105-
55.016).
Sec. 105-55.010 Demand for payment.
(a) Written demand, as described in paragraph (b) of this section,
will be made promptly upon a debtor of the United States in terms
informing the debtor of the consequences of failing to cooperate with
the General Services Administration (GSA) to resolve the debt. The
specific content, timing, and number of demand letters (usually no more
than three, thirty days apart) will depend upon the type and amount of
the debt and the debtor's response, if any, to GSA's letters, telephone
calls, electronic mail (e-mail) or Internet inquiries. In determining
the timing of the demand letter(s), GSA will give due regard to the
need to refer debts promptly to the Department of Justice for
litigation, in accordance with Sec. 105-55.031. When necessary to
protect the Government's interest (for example, to prevent the running
of a statute of limitations), written demand may be preceded by other
appropriate actions under this part, including immediate referral for
litigation.
(b) Demand letters will inform the debtor--
(1) The basis and the amount of the indebtedness and the rights, if
any, the debtor may have to seek review within GSA (see Sec. 105-
55.011(e));
(2) The applicable standards for imposing any interest, penalties,
or administrative costs (see Sec. 105-55.016);
(3) The date by which payment should be made to avoid late charges
(i.e., interest, penalties, and administrative costs) and enforced
collection, which generally will not be more than 30 days from the date
the demand letter is mailed or hand-delivered; and
(4) The name, address, and phone number of a contact person or
office within GSA.
(c) GSA will exercise care to ensure that demand letters are mailed
or hand-delivered on the same day they are dated. For the purposes of
written demand, notification by electronic mail (e-mail) and/or
Internet delivery is considered a form of written demand notice. There
is no prescribed format for demand letters. GSA will utilize demand
letters and procedures that will lead to the earliest practicable
determination of whether the debt can be resolved administratively or
must be referred for litigation.
(d) GSA may include in demand letters such items as the willingness
to discuss alternative methods of payment; Agency policies with respect
to the use of credit bureaus, debt collection centers, and collection
agencies; Agency remedies to enforce payment of the debt (including
assessment of interest, administrative costs and penalties,
administrative garnishment, the use of collection agencies, Federal
salary offset, tax refund offset, administrative offset, and
litigation); the requirement that any debt delinquent for more than 180
days will be transferred to the Department of the Treasury for
collection; and, depending on applicable statutory authority, the
debtor's entitlement to consideration of a waiver.
(e) GSA will respond promptly to communications from debtors,
within 30 days whenever feasible, and will advise debtors who dispute
debts to furnish available evidence to support their contentions.
(f) Prior to the initiation of the demand process or at any time
during or after completion of the demand process, if GSA determines to
pursue, or is required to pursue, offset, the procedures applicable to
offset will be followed (see Sec. 105-55.011). The availability of
funds or money for debt satisfaction by offset and GSA's determination
to pursue collection by offset will release the Agency from the
necessity of further compliance with paragraphs (a), (b), (c), and (d)
of this section.
(g) Prior to referring a debt for litigation, GSA will advise each
person determined to be liable for the debt that, unless the debt can
be collected administratively, litigation may be initiated. This
notification will comply with Executive Order 12988 (3 CFR, 1996 Comp.
pp. 157-163) and may be given as part of a demand letter under
paragraph (b) of this section or in a separate document.
(h) When GSA learns a bankruptcy petition has been filed with
respect to a debtor, before proceeding with further collection action,
the Agency will ascertain the impact of the Bankruptcy Code on any
pending or contemplated collection activities. Unless the Agency
determines the automatic stay imposed at the time of filing pursuant to
11 U.S.C. 362 has been lifted or is no longer in effect, in most cases
collection activity against the debtor will stop immediately.
(1) A proof of claim will be filed in most cases with the
bankruptcy court or the Trustee. GSA will refer to the provisions of 11
U.S.C. 106 relating to the consequences on sovereign immunity of filing
a proof of claim.
(2) If GSA is a secured creditor, it may seek relief from the
automatic stay regarding its security, subject to the provisions and
requirements of 11 U.S.C. 362.
(3) Offset is stayed in most cases by the automatic stay. However,
GSA will determine whether its payments to the debtor and payments of
other agencies available for offset may be frozen by the Agency until
relief from the automatic stay can be obtained from the bankruptcy
court. GSA also will determine whether recoupment is available.
Sec. 105-55.011 Collection by administrative offset.
(a) Scope. (1) The term ``administrative offset'' has the meaning
provided in 31 U.S.C. 3701(a)(1).
(2) This section does not apply to--
(i) Debts arising under the Social Security Act, except as provided
in 42 U.S.C. 404;
(ii) Payments made under the Social Security Act, except as
provided for in 31 U.S.C. 3716(c) (see 31 CFR 285.4, Federal Benefit
Offset);
(iii) Debts arising under, or payments made under, the Internal
Revenue Code
[[Page 68744]]
(see 31 CFR 285.2, Tax Refund Offset) or the tariff laws of the United
States;
(iv) Offsets against Federal salaries to the extent these standards
are inconsistent with regulations published to implement such offsets
under 5 U.S.C. 5514 and 31 U.S.C. 3716 (see 5 CFR part 550, subpart K,
and 31 CFR 285.7, Federal Salary Offset);
(v) Offsets under 31 U.S.C. 3728 against a judgment obtained by a
debtor against the United States;
(vi) Offsets or recoupments under common law, State law, or Federal
statutes specifically prohibiting offsets or recoupments of particular
types of debts; or
(vii) Offsets in the course of judicial proceedings, including
bankruptcy.
(3) Unless otherwise provided for by contract or law, debts or
payments that are not subject to administrative offset under 31 U.S.C.
3716 may be collected by administrative offset under the common law or
other applicable statutory authority.
(4) Unless otherwise provided by law, administrative offset of
payments under the authority of 31 U.S.C. 3716 to collect a debt may
not be conducted more than 10 years after the General Services
Administration's (GSA's) right to collect the debt first accrued,
unless facts material to GSA's right to collect the debt were not known
and could not reasonably have been known by the official or officials
of GSA who were charged with the responsibility to discover and collect
such debts. This limitation does not apply to debts reduced to a
judgment.
(5) In bankruptcy cases, GSA will ascertain the impact of the
Bankruptcy Code, particularly 11 U.S.C. 106, 362, and 553, on pending
or contemplated collections by offset.
(b) Mandatory centralized administrative offset. (1) GSA is
required to refer past due, legally enforceable non-tax debts that are
over 180 days delinquent to the Secretary for collection by centralized
administrative offset. Debts that are less than 180 days delinquent
also may be referred to the Secretary for this purpose. See paragraph
(b)(5) of this section for debt certification requirements.
(2) The names and taxpayer identifying numbers (TINs) of debtors
who owe debts referred to the Secretary as described in paragraph
(b)(1) of this section will be compared to the names and TINs on
payments to be made by Federal disbursing officials. Federal disbursing
officials include disbursing officials of the Department of the
Treasury, the Department of Defense, the United States Postal Service,
other Government corporations, and disbursing officials of the United
States designated by the Secretary. When the name and TIN of a debtor
match the name and TIN of a payee and all other requirements for offset
have been met, the payment will be offset to satisfy the debt.
(3) Federal disbursing officials will notify the debtor/payee in
writing that an offset has occurred to satisfy, in part or in full, a
past due, legally enforceable delinquent debt. The notice will include
a description of the type and amount of the payment from which the
offset was taken, the amount of offset that was taken, the identity of
GSA as the creditor agency requesting the offset, and a contact point
within GSA who will respond to questions regarding the offset.
(4)(i) Offsets may be initiated only after the debtor--
(A) Has been sent written notice of the type and amount of the
debt, the intention of GSA to use administrative offset to collect the
debt, and an explanation of the debtor's rights under 31 U.S.C.
3716(c)(7); and
(B) The debtor has been given--
(1) The opportunity to inspect and copy Agency records related to
the debt;
(2) The opportunity for a review within GSA of the determination of
indebtedness (see paragraph (e) of this section); and
(3) The opportunity to make a written agreement to repay the debt.
(ii) The procedures set forth in paragraph (b)(4)(i) of this
section may be omitted when--
(A) The offset is in the nature of a recoupment;
(B) The debt arises under a contract as set forth in Cecile
Industries, Inc. v. Cheney, 995 F.2d 1052 (Fed. Cir. 1993) (notice and
other procedural protections set forth in 31 U.S.C. 3716(a) do not
supplant or restrict established procedures for contractual offsets
accommodated by the Contracts Disputes Act); or
(C) In the case of non-centralized administrative offsets conducted
under paragraph (c) of this section, GSA first learns of the existence
of the amount owed by the debtor when there is insufficient time before
payment would be made to the debtor/payee to allow for prior notice and
an opportunity for review. When prior notice and an opportunity for
review are omitted, GSA will give the debtor such notice and an
opportunity for review as soon as practicable and will promptly refund
any money ultimately found not to have been owed to the Government.
(iii) When GSA previously has given a debtor any of the required
notice and review opportunities with respect to a particular debt (see,
e.g., Sec. 105-55.010), the Agency need not duplicate such notice and
review opportunities before administrative offset may be initiated.
(5) When referring delinquent debts to the Secretary, GSA will
certify, in a form acceptable to the Secretary, that--
(i) The debt(s) is (are) past due and legally enforceable; and
(ii) GSA has complied with all due process requirements under 31
U.S.C. 3716(a) and Agency regulations.
(6) Payments that are prohibited by law from being offset are
exempt from centralized administrative offset. The Secretary shall
exempt payments under means-tested programs from centralized
administrative offset when requested in writing by the Administrator.
Also, the Secretary may exempt other classes of payments from
centralized offset upon the written request of the Administrator.
(7) Benefit payments made under the Social Security Act (42 U.S.C.
301 et seq.), part B of the Black Lung Benefits Act (30 U.S.C. 921 et
seq.), and any law administered by the Railroad Retirement Board (other
than tier 2 benefits), may be offset only in accordance with Treasury
regulations, issued in consultation with the Social Security
Administration, the Railroad Retirement Board, and the Office of
Management and Budget. See 31 CFR 285.4.
(8) In accordance with 31 U.S.C. 3716(f), the Secretary may waive
the provisions of the Computer Matching and Privacy Protection Act of
1988 concerning matching agreements and post-match notification and
verification (5 U.S.C. 552a(o) and (p)) for centralized administrative
offset upon receipt of a certification from GSA that the due process
requirements enumerated in 31 U.S.C. 3716(a) have been met. The
certification of a debt in accordance with paragraph (b)(5) of this
section will satisfy this requirement. If such a waiver is granted,
only the Data Integrity Board of the Department of the Treasury is
required to oversee any matching activities, in accordance with 31
U.S.C. 3716(g). This waiver authority does not apply to offsets
conducted under paragraphs (c) and (d) of this section.
(c) Non-centralized administrative offset. (1) Generally, non-
centralized administrative offsets are ad hoc case-by-case offsets that
GSA conducts, at the Agency's discretion, internally or in cooperation
with another agency certifying or authorizing payments to the debtor.
Unless otherwise prohibited by law, when centralized administrative
offset is not available or appropriate, past due, legally enforceable
non-tax delinquent debts may be collected through non-centralized
administrative offset. In these cases, GSA may make a
[[Page 68745]]
request directly to a payment authorizing agency to offset a payment
due a debtor to collect a delinquent debt. For example, it may be
appropriate for GSA to request the Office of Personnel Management (OPM)
offset a Federal employee's lump sum payment upon leaving Government
service to satisfy an unpaid advance.
(2) Such offsets will occur only after--
(i) The debtor has been provided due process as set forth in
paragraph (b)(4) of this section; and
(ii) The payment authorizing agency has received written
certification from GSA that the debtor owes the past due, legally
enforceable delinquent debt in the amount stated, and that GSA has
fully complied with its regulations concerning administrative offset.
(3) Payment authorizing agencies will comply with offset requests
by GSA to collect debts owed to the United States, unless the offset
would not be in the best interests of the United States with respect to
the program of the payment authorizing agency, or would otherwise be
contrary to law.
(4) When collecting multiple debts by non-centralized
administrative offset, GSA will apply the recovered amounts to those
debts in accordance with the best interests of the United States, as
determined by the facts and circumstances of the particular case,
particularly the applicable statute of limitations.
(d) Requests to OPM to offset a debtor's anticipated or future
benefit payments under the Civil Service Retirement and Disability
Fund. Upon providing OPM written certification that a debtor has been
afforded the procedures provided in paragraph (b)(4) of this section,
GSA may request OPM to offset a debtor's anticipated or future benefit
payments under the Civil Service Retirement and Disability Fund (Fund)
in accordance with regulations codified at 5 CFR 831.1801 through
831.1808. Upon receipt of such a request, OPM will identify and
``flag'' a debtor's account in anticipation of the time when the debtor
requests, or becomes eligible to receive, payments from the Fund. This
will satisfy any requirement that offset be initiated prior to the
expiration of the time limitations referenced in paragraph (a)(4) of
this section.
(e) Review requirements. (1) A debtor may seek review of a debt by
sending a signed and dated petition for review to the official named in
the demand letter. A copy of the petition must also be sent to the GSA
Board of Contract Appeals (GSBCA) at the address indicated in paragraph
(e)(6) of this section.
(2) For purposes of this section, whenever GSA is required to
afford a debtor a review within the Agency, the hearing official will
provide the debtor with a reasonable opportunity for an oral hearing
when the debtor requests reconsideration of the debt and the hearing
official determines that the question of the indebtedness cannot be
resolved by review of the documentary evidence; for example, when the
validity of the debt turns on an issue of credibility or veracity.
(3) Witnesses will be asked to testify under oath or affirmation,
and a written transcript of the hearing will be kept and made available
to either party in the event of an appeal under the Administrative
Procedure Act, 5 U.S.C. 701-706. Arrangements for the taking of the
transcript will be made by the hearing official, and all charges
associated with the taking of the transcript will be the responsibility
of GSA.
(4) In those cases when an oral hearing is not required by this
section, the hearing official will accord the debtor a ``paper
hearing,'' that is, a determination of the request for reconsideration
based upon a review of the written record.
(5) Hearings will be conducted by a Board Judge of the GSBCA. GSA
must provide proof that a valid non-tax debt exists, and the debtor
must provide evidence that no debt exists or that the amount of the
debt is incorrect.
(6) If an oral hearing is provided, the debtor may choose to have
it conducted in the hearing official's office located at GSA Central
Office, 1800 F St., NW., Washington, DC 20405, at another location
designated by the hearing official, or may choose a hearing by
telephone. All personal and travel expenses incurred by the debtor in
connection with an in-person hearing will be borne by the debtor. All
telephonic charges incurred during a hearing will be the responsibility
of GSA.
(7) If the debtor is an employee of GSA, the employee may represent
himself or herself or may be represented by another person of his or
her choice at the hearing. GSA will not compensate the employee for
representation expenses, including hourly fees for attorneys, travel
expenses, and costs for reproducing documents.
(8) A written decision will be issued by the hearing official no
later than 60 days from the date the petition for review is received by
GSA. The decision will state the--
(i) Facts supporting the nature and origin of the debt;
(ii) Hearing officials analysis, findings, and conclusions as to
the debtor's and/or GSA's grounds;
(iii) Amount and validity of the debt; and
(iv) Repayment schedule, if applicable.
(9) The hearing official's decision will be the final Agency action
for the purposes of judicial review under the Administrative Procedure
Act (5 U.S.C. 701 et seq.).
(f) Waiver requirements. (1) Under certain circumstances, a waiver
of a claim against an employee of GSA arising out of an erroneous
payment of pay, allowances, travel, transportation, or relocation
expenses and allowances may be granted in whole or in part.
(2) GSA procedures for waiving a claim of erroneous payment of pay
and allowances can be found in GSA Order CFO 4200.1, ``Waiver of Claims
for Overpayment of Pay and Allowances''.
(3) GSA will follow the procedures of 5 U.S.C. 5584 when
considering a request for waiver of erroneous payment of travel,
transportation, or relocation expenses and allowances.
Sec. 105-55.012 Contracting with private collection contractors and
with entities that locate and recover unclaimed assets.
(a) Subject to the provisions of paragraph (b) of this section, the
General Services Administration (GSA) may contract with private
collection contractors, as defined in 31 U.S.C. 3701(f), to recover
delinquent debts provided that--
(1) GSA retain the authority to resolve disputes, compromise debts,
suspend or terminate collection activity, and refer debts for
litigation;
(2) The private collection contractor is not allowed to offer the
debtor, as an incentive for payment, the opportunity to pay the debt
less the private collection contractor's fee unless GSA has granted
such authority prior to the offer;
(3) The contract provides that the private collection contractor is
subject to the Privacy Act of 1974 to the extent specified in 5 U.S.C.
552a(m), and to applicable Federal and state laws and regulations
pertaining to debt collection practices, including but not limited to
the Fair Debt Collection Practices Act, 15 U.S.C. 1692; and
(4) The private collection contractor is required to account for
all amounts collected.
(b) GSA will use Governmentwide debt collection contracts to obtain
debt collection services provided by private collection contractors.
However, GSA may refer debts to private collection contractors pursuant
to a contract
[[Page 68746]]
between the Agency and the private collection contractor only if such
debts are not subject to the requirement to transfer debts to Treasury
for debt collection. See 31 U.S.C. 3711(g); 31 CFR 285.12(e).
(c) GSA may fund private collection contractor contracts in
accordance with 31 U.S.C. 3718(b), or as otherwise permitted by law.
(d) GSA may enter into contracts for locating and recovering assets
of the United States, such as unclaimed assets.
(e) GSA may enter into contracts for debtor asset and income search
reports. In accordance with 31 U.S.C. 3718(b), such contracts may
provide that the fee a contractor charges the Agency for such services
may be payable from the amounts recovered, unless otherwise prohibited
by statute.
Sec. 105-55.013 Suspension or revocation of eligibility for loans and
loan guaranties, licenses, permits, or privileges.
(a) Unless waived by the Administrator, the General Services
Administration (GSA) will not extend financial assistance in the form
of a loan, loan guarantee, or loan insurance to any person delinquent
on a non-tax debt owed to a Federal agency. This prohibition does not
apply to disaster loans. The authority to waive the application of this
section may be delegated to the Chief Financial Officer and re-
delegated only to the Deputy Chief Financial Officer of GSA. GSA may
extend credit after the delinquency has been resolved. The Secretary
may exempt classes of debts from this prohibition and has prescribed
standards defining when a ``delinquency'' is ``resolved'' for purposes
of this prohibition. See 31 CFR 285.13.
(b) In non-bankruptcy cases, GSA, when seeking the collection of
statutory penalties, forfeitures, or other types of claims, will
consider the suspension or revocation of licenses, permits, or other
privileges for any inexcusable or willful failure of a debtor to pay
such a debt in accordance with GSA regulations or governing procedures.
The debtor will be advised in GSA's written demand for payment of the
Agency's ability to suspend or revoke licenses, permits, or privileges.
If GSA makes, guarantees, insures, acquires, or participates in loans,
the Agency will consider suspending or disqualifying any lender,
contractor, or broker from doing further business with the Agency or
engaging in programs sponsored by the Agency if such lender,
contractor, or broker fails to pay its debts to the Government within a
reasonable time or if such lender, contractor, or broker has been
suspended, debarred, or disqualified from participation in a program or
activity by another Federal agency. The failure of any surety to honor
its obligations in accordance with 31 U.S.C. 9305 will be reported to
the Treasury. The Treasury will forward notification to all interested
agencies that a surety's certificate of authority to do business with
the Government has been revoked by the Treasury.
(c) The suspension or revocation of licenses, permits, or
privileges also may extend to GSA programs or activities administered
by the states on behalf of GSA, to the extent they affect GSA's ability
to collect money or funds owed by debtors.
(d) In bankruptcy cases, before advising the debtor of GSA's
intention to suspend or revoke licenses, permits, or privileges, the
Agency will ascertain the impact of the Bankruptcy Code, particularly
11 U.S.C. 362 and 525, which may restrict such action.
Sec. 105-55.014 Liquidation of collateral.
(a) The General Services Administration (GSA) will liquidate
security or collateral through the exercise of a power of sale in the
security instrument or a non-judicial foreclosure, and apply the
proceeds to the applicable debt(s), if the debtor fails to pay the
debt(s) within a reasonable time after demand and if such action is in
the best interest of the United States. Collection from other sources,
including liquidation of security or collateral, is not a prerequisite
to requiring payment by a surety, insurer, or guarantor unless such
action is expressly required by statute or contract.
(b) When GSA learns a bankruptcy petition has been filed with
respect to a debtor, the Agency will ascertain the impact of the
Bankruptcy Code, including, but not limited to, 11 U.S.C. 362, to
determine the applicability of the automatic stay and the procedures
for obtaining relief from such stay prior to proceeding under paragraph
(a) of this section.
Sec. 105-55.015 Collection in installments.
(a) Whenever feasible, the General Services Administration (GSA)
will collect the total amount of a debt in one lump sum. If a debtor is
financially unable to pay a debt in one lump sum, GSA may accept
payment in regular installments. GSA may obtain financial statements
from debtors who represent they are unable to pay in one lump sum and
independently verify such representations whenever possible (see Sec.
105-55.020(g)). When GSA agrees to accept payments in regular
installments, a legally enforceable written agreement from the debtor
will be obtained specifying all of the terms of the arrangement and
containing a provision accelerating the debt in the event of default.
If the debtor's financial statement discloses the ownership of assets
which are free and clear of liens or security interests, or assets in
which the debtor owns an equity, the debtor may be asked to secure the
payment of an installment note by executing a Security Agreement and
Financing Statement transferring to the United States a security
interest in the asset until the debt is paid.
(b) The size and frequency of installment payments will bear a
reasonable relation to the size of the debt and the debtor's ability to
pay. The installment payments will be sufficient in size and frequency
to liquidate the debt in three years or less, unless circumstances
warrant a longer period.
(c) Security for deferred payments may be obtained in appropriate
cases. GSA may accept installment payments notwithstanding the refusal
of the debtor to execute a written agreement or to give security, at
the Agency's option.
Sec. 105-55.016 Interest, penalties, and administrative costs.
(a) Except as provided in paragraphs (g), (h), and (i) of this
section, the General Services Administration (GSA) will charge
interest, penalties, and administrative costs on debts owed to the
United States pursuant to 31 U.S.C. 3717. GSA will send by U.S. mail,
overnight delivery service, or hand-delivery a written notice to the
debtor, at the debtor's most recent address available to the Agency,
explaining the Agency's requirements concerning these charges, except
where these requirements are included in a contractual or repayment
agreement. These charges will continue to accrue until the debt is paid
in full or otherwise resolved through compromise, termination, or
waiver of the charges.
(b) GSA will charge interest on debts owed the United States as
follows:
(1) Interest will accrue from the date of delinquency, or as
otherwise provided by law.
(2) Unless otherwise established in a contract, repayment
agreement, or by statute, the rate of interest charged will be the rate
established annually by the Secretary in accordance with 31 U.S.C.
3717(a)(1). Pursuant to 31 U.S.C. 3717, GSA may charge a higher rate of
interest if it is reasonably determined that a higher rate is necessary
to protect the rights of the United States. GSA will document the
reason(s) for a
[[Page 68747]]
determination that the higher rate is necessary.
(3) The rate of interest, as initially charged, will remain fixed
for the duration of the indebtedness. When a debtor defaults on a
repayment agreement and seeks to enter into a new agreement, GSA may
require payment of interest at a new rate that reflects the Current
Value of Funds Rate (CVFR) at the time the new agreement is executed.
Interest will not be compounded, that is, interest will not be charged
on interest, penalties, or administrative costs required by this
section. If a debtor defaults on a previous repayment agreement,
charges that accrued but were not collected under the defaulted
agreement will be added to the principal under the new repayment
agreement.
(c) GSA will assess administrative costs incurred for processing
and handling delinquent debts. The calculation of administrative costs
will be based on actual costs incurred or upon estimated costs as
determined by the Agency.
(d) Unless otherwise established in a contract, repayment
agreement, or by statute, GSA will charge a penalty, pursuant to 31
U.S.C. 3717(e)(2), not to exceed six percent a year on the amount due
on a debt that is delinquent for more than 90 days. This charge will
accrue from the date of delinquency.
(e) GSA may increase an ``administrative debt'' by the cost of
living adjustment in lieu of charging interest and penalties under this
section. ``Administrative debt'' includes, but is not limited to, a
debt based on fines, penalties, and overpayments, but does not include
a debt based on the extension of Government credit, such as those
arising from loans and loan guaranties. The cost of living adjustment
is the percentage by which the Consumer Price Index for the month of
June of the calendar year preceding the adjustment exceeds the Consumer
Price Index for the month of June of the calendar year in which the
debt was determined or last adjusted. Increases to administrative debts
will be computed annually. GSA will use this alternative only when
there is a legitimate reason to do so, such as when calculating
interest and penalties on a debt would be extremely difficult because
of the age of the debt.
(f) When a debt is paid in partial or installment payments, amounts
received by GSA will be applied first to outstanding penalties, second
to administrative charges, third to interest, and last to principal.
(g) GSA will waive the collection of interest, penalty and
administrative charges imposed pursuant to this section on the portion
of the debt that is paid within 30 days after the date on which
interest began to accrue. GSA may extend this 30-day period on a case-
by-case basis. In addition, GSA may waive interest, penalties, and
administrative costs charged under this section, in whole or in part,
without regard to the amount of the debt, either under the criteria set
forth in these standards for the compromise of debts, or if the Agency
determines that collection of these charges resulted from Agency error,
is against equity and good conscience, or is not in the best interest
of the United States.
(h) Unless a statute or regulation specifically prohibits
collection, interest, penalties and administrative costs will continue
to accrue for periods during which collection activity has been
suspended pending Agency review or waiver consideration.
(i) GSA is authorized to impose interest and related charges on
debts not subject to 31 U.S.C. 3717, in accordance with the common law.
Sec. 105-55.017 Use and disclosure of mailing addresses.
(a) When attempting to locate a debtor in order to collect or
compromise a debt under this part or other authority, the General
Services Administration (GSA) may send a request to the Secretary (or
designee) to obtain a debtor's mailing address from the records of the
Internal Revenue Service.
(b) GSA is authorized to use mailing addresses obtained under
paragraph (a) of this section to enforce collection of a delinquent
debt and may disclose such mailing addresses to other agencies and to
collection agencies for collection purposes.
Sec. 105-55.018 Exemptions.
(a) The preceding sections of this part, to the extent they reflect
remedies or procedures prescribed by the Debt Collection Act of 1982
and the Debt Collection Improvement Act of 1996, such as administrative
offset, use of credit bureaus, contracting for collection agencies, and
interest and related charges, do not apply to debts arising under, or
payments made under, the Internal Revenue Code of 1986, as amended (26
U.S.C. 1 et seq.); the Social Security Act (42 U.S.C. 301 et seq.),
except to the extent provided under 42 U.S.C. 404 and 31 U.S.C.
3716(c); or the tariff laws of the United States. These remedies and
procedures, however, may be authorized with respect to debts that are
exempt from the Debt Collection Act of 1982 and the Debt Collection
Improvement Act of 1996, to the extent they are authorized under some
other statute or the common law.
(b) Claims arising from the audit of transportation accounts
pursuant to 31 U.S.C. 3726 will be determined, collected, compromised,
terminated or settled in accordance with regulation published under the
authority of 31 U.S.C. 3726 (see 41 CFR part 101-41, administered by
the Director, Office of Transportation Audits) and are otherwise
exempted from this part.
Sec. 105-55.019 Compromise of claims.
(a) The standards set forth in this section apply to the compromise
of debts pursuant to 31 U.S.C. 3711. The General Services
Administration (GSA) may exercise such compromise authority for debts
arising out of activities of, or referred or transferred for collection
services to, the Agency when the amount of the debt then due, exclusive
of interest, penalties, and administrative costs, does not exceed
$100,000 or any higher amount authorized by the Attorney General. The
Administrator may designate other GSA officials to exercise the
authorities in this section.
(b) Unless otherwise provided by law, when the principal balance of
a debt, exclusive of interest, penalties, and administrative costs,
exceeds $100,000 or any higher amount authorized by the Attorney
General, the authority to accept the compromise rests with the
Department of Justice. GSA will evaluate the compromise offer, using
the factors set forth in Sec. 105-55.020. If an offer to compromise
any debt in excess of $100,000 is acceptable to the Agency, GSA will
refer the debt to the Civil Division or other appropriate litigating
division in the Department of Justice using a Claims Collection
Litigation Report. The referral will include appropriate financial
information and a recommendation for the acceptance of the compromise
offer. Justice Department approval is not required if GSA rejects a
compromise offer.
Sec. 105-55.020 Bases for compromise.
(a) The General Services Administration (GSA) may compromise a debt
if the full amount cannot be collected because--
(1) The debtor is unable to pay the full amount in a reasonable
time, as verified through credit reports or other financial
information.
(2) GSA is unable to collect the debt in full within a reasonable
time by enforced collection proceedings.
(3) The cost of collecting the debt does not justify the enforced
collection of the full amount.
[[Page 68748]]
(4) There is significant doubt concerning the Government's ability
to prove its case in court.
(b) In determining the debtor's inability to pay, GSA will consider
relevant factors such as the following:
(1) Age and health of the debtor.
(2) Present and potential income.
(3) Inheritance prospects.
(4) The possibility that assets have been concealed or improperly
transferred by the debtor.
(5) The availability of assets or income that may be realized by
enforced collection proceedings.
(c) GSA will verify the debtor's claim of inability to pay by using
a credit report and other financial information as provided in
paragraph (g) of this section. GSA will consider the applicable
exemptions available to the debtor under State and Federal law in
determining the Government's ability to enforce collection. GSA also
may consider uncertainty as to the price that collateral or other
property will bring at a forced sale in determining the Government's
ability to enforce collection. A compromise effected under this section
will be for an amount that bears a reasonable relation to the amount
that can be recovered by enforced collection procedures, with regard to
the exemptions available to the debtor and the time that collection
will take.
(d) If there is significant doubt concerning the Government's
ability to prove its case in court for the full amount claimed, either
because of the legal issues involved or because of a bona fide dispute
as to the facts, then the amount accepted in compromise of such cases
will fairly reflect the probabilities of successful prosecution to
judgment, with due regard given to the availability of witnesses and
other evidentiary support for the Government's claim. In determining
the litigative risks involved, GSA 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.
(e) GSA may compromise a debt if the cost of collecting the debt
does not justify the enforced collection of the full amount. The amount
accepted in compromise in such cases may reflect an appropriate
discount for the administrative and litigative costs of collection,
with consideration given to the time it will take to effect collection.
Collection costs may be a substantial factor in the settlement of small
debts. In determining whether the cost of collection justifies enforced
collection of the full amount, GSA will consider whether continued
collection of the debt, regardless of cost, is necessary to further an
enforcement principle, such as the Government's willingness to pursue
aggressively defaulting and uncooperative debtors.
(f) GSA generally will not accept compromises payable in
installments. This is not an advantageous form of compromise in terms
of time and administrative expense. If, however, payment of a
compromise in installments is necessary, GSA will obtain a legally
enforceable written agreement providing that, in the event of default,
the full original principal balance of the debt prior to compromise,
less sums paid thereon, is reinstated. Whenever possible, GSA will
obtain security for repayment in the manner set forth in Sec. 105-
55.015.
(g) To assess the merits of a compromise offer based in whole or in
part on the debtor's inability to pay the full amount of a debt within
a reasonable time, GSA may obtain a current financial statement from
the debtor, executed under penalty of perjury, showing the debtor's
assets, liabilities, income and expenses. GSA also may obtain credit
reports or other financial information to assess compromise offers. GSA
may use their own financial information form or may request suitable
forms from the Department of Justice or the local United States
Attorney's Office.
Sec. 105-55.021 Enforcement policy.
Pursuant to this section, the General Services Administration may
compromise statutory penalties, forfeitures, or claims established as
an aid to enforcement and to compel compliance, if the Agency's
enforcement policy in terms of deterrence and securing compliance,
present and future, will be adequately served by the Agency's
acceptance of the sum to be agreed upon.
Sec. 105-55.022 Joint and several liability.
(a) When two or more debtors are jointly and severally liable, the
General Services Administration (GSA) may pursue collection activity
against all debtors, as appropriate. GSA will not attempt to allocate
the burden of payment between the debtors but will proceed to liquidate
the indebtedness as quickly as possible.
(b) GSA will ensure that a compromise agreement with one debtor
does not release the Agency's claim against the remaining debtors. The
amount of a compromise with one debtor will not be considered a
precedent or binding in determining the amount that will be required
from other debtors jointly and severally liable on the claim.
Sec. 105-55.023 Further review of compromise offers.
If the General Services Administration (GSA) is uncertain whether
to accept a firm, written, substantive compromise offer on a debt that
is within the Agency's delegated compromise authority, it may refer the
offer to the Civil Division or other appropriate litigating division in
the Department of Justice (DOJ), using a Claims Collection Litigation
Report accompanied by supporting data and particulars concerning the
debt. DOJ may act upon such an offer or return it to GSA with
instructions or advice.
Sec. 105-55.024 Consideration of tax consequences to the Government.
In negotiating a compromise, the General Services Administration
(GSA) may consider the tax consequences to the Government. In
particular, GSA may consider requiring a waiver of tax-loss-carry-
forward and tax-loss-carry-back rights of the debtor. For information
on discharge of indebtedness reporting requirements see Sec. 105-
55.030.
Sec. 105-55.025 Mutual releases of the debtor and the Government.
In all appropriate instances, a compromise that is accepted by the
General Services Administration may be implemented by means of a mutual
release, in which the debtor is released from further non-tax liability
on the compromised debt in consideration of payment in full of the
compromise amount and the Government and its officials, past and
present, are released and discharged from any and all claims and causes
of action arising from the same transaction that the debtor may have.
In the event a mutual release is not executed when a debt is
compromised, unless prohibited by law, the debtor is still deemed to
have waived any and all claims and causes of action against the
Government and its officials related to the transaction giving rise to
the compromised debt.
Sec. 105-55.026 Suspending or terminating collection activity.
(a) The standards set forth in Sec. Sec. 105-55.027 and 105-55.028
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
[[Page 68749]]
Department of Justice (DOJ) for litigation, the General Services
Administration (GSA) may suspend or terminate collection under this
part with respect to debts arising out of activities of, or referred or
transferred for collection services to, the Agency.
(b) If, after deducting the amount of any partial payments or
collections, the principal amount of a debt exceeds $100,000, or such
other amount as the Attorney General may direct, exclusive of interest,
penalties, and administrative costs, the authority to suspend or
terminate rests solely with DOJ. If GSA believes suspension or
termination of any debt in excess of $100,000 may be appropriate, the
Agency will refer the debt to the Civil Division or other appropriate
litigating division in DOJ, using the Claims Collection Litigation
Report. The referral will specify the reasons for the Agency's
recommendation. If, prior to referral to DOJ, GSA determines a debt is
plainly erroneous or clearly without legal merit, the Agency may
terminate collection activity regardless of the amount involved without
obtaining DOJ concurrence.
Sec. 105-55.027 Suspension of collection activity.
(a) The General Services Administration (GSA) may suspend
collection activity on a debt when--
(1) The Agency cannot locate the debtor;
(2) The debtor's financial condition is expected to improve; or
(3) The debtor has requested a waiver or review of the debt.
(b) Based on the current financial condition of the debtor, GSA may
suspend collection activity on a debt when the debtor's future
prospects justify retention of the debt for periodic review and
collection activity and--
(1) The applicable statute of limitations has not expired; or
(2) Future collection can be effected by administrative offset,
notwithstanding the expiration of the applicable statute of limitations
for litigation of claims, with due regard to the 10-year limitation for
administrative offset prescribed by 31 U.S.C. 3716(e)(1); or
(3) The debtor agrees to pay interest on the amount of the debt on
which collection will be suspended, and such suspension is likely to
enhance the debtor's ability to pay the full amount of the principal of
the debt with interest at a later date.
(c)(1) GSA will suspend collection activity during the time
required for consideration of the debtor's request for waiver or
administrative review of the debt if the statute under which the
request is sought prohibits the Agency from collecting the debt during
that time.
(2) If the statute under which the request is sought does not
prohibit collection activity pending consideration of the request, GSA
will use discretion, on a case-by-case basis, to suspend collection.
Further, GSA ordinarily will suspend collection action upon a request
for waiver or review if the Agency is prohibited by statute or
regulation from issuing a refund of amounts collected prior to Agency
consideration of the debtor's request. However, GSA will not suspend
collection when the Agency determines the request for waiver or review
is frivolous or was made primarily to delay collection.
(d) When GSA learns a bankruptcy petition has been filed with
respect to a debtor, in most cases the collection activity on a debt
will be suspended, pursuant to the provisions of 11 U.S.C. 362, 1201,
and 1301, unless the Agency can clearly establish the automatic stay
has been lifted or is no longer in effect. GSA will, if legally
permitted, take the necessary legal steps to ensure no funds or money
are paid by the Agency to the debtor until relief from the automatic
stay is obtained.
Sec. 105-55.028 Termination of collection activity.
(a) The General Services Administration (GSA) may terminate
collection activity when--
(1) The Agency is unable to collect any substantial amount through
its own efforts or through the efforts of others;
(2) The Agency is unable to locate the debtor;
(3) Costs of collection are anticipated to exceed the amount
recoverable;
(4) The debt is legally without merit or enforcement of the debt is
barred by any applicable statute of limitations;
(5) The debt cannot be substantiated; or
(6) The debt against the debtor has been discharged in bankruptcy.
(b) Before terminating collection activity, GSA will pursue all
appropriate means of collection and determine, based upon the results
of the collection activity, that the debt is uncollectible. Termination
of collection activity ceases active collection of the debt. The
termination of collection activity does not preclude GSA from retaining
a record of the account for purposes of--
(1) Selling the debt, if the Secretary determines that such sale is
in the best interests of the United States;
(2) Pursuing collection at a subsequent date in the event there is
a change in the debtor's status or a new collection tool becomes
available;
(3) Offsetting against future income or assets not available at the
time of termination of collection activity; or
(4) Screening future applicants of loans and loan guaranties,
licenses, permits, or privileges for prior indebtedness.
(c) Generally, GSA will terminate collection activity on a debt
that has been discharged in bankruptcy, regardless of the amount. GSA
may continue collection activity, however, subject to the provisions of
the Bankruptcy Code, for any payments provided under a plan of
reorganization. Offset and recoupment rights may survive the discharge
of the debtor in bankruptcy and, under some circumstances, claims also
may survive the discharge. For example, the claims of GSA that it is a
known creditor of a debtor may survive a discharge if the Agency did
not receive formal notice of the proceedings.
Sec. 105-55.029 Exception to termination.
When a significant enforcement policy is involved, or recovery of a
judgment is a prerequisite to the imposition of administrative
sanctions, the General Services Administration may refer debts for
litigation even though termination of collection activity may otherwise
be appropriate.
Sec. 105-55.030 Discharge of indebtedness; reporting requirements.
(a) Before discharging a delinquent debt (also referred to as a
close out of the debt), the General Services Administration (GSA) will
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, 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 and is governed by the Internal Revenue Code. When
collection action on a debt is suspended or terminated, the debt
remains delinquent and further collection action may be pursued at a
later date in accordance with the standards set forth in this part.
When GSA discharges a debt in full or in part, further collection
action is prohibited. Therefore, GSA will make the determination that
collection action is no longer warranted before discharging a debt.
Before discharging a debt, GSA will terminate debt collection action.
[[Page 68750]]
(b) Section 3711(i), Title 31, United States Code, requires GSA to
sell a delinquent non-tax debt upon termination of collection action if
the Secretary determines such a sale is in the best interests of the
United States. Since the discharge of a debt precludes any further
collection action (including the sale of a delinquent debt), GSA may
not discharge a debt until the requirements of 31 U.S.C. 3711(i) have
been met.
(c) Upon discharge of a debt of more than $600, GSA must report the
discharge to the Internal Revenue Service (IRS) in accordance with the
requirements of 26 U.S.C. 6050P and 26 CFR 1.6050P-1. GSA may request
Treasury or Treasury-designated debt collection centers to file such a
discharge report to the IRS on the Agency's behalf.
(d) When discharging a debt, GSA will request the GSA Office of
General Counsel to release any liens of record securing the debt.
Sec. 105-55.031 Prompt referral to the Department of Justice.
(a) The General Services Administration (GSA) will promptly refer
to the Department of Justice (DOJ) for litigation debts on which
aggressive collection activity has been taken in accordance with Sec.
105-55.009 and that cannot be compromised, or on which collection
activity cannot be suspended or terminated, in accordance with
Sec. Sec. 105-55.027 and 105-55.028. GSA may refer those debts arising
out of activities of, or referred or transferred for collection
services to, the Agency. Debts for which the principal amount is over
$1,000,000, or such other amount as the Attorney General may direct,
exclusive of interest and penalties, will be referred to the Civil
Division or other division responsible for litigating such debts at
DOJ, Washington, DC. 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, will be referred to DOJ's
Nationwide Central Intake Facility as required by the Claims Collection
Litigation Report instructions. Debts will be referred as early as
possible, consistent with aggressive GSA collection activity and the
observance of the standards contained in this part, and, in any event,
well within the period for initiating timely lawsuits against the
debtors. GSA will make every effort to refer delinquent debts to DOJ
for litigation within one year of the date such debts last became
delinquent. In the case of guaranteed or insured loans, GSA will make
every effort to refer these delinquent debts to DOJ for litigation
within one year from the date the loan was presented to the Agency for
payment or re-insurance.
(b) DOJ has exclusive jurisdiction over the debts referred to it
pursuant to this section. GSA, as the referring agency, will
immediately terminate the use of any administrative collection
activities to collect a debt at the time of the referral of that debt
to DOJ. GSA will advise DOJ of the collection activities which have
been utilized to date, and their result. GSA will refrain from having
any contact with the debtor and will direct all debtor inquiries
concerning the debt to DOJ, except as otherwise agreed between GSA and
DOJ. GSA will immediately notify DOJ of any payments credited by the
Agency to the debtor's account after referral of a debt under this
section. DOJ will notify GSA of any payments it receives from the
debtor.
Sec. 105-55.032 Claims Collection Litigation Report.
(a) Unless excepted by the Department of Justice (DOJ), the General
Services Administration (GSA) will complete the Claims Collection
Litigation Report (CCLR) (see Sec. 105-55.019(b)), accompanied by a
signed Certificate of Indebtedness, to refer all administratively
uncollectible claims to DOJ for litigation. GSA will complete all
sections of the CCLR appropriate to each claim as required by the CCLR
instructions and furnish such other information as may be required in
specific cases.
(b) GSA will indicate clearly on the CCLR the actions DOJ should
take with respect to the referred claim. The CCLR permits the Agency to
indicate specifically any of a number of litigative activities which
DOJ may pursue, including enforced collection, judgment lien only,
renew judgment lien only, renew judgment lien and enforce collection,
program enforcement, foreclosure only, and foreclosure and deficiency
judgment.
(c) GSA also will use the CCLR to refer claims to DOJ to obtain
approval of any proposals to compromise the claims or to suspend or
terminate Agency collection activity.
Sec. 105-55.033 Preservation of evidence.
The General Services Administration (GSA) will take care to
preserve all files and records that may be needed by the Department of
Justice (DOJ) to prove their claims in court. GSA ordinarily will
include certified copies of the documents that form the basis for the
claim in the packages referring their claims to DOJ for litigation. GSA
will provide originals of such documents immediately upon request by
DOJ.
Sec. 105-55.034 Minimum amount of referrals to the Department of
Justice.
(a) The General Services Administration (GSA) will not refer for
litigation claims of less than $2,500, exclusive of interest,
penalties, and administrative costs, or such other amount as the
Attorney General shall from time to time prescribe. The Department of
Justice (DOJ) will notify GSA if the Attorney General changes this
minimum amount.
(b) GSA will not refer claims of less than the minimum amount
unless--
(1) Litigation to collect such smaller claims is important to
ensure compliance with the Agency's policies or programs;
(2) The claim is being referred solely for the purpose of securing
a judgment against the debtor, which will be filed as a lien against
the debtor's property pursuant to 28 U.S.C. 3201 and returned to GSA
for enforcement; or
(3) The debtor has the clear ability to pay the claim and the
Government effectively can enforce payment, with due regard for the
exemptions available to the debtor under State and Federal law and the
judicial remedies available to the Government.
(c) GSA will consult with the Financial Litigation Staff of the
Executive Office for United States Attorneys in DOJ prior to referring
claims valued at less than the minimum amount.
[FR Doc. 03-30409 Filed 12-9-03; 8:45 am]
BILLING CODE 6820-34-P