[Federal Register: December 29, 2003 (Volume 68, Number 248)]
[Proposed Rules]
[Page 74893-74907]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr29de03-20]
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DEPARTMENT OF VETERANS AFFAIRS
38 CFR Parts 1 and 2
RIN 2900-AK10
Standards for Collection, Compromise, Suspension, or Termination
of Collection Effort, and Referral of Civil Claims for Money or
Property; Regional Office Committees on Waivers and Compromises; Salary
Offset Provisions; Delegations of Authority
AGENCY: Department of Veterans Affairs.
ACTION: Proposed rule.
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SUMMARY: The Department of Veterans Affairs (VA) proposes to revise its
current regulations concerning the collection, compromise, suspension,
termination, and referral of debts owed to VA. The proposed revision
clarifies and simplifies debt collection standards and reflects changes
to Federal debt collection procedures under the Debt Collection
Improvement Act of 1996. VA also proposes to revise regulations
pertaining to the administration of regional office Committees on
Waivers and Compromises, as well as a regulation pertaining to
delegations of authority to the Assistant Secretary for Management.
DATES: Comments must be received on or before February 27, 2004.
ADDRESSES: Mail or hand deliver written comments to: Director,
Regulations Management (00REG1), 810 Vermont Avenue NW., Room 1068,
Washington,
[[Page 74894]]
DC 20420; or fax comments to (202) 273-9026; or e-mail comments to
OGCRegulations@mail.va.gov. Comments should indicate that they are
submitted in response to ``RIN 2900-AK10.'' All comments received will
be available for public inspection in the Office of Regulation Policy
and Management, Room 1063B, between the hours of 8 a.m. and 4:30 p.m.,
Monday through Friday, except holidays. Please call (202) 273-9515 for
an appointment.
FOR FURTHER INFORMATION CONTACT: Peter Mulhern, Cash and Debt
Management Division (047GC1), Department of Veterans Affairs, 810
Vermont Ave. NW., Washington, DC 20420, (202) 273-5570.
SUPPLEMENTARY INFORMATION: The ``Debt Collection Improvement Act (DCIA)
of 1996,'' Pub. L. 104-134, 110 Stat. 1321, 1358 (April 26, 1996)
authorizes several new methods for collecting debts and is the most
significant legislation for the administrative collection of Federal
debt since the Debt Collection Act of 1982, Pub. L. 97-365, 96 Stat.
1749 (October 25, 1982). The DCIA authorizes new debt collection
procedures, including centralized administrative offset, the transfer
or referral of delinquent debt to the Department of the Treasury
(Treasury) or Treasury-designated debt collection centers for
collection (cross-servicing), and administrative wage garnishment.
Treasury and the Department of Justice (DOJ) subsequently issued
revised Federal Claims Collection Standards (FCCS) on November 22,
2000, with an effective date of December 22, 2000. The revised FCCS are
found at Title 31 of the Code of Federal Regulations (CFR), chapter IX,
parts 900 through 904 and conform with relevant statutory changes to
Federal debt collection procedures under the DCIA. Additional rules
concerning these new debt collection procedures have also been issued
by Treasury at Title 31 of the CFR part 285.
The following major changes were incorporated into the revised
FCCS:
1. The Comptroller General was removed as a co-promulgator of the
FCCS and the Secretary of the Treasury was added as a co-promulgator.
2. The revised FCCS reflect the elimination of the Comptroller
General's role in Federal debt collection.
3. The revised FCCS provides agencies with greater latitude to
streamline and customize debt collection procedures to accommodate
agency-specific requirements or unique circumstances.
4. The revised FCCS reflects the requirement that agencies use
government-wide debt collection contracts for referrals to private
collection contractors.
5. The revised FCCS reflects the increase in the maximum principal
amount for a claim, from $20,000 to $100,000, agencies are authorized
to compromise or to suspend or terminate collection activity thereon,
without concurrence by DOJ. In addition, the minimum amount of a claim
that may be referred to DOJ for enforced collection is increased from
$600 to $2,500.
6. The revised FCCS reflects several new debt collection procedures
under the DCIA, including, but not limited to:
(a) Transfer or referral of debt delinquent for more than 180 days
to Treasury or Treasury-designated debt collection centers, for
collection known as ``cross-servicing;''
(b) Mandatory, centralized administrative offset by disbursing
officials; and
(c) Mandatory prohibition against extending federal financial
assistance in the form of a loan or loan guarantee to delinquent
debtors.
In conjunction with the publication of the Treasury/DOJ FCCS and
Treasury's debt collection regulations, VA reviewed its debt collection
regulations in order to identify those regulations that required
revision or could be deleted as either obsolete or duplicative of
Treasury and Treasury/DOJ regulations, as well as to ensure that our
regulations are consistent with statutory mandates and that they are
clearly written. Consequently, VA has prepared the attached proposed
amendments that will remove some debt collection regulations, add new
regulations, and revise the remainder.
As part of the revision of our debt collection regulations, VA also
proposes to revise its interest-charging regulation. Section 1.919
implements VA's authority to assess interest and administrative costs
on debts that arise as a result of participation in a VA benefits,
medical care, or home loan program. The authority for this regulation
is derived from 38 U.S.C. 5315. The recent review of this regulation
indicated that one portion needs to be deleted. Specifically, the
current regulation states that when a debtor requests a waiver,
interest and administrative costs shall not be assessed until either an
initial determination is made on the request or the statutory time
limit for requesting waiver has expired. We propose to amend Sec.
1.919 by removing this portion, since it has no basis in 38 U.S.C.
5315. Likewise, there is no such language in the statutory requirement
for waiver consideration of VA benefit and home loan program debts (38
U.S.C. 5302). Finally, the FCCS does not contain such a requirement in
its government-wide interest regulation (31 CFR 901.9).
VA also is proposing to add two new debt collection regulations.
Section 1.923, ``Administrative wage garnishment,'' is another
collection tool derived from the DCIA and is written in accordance with
Treasury's implementing regulation (31 CFR 285.11). It allows, but does
not mandate, VA to request a non-Federal employer to garnish the
disposable pay of an individual to collect non-tax delinquent debt owed
to VA. VA may do this directly or it may request that Treasury initiate
administrative garnishment procedures after VA has referred the debt to
Treasury for collection. The other proposed new regulation is Sec.
1.924, ``Barring delinquent debtors from obtaining federal loans or
loan insurance or guarantees.'' This is also derived from the DCIA and
a Treasury regulation (31 CFR 285.13), as well as the FCCS (31 CFR
901.6). This regulation states that a person owing an outstanding non-
tax debt that is in delinquent status shall not be eligible for certain
Federal financial assistance.
At the request of the Veterans Benefits Administration, we are
proposing to amend Sec. 1.955(c), ``Regional Office Committees on
Waivers and Compromises.'' The amendment would continue to state that
the administrative control function of the Committees remains with the
fiscal officer. However, it would authorize the station director to
reassign the function to another station activity when the director
determines that another station activity is more appropriate. We
believe this amendment would provide each regional office director with
needed greater management latitude in assigning responsibility for the
administrative control of that station's Committee on Waivers and
Compromises.
The Office of Personnel Management has made changes to their
government-wide salary offset regulations (5 CFR part 550, Subpart K)
in order to comply with the DCIA, which amended 5 U.S.C. 5514. The DCIA
requires that all Federal agencies, to which outstanding delinquent
debts are owed, must participate in an annual computer match of their
delinquent debt records with records of federal employees. In addition,
agencies must notify Treasury of all non-tax debts over 180 days
delinquent. Treasury will match payments to the debtors from the
Federal Government, including federal salary payments, against these
debts. Where a match occurs, the payment will be offset to satisfy the
debt. We are
[[Page 74895]]
proposing to amend VA's regulations to reflect the use of centralized
administrative offset, including salary offset.
Our regulations also would be revised to reflect the fact that the
DCIA amended 5 U.S.C. 5514 so that pay adjustments made to correct
clerical or administrative errors or delays that resulted in
overpayments occurring within the four pay periods next preceding the
adjustment, are excluded from the normally required notice and hearing
procedures. Collection of a debt amounting to $50 or less also would be
excluded from such procedures.
Finally, the review of VA regulations also indicated a need to
revise Sec. 2.6, which delegates certain debt collection authorities
to the Assistant Secretary for Management. Current internal directives
redelegate these authorities directly from the Assistant Secretary to
field personnel. We are proposing to revise the regulation to
correspond to this delegation.
Paperwork Reduction Act
This document contains no provisions constituting a collection of
information under the Paperwork Reduction Act (44 U.S.C. 3501-3521).
Unfunded Mandates
The Unfunded Mandates Reform Act requires, at 2 U.S.C. 1532, that
agencies prepare an assessment of anticipated costs and benefits before
developing any rule that may result in an expenditure by State, local,
or tribal governments, in the aggregate, or by the private sector of
$100 million or more in any given year. This proposed amendment would
have no such effect on State, local, or tribal governments, or the
private sector.
Regulatory Flexibility Act
The Secretary hereby certifies that this proposed rule will not
have a significant economic impact on a substantial number of small
entities as they are defined in the Regulatory Flexibility Act, 5
U.S.C. 601-612. This proposed rule directly affect only individuals
indebted to VA, and do not affect small entities. Therefore, pursuant
to 5 U.S.C. 605(b), this proposed rule is exempt from the initial and
final regulatory flexibility analysis requirements of sections 603 and
604.
Executive Order 12866
This regulatory action has been reviewed by the Office of
Management and Budget under Executive Order 12866.
There is no Catalog of Federal Domestic Assistance number.
List of Subjects
38 CFR Part 1
Claims, Administrative practice and procedure, Veterans.
38 CFR Part 2
Delegations of authority.
Approved: September 25, 2003.
Anthony J. Principi,
Secretary of Veterans Affairs.
For the reasons set forth in the preamble, VA proposes to amend 38
CFR part 1 as follows:
PART 1--GENERAL PROVISIONS
1. The authority citation for part 1 continues to read as follows:
Authority: 38 U.S.C. 501(a), unless otherwise noted.
2. The authority citation preceding Sec. 1.900 is revised to read
as follows:
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, unless
otherwise stated.
3. Section 1.900 is revised to read as follows:
Sec. 1.900 Prescription of standards.
(a) The standards contained in Sec. Sec. 1.900 through 1.953 are
issued pursuant to the Federal Claims Collection Standards, issued by
the Department of the 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 1.900 through 1.953,
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.
(b) 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.''
4. Section 1.901 is revised to read as follows:
Sec. 1.901 No private rights created.
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 other
person, nor shall the failure of VA to comply with any of the
provisions of Sec. Sec. 1.900 through 1.953 be available to any debtor
as a defense.
5. Section 1.902 is revised to read as follows:
Sec. 1.902 Antitrust, fraud, and tax and interagency claims.
(a) The standards in Sec. Sec. 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 DOJ has the authority to
compromise, suspend, or terminate collection activity on such claims.
The standards in Sec. Sec. 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 Sec. Sec. 1.900 through 1.953.
(b) Sections 1.900 through 1.953 do not apply to tax debts.
(c) Sections 1.900 through 1.953 do not apply to claims between
Federal agencies.
(d) Federal agencies should attempt to resolve interagency claims
by negotiation in accordance with Executive Order 12146 (3 CFR, 1980
Comp., pp. 409-412).
6. Section 1.903 is revised to read as follows:
Sec. 1.903 Settlement, waiver, or compromise under other statutory or
regulatory authority.
Nothing in Sec. Sec. 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.
[[Page 74896]]
7. Section 1.904 is revised to read as follows:
Sec. 1.904 Form of payment.
Claims may be paid in the form of money or, when a contractual
basis exists, VA may demand the return of specific property or the
performance of specific services.
8. Section 1.905 is revised to read as follows:
Sec. 1.905 Subdivision of claims not authorized.
Debts may not be subdivided to avoid the monetary ceiling
established by 31 U.S.C. 3711(a)(2). A debtor's liability arising from
a particular transaction or contract shall be considered as 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.
9. Section 1.906 is revised to read as follows:
Sec. 1.906 Required administrative proceedings.
(a) In applying Sec. Sec. 1.900 through 1.953, VA is not required
to omit, foreclose, or duplicate administrative proceedings required by
contract or other laws or regulations.
(b) Nothing contained in Sec. Sec. 1.900 through 1.953 is intended
to foreclose the right of any debtor to an administrative proceeding,
including appeals, waivers, and hearings provided by statute, contract,
or VA regulation (See 38 U.S.C. 3720(a)(4) and 5302 and 42 U.S.C. 2651-
2653).
10. Section 1.907 is revised to read as follows:
Sec. 1.907 Definitions.
(a) The definitions found in the Federal Claims Collection
Standards issued in Sec. 900.2 of Title 31 of the CFR shall apply to
Sec. Sec. 1.900 through 1.953.
(b) As used in Sec. Sec. 1.900 through 1.953, referral for
litigation means referral to the Department of Justice for appropriate
legal action, except in those specified instances where a case is
referred to VA Regional Counsels for legal action.
(c) As used in Sec. Sec. 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, unless
stated otherwise.
(Authority: 31 U.S.C. 3701, 3711 and 38 U.S.C. 5316)
11. The authority citation preceding Sec. 1.910 is removed.
12. Section 1.910 is revised to read as follows:
Sec. 1.910 Aggressive collection action.
(a) VA will take aggressive collection action on a timely basis,
with effective follow-up, to collect all claims for money or property
arising from its activities.
(b) In accordance with 31 U.S.C. 3711(g) and the procedures set
forth at 31 CFR 285.12, VA shall transfer to Treasury any non-tax debt
or claim that has been delinquent for a period of 180 days or more so
that Treasury may take appropriate action to collect the debt or
terminate collection action. 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 of the Treasury;
(4) Is at a debt collection center for a period of time acceptable
to the Secretary of the Treasury;
(5) Will be collected under internal offset procedures within 3
years after the debt first became delinquent; or
(6) Is exempt from this requirement based on a determination by the
Secretary of the Treasury that exemption for a certain class of debt is
in the best interest of the United States. VA may request that the
Secretary exempt specific classes of debts.
(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 administrative 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.
13. Section 1.911 is amended by:
A. Revising paragraphs (a) and (b).
B. Revising paragraphs (c)(3), (d)(4) and (d)(5).
C. Adding paragraphs (d)(6) and (d)(7).
D. Revising paragraphs (f)(1) and (f)(5).
The revisions and addition read as follows:
Sec. 1.911 Collection of debts owed by reason of participation in a
benefits program.
(a) Scope. This section applies to the collection of debts
resulting from an individual's participation in a VA benefit or home
loan program. It does not apply to VA's other debt collection
activities. Standards for the demand for payment of all other debts
owed to VA are set forth in Sec. 1.911a. School liability debts are
governed by Sec. 21.4009 of this title.
(b) Written demands. When VA has determined that a debt exists by
reason of an administrative decision or by operation of law, VA shall
promptly demand, in writing, payment of the debt. VA shall notify the
debtor of his or her rights and remedies and the consequences of
failure to cooperate with collection efforts. Generally, one demand
letter is sufficient, but subsequent demand letters may be issued as
needed.
(c) * * *
* * * * *
(3) Appeal. In accordance with parts 19 and 20 of this title, the
debtor may appeal the decision underlying the debt.
(d) * * *
* * * * *
(4) That collection may be made by offset from current or future VA
benefit payments (see Sec. 1.912a). In addition, the debtor should 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.
(5) That interest and administrative costs may be assessed in
accordance with Sec. 1.915, as appropriate;
(6) That the debtor shall have the opportunity to inspect and copy
records; and
(7) That the debtor shall have the opportunity to enter into a
repayment agreement.
* * * * *
(f) * * *
(1) Appellate rights, in parts 19 and 20 of this title;
* * * * *
(5) The assessment of interest and administrative costs, in Sec.
1.915.
* * * * *
14. Section 1.911a is added to read as follows:
Sec. 1.911a Collection of non-benefit debts.
(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
[[Page 74897]]
demand for payment of VA benefit or home loan program debts are set
forth in Sec. 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 as needed. In determining the timing of the
demand letter, VA should give due regard to the need to refer debts
promptly to DOJ for litigation, in accordance with Sec. Sec. 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.
(c) The written demand letter shall inform the debtor of:
(1) The basis for the indebtedness and any rights the debtor may
have to seek review within VA, including the right to request waiver;
(2) The applicable standards for imposing any interest or other
late payment charges;
(3) The date by which payment should be made to avoid interest and
other late payment charges and enforced collection, which generally
should not be more than 30 days from the date that the demand letter is
mailed;
(4) The name, address, and phone number of a contact person or
office within the agency;
(5) The opportunity to inspect and copy VA records related to the
debt; and
(6) The opportunity to make a written agreement to repay the debt.
(d) In addition to the items listed in paragraph (c) of this
section, VA should include in the demand letter such items as VA's
willingness to discuss alternative methods of payment and its policies
with respect to the use of credit bureaus, debt collection centers, and
collection agencies. The letter should also indicate the agency's
remedies to enforce payment of the debt (including assessment of
interest, administrative costs and penalties, administrative
garnishment, Federal salary offset, tax refund offset, administrative
offset, and litigation) and the requirement that any debt delinquent
for more than 180 days be transferred to Treasury for collection.
(e) VA should respond promptly to communications from debtors and
should advise debtors who dispute debts, or request waiver, to furnish
available evidence to support their contentions.
(f) Prior to referring a debt for litigation, VA should advise each
person determined to be liable for the debt that, unless the debt can
be collected administratively, litigation may be initiated. This
notification may be given as part of a demand letter under paragraph
(c) of this section or in a separate letter.
(g) When VA learns that a bankruptcy petition has been filed with
respect to a debtor, before proceeding with further collection action,
VA should immediately seek legal advice from either VA General Counsel
or Regional Counsel concerning the impact of the Bankruptcy Code on any
pending or contemplated collection activities. Unless VA determines
that 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 should stop immediately.
(1) After seeking legal advice, a proof of claim should be filed in
most cases with the bankruptcy court or the Trustee. VA should 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 VA 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 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 be 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.
15. Section 1.912 is amended by:
A. Revising paragraphs (a), (c)(2), (d)(1), (d)(2), and (f).
B. Adding paragraphs (d)(3), (d)(4), (g), (h), and (i).
The additions and revisions read as follows:
Sec. 1.912 Collection by offset.
(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 an
individual 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 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 Sec. 1.912a. Procedures
for offset from current Federal salary are found in Sec. Sec. 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 Sec. Sec. 1.900 through 1.953 and Sec. Sec. 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.
* * * * *
(c) * * *
(2) If the debtor, within 30 days of the date of the required
notification by VA, requests in writing the waiver of collection of the
debt in accordance with Sec. 1.963, Sec. 1.963a, or Sec. 1.964,
offset shall not commence until VA has made an initial decision to deny
the waiver request.
* * * * *
(d) * * *
(1) Offset may commence prior to either resolution of a dispute or
decision on a waiver request as discussed in paragraph (c) of this
section, if collection of the debt would be jeopardized by deferral of
offset (for example, if VA first learns of the debt when there is
insufficient time before a final payment would be made to the debtor to
allow for prior notice and opportunity for review or waiver
consideration). In such a case, notification pursuant to paragraph (b)
of this section shall be made at the time offset begins or as soon
thereafter as possible. VA shall promptly refund any money that has
been collected that is ultimately found not to have been owed to the
Government.
(2) If the United States has obtained a judgment against the
debtor, offset may commence without the notification required by
paragraph (b) of this section. However, a waiver request filed in
accordance with the time limits and other requirements of Sec. 1.963,
Sec. 1.963a, or Sec. 1.964 will be considered, even if filed after a
judgment has been obtained against the debtor. If waiver is granted, in
whole or in part, refund of amounts already collected will be made in
accordance with Sec. 1.967.
(3) The procedures set forth in paragraph (b) of this section may
be omitted when the debt arises under a
[[Page 74898]]
contract that provides for notice and other procedural protections.
(4) Offset may commence without the notification required by
paragraph (b) of this section when the offset is in the nature of a
recoupment. As defined in 31 CFR 900.2(d), recoupment is a special
method for adjusting debts arising under the same transaction or
occurrence.
* * * * *
(f) When collecting multiple debts by administrative offset, VA
shall 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, paying special attention to
applicable statutes of limitation. In accordance with 31 CFR
901.3(a)(4), VA may not initiate offset to collect a debt more than 10
years after VA's right to collect the debt first accrued (with certain
exceptions as specified in Sec. 901.3(a)(4)).
(g) When VA refers delinquent debts to Treasury for centralized
administrative offset in accordance with 31 CFR part 285, VA must
certify that:
(1) The debts are past due and legally enforceable; and
(2) VA has complied with all due process requirements under 31
U.S.C. 3716(a) and paragraphs (b) and (c) of this section. Payments
that are prohibited by law from being offset are exempt from
centralized administrative offset.
(h) In accordance with 31 U.S.C. 3716(f), the Secretary of the
Treasury 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
a creditor agency that the due process requirements enumerated in 31
U.S.C. 3716(a) and paragraphs (b) and (c) of this section have been
met. The certification of a debt in accordance with paragraph (g) 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).
(i)(1) Unless the offset would not be in VA's best interest, or
would otherwise be contrary to law, VA will comply with requests by
creditor agencies to offset VA payments (except for current salary or
benefit payments) made to a person indebted to the creditor agency.
However, before VA may initiate offset, the creditor agency must
certify in writing to VA that the debtor has been provided:
(i) Written notice of the type and amount of the debt and the
intent of the creditor agency to use administrative offset to collect
the debt;
(ii) The opportunity to inspect and copy agency records related to
the debt;
(iii) The opportunity for review within the agency of the
determination of the indebtedness; and,
(iv) The opportunity to make a written agreement to repay the debt.
(2) Procedures for current salary offset are set forth at
Sec. Sec. 1.980-1.995. Procedures for offset of VA benefit payments
are set forth at Sec. 1.912a.
16. Section 1.912a is amended by adding paragraph (c)(4) to read as
follows:
Sec. 1.912a Collection by offset--from VA benefit payments.
* * * * *
(c) * * *
(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 Sec. 1.911a(c)(1))
concerning the existence or amount of the debt, even if the debtor
subsequently pursues appellate relief in accordance with parts 19 and
20 of this title.
* * * * *
Sec. 1.913 [Removed]
Sec. 1.914 [Removed]
Sec. 1.915 [Removed]
17. Sections 1.913, 1.914, and 1.915 are removed.
Sec. 1.916 [Redesignated as Sec. 1.913]
18. Section 1.916 is redesignated as Sec. 1.913 and is revised to
read as follows:
Sec. 1.913 Liquidation of collateral.
(a) VA should liquidate security or collateral through the exercise
of a power of sale in the security instrument or a nonjudicial
foreclosure, and apply the proceeds to the applicable debt, if the
debtor fails to pay the debt within 180 days 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 VA learns that a bankruptcy petition has been filed with
respect to a debtor, VA should seek legal advice from the VA General
Counsel or Regional Counsel concerning 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. 1.917 [Redesignated as Sec. 1.914]
19. Section 1.917 is redesignated as Sec. 1.914 and is revised to
read as follows:
Sec. 1.914 Collection in installments.
(a) Whenever feasible, VA shall 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, VA may accept payment in regular installments. VA should
obtain financial statements from debtors who represent that they are
unable to pay in one lump sum and independently verify such
representations whenever possible. If VA agrees to accept payments in
regular installments, VA should obtain a legally enforceable written
agreement from the debtor that specifies all of the terms of the
arrangement and contains a provision accelerating the debt in the event
of default.
(b) The size and frequency of installment payments should bear a
reasonable relation to the size of the debt and the debtor's ability to
pay. If possible, the installment payments should be sufficient in size
and frequency to liquidate the debt in 3 years or less.
(c) Security for deferred payments should be obtained in
appropriate cases. However, VA may accept installment payments if the
debtor refuses to execute a written agreement or to give security.
Sec. 1.918 [Removed]
20. Section 1.918 is removed.
Sec. 1.919 [Redesignated as Sec. 1.915]
21. Section 1.919 is redesignated as Sec. 1.915 and is amended by:
A. Revising the heading and paragraphs (a) and (c).
B. In paragraph (d), removing ``Sec. 1.919'' and adding, in its
place, ``this section''.
C. Removing paragraphs (f)(2)(i) and (ii).
D. Revising paragraph (g).
The revisions read as follows:
Sec. 1.915 Interest, administrative costs, and penalties.
(a) Except as otherwise provided by statute, contract, or other
regulation to the contrary, and subject to 38 U.S.C. 3485(e) and 5302,
VA shall assess:
(1) Interest on all indebtedness to the United States arising out
of participation in a VA benefit, medical
[[Page 74899]]
care, or home loan program under authority of Title 38, U.S. Code.
(2) Interest and administrative costs of collection on such debts
described in paragraph (a)(1) of this section where repayment has
become delinquent (as defined in 31 CFR 900.2(b)), and
(3) Interest, administrative costs, and penalties in accordance
with 31 CFR 901.9 on all debts other than those described in paragraph
(a)(1) of this section.
* * * * *
(c) The rate of interest charged by VA shall be based on the rate
established annually by the Secretary of the Treasury in accordance
with 31 U.S.C. 3717 and shall be adjusted annually by VA on the first
day of the calendar year. Once the rate of interest has been determined
for a particular debt, the rate shall remain in effect throughout the
duration of repayment of that debt. When a debtor defaults on a
repayment agreement and seeks to enter into a new agreement, VA may
require payment of interest at a new rate that reflects the current
value of funds to the Treasury at the time the new agreement is
executed. Interest shall not be compounded, that is, interest shall not
be charged on accrued interest and administrative costs required by
this section. If, however, a debtor defaults on a previous repayment
agreement, interest and administrative costs that accrued but were not
collected under the defaulted agreement shall be added to the principal
under the new agreement.
* * * * *
(g) Administrative costs assessed under this section shall be the
average costs of collection of similar debts, or actual collection
costs as may be accurately determined in the particular case. No
administrative costs of collection will be assessed under this section
in any cases where the indebtedness is paid in full prior to the 30-day
period specified in paragraph (e) of this section, or in any case where
a repayment plan is proposed by the debtor and accepted by VA within
that 30-day period, unless such repayment agreement becomes delinquent
(as defined in 31 CFR 900.2(b)).
Sec. 1.920 [Removed]
22. Section 1.920 is removed.
Sec. 1.921 [Removed]
23. Section 1.921 is removed.
Sec. 1.922 [Redesignated as Sec. 1.916]
24. Section 1.922 is redesignated as Sec. 1.916 and is amended by:
A. Revising paragraph (d)(2)(i).
B. Revising the authority citation at the end of the section.
The revision reads as follows:
Sec. 1.916 Disclosure of debt information to consumer reporting
agencies (CRA).
* * * * *
(d) * * *
(2)(i) In accordance with Sec. 1.911 and Sec. 1.911a, VA shall
notify each individual of the right to dispute the existence and amount
of the debt and to request a waiver of the debt, if applicable.
* * * * *
(Authority: 38 U.S.C. 5701(g), (i); 31 U.S.C. 3711(e))
Sec. 1.923 [Redesignated as Sec. 1.917]
25. Section 1.923 is redesignated as Sec. 1.917 and is amended by:
A. Revising paragraph (b) introductory text.
B. Adding paragraphs (c) through (e).
The revision and additions read as follows:
Sec. 1.917 Contracting for collection services.
* * * * *
(b) In accordance with 31 U.S.C. 3718(d), or as otherwise permitted
by law, collection service contracts may be funded in the following
manner:
* * * * *
(c) VA shall use government-wide debt collection contracts to
obtain debt collection services provided by private collection
contractors. However, VA may refer debts to private collection
contractors pursuant to a contract between VA and a 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), and 38 CFR 1.910.
(d) VA may enter into contracts for locating and recovering assets
of the United States, such as unclaimed assets.
(e) VA may enter into contracts for debtor asset and income search
reports. In accordance with 31 U.S.C. 3718(d), such contracts may
provide that the fee a contractor charges the agency for such services
may be payable from the amounts recovered, unless otherwise prohibited
by statute.
(Authority: 31 U.S.C. 3718)
Sec. 1.924 [Redesignated as Sec. 1.918]
26. Section 1.924 is redesignated as Sec. 1.918 and is amended by
revising paragraphs (a) and (b) to read as follows:
Sec. 1.918 Use and disclosure of mailing addresses.
(a) When attempting to locate a debtor in order to compromise or
collect a debt in accordance with Sec. Sec. 1.900 through 1.953, VA
may send a request to the Secretary of the Treasury, or his/her
designee, in order to obtain the debtor's most current mailing address
from the records of the Internal Revenue Service.
(b) VA 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. 1.925 [Redesignated as Sec. 1.919]
27. Section 1.925 is redesignated as Sec. 1.919 and is amended by
revising paragraphs (a) and (b)(3) to read as follows:
Sec. 1.919 Administrative offset against amounts payable from Civil
Service Retirement and Disability Fund, Federal Employees Retirement
System (FERS), final salary check, and lump sum leave payments.
(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, unless such offset represents continuation of
an offset against current salary initiated in accordance with
Sec. Sec. 1.980 through 1.995. See Sec. 1.912 for procedures for
offset against a final salary check and lump sum leave payment.
(b) * * *
(3) VA has complied with Sec. Sec. 1.911, 1.911a, 1.912, 1.912a,
or 31 CFR Sec. 901.3, including any required hearing or review.
* * * * *
Sec. 1.926 [Redesignated as Sec. 1.920]
28. Section 1.926 is redesignated as Sec. 1.920 and amended by:
A. Revising paragraph (a).
B. Revising paragraph (c)(6).
C. Revising paragraph (e).
The revisions read as follows:
Sec. 1.920 Referral of VA debts.
(a) When authorized, VA may refer an uncollectible debt to another
Federal or
[[Page 74900]]
State agency for the purpose of collection action. Collection action
may include the offsetting of the debt from any current or future
payment, except salary (see paragraph (e) of this section), made by
such Federal or State agency to the person indebted to VA.
* * * * *
(c) * * *
(6) Other applicable notices required by Sec. Sec. 1.911, 1.911a,
1.912, and 1.912a.
* * * * *
(e) The referral by VA of a VA debt to another agency for the
purpose of salary offset shall be done in accordance with 38 CFR 1.980
through 1.995 and regulations prescribed by the Director of the Office
of Personnel Management (OPM) in 5 CFR part 550, subpart K.
* * * * *
Sec. 1.927 [Redesignated as Sec. 1.921]
29. Section 1.927 is redesignated as Sec. 1.921 and is revised to
read as follows:
Sec. 1.921 Analysis of costs.
VA collection procedures should provide for periodic comparison of
costs incurred and amounts collected. Data on costs and corresponding
recovery rates for debts of different types and in various dollar
ranges should be used to compare the cost effectiveness of alternative
collection techniques, establish guidelines with respect to points at
which costs of further collection efforts are likely to exceed
recoveries, assist in evaluating offers in compromise, and establish
minimum debt amounts below which collection efforts need not be taken.
Sec. 1.928 [Redesignated as Sec. 1.922]
30. Section 1.928 is redesignated as Sec. 1.922 and is revised to
read as follows:
Sec. 1.922 Exemptions.
(a) Sections 1.900 through 1.953, 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 DCIA of 1996, to
the extent that they are authorized under some other statute or the
common law.
(b) This section should not be construed as prohibiting the use of
Sec. Sec. 1.900 through 1.953 when collecting debts owed by persons
employed by agencies administering the laws cited in paragraph (a) of
this section unless the debt arose under those laws.
(Authority: 31 U.S.C. 3711)
31. Section 1.923 is added to read as follows:
Sec. 1.923 Administrative wage garnishment.
(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 garnishment may be
pursued after VA refers a debt to Treasury in accordance with 31 CFR
285.12 or with Sec. 1.910 of this title. 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, VA 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:
(1) The nature and amount of the debt;
(2) The intention of VA or Treasury to initiate proceedings to
collect the debt through deductions from the debtor's pay until the
debt and all accumulated interest, and other late payment charges, are
paid in full, and;
(3) An explanation of the debtor's rights, including the
opportunity:
(i) To inspect and copy VA records pertaining to the debt;
(ii) To enter into a written repayment agreement with VA or
Treasury under terms agreeable to VA or Treasury, and;
(iii) To request a hearing in accordance with 31 CFR 285.11(f) and
paragraph (c) of this section concerning the existence or amount of the
debt or the terms of the proposed repayment schedule under the
garnishment order. However, the debtor is not entitled to a hearing
concerning the terms of the proposed repayment schedule if these terms
have been established by written agreement under paragraph (b)(3)(ii)
of this section.
(c) Any hearing conducted as part of the administrative wage
garnishment process shall be conducted by the designated hearing
official in accordance with the procedures set forth in 31 CFR
285.11(f). This hearing official may be any VA Board of Contract
Appeals Administrative Judge or Hearing Examiner, or any other VA
hearing official. This hearing official may also conduct administrative
wage garnishment hearings for other Federal agencies.
(1) The hearing may be oral or written as determined by the
designated hearing official. The hearing official shall provide the
debtor with a reasonable opportunity for an oral hearing when the
hearing official determines that the issue in dispute cannot be
resolved by review of documentary evidence. The hearing official shall
establish the time and place of any oral hearing. At the debtor's
option, an oral hearing may be conducted either in person or by
telephone conference call. A hearing is not required to be a formal,
evidentiary-type hearing, but witnesses who testify in oral hearings
must do so under oath or affirmation. While it is not necessary to
produce a transcript of the hearing, the hearing official must maintain
a summary record of the proceedings. All travel expenses incurred by
the debtor in connection with an in-person hearing shall be borne by
the debtor. VA or Treasury shall be responsible for all telephone
expenses. In the absence of good cause shown, a debtor who fails to
appear at a hearing will be deemed as not having timely filed a request
for a hearing.
(2) If the hearing official determines that an oral hearing is not
necessary, then he/she shall afford the debtor a ``paper hearing.'' In
a ``paper hearing,'' the hearing official will decide the issues in
dispute based upon a review of the written record.
(3) If the debtor's written request for a hearing is received by
either VA or Treasury within 15 business days following the mailing of
the notice described in paragraph (b) of this section, then VA or
Treasury shall not issue a withholding order as described in paragraph
(d) of this section until the debtor is afforded the requested hearing
and a decision rendered. If the debtor's written request for a hearing
is not received within 15 business days following the mailing of the
notice described in paragraph (b) of this section, then the hearing
official shall provide a hearing to the debtor, but will not delay
issuance of a withholding order as described in paragraph (d) of this
section, unless the hearing official determines that the delay in
filing was caused by factors beyond the debtor's control.
(4) The hearing official shall notify the debtor of:
(i) The date and time of a telephone conference hearing;
[[Page 74901]]
(ii) The date, time, and location of an in-person oral hearing, or;
(iii) The deadline for the submission of evidence for a written
hearing.
(5) Except as provided in paragraph (c)(6) of this section, 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 that the amount
of the debt is incorrect. In general, this means that the debtor must
show that it is more likely than not that a debt does not exist or that
the amount of the debt is incorrect. The debtor may also present
evidence that terms of the repayment agreement are unlawful, would
cause a financial hardship, or that collection of the debt may not be
pursued due to operation of law.
(6) If the debtor has previously contested the existence and/or
amount of the debt in accordance with Sec. 1.911(c)(1) or Sec.
1.911a(c)(1) of this title 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 described in paragraph (c)(7) of
this section.
(7) The hearing official shall issue a written decision as soon as
practicable, but not later than 60 days after the date on which the
request for such hearing was received by VA or Treasury. The decision
will be the final action for the purposes of judicial review under the
Administrative Procedures Act (5 U.S.C. 701 et seq.). The decision
shall include:
(i) A summary of the facts presented;
(ii) The hearing official's findings, analysis, and conclusions,
and;
(iii) The terms of the repayment schedule, if applicable.
(d) In accordance with 31 CFR 285.11(g) and (h), VA or Treasury
shall send a withholding order and certification form (Treasury Form
SF-29) by first class mail to the debtor's employer within 30 days
after the debtor fails to make a timely request for a hearing. If a
timely request for a hearing has been filed by the debtor, then VA or
Treasury shall send a withholding order and certification form by first
class mail to the debtor's employer within 30 days after a final
decision (see paragraph (c)(6) of this section) is made to proceed with
the garnishment. The employer shall complete and return the
certification form as described in Sec. 285.11(h).
(e) After receipt of the garnishment order, the employer shall
withhold the amount of garnishment as described in 31 CFR 285.11(i)
from all disposable pay payable to the applicable debtor during each
pay period.
(f) A debtor whose wages are subject to a wage withholding order
under 31 CFR 285.11 may request a review, under the procedures set
forth in paragraph (k) of Sec. 285.11, of the amount garnished. A
request for review shall only be considered after garnishment has been
initiated. The request must be based on materially changed
circumstances such as disability, divorce, or catastrophic illness
which result in financial hardship that limits the debtor's ability to
provide food, housing, clothing, transportation, and medical care for
himself/herself and his/her dependents.
32. Section 1.924 is added to read as follows:
Sec. 1.924 Suspension or revocation of eligibility for federal loans,
loan insurance, loan guarantees, licenses, permits, or privileges.
(a) In accordance with 31 U.S.C. 3720B and the procedures set forth
in 31 CFR 285.13 and Sec. 901.6, a person owing an outstanding non-tax
debt that is in delinquent status shall not be eligible for Federal
financial assistance unless exempted under paragraph (d) or waived
under paragraph (e) of this section.
(b) Federal financial assistance or financial assistance means any
Federal loan (other than a disaster loan), loan insurance, or loan
guarantee.
(c) For the purposes of this section only, a debt is in a
delinquent status if the debt has not been paid within 90 days of the
payment due date or by the end of any grace period provided by statute,
regulation, contract, or agreement. The payment due date is the date
specified in the initial written demand for payment. Further guidance
concerning the delinquent status of a debt may be found at 31 CFR
285.13(d).
(d) Upon the written request and recommendation of the Secretary of
Veterans Affairs, the Secretary of the Treasury may grant exemptions
from the provisions of this section. The standards for exemptions
granted for classes of debts are set forth in 31 CFR 285.13(f).
(e)(1) VA's Chief Financial Officer or Deputy Chief Financial
Officer may waive the provisions of paragraph (a) of this section only
on a person-by-person basis.
(2) The Chief Financial Officer or Deputy Chief Financial Officer
should balance the following factors when deciding whether to grant a
waiver:
(i) Whether the denial of the financial assistance to the person
would tend to interfere substantially with or defeat the purposes of
the financial assistance program or otherwise would not be in the best
interests of the Federal government; and
(ii) Whether the granting of the financial assistance to the person
is contrary to the government's goal of reducing losses by requiring
proper screening of potential borrowers.
(3) When balancing the factors described in paragraph (e)(1) and
(e)(2) of this section, the Chief Financial Officer or Deputy Chief
Financial Officer should consider:
(i) The age, amount, and cause(s) of the delinquency and the
likelihood that the person will resolve the delinquent debt; and
(ii) The amount of the total debt, delinquent or otherwise, owed by
the person and the person's credit history with respect to repayment of
debt.
(4) A centralized record shall be retained of the number and type
of waivers granted under this section.
(f) In non-bankruptcy cases, in seeking the collection of statutory
penalties, forfeitures, or other similar types of claims, VA may
suspend or revoke any license, permit, or other privilege granted a
debtor when the debtor inexcusably or willfully fails to pay such a
debt. The debtor should be advised in VA's written demand for payment
of VA's ability to suspend or revoke licenses, permits, or privileges.
VA may suspend or disqualify any lender, contractor, or broker who is
engaged in making, guaranteeing, insuring, acquiring, or participating
in loans from doing further business with VA or engaging in programs
sponsored by VA 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 should be reported to Treasury.
(g) In bankruptcy cases, before advising the debtor of the
intention to suspend or revoke licenses, permits, or privileges, VA
should seek legal advice from the VA General Counsel or Regional
Counsel concerning the impact of the Bankruptcy Code, particularly 11
U.S.C. 362 and 525, which may restrict such action.
(Authority: 31 U.S.C. 3720B)
33. The authority citation preceding Sec. 1.930 is removed.
34. Sections 1.930 through 1.936 are revised to read as follows:
Sec. 1.930 Scope and application.
(a) The standards set forth in this part apply to the compromise of
debts
[[Page 74902]]
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 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 38 CFR 1.931. 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.
(c) The $100,000 limit in paragraph (b) of this section does not
apply to debts that arise out of participation in a VA loan program
under Chapter 37 of Title 38 of the U.S. Code. VA has unlimited
authority to compromise debts arising out of participation in a Chapter
37 loan program, regardless of the amount of the debt.
Sec. 1.931 Bases for compromise.
(a) VA may compromise a debt if it cannot collect the full amount
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) VA 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; or
(4) There is significant doubt concerning VA's ability to prove its
case in court.
(b) In determining the debtor's inability to pay, VA 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; and
(5) The availability of assets or income that may be realized by
enforced collection proceedings.
(c) VA 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. VA should consider the applicable
exemptions available to the debtor under State and Federal law in
determining the ability to enforce collection. VA also may consider
uncertainty as to the price that collateral or other property will
bring at a forced sale in determining the ability to enforce
collection. A compromise effected under this section should be for an
amount that bears a reasonable relation to the amount that can be
recovered by enforced collection procedures, with regard to the
exemptions available to the debtor and the time that collection will
take.
(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 should
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.
(e) VA 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 collecting justifies enforced
collection of the full amount, VA will consider whether continued
collection of the debt, regardless of cost, is necessary to further an
enforcement principle.
(f) VA generally will not accept compromises payable in
installments. If, however, payment of a compromise in installments is
necessary, VA 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, VA will also obtain security for
repayment.
(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, VA will obtain a current financial statement from
the debtor showing the debtor's assets, liabilities, income and
expenses. Agencies also may obtain credit reports or other financial
information to assess compromise offers.
Sec. 1.932 Enforcement policy.
VA may compromise statutory penalties, forfeitures, or claims
established as an aid to enforcement and to compel compliance, if VA's
enforcement policy in terms of deterrence and securing compliance,
present and future, will be adequately served by VA's acceptance of the
sum to be agreed upon.
Sec. 1.933 Joint and several liability.
(a) When two or more debtors are jointly and severally liable, VA
will pursue collection activity against all debtors, as appropriate. VA
will not attempt to allocate the burden of payment between the debtors
but should proceed to liquidate the indebtedness as quickly as
possible.
(b) VA will ensure that a compromise agreement with one debtor does
not release VA's claim against the remaining debtors. The amount of a
compromise with one debtor shall not be considered a precedent or
binding in determining the amount that will be required from other
debtors jointly and severally liable on the claim.
Sec. 1.934 Further review of compromise offers.
If VA is uncertain whether to accept a firm, written, substantive
compromise offer on a debt that is within its delegated compromise
authority, it may refer the offer to VA General Counsel or Regional
Counsel or to the Civil Division or other appropriate division in DOJ,
using a CCLR accompanied by supporting data and particulars concerning
the debt. DOJ may act upon such an offer or return it to the agency
with instructions or advice.
Sec. 1.935 Consideration of tax consequences to the Government.
In negotiating a compromise, VA will consider the tax consequences
to the Government. In particular, VA will consider requiring a waiver
of tax-loss-carry-forward and tax-loss-carry-back rights of the debtor.
Sec. 1.936 Mutual releases of the debtor and VA.
In all appropriate instances, a compromise that is accepted by VA
shall 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
[[Page 74903]]
compromise amount, and VA 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 VA and its officials
related to the transaction giving rise to the compromised debt.
Sec. 1.937 [Removed]
Sec. 1.938 [Removed]
35. Sections 1.937 and 1.938 are removed.
36. Sections 1.940 and 1.941 are revised to read as follows:
Sec. 1.940 Scope and application.
(a) The standards set forth in Sec. Sec. 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 DOJ for
litigation, VA may suspend or terminate collection under this part with
respect to the debt.
(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 VA believes that suspension or
termination of any debt in excess of $100,000 may be appropriate, it
shall refer the debt to the Civil Division or other appropriate
division in DOJ, using the CCLR. The referral should specify the
reasons for VA's recommendation. If, prior to referral to DOJ, VA
determines that a debt is plainly erroneous or clearly without legal
merit, VA may terminate collection activity regardless of the amount
involved without obtaining DOJ concurrence.
Sec. 1.941 Suspension of collection activity.
(a) VA may suspend collection activity on a debt when:
(1) It 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, VA 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, and 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) Collection action may also be suspended, in accordance with
Sec. Sec. 1.911, 1.911a, 1.912, and 1.912a, pending VA action on
requests for administrative review of the existence or amount of the
debt or a request for waiver of collection of the debt. However,
collection action will be resumed once VA issues an initial decision on
the administrative review or waiver request.
(d) When VA learns that a bankruptcy petition has been filed with
respect to a debtor, in most cases the collection activity on a debt
must be suspended, pursuant to the provisions of 11 U.S.C. 362, 1201,
and 1301, unless VA can clearly establish that the automatic stay does
not apply, has been lifted, or is no longer in effect. VA shall seek
legal advice immediately from either the General Counsel or Regional
Counsel and, if legally permitted, take the necessary steps to ensure
that no funds or money are paid by VA to the debtor until relief from
the automatic stay is obtained.
37. Section 1.942 is amended by adding paragraphs (g) and (h) to
read as follows:
Sec. 1.942 Termination of collection activity.
* * * * *
(g) Discharge in bankruptcy. Generally, VA shall terminate
collection activity on a debt that has been discharged in bankruptcy,
regardless of the amount. VA may continue collection activity, 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.
(h) Before terminating collection activity, VA should have pursued
all appropriate means of collection and determined, 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 VA from
retaining a record of the account for purposes of:
(1) Selling the debt, if the Secretary of the Treasury 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 for prior indebtedness.
38. Section 1.943 is revised and Sec. 1.944 is added to read as
follows:
Sec. 1.943 Exception to termination.
When a significant enforcement policy is involved, or recovery of a
judgment is a prerequisite to the imposition of administrative
sanctions, VA may refer debts for litigation even though termination of
collection activity may otherwise be appropriate.
Sec. 1.944 Discharge of indebtedness; reporting requirements.
(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 Sec. Sec. 1.940 through 1.943 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 Sec. 1.900 et seq. 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.
(b) Upon discharge of an indebtedness, VA 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. VA may request
[[Page 74904]]
Treasury or Treasury-designated debt collection centers to file such a
discharge report to the IRS on VA's behalf.
(c) When discharging a debt, VA must request that any liens of
record securing the debt be released.
(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 Section 3711(i)(2) have been
met.
39. The authority citation preceding Sec. 1.950 is removed.
40. Sections 1.950 through 1.953 are revised to read as follows:
Sec. 1.950 Prompt referral.
(a) VA shall promptly refer debts to DOJ for litigation where
aggressive collection activity has been taken in accordance with
Sec. Sec. 1.900 et seq., and such debts cannot be compromised, or on
which collection activity cannot be suspended or terminated, in
accordance with parts Sec. Sec. 1.930 through 1.936 and Sec. Sec.
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 CCLR
instructions. Debts should be referred as early as possible, consistent
with aggressive agency collection activity and the observance of the
standards contained in Sec. Sec. 1.900 et seq., 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 presented to VA for payment or
reinsurance.
(b) DOJ has exclusive jurisdiction over the debts referred to it
pursuant to this section. VA shall immediately terminate the use of any
administrative collection activities to collect a debt at the time of
the referral of that debt to DOJ. VA should advise DOJ of the
collection activities that have been utilized to date, and their
result. VA shall refrain from having any contact with the debtor and
shall direct all debtor inquiries concerning the debt to DOJ. VA shall
immediately notify DOJ of any payments credited to the debtor's account
after referral of a debt under this section. DOJ shall notify VA, in a
timely manner, of any payments it receives from the debtor.
Sec. 1.951 Claims Collection Litigation Report (CCLR).
(a) Unless excepted by Justice, VA shall complete the CCLR,
accompanied by a signed Certificate of Indebtedness, to refer all
administratively uncollectible claims to DOJ for litigation. VA shall
complete all of the 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) VA shall indicate clearly on the CCLR the actions it wishes DOJ
to take with respect to the referred claim.
(c) VA shall also 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. 1.952 Preservation of evidence.
VA must take care to preserve all files and records that may be
needed by DOJ to prove its claims in court. VA ordinarily should
include certified copies of the documents that form the basis for the
claim when referring such claims to DOJ for litigation. VA shall
provide originals of such documents immediately upon request by DOJ.
Sec. 1.953 Minimum amount of referrals to the Department of Justice.
(a) VA shall 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.
DOJ shall promptly notify referring agencies if the Attorney General
changes this minimum amount.
(b) VA shall not refer claims of less than the minimum amount
unless:
(1) Litigation to collect such smaller claims is important to
ensure compliance with VA'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 VA 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) VA should 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.
Sec. 1.954 [Removed]
41. Section 1.954 is removed.
42. Section 1.955 is amended by revising paragraphs (b) through (d)
to read as follows: :
Sec. 1.955 Regional Office Committees on Waivers and Compromises.
* * * * *
(b) Selection. The Director shall designate the employees to serve
as Chairperson, members, and alternates. Except upon specific
authorization of the Under Secretary for Benefits, when workload
warrants a full-time committee, such designation will be part-time
additional duty upon call of the Chairperson.
(c) Control and staff. The administrative control of each Committee
on Waivers and Compromises is the responsibility of the station's
Fiscal Officer. However, the station Director has the authority to
reassign the administrative control function to another station
activity, rather than the Fiscal Officer, whenever the Director
determines that such reassignment is appropriate. The quality control
of the professional and clerical staff of the Committee is the
responsibility of the Chairperson.
(d) Overall control. The Assistant Secretary for Management is
delegated complete management authority, including planning, policy
formulation, control, coordination, supervision, and evaluation of
Committee operations.
* * * * *
43. Section 1.956 is amended by:
A. Revising paragraphs (a)(2)(i) and (a)(2)(ii).
B. Removing paragraph (a)(2)(iii).
C. Redesignating paragraph (a)(2)(iv) as new paragraph (a)(2)(iii).
D. Revising newly redesignated paragraph (a)(2)(iii).
E. Revising paragraphs (a)(3) and (b).
The revisions read as follows:
Sec. 1.956 Jurisdiction.
* * * * *
(a) * * *
(2) Arising out of operations of the Veterans Health
Administration:
(i) Debts resulting from services furnished in error (Sec.
17.101(a) of this chapter).
[[Page 74905]]
(ii) Debts resulting from services furnished in a medical emergency
(Sec. 17.101(b) of this chapter).
(iii) Other claims arising in connection with transactions of the
Veterans Health Administration (Sec. 17.103(c) of this chapter).
(3) Claims for erroneous payments of pay and allowances, and
erroneous payments of travel, transportation, and relocation expenses
and allowances, made to or on behalf of employees (5 U.S.C. 5584)
(b) The Under Secretary for Benefits may, at his or her discretion,
assume original jurisdiction and establish an ad hoc Board to determine
a particular issue arising within this section.
* * * * *
44. Section 1.957 is amended by:
A. Revising paragraphs (a)(1) introductory text and (a)(1)(iii).
B. Removing paragraph (a)(3).
The revision reads as follows:
Sec. 1.957 Committee authority.
(a) * * *
(1) Waivers. A decision may be rendered to grant or deny waiver of
collection of a debt in the following debt categories:
* * * * *
(iii) Services erroneously furnished (Sec. 17.101(a)).
* * * * *
45. Section 1.958 is revised to read as follows:
Sec. 1.958 Finality of decisions.
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 in 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 Sec. 1.963a(a). There is no right of appeal from a
decision rejecting a compromise offer.
46. Section 1.963a is revised to read as follows:
Sec. 1.963a Waiver; erroneous payments of pay and allowances.
(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 Sec. 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 Sec. Sec. 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: Sec. Sec. 1.955(a) through (e)(2),
1.956(a)(introductory text) and (a)(3), 1.959, 1.960, 1.963a, 1.965(c)
and 1.967(c).
(b) Waiver may be granted under this section and 5 U.S.C. 5584 when
collection would be against equity and good conscience and not in the
best interest of the United States. Generally, these criteria will be
met by a finding that the erroneous payment 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 of
the claim. Generally, waiver is precluded when an employee receives a
significant unexplained increase in pay or allowances, or otherwise
knows, or reasonably should know, that an erroneous payment has
occurred, and fails to make inquiries or bring the matter to the
attention of the appropriate officials. Waiver under this standard will
depend upon the facts existing in each case.
(c) An application for waiver must be received within 3 years
immediately following the date on which the erroneous payment was
discovered.
(Authority: 5 U.S.C. 5584, 38 U.S.C. 501)
Sec. 1.965 [Amended]
47. Section 1.965 is amended by removing paragraph (b)(3).
Sec. 1.970 [Amended]
48. Section 1.970 is amended by removing ``Sec. Sec. 1.900 through
1.937'' and adding, in its place, ``Sec. Sec. 1.930 through 1.936''.
49. Section 1.980 is amended by:
A. Revising paragraphs (a) and (b).
B. Redesignating paragraphs (f) and (g) as (h) and (i).
C. Adding new paragraphs (f) and (g).
D. Revising newly redesignated paragraph (h).
The revisions and additions read as follows:
Sec. 1.980 Scope.
(a) In accordance with 5 CFR part 550, subpart K, the provisions
set forth in Sec. Sec. 1.980 through 1.995 implement VA's authority
for the use of salary offset to satisfy certain debts owed to VA.
(b) These regulations apply to offsets from the salaries of current
employees of VA, or any other agency, who owe debts to VA. Offsets by
VA from salaries of current VA employees who owe debts to other
agencies shall be processed in accordance with procedures set forth in
5 CFR part 550, subpart K.
* * * * *
(f) These regulations do not apply to a routine intra-agency
adjustment of pay that is made to correct an overpayment of pay
attributable to clerical or administrative errors or delays in
processing pay documents, if the overpayment occurred within the four
pay periods preceding the adjustment and, at the time of such
adjustment, or as soon thereafter as practicable, the individual is
provided written notice of the nature and amount of the adjustment and
a point of contact for such adjustment.
(g) These regulations do not apply to any adjustment to collect a
debt amounting to $50 or less, if at the time of such adjustment, or as
soon thereafter as practicable, the individual is provided with written
notice of the nature and amount of the adjustment and a point of
contact for contesting such adjustment.
(h) These regulations do not preclude the compromise, suspension,
or termination of collection action under the FCCS (31 CFR parts 900
through 904) and VA regulations 38 CFR 1.930 through 1.953.
* * * * *
50. Section 1.982 is amended by revising paragraphs (a), (b), and
(c)(3) to read as follows:
Sec. 1.982 Salary offsets of debts involving benefits under the laws
administered by VA.
(a) VA will not collect a debt involving benefits under the laws
administered by VA by salary offset unless the Secretary or appropriate
designee first provides the employee with a minimum of 30 calendar days
written notice.
(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 (Sec. 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
[[Page 74906]]
with the procedures set forth in 38 CFR parts 19 and 20 and will
contain the determination and information required by Sec. 1.983(b)(1)
through (5), (7), (9), (10), and (12) through (14). The notice will
also state that the offset schedule under the procedures set forth in
Sec. 1.984 and such a request will stay the commencement of salary
offset.
(c) * * *
(3) That the employee may request a waiver of the debt pursuant to
38 CFR 1.911(c)(2) subject to the time limits of 38 U.S.C. 5302.
* * * * *
51. Section 1.983 is amended by revising paragraphs (b)(8) and
(b)(13) to read as follows:
Sec. 1.983 Notice requirements before salary offsets of debts not
involving benefits under laws administered by VA.
* * * * *
(b) * * *
(8) The VA employee's right to request an oral or paper hearing on
the Secretary 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 all VA employees. 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.
* * * * *
(13) The employee's right, if applicable, to request waiver under 5
U.S.C. 5584 and 38 CFR 1.963a and any other rights and remedies
available to the employee under statutes or regulations governing the
program for which the collection is being made; and
* * * * *
Sec. 1.984 [Amended]
52. Section 1.984 is amended by:
A. In paragraph (a), removing ``20 calendar days'' and adding, in
its place, ``30 calendar days''.
B. In paragraph (b), removing ``20 day period'' and adding, in its
place, ``30-day period''.
Sec. 1.989 [Amended]
53. In Sec. 1.989 paragraph (a) is amended by removing ``20
calendar days'' and adding, in its place, ``30 calendar days''.
Sec. 1.990 [Amended]
54. In Sec. 1.990, paragraph (a) is amended by removing ``20
calendar days'' and adding, in its place, ``30 calendar days''.
55. Section 1.991 is amended by revising paragraph (d) to read as
follows:
Sec. 1.991 Procedures for salary offset: when deductions may begin.
* * * * *
(d) If an employee retires, resigns, or his or her employment ends
before collection of the amount of the indebtedness is completed, the
remaining indebtedness will be collected according to procedures for
administrative offset (see 31 CFR 901.3, 38 CFR 1.912, and 5 CFR
831.1801 through 831.1808).
56. Section 1.992 is amended by revising paragraph (c) to read as
follows:
Sec. 1.992 Procedures for salary offset.
* * * * *
(c) Imposition of interest, penalties, and administrative costs.
Interest, penalties, and administrative costs shall be charged in
accordance with 31 CFR 901.9 and 38 CFR 1.915.
57. Section 1.995 is added to read as follows:
Sec. 1.995 Requesting recovery through centralized administrative
offset.
(a) Under 31 U.S.C. 3716, VA and other creditor agencies must
notify Treasury of all debts over 180 days delinquent so that recovery
of such debts may be made by centralized administrative offset. This
includes those debts that VA and other agencies seek from the pay
account of an employee of another Federal agency via salary offset.
Treasury and other disbursing officials will match payments, including
Federal salary payments, against these debts. Where a match occurs, and
all the requirements for offset have been met, the payment will be
offset to satisfy the debt in whole or part.
(b) Prior to submitting a debt to Treasury for the purpose of
collection by offset, including salary offset, VA shall provide written
certification to Treasury that:
(1) The debt is past due and legally enforceable in the amount
submitted to Treasury and that VA will ensure that any subsequent
collections are credited to the debt and that Treasury shall be
notified of such;
(2) Except in the case of a judgment debt or as otherwise allowed
by law, the debt is referred to Treasury for offset within 10 years
after VA's right of action accrues;
(3) VA has complied with the provisions of 31 U.S.C. 3716 and 38
CFR 1.912 and 1.912a including, but not limited to, those provisions
requiring that VA provide the debtor with applicable notices and
opportunities for a review of the debt; and
(4) VA has complied with the provisions of 5 U.S.C. 5514 (salary
offset) and 38 CFR 1.980 through 1.994 including, but not limited to,
those provisions requiring that VA provide the debtor with applicable
notices and opportunities for a hearing.
(c) Specific procedures for notifying Treasury of debts for
purposes of collection by centralized administrative offset are
contained in the 31 CFR 285.7. VA and other creditor agencies may
notify Treasury of debts that have been delinquent for 180 days or
less, including debts that VA and other creditor agencies seek to
recover from the pay of an employee via salary offset.
PART 2--DELEGATIONS OF AUTHORITY
1. The authority citation for part 2 continues to read as follows:
Authority: 5 U.S.C. 302, 552a; 38 U.S.C. 501, 512, 515, 1729,
1729A, 5711; 44 U.S.C. 3702, unless otherwise noted.
2. Section 2.6 is amended by:
A. Revising the heading of paragraph (c).
B. In paragraph (c)(1), removing the ``Assistant Secretary for
Finance and Information Resources Management'' and adding, in its
place, ``Assistant Secretary for Management''.
C. In paragraph (c)(2), removing the ``Assistant Secretary for
Finance and Information Resources Management'' each time it appears and
adding, in its place, ``Assistant Secretary for Management''.
D. Revising paragraph (d).
The revisions read as follows:
Sec. 2.6 Secretary's delegations of authority to certain officials
(38 U.S.C. 512).
* * * * *
(c) Office of Management.
* * * * *
(d) The Assistant Secretary for Management (Chief Financial
Officer) is delegated authority to take appropriate action (other than
provided for in paragraph (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 Sec. 1.900 et seq. The Assistant Secretary
[[Page 74907]]
for Management (Chief Financial Officer) may redelegate such authority
as he/she deems appropriate to administration heads and staff office
directors.
* * * * *
[FR Doc. 03-31620 Filed 12-24-03; 8:45 am]
BILLING CODE 8320-01-P