[Federal Register: April 3, 2006 (Volume 71, Number 63)]
[Rules and Regulations]
[Page 16481-16488]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr03ap06-3]
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DEPARTMENT OF STATE
22 CFR Part 34
[Public Notice: 5310]
Debt Collection
AGENCY: Department of State.
ACTION: Final rule.
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SUMMARY: The Department of State is revising its debt collection
regulations to conform to changes in Federal Government-wide debt
collection laws and regulations, including the Debt Collection
Improvement Act of 1996 and the revised Federal Claims Collections
Standards jointly issued by the Department of the Treasury and
Department of Justice in 2000.
DATES: This rule is effective May 3, 2006.
ADDRESSES: You may submit comments by any of the following methods:
E-mail: AmoryER@state.gov
Mail paper submissions to the Deputy Assistant Secretary
for Global Financial Services, Charleston Financial Service Center,
P.O. Box 150008, Charleston, S.C. 29415-5008.
Persons with access to the internet may also view this notice by
going to the regulations.gov Web site at: http://www.regulations.gov/index.cfm
.
FOR FURTHER INFORMATION CONTACT: Elizabeth Amory, Office of the Legal
Adviser, Charleston Financial Service Center, telephone 843-308-5605.
SUPPLEMENTARY INFORMATION: This rule revises the Department of State's
(State) debt collection regulations found at 22 CFR part 34 to conform
to the Debt Collection Improvement Act of 1996 (DCIA), Public Law 104-
134, 110 Stat. 1321, 1358 (Apr. 26, 1996), the revised Federal Claims
Collection Standards, 31 CFR Chapter IX (parts 900 through 904), and
other laws applicable to the collection of non-tax debt owed to the
Government.
This regulation provides procedures for the collection of debts
owed to State entities. State adopts the Government-wide debt
collection standards promulgated by the Departments of the Treasury and
Justice, known as the Federal Claims Collection Standards (FCCS), as
revised on November 22, 2000 (65 FR 70390), and supplements the FCCS by
prescribing procedures
[[Page 16482]]
consistent with the FCCS, as necessary and appropriate for State
operations. Nothing in this regulation precludes the use of otherwise
authorized collection remedies not contained in this regulation.
Regulatory Analysis
Administrative Procedures Act
No notice of proposed rulemaking is required under the
Administrative Procedure Act (APA) because these rules relate solely to
agency procedure and practice (5 U.S.C. 553(b)(3)(A)).
Regulatory Flexibility Act
The Department, in accordance with the Regulatory Flexibility Act
(5 U.S.C. 605(b)), has reviewed this regulation and, by approving it,
certifies that this final rule will not have a significant economic
impact on a substantial number of small entities.
Unfunded Mandated Reform Act of 1995
This rule will not result in the expenditure by State, local, and
tribal governments, in the aggregate, or by the private sector, of $100
million or more in any one year and it will not significantly or
uniquely affect small governments. Therefore, no actions were deemed
necessary under the provisions of the Unfunded Mandates Reform Act of
1995.
Small Business Regulatory Enforcement Act of 1996
This rule is not a major rule as defined by section 251 of the
Small Business Regulatory Enforcement Act of 1996 (5 U.S.C. 804). This
rule will not result in an annual effect on the economy of $100 million
or more; a major increase in costs or prices for consumers, individual
industries, Federal, State, or local government agencies, or geographic
regions; or significant adverse effects on competition, employment,
investment, productivity, innovation, or on the ability of United
States-based enterprises to compete with foreign-based enterprises in
domestic and export markets.
Executive Order 12866
The Department does not consider this rule to be a ``significant
regulatory action'' under Executive Order 12866, section 3(f),
Regulatory Planning and Review. In addition, the Department is exempt
from Executive Order 12866 except to the extent that it is promulgating
regulations in conjunction with a domestic agency that are significant
regulatory actions. The Department has nevertheless reviewed the
regulation to ensure its consistency with the regulatory philosophy and
principles set forth in the Executive Order.
Executive Order 12988
The Department has reviewed this regulation in light of sections
3(a) and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to
eliminate ambiguity, minimize litigation, establish clear legal
standards, and reduce burden.
Executive Order 13132
This regulation will not have substantial direct effects on the
States, the relationship between the National Government and the
States, or on the distribution of power and responsibilities among the
various levels of government. Therefore, the Department determines that
this rule does not have sufficient federalism implications to require
consultations or warrant the preparation of a federalism summary impact
statement.
Executive Order 12372
This regulation does not require review under Executive Order
12372, Intergovernmental Review of Federal Programs.
Paperwork Reduction Act
This rule does not impose any new reporting or recordkeeping
requirements subject to the Paperwork Reduction Act, 44 U.S.C. chapter
35.
List of Subjects in 22 CFR Part 34
Administrative practice and procedure, Claims, Debts, Garnishment
of wages, Government employee, Hearing and appeal procedures, Pay
administration, Salaries, Wages.
0
In consideration of the foregoing, the State Department amends Title 22
of the Code of Federal Regulations, by revising Part 34 to read:
PART 34--DEBT COLLECTION
Subpart A--General Provision
Sec.
34.1 Purpose
34.2 Scope
34.3 Exceptions
34.4 Definitions
34.5 Other procedures or actions
34.6 Interest, penalties, and administrative cost
34.7 Collection in installments
Subpart B--Collection Actions
34.8 Notice and demand for payment
34.9 Request for internal administrative review
34.10 Collection Methods
Subpart C--Salary Offset
34.11 Scope
34.12 Coordinating offset with another Federal agency
34.13 Notice requirements before offset
34.14 Request for an outside hearing for certain debts
34.15 Outside hearing
34.16 Procedures for salary offset
34.17 Non-waiver of rights by payment
Subpart D--Collection Adjustments
34.18 Waiver of indebtedness
34.19 Compromise
34.20 Suspension
34.21 Termination
34.22 Discharge
34.23 Bankruptcy
34.24 Refunds
Authority: 31 U.S.C. 3701-3719; 5 U.S.C. 5514; 31 C.F.R. part
285; 31 CFR parts 900-904; 5 CFR 550 subpart K.
Subpart A--General Provisions
Sec. 34.1 Purpose.
These regulations prescribe the procedures to be used by the United
States Department of State (STATE) in the collection of debts owed to
STATE and to the United States.
Sec. 34.2 Scope.
(a) Except as set forth in this part or otherwise provided by law,
STATE will conduct administrative actions to collect debts (including
offset, compromise, suspension, termination, disclosure and referral)
in accordance with the Federal Claims Collection Standards (FCCS) of
the Department of the Treasury and Department of Justice, 31 CFR parts
900-904.
(b) This part is not applicable to STATE claims against another
Federal agency, any foreign country or any political subdivision
thereof, or any public international organization.
Sec. 34.3 Exceptions.
(a) Debts arising from the audit of transportation accounts
pursuant to 31 U.S.C. 3726 shall be determined, collected, compromised,
terminated, or settled in accordance with the regulations published at
41 CFR part 102-118.
(b) Debts arising out of acquisition contracts subject to the
Federal Acquisition Regulation (FAR) shall be determined, collected,
compromised, terminated, or settled in accordance with those
regulations (see 48 CFR part 32).
(c) Debts based in whole or in part on conduct in violation of the
antitrust laws, or in regard to which there is an indication of fraud,
presentation of a false claim, or misrepresentation on the part of the
debtor or any other party having an interest in the claim, shall be
referred to the Department of Justice for compromise, suspension, or
termination of collection action.
[[Page 16483]]
(d) Tax debts are excluded from the coverage of this regulation.
Sec. 34.4 Definitions.
For purposes of the section:
(a) Administrative offset means withholding funds payable by the
United States to, or held by the United States for, a person to satisfy
a debt owed by the person to the United States.
(b) Administrative wage garnishment means the process by which a
Federal agency orders a non-Federal employer to withhold amounts from a
debtor's wages to satisfy a debt owed to the United States.
(c) Compromise means that the creditor agency accepts less than the
full amount of an outstanding debt in full satisfaction of the entire
amount of the debt.
(d) Creditor agency means the Federal agency to which a debt is
owed.
(e) Debt or claim means an amount of money which has been
determined to be owed to the United States from any person. A debtor's
liability arising from a particular contract or transaction shall be
considered a single claim for purposes of the monetary ceilings of the
FCCS.
(f) Debtor means a person who owes the Federal government money.
(g) Delinquent debt means a debt that has not been paid by the date
specified in STATE's written notification or applicable contractual
agreement, unless other satisfactory arrangements have been made by
that date, or that has not been paid in accordance with a payment
agreement with STATE.
(h) Discharge means the release of a debtor from personal liability
for a debt. Further collection action is prohibited.
(i) Disposable pay means the amount that remains from an employee's
current basic pay, special pay, incentive pay, retired pay, retainer
pay, or in the case of an employee not entitled to basic pay, other
authorized pay remaining after required deductions for Federal, State
and local income taxes; Social Security taxes, including Medicare
taxes; Federal retirement programs; normal premiums for life and health
insurance benefits and such other deductions that are required by law
to be withheld, excluding garnishments.
(j) FCCS means the Federal Claims Collection Standards published
jointly by the Departments of the Treasury and Justice and codified at
31 CFR parts 900-904.
(k) Person means an individual, corporation, partnership,
association, organization, State or local government, or any other type
of entity other than a Federal agency, Foreign Government, or public
international organization.
(l) Salary offset means the withholding of amounts from the current
pay account of a Federal employee to satisfy a debt owed by that
employee to the United States.
(m) Suspension means the temporary cessation of active debt
collection pending the occurrence of an anticipated event.
(n) Termination means the cessation of all active debt collection
action for the foreseeable future.
(o) Waiver means a decision to forgo collection of a debt owed to
the United States, as provided for by a specific statute and according
to the standards set out under that statute.
Sec. 34.5 Other procedures or actions.
(a) Nothing contained in this regulation is intended to require
STATE to duplicate administrative proceedings required by contract or
other laws or regulations.
(b) Nothing in this regulation is intended to preclude utilization
of informal administrative actions or remedies which may be available.
(c) Nothing contained in this regulation is intended to deter STATE
from demanding the return of specific property or from demanding the
return of the property or the payment of its value.
(d) The failure of STATE to comply with any provision in this
regulation shall not serve as defense to the debt.
Sec. 34.6 Interest, penalties, and administrative costs.
Except as otherwise provided by statute, contract or excluded in
accordance with the FCCS, STATE will assess:
(a) Interest on delinquent debts in accordance with 31 CFR 901.9.
(b) Penalties at the rate of 6 percent a year or such other rate as
authorized by law on any portion of a debt that is delinquent for more
than 90 days.
(c) Administrative costs to cover the costs of processing and
calculating delinquent debts.
(d) Late payment charges under paragraphs (a) and (b) of this
section shall be computed from the date of delinquency.
(e) When a debt is paid in partial or installment payments, amounts
received shall be applied first to outstanding penalty and
administrative cost charges, second to accrued interest, and then to
outstanding principal.
(f) STATE shall consider waiver of interest, penalties and/or
administrative costs in accordance with the FCCS, 31 CFR 901.9(g).
Sec. 34.7 Collection in installments.
Whenever feasible, and except as required otherwise by law, debts
owed to the United States, together with interest, penalties, and
administrative costs as required by this regulation, should be
collected in one lump sum. This is true whether the debt is being
collected under administrative offset, including salary offset, or by
another method, including voluntary payment. However, if the debtor is
financially unable to pay the indebtedness in one lump sum, payment may
be accepted in regular installments. If STATE agrees to accept payment
in installments, it may require a legally enforceable written agreement
from the debtor that specifies all of the terms of the arrangement and
which contains a provision accelerating the debt in the event the
debtor defaults. The size and frequency of the payments should bear a
reasonable relation to the size of the debt and ability of the debtor
to pay. If possible, the installment payments should be sufficient in
size and frequency to liquidate the Government's claim within 3 years.
Subpart B--Collection Actions
Sec. 34.8 Notice and Demand for Payment.
(a) STATE shall promptly hand deliver or send by first-class mail
to the debtor at the debtor's most current address in the records of
STATE at least one written notice. Written demand under this subpart
may be preceded by other appropriate actions under this part and or the
FCCS, including but not limited to actions taken under the procedures
applicable to administrative offset, including salary offset.
(b) The written notice shall inform the debtor of:
(1) The basis of the debt;
(2) The amount of the debt;
(3) The date by which payment should be made to avoid the
imposition of interest, penalties and administrative costs, and the
enforced collection actions described in paragraph (b)(7) of this
section;
(4) The applicable standards for imposing of interest, penalties
and administrative costs to delinquent debts;
(5) STATE's readiness to discuss alternative payment arrangements
and how the debtor may offer to enter into a written agreement to repay
the debt under terms acceptable to STATE;
(6) The name, address and telephone number of a contact person or
office within STATE;
(7) STATE's intention to enforce collection by taking one or more
of the following actions if the debtor fails to pay or otherwise
resolve the debt:
[[Page 16484]]
(i) Offset from Federal payments otherwise due to the debtor,
including income tax refunds, salary, certain benefit payments,
retirement, vendor payments, travel reimbursement and advances, and
other Federal payments due from STATE, other Federal agencies, or
through centralized disbursing from the Department of the Treasury;
(ii) Referral to private collection agency
(iii) Report to credit bureaus
(iv) Administrative Wage Garnishment
(v) Litigation by the Department of Justice
(vi) Referral to the Financial Management Service of the Department
of the Treasury for collection
(vii) Liquidation of collateral
(viii) Other actions as permitted by the FCCS and applicable law;
(8) The debtor's right to inspect and copy records related to the
debt;
(9) The debtor's right to an internal review of STATE's
determination that the debtor owes a debt or the amount of the debt;
(10) The debtor's right, if any, to request waiver of collection of
certain debts, as applicable (see Sec. 34.18);
(11) Requirement that the debtor advise STATE of any bankruptcy
proceeding of the debtor; and
(12) Provision for refund of amounts collected if later decision
finds that the amount of the debt is not owed or is waived.
(c) Exceptions to notice requirements. STATE may omit from a notice
to a debtor one or more of the provisions contained in paragraphs
(b)(7) through (b)(12) of this section if STATE determines that any
provision is not legally required given the collection remedies to be
applied to a particular debt, or which have already been provided by
prior notice, applicable agreement, or contract.
Sec. 34.9 Requests for Internal Administrative Review.
(a) For all collection methods for debts owed to STATE, the debtor
may request a review within State of the existence or the amount of the
debt. For offset of current Federal salary under 5 U.S.C. 5514 for
certain debts, debtors may also request an outside hearing. See subpart
C of this part.
This subpart rather than subpart C applies to collections by salary
offset for debts arising under 5 U.S.C. 5705 (travel advances), 5
U.S.C. 4108 (training expenses), and other statutes specifically
providing for collection by salary offset.
(b) A debtor requesting an internal review shall do so in writing
to the contact office by the payment due date stated within the initial
notice sent under 34.8(b) or other applicable provision. The debtor's
written request shall state the basis for the dispute and include any
relevant documentation in support.
(1) STATE will provide for an internal review of the debt by an
appropriate official. The review may include examination of documents,
internal discussions with relevant officials and discussion by letter
or orally with the debtor, at STATE's discretion. An oral hearing may
be provided when the matter cannot be decided on the documentary record
because it involves issues of credibility or veracity. Unless otherwise
required by law, such oral hearing shall not be a formal evidentiary
hearing. If an oral hearing is appropriate, the time and location of
the hearing shall be established by STATE. An oral hearing may be
conducted, at the debtor's option, either in-person or by telephone
conference. All travel expenses incurred by the debtor in connection
with an in-person hearing will be borne by the debtor. All telephonic
charges incurred during the hearing will be the responsibility of
STATE. During the period of review, STATE may suspend collection
activity, including the accrual of interest and penalties, on any
disputed portion of the debt if STATE determines that suspension is in
the Department's best interest or would serve equity and good
conscience.
(2) If after review STATE either sustains or amends its
determination, it shall notify the debtor of its intent to collect the
sustained or amended debt. If previously suspended, collection actions
will be re-instituted unless payment of the sustained or amended amount
is received or the debtor has made a proposal for a payment plan to
which STATE agrees, by the date specified in the notification of
STATE's decision.
Sec. 34.10 Collection Methods.
Upon completion of notice and provision of all due process rights
as listed in 34.8(b) of this section and upon final determination of
the existence and amount of a debt, unless other acceptable payment
arrangements have been made or procedures under a specific statute
apply, STATE shall collect the debt by one or more of the following
methods:
(a) Administrative offset.
(1) Payments otherwise due the debtor from the United States shall
be offset from the debt in accordance with 31 CFR 901.3. These may be
funds under the control of the Department of State or other Federal
agencies. Collection may be made through centralized offset by the
Financial Management Service (``FMS'') of the Department of the
Treasury.
(2) Such payments include but are not limited to vendor payments,
salary, retirement, lump sum payments due upon Federal employment
separation, travel reimbursements, tax refunds, loans or other
assistance. For offset of Federal salary payments under 5 U.S.C. 5514
for certain types of debt see subpart C of this part.
(3) Administrative offset under this subsection does not apply to
debts specified in the FCCS, 31 CFR 901.3(a)(2).
(4) Before administrative offset is instituted by another Federal
agency or the FMS, STATE shall certify in writing to that entity that
the debt is past due and legally enforceable and that STATE has
complied with all applicable due process and other requirements as
described in this part and other Federal law and regulations.
(5) Administrative offset of anticipated or future benefit payments
under the Civil Service Retirement and Disability Fund will be
requested by STATE pursuant to 5 CFR 831.1801-1808.
(6) Expedited offset. STATE may effect an offset against a debtor
prior to sending a notice to the debtor as described in Sec. 34.8,
when:
(i) The offset is in the nature of a recoupment,
(ii) Offset is executed pursuant to procedures set out in the
Contracts Disputes Act,
(iii) Previous notice and opportunity for review have been given,
or
(iv) There is insufficient time before payment would be made to the
debtor/payee to allow prior notice and an opportunity for review. In
such case, STATE shall give the debtor notice and an opportunity for
review as soon as practicable and shall promptly refund any money
ultimately found not to have been owed to the Government.
(7) Unless otherwise provided by law, administrative offset of
payments under the authority of 31 U.S.C. 3716 to collect a debt may
not be conducted more than 10 years after the Government's right to
collect the debt first accrued, unless facts material to the
Government's right to collect the debt were not known and could not
reasonably have been known by the official charged with the
responsibility to discover and collect such debts. This limitation does
not apply to debts reduced to a judgment.
(b) Referral to Private Collection Agency. STATE may contract for
collection services to recover delinquent
[[Page 16485]]
debts, or transfer a delinquent debt to FMS for private collection
action, pursuant to 31 U.S.C. 3718, 22 U.S.C. 2716 and the FCCS, 31 CFR
901.5, as applicable. STATE will not use a collection agency to collect
a debt owed by a currently employed or retired Federal employee, if
collection by salary or annuity offset is available.
(c) Disclosure to consumer reporting agencies. STATE may disclose
delinquent debts to consumer reporting agencies and other automated
databases in accordance with 31 U.S.C. 3711(e) and the FCCS, 31 CFR
901.4, and in compliance with the Bankruptcy Code and the Privacy Act 5
U.S.C. 552a.
(d) Liquidation of Collateral, if applicable, in accordance with
the FCCS, 31 CFR 901.7.
(e) Suspension or revocation of eligibility for loans and loan
guaranties, licenses, permits, or privileges in accordance with the
FCCS, 31 CFR 901.6.
(f) Litigation. Debts may be referred to the Department of Justice
for litigation for collection in accordance with the standards set
forth in the FCCS, 31 CFR part 904.
(g) Transfer to FMS. Debts delinquent more than 180 days shall be
transferred to the Financial Management Service of the Department of
the Treasury for collection by all available means. Debts delinquent
less that 180 days may also be so transferred.
(h) Administrative Wage Garnishment. STATE may collect debts from a
non-Federal employee's wages by means of administrative wage
garnishment in accordance with the requirements of 31 U.S.C. 3720D and
31 CFR 285.11. All parts of 31 CFR 285.11 are incorporated by reference
into these regulations, including the hearing procedures described in
31 CFR 285.11(f).
(i) Salary Offset. See subpart C of this part.
Subpart C--Salary Offset
Sec. 34.11 Scope.
(a) This subpart sets forth STATE's procedures for the collection
of a Federal employee's current pay by salary offset to satisfy certain
debts owed to the United States.
(b) This subpart applies to:
(1) Current employees of STATE and other agencies who owe debts to
STATE;
(2) Current employees of STATE who owe debts to other agencies.
(c) This subpart does not apply to (1)
Offset of a separating employee's final payments or Foreign Service
annuity payments which are covered under administrative offset (See
Sec. 34.10(a)),
(2) Debts or claims arising under the Internal Revenue Code of 1954
(26 U.S.C. 1 et seq.); the Social Security Act (42 U.S.C. 301 et seq.);
the tariff laws of the United States.
(3) Any adjustment to pay arising out of an employee's election of
coverage or a change in coverage under a Federal benefits program
requiring periodic deductions from pay, if the amount to be recovered
was accumulated over 4 pay periods or less.
(4) Any 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 4 pay periods preceding the adjustment
and, at the time of such adjustment, or as soon thereafter as
practical, the individual is provided written notice of the nature and
the amount of the adjustment and point of contact for contesting such
adjustment.
(5) Any adjustment to collect a debt amounting to $50 or less, if,
at the time of such adjustment, or as soon thereafter as practical, the
individual is provided written notice of the nature and the amount of
the adjustment and a point of contact for contesting such adjustment.
(d) These regulations do not preclude an employee from requesting
waiver of the debt, if waiver is available under subpart D of this part
or by other regulation or statute.
(e) Nothing in these regulations precludes the compromise,
suspension or termination of collection actions where appropriate under
subpart D of this part or other regulations or statutes.
Sec. 34.12 Coordinating offset with another Federal agency.
(a) When STATE is owed a debt by an employee of another agency, the
other agency shall not initiate the requested offset until STATE
provides the agency with a written certification that the debtor owes
STATE a debt (including the amount and basis of the debt and the due
date of payment) and that STATE has complied with these regulations.
(b) When another agency is owed the debt, STATE may use salary
offset against one of its employees who is indebted to another agency,
if requested to do so by that agency. Such request must be accompanied
by a certification that the person owes the debt (including the amount
and basis of the debt and the due date of payment) and that the agency
has complied with its regulations as required by 5 U.S.C. 5514 and 5
CFR part 550, subpart K.
Sec. 34.13 Notice requirements before offset.
Except as provided in Sec. 34.16, salary offset deductions will not
be made unless STATE first provides the employee with a written notice
that he/she owes a debt to the Federal Government at least 30 calendar
days before salary offset is to be initiated. When STATE is the
creditor agency, this notice of intent to offset an employee's salary
shall be hand-delivered or sent by first class mail to the last known
address that is available to the Department and will state:
(a) That STATE has reviewed the records relating to the debt and
has determined that the debt is owed, its origin and nature, and the
amount due;
(b) The intention of STATE to collect the debt by means of
deduction from the employee's current pay until the debt and any and
all accumulated interest, penalties and administrative costs are paid
in full;
(c) The amount, frequency, approximate beginning date, and duration
of the intended deductions;
(d) The requirement to assess and collect interest, penalties, and
administrative costs in accordance with Sec. 34.6, unless waived in
accordance with Sec. 34.6(f);
(e) The employee's right to inspect and copy any STATE records
relating to the debt, or, if the employee or their representative
cannot personally inspect the records, to request and receive a copy of
such records;
(f) The opportunity to voluntarily repay the debt or to enter into
a written agreement (under terms agreeable to STATE) to establish a
schedule for repayment of the debt in lieu of offset;
(g) Right to an internal review or outside hearing.
(1) An internal review under Sec. 34.9 may be requested in cases of
collections by salary offset for debts arising under 5 U.S.C. 5705
(travel advances), 5 U.S.C. 4108 (training expenses), and other
statutes specifically providing for collection by salary offset.
(2) For all other debts, an internal review or an outside hearing
conducted by an official not under the supervision or control of STATE
may be requested with respect to the existence of the debt, the amount
of the debt, or the repayment schedule (i.e. the percentage of
disposable pay to be deducted each pay period);
(h) That the timely filing of a request for an outside hearing or
internal review within 30 calendar days after the date of the notice of
intent to offset will stay the commencement of collection proceedings;
[[Page 16486]]
(i) The method and time period for requesting an internal review or
outside hearing;
(j) That a final decision on the internal review or outside hearing
(if one is requested) will be issued at the earliest practical date,
but not later than 60 days after the filing of the request, unless the
employee requests and the outside hearing official grants a delay in
the proceedings;
(k) That any knowingly false or frivolous statements,
representation, or evidence may subject the employee to disciplinary
procedures (5 U.S.C. Chapter 75, 5 CFR part 752 or other applicable
statutes or regulations); penalties (31 U.S.C. 3729-3731 or other
applicable statutes or regulations); or criminal penalties (18 U.S.C.
286, 287, 1001, and 1002 or other applicable statutes or regulations);
(l) Any other rights and remedies available to the employee under
statutes or regulations governing the program for which the collection
is being made;
(m) That the amounts paid on the debt which are later waived or
found not owed to the United States will be promptly refunded to the
employee, unless there are applicable contractual or statutory
provisions to the contrary; and
(n) The name and address of the STATE official to whom
communications should be directed.
Sec. 34.14 Request for an outside hearing for certain debts.
(a) Except as provided in paragraph (d) of this section, an
employee must file a request that is received by STATE not later than
30 calendar days from the date of STATE's notice described in Sec.
34.13 if an employee wants an outside hearing pursuant to Sec.
34.13(g)(2) concerning:
(1) The existence or amount of the debt; or
(2) STATE's proposed offset schedule.
(b) The request must be signed by the employee and should identify
and explain with reasonable specificity and brevity the facts, evidence
and witnesses which the employee believes support his or her position.
If the employee objects to the percentage of disposable pay to be
deducted from each check, the request should state the objection and
the reasons for it.
(c) The employee must also specify whether an oral or paper hearing
is requested. If an oral hearing is desired, the request should explain
why the matter cannot be resolved by review of the documentary evidence
alone.
(d) If the employee files a request for an outside hearing later
than the required 30 calendar days as described in paragraph (a) of
this section, STATE may accept the request if the employee can show
that the delay was because of circumstances beyond his or her control
or because of failure to receive notice of the filing deadline (unless
the employee has actual notice of the filing deadline).
(e) An employee waives the right to an outside hearing and will
have his or her pay offset if the employee fails to file a petition for
a hearing as prescribed in paragraph (a) of this section.
Sec. 34.15 Outside Hearings.
(a) If an employee timely files a request for an outside hearing
under Sec. 34.13(g)(2), pursuant to 5 U.S.C. 5514(a)(2), STATE shall
select the time, date, and location of the hearing.
(b) Outside hearings shall be conducted by a hearing official not
under the supervision or control of STATE.
(c) Procedure. (1) After the employee requests a hearing, the
hearing official shall notify the employee of the form of the hearing
to be provided. If the hearing will be oral, notice shall set forth the
date, time and location of the hearing. If the hearing will be paper,
the employee shall be notified that he or she should submit arguments
in writing to the hearing official by a specified date after which the
record shall be closed. This date shall give the employee reasonable
time to submit documentation.
(2) Oral hearing. An employee who requests an oral hearing shall be
provided an oral hearing if the hearing official determines that the
matter cannot be resolved by review of documentary evidence alone (e.g.
when an issue of credibility or veracity is involved). The hearing is
not an adversarial adjudication, and need not take the form of an
evidentiary hearing.
(3) Paper hearing. If the hearing official determines that an oral
hearing is not necessary, he or she will make a decision based upon a
review of the available written record.
(4) Record. The hearing official must maintain a summary record of
any hearing provided by this subpart. Witnesses who provide testimony
will do so under oath or affirmation.
(5) Content of decision. The written decision shall include:
(i) A statement of the facts presented to support the origin,
nature, and amount of the debt;
(ii) The hearing official's findings, analysis, and conclusions;
and
(iii) The terms of any repayment schedules, or the date salary
offset will commence, if applicable.
(6) Failure to appear. In the absence of good cause shown (e.g.
excused illness), an employee who fails to appear at a hearing shall be
deemed, for the purpose of this subpart, to admit the existence and
amount of the debt as described in the notice of intent. The hearing
official shall schedule a new hearing date upon the request of the
creditor agency representative when good cause is shown.
(d) A hearing official's decision is considered to be an official
certification regarding the existence and amount of the debt for
purposes of executing salary offset under 5 U.S.C. 5514 only. It does
not supersede the finding by STATE that a debt is owed and does not
affect the Government's ability to recoup the indebtedness through
alternative collection methods under Sec. 34.10.
Sec. 34.16 Procedures for salary offset.
Unless otherwise provided by statute or contract, the following
procedures apply to salary offset:
(a) Method. Salary offset will be made by deduction at one or more
officially established pay intervals from the current pay account of
the employee without his or her consent.
(b) Source. The source of salary offset is current disposable pay.
(c) Types of collection. (1) Lump sum payment. Ordinarily debts
will be collected by salary offset in one lump sum if possible.
However, if the amount of the debt exceeds 15 percent of disposable pay
for an officially established pay interval, the collection by salary
offset must be made in installment deductions.
(2) Installment deductions. (i) The size of installment deductions
must bear a reasonable relation to the size of the debt and the
employee's ability to pay. If possible, the size of the deduction will
be that necessary to liquidate the debt in no more than 1 year.
However, the amount deducted for any period must not exceed 15 percent
of the disposable pay from which the deduction is made, except as
provided by other regulations or unless the employee has agreed in
writing to a greater amount.
(ii) Installment payments of less than $25 per pay period will be
accepted only in the most unusual circumstances.
(iii) Installment deductions will be made over a period of not
greater than the anticipated period of employment.
Sec. 34.17 Non-waiver of rights by payments.
So long as there are no statutory or contractual provisions to the
contrary, no employee payment (of all or a portion of a debt) collected
under this subpart will be interpreted as a waiver of any rights that
the employee may have under 5 U.S.C. 5514.
[[Page 16487]]
Subpart D--Collection Adjustments
Sec. 34.18 Waivers of indebtedness.
(a) Waivers of indebtedness may be granted only as provided for
certain types of debt by specific statutes and according to the
standards set out under those statutes.
(b) Authorities. (1) Debts arising out of erroneous payments of pay
and allowances. 5 U.S.C. 5584 provides authority for waiving in whole
or in part debts arising out of erroneous payments of pay and
allowances, and travel, transportation and relocation expenses and
allowances, if collection would be against equity and good conscience
and not in the best interests of the United States.
(i) Waiver may not be granted if there exists in connection with
the claim an indication of fraud, misrepresentation, fault, or lack of
good faith on the part of the employee or any other person having an
interest in obtaining a waiver.
(ii) Fault is considered to exist if in light of the circumstances
the employee knew or should have known through the exercise of due
diligence that an error existed but failed to take corrective action.
What an employee should have known is evaluated under a reasonable
person standard. Employees are, however, expected to have a general
understanding of the Federal pay system applicable to them.
(iii) An employee with notice that a payment may be erroneous is
expected to make provisions for eventual repayment. Financial hardship
is not a basis for granting a waiver for an employee who was on notice
of an erroneous payment.
(iv) If the deciding official finds no indication of fraud,
misrepresentation, fault, or lack of good faith on the part of the
employee or any other person having an interest in obtaining a waiver
of the claim, the employee is not automatically entitled to a waiver.
Before a waiver can be granted, the deciding official must also
determine that collection of the claim against an employee would be
against equity and good conscience and not in the best interests of the
United States. Factors to consider when determining if collection of a
claim against an employee would be against equity and good conscience
and not in the best interests of the United States include, but are not
limited to:
(A) Whether collection of the claim would cause serious financial
hardship to the employee from whom collection is sought.
(B) Whether, because of the erroneous payment, the employee either
has relinquished a valuable right or changed positions for the worse,
regardless of the employee's financial circumstances.
(C) The time elapsed between the erroneous payment and discovery of
the error and notification of the employee;
(D) Whether failure to make restitution would result in unfair gain
to the employee;
(E) Whether recovery of the claim would be unconscionable under the
circumstances.
(2) Debts arising out of advances in pay. 5 U.S.C. 5524a provides
authority for waiving in whole or in part a debt arising out of an
advance in pay if it is shown that recovery would be against equity and
good conscience or against the public interest.
(i) Factors to be considered when determining if recovery of an
advance payment would be against equity and good conscience or against
the public interest include, but are not limited to:
(A) Death of the employee;
(B) Retirement of the employee for disability;
(C) Inability of the employee to return to duty because of
disability (supported by an acceptable medical certificate); and
(D) Whether failure to repay would result in unfair gain to the
employee.
(ii) [Reserved]
(3) Debts arising out of advances in situations of authorized or
ordered departures. 5 U.S.C. 5522 provides authority for waiving in
whole or in part a debt arising out of an advance payment of pay,
allowances, and differentials provided under this section if it is
shown that recovery would be against equity and good conscience or
against the public interest.
(i) Factors to be considered when determining if recovery of an
advance payment would be against equity and good conscience or against
the public interest include, but are not limited to:
(A) Death of the employee;
(B) Retirement of the employee for disability;
(C) Inability of the employee to return to duty because of
disability (supported by an acceptable medical certificate); and
(D) Whether failure to repay would result in unfair gain to the
employee.
(ii) [Reserved]
(4) Debts arising out of advances of allowances and differentials
for employees stationed abroad. 5 U.S.C. 5922 provides authority for
waiving in whole or in part a debt arising out of an advance of
allowances and differentials provided under this subchapter if it is
shown that recovery would be against equity and good conscience or
against the public interest.
(i) Factors to be considered when determining if recovery of an
advance payment would be against equity and good conscience or against
the public interest include, but are not limited to:
(A) Death of the employee;
(B) Retirement of the employee for disability;
(C) Inability of the employee to return to duty because of
disability (supported by an acceptable medical certificate); and
(D) Whether failure to repay would result in unfair gain to the
employee.
(ii) [Reserved]
(5) Debts arising out of employee training expenses. 5 U.S.C. 4108
provides authority for waiving in whole or in part a debt arising out
of employee training expenses if it is shown that recovery would be
against equity and good conscience or against the public interest.
(i) Factors to be considered when determining if recovery of a debt
arising out of employee training expenses would be against equity and
good conscience or against the public interest include, but are not
limited to:
(A) Death of the employee;
(B) Retirement of the employee for disability;
(C) Inability of the employee to return to duty because of
disability (supported by an acceptable medical certificate); and
(D) Whether failure to repay would result in unfair gain to the
employee.
(ii) [Reserved]
(6) Under-withholding of life insurance premiums. 5 U.S.C. 8707(d)
provides authority for waiving the collection of unpaid deductions
resulting from under-withholding of Federal Employees' Group Life
Insurance Program premiums if the individual is without fault and
recovery would be against equity and good conscience.
(i) Fault is considered to exist if in light of the circumstances
the employee knew or should have known through the exercise of due
diligence that an error existed but failed to take corrective action.
(ii) Factors to be considered when determining whether recovery of
unpaid deduction resulting from under-withholding would be against
equity and good conscience include, but are not limited to:
(A) Whether collection of the claim would cause serious financial
hardship to the individual from whom collection is sought.
(B) The time elapsed between the failure to properly withhold and
discovery of the failure and notification of the individual;
(C) Whether failure to make restitution would result in unfair gain
to the individual;
[[Page 16488]]
(D) Whether recovery of the claim would be unconscionable under the
circumstances.
(7) Overpayments of Foreign Service Annuities. For waiver of debts
arising from overpayments from the Foreign Service Retirement and
Disability Fund under the Foreign Service Retirement and Disability
System or the Foreign Service Pension System see 22 CFR part 17.
(8) As otherwise provided by law.
(c) Waiver of indebtedness is an equitable remedy and as such must
be based on an assessment of the facts involved in the individual case
under consideration.
(d) The burden is on the employee to demonstrate that the
applicable waiver standard has been met.
(e) Requests. A debtor requesting a waiver shall do so in writing
to the contact office by the payment due date stated within the initial
notice sent under Sec. 34.8(b) or other applicable provision. The
debtor's written response shall state the basis for the dispute and
include any relevant documentation in support.
(f) While a waiver request is pending, STATE may suspend
collection, including the accrual of interest and penalties, on the
debt if STATE determines that suspension is in the Department's best
interest or would serve equity and good conscience.
Sec. 34.19 Compromise.
STATE may attempt to effect compromise in accordance with the
standards set forth in the FCCS, 31 CFR part 902.
Sec. 34.20 Suspension.
The suspension of collection action shall be made in accordance
with the standards set forth in the FCCS, 31 CFR 903.1-903.2
Sec. 34.21 Termination.
The termination of collection action shall be made in accordance
with the standards set forth in the FCCS, 31 CFR 903.1 and 903.3-903.4.
Sec. 34.22 Discharge.
Once a debt has been closed out for accounting purposes and
collection has been terminated, the debt is discharged. STATE must
report discharged debt as income to the debtor to the Internal Revenue
Service per 26 U.S.C. 6050P and 26 CFR 1.6050P-1.
Sec. 34.23 Bankruptcy.
A debtor should notify STATE at the contact office provided in the
original notice of the debt, if the debtor has filed for bankruptcy.
STATE will require documentation from the applicable court indicating
the date of filing and type of bankruptcy. Pursuant to the laws of
bankruptcy, STATE will suspend debt collection upon such filing unless
the automatic stay is no longer in effect or has been lifted. In
general, collection of a debt discharged in bankruptcy shall be
terminated unless otherwise provided for by bankruptcy law.
Sec. 34.24 Refunds.
(a) STATE will refund promptly to the appropriate individual
amounts offset under this regulation when:
(1) A debt is waived or otherwise found not owing the United States
(unless expressly prohibited by statute or regulation); or
(2) STATE is directed by an administrative or judicial order to
make a refund.
(b) Refunds do not bear interest unless required or permitted by
law or contract.
Dated: February 1, 2006.
Henrietta H. Fore,
Under Secretary for Management, Department of State.
[FR Doc. 06-3135 Filed 3-31-06; 8:45 am]
BILLING CODE 4710-37-P