[Code of Federal Regulations]
[Title 14, Volume 5]
[Revised as of January 1, 2008]
From the U.S. Government Printing Office via GPO Access
[CITE: 14CFR1261.603]

[Page 359-362]
 
                     TITLE 14--AERONAUTICS AND SPACE
 
                          SPACE ADMINISTRATION
 
PART 1261_PROCESSING OF MONETARY CLAIMS (GENERAL)--Table of Contents
 
 Subpart 1261.6_Collection by Offset From Indebted Government Employees
 
Sec. 1261.603  Procedures for salary offset.

    If NASA is both the paying and creditor agency, the following 
requirements must be met before a deduction is made from the current pay 
account of an employee.
    (a) Written notice. The employee must be sent a minimum of 30 days 
written notice, which specifies:
    (1) The origin, nature and amount of the indebtedness, and the 
official to contact within the agency (ordinarily, the designated 
financial management official for the particular installation);
    (2) The intention of the agency to initiate collection of the debt 
through salary offset by deductions from the employee's current 
disposable pay, stating the amount, frequency, proposed beginning date, 
and duration of intended deductions (the amount to be deducted for any 
period, without the consent of the employee, may not exceed 15 percent 
of disposable pay);
    (3) An explanation of any interest, penalties, or administrative 
costs included in the amount, and that such assessment must be made 
unless excused in accordance with 14 CFR 1261.412;
    (4) The right for an opportunity (which does not toll the running of 
the 30-day period) to inspect and copy NASA records relating to the debt 
or to request and receive (if reasonable) a copy of such records, 
provided that

[[Page 360]]

such opportunity must be exercised on or before the 15th day following 
receipt of the notice and can be conducted only during official working 
hours for a reasonable period of time not to exceed 5 working days;
    (5) If not previously provided, the opportunity (under terms 
agreeable to NASA) to establish a schedule for the voluntary repayment 
of the debt or to enter into a written agreement to establish a schedule 
for repayment of the debt in lieu of offset. The agreement must be in 
writing, signed by both the employee and the authorized agency official 
(see 14 CFR 1261.402) and documented in NASA's files (see 14 CFR 
1261.407(d));
    (6) An opportunity for a hearing, as provided in paragraph (c) of 
this section, on the agency's determination concerning the existence and 
amount of the debt, and the terms of the repayment schedule (in the case 
of an employee whose repayment schedule is established other than by 
written agreement);
    (7) The hearing request should be addressed to the Office of the 
NASA General Counsel or to the Office of Chief Counsel of the NASA 
installation involved, as appropriate; counsel's name and address will 
be as stated in the notice.
    (8) Any other rights and remedies available to the employee under 
statutes or regulations governing the program for which the collection 
is being made; and
    (9) Unless there are applicable contractual or statutory provisions 
to the contrary, that amounts paid on or deducted for the debt which are 
later waived or found not owed to the United States will be promptly 
refunded to the employee.
    (b) Exception to entitlement to written notice. NASA is not required 
to comply with paragraph (a) of this section for 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 four pay 
periods or less.
    (c) Petition filing; hearing; decision and review. The notice 
described in paragraph (a) of this section should include the following 
provisions, which may be copied and attached to the notice.
    (1) The employee may petition for a hearing, but such petition must 
be in writing and received by NASA on or before the 15th day following 
receipt of the notice, and include a statement of the reasons for such 
hearing. No particular form is required, and a timely, legible letter 
request (with the stated reasons) will suffice; however, the employee 
must sign the petition and include with it, with reasonable specificity, 
all the supporting facts and evidence, including a list of the 
witnesses, if any.
    (2) The petition should be addressed to the agency counsel 
designated in the notice, but the hearing will be conducted by an 
official not under the supervision or control of the NASA Administrator 
or by appointment of an administrative law judge. Notice of the name and 
address of the hearing official will be sent to the employee within 10 
days of receipt of petition. A hearing official will be designated on a 
case-by-case basis under reimbursable arrangements or through direct 
payment as events may warrant.
    (3) The timely filing of the petition will stay the commencement of 
collection; and the final decision on the hearing will be issued at the 
earliest practicable date, but not later than 60 days after the filing 
of the petition requesting the hearing unless the employee requests and 
the hearing official grants a delay in the proceedings.
    (4) Any knowingly false or frivolous statements, representations, or 
evidence may subject the employee to:
    (i) Disciplinary procedures appropriate under Chapter 75 of Title 5, 
United States Code, 5 CFR part 752, or any other applicable statutes or 
regulations;
    (ii) Penalties under the False Claims Act, sections 3729 through 
3731 of Title 31, United States Code, or any other applicable statutory 
authority; or
    (iii) Criminal penalties under sections 286, 287, 1001, and 1002 of 
Title 18, United States Code, or any other applicable statutory 
authority.
    (5) The form and content of the hearing will be determined by the 
hearing official depending on the nature and complexity of the 
transaction giving

[[Page 361]]

rise to the debt. The hearing is not an adversarial adjudication, and 
need not take the form of an evidentiary hearing. However, depending on 
the particular facts and circumstances, the hearing may be analogous to 
a fact- finding proceeding with oral presentations; or an informal 
meeting with or interview of the employee; or formal written 
submissions, with an opportunity for oral presentation, and decision 
based on the available written record. Ordinarily, hearings may consist 
of informal conferences before the hearing official in which the 
employee and agency officials will be given full opportunity to present 
evidence, witnesses, and argument. The employee may represent himself or 
herself or be represented by an individual of his or her choice. The 
hearing official must maintain a summary record of the hearing provided 
under this subpart. For additional guidance, see 14 CFR 1261.503.
    (6) The decision will be in writing and state:
    (i) The facts purported to evidence the nature and origin of the 
alleged debt;
    (ii) The respective positions of the agency and of the employee;
    (iii) The hearing official's analysis (which address the employee's/
agency's grounds, the amount and validity of the alleged debt, and, 
where applicable, the repayment schedule); and
    (iv) The hearing official's findings and conclusions.
    (7) The hearing official will notify the employee, the NASA 
Comptroller or designee, and the designated agency counsel of the 
decision.
    (8) The decision of the hearing official shall constitute the Final 
Administrative Decision of the agency.
    (d) Petition after time expiration. No petition for a hearing is to 
be granted if made after the 15-day period prescribed in paragraph 
(c)(1) of this section, unless the employee can show to the satisfaction 
of the agency official indicated on the notice that the delay was caused 
by circumstances beyond his or her control (for example, proven 
incapacity, illness, or hospitalization), or that the agency did not 
give notice of the time limit and the employee was otherwise unaware of 
such limit.
    (e) Limitation on amount and duration of deductions. Ordinarily, 
debts must be collected in one lump-sum payment. However, if the 
employee is financially unable to pay in one lump sum or if the amount 
of the debt exceeds 15 percent of disposable pay for an officially 
established pay interval, collection must be made in installments. The 
size of installment deductions must bear a reasonable relationship to 
the size of the debt and the employee's ability to pay (see 14 CFR 
1261.411), but the amount deducted for any period must not exceed 15 
percent of the disposable pay from which the deduction is made (unless 
the employee has agreed in writing to the deduction of a greater 
amount). Deduction must commence with the next full pay interval 
(ordinarily, the next biweekly pay period). Such installment deductions 
must be made over a period not greater than the anticipated period of 
active duty or employment, as the case may be, except as provided in 
paragraph (f) of this section.
    (f) Determining ability to pay. An offset may produce an extreme 
financial hardship for an employee if it prevents the employee from 
meeting costs necessarily incurred for essential subsistence expenses 
for food, reasonable housing, clothing, transportation, and medical 
care. In determining whether an offset would prevent the employee from 
meeting the essential subsistence expenses, the employee may be required 
to show income from all sources (including spouse and dependents, if 
applicable), list all known assets, explain exceptional expenses, and 
produce any other relevant factors.
    (g) Liquidation from final check; other recovery. If the employee 
retires or resigns from Federal service, or if his or her employment or 
period of active duty ends before collection of the debt is completed, 
the balance may be deducted from the final salary payment and any 
remaining balance from the lump-sum leave, if applicable. If the debt is 
not fully paid by offset from any final payment due the former employee 
as of the date of separation, offset may be made from later payments of 
any kind due the former employee from the United States (as provided in

[[Page 362]]

14 CFR part 1261 subpart 1261.5, including offset from the Civil Service 
Retirement and Disability Fund under 14 CFR 1261.507).
    (h) Interest, penalties, and administrative costs. Assessment of 
interest, penalties, and administrative costs, on debts being collected 
under this subpart, shall be in accordance with 14 CFR 1261.412 which 
implements 4 CFR 102.13.