[Federal Register Volume 68, Number 65 (Friday, April 4, 2003)]
[Rules and Regulations]
[Pages 16437-16446]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-8185]


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CORPORATION FOR NATIONAL AND COMMUNITY SERVICE

45 CFR Part 2506

RIN 3045-AA20


Debt Collection

AGENCY: Corporation for National and Community Service.

ACTION: Final rule.

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SUMMARY: The Corporation for National and Community Service 
(hereinafter the ``Corporation'') is issuing regulations governing the 
collection of debts owed to it and other Federal agencies. Federal 
agencies are required to try to collect debts owed to the Federal 
government. These regulations describe actions that the Corporation may 
take to collect debts; they apply, with certain exceptions, to any 
person or entity. These regulations conform the Corporation's interim 
regulations to the amended procedures in the revised Federal Claims 
Collection Standards (FCCS) issued by the Department of the Treasury 
(Treasury) and the Department of Justice (DOJ) and adopt by reference 
Treasury's administrative wage garnishment procedures. These 
regulations also provide that the Corporation has entered into a cross-
servicing agreement with Treasury under which Treasury will take 
authorized action to collect amounts owed to the Corporation.

DATES: This rule is effective on May 5, 2003.

ADDRESSES: Comments must be sent to Corporation for National and 
Community Service, William L. Anderson, III, Deputy Chief Financial 
Officer, 1201 New York Avenue, NW., Room 7207, Washington, DC 20525, e-
mail [email protected], telefax number (202) 565-2780; the TTY number is 
(202) 565-2799.

FOR FURTHER INFORMATION CONTACT: Suzanne Dupre, telephone number (202) 
606-5000, extension 396; [email protected]; or telefax number (202) 565-
2796.

SUPPLEMENTARY INFORMATION: Under these regulations, the Corporation may 
collect debts owed to it through a number of actions, including the 
following:
    [sbull] Making offsets against amounts, including salary payments, 
owed to the debtor by the Corporation or other Federal agencies;
    [sbull] Referring the debt to a private collection contractor;
    [sbull] Referring the matter to the U.S. Department of Justice 
(DOJ) for initiation of a judicial proceeding against the debtor; and
    [sbull] Referring the matter to the Treasury to take all of the 
above-listed actions to collect debts for the Corporation, pursuant to 
a cross-servicing agreement.
    In addition, these regulations describe the actions necessary for 
the Corporation to take collection actions on behalf of another Federal 
agency. These actions could include making offsets against the salary 
of a Corporation employee or against any other amounts owed by the 
Corporation to the debtor. These regulations implement the requirements 
of the Federal Claims Collection Act of 1966 (Pub. L. 89-508, 80 Stat. 
308) as amended by the Debt Collection Act of 1982 (Pub. L. 97-365, 96 
Stat. 1749) and the Debt Collection Improvement Act of 1996 (Pub. L. 
104-134, 110 Stat. 1321, 31 U.S.C. 3720A). These regulations are issued 
in conformity with the Federal Claims Collection Standards issued by 
DOJ and

[[Page 16438]]

the Treasury (31 CFR Chapter IX, parts 900-904, 65 FR 70390 (11/22/
2000)). The regulations in this part are also issued in conformity with 
the regulations of the Office of Personnel Management (OPM) on offsets 
against Federal employee salaries (5 CFR part 550, subpart K), and the 
Treasury regulations on Administrative Wage Garnishment (31 CFR 
285.11).
    The Corporation has determined that these regulations pertain to 
agency practice and procedure and are interpretative in nature. The 
procedures contained in these regulations for salary, tax refund, and 
administrative offsets and for administrative wage garnishment are 
mandated by law and by regulations promulgated by OPM, the Treasury 
Financial Management Service, and jointly by the DOJ and the Treasury. 
Therefore, under 5 U.S.C. 553(b)-(d), these regulations are not subject 
to the Administrative Procedures Act (APA) and the requirements of the 
APA for a notice and comment period and a delayed effective date.
    Comments on proposed rule. On January 29, 1999 (64 FR 4315), the 
Corporation published interim claims collection regulations that 
conformed to the DCIA and to the FCCS. The comment period expired on 
March 29, 1999. No comments were received on the interim regulations. 
These regulations are somewhat expanded to be more clear; and they 
incorporate by reference the procedures for administrative wage 
garnishment in Treasury regulations. There are no other substantive 
changes.
    This rule is a significant regulatory action for the purpose of 
Executive Order 12866 and has been reviewed by the Office of Management 
and Budget. As required by the Regulatory Flexibility Act, I certify 
that these regulations will not have a significant economic impact on a 
substantial number of small entities. This rule has no federalism 
implications. This rule is not a major rule.

List of Subjects in 45 CFR Part 2506

    Administrative practice and procedures; Claims; Debts; Government 
employees; Garnishment of Wages; Salaries; Wages.


0
For the reasons stated in the preamble, the Corporation revises part 
2506 of 45 CFR Chapter XXV to read as follows:

PART 2506--COLLECTION OF DEBTS

Subpart A--Introduction

Sec.
2506.1 Why is the Corporation issuing these regulations?
2506.2 Under what authority does the Corporation issue these 
regulations?
2506.3 What definitions apply to the regulations in this part?
2506.4 What types of debts are excluded from these regulations?
2506.5 If a debt is not excluded from these regulations, may it be 
compromised, suspended, terminated, or waived?
2506.6 What is a claim or debt?
2506.7 Why does the Corporation have to collect debts?
2506.8 What action might the Corporation take to collect debts?
2506.9 What rights do I have as a debtor?

Subpart B--General Provisions

2506.10 Will the Corporation use its cross-servicing agreement with 
Treasury to collect its debts?
2506.11 Will the Corporation refer debts to the Department of 
Justice?
2506.12 Will the Corporation provide information to credit reporting 
agencies?
2506.13 How will the Corporation contract for private collection 
services?
2506.14 What should I expect to receive from the Corporation if I 
owe a debt to the Corporation?
2506.15 What will the notice tell me regarding collection actions 
that might be taken if the debt is not paid within 60 days of the 
notice, or arrangements to pay the debt are not made within 60 days 
of the notice?
2506.16 What will the notice tell me about my opportunity for review 
of my debt?
2506.17 What must I do to obtain a review of my debt, and how will 
the review process work?
2506.18 What interest, penalty charges, and administrative costs 
will I have to pay on a debt owed to the Corporation?
2506.19 How can I resolve my debt through voluntary repayment?
2506.20 What is the extent of the Chief Executive Officer's 
authority to compromise debts owed to the Corporation, or to suspend 
or terminate collection action on such debts?
2506.21 May the Corporation's failure to comply with these 
regulations be used as a defense to a debt?

Subpart C--Salary Offset

2506.30 What debts are included or excluded from coverage of these 
regulations on salary offset?
2506.31 May I ask the Corporation to waive an overpayment that 
otherwise would be collected by offsetting my salary as a Federal 
employee?
2506.32 What are the Corporation's procedures for salary offset?
2506.33 How will the Corporation coordinate salary offsets with 
other agencies?
2506.34 Under what conditions will the Corporation make a refund of 
amounts collected by salary offset?
2506.35 Will the collection of a debt by salary offset act as a 
waiver of my rights to dispute the claimed debt?

Subpart D--Tax Refund Offset

2506.40 Which debts can the Corporation refer to Treasury for 
collection by offsetting tax refunds?
2506.41 What are the Corporation's procedures for collecting debts 
by tax refund offset?

Subpart E--Administrative Offset

2506.50 Under what circumstances will the Corporation collect 
amounts that I owe to the Corporation (or some other Federal agency) 
by offsetting the debt against payments that the Corporation (or 
some other Federal agency) owes me?
2506.51 How will the Corporation request that my debt to the 
Corporation be collected by offset against some payment that another 
Federal agency owes me?
2506.52 What procedures will the Corporation use to collect amounts 
I owe to a Federal agency by offsetting a payment that the 
Corporation would otherwise make to me?
2506.53 When may the Corporation make an offset in an expedited 
manner?
2506.54 Can a judgment I have obtained against the United States be 
used to satisfy a debt that I owe to the Corporation?

Subpart F--Administrative Wage Garnishment

2506.55 How will the Corporation collect debts through 
Administrative Wage Garnishment?

    Authority: 5 U.S.C. 5514; 31 U.S.C. 3701-3720A, 3720D; 44 U.S.C. 
2104(a).

Subpart A--Introduction


Sec.  2506.1  Why is the Corporation issuing these regulations?

    (a) The Corporation is issuing these regulations to inform the 
public of procedures that may be used by the Corporation for the 
collection of debt.
    (b) These regulations provide that the Corporation will attempt to 
collect debts owed to it or other Government agencies either directly, 
or by other means including salary offsets, administrative offsets, tax 
refund offsets, or administrative wage garnishment.
    (c) These regulations also provide that the Corporation has entered 
into a cross-servicing agreement with the U.S. Department of the 
Treasury (Treasury) under which the Treasury will take authorized 
action to collect amounts owed to the Corporation.


Sec.  2506.2  Under what authority does the Corporation issue these 
regulations?

    (a) The Corporation is issuing the regulations in this part under 
the authority of 31 U.S.C. chapter 37, 3701-3720A and 3720D. These 
sections implement the requirements of the Federal Claims Collection 
Act of 1966, as amended by the Debt Collection Act of 1982 and the Debt 
Collection Improvement Act of 1996.

[[Page 16439]]

    (b) The Corporation is also issuing the regulations in this part to 
conform to the Federal Claims Collection Standards (FCCS), which 
prescribe standards for handling the Federal Government's claims for 
money or property. The FCCS are issued by the Department of Justice 
(DOJ) and the Treasury at 31 CFR chapter IX, parts 900-904. The 
Corporation adopts those standards without change. The regulations in 
this part supplement the FCCS by prescribing procedures necessary and 
appropriate for the Corporation's operations.
    (c) The Corporation is also issuing the regulations in this part to 
conform to the standards for handling Administrative Wage Garnishment 
processing by the Federal Government. The standards are issued by the 
Treasury at 31 CFR 285.11. The Corporation adopts those standards 
without change. The regulations in this part supplement the standards 
by prescribing procedures necessary and appropriate for the 
Corporation's operations.
    (d) The Corporation is further issuing the regulations in this part 
under the authority of 5 U.S.C. 5514, and the salary offset regulations 
published by the Office of Personnel and Management at 5 CFR part 550, 
subpart K.
    (e) All of these debt collection regulations are issued under the 
Corporation's authority under 42 U.S.C. 12651c(c).


Sec.  2506.3  What definitions apply to the regulations in this part?

    As used in this part:
    Administrative offset means withholding funds payable by the United 
States (including funds payable by the United States on behalf of a 
State government) to, or held by the United States for, a person to 
satisfy a debt.
    Administrative wage garnishment means a process whereby a Federal 
agency may, without first obtaining a court order, order an employer to 
withhold up to 15 percent of your disposable pay for payment to the 
Federal agency to satisfy a delinquent non-tax debt.
    Agency means a department, agency, court, court administrative 
office, or instrumentality in the executive, judicial, or legislative 
branch of government, including a government corporation.
    Certification means a written statement received by a paying agency 
or disbursing official from a creditor agency that requests the paying 
agency or disbursing official to offset the salary of an employee and 
specifies that required procedural protections have been afforded the 
employee.
    Chief Executive Officer means the Chief Executive Officer of the 
Corporation, or his or her designee.
    Claim (see definition of Debt in this section).
    Compromise means the settlement of a debt for less than the full 
amount owed.
    Corporation means the Corporation for National and Community 
Service.
    Creditor agency means the agency to which the debt is owed, 
including a debt collection center when acting on behalf of the 
creditor agency.
    Cross-servicing agreement is a letter of agreement entered into 
between the Corporation and the Financial Management Service (FMS) of 
the Treasury in which the Corporation has authorized FMS to take all 
appropriate actions to enforce collection of debts or groups of debts 
referred to FMS by the Corporation. These debt collection services are 
provided by FMS on behalf of the Corporation in accordance with all 
statutory and regulatory requirements.
    Day means calendar day. To count days, include the last day of the 
period unless it is a Saturday, a Sunday, or a Federal legal holiday.
    Debt and claim are deemed synonymous and interchangeable. These 
terms mean an amount of money, funds, or property that has been 
determined by an agency official to be due the United States from any 
person, organization, or entity except another Federal agency. For the 
purpose of administrative offset under 31 U.S.C. 3716 and subpart E of 
these regulations, the terms, ``debt'' and ``claim'' also include 
money, funds or property owed by a person to a State (including past-
due support being enforced by a State); the District of Columbia; 
American Samoa; Guam; the United States Virgin Islands; the 
Commonwealth of the Northern Mariana Islands; or the Commonwealth of 
Puerto Rico.
    Debt collection center means the Treasury or any other agency or 
division designated by the Secretary of the Treasury with authority to 
collect debts on behalf of creditor agencies.
    Debtor means a person, organization, or entity, except another 
Federal agency, who owes a debt. Use of the terms ``I,'' ``you,'' 
``me,'' and similar references to the reader of the regulations in this 
part are meant to apply to debtors as defined in this paragraph.
    Delinquent debt means a debt that has not been paid by the date 
specified in the Corporation's initial written demand for payment or 
applicable agreement or instrument (including a post-delinquency 
payment agreement), unless other satisfactory payment arrangements have 
been made.
    Disposable pay means the part of an employee's pay that remains 
after deductions that are required to be withheld by law have been 
made.
    Employee means a current employee of an agency, including a current 
member of the Armed Forces or Reserve of the Armed Forces of the United 
States.
    Federal Claims Collection Standards (FCCS) means the standards 
currently published by DOJ and the Treasury at 31 CFR parts 900-904.
    Paying agency means any agency that is making payments of any kind 
to a debtor. In some cases, the Corporation may be both the creditor 
agency and the paying agency.
    Payroll office means the office that is primarily responsible for 
payroll records and the coordination of pay matters with the 
appropriate personnel office.
    Person includes a natural person or persons, profit or non-profit 
corporation, partnership, association, trust, estate, consortium, state 
or local government, or other entity that is capable of owing a debt to 
the United States; however, agencies of the United States are excluded.
    Private collection contractor means a private debt collector under 
contract with an agency to collect a non-tax debt owed to the United 
States.
    Salary offset means a payroll procedure to collect a debt under 5 
U.S.C. 5514 and 31 U.S.C. 3716 by deduction(s) at one or more 
officially established pay intervals from the current pay account of an 
employee, without his or her consent.
    Tax refund offset means the reduction of a tax refund by the amount 
of a past-due legally enforceable debt owed to the Corporation or any 
other Federal agency.
    Waiver means the cancellation, remission, forgiveness, or non-
recovery of a debt.
    Withholding order means any order for withholding or garnishment of 
pay issued by an agency, or judicial or administrative body.


Sec.  2506.4  What types of debts are excluded from these regulations?

    The following types of debts are excluded:
    (a) Debts or claims arising under the Internal Revenue Code (26 
U.S.C. 1 et seq.) or the tariff laws of the United States, or the 
Social Security Act (42 U.S.C. 301 et seq.); except as provided under 
sections 204(f) and 1631 (42 U.S.C. 404(f) and 1383(b)(4)(A)).
    (b) Any case to which the Contract Disputes Act (41 U.S.C. 601 et 
seq.) applies;

[[Page 16440]]

    (c) Any case where collection of a debt is explicitly provided for 
or provided by another statute, e.g., travel advances under 5 U.S.C. 
5705 and employee training expenses under 5 U.S.C. 4108, or, as 
provided for by title 11 of the United States Code, when the claims 
involve bankruptcy;
    (d) Any debt based in whole or in part on conduct in violation of 
the antitrust laws or 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, as described in the FCCS, unless DOJ 
authorizes the Corporation to handle the collection;
    (e) Claims between Federal agencies;
    (f) 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 initiated more than 10 years after the Government's right to 
collect the debt first accrued. (Exception: The 10-year limit does not 
apply if facts material to the Federal Government's right to collect 
the debt were not known and could not reasonably have been known by the 
official or officials of the Government who were charged with the 
responsibility to discover and collect such debts.) The 10-year 
limitation also does not apply to debts reduced to a judgment; and
    (g) Unless otherwise stated, debts which have been transferred to 
the Treasury or referred to the DOJ will be collected in accordance 
with the procedures of those agencies.


Sec.  2506.5  If a debt is not excluded from these regulations, may it 
be compromised, suspended, terminated, or waived?

    Nothing in this part precludes:
    (a) The compromise, suspension, or termination of collection 
actions, where appropriate under the FCCS, or the use of alternative 
dispute resolution methods if they are consistent with applicable law 
and regulations.
    (b) An employee from requesting waiver of an erroneous payment 
under 5 U.S.C. 5584, 10 U.S.C. 2774, or 32 U.S.C. 716; or any debtor 
from questioning the amount or validity of a debt, in the manner set 
forth in this part.


Sec.  2506.6  What is a claim or debt?

    A claim or debt is an amount of money, funds, or property that has 
been determined by an agency official to be due the United States from 
any person, organization, or entity except another Federal agency (see 
Sec.  2506.3).


Sec.  2506.7  Why does the Corporation have to collect debts?

    Federal agencies are required to try to collect claims or debts of 
the Federal Government for money, funds, or property arising out of the 
agency's activities.


Sec.  2506.8  What action might the Corporation take to collect debts?

    (a) There are a number of actions that the Corporation is permitted 
to take when attempting to collect debts. These actions include:
    (1) Salary, tax refund or administrative offset, or administrative 
wage garnishment (see subparts C, D, E, and F of this part 
respectively); or
    (2) Using the services of private collection contractors.
    (b) In certain instances, usually after collection efforts have 
proven unsuccessful, the Corporation transfers debts to the Treasury 
for collection or refers them to the DOJ for litigation (see Sec. Sec.  
2506.10 and 2506.11).


Sec.  2506.9  What rights do I have as a debtor?

    As a debtor you have several basic rights. You have a right to:
    (a) Notice as set forth in these regulations (see Sec.  2506.14);
    (b) Inspect the records that the Corporation has used to determine 
that you owe a debt (see Sec.  2506.14);
    (c) Request review of the debt and possible payment options (see 
Sec.  2506.17);
    (d) Propose a voluntary repayment agreement (see Sec.  2506.19); 
and/or
    (e) Question if the debt is excluded from these regulations (see 
Sec.  2506.5(b)).

Subpart B--General Provisions.


Sec.  2506.10  Will the Corporation use its cross-servicing agreement 
with Treasury to collect its debts?

    (a) The Corporation entered into a cross-servicing agreement on 
March 26, 1999, with Treasury Financial Management Services (FMS) that 
authorizes the Treasury to take the collection actions described in 
this part on behalf of the Corporation (see Sec.  2506.3). The 
Corporation will refer debts or groups of debts to FMS for collection 
action. The debt collection procedures that the Treasury FMS uses are 
based on 31 U.S.C. chapter 37 and this part.
    (b) The Corporation must transfer to the Treasury any debt that has 
been delinquent for a period of 180 days or more, so that the Secretary 
of the Treasury may take appropriate action to collect the debt or 
terminate collection action. This is pursuant to Sec.  901.3 of the 
FCCS.
    (c) Paragraph (b) of this section will not apply to any debt or 
claim that:
    (1) Is in litigation or foreclosure;
    (2) Will be disposed of under an approved asset sales program;
    (3) Has been referred to a private collection contractor for 
collection 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 date the debt or claim is first delinquent; or
    (6) Is exempt from this requirement based on a determination by the 
Secretary of the Treasury.


Sec.  2506.11  Will the Corporation refer debts to the Department of 
Justice?

    The Corporation will refer to DOJ for litigation debts on which 
aggressive collection actions have been taken, but which could not be 
collected, compromised, suspended, or terminated. Referrals will be 
made as early as possible, consistent with aggressive Corporation 
collection action, and within the period for bringing a timely suit 
against the debtor.


Sec.  2506.12  Will the Corporation provide information to credit 
reporting agencies?

    (a) The Corporation will report certain delinquent debts to 
appropriate consumer credit reporting agencies by providing the 
following information:
    (1) A statement that the debt is valid and overdue;
    (2) The name, address, taxpayer identification number, and any 
other information necessary to establish the identity of the debtor;
    (3) The amount, status, and history of the debt; and
    (4) The program or pertinent activity under which the debt arose.
    (b) Before disclosing debt information to a credit reporting 
agency, the Corporation:
    (1) Takes reasonable action to locate the debtor if a current 
address is not available;
    (2) Provides the notice required under Sec.  2506.14(a) if a 
current address is available; and
    (3) Obtains satisfactory assurances from the credit reporting 
agency that it complies with the Fair Credit Reporting Act (15 U.S.C. 
1681 et seq.) and other Federal laws governing the provision of credit 
information.
    (c) At the time debt information is submitted to a credit reporting 
agency, the Corporation provides a written statement to the reporting 
agency that all required actions have been taken. In addition, the 
Corporation thereafter ensures that the credit reporting agency is 
promptly informed of any substantive change in the conditions or amount 
of the debt, and promptly verifies or

[[Page 16441]]

corrects information relevant to the debt.
    (d) If a debtor disputes the validity of the debt, the credit 
reporting agency refers the matter to the appropriate Corporation 
official. The credit reporting agency excludes the debt from its 
reports until the Corporation certifies in writing that the debt is 
valid.
    (e) The Corporation may disclose to a commercial credit bureau 
information concerning a commercial debt, including the following:
    (1) Information necessary to establish the name, address, and 
employer identification number of the commercial debtor;
    (2) The amount, status, and history of the debt; and
    (3) The program or pertinent activity under which the debt arose.


Sec.  2506.13  How will the Corporation contract for private collection 
services?

    The Corporation uses the services of a private collection 
contractor when it determines that such use is in the Corporation's 
best interest. When the Corporation determines that there is a need to 
contract for private collection services, the Corporation:
    (a) Retains sole authority to:
    (1) Resolve any dispute with the debtor regarding the validity of 
the debt;
    (2) Compromise the debt;
    (3) Suspend or terminate collection action;
    (4) Refer the debt to the DOJ for litigation; and
    (5) Take any other action under this part;
    (b) Requires the contractor to comply with the:
    (1) Privacy Act of 1974, as amended, to the extent specified in 5 
U.S.C. 552a(m);
    (2) Fair Debt Collection Practices Act (15 U.S.C. 1692-1692o); and
    (3) Other applicable Federal and State laws pertaining to debt 
collection practices and applicable regulations of the Corporation in 
this part;
    (c) Requires the contractor to account accurately and fully for all 
amounts collected; and
    (d) Requires the contractor to provide to the Corporation, upon 
request, all data and reports contained in its files related to its 
collection actions on a debt.


Sec.  2506.14  What should I expect to receive from the Corporation if 
I owe a debt to the Corporation?

    (a) The Corporation will send you a written notice when we 
determine that you owe a debt to the Corporation. The notice will be 
hand-delivered or sent to you at the most current address known to the 
Corporation. The notice will inform you of the following:
    (1) The amount, nature, and basis of the debt;
    (2) That a designated Corporation official has reviewed the debt 
and determined that it is valid;
    (3) That payment of the debt is due as of the date of the notice, 
and that the debt will be considered delinquent if you do not pay it 
within 30 days of the date of the notice;
    (4) The Corporation's policy concerning interest, penalty charges, 
and administrative costs (see Sec.  2506.18), including a statement 
that such assessments must be made against you unless excused in 
accordance with the FCCS and this part;
    (5) That you have the right to inspect and copy disclosable 
Corporation records pertaining to your debt, or to receive copies of 
those records if personal inspection is impractical;
    (6) That you have the opportunity to enter into an agreement, in 
writing and signed by both you and the designated Corporation official, 
for voluntary repayment of the debt (see Sec.  2506.19);
    (7) The address, telephone number, and name of the Corporation 
official available to discuss the debt;
    (8) Possible collection actions that might be taken if the debt is 
not paid within 60 days of the notice, or arrangements to pay the debt 
are not made within 60 days of the notice (see Sec.  2506.15 for a 
fuller description of possible actions);
    (9) That the Corporation may suspend or revoke any licenses, 
permits, or other privileges for failure to pay a debt; and
    (10) Information on your opportunity to obtain a review concerning 
the existence or amount of the debt, or the proposed schedule for 
offset of Federal employee salary payments (see Sec.  2506.16).
    (b) The Corporation will respond promptly to communications from 
you.
    (c) Exception to entitlement to notice, hearing, written responses, 
and final decisions. With respect to the regulations covering internal 
salary offset collections (see Sec.  2506.32), the Corporation excepts 
from the provisions of paragraph (a) of this section--
    (1) 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;
    (2) 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 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; or
    (3) 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.


Sec.  2506.15  What will the notice tell me regarding collection 
actions that might be taken if the debt is not paid within 60 days of 
the notice, or arrangements to pay the debt are not made within 60 days 
of the notice?

    The notice provided under Sec.  2506.14 will advise you that, 
within 60 days of the date of the notice, your debt (including any 
interest, penalty charges, and administrative costs) must be paid or 
you must enter into a voluntary repayment agreement. If you do not pay 
the debt or enter into the agreement within that deadline, the 
Corporation may enforce collection of the debt by any or all of the 
following methods:
    (a) By transferring the debt to the Treasury for collection, 
including under a cross-servicing agreement with the Treasury (see 
Sec.  2506.10);
    (b) By referral to a credit reporting agency (see Sec.  2506.12), 
private collection contractor (see Sec.  2506.13), or the DOJ (see 
Sec.  2506.11);
    (c) If you are a Corporation employee, by deducting money from your 
disposable pay account until the debt (and all accumulated interest, 
penalty charges, and administrative costs) is paid in full (see subpart 
C of this part). The Corporation will specify the amount, frequency, 
approximate beginning date, and duration of the deduction. 5 U.S.C. 
5514 and 31 U.S.C. 3716 govern such proceedings;
    (d) If you are an employee of a Federal agency other than the 
Corporation, by initiating certification procedures to implement a 
salary offset by that Federal agency (see subpart C of this part). 5 
U.S.C. 5514 governs such proceedings;
    (e) By referring the debt to the Treasury for offset against any 
refund of overpayment of tax (see subpart D of this part);
    (f) By administrative offset (see subpart E of this part);
    (g) By administrative wage garnishment (see subpart F of this 
part); or
    (h) By liquidation of security or collateral. The Corporation has 
the right

[[Page 16442]]

to hold security or collateral, liquidate it, and apply the proceeds to 
your debt through the exercise of a power of sale in the security 
instrument or a foreclosure. The Corporation will not follow the 
procedures in this paragraph (h) if the cost of disposing of the 
collateral will be disproportionate to its value.


Sec.  2506.16  What will the notice tell me about my opportunity for 
review of my debt?

    The notice provided by the Corporation under Sec. Sec.  2506.14 and 
2506.15 will also advise you of the opportunity to obtain a review 
within the Corporation concerning the existence or amount of the debt 
or the proposed schedule for offset of Federal employee salary 
payments. The notice will also advise you of the following:
    (a) The name, address, and telephone number of a Corporation 
official whom you may contact concerning procedures for requesting a 
review;
    (b) The method and time period for requesting a review;
    (c) That the filing of a request for a review on or before the 60th 
day following the date of the notice will stay the commencement of 
collection proceedings;
    (d) The name and address of the Corporation official to whom you 
should send the request for a review;
    (e) That a final decision on the review (if one is requested) will 
be issued in writing at the earliest practical date, but not later than 
60 days after the receipt of the request for a review, unless you 
request, and the review official grants, a delay in the proceedings;
    (f) That any knowingly false or frivolous statements, 
representations, or evidence may subject you to:
    (1) Disciplinary procedures appropriate under 5 U.S.C. chapter 75, 
5 CFR part 752, or any other applicable statute or regulations;
    (2) Penalties under the False Claims Act (31 U.S.C. 3729-3733) or 
any other applicable statutory authority; and
    (3) Criminal penalties under 18 U.S.C. 286, 287, 1001, and 1002, or 
any other applicable statutory authority;
    (g) Any other rights available to you to dispute the validity of 
the debt or to have recovery of the debt waived, or remedies available 
to you under statutes or regulations governing the program for which 
the collection is being made; and
    (h) That unless there are applicable contractual or statutory 
provisions to the contrary, amounts paid on or deducted for the debt 
that are later waived or found not owed will be promptly refunded to 
you.


Sec.  2506.17  What must I do to obtain a review of my debt, and how 
will the review process work?

    (a) Request for review. (1) You have the right to request a review 
by the Corporation of the existence or the amount of your debt, the 
proposed schedule for offset of Federal employee salary payments, or 
whether the debt is past due or legally enforceable. If you want a 
review, you must send a written request to the Corporation official 
designated in the notice (see Sec.  2506.16(d)).
    (2) You must sign your request for review and fully identify and 
explain with reasonable specificity all the facts, evidence, and 
witnesses that support your position. Your request for review should be 
accompanied by available evidence to support your contentions.
    (3) Your request for review must be received by the designated 
officer or employee of the Corporation on or before the 60th calendar 
day following the date of the notice. Timely filing will stay the 
commencement of collection procedures. The Corporation may consider 
requests filed after the 60-day period provided for in this section if 
you:
    (i) Can show that the delay was the result of circumstances beyond 
your control; or
    (ii) Did not receive notice of the filing deadline (unless you had 
actual notice of the filing deadline).
    (b) Inspection of the Corporation records related to the debt. (1) 
If you want to inspect or copy the Corporation records related to the 
debt (see Sec.  2506.14(a)(5)), you must send a letter to the 
Corporation official designated in the notice. Your letter must be 
received within 30 days of the date of the notice.
    (2) In response to the timely request described in paragraph (b)(1) 
of this section, the designated Corporation official will notify you of 
the location and time when you may inspect and copy records related to 
the debt.
    (3) If personal inspection of the Corporation records related to 
the debt is impractical, reasonable arrangements will be made to send 
you copies of those records.
    (c) Review official. (1) When required by Federal law or 
regulation, such as in a salary offset situation, the Corporation will 
request an administrative law judge, or hearing official from another 
agency who is not under the supervision or control of the Chief 
Executive Officer, to conduct the review. In these cases, the hearing 
official will, following the review, submit the review decision to the 
Chief Executive Officer for the issuance of the Corporation's final 
decision (see paragraph (f) of this section for content of the review 
decision).
    (2) When Federal law or regulation does not require the Corporation 
to have the review conducted by an administrative law judge, or by a 
hearing official from another agency who is not under the supervision 
or control of the Chief Executive Officer, the Corporation has the 
right to appoint a hearing official to conduct the review. In these 
cases, the hearing official will, following the review, submit the 
review decision to the Chief Executive Officer for the issuance of the 
Corporation's final decision (see paragraph (f) of this section for the 
content of the review decision).
    (d) Review procedure. If you request a review, the review official 
will notify you of the form of the review to be provided. The review 
official will determine whether an oral hearing is required, or if a 
review of the written record is sufficient, in accordance with the 
FCCS. Although you may request an oral hearing, such a hearing is 
required only when a review of the documentary evidence cannot 
determine the question of indebtedness, such as when the validity of 
the debt turns on an issue of credibility or truthfulness. In either 
case, the review official will conduct the review in accordance with 
the FCCS. If the review will include an oral hearing, the notice sent 
to you by the review official will set forth the date, time, and 
location of the hearing.
    (e) Date of decision. (1) The review official will issue a written 
decision, based upon either the written record or documentary evidence 
and information developed at an oral hearing. This decision will be 
issued as soon as practical, but not later than 60 days after the date 
on which the Corporation received your request for a review, unless you 
request, and the review official grants, a delay in the proceedings.
    (2) If the Corporation is unable to issue a decision within 60 days 
after the receipt of the request for a hearing:
    (i) The Corporation may not issue a withholding order or take other 
action until the review (in whatever form) is held and a decision is 
rendered; and
    (ii) If the Corporation previously issued a withholding order to 
the debtor's employer, the Corporation must suspend the withholding 
order beginning on the 61st day after the receipt of the review request 
and continuing until a review (in whatever form) is held and a decision 
is rendered.
    (f) Content of review decision. The review official will prepare a 
written decision that includes:

[[Page 16443]]

    (1) A statement of the facts presented to support the origin, 
nature, and amount of the debt;
    (2) The review official's findings, analysis, and conclusions; and
    (3) The terms of any repayment schedule, if applicable.
    (g) Interest, penalty charge, and administrative cost accrual 
during review period. Interest, penalty charges, and administrative 
costs authorized by law will continue to accrue during the review 
period.


Sec.  506.18  What interest, penalty charges, and administrative costs 
will I have to pay on a debt owed to the Corporation?

    (a) Interest. (1) The Corporation will assess interest on all 
delinquent debts unless prohibited by statute, regulation, or contract.
    (2) Interest begins to accrue on all debts from the date that the 
debt becomes delinquent. The Corporation will not recover interest if 
you pay the debt within 30 days of the date on which interest begins to 
accrue. The Corporation will assess interest at the rate established 
annually by the Secretary of the Treasury under 31 U.S.C. 3717, unless 
a different rate is either necessary to protect the interests of the 
Corporation or established by a contract, repayment agreement, or 
statute. The Corporation will notify you of the basis for its finding 
when a different rate is necessary to protect the interests of the 
Corporation.
    (3) The Chief Executive Officer may extend the 30-day period for 
payment without interest when he or she determines that such action is 
in the best interest of the Corporation. A decision to extend or not to 
extend the payment period is final and is not subject to further 
review.
    (b) Penalty. The Corporation will assess a penalty charge of 6 
percent a year on any portion of a debt that is delinquent for more 
than 90 days.
    (c) Administrative costs. The Corporation will assess charges to 
cover administrative costs incurred as a result of your failure to pay 
a debt before it becomes delinquent. Administrative costs include the 
additional costs incurred in processing and handling the debt because 
it became delinquent, such as costs incurred in obtaining a credit 
report or in using a private collection contractor, or service fees 
charged by a Federal agency for collection activities undertaken on 
behalf of the Corporation.
    (d) Allocation of payments. A partial or installment payment by a 
debtor will be applied first to outstanding penalty assessments, second 
to administrative costs, third to accrued interest, and fourth to the 
outstanding debt principal.
    (e) Additional authority. The Corporation may assess interest, 
penalty charges, and administrative costs on debts that are not subject 
to 31 U.S.C. 3717 to the extent authorized under common law or other 
applicable statutory authority.
    (f) Waiver. (1) The Chief Executive Officer may (without regard to 
the amount of the debt) waive collection of all or part of accrued 
interest, penalty charges, or administrative costs, if he or she 
determines that collection of these charges would be against equity and 
good conscience or not in the best interest of the Corporation.
    (2) A decision to waive interest, penalty charges, or 
administrative costs may be made at any time before a debt is paid. 
However, and unless otherwise stated in these regulations, where these 
charges have been collected before the waiver decision, they will not 
be refunded. The Chief Executive Officer's decision to waive or not 
waive collection of these charges is final and is not subject to 
further review.


Sec.  2506.19  How can I resolve my debt through voluntary repayment?

    (a) In response to a notice of debt, you may propose to the 
Corporation that you be allowed to repay the debt through a voluntary 
repayment agreement in lieu of the Corporation taking other collection 
actions under this part.
    (b) Your request to enter into a voluntary repayment agreement 
must:
    (1) Be in writing;
    (2) Admit the existence of the debt; and
    (3) Either propose payment of the debt (together with interest, 
penalty charges, and administrative costs) in a lump sum, or set forth 
a proposed repayment schedule.
    (c) The Corporation will collect debts in one lump sum whenever 
feasible. However, if you are unable to pay your debt in one lump sum, 
the Corporation may accept payment in regular installments that bear a 
reasonable relationship to the size of the debt and your ability to 
pay. If possible, the installment payments should be sufficient in size 
and frequency to liquidate the debt in three years or less.
    (d) The Corporation will consider a request to enter into a 
voluntary repayment agreement in accordance with the FCCS. The Chief 
Executive Officer may request additional information from you, 
including financial statements if you request to make payments in 
installments, in order to determine whether to accept a voluntary 
repayment agreement. It is within the Chief Executive Officer's 
discretion to accept a repayment agreement instead of proceeding with 
other collection actions under this part, and to set the necessary 
terms of any voluntary repayment agreement. No repayment agreement will 
be binding on the Corporation unless it is in writing and signed by 
both you and the Chief Executive Officer. At the Corporation's option, 
you may be required to provide security as part of the agreement to 
make payments in installments. Notwithstanding the provisions of this 
section, 31 U.S.C. 3711 will govern any reduction or compromise of a 
debt.


Sec.  2506.20  What is the extent of the Chief Executive Officer's 
authority to compromise debts owed to the Corporation, or to suspend or 
terminate collection action on such debts?

    (a) The Chief Executive Officer may compromise, suspend, or 
terminate collection action on those debts owed to the Corporation that 
do not exceed $100,000 excluding interest, in conformity with the 
Federal Claims Collection Act of 1966, as amended. The Corporation will 
follow the policies in Sec.  902.2 of the FCCS.
    (b) The uncollected portion of a debt owed to the Corporation that 
is not recovered as the result of a compromise will be reported to the 
Internal Revenue Service (IRS) as income to the debtor in accordance 
with IRS procedures if this uncollected amount is at least $600.00.


Sec.  2506.21  May the Corporation's failure to comply with these 
regulations be used as a defense to a debt?

    No, the failure of the Corporation to comply with any standard in 
the FCCS or these regulations will not be available to any debtor as a 
defense.

Subpart C--Salary Offset


Sec.  2506.30  What debts are included or excluded from coverage of 
these regulations on salary offset?

    (a) The regulations in this subpart provide the Corporation 
procedures for the collection by salary offset of a Federal employee's 
pay to satisfy certain debts owed to the Corporation or to other 
Federal agencies.
    (b) The regulations in this subpart do not apply to any case where 
collection of a debt by salary offset is explicitly provided for or 
prohibited by another statute.
    (c) Nothing in the regulations in this subpart precludes the 
compromise, suspension, or termination of collection actions under the 
Federal Claims Collection Act of 1966, as amended, or the FCCS.

[[Page 16444]]

    (d) A levy imposed under the Internal Revenue Code takes precedence 
over a salary offset under this subpart, as provided in 5 U.S.C. 
5514(d).


Sec.  2506.31  May I ask the Corporation to waive an overpayment that 
otherwise would be collected by offsetting my salary as a Federal 
employee?

    Yes, the regulations in this subpart do not preclude you from 
requesting waiver of an overpayment under 5 U.S.C. 5584 or 8346(b), 10 
U.S.C. 2774, 32 U.S.C. 716, or other statutory provisions pertaining to 
the particular debts being collected.


Sec.  2506.32  What are the Corporation's procedures for salary offset?

    (a) The Corporation will coordinate salary deductions under this 
subpart as appropriate.
    (b) If you are a Corporation employee who owes a debt to the 
Corporation, the Corporation's payroll office in Human Resources will 
determine the amount of your disposable pay and will implement the 
salary offset.
    (c) Deductions will begin within three official pay periods 
following receipt by the Corporation's payroll office of certification 
of debt from the creditor agency.
    (d) The Notice provisions of these regulations do not apply to 
certain debts arising under this section (see Sec.  2506.14(c)).
    (e) Types of collection. (1) Lump-sum offset. If the amount of the 
debt is equal to or less than 15 percent of disposable pay, the debt 
generally will be collected through one lump-sum offset.
    (2) Installment deductions. Installment deductions will be made 
over a period not greater than the anticipated period of employment. 
The size and frequency of installment deductions will bear a reasonable 
relation to the size of the debt and your ability to pay. However, the 
amount deducted from any period will not exceed 15 percent of the 
disposable pay from which the deduction is made unless you have agreed 
in writing to the deduction of a greater amount. If possible, 
installment payments will be sufficient in size and frequency to 
liquidate the debt in three years or less.
    (3) Deductions from final check. A deduction exceeding the 15 
percent of disposable pay limitation may be made from any final salary 
payment under 31 U.S.C. 3716 and the FCCS in order to liquidate the 
debt, whether the employee is being separated voluntarily or 
involuntarily.
    (4) Deductions from other sources. If an employee subject to salary 
offset is separated from the Corporation and the balance of the debt 
cannot be liquidated by offset of the final salary check, the 
Corporation may offset later payments of any kind against the balance 
of the debt, as allowed by 31 U.S.C. 3716 and the FCCS.
    (f) Multiple debts. In instances where two or more creditor 
agencies are seeking salary offsets, or where two or more debts are 
owed to a single creditor agency, the Corporation's payroll office may, 
at its discretion, determine whether one or more debts should be offset 
simultaneously within the 15 percent limitation.


Sec.  2506.33  How will the Corporation coordinate salary offsets with 
other agencies?

    (a) Responsibilities of the Corporation as the creditor agency 
(i.e. when the debtor owes a debt to the Corporation and is an employee 
of another agency). Upon completion of the procedures established in 
this subpart and pursuant to 5 U.S.C. 5514 and 31 U.S.C. 3716, the 
Corporation must submit a claim to a paying agency or disbursing 
official.
    (1) In its claim, the Corporation must certify, in writing, the 
following:
    (i) That the employee owes the debt;
    (ii) The amount and basis of the debt;
    (iii) The date the Corporation's right to collect the debt first 
accrued;
    (iv) That the Corporation's regulations in this subpart have been 
approved by OPM under 5 CFR part 550, subpart K; and
    (v) That the Corporation has met the certification requirements of 
the paying agency.
    (2) If the collection must be made in installments, the 
Corporation's claim will also advise the paying agency of the amount or 
percentage of disposable pay to be collected in each installment. The 
Corporation may also advise the paying agency of the number of 
installments to be collected and the date of the first installment, if 
that date is other than the next officially established pay period.
    (3) The Corporation will also include in its claim:
    (i) The employee's written consent to the salary offset;
    (ii) The employee's signed statement acknowledging receipt of the 
procedures required by 5 U.S.C. 5514; or
    (iii) Information regarding the completion of procedures required 
by 5 U.S.C. 5514, including the actions taken and the dates of those 
actions.
    (4) If the employee is in the process of separating and has not 
received a final salary check or other final payment(s) from the paying 
agency, the Corporation must submit its claim to the paying agency or 
disbursing official for collection under 31 U.S.C. 3716. The paying 
agency will (under its regulations adopted under 5 U.S.C. 5514 and 5 
CFR part 550, subpart K), certify the total amount of its collection on 
the debt and notify the employee and the Corporation. If the paying 
agency's collection does not fully satisfy the debt, and the paying 
agency is aware that the debtor is entitled to payments from the Civil 
Service Retirement and Disability Fund or other similar payments that 
may be due the debtor employee from other Federal government sources, 
then (under its regulations adopted under 5 U.S.C. 5514 and 5 CFR part 
550, subpart K), the paying agency will provide written notice of the 
outstanding debt to the agency responsible for making the other 
payments to the debtor employee. The written notice will state that the 
employee owes a debt, the amount of the debt, and that the provisions 
of this section have been fully complied with. However, the Corporation 
must submit a properly certified claim under this paragraph (a)(4) to 
the agency responsible for making the other payments before the 
collection can be made.
    (5) If the employee is already separated and all payments due from 
his or her former paying agency have been paid, the Corporation may 
request, unless otherwise prohibited, that money due and payable to the 
employee from the Civil Service Retirement and Disability Fund or other 
similar funds be administratively offset to collect the debt.
    (6) Employee transfer. When an employee transfers from one paying 
agency to another paying agency, the Corporation will not repeat the 
due process procedures described in 5 U.S.C. 5514 and this subpart to 
resume the collection. The Corporation will submit a properly certified 
claim to the new paying agency and will subsequently review the debt to 
ensure that the collection is resumed by the new paying agency.
    (b) Responsibilities of the Corporation as the paying agency (i.e., 
when the debtor owes a debt to another agency and is an employee of the 
Corporation).
    (1) Complete claim. When the Corporation receives a certified claim 
from a creditor agency (under the creditor agency's regulations adopted 
under 5 U.S.C. 5514 and 5 CFR part 550, subpart K), deductions should 
be scheduled to begin within three officially established pay 
intervals. Before deductions can begin, the Corporation sends the 
employee a written notice containing:
    (i) A statement that the Corporation has received a certified claim 
from the creditor agency;

[[Page 16445]]

    (ii) The amount of the debt;
    (iii) The date salary offset deductions will begin; and
    (iv) The amount of such deductions.
    (2) Incomplete claim. When the Corporation receives an incomplete 
certification of debt from a creditor agency, the Corporation will 
return the claim with a notice that the creditor agency must:
    (i) Comply with the procedures required under 5 U.S.C. 5514 and 5 
CFR part 550, subpart K, and
    (ii) Properly certify a claim to the Corporation before the 
Corporation will take action to collect from the employee's current pay 
account.
    (3) The Corporation is not authorized to review the merits of the 
creditor agency's determination with respect to the amount or validity 
of the debt certified by the creditor agency.
    (4) Employees who transfer from the Corporation to another paying 
agency. If, after the creditor agency has submitted the claim to the 
Corporation, the employee transfers from the Corporation to a different 
paying agency before the debt is collected in full, the Corporation 
will certify the total amount collected on the debt and notify the 
employee and the creditor agency in writing. The notification to the 
creditor agency will include information on the employee's transfer.


Sec.  2506.34  Under what conditions will the Corporation make a refund 
of amounts collected by salary offset?

    (a) If the Corporation is the creditor agency, it will promptly 
refund any amount deducted under the authority of 5 U.S.C. 5514, when:
    (1) The debt is waived or all or part of the funds deducted are 
otherwise found not to be owed (unless expressly prohibited by statute 
or regulation); or
    (2) An administrative or judicial order directs the Corporation to 
make a refund.
    (b) Unless required or permitted by law or contract, refunds under 
this section will not bear interest.


Sec.  2506.35  Will the collection of a debt by salary offset act as a 
waiver of my rights to dispute the claimed debt?

    No, your involuntary payment of all or any portion of a debt under 
this subpart will not be construed as a waiver of any rights that you 
may have under 5 U.S.C. 5514 or other provisions of a law or written 
contract, unless there are statutory or contractual provisions to the 
contrary.

Subpart D--Tax Refund Offset


Sec.  2506.40  Which debts can the Corporation refer to Treasury for 
collection by offsetting tax refunds?

    (a) The regulations in this subpart implement 31 U.S.C. 3720A, 
which authorizes the Treasury to reduce a tax refund by the amount of a 
past-due, legally enforceable debt owed to a Federal agency.
    (b) For purposes of this section, a past-due, legally enforceable 
debt referable to the Treasury for tax refund offset is a debt that is 
owed to the Corporation and:
    (1) Is at least $25.00;
    (2) Except in the case of a judgment debt, has been delinquent for 
at least three months and will not have been delinquent more than 10 
years at the time the offset is made;
    (3) With respect to which the Corporation has:
    (i) Given the debtor at least 60 days to present evidence that all 
or part of the debt is not past due or legally enforceable;
    (ii) Considered evidence presented by the debtor; and
    (iii) Determined that an amount of the debt is past due and legally 
enforceable;
    (4) With respect to which the Corporation has notified or has made 
a reasonable attempt to notify the debtor that:
    (i) The debt is past due, and
    (ii) Unless repaid within 60 days of the date of the notice, the 
debt may be referred to the Treasury for offset against any refund of 
overpayment of tax; and
    (5) All other requirements of 31 U.S.C. 3720A and the Treasury 
regulations relating to the eligibility of a debt for tax return offset 
(31 CFR 285.2) have been satisfied.


Sec.  2506.41  What are the Corporation's procedures for collecting 
debts by tax refund offset?

    (a) The Corporation's Accounting and Financial Management Services 
Division will be the point of contact with the Treasury for 
administrative matters regarding the offset program.
    (b) The Corporation will ensure that the procedures prescribed by 
the Treasury are followed in developing information about past-due 
debts and submitting the debts to the Treasury.
    (c) The Corporation will submit to the Treasury a notification of a 
taxpayer's liability for past-due legally enforceable debt. This 
notification will contain the following:
    (1) The name and taxpayer identification number of the debtor;
    (2) The amount of the past-due and legally enforceable debt;
    (3) The date on which the original debt became past due;
    (4) A statement certifying that, with respect to each debt 
reported, all of the requirements of Sec.  2506.40(b) have been 
satisfied; and
    (5) Any other information as prescribed by Treasury.
    (d) For purposes of this section, notice that collection of the 
debt is stayed by a bankruptcy proceeding involving the debtor will bar 
referral of the debt to the Treasury.
    (e) The Corporation will promptly notify the Treasury to correct 
data when the Corporation:
    (1) Determines that an error has been made with respect to a debt 
that has been referred;
    (2) Receives or credits a payment on the debt; or
    (3) Receives notice that the person owing the debt has filed for 
bankruptcy under title 11 of the United States Code and the automatic 
stay is in effect or has been adjudicated bankrupt and the debt has 
been discharged.
    (f) When advising debtors of the Corporation's intent to refer a 
debt to the Treasury for offset, the Corporation will also advise 
debtors of remedial actions (see Sec. Sec.  2506.9 and 2506.14 through 
2506.16 of this part) available to defer the offset or prevent it from 
taking place.

Subpart E--Administrative Offset


Sec.  2506.50  Under what circumstances will the Corporation collect 
amounts that I owe to the Corporation (or some other Federal agency) by 
offsetting the debt against payments that the Corporation (or some 
other Federal agency) owes me?

    (a) The regulations in this subpart apply to the collection of any 
debts you owe to the Corporation, or to any request from another 
Federal agency that the Corporation collect a debt you owe by 
offsetting your debt against a payment the Corporation owes you. 
Administrative offset is authorized under section 5 of the Federal 
Claims Collection Act of 1966, as amended (31 U.S.C. 3716). The 
Corporation will carry out administrative offset in accordance with the 
provisions of the Federal Claims Collection Standards. The regulations 
in this subpart are intended only to supplement the provisions of the 
FCCS.
    (b) The Chief Executive Officer, after attempting to collect a debt 
you owe to the Corporation under section 3(a) of the Federal Claims 
Collection Act of 1966, as amended (31 U.S.C. 3711(a)), may collect the 
debt by administrative offset only after giving you:
    (1) Written notice of the type and amount of the debt, the 
intention of the

[[Page 16446]]

Chief Executive Officer to collect the debt by administrative offset, 
and an explanation of the rights of the debtor;
    (2) An opportunity to inspect and copy the records of the 
Corporation related to the debt;
    (3) An opportunity for a review within the Corporation of the 
decision of the Corporation related to the debt; and
    (4) An opportunity to make a written agreement with the Chief 
Executive Officer to repay the amount of the debt.
    (c) No collection by administrative offset will be made on any debt 
that has been outstanding for more than 10 years, unless facts material 
to the Corporation's or the requesting Federal agency's right to 
collect the debt were not known, and reasonably could not have been 
known, by the official or officials responsible for discovering and 
collecting the debt.
    (d) The regulations in this subpart do not apply to:
    (1) A case in which administrative offset of the type of debt 
involved is explicitly prohibited by statute; or
    (2) Debts owed to the Corporation by Federal agencies.


Sec.  2506.51  How will the Corporation request that my debt to the 
Corporation be collected by offset against some payment that another 
Federal agency owes me?

    The Chief Executive Officer may request that funds due and payable 
to you by another Federal agency instead be paid to the Corporation to 
satisfy a debt you owe to the Corporation. The Corporation will refer 
debts to the Treasury for centralized administrative offset in 
accordance with the FCCS and the procedures established by the 
Treasury. Where centralized offset is not available or appropriate, the 
Corporation may request offset directly from the Federal agency that is 
holding funds for you. In requesting administrative offset, the 
Corporation will certify in writing to the Federal agency that is 
holding funds for you:
    (a) That you owe the debt;
    (b) The amount and basis of the debt; and
    (c) That the Corporation has complied with the requirements of 31 
U.S.C. 3716, its own administrative offset regulations in this subpart, 
the applicable administrative offset regulations of the agency holding 
the funds, and the applicable provisions of the FCCS with respect to 
providing you with due process.


Sec.  2506.52  What procedures will the Corporation use to collect 
amounts I owe to a Federal agency by offsetting a payment that the 
Corporation would otherwise make to me?

    (a) Any Federal agency may request that the Corporation 
administratively offset funds due and payable to you in order to 
collect a debt you owe to that agency. The Corporation will initiate 
the requested offset only upon:
    (1) Receipt of written certification from the creditor agency 
stating:
    (i) That you owe the debt;
    (ii) The amount and basis of the debt;
    (iii) That the agency has prescribed regulations for the exercise 
of administrative offset; and
    (iv) That the agency has complied with its own administrative 
offset regulations and with the applicable provisions of the FCCS, 
including providing you with any required hearing or review; and
    (2) A determination by the Chief Executive Officer that offsetting 
funds payable to you by the Corporation in order to collect a debt owed 
by you would be in the best interest of the United States as determined 
by the facts and circumstances of the particular case, and that such an 
offset would not otherwise be contrary to law.
    (b) Multiple debts. In instances where two or more creditor 
agencies are seeking administrative offsets, or where two or more debts 
are owed to a single creditor agency, the Corporation may, in its 
discretion, allocate the amount it owes to you to the creditor agencies 
in accordance with the best interest of the United States as determined 
by the facts and circumstances of the particular case, paying special 
attention to applicable statutes of limitations.


Sec.  2506.53  When may the Corporation make an offset in an expedited 
manner?

    The Corporation may effect an administrative offset against a 
payment to be made to you before completion of the procedures required 
by Sec. Sec.  2506.51 and 2506.52 if failure to take the offset would 
substantially jeopardize the Corporation's ability to collect the debt 
and the time before the payment is to be made does not reasonably 
permit the completion of those procedures. An expedited offset will be 
followed promptly by the completion of those procedures. Amounts 
recovered by offset, but later found not to be owed to the United 
States, will be promptly refunded.


Sec.  2506.54  Can a judgment I have obtained against the United States 
be used to satisfy a debt that I owe to the Corporation?

    Yes. Collection by offset against a judgment obtained by a debtor 
against the United States will be accomplished in accordance with 31 
U.S.C. 3728 and 31 U.S.C. 3716.

Subpart F--Administrative Wage Garnishment


Sec.  2506.55  How will the Corporation collect debts through 
Administrative Wage Garnishment?

    The Corporation will collect debts through Administrative Wage 
Garnishment in accordance with the Administrative Wage Garnishment 
regulations issued by the Treasury. The Corporation adopts, for 
purposes of this subpart, the Treasury's Administrative Wage 
Garnishment regulations in 31 CFR 285.11. This procedure allows the 
Corporation to garnish the disposable pay of a debtor without first 
obtaining a court order.

    Dated: March 29, 2003.
Michelle Guillermin,
Chief Financial Officer.
[FR Doc. 03-8185 Filed 4-3-03; 8:45 am]
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