[Federal Register Volume 68, Number 133 (Friday, July 11, 2003)]
[Rules and Regulations]
[Pages 41274-41284]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-17286]



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GENERAL SERVICES ADMINISTRATION

41 CFR Part 105-55

[GSPMR Case 2003-105-1]
RIN 3090-AH84


General Services Administration Property Management Regulations; 
Collection of Claims Owed the United States

AGENCY: Office of Finance, General Services Administration (GSA).

ACTION: Proposed rule.

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SUMMARY: The General Services Administration (GSA) is proposing to 
amend and reissue its regulations concerning the procedures used to 
collect debts owed to GSA by incorporating applicable provisions as 
required by the Debt Collection Improvement Act of 1996 (DCIA) and the 
Federal Claims Collection Standards.

DATES: Interested parties should submit comments in writing on or 
before September 9, 2003 to be considered in the formulation of a final 
rule.

ADDRESSES: Submit written comments to: General Services Administration, 
Office of Finance (BCD), Office of the Chief Financial Officer, 1800 F 
Street, NW, Room 3121, ATTN: Michael J. Kosar, Washington, DC 20405. 
Submit electronic comments via the Internet to: [email protected]. 
Please submit comments only and cite GSPMR case 2003-105-1 in all 
correspondence related to this case.

FOR FURTHER INFORMATION CONTACT: The Regulatory Secretariat, Room 4035, 
GS Building, Washington, DC, 20405, at (202) 501-4755 for information 
pertaining to status or publication schedules. For clarification of 
content, contact Michael J. Kosar, Office of the Chief Financial 
Officer (202) 501-2029. Please cite GSPMR case 2003-105-1.

SUPPLEMENTARY INFORMATION: 

A. Background

    The GSA proposes to amend and reissue its debt collection 
procedures to incorporate changes presented in the amended Federal 
Claims Collection Standards (FCCS) issued jointly on November 22, 2000, 
by the Department of the Treasury (Treasury) and the Department of 
Justice (DoJ), under the Debt Collection Improvement Act of 1996 
(DCIA). GSA currently has rules for collecting unpaid debts through 
three offset methods: administrative, salary, and tax refund. These 
rules were adopted with then existing provisions of the Debt Collection 
Act of 1982, the FCCS of 1966, and other authorities governing the 
collection of Federal debts.

B. Executive Order 12866

    GSA has determined this regulation is not a significant regulatory 
action as defined in Executive Order 12866 and, accordingly, this 
regulation has not been reviewed by the Office of Management and 
Budget.

C. Regulatory Flexibility Act

    It is hereby certified this regulation will not have a significant 
economic impact on a substantial number of small entities because the 
regulation either: (1) Results in greater flexibility for GSA to 
streamline debt collection regulations, or (2) reflects the statutory 
language contained in the DCIA. Accordingly, a Regulatory Flexibility 
Analysis is not required.

D. Executive Order 13132

    This regulation will not have a substantial direct effect on the 
states, on the relationship between the national government and the 
states, or on distribution of power and responsibilities among the 
various levels of government. Therefore, in accordance with Executive 
Order 13132, it is determined this regulation does not have sufficient 
federalism implications to warrant the preparation of a Federalism 
Assessment.

E. Unfunded Mandates Reform Act of 1995

    This regulation will not result in the expenditure by state, local 
and tribal governments, in the aggregate, or by the private sector, of 
$100 million or more in any one (1) year, and it will not significantly 
or uniquely affect small governments. Therefore, no actions were deemed 
necessary under the provisions of the Unfunded Mandates Reform Act of 
1995.

F. Small Business Regulatory Enforcement Fairness Act of 1996

    This rule is not a major rule as defined by section 251 of the 
Small Business Regulatory Enforcement Act, 5 U.S.C. 804. This rule will 
not result in an annual effect on the economy of $100 million or more; 
a major increase in costs or prices; or significant adverse effects on 
competition, employment, investment, productivity, innovation, or on 
the ability of United States-based companies to compete with foreign-
based companies in domestic or export markets.

G. Paperwork Reduction Act

    This rule does not contain information collection requirements that 
require approval by the Office of Management and Budget under the 
Paperwork Reduction Act, 44 U.S.C. 3507, et seq.

List of Subjects in 41 CFR Part 105-55

    Claims owed the United States, antitrust, fraud, taxes, interagency 
claims, offset, payments, administrative practice and procedure, credit 
bureaus, compromise, suspension, termination and discharge of debts, 
hearing and appeals procedures, debts.

    Dated: June 30, 2003.
Kathleen M. Turco,
Chief Financial Officer, Office of the Chief Financial Officer.

0
For the reasons set forth in the preamble, GSA proposes to revise 41 
CFR part 105-55 as follows:

CHAPTER 105--GENERAL SERVICES ADMINISTRATION

PART 105-55--COLLECTION OF CLAIMS OWED THE UNITED STATES

Sec.
105-55.001 Prescription of standards.
105-55.002 Definitions.
105-55.003 Antitrust, fraud, tax, interagency claims, and claims 
over $100,000 excluded.
105-55.004 Compromise, waiver, or disposition under other statutes 
not precluded.
105-55.005 Form of payment.
105-55.006 Subdivision of claims not authorized.
105-55.007 Required administrative proceedings.
105-55.008 No private rights created.
105-55.009 Aggressive agency collection activity.
105-55.010 Demand for payment.
105-55.011 Collection by administrative offset.
105-55.012 Contracting with private collection contractors and with 
entities that locate and recover unclaimed assets.
105-55.013 Suspension or revocation of eligibility for loans and 
loan guaranties, licenses, permits, or privileges.
105-55.014 Liquidation of collateral.
105-55.015 Collection in installments.
105-55.016 Interest, penalties, and administrative costs.
105-55.017 Use and disclosure of mailing addresses.
105-55.018 Exemptions.
105-55.019 Compromise of claims.
105-55.020 Bases for compromise.
105-55.021 Enforcement policy.
105-55.022 Joint and several liability.
105-55.023 Further review of compromise offers.
105-55.024 Consideration of tax consequences to the Government.
105-55.025 Mutual releases of the debtor and the Government.

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105-55.026 Suspending or terminating collection activity.
105-55.027 Suspension of collection activity.
105-55.028 Termination of collection activity.
105-55.029 Exception to termination.
105-55.030 Discharge of indebtedness; reporting requirements.
105-55.031 Prompt referral to the Department of Justice.
105-55.032 Claims Collection Litigation Report.
105-55.033 Preservation of evidence.
105-55.034 Minimum amount of referrals to the Department of Justice.

    Authority: 5 U.S.C. 552-553, 31 U.S.C. 321, 3701, 3711, 3716, 
3717, 3718, 3719, 3720B, 3720D; 31 CFR Parts 900-904.


Sec.  105-55.001  Prescription of standards.

    (a) The Secretary of the Treasury and the Attorney General of the 
United States issued regulations for collecting debts owed the United 
States under the authority contained in 31 U.S.C. 3711(d)(2). The 
regulations in this part prescribe standards for GSA use in the 
administrative collection, offset, compromise, and the suspension or 
termination of collection activity for civil claims for money, funds, 
or property, as defined by 31 U.S.C. 3701(b), unless specific GSA 
statutes or regulations apply to such activities or, as provided for by 
Title 11 of the United States Code, when the claims involve bankruptcy. 
The regulations in this part also prescribe standards for referring 
debts to the Department of Justice for litigation. Additional guidance 
is contained in the Office of Management and Budget's Circular A-129 
(Revised), ``Policies for Federal Credit Programs and Non-Tax 
Receivables'' (available at http://www.whitehouse.gov/omb), the 
Department of the Treasury's ``Managing Federal Receivables,'' and 
other publications concerning debt collection and debt management 
(available at http://www/fms.treas.gov/debt/regulations.html).
    (b) GSA is not limited to the remedies contained in this part and 
will use all authorized remedies, including alternative dispute 
resolution and arbitration, to collect civil claims, to the extent such 
remedies are not inconsistent with the Federal Claims Collection Act, 
as amended, Chapter 37 of Title 31, U.S. Code; the Debt Collection Act 
of 1982, 5 U.S.C. 5514; the Debt Collection Improvement Act of 1996, 31 
U.S.C. 3701, et seq., or other relevant statutes. The regulations in 
this part are not intended to impair GSA's common law rights to collect 
debts.
    (c) Standards and policies regarding the classification of debt for 
accounting purposes (for example, write off of uncollectible debt) are 
contained in the Office of Management and Budget's Circular A-129 
(Revised), ``Policies for Federal Credit Programs and Non-Tax 
Receivables.''


Sec.  105-55.002  Definitions.

    (a) Administrative offset, as defined in 31 U.S.C. 3701(a)(1), 
means withholding funds payable by the United States (including funds 
payable by the United States on behalf of a State government) to, or 
held by the United States for, a person to satisfy a claim.
    (b) Compromise means the reduction of a debt as provided in 
Sec. Sec.  101-55.019 and 101-55.020 of this part.
    (c) Debt collection center means the Department of the Treasury or 
other Government agency or division designated by the Secretary of the 
Treasury with authority to collect debts on behalf of creditor agencies 
in accordance with 31 U.S.C. 3711(g).
    (d) Debtor means an individual, organization, association, 
corporation, partnership, or a State or local government indebted to 
the United States or a person or entity with legal responsibility for 
assuming the debtor's obligation.
    (e) Delinquent or past-due non-tax debt means any non-tax debt that 
has not been paid by the date specified in GSA's initial written demand 
for payment or applicable agreement or instrument (including a post-
delinquency payment agreement), unless other satisfactory payment 
arrangements have been made.
    (f) For the purposes of the standards in this part, unless 
otherwise stated, the term Administrator refers to the Administrator of 
General Services or the Administrator's delegate.
    (g) For the purposes of the standards in this part, the terms claim 
and debt are synonymous and interchangeable. They refer to an amount of 
money, funds, or property that has been determined by GSA to be due the 
United States from any person, organization, or entity, except another 
Federal agency, from sources which include loans insured or guaranteed 
by the United States and all other amounts due the United States from 
fees, leases, rents, royalties, services, sales of real or personal 
property, overpayments, penalties, damages, interest, fines and 
forfeitures and all other similar sources, including debt administered 
by a third party as an agent for the Federal Government. For the 
purposes of administrative offset under 31 U.S.C. 3716, the terms claim 
and debt include an amount of money, funds, or property owed by a 
person to a State (including past-due support being enforced by a 
State), the District of Columbia, American Samoa, Guam, the United 
States Virgin Islands, the Commonwealth of the Northern Mariana 
Islands, or the Commonwealth of Puerto Rico.
    (h) For the purposes of the standards in this part, unless 
otherwise stated, the terms GSA and Agency are synonymous and 
interchangeable.
    (i) For the purposes of the standards in this part, unless 
otherwise stated, Secretary means the Secretary of the Treasury or the 
Secretary's delegate.
    (j) For the standards in this part, Federal agencies include 
agencies of the executive, legislative, and judicial branches of the 
Government, including Government corporations.
    (k) Hearing means a review of the documentary evidence concerning 
the existence and/or amount of a debt, and/or the terms of a repayment 
schedule, provided such repayment schedule is established other than by 
a written agreement entered into pursuant to this part. If the hearing 
official determines the issues in dispute cannot be resolved solely by 
review of the written record, such as when the validity of the debt 
turns on the issue of credibility or veracity, an oral hearing may be 
provided.
    (1) Hearing official means a Board Judge of the GSA Board of 
Contract Appeals.
    (m) In this part, words in the plural form shall include the 
singular and vice versa, and words signifying the masculine gender 
shall include the feminine and vice versa. The terms includes and 
including do not exclude matters not listed but do include matters that 
are in the same general class.
    (n) Reconsideration means a request by the employee to have a 
secondary review by GSA of the existence and/or amount of the debt, 
and/or the proposed offset schedule.
    (o) Recoupment is a special method for adjusting debts arising 
under the same transaction or occurrence. For example, obligations 
arising under the same contract generally are subject to recoupment.
    (p) Taxpayer identifying number means the identifying number 
described under section 6109 of the Internal Revenue Code of 1986 (26 
U.S.C. 6109). For an individual, the taxpayer identifying number is the 
individual's social security number.
    (q) Waiver means the cancellation, remission, forgiveness, or non-
recovery of a debt or debt-related charge as permitted or required by 
law.

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Sec.  105-55.003  Antitrust, fraud, tax, interagency claims, and claims 
over $100,000 excluded.

    (a) The standards in this part relating to compromise, suspension, 
and termination of collection activity do not apply to any debt based 
in whole or in part on conduct in violation of the antitrust laws or to 
any debt involving fraud, the presentation of a false claim, or 
misrepresentation on the part of the debtor or any party having an 
interest in the claim. The standards of this part relating to the 
administrative collection of claims do apply, but only to the extent 
authorized by the Department of Justice in a particular case. Upon 
identification of a claim based in whole or in part on conduct in 
violation of the antitrust laws or any claim involving fraud, the 
presentation of a false claim, or misrepresentation on the part of the 
debtor or any party having an interest in the claim, GSA will promptly 
refer the case to the GSA Office of Inspector General (OIG). The OIG 
has the responsibility for investigating or referring the matter, where 
appropriate, to the Department of Justice (DoJ) for action. At its 
discretion, DoJ may return the claim to GSA for further handling in 
accordance with the standards of this part.
    (b) This part does not apply to tax debts.
    (c) This part does not apply to claims between GSA and other 
Federal agencies.
    (d) This part does not apply to claims over $100,000.


Sec.  105-55.004  Compromise, waiver, or disposition under other 
statutes not precluded.

    Nothing in this part precludes GSA disposition of any claim under 
statutes and implementing regulations other than subchapter II of 
chapter 37 of Title 31 of the United States Code (Claims of the United 
States Government) and the standards in this part. See, e.g., the 
Federal Medical CareRecovery Act, 42 U.S.C. 2651-2653, and applicable 
regulations, 28 CFR part 43. In such cases, the laws and regulations 
specifically applicable to claims collection activities of GSA 
generally take precedence.


Sec.  105-55.005  Form of payment.

    Claims may be paid in the form of money or, when a contractual 
basis exists, GSA may demand the return of specific property or the 
performance of specific services.


Sec.  105-55.006  Subdivision of claims not authorized.

    Debts will not be subdivided to avoid the monetary ceiling 
established by 31 U.S.C. 3711(a)(2). A debtor's liability arising from 
a particular transaction or contract shall be considered a single debt 
in determining whether the debt is one of less than $100,000 (excluding 
interest, penalties, and administrative costs) or such higher amount as 
the Attorney General shall from time to time prescribe for purposes of 
compromise, suspension, or termination of collection activity.


Sec.  105-55.007  Required administrative proceedings.

    GSA is not required to omit, foreclose, or duplicate administrative 
proceedings required by contract or other laws or regulations.


Sec.  105-55.008  No private rights created.

    The standards in this part do not create any right or benefit, 
substantive or procedural, enforceable at law or in equity by a party 
against the United States, its agencies, its officers, or any other 
person, nor shall the failure of GSA to comply with any of the 
provisions of this part be available to any debtor as a defense.


Sec.  105-55.009  Aggressive agency collection activity.

    (a) GSA will aggressively collect all debts arising out of 
activities of, or referred or transferred for collection services to, 
GSA. Collection activities will be undertaken promptly, including 
letters, telephone calls, electronic mail (e-mail), and internet 
inquiries, with follow-up action taken as necessary.
    (b) Debts referred or transferred to Treasury, or Treasury-
designated debt collection centers under the authority of 31 U.S.C. 
3711(g), will be serviced, collected, or compromised, or the collection 
action will be suspended or terminated, in accordance with the 
statutory requirements and authorities applicable to the collection of 
such debts.
    (c) GSA will cooperate with other agencies in their debt collection 
activities.
    (d) GSA will consider referring debts that are less than 180 days 
delinquent to Treasury or to Treasury-designated ``debt collection 
centers'' to accomplish efficient, cost effective debt collection. 
Treasury is a debt collection center, is authorized to designate 
otherFederal agencies as debt collection centers based on their 
performance in collecting delinquent debts, and may withdraw such 
designations. Referrals to debt collection centers shall be at the 
discretion of, and for a time period acceptable to, the Secretary. 
Referrals may be for servicing, collection, compromise, suspension, or 
termination of collection action.
    (e) GSA will transfer to the Secretary any debt that has been 
delinquent for a period of 180 days or more so the Secretary may take 
appropriate action to collect the debt or terminate collection action. 
See 31 CFR 285.12(Transfer of Debts to Treasury for Collection). This 
requirement does not apply to any debt that--
    (1) Is in litigation or foreclosure;
    (2) Will be disposed of under an approved asset sale program;
    (3) Has been referred to a private collection contractor for a 
period of time acceptable to the Secretary;
    (4) Is at a debt collection center for a period of time acceptable 
to the Secretary (see paragraph (d) of this section);
    (5) Will be collected under internal offset procedures within three 
years after the debt first became delinquent;
    (6) Is exempt from this requirement based on a determination by the 
Secretary that exemption for a certain class of debt is in the best 
interest of the United States. GSA may request the Secretary to exempt 
specific classes of debts;
    (7) Is in bankruptcy (see Sec.  105-55.010(h) of this part);
    (8) Involves a deceased debtor;
    (9) Is owed to GSA by a foreign government; or
    (10) Is in an administrative appeals process, until the process is 
complete and the amount due is set.
    (f) Agencies operating Treasury-designated debt collection centers 
are authorized to charge a fee for services rendered regarding referred 
or transferred debts. The fee may be paid out of amounts collected and 
will be added to the debt as an administrative cost (see Sec.  105-
55.016 of this part).


Sec.  105-55.010  Demand for payment.

    (a) Written demand, as described in paragraph (b) of this section, 
will be made promptly upon a debtor of the United States in terms 
informing the debtor of the consequences of failing to cooperate with 
GSA to resolve the debt. The specific content, timing, and number of 
demand letters (usually no more than three, thirty days apart) will 
depend upon the type and amount of the debt and the debtor's response, 
if any, to GSA's letters, telephone calls, electronic mail (e-mail) or 
internet inquiries. In determining the timing of the demand letter(s), 
GSA will give due regard to the need to refer debts promptly to the 
Department of Justice for litigation, in accordance with Sec.  105-
55.031 of this part. When necessary to protect the Government's 
interest (for example, to prevent the running of a statute of 
limitations), written demand

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may be preceded by other appropriate actions under this part, including 
immediate referral for litigation.
    (b) Demand letters will inform the debtor of--
    (1) The basis and the amount of the indebtedness and the rights, if 
any, the debtor may have to seek review withinGSA (see Sec.  105-
55.011(e) of this part);
    (2) The applicable standards for imposing any interest, penalties, 
or administrative costs (see Sec.  105-55.016 of this part);
    (3) The date by which payment should be made to avoid late charges 
(i.e., interest, penalties, and administrative costs) and enforced 
collection, which generally will not be more than 30 days from the date 
the demand letter is mailed or hand-delivered; and
    (4) The name, address, and phone number of a contact person or 
office within GSA.
    (c) GSA will exercise care to ensure that demand letters are mailed 
or hand-delivered on the same day they are dated. For the purposes of 
written demand, notification by electronic mail (e-mail) and/or 
internet delivery is considered a form of written demand notice. There 
is no prescribed format for demand letters. GSA will utilize demand 
letters and procedures that will lead to the earliest practicable 
determination of whether the debt can be resolved administratively or 
must be referred for litigation.
    (d) GSA may include in demand letters such items as the willingness 
to discuss alternative methods of payment; agency policies with respect 
to the use of credit bureaus, debt collection centers, and collection 
agencies; agency remedies to enforce payment of the debt (including 
assessment of interest, administrative costs and penalties, 
administrative garnishment, the use of collection agencies, Federal 
salary offset, tax refund offset, administrative offset, and 
litigation); the requirement that any debt delinquent for more than 180 
days will be transferred to the Department of the Treasury for 
collection; and, depending on applicable statutory authority, the 
debtor's entitlement to consideration of a waiver.
    (e) GSA will respond promptly to communications from debtors, 
within 30 days whenever feasible, and will advise debtors who dispute 
debts to furnish available evidence to support their contentions.
    (f) Prior to the initiation of the demand process or at any time 
during or after completion of the demand process, if GSA determines to 
pursue, or is required to pursue offset, the procedures applicable to 
offset will be followed (see Sec.  105-55.011 of this part). The 
availability of funds or money for debt satisfaction by offset and 
GSA's determination to pursue collection by offset will release the 
agency from the necessity of further compliance with paragraphs (a), 
(b), (c), and (d) of this section.
    (g) Prior to referring a debt for litigation, GSA will advise each 
person determined to be liable for the debt that, unless the debt can 
be collected administratively, litigation may be initiated. This 
notification will comply with Executive Order 12988 (3 CFR, 1996 Comp. 
pp. 157-163) and may be given as part of a demand letter under 
paragraph (b) of this section or in a separate document.
    (h) When GSA learns a bankruptcy petition has been filed with 
respect to a debtor, before proceeding with further collection action, 
the agency will ascertain the impact of the Bankruptcy Code on any 
pending or contemplated collection activities. Unless the agency 
determines the automatic stay imposed at the time of filing pursuant to 
11U.S.C. Sec.  362 has been lifted or is no longer in effect, in most 
cases collection activity against the debtor will stop immediately.
    (1) A proof of claim will be filed in most cases with the 
bankruptcy court or the Trustee. GSA will refer to the provisions of 11 
U.S.C. 106 relating to the consequences on sovereign immunity of filing 
a proof of claim.
    (2) If GSA is a secured creditor, it may seek relief from the 
automatic stay regarding its security, subject to the provisions and 
requirements of 11 U.S.C. 362.
    (3) Offset is stayed in most cases by the automatic stay. However, 
GSA will determine whether its payments to the debtor and payments of 
other agencies available for offset may be frozen by the agency until 
relief from the automatic stay can be obtained from the bankruptcy 
court. GSA also will determine whether recoupment is available.


Sec.  105-55.011  Collection by administrative offset.

    (a) Scope. (1) The term ``administrative offset'' has the meaning 
provided in 31 U.S.C. 3701(a)(1).
    (2) This section does not apply to--
    (i) Debts arising under the Social Security Act, except as provided 
in 42 U.S.C. 404;
    (ii) Payments made under the Social Security Act, except as 
provided for in 31 U.S.C. 3716(c) (see 31 CFR 285.4, Federal Benefit 
Offset);
    (iii) Debts arising under, or payments made under, the Internal 
Revenue Code (see 31 CFR 285.2, Tax Refund Offset) or the tariff laws 
of the United States;
    (iv) Offsets against Federal salaries to the extent these standards 
are inconsistent with regulations published to implement such offsets 
under 5 U.S.C. 5514 and 31 U.S.C. 3716 (see 5 CFR part 550, subpart K, 
and 31 CFR 285.7, Federal Salary Offset);
    (v) Offsets under 31 U.S.C. 3728 against a judgment obtained by a 
debtor against the United States;
    (vi) Offsets or recoupments under common law, State law, or Federal 
statutes specifically prohibiting offsets or recoupments of particular 
types of debts; or
    (vii) Offsets in the course of judicial proceedings, including 
bankruptcy.
    (3) Unless otherwise provided for by contract or law, debts or 
payments that are not subject to administrative offset under 31 U.S.C. 
3716 may be collected by administrative offset under the common law or 
other applicable statutory authority.
    (4) Unless otherwise provided by law, administrative offset of 
payments under the authority of 31 U.S.C. 3716 to collect a debt may 
not be conducted more than 10 years after GSA's right to collect the 
debt first accrued, unless facts material to GSA's right to collect the 
debt were not known and could not reasonably have been known by the 
official or officials of GSA who were charged with the responsibility 
to discover and collect such debts. This limitation does not apply to 
debts reduced to a judgment.
    (5) In bankruptcy cases, GSA will ascertain the impact of the 
Bankruptcy Code, particularly 11 U.S.C. 106, 362, and 553, on pending 
or contemplated collections by offset.
    (b) Mandatory centralized administrative offset. (1) GSA is 
required to refer past due, legally enforceable non-tax debts that are 
over 180 days delinquent to the Secretary for collection by centralized 
administrative offset. Debts that are less than 180 days delinquent 
also may be referred to the Secretary for this purpose. See paragraph 
(b)(5) of this section for debt certification requirements.
    (2) The names and taxpayer identifying numbers (TINs) of debtors 
who owe debts referred to the Secretary as described in paragraph 
(b)(1) of this section will be compared to the names and TINs on 
payments to be made by Federal disbursing officials. Federal disbursing 
officials include disbursing officials of the Department of the 
Treasury, the Department of Defense, the United States Postal Service, 
other

[[Page 41278]]

Government corporations, and disbursing officials of the United States 
designated by the Secretary. When the name and TIN of a debtor match 
the name and TIN of a payee and all other requirements for offset have 
been met, the payment will be offset to satisfy the debt.
    (3) Federal disbursing officials will notify the debtor/payee in 
writing that an offset has occurred to satisfy, in part or in full, a 
past due, legally enforceable delinquent debt. The notice will include 
a description of the type and amount of the payment from which the 
offset was taken, the amount of offset that was taken, the identity of 
GSA as the creditor agency requesting the offset, and a contact point 
within GSA who will respond to questions regarding the offset.
    (4)(i) Offsets may be initiated only after the debtor--
    (A) Has been sent written notice of the type and amount of the 
debt, the intention of GSA to use administrative offset to collect the 
debt, and an explanation of the debtor's rights under 31 U.S.C. 3716 
(c)(7); and
    (B) The debtor has been given--
    (1) The opportunity to inspect and copy agency records related to 
the debt;
    (2) The opportunity for a review within GSA of the determination of 
indebtedness (see paragraph (e) of this section); and
    (3) The opportunity to make a written agreement to repay the debt.
    (ii) The procedures set forth in paragraph (b)(4)(i) of this 
section may be omitted when--
    (A) The offset is in the nature of a recoupment;
    (B) The debt arises under a contract as set forth in Cecile 
Industries, Inc. v. Cheney, 995 F.2d 1052 (Fed. Cir. 1993) (notice and 
other procedural protections set forth in 31 U.S.C. 3716(a) do not 
supplant or restrict established procedures for contractual offsets 
accommodated by the Contracts Disputes Act); or
    (C) In the case of non-centralized administrative offsets conducted 
under paragraph (c) of this section, GSA first learns of the existence 
of the amount owed by the debtor when there is insufficient time before 
payment would be made to the debtor/payee to allow for prior notice and 
an opportunity for review. When prior notice and an opportunity for 
review are omitted, GSA will give the debtor such notice and an 
opportunity for review as soon as practicable and will promptly refund 
any money ultimately found not to have been owed to the Government.
    (iii) When GSA previously has given a debtor any of the required 
notice and review opportunities with respect to a particular debt (see, 
e.g., Sec.  105-55.010 of this part), the agency need not duplicate 
such notice and review opportunities before administrative offset may 
be initiated.
    (5) When referring delinquent debts to the Secretary, GSA will 
certify, in a form acceptable to the Secretary, that--
    (i) The debt(s) is (are) past due and legally enforceable; and
    (ii) GSA has complied with all due process requirements under 31 
U.S.C. 3716(a) and agency regulations.
    (6) Payments that are prohibited by law from being offset are 
exempt from centralized administrative offset. The Secretary shall 
exempt payments under means-tested programs from centralized 
administrative offset when requested in writing by the Administrator. 
Also, the Secretary may exempt other classes of payments from 
centralized offset upon the written request of the Administrator.
    (7) Benefit payments made under the Social Security Act (42 U.S.C. 
301 et seq.), part B of the Black Lung Benefits Act (30 U.S.C. 921 et 
seq.), and any law administered by the Railroad Retirement Board (other 
than tier 2 benefits), may be offset only in accordance with Treasury 
regulations, issued in consultation with the Social Security 
Administration, the Railroad Retirement Board, and the Office of 
Management and Budget. See 31 CFR 285.4.
    (8) In accordance with 31 U.S.C. 3716(f), the Secretary may waive 
the provisions of the Computer Matching and Privacy Protection Act of 
1988 concerning matching agreements and post-match notification and 
verification (5 U.S.C. 552a(o) and (p)) for centralized administrative 
offset upon receipt of a certification from GSA that the due process 
requirements enumerated in 31 U.S.C. 3716(a) have been met. The 
certification of a debt in accordance with paragraph (b)(5) of this 
section will satisfy this requirement. If such a waiver is granted, 
only the Data Integrity Board of the Department of the Treasury is 
required to oversee any matching activities, in accordance with 31 
U.S.C. Sec.  3716(g). This waiver authority does not apply to offsets 
conducted under paragraphs (c) and (d) of this section.
    (c) Non-centralized administrative offset. (1) Generally, non-
centralized administrative offsets are ad hoc case-by-case offsets that 
GSA conducts, at the agency's discretion, internally or in cooperation 
with another agency certifying or authorizing payments to the debtor. 
Unless otherwise prohibited by law, when centralized administrative 
offset is not available or appropriate, past due, legally enforceable 
non-tax delinquent debts may be collected through non-centralized 
administrative offset. In these cases, GSA may make a request directly 
to a payment authorizing agency to offset a payment due a debtor to 
collect a delinquent debt. For example, it may be appropriate for GSA 
to request the Office of Personnel Management (OPM) offset a Federal 
employee's lump-sum payment upon leaving Government service to satisfy 
an unpaid advance.
    (2) Such offsets will occur only after--
    (i) The debtor has been provided due process as set forth in 
paragraph (b)(4) of this section; and
    (ii) The payment authorizing agency has received written 
certification from GSA that the debtor owes the past due, legally 
enforceable delinquent debt in the amount stated, and that GSA has 
fully complied with its regulations concerning administrative offset.
    (3) Payment authorizing agencies will comply with offset requests 
by GSA to collect debts owed to the United States, unless the offset 
would not be in the best interests of the United States with respect to 
the program of the payment authorizing agency, or would otherwise be 
contrary to law.
    (4) When collecting multiple debts by non-centralized 
administrative offset, GSA will apply the recovered amounts to those 
debts in accordance with the best interests of the United States, as 
determined by the facts and circumstances of the particular case, 
particularly the applicable statute of limitations.
    (d) Requests to OPM to offset a debtor's anticipated or future 
benefit payments under the Civil Service Retirement and Disability 
Fund. Upon providing OPM written certification that a debtor has been 
afforded the procedures provided in paragraph (b)(4) of this section, 
GSA may request OPM to offset a debtor's anticipated or future benefit 
payments under the Civil Service Retirement and Disability Fund (Fund) 
in accordance with regulations codified at 5 CFR 831.1801 to 831.1808. 
Upon receipt of such a request, OPM will identify and ``flag'' a 
debtor's account in anticipation of the time when the debtor requests, 
or becomes eligible to receive, payments from the Fund. This will 
satisfy any requirement that offset be initiated prior to the 
expiration of the time limitations referenced in paragraph (a)(4) of 
this section.
    (e) Review requirements. (1) A debtor may seek review of a debt by 
sending a signed and dated petition for review to the official named in 
the demand letter. A copy of the petition must also be sent to the GSA 
Board of Contract Appeals

[[Page 41279]]

(GSBCA) at the address indicated in paragraph (e)(6) of this section.
    (2) For purposes of this section, whenever GSA is required to 
afford a debtor a review within the agency, the hearing official will 
provide the debtor with a reasonable opportunity for an oral hearing 
when the debtor requests reconsideration of the debt and the hearing 
official determines that the question of the indebtedness cannot be 
resolved by review of the documentary evidence; for example, when the 
validity of the debt turns on an issue of credibility or veracity.
    (3) Witnesses will be asked to testify under oath or affirmation, 
and a written transcript of the hearing will be kept and made available 
to either party in the event of an appeal under the Administrative 
Procedure Act, 5 U.S.C. 701-706. Arrangements for the taking of the 
transcript will be made by the hearing official, and all charges 
associated with the taking of the transcript will be the responsibility 
of GSA.
    (4) In those cases when an oral hearing is not required by this 
section, the hearing official will accord the debtor a ``paper 
hearing,'' that is, a determination of the request for reconsideration 
based upon a review of the written record.
    (5) Hearings will be conducted by a Board Judge of the GSBCA. GSA 
must provide proof that a valid non-tax debt exists, and the debtor 
must provide evidence that no debt exists or that the amount of the 
debt is incorrect.
    (6) If an oral hearing is provided, the debtor may choose to have 
it conducted in the hearing official's office located at GSA Central 
Office, 1800 F St., NW., Washington, DC 20405, at another location 
designated by the hearing official, or may choose a hearing by 
telephone. All personal and travel expenses incurred by the debtor in 
connection with an in-person hearing will be borne by the debtor. All 
telephonic charges incurred during a hearing will be the responsibility 
of GSA.
    (7) If the debtor is an employee of GSA, the employee may represent 
himself or herself or may be represented by another person of his or 
her choice at the hearing. GSA will not compensate the employee for 
representation expenses, including hourly fees for attorneys, travel 
expenses, and costs for reproducing documents.
    (8) A written decision will be issued by the hearing official no 
later than 60 days from the date the petition for review is received by 
GSA. The decision will state the--
    (i) Facts supporting the nature and origin of the debt;
    (ii) Hearing official's analysis, findings, and conclusions as to 
the debtor's and/or GSA's grounds;
    (iii) Amount and validity of the debt; and
    (iv) Repayment schedule, if applicable.
    (9) The hearing official's decision will be the final agency action 
for the purposes of judicial review under the Administrative Procedure 
Act (5 U.S.C. 701 et seq.).
    (f) Waiver requirements. (1) Under certain circumstances, a waiver 
of a claim against an employee of GSA arising out of an erroneous 
payment of pay, allowances, travel, transportation, or relocation 
expenses and allowances may be granted in whole or in part.
    (2) GSA procedures for waiving a claim of erroneous payment of pay 
and allowances can be found in GSA Order CFO 4200.1, ``Waiver of Claims 
for Overpayment of Pay and Allowances''.
    (3) GSA will follow the procedures of 5 U.S.C. 5584 when 
considering a request for waiver of erroneous payment of travel, 
transportation, or relocation expenses and allowances.


Sec.  105-55.012  Contracting with private collection contractors and 
with entities that locate and recover unclaimed assets.

    (a) Subject to the provisions of paragraph (b) of this section, GSA 
may contract with private collection contractors, as defined in 31 
U.S.C. 3701(f), to recover delinquent debts provided that--
    (1) GSA retain the authority to resolve disputes, compromise debts, 
suspend or terminate collection activity, and refer debts for 
litigation;
    (2) The private collection contractor is not allowed to offer the 
debtor, as an incentive for payment, the opportunity to pay the debt 
less the private collection contractor's fee unless GSA has granted 
such authority prior to the offer;
    (3) The contract provides that the private collection contractor is 
subject to the Privacy Act of 1974 to the extent specified in 5 U.S.C. 
552a(m), and to applicable Federal and state laws and regulations 
pertaining to debt collection practices, including but not limited to 
the Fair Debt Collection Practices Act, 15 U.S.C. 1692; and
    (4) The private collection contractor is required to account for 
all amounts collected.
    (b) GSA will use Governmentwide debt collection contracts to obtain 
debt collection services provided by private collection contractors. 
However, GSA may refer debts to private collection contractors pursuant 
to a contract between the agency and the private collection contractor 
only if such debts are not subject to the requirement to transfer debts 
to Treasury for debt collection. See 31 U.S.C. 3711(g); 31 CFR 
285.12(e).
    (c) GSA may fund private collection contractor contracts in 
accordance with 31 U.S.C. 3718(b), or as otherwise permitted by law.
    (d) GSA may enter into contracts for locating and recovering assets 
of the United States, such as unclaimed assets.
    (e) GSA may enter into contracts for debtor asset and income search 
reports. In accordance with 31 U.S.C. 3718(b), such contracts may 
provide that the fee a contractor charges the agency for such services 
may be payable from the amounts recovered, unless otherwise prohibited 
by statute.


Sec.  105-55.013  Suspension or revocation of eligibility for loans and 
loan guaranties, licenses, permits, or privileges.

    (a) Unless waived by the Administrator, GSA will not extend 
financial assistance in the form of a loan, loan guarantee, or loan 
insurance to any person delinquent on a non-tax debt owed to a Federal 
agency. This prohibition does not apply to disaster loans. The 
authority to waive the application of this section may be delegated to 
the Chief Financial Officer and re-delegated only to the Deputy Chief 
Financial Officer of GSA. GSA may extend credit after the delinquency 
has been resolved. The Secretary may exempt classes of debts from this 
prohibition and has prescribed standards defining when a 
``delinquency'' is ``resolved'' for purposes of this prohibition. See 
31 CFR 285.13.
    (b) In non-bankruptcy cases, GSA, when seeking the collection of 
statutory penalties, forfeitures, or other types of claims, will 
consider the suspension or revocation of licenses, permits, or other 
privileges for any inexcusable or willful failure of a debtor to pay 
such a debt in accordance with GSA regulations or governing procedures. 
The debtor will be advised in GSA's written demand for payment of the 
agency's ability to suspend or revoke licenses, permits, or privileges. 
If GSA makes, guarantees, insures, acquires, or participates in loans, 
the agency will consider suspending or disqualifying any lender, 
contractor, or broker from doing further business with the agency or 
engaging in programs sponsored by the agency if such lender, 
contractor, or broker fails to pay its debts to the Government within a 
reasonable time or if such lender, contractor, or broker has been

[[Page 41280]]

suspended, debarred, or disqualified from participation in a program or 
activity by another Federal agency. The failure of any surety to honor 
its obligations in accordance with 31 U.S.C. Sec.  9305 will be 
reported to the Treasury. The Treasury will forward notification to all 
interested agencies that a surety's certificate of authority to do 
business with the Government has been revoked by the Treasury.
    (c) The suspension or revocation of licenses, permits, or 
privileges also may extend to GSA programs or activities administered 
by the states on behalf of GSA, to the extent they affect GSA's ability 
to collect money or funds owed by debtors.
    (d) In bankruptcy cases, before advising the debtor of GSA's 
intention to suspend or revoke licenses, permits, or privileges, the 
agency will ascertain the impact of the Bankruptcy Code, particularly 
11 U.S.C. 362 and 525, which may restrict such action.


Sec.  105-55.014  Liquidation of collateral.

    (a) GSA will liquidate security or collateral through the exercise 
of a power of sale in the security instrument or a non-judicial 
foreclosure, and apply the proceeds to the applicable debt(s), if the 
debtor fails to pay the debt(s) within a reasonable time after demand 
and if such action is in the best interest of the United States. 
Collection from other sources, including liquidation of security or 
collateral, is not a prerequisite to requiring payment by a surety, 
insurer, or guarantor unless such action is expressly required by 
statute or contract.
    (b) When GSA learns a bankruptcy petition has been filed with 
respect to a debtor, the agency will ascertain the impact of the 
Bankruptcy Code, including, but not limited to, 11 U.S.C. 362, to 
determine the applicability of the automatic stay and the procedures 
for obtaining relief from such stay prior to proceeding under paragraph 
(a) of this section.


Sec.  105-55.015  Collection in installments.

    (a) Whenever feasible, GSA will collect the total amount of a debt 
in one lump sum. If a debtor is financially unable to pay a debt in one 
lump sum, GSA may accept payment in regular installments. GSA may 
obtain financial statements from debtors who represent they are unable 
to pay in one lump sum and independently verify such representations 
whenever possible (see Sec. 105-55.020(g) of this part). When GSA 
agrees to accept payments in regular installments, a legally 
enforceable written agreement from the debtor will be obtained 
specifying all of the terms of the arrangement and containing a 
provision accelerating the debt in the event of default. If the 
debtor's financial statement discloses the ownership of assets which 
are free and clear of liens or security interests, or assets in which 
the debtor owns an equity, the debtor may be asked to secure the 
payment of an installment note by executing a Security Agreement and 
Financing Statement transferring to the United States a security 
interest in the asset until the debt is paid.
    (b) The size and frequency of installment payments will bear a 
reasonable relation to the size of the debt and the debtor's ability to 
pay. The installment payments will be sufficient in size and frequency 
to liquidate the debt in three years or less, unless circumstances 
warrant a longer period.
    (c) Security for deferred payments may be obtained in appropriate 
cases. GSA may accept installment payments notwithstanding the refusal 
of the debtor to execute a written agreement or to give security, at 
the agency's option.


Sec.  105-55.016  Interest, penalties, and administrative costs.

    (a) Except as provided in paragraphs (g), (h), and (i) of this 
section, GSA will charge interest, penalties, and administrative costs 
on debts owed to the United States pursuant to 31 U.S.C. 3717. GSA will 
send by U.S. mail, overnight delivery service, or hand-delivery a 
written notice to the debtor, at the debtor's most recent address 
available to the agency, explaining the agency's requirements 
concerning these charges, except where these requirements are included 
in a contractual or repayment agreement. These charges will continue to 
accrue until the debt is paid in full or otherwise resolved through 
compromise, termination, or waiver of the charges.
    (b) GSA will charge interest on debts owed the United States as 
follows:
    (1) Interest will accrue from the date of delinquency, or as 
otherwise provided by law.
    (2) Unless otherwise established in a contract, repayment 
agreement, or by statute, the rate of interest charged will be the rate 
established annually by the Secretary in accordance with 31 U.S.C. 
3717(a)(1). Pursuant to 31 U.S.C. 3717, GSA may charge a higher rate of 
interest if it is reasonably determined that a higher rate is necessary 
to protect the rights of the United States. GSA will document the 
reason(s) for a determination that the higher rate is necessary.
    (3) The rate of interest, as initially charged, will remain fixed 
for the duration of the indebtedness. When a debtor defaults on a 
repayment agreement and seeks to enter into a new agreement, GSA may 
require payment of interest at a new rate that reflects the Current 
Value of Funds Rate (CVFR) at the time the new agreement is executed. 
Interest will not be compounded; that is, interest will not be charged 
on interest, penalties, or administrative costs required by this 
section. If a debtor defaults on a previous repayment agreement, 
charges that accrued but were not collected under the defaulted 
agreement will be added to the principal under the new repayment 
agreement.
    (c) GSA will assess administrative costs incurred for processing 
and handling delinquent debts. The calculation of administrative costs 
will be based on actual costs incurred or upon estimated costs as 
determined by the agency.
    (d) Unless otherwise established in a contract, repayment 
agreement, or by statute, GSA will charge a penalty, pursuant to 31 
U.S.C. 3717(e)(2), not to exceed six percent a year on the amount due 
on a debt that is delinquent for more than 90 days. This charge will 
accrue from the date of delinquency.
    (e) GSA may increase an ``administrative debt'' by the cost of 
living adjustment in lieu of charging interest and penalties under this 
section. ``Administrative debt'' includes, but is not limited to, a 
debt based on fines, penalties, and overpayments, but does not include 
a debt based on the extension of Government credit, such as those 
arising from loans and loan guaranties. The cost of living adjustment 
is the percentage by which the Consumer Price Index for the month of 
June of the calendar year preceding the adjustment exceeds the Consumer 
Price Index for the month of June of the calendar year in which the 
debt was determined or last adjusted. Increases to administrative debts 
will be computed annually. GSA will use this alternative only when 
there is a legitimate reason to do so, such as when calculating 
interest and penalties on a debt would be extremely difficult because 
of the age of the debt.
    (f) When a debt is paid in partial or installment payments, amounts 
received by GSA will be applied first to outstanding penalties, second 
to administrative charges, third to interest, and last to principal.
    (g) GSA will waive the collection of interest, penalty and 
administrative charges imposed pursuant to this section on the portion 
of the debt that is paid within 30 days after the date on which 
interest began to accrue. GSA may extend this 30-day period on a

[[Page 41281]]

case-by-case basis. In addition, GSA may waive interest, penalties, and 
administrative costs charged under this section, in whole or in part, 
without regard to the amount of the debt, either under the criteria set 
forth in these standards for the compromise of debts, or if the agency 
determines that collection of these charges resulted from agency error, 
is against equity and good conscience, or is not in the best interest 
of the United States.
    (h) Unless a statute or regulation specifically prohibits 
collection, interest, penalties and administrative costs will continue 
to accrue for periods during which collection activity has been 
suspended pending agency review or waiver consideration.
    (i) GSA is authorized to impose interest and related charges on 
debts not subject to 31 U.S.C. 3717, in accordance with the common law.


Sec.  105-55.017  Use and disclosure of mailing addresses.

    (a) When attempting to locate a debtor in order to collect or 
compromise a debt under this part or other authority, GSA may send a 
request to the Secretary (or designee) to obtain a debtor's mailing 
address from the records of the Internal Revenue Service.
    (b) GSA is authorized to use mailing addresses obtained under 
paragraph (a) of this section to enforce collection of a delinquent 
debt and may disclose such mailing addresses to other agencies and to 
collection agencies for collection purposes.


Sec.  105-55.018  Exemptions.

    (a) The preceding sections of this part, to the extent they reflect 
remedies or procedures prescribed by the Debt Collection Act of 1982 
and the Debt Collection Improvement Act of 1996, such as administrative 
offset, use of credit bureaus, contracting for collection agencies, and 
interest and related charges, do not apply to debts arising under, or 
payments made under, the Internal Revenue Code of 1986, as amended (26 
U.S.C. 1 et seq.); the Social Security Act (42 U.S.C. 301 et seq.), 
except to the extent provided under 42 U.S.C. 404 and 31 U.S.C. 
3716(c); or the tariff laws of the United States. These remedies and 
procedures, however, may be authorized with respect to debts that are 
exempt from the Debt Collection Act of 1982 and the Debt Collection 
Improvement Act of 1996, to the extent they are authorized under some 
other statute or the common law.
    (b) Claims arising from the audit of transportation accounts 
pursuant to 31 U.S.C. 3726 will be determined, collected, compromised, 
terminated or settled in accordance with regulation published under the 
authority of 31 U.S.C. 3726 (see 41 CFR part 101-41, administered by 
the Director, Office of Transportation Audits) and are otherwise 
exempted from this part.


Sec.  105-55.019  Compromise of claims.

    (a) The standards set forth in this section apply to the compromise 
of debts pursuant to 31 U.S.C. 3711. GSA may exercise such compromise 
authority for debts arising out of activities of, or referred or 
transferred for collection services to, the agency when the amount of 
the debt then due, exclusive of interest, penalties, and administrative 
costs, does not exceed $100,000 or any higher amount authorized by the 
Attorney General. The Administrator may designate other GSA officials 
to exercise the authorities in this section.
    (b) Unless otherwise provided by law, when the principal balance of 
a debt, exclusive of interest, penalties, and administrative costs, 
exceeds $100,000 or any higher amount authorized by the Attorney 
General, the authority to accept the compromise rests with the 
Department of Justice. GSA will evaluate the compromise offer, using 
the factors set forth in Sec.  105-55.020 of this part. If an offer to 
compromise any debt in excess of $100,000 is acceptable to the agency, 
GSA will refer the debt to the Civil Division or other appropriate 
litigating division in the Department of Justice using a Claims 
Collection Litigation Report (CCLR). The referral will include 
appropriate financial information and a recommendation for the 
acceptance of the compromise offer. Justice Department approval is not 
required if GSA rejects a compromise offer.


Sec.  105-55.020  Bases for compromise.

    (a) GSA may compromise a debt if the full amount cannot be 
collected because--
    (1) The debtor is unable to pay the full amount in a reasonable 
time, as verified through credit reports or other financial 
information;
    (2) GSA is unable to collect the debt in full within a reasonable 
time by enforced collection proceedings;
    (3) The cost of collecting the debt does not justify the enforced 
collection of the full amount; or
    (4) There is significant doubt concerning the Government's ability 
to prove its case in court.
    (b) In determining the debtor's inability to pay, GSA will consider 
relevant factors such as the following:
    (1) Age and health of the debtor.
    (2) Present and potential income.
    (3) Inheritance prospects.
    (4) The possibility that assets have been concealed or improperly 
transferred by the debtor.
    (5) The availability of assets or income that may be realized by 
enforced collection proceedings.
    (c) GSA will verify the debtor's claim of inability to pay by using 
a credit report and other financial information as provided in 
paragraph (g) of this section. GSA will consider the applicable 
exemptions available to the debtor under state and Federal law in 
determining the Government's ability to enforce collection. GSA also 
may consider uncertainty as to the price that collateral or other 
property will bring at a forced sale in determining the Government's 
ability to enforce collection. A compromise effected under this section 
will be for an amount that bears a reasonable relation to the amount 
that can be recovered by enforced collection procedures, with regard to 
the exemptions available to the debtor and the time that collection 
will take.
    (d) If there is significant doubt concerning the Government's 
ability to prove its case in court for the full amount claimed, either 
because of the legal issues involved or because of a bona fide dispute 
as to the facts, then the amount accepted in compromise of such cases 
will fairly reflect the probabilities of successful prosecution to 
judgment, with due regard given to the availability of witnesses and 
other evidentiary support for the Government's claim. In determining 
the litigative risks involved, GSA will consider the probable amount of 
court costs and attorney fees pursuant to the Equal Access to Justice 
Act, 28 U.S.C. 2412 that may be imposed against the Government if it is 
unsuccessful in litigation.
    (e) GSA may compromise a debt if the cost of collecting the debt 
does not justify the enforced collection of the full amount. The amount 
accepted in compromise in such cases may reflect an appropriate 
discount for the administrative and litigative costs of collection, 
with consideration given to the time it will take to effect collection. 
Collection costs may be a substantial factor in the settlement of small 
debts. In determining whether the cost of collection justifies enforced 
collection of the full amount, GSA will consider whether continued 
collection of the debt, regardless of cost, is necessary to further an 
enforcement principle, such as the Government's willingness to pursue 
aggressively defaulting and uncooperative debtors.

[[Page 41282]]

    (f) GSA generally will not accept compromises payable in 
installments. This is not an advantageous form of compromise in terms 
of time and administrative expense. If, however, payment of a 
compromise in installments is necessary, GSA will obtain a legally 
enforceable written agreement providing that, in the event of default, 
the full original principal balance of the debt prior to compromise, 
less sums paid thereon, is reinstated. Whenever possible, GSA will 
obtain security for repayment in the manner set forth in Sec.  105-
55.015 of this part.
    (g) To assess the merits of a compromise offer based in whole or in 
part on the debtor's inability to pay the full amount of a debt within 
a reasonable time, GSA may obtain a current financial statement from 
the debtor, executed under penalty of perjury, showing the debtor's 
assets, liabilities, income and expenses. GSA also may obtain credit 
reports or other financial information to assess compromise offers. GSA 
may use their own financial information form or may request suitable 
forms from the Department of Justice or the local United States 
Attorney's Office.


Sec.  105-55.021  Enforcement policy.

    Pursuant to this section, GSA may compromise statutory penalties, 
forfeitures, or claims established as an aid to enforcement and to 
compel compliance, if the agency's enforcement policy in terms of 
deterrence and securing compliance, present and future, will be 
adequately served by the agency's acceptance of the sum to be agreed 
upon.


Sec.  105-55.022  Joint and several liability.

    (a) When two or more debtors are jointly and severally liable, GSA 
may pursue collection activity against all debtors, as appropriate. GSA 
will not attempt to allocate the burden of payment between the debtors 
but will proceed to liquidate the indebtedness as quickly as possible.
    (b) GSA will ensure that a compromise agreement with one debtor 
does not release the agency's claim against the remaining debtors. The 
amount of a compromise with one debtor will not be considered a 
precedent or binding in determining the amount that will be required 
from other debtors jointly and severally liable on the claim.


Sec.  105-55.023  Further review of compromise offers.

    If GSA is uncertain whether to accept a firm, written, substantive 
compromise offer on a debt that is within the agency's delegated 
compromise authority, it may refer the offer to the Civil Division or 
other appropriate litigating division in the Department of Justice, 
using a CCLR accompanied by supporting data and particulars concerning 
the debt. The Department of Justice may act upon such an offer or 
return it to GSA with instructions or advice.


Sec.  105-55.024  Consideration of tax consequences to the Government.

    In negotiating a compromise, GSA may consider the tax consequences 
to the Government. In particular, GSA may consider requiring a waiver 
of tax-loss-carry-forward and tax-loss-carry-back rights of the debtor. 
For information on discharge of indebtedness reporting requirements see 
Sec.  105-55.030 of this part.


Sec.  105-55.025  Mutual releases of the debtor and the Government.

    In all appropriate instances, a compromise that is accepted by GSA 
may be implemented by means of a mutual release, in which the debtor is 
released from further non-tax liability on the compromised debt in 
consideration of payment in full of the compromise amount and the 
Government and its officials, past and present, are released and 
discharged from any and all claims and causes of action arising from 
the same transaction that the debtor may have. In the event a mutual 
release is not executed when a debt is compromised, unless prohibited 
by law, the debtor is still deemed to have waived any and all claims 
and causes of action against the Government and its officials related 
to the transaction giving rise to the compromised debt.


Sec.  105-55.026  Suspending or terminating collection activity.

    (a) The standards set forth in Sec. Sec.  105-55.027 and 105-55.028 
of this part apply to the suspension or termination of collection 
activity pursuant to 31 U.S.C. 3711 on debts that do not exceed 
$100,000, or such other amount as the Attorney General may direct, 
exclusive of interest, penalties, and administrative costs, after 
deducting the amount of partial payments or collections, if any. Prior 
to referring a debt to the Department of Justice for litigation, GSA 
may suspend or terminate collection under this part with respect to 
debts arising out of activities of, or referred or transferred for 
collection services to, the agency.
    (b) If, after deducting the amount of any partial payments or 
collections, the principal amount of a debt exceeds $100,000, or such 
other amount as the Attorney General may direct, exclusive of interest, 
penalties, and administrative costs, the authority to suspend or 
terminate rests solely with the Department of Justice. If GSA believes 
suspension or termination of any debt in excess of $100,000 may be 
appropriate, the agency will refer the debt to the Civil Division or 
other appropriate litigating division in the Department of Justice, 
using the CCLR. The referral will specify the reasons for the agency's 
recommendation. If, prior to referral to the Department of Justice, GSA 
determines a debt is plainly erroneous or clearly without legal merit, 
the agency may terminate collection activity regardless of the amount 
involved without obtaining Department of Justice concurrence.


Sec.  105-55.027  Suspension of collection activity.

    (a) GSA may suspend collection activity on a debt when--
    (1) The agency cannot locate the debtor;
    (2) The debtor's financial condition is expected to improve; or
    (3) The debtor has requested a waiver or review of the debt.
    (b) Based on the current financial condition of the debtor, GSA may 
suspend collection activity on a debt when the debtor's future 
prospects justify retention of the debt for periodic review and 
collection activity and--
    (1) The applicable statute of limitations has not expired; or
    (2) Future collection can be effected by administrative offset, 
notwithstanding the expiration of the applicable statute of limitations 
for litigation of claims, with due regard to the 10-year limitation for 
administrative offset prescribed by 31 U.S.C. 3716(e)(1); or
    (3) The debtor agrees to pay interest on the amount of the debt on 
which collection will be suspended, and such suspension is likely to 
enhance the debtor's ability to pay the full amount of the principal of 
the debt with interest at a later date.
    (c)(1) GSA will suspend collection activity during the time 
required for consideration of the debtor's request for waiver or 
administrative review of the debt if the statute under which the 
request is sought prohibits the agency from collecting the debt during 
that time.
    (2) If the statute under which the request is sought does not 
prohibit collection activity pending consideration of the request, GSA 
will use discretion, on a case-by-case basis, to suspend collection. 
Further, GSA ordinarily will suspend collection

[[Page 41283]]

action upon a request for waiver or review if the agency is prohibited 
by statute or regulation from issuing a refund of amounts collected 
prior to agency consideration of the debtor's request. However, GSA 
will not suspend collection when the agency determines the request for 
waiver or review is frivolous or was made primarily to delay 
collection.
    (d) When GSA learns a bankruptcy petition has been filed with 
respect to a debtor, in most cases the collection activity on a debt 
will be suspended, pursuant to the provisions of 11 U.S.C. 362, 1201, 
and 1301, unless the agency can clearly establish the automatic stay 
has been lifted or is no longer in effect. GSA will, if legally 
permitted, take the necessary legal steps to ensure no funds or money 
are paid by the agency to the debtor until relief from the automatic 
stay is obtained.


Sec.  105-55.028  Termination of collection activity.

    (a) GSA may terminate collection activity when--
    (1) The agency is unable to collect any substantial amount through 
its own efforts or through the efforts of others;
    (2) The agency is unable to locate the debtor;
    (3) Costs of collection are anticipated to exceed the amount 
recoverable;
    (4) The debt is legally without merit or enforcement of the debt is 
barred by any applicable statute of limitations;
    (5) The debt cannot be substantiated; or
    (6) The debt against the debtor has been discharged in bankruptcy.
    (b) Before terminating collection activity, GSA will pursue all 
appropriate means of collection and determine, based upon the results 
of the collection activity, that the debt is uncollectible. Termination 
of collection activity ceases active collection of the debt. The 
termination of collection activity does not preclude GSA from retaining 
a record of the account for purposes of--
    (1) Selling the debt, if the Secretary determines that such sale is 
in the best interests of the United States;
    (2) Pursuing collection at a subsequent date in the event there is 
a change in the debtor's status or a new collection tool becomes 
available;
    (3) Offsetting against future income or assets not available at the 
time of termination of collection activity; or
    (4) Screening future applicants of loans and loan guaranties, 
licenses, permits, or privileges for prior indebtedness.
    (c) Generally, GSA will terminate collection activity on a debt 
that has been discharged in bankruptcy, regardless of the amount. GSA 
may continue collection activity, however, subject to the provisions of 
the Bankruptcy Code, for any payments provided under a plan of 
reorganization. Offset and recoupment rights may survive the discharge 
of the debtor in bankruptcy and, under some circumstances, claims also 
may survive the discharge. For example, the claims of GSA that it is a 
known creditor of a debtor may survive a discharge if the agency did 
not receive formal notice of the proceedings.


Sec.  105-55.029  Exception to termination.

    When a significant enforcement policy is involved, or recovery of a 
judgment is a prerequisite to the imposition of administrative 
sanctions, GSA may refer debts for litigation even though termination 
of collection activity may otherwise be appropriate.


Sec.  105-55.030  Discharge of indebtedness; reporting requirements.

    (a) Before discharging a delinquent debt (also referred to as a 
close out of the debt), GSA will take all appropriate steps to collect 
the debt in accordance with 31 U.S.C. 3711(g), including, as 
applicable, administrative offset, tax refund offset, Federal salary 
offset, referral to Treasury, Treasury-designated debt collection 
centers or private collection contractors, credit bureau reporting, 
wage garnishment, litigation, and foreclosure. Discharge of 
indebtedness is distinct from termination or suspension of collection 
activity and is governed by the Internal Revenue Code. When collection 
action on a debt is suspended or terminated, the debt remains 
delinquent and further collection action may be pursued at a later date 
in accordance with the standards set forth in this part. When GSA 
discharges a debt in full or in part, further collection action is 
prohibited. Therefore, GSA will make the determination that collection 
action is no longer warranted before discharging a debt. Before 
discharging a debt, GSA will terminate debt collection action.
    (b) Section 3711(i), Title 31, United States Code, requires GSA to 
sell a delinquent non-tax debt upon termination of collection action if 
the Secretary determines such a sale is in the best interests of the 
United States. Since the discharge of a debt precludes any further 
collection action (including the sale of a delinquent debt), GSA may 
not discharge a debt until the requirements of 31 U.S.C. 3711(i) have 
been met.
    (c) Upon discharge of a debt of more than $600, GSA must report the 
discharge to the IRS in accordance with the requirements of 26 U.S.C. 
6050P and 26 CFR 1.6050P-1. GSA may request Treasury or Treasury-
designated debt collection centers to file such a discharge report to 
the IRS on the agency's behalf.
    (d) When discharging a debt, GSA will request the GSA Office of 
General Counsel to release any liens of record securing the debt.


Sec.  105-55.031  Prompt referral to the Department of Justice.

    (a) GSA will promptly refer to the Department of Justice (DoJ) for 
litigation debts on which aggressive collection activity has been taken 
in accordance with Sec.  105-55.009 of this part and that cannot be 
compromised, or on which collection activity cannot be suspended or 
terminated, in accordance with Sec. Sec.  105-55.027 and 105-55.028 of 
this part. GSA may refer those debts arising out of activities of, or 
referred or transferred for collection services to, the agency. Debts 
for which the principal amount is over $1,000,000, or such other amount 
as the Attorney General may direct, exclusive of interest and 
penalties, will be referred to the Civil Division or other division 
responsible for litigating such debts at DoJ, Washington, DC. Debts for 
which the principal amount is $1,000,000, or less, or such other amount 
as the Attorney General may direct, exclusive of interest or penalties, 
will be referred to DoJ's Nationwide Central Intake Facility as 
required by the CCLR instructions. Debts will be referred as early as 
possible, consistent with aggressive GSA collection activity and the 
observance of the standards contained in this part, and, in any event, 
well within the period for initiating timely lawsuits against the 
debtors. GSA will make every effort to refer delinquent debts to DoJ 
for litigation within one year of the date such debts last became 
delinquent. In the case of guaranteed or insured loans, GSA will make 
every effort to refer these delinquent debts to DoJ for litigation 
within one year from the date the loan was presented to the agency for 
payment or re-insurance.
    (b) DoJ has exclusive jurisdiction over the debts referred to it 
pursuant to this section. GSA, as the referring agency, will 
immediately terminate the use of any administrative collection 
activities to collect a debt at the time of the referral of that debt 
to DoJ. GSA will advise DoJ of the collection activities which have 
been utilized to date, and their result. GSA will refrain from having 
any contact with the debtor and will direct all debtor inquiries 
concerning the debt to DoJ, except as

[[Page 41284]]

otherwise agreed between GSA and DoJ. GSA will immediately notify DoJ 
of any payments credited by the agency to the debtor's account after 
referral of a debt under this section. DoJ will notify GSA of any 
payments it receives from the debtor.


Sec.  105-55.032  Claims Collection Litigation Report.

    (a) Unless excepted by the Department of Justice (DoJ), GSA will 
complete the Claims Collection Litigation Report (CCLR) (see Sec.  105-
55.019(b) of this part), accompanied by a signed Certificate of 
Indebtedness, to refer all administratively uncollectible claims to DoJ 
for litigation. GSA will complete all sections of the CCLR appropriate 
to each claim as required by the CCLR instructions and furnish such 
other information as may be required in specific cases.
    (b) GSA will indicate clearly on the CCLR the actions DoJ should 
take with respect to the referred claim. The CCLR permits the agency to 
indicate specifically any of a number of litigative activities which 
DoJ may pursue, including enforced collection, judgment lien only, 
renew judgment lien only, renew judgment lien and enforce collection, 
program enforcement, foreclosure only, and foreclosure and deficiency 
judgment.
    (c) GSA also will use the CCLR to refer claims to DoJ to obtain 
approval of any proposals to compromise the claims or to suspend or 
terminate agency collection activity.


Sec.  105-55.033  Preservation of evidence.

    GSA will take care to preserve all files and records that may be 
needed by DoJ to prove their claims in court. GSA ordinarily will 
include certified copies of the documents that form the basis for the 
claim in the packages referring their claims to DoJ for litigation. GSA 
will provide originals of such documents immediately upon request by 
DoJ.


Sec.  105-55.034  Minimum amount of referrals to the Department of 
Justice.

    (a) GSA will not refer for litigation claims of less than $2,500, 
exclusive of interest, penalties, and administrative costs, or such 
other amount as the Attorney General shall from time to time prescribe. 
The Department of Justice (DoJ) will notify GSA if the Attorney General 
changes this minimum amount.
    (b) GSA will not refer claims of less than the minimum amount 
unless--
    (1) Litigation to collect such smaller claims is important to 
ensure compliance with the agency's policies or programs;
    (2) The claim is being referred solely for the purpose of securing 
a judgment against the debtor, which will be filed as a lien against 
the debtor's property pursuant to 28 U.S.C. 3201 and returned to GSA 
for enforcement; or
    (3) The debtor has the clear ability to pay the claim and the 
Government effectively can enforce payment, with due regard for the 
exemptions available to the debtor under state and Federal law and the 
judicial remedies available to the Government.
    (c) GSA will consult with the Financial Litigation Staff of the 
Executive Office for United States Attorneys in DoJ prior to referring 
claims valued at less than the minimum amount.
[FR Doc. 03-17286 Filed 7-10-03; 8:45 am]
BILLING CODE 6820-34-P