[Federal Register Volume 70, Number 149 (Thursday, August 4, 2005)]
[Proposed Rules]
[Pages 44870-44878]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-14794]


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PRESIDIO TRUST

36 CFR Part 1011


Debt Collection

AGENCY: Presidio Trust.

ACTION: Proposed rule with request for comments.

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SUMMARY: This rule proposes to adopt debt collection regulations to 
conform to the Debt Collection Improvement Act of 1996, the Federal 
Claims Collection Standards, and other laws applicable to the 
collection of nontax debts owed to the Presidio Trust.

DATES: Comments regarding this proposed rule must be received on or 
before September 19, 2005.

ADDRESSES: Send comments to Karen Cook, General Counsel, Presidio 
Trust, 34 Graham Street, San Francisco, CA 94129. Comments also may be 
submitted by electronic mail to [email protected].

FOR FURTHER INFORMATION CONTACT: Karen Cook, General Counsel, Presidio 
Trust, at (415) 561-5300, 34 Graham Street, San Francisco, CA 94129.

    Dated: July 20, 2005.
Karen A. Cook,
General Counsel.

SUPPLEMENTARY INFORMATION:

Background

    This proposed rule establishes the Presidio Trust's debt collection 
regulations. They conform to the Debt Collection Improvement Act of 
1996 (DCIA), Public Law 104-134, 110 Stat. 1321, 1358 (Apr. 26, 1996), 
the Federal Claims Collection Standards, 31 CFR Chapter IX (parts 900 
through 904), and other laws applicable to the collection of nontax 
debt owed to the Government.
    This proposed regulation provides procedures for the collection of 
nontax debts owed to the Presidio Trust. The Presidio Trust adopts the 
Governmentwide debt collection standards promulgated by the Departments 
of the Treasury and Justice, known as the Federal Claims Collection 
Standards (FCCS), as revised on November 22, 2000 (65 FR 70390), and 
supplements the FCCS by prescribing procedures consistent with the 
FCCS, as necessary and appropriate for Presidio Trust operations. The 
Presidio Trust may, but is not required to, adopt additional procedures 
and guidelines consistent with this proposed regulation, the FCCS, and 
other applicable Federal laws, policies and procedures. This proposed 
regulation also provides the procedures for the collection of debts 
owed to another

[[Page 44871]]

Federal agency when a request for offset is received from another 
Federal agency.
    This proposed regulation does not apply to the collection of tax 
debts, which is governed by the Internal Revenue Code of 1986 (26 
U.S.C. 1 et seq.) and regulations, policies and procedures issued by 
the Internal Revenue Service.
    Nothing in this proposed regulation precludes the use of collection 
remedies not contained in this regulation. For example, the Presidio 
Trust may collect unused travel advances through setoff of an 
employee's pay under 5 U.S.C. 5705. The Presidio Trust may 
simultaneously use multiple collection remedies to collect a debt, 
except as prohibited by law.

Section Analysis

Subpart A--Sections 1011.1 Through 1011.3

    Subpart A of this proposed regulation addresses the general 
provisions applicable to the collection of nontax debts owed to the 
Presidio Trust.
    As stated in section 1011.2 of this proposed rule, nothing in this 
regulation requires the Presidio Trust to duplicate notices or 
administrative proceedings required by contract, this regulation or 
other laws or regulations. Thus, for example, the Presidio Trust is not 
required to provide a debtor with two hearings on the same issue merely 
because the entity uses two different collection tools, each of which 
requires that the debtor be provided with a hearing.

Subpart B--Sections 1011.4 Through 1011.20

    Subpart B of this proposed regulation describes the procedures to 
be followed by the Presidio Trust when collecting debts owed to the 
Presidio Trust. Among other things, subpart B outlines the due process 
procedures the Presidio Trust will follow when using offset 
(administrative, tax refund and salary) to collect a debt, when 
garnishing a debtor's wages, or before reporting a debt to a credit 
bureau. Specifically, the Presidio Trust will provide debtors with 
notice of the amount and type of debt, the intended collection action 
to be taken, how a debtor may pay the debt or make alternate repayment 
arrangements, how a debtor may review documents related to the debt, 
how a debtor may dispute the debt, and the consequences to the debtor 
if the debt is not paid. Notices may be sent by first-class mail, and 
if not returned by the United States Postal Service, the Presidio Trust 
may presume that the notice was received. See Rosenthal v. Walker, 111 
U.S. 185 (1884); Mahon v. Credit Bureau of Placer County Incorporated, 
171 F.3d 1197 (9th Cir. 1999). Nothing in this proposed regulation 
precludes the Presidio Trust from sending a notice by certified mail if 
appropriate or required by statute.
    Subpart B also explains the circumstances under which the Presidio 
Trust may waive interest, penalties and administrative costs.
    This proposed regulation also incorporates procedures for several 
collection remedies authorized by the DCIA, such as administrative wage 
garnishment.

Subpart C--Sections 1011.21 and 1011.22

    Subpart C of this proposed regulation describes the procedures to 
be followed when another Federal agency would like to use the offset 
process to collect a debt from payment issued by the Presidio Trust as 
a payment agency.

Regulatory Analysis

E.O. 12866, Regulatory Review

    This proposed rule is not a significant regulatory action as 
defined in Executive Order 12866.

Regulatory Flexibility Act

    This proposed rule will only affect persons who owe delinquent 
nontax debts to the Presidio Trust and other Federal agencies. 
Accordingly, a regulatory flexibility analysis is not required.

List of Subjects for 36 CFR Part 1011

    Administrative practice and procedure, Claims, Debt collections, 
Federal employees, Garnishment of wages, Reporting and recordkeeping 
requirements.

Authority and Issuance

    For the reasons set forth in the preamble, 36 CFR part 1011 is 
proposed to be added to read as follows:

PART 1011--DEBT COLLECTION

Subpart A--General Provisions
Sec.
1011.1 What definitions apply to the regulations in this part?
1011.2 Why is the Presidio Trust issuing these regulations and what 
do they cover?
1011.3 Do these regulations adopt the Federal Claims Collection 
Standards?
Subpart B--Procedures To Collect Presidio Trust Debts
1011.4 What notice will the Presidio Trust send to a debtor when 
collecting a debt?
1011.5 What interest, penalty charges and administrative costs will 
the Presidio Trust add to a debt?
1011.6 When will the Presidio Trust allow a debtor to enter into a 
repayment agreement?
1011.7 When will the Presidio Trust compromise a debt?
1011.8 When will the Presidio Trust suspend or terminate debt 
collection on a debt?
1011.9 When will the Presidio Trust transfer a debt to the Financial 
Management Service for collection?
1011.10 How will the Presidio Trust use administrative offset 
(offset of non-tax Federal payments) to collect a debt?
1011.11 How will the Presidio Trust use tax refund offset to collect 
a debt?
1011.12 How will the Presidio Trust offset a Federal employee's 
salary to collect a debt?
1011.13 How will the Presidio Trust use administrative wage 
garnishment to collect a debt from a debtor's wages?
1011.14 How will the Presidio Trust report debts to credit bureaus?
1011.15 How will the Presidio Trust refer debts to private 
collection contractors?
1011.16 When will the Presidio Trust refer debts to the Department 
of Justice?
1011.17 Will a debtor who owes a debt be ineligible for Presidio 
Trust licenses, permits, leases, privileges or services?
1011.18 How does a debtor request a special review based on a change 
in circumstances such as catastrophic illness, divorce, death or 
disability?
1011.19 Will the Presidio Trust issue a refund if money is 
erroneously collected on a debt?
1011.20 Will the Presidio Trust's failure to comply with these 
regulations be a defense to a debt?
Subpart C--Procedures for Offset of Presidio Trust Payments To Collect 
Debts Owed to Other Federal Agencies
1011.21 How do other Federal agencies use the offset process to 
collect debts from payments issued by the Presidio Trust?
1011.22 What does the Presidio Trust do upon receipt of a request to 
offset the salary of a Presidio Trust employee to collect a debt 
owed by the employee to another Federal agency?

    Authority: The Presidio Trust is authorized to publish this 
proposed rule pursuant to 16 U.S.C. 460bb appendix, as amended.

Subpart A--General Provisions


Sec.  1011.1  What definitions apply to the regulations in this part?

    As used in this part:
    Administrative offset or 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 owed by the person. The term ``administrative 
offset'' includes, without limitation, the offset of Federal salary, 
vendor, retirement, and Social Security benefit payments. The terms 
``centralized administrative offset'' and

[[Page 44872]]

``centralized offset'' refer to the process by which the Treasury 
Department's Financial Management Service offsets Federal payments 
through the Treasury Offset Program.
    Administrative wage garnishment means the process by which a 
Federal agency may, without first obtaining a court order, order a non-
Federal employer to withhold amounts from a debtor's wages to satisfy a 
delinquent debt.
    Agency or Federal agency means a department, agency, court, court 
administrative office, or instrumentality in the executive, judicial or 
legislative branch of the Federal government, including government 
corporations.
    Certification means a written statement received by a paying agency 
or disbursing official 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.
    Compromise means the settlement or forgiveness of all or a portion 
of a debt.
    Creditor agency means any Federal agency that is owed a debt and 
includes a debt collection center when it is acting on behalf of the 
Presidio Trust.
    Debt means any amount of money, funds or property that has been 
determined by an appropriate agency official to be owed to the United 
States by a person. As used in this part, the term ``debt'' does not 
include debts arising under the Internal Revenue Code.
    Debt collection center means the Treasury Department or any agency 
or division designated by the Secretary of the Treasury with authority 
to collect debts on behalf of creditor agencies.
    Debtor means a person who owes a debt to the United States.
    Delinquent debt means a debt that has not been paid by the date 
specified in the Presidio Trust'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 that part of an employee's pay that remains 
after deductions that are required by law to be withheld have been 
made.
    Employee or Federal employee means a current employee of the 
Presidio Trust or other Federal agency, including a current member of 
the Armed Forces, Reserve of the Armed Forces of the United States or 
of the National Guard.
    FCCS means the Federal Claims Collection Standards, which were 
jointly published by the Departments of the Treasury and Justice and 
codified at 31 CFR parts 900-904.
    FMS means the Financial Management Service, a bureau of the 
Treasury Department, which is responsible for the centralized 
collection of delinquent debts through the offset of Federal payments 
and other means.
    IRS means the Internal Revenue Service.
    Paying agency means any agency that is making payments of any kind 
to a debtor. In some cases, the Presidio Trust may be both the paying 
agency and the creditor agency.
    Person means an individual, corporation, partnership, association, 
organization, state or local government, or any other type of entity 
other than a Federal agency.
    Private collection contractor means a private debt collector under 
contract with an agency to collect a non-tax debt owed to the Presidio 
Trust.
    Salary offset means a type of administrative offset to collect a 
debt owed by a Federal employee from the current pay account of the 
employee.
    Tax refund offset means the reduction of a tax refund by the amount 
of a delinquent debt owed to the Presidio Trust.
    Treasury Department means the United States Department of the 
Treasury.
    Treasury Offset Program means the Treasury Department's program for 
withholding funds payable by the United States to a person to satisfy a 
debt owed by the person utilizing the Financial Management Service's 
system that compares information about payments with information about 
debts.


Sec.  1011.2  Why is the Presidio Trust issuing these regulations and 
what do they cover?

    (a) Scope. The Presidio Trust is issuing these regulations to 
provide procedures for the collection of debts owed to the Presidio 
Trust. This part also provides procedures for collection of other debts 
owed to the United States when a request for offset of a Treasury 
payment is received by the Treasury Department from another agency (for 
example, when a Presidio Trust employee owes a debt to the United 
States Department of Education).
    (b) Applicability. (1) This part applies to the Presidio Trust when 
collecting a debt and to persons who owe a debt to the Presidio Trust, 
or to Federal agencies requesting offset of a payment issued by the 
Presidio Trust as a paying agency (including salary payments to 
Presidio Trust employees).
    (2) This part does not apply to tax debts.
    (3) Nothing in this part precludes collection or disposition of any 
debt under statutes and regulations other than those described in this 
part.
    (c) Additional policies, guidelines and procedures. The Presidio 
Trust may adopt additional policies, guidelines and procedures 
consistent with this part and other applicable law.
    (d) Duplication not required. Nothing in this part requires the 
Presidio Trust to duplicate notices or administrative proceedings 
required by contract, this part or other laws or regulations.
    (e) Use of multiple collection remedies allowed. The Presidio Trust 
may simultaneously use multiple collection remedies to collect a debt, 
except as prohibited by law. This part is intended to promote 
aggressive debt collection, using for each debt all available 
collection remedies. These remedies are not listed in any prescribed 
order to provide the Presidio Trust with flexibility in determining 
which remedies will be most efficient in collecting the particular 
debt.
    (f) Cross-servicing with the Treasury Department. These regulations 
authorize the Presidio Trust to enter a cross-servicing agreement with 
the Treasury Department under which the Treasury Department will take 
authorized action to collect debts owed to the Presidio Trust.


Sec.  1011.3  Do these regulations adopt the Federal Claims Collections 
Standards?

    This part adopts and incorporates all provisions of the FCCS. This 
part also supplements the FCCS by prescribing procedures consistent 
with the FCCS, as necessary and appropriate for Presidio Trust 
operations.

Subpart B--Procedures To Collect Presidio Trust Debts


Sec.  1011.4  What notice will the Presidio Trust send to a debtor when 
collecting a debt?

    (a) Notice requirements. The Presidio Trust will aggressively 
collect debts. The Presidio Trust will send at least one written notice 
to a debtor informing the debtor of the consequences of failing to pay 
or otherwise resolve a debt. The notice(s) will be sent to the debtor's 
most current address for the debtor in the records of the Presidio 
Trust. Except as otherwise provided in paragraph (b) of this section, 
the written notice(s) will explain to the debtor:
    (1) The amount, nature and basis of the debt;
    (2) How interest, penalty charges and administrative costs are 
added to the debt, the date by which payment should be made to avoid 
such charges, and that

[[Page 44873]]

such assessments must be made unless waived (see Sec.  1011.5 of this 
part);
    (3) The date by which payment is due and that the debt will be 
considered delinquent if payment is not received by the Presidio Trust 
by the due date, which date will not be less than 30 days after the 
date of the notice, and the date by which payment must be received by 
the Presidio Trust to avoid the enforced collection actions described 
in paragraph (a)(6) of this section, which date will not be less than 
60 days after the date of the notice;
    (4) How the debtor may enter into a written agreement to repay the 
debt voluntarily under terms acceptable to the Presidio Trust (see 
Sec.  1011.6 of this part);
    (5) The name, address and telephone number of a contact person 
within the Presidio Trust;
    (6) The Presidio Trust's intention to enforce collection if the 
debtor fails to pay or otherwise resolve the debt, by taking one or 
more of the following actions:
    (i) Offset the debtor's federal payments, including income tax 
refunds, salary, certain benefit payments (such as Social Security), 
retirement, vendor, travel reimbursements and advances, and other 
federal payments (see Sec.  1011.10 through 1011.12 of this part);
    (ii) Refer the debt to a private collection agency (see Sec.  
1011.15 of this part);
    (iii) Report the debt to a credit bureau (see Sec.  1011.14 of this 
part);
    (iv) Garnish the debtor's wages through administrative wage 
garnishment (see Sec.  1011.13 of this part);
    (v) Refer the debt to the Department of Justice to initiate 
litigation to collect the debt (see Sec.  1011.16 of this part);
    (vi) Refer the debt to the FMS for collection (see Sec.  1011.9 of 
this part);
    (7) That debts over 180 days delinquent must be referred to the FMS 
for the collection actions described in paragraph (a)(6) of this 
section (see Sec.  1011.9 of this part);
    (8) How the debtor may inspect and/or obtain copies of disclosable 
records related to the debt;
    (9) How the debtor may request a review of the Presidio Trust's 
determination that the debtor owes a debt.
    (10) How a debtor may request a hearing if the Presidio Trust 
intends to garnish the debtor's non-Federal wages (see Sec.  1011.13(a) 
of this part), including:
    (i) The method and time period for requesting a hearing;
    (ii) That the timely filing of a request for a hearing on or before 
the 15th business day following the date of the notice will stay the 
commencement of administrative wage garnishment, but not necessarily 
other collection procedures; and
    (iii) The name and address of the office to which the request for a 
hearing should be sent.
    (11) How a debtor who is a Federal employee subject to Federal 
salary offset may request a hearing (see Sec.  1011.12(e) of this 
part), including:
    (i) The method and time period for requesting a hearing;
    (ii) That the timely filing of a request for a hearing on or before 
the 15th business day following the date of the notice will stay the 
commencement of salary offset, but not necessarily other collection 
procedures;
    (iii) The name and address of the office to which the request for a 
hearing should be sent;
    (iv) That the Presidio Trust will refer the debt to the debtor's 
employing agency or to the FMS to implement salary offset, unless the 
employee files a timely request for a hearing;
    (v) That a final decision on the hearing, if requested, will be 
issued at the earliest practical date, but not later than 60 days after 
the filing of the request for a hearing, unless the employee requests 
and the hearing official grants a delay in the proceedings;
    (vi) That any knowingly false or frivolous statements, 
representations, or evidence may subject the Federal employee to 
penalties under the False Claims Act (31 U.S.C. 3729-3731) or other 
applicable statutory authority, and criminal penalties under 18 U.S.C. 
286, 287, 1001, and 1002, or other applicable statutory authority;
    (vii) That unless prohibited by contract or statute, amounts paid 
on or deducted for the debt which are later waived or found not owed to 
the United States will be promptly refunded to the employee; and
    (viii) That proceedings with respect to such debt are governed by 5 
U.S.C. 5514 and 31 U.S.C. 3716;
    (12) That the debtor may request a waiver of the debt;
    (13) That the debtor's spouse may claim the spouse's share of a 
joint income tax refund by filing Form 8379 with the IRS;
    (14) That the debtor may exercise other statutory or regulatory 
rights and remedies available to the debtor;
    (15) That the Presidio Trust may suspend or revoke any licenses, 
permits, leases, privileges or services for failure to pay a debt (see 
Sec.  1011.17 of this part); and
    (16) That the debtor should advise the Presidio Trust of a 
bankruptcy proceeding of the debtor or another person liable for the 
debt being collected.
    (b) Exceptions to notice requirements. The Presidio Trust may omit 
from a notice to a debtor one or more of the provisions contained in 
paragraphs (a)(6) through (a)(16) of this section if the Presidio 
Trust, in consultation with its General Counsel, determines that any 
provision is not legally required given the collection remedies to be 
applied to a particular debt.
    (c) Respond to debtors. The Presidio Trust will respond promptly to 
communications from debtors.


Sec.  1011.5  What interest, penalty charges and administrative costs 
will the Presidio Trust add to a debt?

    (a) Interest. (1) The Presidio Trust 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 the debt 
becomes delinquent. The Presidio Trust will waive collection of 
interest if the debt is paid within 30 days of the date on which 
interest begins to accrue. The Presidio Trust will assess interest at 
the rate established by the Treasury Department under 31 U.S.C. 3717, 
unless a different rate is established by a contract, repayment 
agreement or statute. The Presidio Trust will notify the debtor of the 
basis for the interest rate assessed.
    (b) Penalty. The Presidio Trust will assess a penalty of not more 
than 6% a year, or such other higher rate as authorized by law, on any 
portion of a debt that is delinquent for more than 90 days.
    (c) Administrative costs. The Presidio Trust will assess charges to 
cover administrative costs incurred as a result of the debtor's failure 
to pay a debt before it becomes delinquent. Administrative costs 
include the costs of processing and handling a debt, obtaining a credit 
report, using a private collection contractor, costs of a hearing 
including, the costs of a hearing officer, and service fees charged by 
a Federal agency for collection activities undertaken on behalf of the 
Presidio Trust.
    (d) Allocation of payments. A partial or installment payment by a 
debtor will be applied first to administrative costs, second to 
outstanding penalty assessments, third to accrued interest, and fourth 
to outstanding debt principal.
    (e) Additional authority. The Presidio Trust may have additional 
policies, guidelines and procedures regarding how interest, penalties 
and

[[Page 44874]]

administrative costs are assessed on particular types of debts. The 
Presidio Trust will explain in the notice to the debtor described in 
Sec.  1011.4 of this part how interest, penalties, administrative costs 
and other charges are assessed, unless the requirements are included in 
a contract or repayment agreement.
    (f) Waiver. (1) The Presidio Trust may waive collection of all or 
part of accrued interest, penalties and administrative costs when it 
would be against equity and good conscience or not in the Presidio 
Trust's best interest to collect such charges.
    (2) A decision to waive interest, penalties or administrative costs 
may be made at any time before a debt is paid. However, unless 
otherwise provided in these regulations, when these charges have been 
collected before the waiver decision, they will not be refunded.
    (g) Accrual during suspension of debt collection. In most cases, 
interest, penalties and administrative costs will continue to accrue 
during any period when collection has been suspended for any reason 
(for example, when the debtor has requested a hearing). The Presidio 
Trust may suspend accrual of any or all of these charges when accrual 
would be against equity and good conscience or not in the Presidio 
Trust's best interest.


Sec.  1011.6  When will the Presidio Trust allow a debtor to enter into 
a repayment agreement?

    (a) Voluntary repayment. In response to a notice of a debt, the 
debtor may propose to the Presidio Trust the voluntary repayment of the 
debt in lieu of the Presidio Trust taking other collection actions 
under this part.
    (b) Debtor's request. The request from the debtor must:
    (1) Be in writing;
    (2) Admit the existence of the entire debt; and
    (3) Either propose payment of the debt (together with interest, 
penalties and administrative costs) in a lump sum, or set forth a 
proposed repayment schedule.
    (c) Repayment schedule. The Presidio Trust will collect debts in 
one lump sum whenever feasible. The Presidio Trust may accept payment 
in regular installments that bear a reasonable relationship to the size 
of the debt.
    (d) Repayment agreement. The Presidio Trust will consider a request 
to enter into a voluntary repayment agreement in accordance with the 
FCCS. The Presidio Trust may request additional information from the 
debtor, including financial statements, in order to determine whether 
to enter into a voluntary repayment agreement. The Presidio Trust will 
set the necessary terms of any repayment agreement. No repayment 
agreement will be binding on the Presidio Trust unless it is in writing 
and signed by both the debtor and an authorized Presidio Trust 
representative. The Presidio Trust is not required to enter into a 
repayment agreement.


Sec.  1011.7  When will the Presidio Trust compromise a debt?

    (a) Authority. The Presidio Trust may compromise a debt in 
accordance with the FCCS and such procedures as the Presidio Trust may 
adopt. (See Sec.  1011.16 of this subpart).
    (b) Report to IRS. The uncollected portion of a debt owed to the 
Presidio Trust that is not recovered as the result of a compromise will 
be reported to the IRS as income to the debtor in accordance with IRS 
and Presidio Trust procedures.


Sec.  1011.8  When will the Presidio Trust suspend or terminate debt 
collection on a debt?

    If, after pursuing all appropriate means of collection, the 
Presidio Trust determines that a debt is uncollectible, the Presidio 
Trust may suspend or terminate debt collection activity in accordance 
with the FCCS and the Presidio Trust's procedures.


Sec.  1011.9  When will the Presidio Trust transfer a debt to the 
Financial Management Service for collection?

    (a) Cross-servicing. The Presidio Trust will transfer any eligible 
debt that is more than 180 days delinquent to the FMS for debt 
collection services, a process known as ``cross-servicing.'' The 
Presidio Trust may transfer debts delinquent 180 days or less to the 
FMS in accordance with the procedures described in 31 CFR 285.12. The 
FMS takes appropriate action to collect or compromise the transferred 
debt, or to suspend or terminate collection action thereon, in 
accordance with the statutory and regulatory requirements and 
authorities applicable to the debt and the collection action to be 
taken. Appropriate action includes, without limitation, contact with 
the debtor, referral of the debt to the Treasury Offset Program, 
private collection agencies or the Department of Justice, reporting of 
the debt to credit bureaus, and administrative wage garnishment.
    (b) Notice; certification. At least 60 days prior to transferring a 
debt to the FMS, the Presidio Trust will send notice to the debtor as 
required by Sec.  1011.4 of this part. The Presidio Trust will certify 
to the FMS, in writing, that the debt is valid, delinquent, legally 
enforceable and that there are no legal bars to collection. In 
addition, the Presidio Trust will certify its compliance with all 
applicable due process and other requirements as described in this part 
and other Federal laws.
    (c) Treasury Offset Program. As part of its debt collection 
process, the FMS uses the Treasury Offset Program to collect debts by 
administrative and tax refund offset. The Treasury Offset Program is a 
centralized offset program administered by the FMS to collect 
delinquent debts owed to Federal agencies and states (including past-
due child support). Under the Treasury Offset Program, before a federal 
payment is disbursed, the FMS compares the name and taxpayer 
identification number (TIN) of the payee with the names and TINs of 
debtors that have been submitted by Federal agencies and states to the 
Treasury Offset Program database. If there is a match, the FMS (or, in 
some cases, another Federal disbursing agency) offsets all or a portion 
of the federal payment, disburses any remaining payment to the payee, 
and pays the offset amount to the creditor agency. Federal payments 
eligible for offset include, without limitation, income tax refunds, 
salary, travel advances and reimbursements, retirement and vendor 
payments, and Social Security and other benefit payments.


Sec.  1011.10  How will the Presidio Trust use administrative offset 
(offset of non-tax federal payments) to collect a debt?

    (a) Centralized administrative offset through the Treasury Offset 
Program. (1) If not already transferred to the FMS under Sec.  1011.9 
of this part, the Presidio Trust will refer any eligible debt over 180 
days delinquent to the Treasury Offset Program for collection by 
centralized administrative offset. The Presidio Trust may refer any 
eligible debt less than 180 days delinquent to the Treasury Offset 
Program for offset.
    (2) At least 60 days prior to referring a debt to the Treasury 
Offset Program, in accordance with paragraph (a)(1) of this section, 
the Presidio Trust will send notice to the debtor in accordance with 
the requirements of Sec.  1011.4 of this part. The Presidio Trust will 
certify to the FMS, in writing, that the debt is valid, delinquent, 
legally enforceable and that there are no legal bars to collection by 
offset. In addition, the Presidio Trust will certify its compliance 
with the requirements described in this part.
    (b) Non-centralized administrative offset for a debt. (1) When 
centralized administrative offset through the Treasury Offset Program 
is not available or appropriate, the Presidio Trust may collect 
delinquent, legally enforceable

[[Page 44875]]

debts through non-centralized administrative offset. In these cases, 
the Presidio Trust may offset a payment internally or make an offset 
request directly to a federal paying agency.
    (2) At least 30 days prior to offsetting a payment internally or 
requesting a federal paying agency to offset a payment, the Presidio 
Trust will send notice to the debtor in accordance with the 
requirements of Sec.  1011.4 of this part. When referring a debt for 
offset under this paragraph (b), the Presidio Trust will certify, in 
writing, that the debt is valid, delinquent, legally enforceable and 
that there are no legal bars to collection by offset. In addition, the 
Presidio Trust will certify its compliance with these regulations 
concerning administrative offset.
    (c) Administrative review. The notice described in Sec.  1011.4 of 
this part will explain to the debtor how to request an administrative 
review of the Presidio Trust determination that the debtor owes a debt 
and how to present evidence that the debt is not delinquent or legally 
enforceable. In addition to challenging the existence and amount of the 
debt, the debtor may seek a review of the terms of repayment. In most 
cases, the Presidio Trust will provide the debtor with a ``paper 
hearing'' based upon a review of the written record, including 
documentation provided by the debtor. The Presidio Trust will provide 
the debtor with a reasonable opportunity for an oral hearing when the 
debtor requests reconsideration of the debt and the Presidio Trust 
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. Unless otherwise 
required by law, an oral hearing under this section is not required to 
be a formal evidentiary hearing, although the Presidio Trust will 
document all significant matters presented at the hearing. The Presidio 
Trust may suspend collection through administrative offset and/or other 
collection actions pending the resolution of a debtor's dispute. The 
Presidio Trust may establish policies, guidelines and procedures 
concerning the administrative review process consistent with the FCCS 
and the regulations in this section.
    (d) Procedures for expedited offset. Under the circumstances 
described by the FCCS, the Presidio Trust may effect an offset against 
a payment to be made to the debtor prior to sending a notice to the 
debtor, as described in Sec.  1011.4 of this part, or completing the 
procedures described in paragraph (b)(2) and (c) of this section. The 
Presidio Trust will give the debtor notice and an opportunity for 
review as soon as practicable and promptly refund any money ultimately 
found not to have been owed to the Government.


Sec.  1011.11  How will the Presidio Trust use tax refund offset to 
collect a debt?

    (a) Tax refund offset. In most cases, the FMS uses the Treasury 
Offset Program to collect debts by the offset of tax refunds and other 
federal payments. See Sec.  1011.9(c) of this part. If not already 
transferred to the FMS under Sec.  1011.9 of this part, the Presidio 
Trust will refer to the Treasury Offset Program any delinquent, legally 
enforceable debt for collection by tax refund offset.
    (b) Notice; certification. At least 60 days prior to referring a 
debt to the Treasury Offset Program, the Presidio Trust will send 
notice to the debtor in accordance with the requirements of Sec.  
1011.4 of this part. The Presidio Trust will certify to the FMS's 
Treasury Offset Program, in writing, that the debt is delinquent and 
legally enforceable in the amount submitted and that the Presidio Trust 
has made reasonable efforts to obtain payment of the debt. In addition, 
the Presidio Trust will certify its compliance with all applicable due 
process and other requirements described in this part and other 
applicable law.
    (c) Administrative review. The notice described in Sec.  1011.4 of 
this part will provide the debtor with at least 60 days prior to the 
initiation of tax refund offset to request an administrative review as 
described in Sec.  1011.10(c) of this part. The Presidio Trust may 
suspend collection through tax refund offset and/or other collection 
actions pending the resolution of the debtor's dispute.


Sec.  1011.12  How will the Presidio Trust offset a Federal employee's 
salary to collect a debt?

    (a) Federal salary offset. (1) Salary offset is used to collect 
debts owed to the United States by Federal employees. If a Presidio 
Trust employee owes a debt, the Presidio Trust may offset the 
employee's federal salary to collect the debt in the manner described 
in this section. For information on how a Federal agency other than the 
Presidio Trust may collect a debt from the salary of a Presidio Trust 
employee, see Sec.  1011.21 and 1011.22, subpart C, of this part.
    (2) Nothing in this part requires the Presidio Trust to collect a 
debt in accordance with the provisions of this section if Federal law 
allows otherwise.
    (b) Centralized salary offset through the Treasury Offset Program. 
As described in Sec.  1011.9(a) of this part, the Presidio Trust will 
refer debts to the FMS for collection by administrative offset, 
including salary offset, through the Treasury Offset Program.
    (c) Non-centralized salary offset for Treasury debts. The Presidio 
Trust may collect delinquent debts through non-centralized salary 
offset. In these cases, the Presidio Trust may offset a payment 
internally or make a request directly to a paying agency to offset a 
salary payment to collect a delinquent debt owed by a Federal employee. 
At least 30 days prior to offsetting internally or requesting a Federal 
agency to offset a salary payment, the Presidio Trust will send notice 
to the debtor in accordance with the requirements of Sec.  1011.4 of 
this part. When referring a debt for offset, the Presidio Trust will 
certify to the paying agency, in writing, that the debt is valid, 
delinquent and legally enforceable in the amount stated, and there are 
no legal bars to collection by salary offset. In addition, the Presidio 
Trust will certify that all due process and other prerequisites to 
salary offset have been met. See 5 U.S.C. 5514, 31 U.S.C. 3716(a), and 
this section for a description of the process for salary offset.
    (d) When prior notice not required. The Presidio Trust is not 
required to provide prior notice to a Presidio Trust employee when the 
following adjustments are made:
    (1) Any adjustment to pay arising out of a Presidio Trust 
employee's election of coverage or a change in coverage under a Federal 
benefits program requiring periodic deductions from pay, if the amount 
to be recovered was accumulated over four pay periods or fewer;
    (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 four 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.
    (e) Hearing procedures. (1) Request for a hearing. A Presidio Trust 
employee who has received a notice that

[[Page 44876]]

a debt will be collected by means of salary offset may request a 
hearing concerning the existence or amount of the debt. The employee 
also may request a hearing concerning the amount proposed to be 
deducted from the employee's pay each pay period. The employee must 
send any request for hearing, in writing, to the office designated in 
the notice described in Sec.  1011.4(a)(11). The request must be 
received by the designated office on or before the 15th business day 
following the employee's receipt of the notice. The employee must sign 
the request and specify whether an oral or paper hearing is requested. 
If an oral hearing is requested, the employee must explain why the 
matter cannot be resolved by review of the documentary evidence alone.
    (2) Failure to submit timely request for hearing. If the employee 
fails to submit a request for hearing within the time period described 
in paragraph (e)(1) of this section, the employee will have waived the 
right to a hearing, and salary offset may be initiated. However, the 
Presidio Trust may accept a late request for hearing if the employee 
can show that the late request was the result of circumstances beyond 
the employee's control or because of a failure to receive actual notice 
of the filing deadline.
    (3) Hearing official. The Presidio Trust hearing must be conducted 
by a hearing official who is not under the supervision or control of 
the Board of Directors of the Presidio Trust. The hearing official need 
not be an employee of the Federal Government.
    (4) Notice of hearing. After the employee requests a hearing, a 
designated hearing official will inform the employee of the form of the 
hearing to be provided. For oral hearings, the notice will set forth 
the date, time and location of the hearing. For paper hearings, the 
notice will notify the employee of the date by which the employee 
should submit written arguments to the designated hearing official. The 
hearing official will give the employee reasonable time to submit 
documentation in support of the employee's position. The hearing 
official will schedule a new hearing date if requested by both parties. 
The hearing official will give both parties reasonable notice of the 
time and place of a rescheduled hearing.
    (5) Oral hearing. The hearing official will conduct an oral hearing 
if the official determines that the matter cannot be resolved by review 
of documentary evidence alone (for example, when an issue of 
credibility or veracity is involved). The hearing official will 
determine the procedure for the oral hearing, determining, for example, 
the hearing length.
    (6) Paper hearing. If the hearing official determines that an oral 
hearing is not necessary, the official will make the determination 
based upon a review of the available written record, including any 
documentation submitted by the employee in support of the employee's 
position.
    (7) Date of decision. The hearing official will issue a written 
opinion setting forth the decision, based upon documentary evidence and 
information developed at the hearing, as soon as practicable after the 
hearing.
    (8) Final agency action. The hearing official's decision will be 
final.
    (f) Salary offset process. (1) Determination of disposable pay. The 
Presidio Trust payroll office will determine the amount of the 
employee's disposable pay (as defined in Sec.  1011.1 of this part) and 
will implement salary offset.
    (2) When salary offset begins. Deductions will begin within three 
official pay periods.
    (3) Amount of salary offset. The amount to be offset from each 
salary payment will be up to 15% of the employee's disposable pay, as 
follows:
    (i) If the amount of the debt is equal to or less than 15% of the 
disposable pay, such debt generally will be collected in one lump sum 
payment;
    (ii) Installment deductions will be made over a period of no 
greater than the anticipated period of employment. An installment 
deduction will not exceed 15% of the disposable pay from which the 
deduction is made unless the employee has agreed in writing to the 
deduction of a greater amount.
    (4) Final salary payment. After the employee's employment with the 
Presidio Trust ends, the Presidio Trust may make a lump sum deduction 
exceeding 15% of disposable pay from any final salary or other payments 
in order to satisfy a debt.


Sec.  1011.13  How will the Presidio Trust use administrative wage 
garnishment to collect a debt from a debtor's wages?

    (a) Authority and process. The Presidio Trust is authorized to 
collect debts from a debtor's wages by means of administrative wage 
garnishment in accordance with the requirements of the FCCS and other 
applicable law. This part adopts and incorporates all of the provisions 
of 31 CFR 285.11 concerning administrative wage garnishment, including 
the hearing procedures described therein. The Presidio Trust may use 
administrative wage garnishment to collect a delinquent debt unless the 
debtor is making timely payments under an agreement to pay the debt in 
installments (see Sec.  1011.6 of this part). At least 30 days prior to 
initiating an administrative wage garnishment, the Presidio Trust will 
send notice to the debtor in accordance with the requirements of Sec.  
1011.4 of this part, including the requirements of Sec.  1011.4(a)(10) 
of this part. For debts referred to the FMS under Sec.  1011.9 of this 
part, the Presidio Trust may authorize the FMS to send a notice 
informing the debtor that administrative wage garnishment will be 
initiated and how the debtor may request a hearing as described in 
Sec.  1011.4(a)(10) of this part. If a debtor makes a timely request 
for a hearing, administrative wage garnishment will not begin until a 
hearing is held and a decision is sent to the debtor. If a debtor's 
hearing request is not timely, the Presidio Trust may suspend 
collection by administrative wage garnishment. All travel expenses 
incurred by the debtor in connection with an in-person hearing will be 
borne by the debtor.
    (b) Not applicable to federal salary offset. This section does not 
apply to federal salary offset, the process by which the Presidio Trust 
collects debts from the salaries of Federal employees (see Sec.  
1011.12 of this part).


Sec.  1011.14  How will the Presidio Trust report debts to credit 
bureaus?

    The Presidio Trust will report delinquent debts to credit bureaus 
in accordance with the provisions of 31 U.S.C. 3711(e) and the FCCS. At 
least 60 days prior to reporting a delinquent debt to a consumer 
reporting agency, the Presidio Trust will send notice to the debtor in 
accordance with the requirements of Sec.  1011.4 of this part. The 
Presidio Trust may authorize the FMS to report to credit bureaus those 
delinquent debts that have been transferred to the FMS under Sec.  
1011.9 of this part.


Sec.  1011.15  How will the Presidio Trust refer debts to private 
collection contractors?

    The Presidio Trust will transfer delinquent debts to the FMS to 
obtain debt collection services provided by private collection 
contractors. See Sec.  1011.9 of this part.


Sec.  1011.16  When will the Presidio Trust refer debts to the 
Department of Justice?

    (a) Compromise or suspension or termination of collection activity. 
The Presidio Trust will refer debts having a principal balance over 
$100,000, or such higher amount as authorized by the Attorney General, 
to the Department of Justice for approval of any compromise of a debt 
or suspension or termination

[[Page 44877]]

of collection activity. See the FCCS and Sec.  1011.7 and 1011.8 of 
this part.
    (b) Litigation. The Presidio Trust will promptly refer to the 
Department of Justice for litigation delinquent debts on which 
aggressive collection activity has been taken in accordance with this 
part that the Presidio Trust determines should not be compromised, and 
on which collection activity should not be suspended or terminated. The 
Presidio Trust may authorize the FMS to refer to the Department of 
Justice for litigation those delinquent debts that have been 
transferred to the FMS under Sec.  1011.9 of this part.


Sec.  1011.17  Will a debtor who owes a debt be ineligible for Presidio 
Trust licenses, permits, leases, privileges or services?

    Unless prohibited by law, the Presidio Trust may terminate, suspend 
or revoke licenses, permits, leases (subject to the terms of the 
leases), or other privileges or services for any inexcusable or willful 
failure of a debtor to pay a debt. The Presidio Trust may establish 
guidelines and procedures governing termination, suspension and 
revocation for delinquent debtors. If applicable, the Presidio Trust 
will advise the debtor in the notice required by Sec.  1011.4 of this 
part of the Presidio Trust's ability to suspend or revoke licenses, 
permits or privileges.


Sec.  1011.18  How does a debtor request a special review based on a 
change in circumstances such as catastrophic illness, divorce, death or 
disability?

    (a) Material change in circumstances. A debtor who owes a debt may, 
at any time, request a special review by the Presidio Trust of the 
amount of any offset, administrative wage garnishment or voluntary 
payment, based on materially changed circumstances beyond the control 
of the debtor such as, without limitation, catastrophic illness, 
divorce, death or disability.
    (b) Inability to pay. For purposes of this section, in determining 
whether an involuntary or voluntary payment would prevent the debtor 
from meeting essential subsistence expenses (costs incurred for food, 
housing, clothing, transportation and medical care), the debtor must 
submit a detailed statement and supporting documents for the debtor, 
and the debtor's dependents, indicating:
    (1) Income from all sources;
    (2) Assets;
    (3) Liabilities;
    (4) Number of dependents;
    (5) Expenses for food, housing, clothing and transportation;
    (6) Medical expenses; and
    (7) Exceptional expenses, if any.
    (c) Alternative payment arrangement. If the debtor requests a 
special review under this section, the debtor must submit an 
alternative proposed payment schedule and a statement to the Presidio 
Trust, with supporting documents, showing why the current offset, 
garnishment or repayment schedule imposes an extreme financial hardship 
on the debtor. The Presidio Trust will evaluate the statement and 
documentation and determine whether the current offset, garnishment or 
repayment schedule imposes extreme financial hardship on the debtor. 
The Presidio Trust will notify the debtor in writing of such 
determination, including, if appropriate, a revised offset, garnishment 
or payment schedule. If the special review results in a revised offset, 
garnishment or repayment schedule, the Presidio Trust will notify the 
appropriate agency or other persons about the new terms.


Sec.  1011.19  Will the Presidio Trust issue a refund if money is 
erroneously collected on a debt?

    The Presidio Trust will promptly refund to a debtor any amount 
collected on a debt when the debt is waived or otherwise found not to 
be owed to the United States, or as otherwise required by law. Refunds 
under this part will not bear interest unless required by law.


Sec.  1011.20  Will the Presidio Trust's failure to comply with these 
regulations be a defense to a debt?

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

Subpart C--Procedures for Offset of Presidio Trust Payments To 
Collect Debts Owed to Other Federal Agencies


Sec.  1011.21  How do other Federal agencies use the offset process to 
collect debts from payments issued by the Presidio Trust?

    (a) Offset of Presidio Trust payments to collect debts owed to 
other Federal agencies. (1) In most cases, Federal agencies submit 
eligible debts to the Treasury Offset Program to collect delinquent 
debts from payments issued by other Federal agencies, a process known 
as ``centralized offset.'' When centralized offset is not available or 
appropriate, any Federal agency may ask the Presidio Trust (when acting 
as a paying agency) to collect a debt owed to such agency by offsetting 
funds payable to a debtor by the Presidio Trust, including salary 
payments issued to the Presidio Trust employees. This section and Sec.  
1011.22 of this subpart C apply when a Federal agency asks the Presidio 
Trust to offset a payment issued by the Presidio Trust to a person who 
owes a debt to the United States.
    (2) This subpart C does not apply to the collection of debts 
through tax refund offset.
    (b) Administrative offset (including salary offset); certification. 
The Presidio Trust will initiate a requested offset only upon receipt 
of written certification from the creditor agency that the debtor owes 
the delinquent, legally enforceable debt in the amount stated, and that 
the creditor agency has fully complied with all applicable due process 
and other requirements, and the creditor agency's regulations, as 
applicable. Offsets will continue until the debt is paid in full or 
otherwise resolved to the satisfaction of the creditor agency.
    (c) Where a creditor agency makes requests for offset. Requests for 
offset under this section must be sent to the Presidio Trust, ATTN: 
Chief Financial Officer, P.O. Box 29052, San Francisco, CA 94129-0052.
    (d) Incomplete certification. The Presidio Trust will return an 
incomplete debt certification to the creditor agency with notice that 
the creditor agency must comply with paragraph (b) of this section 
before action will be taken to collect a debt from a payment issued by 
the Presidio Trust.
    (e) Review. The Presidio Trust 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.
    (f) When the Presidio Trust will not comply with offset request. 
The Presidio Trust will comply with the offset request of another 
agency unless the Presidio Trust determines that the offset would not 
be in the best interests of the United States, or would otherwise be 
contrary to law.
    (g) Multiple debts. When two or more creditor agencies are seeking 
offsets from payments made to the same person, or when two or more 
debts are owed to a single creditor agency, the Presidio Trust may 
determine the order in which the debts will be collected or whether one 
or more debts should be collected by offset simultaneously.
    (h) Priority of debts owed to the Presidio Trust. For purposes of 
this section, debts owed to the Presidio Trust generally take 
precedence over debts owed to other agencies. The Presidio Trust may 
determine whether to pay debts owed to other agencies before paying a 
debt owed to the Presidio Trust. The Presidio Trust will determine the 
order in which the debts will be collected based on the best interests 
of the United States.

[[Page 44878]]

Sec.  1011.22  What does the Presidio Trust do upon receipt of a 
request to offset the salary of a Presidio Trust employee to collect a 
debt owed by the employee to another Federal agency?

    (a) Notice to the Presidio Trust employee. When the Presidio Trust 
receives proper certification of a debt owed by one of its employees, 
the Presidio Trust will begin deductions from the employee's pay at the 
next officially established pay interval. The Presidio Trust will send 
a written notice to the employee indicating that a certified debt claim 
has been received from the creditor agency, the amount of the debt 
claimed to be owed to the creditor agency, the date deductions from 
salary will begin, and the amount of such deductions.
    (b) Amount of deductions from a Presidio Trust employee's salary. 
The amount deducted under Sec.  1011.21(b) of this part will be the 
lesser of the amount of the debt certified by the creditor agency or an 
amount up to 15% of the debtor's disposable pay. Deductions will 
continue until the Presidio Trust knows that the debt is paid in full 
or until otherwise instructed by the creditor agency. Alternatively, 
the amount offset may be an amount agreed upon, in writing, by the 
debtor and the creditor agency. See Sec.  1011.12(g) (salary offset 
process).
    (c) When the debtor is no longer employed by the Presidio Trust. 
(1) Offset of final and subsequent payments. If the Presidio Trust 
employee retires or resigns or if his or her employment ends before 
collection of the debt is complete, the Presidio Trust will continue to 
offset up to 100% of an employee's subsequent payments until the debt 
is paid or otherwise resolved. Such payments include a debtor's final 
salary payment, lump-sum leave payment, and other payments payable to 
the debtor by the Presidio Trust.
    (2) Notice to the creditor agency. If the employee's employment 
with the Presidio Trust terminates before the debt is paid in full, the 
Presidio Trust will certify to the creditor agency the total amount of 
its collection. If the Presidio Trust is aware that the employee is 
entitled to payments from the Civil Service Retirement and Disability 
Fund, Federal Employee Retirement System, or other similar payments, 
the Presidio Trust will provide written notice to the agency making 
such payments that the debtor owes a debt (including the amount) and 
that the provisions of 5 CFR 550.1109 have been fully complied with. 
The creditor agency is responsible for submitting a certified claim to 
the agency responsible for making such payments before collection may 
begin. Generally, creditor agencies will collect such monies through 
the Treasury Offset Program as described in Sec.  1011.9(c) of this 
part.
    (3) Notice to the debtor. The Presidio Trust will provide to the 
debtor a copy of any notices sent to the creditor agency under 
paragraph (c)(2) of this section.
    (d) When the debtor transfers to another Federal agency. (1) Notice 
to the creditor agency. If the debtor transfers to another Federal 
agency before the debt is paid in full, the Presidio Trust will notify 
the creditor agency and will certify the total amount of its collection 
on the debt. The Presidio Trust will provide a copy of the 
certification to the creditor agency. The creditor agency is 
responsible for submitting a certified claim to the debtor's new 
employing agency before collection may begin.
    (2) Notice to the debtor. The Presidio Trust will provide to the 
debtor a copy of any notices and certifications sent to the creditor 
agency under paragraph (d)(1) of this section.
    (e) Request for hearing official. The Presidio Trust will provide a 
hearing official upon the creditor agency's request with respect to the 
Presidio Trust employee.

[FR Doc. 05-14794 Filed 8-3-05; 8:45 am]
BILLING CODE 4310-4R-P