31 CFR § 285.12 - Transfer of debts to Treasury for collection.
(a) Definitions. For purposes of this section:
Centralized Receivables Service means the program through which Fiscal Service provides servicing, pursuant to 31 U.S.C. 3711(g), for Federal nontax debt from the point at which a creditor agency establishes a debt until the debt is paid, otherwise resolved, or referred to the Cross-Servicing program for further action.
Creditor agency means any Federal agency that is owed a debt.
Cross-Servicing program means the program through which Fiscal Service provides delinquent nontax debt collection services pursuant to 31 U.S.C. 3711(g).
Days delinquent refers to the number of days that a debt has been in a delinquent status. For administrative debts (e.g., debts arising from fines, penalties, and overpayments), the first day of delinquency generally is the date of the creditor agency's initial written demand for payment. For debts that arise from the extension of credit through direct loans, loan guarantees, or insurance, the date of delinquency generally is the due date specified in the applicable agreement or instrument.
Debt means any amount of money, funds or property that has been determined by an appropriate official of the Federal government to be owed to the United States by a person. As used in this section, the term “debt” does not include debts arising under the Internal Revenue Code of 1986.
Debt collection center means a Federal agency or a unit or subagency within a Federal agency that has been designated by the Secretary to collect debt owed to the United States. Fiscal Service is a debt collection center.
Debtor means a person who owes a debt.
Delinquent or past-due refers to the status of a debt and means a debt has not been paid by the date specified in the creditor agency's initial written demand for payment, or other applicable agreement or instrument, unless other payment arrangements satisfactory to the creditor agency have been made.
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.
Fiscal Service means the Bureau of the Fiscal Service, a bureau of the Department of the Treasury.
Legally enforceable refers to a characteristic of a debt and means there has been a final agency determination that the debt, in the amount stated, is due, and there are no legal bars to collection. A debt would not be legally enforceable, for example, if the debt is:
(1) The subject of a pending administrative review required by a statute or regulation that prohibits collection action during the review process; or
(2) Governed by a statute that precludes collection.
Person means an individual, corporation, partnership, association, organization, State or local government, or any other type of entity other than the United States or a Federal agency.
Secretary means the Secretary of the Treasury.
(b) In general. Fiscal Service and other debt collection centers may take debt collection action on behalf of one or more Federal agencies or a unit or subagency thereof. Fiscal Service provides these services through its Cross-Servicing program and its Centralized Receivables Service.
(c) Mandatory transfer of debts to Fiscal Service's Cross-Servicing program.
(1) A debt is considered eligible for transfer to the Cross-Servicing program only if it is past due and is legally enforceable.
(2) Except as set forth in paragraphs (c)(3) and (d) of this section, a creditor agency must transfer any eligible debt that is over $25 (or such other amount as Fiscal Service may determine) to the Cross-Servicing program by no later than 120 days delinquent if the creditor agency relies on the Cross-Servicing program to submit the transferred debts for centralized offset on the creditor agency's behalf or, otherwise, by no more than 180 days delinquent.
(3) If a final agency determination resulting from an administrative appeal or review process is not made until after the time specified in paragraph (c)(2) of this section, the creditor agency must transfer such debt to the Cross-Servicing program within 30 days after the date of the final decision.
(4) For accounting and reporting purposes, the debt remains on the books and records of the Federal agency, which transferred the debt.
(5) On behalf of the creditor agency, Fiscal Service will take appropriate action to collect or compromise the transferred debt, or to suspend or terminate collection action thereon. Appropriate action to collect a debt may include referral to another debt collection center, a private collection contractor, or the Department of Justice for litigation. The creditor agency must advise Fiscal Service, in writing, of any specific statutory or regulatory requirements pertaining to its debt and will agree, in writing, to a collection strategy, which includes parameters for entering into compromise and repayments agreements with debtors.
(d) Exceptions to mandatory transfer.
(1) A creditor agency is not required to transfer a debt to Fiscal Service pursuant to paragraph (c)(1) of this section only during such period of time that the debt:
(i) Is in litigation or foreclosure as described in paragraph (d)(2) of this section;
(ii) Is scheduled for sale as described in paragraph (d)(3) of this section;
(iii) Is at a private collection contractor if the debt has been referred to a private collection contractor for a period of time determined by the Secretary;
(iv) Is at a debt collection center if the debt has been referred to a Treasury-designated debt collection center in accordance with paragraph (f) of this section;
(v) Is being collected by internal offset as described in paragraph (d)(4) of this section;
(vi) Is being serviced and/or collected in accordance with applicable statutes and/or regulations by third parties, such as private lenders or guaranty agencies; or
(vii) Is covered by an exemption granted by the Secretary as described in paragraph (d)(5) of this section.
(2)
(i) A debt is in litigation if:
(A) The debt has been referred to the Attorney General for litigation by the creditor agency; or
(B) The debt is the subject of proceedings pending in a court of competent jurisdiction, including bankruptcy proceedings, whether initiated by the creditor agency, the debtor, or any other party.
(ii) A debt is in foreclosure if:
(A)(1) Collateral securing the debt is the subject of judicial foreclosure proceedings in a court of competent jurisdiction; or
(2) Notice has been issued that collateral securing the debt will be foreclosed upon, liquidated, sold, or otherwise transferred pursuant to applicable law in a nonjudicial proceeding; and
(B) The creditor agency anticipates that proceeds will be available from the liquidation of the collateral for application to the debt.
(3) A debt is scheduled for sale if:
(i) The debt will be disposed of under an asset sales program within one (1) year after becoming eligible for sale; or
(ii) The debt will be disposed of under an asset sales program and a schedule established by the creditor agency and approved by the Director of the Office of Management and Budget.
(4) A debt is being collected by internal offset if a creditor agency expects the debt to be collected in full within three (3) years from the date of delinquency through the withholding of funds payable to the debtor by the creditor agency, or if the creditor agency has issued notice to the debtor of the creditor agency's intent to offset such funds.
(5) The Secretary may exempt classes of debt from mandatory referral. (i) Upon the written request of the head of a Federal agency, or as the Secretary may determine on his/her own initiative, the Secretary may exempt any class of debts from the application of the requirement described in paragraph (c)(1) of this section. In determining whether to exempt a class of debts, the Secretary will determine whether exemption is in the best interests of the Government after considering the following factors:
(A) Whether an exemption is the best means to protect the government's financial interest, taking into consideration the number, dollar amount, age and collection rates of the debts for which exemption is requested;
(B) Whether the nature of the program under which the delinquencies have arisen is such that the transfer of such debts would interfere with program goals; and
(C) Whether an exemption would be consistent with the purposes of the Debt Collection Improvement Act of 1996 (DCIA), Pub. L. 104–134, 110 Stat. 1321–358 (April 26, 1996).
(ii) Requests for exemptions must clearly identify the class of debts for which an exemption is sought and must explain how application of the factors listed above to that class of debts warrants an exemption.
(iii) Requests for exemption must be made by the head of the agency requesting the exemption, the Chief Financial Officer of the agency, or the Deputy Chief Financial Officer of the agency. For purposes of this section, the head of an agency does not include the head of a subordinate organization within a department or agency.
(e) [Reserved]
(f) Debt collection centers. A creditor agency may transfer debt that has not been transferred to Fiscal Service, such as debt less than 180 days delinquent, to a Treasury-designated debt collection center, with the consent of, and in accordance with procedures established by Fiscal Service. Debt collection centers will take action upon a debt in accordance with the statutory or regulatory requirements and other authorities that apply to the debt or to the particular action being taken. Debt collection centers may, on behalf of the creditor agency and subject to the terms under which the debt collection center has been designated as such by the Secretary, take any action to collect, compromise, suspend or terminate collection action on debts, in accordance with terms and conditions agreed upon in writing by the creditor agency and the debt collection center or Fiscal Service. Debt collection centers may charge fees for the debt collection services in accordance with the provisions of paragraph (j) of this section.
(g) Administrative offset. As described in paragraph (c) of this section, under the DCIA, agencies are required to transfer all debts over 180 days delinquent to Fiscal Service for purposes of debt collection (i.e., cross-servicing). Agencies are also required, under the DCIA, to notify the Secretary of all debts over 120 days delinquent for purposes of administrative offset. Administrative offset is one type of collection tool used by Fiscal Service and Treasury-designated debt collection centers to collect debts transferred under this section. Thus, by transferring debt to Fiscal Service or to a Treasury-designated debt collection center under this section, Federal agencies will satisfy the requirement to notify the Secretary of debts for purposes of administrative offset and duplicate referrals are not required. Agencies relying on Fiscal Service to submit debts for administrative offset on the agency's behalf must transfer the debts to Fiscal Service no later than 120 days after the debts become delinquent in order to satisfy the 120-day notice requirement for purposes of administrative offset. A debt which is not transferred to Fiscal Service for purposes of debt collection, however, such as a debt which falls within one of the exempt categories listed in paragraph (d) of this section, nevertheless may be subject to the DCIA requirement of notification to the Secretary for purposes of administrative offset.
(h) Voluntary referral of debts less than 180 days delinquent. A creditor agency may refer any debt that is less than 180 days delinquent to Fiscal Service or, with the consent of Fiscal Service, to a Treasury-designated debt collection center for debt collection services.
(i) Certification. Before a debt may be transferred to Fiscal Service or another debt collection center, the head of the creditor agency or his or her delegate must certify, in writing, that the debts being transferred are valid, legally enforceable, and that there are no legal bars to collection. Creditor agencies must also certify that they have complied with all prerequisites to a particular collection action under the laws, regulations or policies applicable to the debt unless the creditor agency has requested, and Fiscal Service has agreed, to do so on the creditor agency's behalf. The creditor agency shall notify Fiscal Service immediately of any change in the status of the legal enforceability of the debt, for example, if the creditor agency receives notice that the debtor has filed for bankruptcy protection.
(j) Fees. Fiscal Service and other debt collection centers may charge Federal agencies fees sufficient to cover the full cost of providing debt collection services authorized by this section. Fiscal Service and other debt collection centers may calculate fees in any manner designed to cover up to the full cost of providing these services, including based on a percentage of collections received on account of a debt while it was being serviced under this section or a flat fee based on actions taken under this section by Fiscal Service or another debt collection center with regard to a debt or group of debts. Such fees may be determined based on overall program costs and need not be based on costs related to the collection of a specific debt. Fiscal Service and debt collection centers are authorized to retain fees from amounts collected and may deposit and use such fees in accordance with 31 U.S.C. 3711(g). Fees charged by Fiscal Service and other debt collection centers may be added to the debt as an administrative cost if authorized under 31 U.S.C. 3717(e).
(k) Social Security numbers. When conducting activities for or related to its Centralized Receivables Service or Cross-Servicing program, Fiscal Service will ensure that an individual's Social Security number will not be visible on the outside of any package it sends by physical mail or in the subject line of an email. In addition, Fiscal Service generally will redact or partially redact Social Security numbers in documents it sends by mail; however, to administer these programs, Fiscal Service may include Social Security numbers in mailed documents, including, for example:
(1) In interoffice and interagency communications;
(2) In communications with private collection contractor and agents that assist Fiscal Service in its debt collection activities;
(3) In notices and letters, including demand letters and notices to employers regarding wage garnishment, when the Social Security number is (or is embedded in) a creditor agency's account number, debt identification number, or debtor identification number;
(4) In notices to employers regarding wage garnishment;
(5) In response to a request of a debtor or a debtor's representative for records of Fiscal Service's collection activities; and
(6) When required by law.