31 CFR § 285.5 - Centralized offset of Federal payments to collect nontax debts owed to the United States.
(1) This section governs the centralized offset of Federal payments to collect delinquent, nontax debts owed to Federal agencies in accordance with 31 U.S.C. 3716, 3720A and 26 U.S.C. 6402 and applicable regulations. The Department of the Treasury's Bureau of the Fiscal Service (Fiscal Service) administers centralized offset through the Treasury Offset Program. Offset occurs when the Federal government withholds part or all of a debtor's Federal payment to satisfy the debtor's delinquent debt owed to the government.
(2) Special rules apply to the collection of delinquent, nontax debts through the centralized offset of certain types of Federal payments, including tax refunds (31 CFR 285.2), Federal benefit payments (31 CFR 285.4), and Federal salary payments (31 CFR 285.7). While this rule applies to such payments, nothing in this rule is intended to contradict any provision of those more specific sections. To the extent any provision of this rule is inconsistent with a more specific provision of § 285.2, § 285.4 or § 285.7 of this part, the more specific provision shall apply.
(3) The receipt of collections pursuant to this section does not preclude a Federal agency from pursuing other debt collection remedies in conjunction with centralized offset. Nothing in this section precludes an agency from pursuing all available debt collection remedies simultaneously, provided that collections do not exceed the amount of the debt, including any interest, penalties, and administrative costs.
(b)Definitions. As used in this section:
Agency or Federal agency means a department, agency or subagency, court, court administrative office, or instrumentality in the executive, judicial, or legislative branch of the Federal Government, including government corporations.
Centralized offset means the offset of Federal payments through the Treasury Offset Program to collect debts which creditor agencies have certified pursuant to 31 U.S.C. 3716(c), 3720A(a) and applicable regulations. The term “centralized offset” includes the Treasury Offset Program's processing of offsets of Federal payments disbursed by disbursing officials other than Fiscal Service.
Creditor agency has the same meaning as found at 31 U.S.C. 3701(e)(1) and means any Federal agency that is owed a claim or debt that seeks to collect that claim or debt through offset of Federal payments.
Debt or claim has the meaning contained in 31 U.S.C. 3701(b) and 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, organization, or entity, except another Federal agency. The terms “debt” and “claim” are synonymous and include debt administered by a third party acting as an agent for the Federal Government. For purposes of this section, the term “debt” does not include debts arising under the Internal Revenue Code of 1986 (26 U.S.C. 1et seq.), the tariff laws of the United States, or the Social Security Act (42 U.S.C. 301et seq.), except to the extent provided in sections 204(f) and 1631(b)(4) of such Act (42 U.S.C. 404(f) and 1383(b)(4)(A), respectively) and 31 U.S.C. 3716(c).
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 agency's initial written demand for payment, or applicable agreement or instrument (including a post-delinquency payment agreement), unless other payment arrangements satisfactory to the creditor agency have been made. Nothing in this section is intended to define whether a debt is delinquent or past-due for purposes other than offset under this section.
Delinquent debt record means information about a past-due, legally enforceable debt submitted by a creditor agency to Fiscal Service for purposes of offset in accordance with the provisions of this section. Information about a past-due, legally enforceable debt includes, but is not limited to, the amount of the debt and the debtor's name, address, and taxpayer identifying number.
Disbursing official means an official who has authority to disburse public money pursuant to 31 U.S.C. 3321 or another law, including an official of the Department of the Treasury, the Department of Defense, the United States Postal Service, or any other government corporation, or any official of the United States designated by the Secretary of the Treasury to disburse public money.
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 by offset. Debts that are not legally enforceable for purposes of this section include, but are not limited to, debts subject to the automatic stay in bankruptcy proceedings or debts covered by a statute that prohibits collection of such debt by offset. For example, if a delinquent debt is the subject of a pending administrative review process required by statute or regulation, and if collection action during the review process is prohibited, the debt is not considered legally enforceable for purposes of this section. Nothing in this section is intended to define whether a debt is legally enforceable for purposes other than offset under this section.
Match means the taxpayer identifying number and name (or derivative thereof) of the payee on a payment record are the same as the taxpayer identifying number and name of the debtor on a delinquent debt record.
Past-due has the same meaning as “delinquent”, as defined above.
Payee means a person who is due a payment from a disbursing official as certified by the payment agency. For purposes of this section, a “payee” is a person who is entitled to the benefit of all or part of a payment from a disbursing official.
Payment record means information contained on a payment request, in the form of a certified payment voucher or other similar form, that has been transmitted to a disbursing official for disbursement in accordance with the provisions of 31 U.S.C. 3325 and 3528 or other applicable law. For purposes of matching, “payment record” may include information extracted from a payment request. Such information could include, but is not limited to, the amount and type of payment and the payee's name, address, and taxpayer identifying number.
Recurring payment means a payment to an individual that is expected to be payable to a payee at regular intervals, at least four times annually. The term “recurring payment” does not include payments made pursuant to a Federal contract, grant or cooperative agreement.
Representative payee means a person named as payee on the payment voucher certified by the payment agency who is acting on behalf of a person entitled to receive the benefit of all or part of the payment.
Secretary means the Secretary of the Treasury.
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 generally the individual's social security number.
(2) Disbursing officials shall compare payment records with delinquent debt records submitted to Fiscal Service for collection by offset. When a match occurs, and all other requirements for offset have been met, the disbursing official shall offset the payment to satisfy, in whole or part, the payee's debt to the extent allowed by law. The disbursing official shall pay any amounts not offset to the payee. See paragraphs (e), (f), (g), and (h) of this section.
(d)Requirements for creditor agencies -
(1)Mandatory notification of delinquent debts. As required by 31 U.S.C. 3716(c)(6), and in accordance with the provisions of this section, a creditor agency shall notify Fiscal Service of all legally enforceable debts over 120 days delinquent that are owed to the creditor agency. By complying with this requirement, creditor agencies will satisfy the requirement of 31 U.S.C. 3720A(a) to notify the Secretary of past due, legally enforceable debt for purposes of tax refund offset. If a debt which is over 120 days delinquent is considered not legally enforceable solely because it is under review as described in paragraph (d)(6)(ii)(C) of this section, the agency must submit the debt to Fiscal Service for collection by offset within 30 days of completing the review.
(2)Discretionary notification of delinquent debts. Creditor agencies may notify Fiscal Service of any debt that is less than 120 days delinquent, so long as the requirements of paragraph (d)(3) of this section are met.
(B) Legally enforceable;
(C) More than $25, or such other amount as Fiscal Service may prescribe; and
(iii)Debts owed by foreign sovereigns may be referred to Treasury Offset Program at the discretion of the creditor agency to the extent allowed by law, but are excluded from mandatory referral under paragraph (d)(1) of this section.
(iv) In accordance with 31 U.S.C. 3719 and the procedures promulgated thereunder, creditor agencies must report to Treasury the amount of debt over 120 days delinquent eligible for the Treasury Offset Program. The procedures require that such report include the amount of debt over 120 days delinquent that the creditor agency has determined is not eligible for the Treasury Offset Program and the reasons for such determination.
(v) Creditor agencies may submit nontax debts to Fiscal Service for collection by centralized offset irrespective of the amount of time the debt has been outstanding. Accordingly, all nontax debts, including debts that were outstanding for ten years or longer prior to June 11, 2009 may be collected by centralized offset.
(4)Creditor agency regulations. Prior to submitting a debt to Fiscal Service for purposes of offset, Federal agencies shall prescribe regulations in accordance with the requirements of 31 U.S.C. 3716(b), 3131 CFR 901.3(b)(4), 3131 U.S.C. 3720A(a), and 3131 CFR 285.2(c). Before submitting debts to Fiscal Service for purposes of offsetting Federal salary payments, creditor agencies must also publish regulations pursuant to 5 U.S.C. 5514, 3131 CFR 285.7(d)(2), and 5 CFR 550.1104.
(v) Written certification as required in paragraph (d)(6) of this section; and
(vi) Other information as may be requested by Fiscal Service.
(6)Creditor agency certification. At the time the creditor agency notifies Fiscal Service of a debt for purposes of collection by offset, the creditor agency shall provide, in the manner required by Fiscal Service, written certification to Fiscal Service that:
(A) Written notification, at least sixty days prior to submitting the debt and at the debtor's most current address known to the agency, of the nature and the amount of the debt, the intention of the creditor agency to collect the debt through offset, and an explanation of the rights of the debtor;
(C) An opportunity for a review within the creditor agency of the determination of indebtedness, including the opportunity to present evidence that all or part of the debt is not past-due or legally enforceable;
(D) An opportunity to enter into a written repayment agreement with the creditor agency; and
(E) In the case of Federal employees, an opportunity for a hearing prior to submitting the debt for Federal salary offset. See 5 U.S.C. 5514 and 55 CFR 550.1104. (See 31 CFR 285.7(d), which describes the authority to waive the salary offset certification as a prerequisite to referring the debt for other types of offsets.)
(iii) For debts outstanding more than ten years on or before June 11, 2009, the notice of intent to offset described in paragraph (d)(6)(ii)(A) of this section was sent to the debtor after the debt was outstanding for more than ten years, and that the debtor was afforded the rights described in paragraphs (d)(6)(ii)(B) through (E). This requirement will apply even in a case where notice was also sent prior to the debt being outstanding for ten years but does not apply to any debt that could be collected by offset without regard to any time limitation prior to June 11, 2009.
(iv) The creditor agency has complied with all statutes, regulations, and policies applicable to the creditor agency's assessment of interest, penalties and administrative costs (including, as applicable, 31 U.S.C. 3717), and that the creditor agency has provided a written notice to debtors explaining the creditor agency's requirements concerning any such charges assessed against those debtors;
(v) The individual signing the certification has the delegated authority to execute the certification on behalf of the head of the creditor agency; and
(vi) Such additional information that Fiscal Service may from time to time require in compliance with law, regulation or policy.
(7)Updating certification. After a debt has been submitted to Fiscal Service for purposes of collection by offset, the creditor agency shall provide, at least annually, in the manner and time frames required by Fiscal Service, written certification to Fiscal Service that:
(8)Fiscal Service instructions to creditor agencies. Agencies will provide the certification in a form and manner prescribed by Fiscal Service. Fiscal Service will instruct agencies as to the form such written certifications will take and how certifications can be delivered to Fiscal Service, including, but not limited to, the use of electronic data transmission.
(9)Agencies which are both creditor and disbursing officials. A creditor agency that also designates disbursing officials pursuant to 31 U.S.C. 3321(c) is not required to certify debts arising out of its operations to Fiscal Service before such agency's disbursing officials offset to collect such claims. This paragraph (d)(9) does not apply to Fiscal Service when it submits debts which it is servicing pursuant to 31 U.S.C. 3711(g).
(10)Correcting and updating debt information.
(ii) The creditor agency shall update delinquent debt records, in the manner and time frames required by Fiscal Service, to reflect any amounts credited by the creditor agency to the debtor's account after submission of the debt to Fiscal Service (other than credits for amounts collected by centralized offset).
(iii) The creditor agency may update delinquent debt records to reflect any increases in the amount of the debt submitted to Fiscal Service for collection by offset provided that the creditor agency has complied with the requirements of paragraph (d)(6) of this section with regard to the increased amounts.
(iv) 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.
(11)Debts at Fiscal Service, a debt collection center, or the Department of Justice. If a creditor agency has transferred a debt to Fiscal Service or a Treasury-designated debt collection center pursuant to 31 U.S.C. 3711(g) and 3131 CFR 285.12, or if a creditor agency has referred a debt to the Department of Justice for enforced collection, then Fiscal Service, the debt collection center, or the Department of Justice, as the case may be, is responsible for submitting the debt information to Fiscal Service to satisfy the creditor agency's obligations under 31 U.S.C. 3716(c)(6) and this section.
(12)Certification of amount to be offset if different than maximum allowed by law. Generally, the amount of an offset will be calculated as set forth in paragraph (f)(2) of this section. If the creditor agency certifies to Fiscal Service that the creditor agency has determined the offset amount allowed by law would result in financial hardship to the debtor and that a lesser offset amount (specified either in dollar amount or as a percentage of the payment) is reasonable and appropriate based on the debtor's financial circumstances, then the disbursing official shall offset such lesser amount specified by the creditor agency.
(e)Payments made by the United States -
(1)Payments eligible for offset. Except as set forth in paragraph (e)(2) of this section, all Federal payments are eligible for offset under this section. Eligible Federal payments include, but are not limited to, Federal wage, salary, and retirement payments, vendor and expense reimbursement payments, certain benefit payments, travel advances and reimbursements, grants, fees, refunds, judgments (including those certified for payment pursuant to 31 U.S.C. 1304), tax refunds, and other payments made by Federal agencies.
(2)Payments excluded from offset under this section. This section does not apply to the following payments:
(i)Black Lung Part C benefit payments, or Railroad Retirement tier 2 payments;
(ii) Payments made under the tariff laws of the United States;
(iv) Payments made under any program administered by the Secretary of Education under title IV of the Higher Education Act of 1965 for which payments are certified by the Department of Education;
(v) Payments made under any other Federal law if offset is expressly prohibited by Federal statute;
(vii) Federal loan payments other than travel advances.
(3)Specific rules for certain payment types.
(i) Specific rules apply with respect to the offset of the following types of payments:
(A) Social Security benefit payments (excluding Supplemental Security Income payments), Black Lung (part B) payments, and Railroad Retirement (other than tier 2) payments to the extent such payments are subject to offset under 31 U.S.C. 3716(c)(3)(A) (see 31 CFR 285.4);
(ii) This section governs the offset of such payments to the extent that this section is not inconsistent with the special rules that apply for a particular type of payment.
(4)Payments made to joint payees. If a payment is certified to more than one payee (i.e., joint payees), the entire payment (including a tax refund payment) will be subject to offset for a debt of either payee, unless otherwise prohibited by law or regulation. See 31 CFR 285.2(g) regarding offset of joint tax refunds and claims to return offset funds to the non-debtor, joint payee.
(5)Payments made to representative payees. If a payment is made to a person solely in that person's capacity as a representative payee for another person having the beneficial interest in a payment, the disbursing official shall offset that payment only to collect debts owed by the person having the beneficial interest in the payment. Payment agencies are responsible for identifying representative payees.
(i) If a person, including a Federal contractor, assigns the right to receive a Federal payment to a third party (the “assignee”), the assigned payment will be subject to offset to collect a delinquent debt owed by the assignee.
(A) In accordance with 41 U.S.C. 15(e)-(f), the payment has been properly assigned to a financial institution pursuant to a Federal contract, the contract contains provisions prohibiting the payment from being reduced or offset for debts owed by the contractor, and the debt arose independently of the contract; or
(B) pursuant to 31 U.S.C. 3727, the payment is being made to the assignee as settlement or satisfaction of a claim brought by the assignee against the creditor agency based upon the contract, and the debt of the contractor arises independently of the contract; or
(7)Payment agency requests for exemptions from centralized offset pursuant to 31 U.S.C. 3716(c)(3)(B) -
(i)Means-tested payments. The Secretary will exempt from centralized offset payments made under means-tested programs when requested by the head of the agency making such payments. For purposes of this section “means-tested programs” are those which base eligibility on a determination that the income and/or assets of the beneficiary are inadequate to provide the beneficiary with an adequate standard of living without program assistance.
(ii)Payments made under programs which are not means-tested. Upon written request from the payment agency, the Secretary may exempt classes of payments which are not means-tested. Payment agencies may request that the Secretary exempt 100% of each payment in a payment class or that the Secretary exempt a specific lesser percentage. The Secretary will consider such requests under standards prescribed by the Secretary and published on the Fiscal Service Web site. See www.fiscal.treasury.gov/debt.
(iii)Procedures for requesting exemptions. The head of the payment agency must make a request for exemption in writing. The request must comply with the procedures published by Fiscal Service and made available at its Web site. See www.fiscal.treasury.gov/debt.
(iv)Exemptions apply to classes of payments. The Secretary will only exempt classes of payments. Requests for exemption of individual payments will not be considered.
(8)Payment agency responsibilities.
(i) Payment agencies shall prepare and submit payment vouchers in the manner prescribed by the disbursing official to ensure that all payments legally eligible for offset will be offset and all payments not eligible will not be offset. Payment agencies shall notify the disbursing agency, in the manner prescribed by Fiscal Service, that a payment is a recurring payment.
(9)Payment and disbursing officials have satisfied the obligation underlying the payment. When an offset occurs, the debtor has received payment in full for the underlying obligation represented by the payment. Pursuant to 31 U.S.C. 3716(c)(2)(A), neither the disbursing official nor the payment agency shall be liable for the amount of the offset on the basis that the underlying obligation was not satisfied. For example, if an agency certifies a payment to a Federal contractor for work completed or services provided, and that payment is offset to collect a delinquent debt that the contractor owes to another Federal agency, the contractor has been paid in full for its services. When the creditor agency credits the offset amount to the contractor's delinquent debt, the contractor has received full value for the services performed under the contract.
(1)When offset occurs. When a match occurs and all other requirements for offset under 31 U.S.C. 3716(c), 3720A, and applicable regulations have been met, the disbursing official shall offset the payee's Federal payment to satisfy, in whole or part, the debt owed by the debtor. Offsets will continue until the debt, including any interest, penalties, and administrative costs, is paid in full or otherwise resolved to the satisfaction of the creditor agency.
(i) Except as otherwise provided in 31 CFR 285.4(e) and 285.7(g) (addressing centralized offset of certain Federal benefit payments and salary payments, respectively), the disbursing official shall offset the lesser of:
(A) The amount of the payment as shown on the payment record; or
(B) The amount of the debt, including any interest, penalties and administrative costs; or
(C) In the case of retirement annuity payments certified by the Office of Personnel Management, up to twenty-five percent of the amount of the payment as shown on the payment record.
(ii) Notwithstanding paragraph (f)(2)(i) of this section, if a creditor agency has specified another amount, either in dollars or as a percentage of the payment, pursuant to paragraph (d)(15) of this section, the disbursing official shall offset the amount specified by the creditor agency.
(3)Priorities for collecting multiple debts owed by the payee.
(i) A levy pursuant to the Internal Revenue Code of 1986 shall take precedence over deductions under this section.
(1)Warning notice by disbursing official to payee/debtor. Before offsetting a recurring payment, the disbursing official, or Fiscal Service on behalf of the disbursing official, will notify the payee in writing when offsets will begin (which may be stated as a number of days or number of payments from the time of the notice) and the anticipated amount of such offset (which may be stated as a percentage of the payment). Such notice shall also provide the information contained in paragraph (g)(3) of this section. Failure to send such notice does not affect the validity of the offset.
(2)No additional warning notice when collections are suspended and resumed. As described in paragraph (f)(3)(iii) of this section, Fiscal Service may suspend or reduce the application of collections from a recurring payment for one debt when another debt, which is owed by the same debtor and has a higher legal priority, is submitted to Fiscal Service for collection. The disbursing official is not required to send additional warning notices when collections for the lower priority debt resume; however, pursuant to paragraph (g)(3) of this section, each offset will be accompanied by an offset notice, which explains how the offset amounts were applied.
(3)Offset notice. When an offset occurs under this section, the disbursing official, or Fiscal Service on behalf of the disbursing official, shall notify the payee in writing that an offset has occurred including:
(i) A description of the payment and the amount of offset taken;
(h)Notification to creditor and payment agencies.
(1)Fiscal Service will notify the creditor agency of all offsets made to collect the creditor agency's debts. Such notification shall include the complete name and taxpayer identifying number of each debtor/payee, the total amounts collected from each debtor/payee's payment, and the amount of any fees charged by Fiscal Service and any other disbursing official conducting offsets. Fiscal Service will not advise the creditor agency of the source of payment from which such amounts were collected.
(2) When a non-Treasury disbursing official conducts the offset, that disbursing official will transmit to Fiscal Service all of the information necessary for Fiscal Service to send notification under paragraph (h)(1) of this section, including the amount of any fees that the creditor agency is responsible for paying.
(3)Fiscal Service will make available to the payment agency the information contained in the notification of offset, so that the payment agency may direct any questions concerning the claim to the appropriate contact person in the creditor agency.
(i)Disposition of amounts collected.
(1)Fiscal Service will transmit amounts collected for debts, less fees charged pursuant to paragraph (j) of this section, to the appropriate creditor agency or agencies. Alternatively, Fiscal Service may bill the creditor agency for any fees charged pursuant to paragraph (j) of this section.
(2) If Fiscal Service learns from a paying agency that a payment should not have been made, and thus not offset, Fiscal Service will notify the creditor agency. Fiscal Service may deduct the offset amount from future amounts payable to the creditor agency. Alternatively, upon Fiscal Service's request, the creditor agency shall return promptly to the disbursing official an amount equal to the amount of the offset (without regard to whether any other amounts payable to such disbursing official have been paid).
(3) Generally, the disbursing official is not responsible for refunding money to debtors. The creditor agency shall notify Fiscal Service any time the creditor agency returns all or any part of an offset payment to an affected payee. See paragraph (d)(10)(v) of this section. Fiscal Service and the creditor agency shall adjust the debtor records appropriately.
(j)Fees.Fiscal Service may charge a fee sufficient to cover the full cost of implementing the centralized offset program, including the amount of any fees charged by other disbursing officials conducting an offset under this section. Fiscal Service may deduct the fees from amounts collected by offset or may bill the creditor agencies. Fiscal Service will charge fees only for actual offsets collected.
(k)Waiver of certain provisions under the Computer Matching Privacy and Protection Act of 1988. As authorized by 31 U.S.C. 3716(f), Fiscal Service, under a delegation of authority from the Secretary, has waived certain requirements of the Computer Matching and Privacy Protection Act of 1988, Pub. L. No. 100-503, as amended, for matches between delinquent debt records and payment records for offset purposes upon written certification by the head of the creditor agency that the requirements of 31 U.S.C. 3716(a) have been met. Specifically, for administrative offset of Federal payments other than tax refunds, Fiscal Service has waived the requirements for a computer matching agreement contained in 5 U.S.C. 552a(o) and for post-match notice and verification contained in 5 U.S.C. 552a(p) so long as the creditor agency provides certification to Fiscal Service in accordance with the provisions of paragraph (d)(6) of this section. Such waiver is not necessary for offset of Federal tax refunds, pursuant to 5 U.S.C. 552a(a)(8)(B). The Data Integrity Board of the Department of the Treasury shall review and include in reports under 5 U.S.C. 552a(u)(3)(D) a description of the matching activities conducted for centralized offset under this section. No other Data Integrity Board is required to take any action under 5 U.S.C. 552a(u) concerning these computerized comparisons.