§ 200.305 - Federal payment.

§ 200.305 Federal payment.

(a) For states, payments Payments for States. Payments for States are governed by Treasury-State Cash Management Improvement Act (CMIA) agreements and default procedures codified at 31 CFR part 205 and Treasury Financial Manual (TFM) 4A-2000, “Overall Disbursing Rules for All Federal Agencies”Agencies.”

(b) For non-Federal entities other than states, payments Payments for recipients and subrecipients other than States. For recipients and subrecipients other than States, payment methods must minimize the time elapsing between the transfer of funds from the United States Treasury Federal agency or the pass-through entity and the disbursement of funds by the non-Federal entity recipient or subrecipient regardless of whether the payment is made by electronic funds transfer , or issuance or redemption of checks, warrants, or payment by other means. See also § 200.302(b)(6). Except as noted elsewhere in this part, the Federal agencies agency must require recipients to use only OMB-approved, governmentwide information collection requests government-wide information collections to request payment.

(1) The non-Federal entity recipient or subrecipient must be paid in advance, provided it maintains or demonstrates the willingness to maintain both written procedures that minimize the time elapsing between the transfer of funds and disbursement by the non-Federal entityrecipient or subrecipient, and financial management systems that meet the standards for fund control and accountability as established in this part. Advance payments to a non-Federal entity recipient or subrecipient must be limited to the minimum amounts needed and be timed to be in accordance with the actual, immediate cash requirements of the non-Federal entity recipient or subrecipient in carrying out the purpose of the approved program or project. The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the non-Federal entity recipient or subrecipient for direct program or project costs and the proportionate share of any allowable indirect costs. The non-Federal entity recipient or subrecipient must make timely payment payments to contractors in accordance with the contract provisions.

(2) Whenever possible, advance payments payment requests by the recipient or subrecipient must be consolidated to cover anticipated cash needs for all Federal awards made received by the recipient from the awarding Federal awarding agency to the recipientagency or pass-through entity.

(i) Advance payment mechanisms must comply with 31 CFR part 208 and include, but are not limited to, Treasury check checks and electronic funds transfer and must comply with applicable guidance in 31 CFR part 208transfers.

(ii) Non-Federal entities Recipients and subrecipients must be authorized to submit requests for advance payments and reimbursements at least monthly payment requests as often as necessary when electronic fund transfers are not used, and as often as they like used or at least monthly when electronic transfers are used, in accordance with the provisions of the not used. See Electronic Fund Transfer Act (15 U.S.C. 1693-1693r).

(3) Reimbursement is the preferred method when the requirements in this paragraph (b) cannot be met, when the Federal awarding agency or pass-through entity sets a specific condition per § 200.208, when requested by the recipient or subrecipient, when the non-Federal entity requests payment by reimbursement. This method may be used on any Federal award a Federal award is for construction, or if the major when a significant portion of the construction project is accomplished through private market financing or Federal loans , and the Federal award constitutes a minor portion of the project. When the reimbursement method is used, the Federal awarding agency or pass-through entity must make payment within 30 calendar days after receipt of the billing, payment request unless the Federal awarding agency or pass-through entity reasonably believes the request to be improper.

(4) If the non-Federal entity recipient or subrecipient cannot meet the criteria for advance payments and the Federal awarding agency or pass-through entity has determined that reimbursement is not feasible because the non-Federal entity recipient or subrecipient lacks sufficient working capital, the Federal awarding agency or pass-through entity may provide cash on a working capital advance basis. Under this procedure, the Federal awarding agency or pass-through entity must advance cash payments to the non-Federal entity recipient or subrecipient to cover its estimated disbursement needs for an initial period generally geared aligned to the non-Federal entityrecipient's or subrecipient's disbursing cycle. ThereafterAfter that, the Federal awarding agency or pass-through entity must reimburse the non-Federal entity recipient or subrecipient for its actual cash disbursements. Use of the working capital advance payment method of payment requires that the pass-through entity provide timely advance payments to any subrecipients in order to meet the subrecipient's actual cash disbursements. The pass-through entity must not use the working capital advance method of payment must not be used by the pass-through entity if the reason for using this method is the unwillingness or inability of the pass-through entity to provide timely advance payments to the subrecipient to meet the subrecipient's actual cash disbursements.

(5) To the extent If available, the non-Federal entity recipient or subrecipient must disburse funds available from program income (including repayments to a revolving fund), rebates, refunds, contract settlements, audit recoveries, and interest earned on such Federal funds before requesting additional cash payments.

(6) Unless otherwise required by Federal statutes, payments Payments for allowable costs by non-Federal entities must not be withheld at any time during the period of performance unless the conditions of § 200.208, subpart D of this part, including § 200.339, or one or more required by Federal statute, regulations, or in one of the following appliesinstances:

(i) The non-Federal entity recipient or subrecipient has failed to comply with the project objectives, Federal statutes, regulations, or the terms and conditions of the Federal award.; or

(ii) The non-Federal entity recipient or subrecipient is delinquent in a debt to the United States as defined in OMB Circular A-129, “Policies for Federal Credit Programs and Non-Tax Receivables.” Under such conditions, the Federal awarding agency or pass-through entity may, upon after providing reasonable notice, inform the non-Federal entity that payments must not be made withhold payments to the recipient or subrecipient for financial obligations incurred after a specified date until the conditions are corrected or the indebtedness debt is repaid to the Federal Government is liquidated.

(

iii

7) A payment withheld for failure to comply with

Federal award conditions, but without suspension

the terms and conditions of the Federal award

,

must be released to the

non-Federal entity

recipient or subrecipient upon subsequent compliance. When a Federal award is suspended, payment adjustments

will

must be made in accordance with § 200.343.

(

iv

8) A payment must not be made to a

non-Federal entity

recipient or subrecipient for amounts that

are withheld by the non-Federal entity from payment to

the recipient or subrecipient withholds from contractors to assure satisfactory completion of work.

A payment

Payment must be made when the

non-Federal entity actually

recipient or subrecipient disburses the withheld funds to the contractors or to escrow accounts established to

assure

ensure satisfactory completion of work.

(

7) Standards governing the use of banks and other institutions as depositories of advance payments under Federal awards are as follows.(i) The Federal awarding agency and

9) The Federal agency or pass-through entity must not require separate depository accounts for funds provided to

a non-Federal entity or

the recipient or subrecipient or establish any eligibility requirements for depositories

for funds provided to the non-Federal entity

. However, the

non-Federal entity

recipient or subrecipient must be able to account for all Federal funds received, obligated, and expended.

(

ii

10) Advance payments of Federal funds must be deposited and maintained in insured accounts whenever possible.

(

8

11) The

non-Federal entity

recipient or subrecipient must maintain advance payments of Federal

awards

funds in interest-bearing accounts

,

unless one of the following

apply

applies:

(i) The

non-Federal entity

recipient or subrecipient receives less than $250,000 in Federal

awards

funding per year

.

;

(ii) The best

reasonably

available interest-bearing account would not reasonably be expected to earn interest in excess of $500 per year on Federal cash balances

.

;

(iii) The depository would require an average or minimum balance so high that it would not be feasible

within

with the expected Federal and non-Federal cash resources

.

;

(iv) A foreign government or banking system prohibits or precludes interest-bearing accounts; or

(v) An interest-bearing account is not readily accessible (for example, due to public or political unrest in a foreign country).

(

9) Interest earned amounts

12) The recipient or subrecipient may retain up to $500 per year

may be retained by the non-Federal entity for administrative expense

of interest earned on Federal funds to use for administrative expenses of the recipient or subrecipient. Any additional interest earned on Federal

advance payments deposited in interest-bearing accounts

funds must be

remitted

returned annually to the Department of Health and Human Services Payment Management System (PMS) through

an electronic medium using

either the Automated Clearing House (ACH) network or a Fedwire Funds Service payment.

(i) For returning interest on Federal awards paid through PMS, the refund should:

(A) Provide an explanation stating that the refund is for interest;

(B) List the PMS Payee Account Number(s) (PANs);

(C) List the Federal award number(s) for which the interest was earned; and

(D) Make returns payable to: Department of Health and Human Services.

(ii) For returning interest on Federal awards not paid through PMS, the refund should:

(A) Provide an explanation stating that the refund is for interest;

(B) Include the name of the awarding agency;

(C) List the Federal award number(s) for which the interest was earned; and

(D) Make returns payable to: Department of Health and Human Services.

(10) Funds, principal, and excess cash returns must be directed to the original Federal agency payment system. The non-Federal entity should review instructions from the original Federal agency payment system. Returns should include the following information:

(i) Payee Account Number (PAN), if the payment originated from PMS, or Agency information to indicate whom to credit the funding if the payment originated from ASAP, NSF, or another Federal agency payment system.

(ii) PMS document number and subaccount(s), if the payment originated from PMS, or relevant account numbers if the payment originated from another Federal agency payment system.

(iii) The reason for the return (e.g., excess cash, funds not spent, interest, part interest part other, etc.)

(11) When returning funds or interest to PMS you must include the following as applicable:

(i) For ACH Returns:

Routing Number: 051036706

Account number: 303000

Bank Name and Location: Credit Gateway—ACH Receiver St. Paul, MN

(ii) For Fedwire Returns¹:

Routing Number: 021030004

Account number: 75010501

Bank Name and Location: Federal Reserve Bank Treas NYC/Funds Transfer Division New York, NY

¹ Please note that the organization initiating payment is likely to incur a charge from their Financial Institution for this type of payment.

(iii) For International ACH Returns:

Beneficiary Account: Federal Reserve Bank of New York/ITS (FRBNY/ITS)

Bank: Citibank N.A. (New York)

Swift Code: CITIUS33

Account Number: 36838868

Bank Address: 388 Greenwich Street, New York, NY 10013 USA

Payment Details (Line 70): Agency Locator Code (ALC): 75010501

Name (abbreviated when possible) and ALC Agency POC

(iv) For recipients that do not have electronic remittance capability, please make check² payable to: “The Department of Health and Human Services.”

Mail Check to Treasury approved lockbox:

HHS Program Support Center, P.O. Box 530231, Atlanta, GA 30353-0231

² Please allow 4-6 weeks for processing of a payment by check to be applied to the appropriate PMS account.

(v) Questions can be directed to PMS at 877-614-5533 or [e-mail].

All interest in excess of $500 per year must be returned to PMS regardless of whether the recipient or subrecipient was paid through PMS. Instructions for returning interest can be found at https://pms.psc.gov/grant-recipients/returning-funds-interest.html.

(13) All other Federal funds must be returned to the payment system of the Federal agency. Returns should follow the instructions provided by the Federal agency. All returns to PMS should follow the instructions provided at https://pms.psc.gov/grant-recipients/returning-funds-interest.html.