[Federal Register Volume 59, Number 65 (Tuesday, April 5, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-8089]
[[Page Unknown]]
[Federal Register: April 5, 1994]
-----------------------------------------------------------------------
DEPARTMENT OF AGRICULTURE
Agricultural Stabilization and Conservation Service
7 CFR Part 792
RIN 0560-AD03
Debt Settlement Policies and Procedures
AGENCY: Agricultural Stabilization and Conservation Service, USDA.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: A proposed rule was published on June 15, 1993, with respect
to the debt management practices of the Agricultural Stabilization and
Conservation Service (ASCS). This final rule adopts, with minor
changes, the provisions of the proposed rule. Accordingly, this final
rule sets forth the policies and procedures which ASCS will use to
settle debts. ASCS policies and procedures conform to the guidelines
set forth in the Federal Claims Collection Act, as amended by the Debt
Collection Act of 1982. ASCS will also follow the provisions of the
Federal Claims Collection Standards with respect to administrative
actions undertaken by ASCS to settle claims. This regulation is
necessary to protect the financial integrity of many Federal
agricultural programs by ensuring the Government will be able to
collect, or otherwise settle, debts owed it by any person,
organization, corporation, or other legal entity.
EFFECTIVE DATE: April 5, 1994.
FOR FURTHER INFORMATION CONTACT: Paula Roney, Debt Management and
Contract Procedures Branch, Financial Management Division, ASCS, at
703-305-1424.
SUPPLEMENTARY INFORMATION:
Executive Order 12866
This final rule is issued in conformance with Executive Order
12866. Based on information compiled by the Department, it has been
determined that this final rule:
(1) Would have an annual effect on the economy of less than $100
million;
(2) Would not adversely affect in a material way the economy, a
sector of the economy, productivity, competition, jobs, the
environment, public health or safety, or State, local, or tribal
governments or communities;
(3) Would not create a serious inconsistency or otherwise interfere
with an action taken or planned by another agency;
(4) Would not alter the budgetary impact of entitlements, grants,
user fees, or loan programs or rights and obligations of recipients
thereof; and
(5) Would not raise novel legal or policy issues arising out of
legal mandates, the President's priorities, or principles set forth in
Executive Order 12866. Paperwork Reduction Act
The information collection requirements of these regulations were
reviewed and approved through July 31, 1996, by the Office of
Management and Budget (OMB) and assigned OMB No. 0560-0146. The
reporting burden for required reports is estimated to average 10
minutes per response, including the time for reviewing instructions,
searching existing data sources, maintaining the data and completing
the information collection. Send comments regarding this burden
estimate, including suggestions for reducing the burden, to OIRM, AG
Box 7630, Washington, DC 20250.
Regulatory Flexibility Act
ASCS is not required by 5 U.S.C. 553 or any other provision of law
to publish a notice of proposed rulemaking with respect to the subject
matter of this final rule. Therefore this action is exempt from the
provision of the Regulatory Flexibility Act and no Regulatory
Flexibility Analysis was prepared.
Executive Order 12778
This final rule has been reviewed in accordance with Executive
Order 12778. It is not retroactive and preempts State and local laws.
Before any judicial action may be brought regarding the provisions of
this final rule, administrative appeal remedies set forth at 7 CFR
parts 24 and 780 must be exhausted.
Executive Order 12372
This action will not have a significant impact specifically upon
area and community development; therefore, review as established by
Executive Order 12372 (July 14, 1982) was not used to assure that units
of local government are informed of this action.
Background
The Federal Claims Collection Act of 1966 (the Act), as amended by
the Debt Collection Act of 1982 (31 U.S.C. 3711, et seq.), and the
joint regulations promulgated thereunder by the Comptroller General and
the Attorney General (4 CFR parts 101-105) provide minimum standards
for the administrative collection of claims by the United States. The
Federal Claims Collection Standards (FCCS) require each Federal agency
to take aggressive action to collect debts owed it, and to cooperate
with other Federal agencies in their debt collection activities.
Federal agencies are required to promulgate regulations consistent with
the standards.
Currently, ASCS follows the Department of Agriculture's debt
collection procedures at 7 CFR part 3. However, 7 CFR part 3 provides
that the head of any agency of the Department may adopt separate
regulations to be followed for the collection of claims and debts. ASCS
requires separate regulations for the following reasons:
(1) In order to make ASCS regulations consistent with Commodity
Credit Corporation's debt settlement policies and procedures at 7 CFR
part 1403 to the extent that it would not conflict with the Act or the
FCCS, such as providing for hearings and reviews to our National
Appeals Division;
(2) In order to set our priority for collecting debt by offset;
(3) In order to allow ASCS to depart from 7 CFR part 3 in those
areas where it would not conflict with the Act or the FCCS, such as the
requirement in 7 CFR part 3 to send notice by personal delivery or
certified mail; and,
(4) To allow any amendments or revisions necessitated by statutory
or program changes to be made at the agency level rather than the
departmental level.
This regulation is necessary to protect the financial integrity of
many Federal agricultural programs by ensuring the Government will be
able to collect, or otherwise settle, debts owed it by any person,
organization, corporation, or other legal entity.
Two comments were received in response to the proposed rule
published in the Federal Register on June 15, 1993 (58 FR 33029). The
first commenter questioned why ASCS failed to address the use of
alternative dispute resolution, as required by Pub. L. 101-552. Pub. L.
101-552 requires the Secretary of Agriculture, with respect to each
program under the Secretary's jurisdiction that makes, guarantees, or
insures agricultural loans, to prescribe rules requiring each such
program to participate in State agricultural loan mediation programs.
However, since ASCS does not make, guarantee or insure agricultural
loans, this provision does not apply to it. Rules governing mediation
of Commodity Credit Corporation agricultural loan programs administered
by ASCS employees to which this provision does apply are contained in 7
CFR part 1405.
This commenter also objects to the provision of 7 CFR 792.8 which
provides that all debts due ASCS or CCC may be offset without regard to
assignments which may have been filed. This provision was developed to
increase the ability of ASCS and CCC to recoup delinquent debts and to
deter the circumvention of offset by such practices as the assignment
of payments to friends, relatives, partners, or subsidiary
corporations. Taking an assignment of an ASCS or CCC program payment as
security for a debt has never been without risk. There has always been
the possibility that a payment will not be made, e.g., if a producer
fails to comply with contract requirements. Therefore, it was
determined that any heightened risk to lenders is outweighed by the
benefit to the Government in the increased ability to collect
delinquent debts.
This commenter further takes exception to the provision in 7 CFR
792.10(b) which states that ASCS will assess late payment interest on
the full amount of delinquent debts, which means the sum of the
principal, accrued program interest and any other charges which are due
and owing at the time the late payment interest is assessed. The
commenter states that this provision is illegal under North Dakota law
and has the effect of charging a rate in excess of that which is
disclosed to the borrower. Since ASCS programs are not loan programs,
debts due ASCS are not based on amounts borrowed. Instead they are
generally based on failure to comply with contract provisions. Further,
agencies of the Federal Government are not bound by State laws
regarding debt collection activities.
This commenter states that provisions of 7 CFR 792.7, which provide
for administrative offset prior to the completion of due process
requirements in certain circumstances, have the effect of
``swallowing'' due process. The commenter also states that payments
should be withheld rather than offset during the period before due
process is completed. The language referred to in 7 CFR 792.7 is taken
from the Federal Claims Collection Standards with which agencies are
required to be consistent. In addition, taking offset prior to
completion of due process requirements does not negate any rights which
the debtor has. Due process requirements still must be completed.
Further, there is no benefit to the debtor in ``withholding'' payment
rather than offsetting payment. In either case, the debtor does not
have use of the funds. In fact by offsetting payment and applying it to
the debt, rather than merely holding the payment, the debtor is ensured
that any interest assessment will be stopped. If when due process is
completed it is determined that the debtor does not owe the debt, the
offset payment will be returned to the debtor, with prompt payment
interest when applicable.
Finally, this commenter made several broad policy suggestions which
were not within the scope of these regulations. These suggestions will
not be responded to in this regulation.
The second commenter also expressed concern that the provisions of
7 CFR 792.7 which permit offset prior to completion of all due process
requirements would negate the due process requirements. As stated
above, that is not the case. Due process requirements do not stop
because offset is taken. They are still required to be completed in the
same time periods regardless of whether or not offset has been taken.
This commenter also needed clarification regarding the difference
between the cited provision for accelerated offset and the provisions
for withholding at 7 CFR 792.9. Withholding is a temporary action and
monies withheld are not actually credited to the debtor. It is
generally used when the amount due is uncertain. Under accelerated
offset, the payment is actually applied to the debt. As stated above,
this will ensure that any interest which may be accruing is stopped.
This is more difficult to ensure in cases of withholding since in most
cases, because the amount due is uncertain, there is no recorded debt
to which to apply the payment.
List of Subjects in 7 CFR Part 792
Claims, Income taxes.
Accordingly, subchapter E, chapter VII of title 7 of the Code of
Federal Regulations is amended by adding a new part 792 to read as
follows:
PART 792--DEBT SETTLEMENT POLICIES AND PROCEDURES
Sec.
792.1 Applicability.
792.2 Administration.
792.3 Definitions.
792.4 Demand for payment of debts.
792.5 Collection by payment in full.
792.6 Collection by installment payments.
792.7 Collection by administrative offset.
792.8 Priorities of offsets versus assignments.
792.9 Withholding.
792.10 Late payment interest, penalty and administrative charges.
792.11 Waiver of late payment interest, penalty charge and
administrative charges.
792.12 Administrative appeal.
792.13 Additional administrative collection action.
792.14 Contact with debtor's employing agency.
792.15 Prior provision of rights with respect to debt.
792.16 Discharge of debts.
792.17 Referral of delinquent debts to credit reporting agencies.
792.18 Referral of debts to Department of Justice.
792.19 Referral of delinquent debts to IRS for tax refund offset.
792.20 Reporting discharged debts to IRS.
792.21 Referral of debts to private collection agencies.
792.22 Collection and compromise.
Authority: 31 U.S.C. 3701, 3711, 3716-3719, 3728; 4 CFR Parts
101-105; 7 CFR 3.21(b).
Sec. 792.1 Applicability.
Except as may otherwise be provided by statute, this part sets
forth the manner in which the Agricultural Stabilization and
Conservation Service (ASCS) will settle and collect debts by ASCS. The
provisions of part 1403 of this title are applicable to actions of ASCS
regarding the settlement and collection of debts on the behalf of the
Commodity Credit Corporation (CCC).
Sec. 792.2 Administration.
The regulations in this part will be administered under the general
supervision and direction of the Administrator, ASCS.
Sec. 792.3 Definitions.
The following definitions shall be applicable to this part:
Administrative charges means the additional costs of processing
delinquent debts against the debtor, to the extent such costs are
attributable to the delinquency. Such costs include, but are not
limited to, costs incurred in obtaining a credit report, costs of
employing commercial firms to locate debtor, costs of employing
contractors for collection services, costs of selling collateral or
property to satisfy the debt.
Administrative offset means deducting money payable or held by the
United States Government, or any agency thereof, to satisfy in whole or
in part a debt owed the Government, or any agency thereof.
ASCS means the Agricultural Stabilization and Conservation Service
of the United States Department of Agriculture (USDA).
CCC means the Commodity Credit Corporation.
Certified financial statement means an account of the assets,
liabilities, income and expenses of a debtor, executed in accordance
with generally accepted accounting principles and attested to as
accurate by the debtor and preparer, under penalty of perjury.
Claim means an amount of money or property which has been
determined by ASCS, after a notice of delinquency and a demand for the
payment of the debt has been made by ASCS, to be owed to ASCS by any
person other than a Federal agency.
Credit reporting agency means: (1) A reporting agency as defined at
4 CFR 102.5(a), or
(2) Any entity which has entered into an agreement with USDA
concerning the referral of credit information.
Debt means any amount owed to ASCS which has not been satisfied
through payment or otherwise.
Debt record refers to the account, register, balance sheet, file,
ledger, data file, or similar record of debts owed to ASCS, CCC, or any
other Government Agency with respect to which collection action is
being pursued, and which is maintained in an ASCS office.
Delinquent debt means: (1) Any debt owed to ASCS that has not been
paid by the date specified in the applicable statute, regulation,
contract, or agreement; or
(2) Any debt that has not been paid by the date of an initial
notification of indebtedness mailed or hand-delivered pursuant to
Sec. 792.4.
Discharged debt means any debt, or part thereof, which ASCS has
determined is uncollectible and has closed out, and if the amount in
controversy exceeds $100,000.00, excluding interest and administrative
charges, or such higher amount as may be prescribed, in which the
Department of Justice has concurred in such determination.
IRS means the Internal Revenue Service.
Late payment interest rate means the amount of interest charged on
delinquent debts and claims. The late payment interest rate shall be
determined as of the date a debt becomes delinquent and shall be equal
to the higher of the Prompt Payment Act interest rate or the standard
late payment rate prescribed by 31 U.S.C. 3717, which is based on the
Treasury Department's current value of funds rate.
Person means an individual, partnership, association, corporation,
estate or trust, or other business enterprise or other legal entity
and, whenever applicable, the Federal Government or a State government,
or any agency thereof.
Salary offset means the deduction of money from the current pay
account of a present or former Government employee payable by the
United States Government to, or held by the Government for, such person
to satisfy a debt that person owes the Government.
Settlement means any final disposition of a debt or claim.
System of records means a group of any records under the control of
ASCS or CCC from which information is retrieved by the name of the
individual, organization or other entity or by some identifying number,
symbol, or other identification assigned to the individual,
organization or other entity.
Withholding means the taking of action to temporarily prevent the
payment of some or all amounts to a debtor under one or more contracts
or programs.
Sec. 792.4 Demand for payment of debts.
(a) When a debt is due ASCS, an initial written demand for payment
of such amount shall be mailed or hand-delivered to the debtor. If the
debt is not paid in full by the date specified in the initial demand
letter, or if a repayment schedule acceptable to ASCS has not been
arranged with the debtor, the initial demand may be followed by two
subsequent written demands at approximately 30-day intervals, unless it
is determined by ASCS that further demands would be futile and the
debtor's response does not require rebuttal. The initial or subsequent
demand letters shall specify the following: (1) The basis for and the
amount of the debt determined to be due ASCS, including the principal,
applicable interest, costs, and other charges;
(2) ASCS' intent to establish an account on a debt record 30 days
after the date of the letter, or other applicable period of time, if
the debt is not paid within that time;
(3) The applicable late payment interest rate.
(i) If a late payment interest rate is specified in the contract,
agreement or program regulation, the debtor shall be informed of that
rate and the date from which the late payment interest has been
accruing;
(ii) If a late payment interest rate is not specified in the
contract, agreement or program regulation, the debtor shall be informed
of the applicable late payment interest rate set out in Sec. 792.10.
(4) ASCS' intent, if applicable, to collect the debt 30 days from
the date of the initial demand letter, or other applicable period of
time, by administrative offset from any CCC or ASCS payments due or to
become due to the debtor, and that the claim may be reported to other
agencies of the Federal government for offset from any amounts due or
to become due to the debtor;
(5) ASCS' intent, if applicable, under Sec. 792.17, to report any
delinquent debt to a credit reporting agency no sooner than 60 days
from the date of the letter;
(6) ASCS' intent, if applicable, under Sec. 792.19, to refer any
delinquent debt to the IRS, no sooner than 60 days from the date of the
letter, to be considered for offset against any tax refund due or to
become due the debtor.
(7) If not previously provided, the debtor's right to request
administrative review by an authorized ASCS official, and the proper
procedure for making such request. If the request relates to the: (i)
Existence or amount of the debt, it must be made within 15 days from
the date of the letter, unless a different time period is specified in
the contract, agreement or program regulation;
(ii) Appropriateness of reporting to a credit reporting agency, it
must be made within 30 days from the date of the letter; or
(iii) Appropriateness of referral to IRS for tax refund offset, it
must be made within 60 days from the date of the letter, if applicable.
(8) The debtor's right to a full explanation of the debt and to
dispute any information in the records of ASCS concerning the debt;
(9) The opportunity afforded the debtor to enter into a written
agreement which is acceptable to ASCS for the repayment of the debt;
(10) That ASCS maintains the right to initiate legal action to
collect the amount of the debt;
(11) That if any portion of the debt remains unpaid or if a
repayment schedule satisfactory to ASCS has not been arranged 90 days
after the due date, a penalty charge shall be assessed on the unpaid
balance of the debt as prescribed in Sec. 792.10(e);
(b) When ASCS deems it necessary to protect the Government's
interest, written demand may be preceded by other appropriate actions.
Sec. 792.5 Collection by payment in full.
Except as ASCS may provide, ASCS shall collect debts owed to the
Government, including applicable interest, penalties, and
administrative costs, in full, whenever feasible whether the debt is
being collected by administrative offset or by another method,
including voluntary payment. If a debt is paid in one lump sum after
the due date, ASCS will impose late payment interest, as provided in
Sec. 792.10, unless such interest is waived as provided in Sec. 792.11.
Sec. 792.6 Collection by installment payments.
(a) Payments in installments may be arranged, at ASCS' discretion,
if a debtor furnishes satisfactory evidence of inability to pay a claim
in full by the specified date. The size and frequency of installment
payments shall: (1) Bear a reasonable relation to the size of the debt
and the debtor's ability to pay; and
(2) Normally be of sufficient size and frequency to liquidate the
debt in not more than three years.
(b) Except as otherwise determined by ASCS, no installment
arrangement will be considered unless the debtor submits a certified
financial statement which reflects the debtor's assets, liabilities,
income, and expenses. The financial statement shall not be required to
be submitted sooner than 15 workdays following its request by ASCS.
(c) All installment payment agreements shall be in writing and
require the payment of interest at the late payment interest rate in
effect on the date such agreement is executed, unless such interest is
waived or reduced by ASCS. The installment agreement shall specify all
the terms of the arrangement and include provision for accelerating the
debt in the event the debtor defaults.
(d) ASCS may deem a repayment plan to be abrogated if the debtor
fails to comply with its terms.
(e) If the debtor's financial statement or other information
discloses the ownership of assets which are not encumbered, the debtor
may be required to secure the payment of an installment note by
executing a security agreement and financing agreement which provides
ASCS a security interest in the assets until the debt is paid in full.
(f) If the debtor owes more than one debt to ASCS, ASCS may allow
the debtor to designate the manner in which a voluntary installment
payment is to be applied. If the debtor does not designate the
application of a voluntary installment or partial payment, the payment
will be applied to such debts as determined by ASCS.
Sec. 792.7 Collection by administrative offset.
(a) The provisions of this section shall apply to all debts due
ASCS except as otherwise provided in this part and part 1404 of this
title. This section is not applicable to:
(1) ASCS requests for administrative offset against money payable
to a debtor from the Civil Service Retirement and Disability Fund and
ASCS requests for salary offset against a present, former or retired
employee of the Federal Government which shall be made in accordance
with regulations at part 3 of this title;
(2) ASCS requests for administrative offset against a Federal
income tax refund payable to a debtor which shall be made in accordance
with Sec. 792.19;
(3) Cases in which ASCS must adjust, by increasing or decreasing, a
payment which is to be paid under a contract in order to properly make
other payments due by ASCS; and
(4) Any case in which a statute explicitly provides for or
prohibits using administrative offset to collect the debt for the type
of debt involved.
(b) Debts due ASCS or CCC may be collected by administrative offset
from amounts payable by ASCS when: (1) The debtor has been provided
written notification of the basis and amount of the debt and has been
given an opportunity to make payment. Such written notification and
opportunity includes notice of the right to pursue an administrative
appeal in accordance with part 780 of this chapter or any other
applicable appeal procedures, if not previously provided;
(2) The debtor has been provided an opportunity to request to
inspect and copy the records of ASCS related to the debt;
(3) The debtor has been given the opportunity to enter into a
written agreement which is acceptable to ASCS for repayment of the
debt;
(4) The debtor has been notified in writing that the debt will be
collected by administrative offset if not paid; and
(5) The debt has not been delinquent for more than ten years or
legal action to enforce the debt has not been barred by an applicable
period of limitation, whichever is later.
(c) Administrative offset shall also be effected against amounts
payable by ASCS:
(1) When requested or approved by the Department of Justice; or
(2) When a person is indebted under a judgment in favor of ASCS or
the United States.
(d) A payment due any person may be offset when there is a breach
of a contract or a violation of ASCS program requirements, and offset
is considered necessary by ASCS to protect the financial interests of
the Government.
(e) ASCS may effect administrative offset against a payment to be
made to a debtor prior to completion of the procedures required by
paragraphs (b)(1) through (b)(4) of this section if: (1) Failure to
take the offset would substantially prejudice ASCS' ability to collect
the debt; and
(2) The time before the payment is to be made does not reasonably
permit the completion of those procedures.
(f) (1) Judgments in favor of the United States may be offset
against any amounts payable by ASCS based on information provided by or
obtained from the Department of Justice. Debts due any agency other
than ASCS which have not been reduced to judgment shall be offset
against amounts payable by ASCS to a debtor when an agency of the U.S.
Government has submitted a written request for offset which is mailed
or hand-delivered to the appropriate ASCS State office, Kansas City
Financial Management Office, Kansas City Management Office, or Kansas
City Commodity Office. Such written request must: (i) Bear the
signature of an authorized representative of the requesting agency;
(ii) Include a certification that all requirements of the law and
the regulations for collection of the debt and for requesting offset
have been complied with;
(iii) State the name, address (including county), and, where
legally available, the Social Security number or employer ID number of
the debtor, and a brief description of the basis of the debt, including
identification of the judgment, if any;
(iv) State the amount of the debt separately as to principal,
interest, penalties, and administrative costs. Interest, if any, shall
be computed on a daily basis to a date shown in the request. The amount
to be offset shall not exceed the principal sum owed by the debtor,
plus interest computed in accordance with the request, and any late
payment interest, penalties and administrative costs that have been
assessed;
(v) Certify that the debtor has not filed for bankruptcy. If the
debtor has filed for bankruptcy, a copy of the order of the bankruptcy
court relieving the agency from the automatic stay must be included;
and
(vi) State the name, address, and telephone number of a contact
person within the agency and the address to which payment should be
sent.
(2) Unless prohibited by law, the head of an agency, or a designee,
may defer or subordinate in whole or in part the right of the agency to
recover through offset all or part of any indebtedness to such agency,
or may withdraw a request for offset. Notice of such action must be
sent to the appropriate ASCS office.
(g)(1) After ASCS has complied with the provisions of this part,
ASCS may request other agencies of the Government to offset amounts
payable by them to persons indebted to ASCS.
(2) In the case of a request to IRS for a tax refund offset, the
provisions at Sec. 792.19 shall apply.
(h) (1) Debts shall be collected by offset in the following order
of priority without regard to the date of the request for such
collection:
(i) Debts to ASCS.
(ii) Debts to other agencies of USDA as determined by ASCS.
(iii) Debts to other government agencies as determined by ASCS.
(2) In the case of multiple debts involving the same debtor, ASCS
may, at its discretion, deviate from the usual order of priority in
applying recovered amounts to debts owed other agencies when considered
to be in the Government's best interest. Such decision shall be made by
ASCS based on the facts and circumstances of the particular case.
(i) Amounts recovered by offset for ASCS and CCC debts but later
found not to be owed to the Government shall be promptly refunded.
(j) The debtor shall be notified whenever any offset action has
been taken.
(k) Offsets made pursuant to this section shall not deprive a
debtor of any right he or she might otherwise have to contest the debt
involved in the offset action either by administrative appeal or by
legal action.
(l) Any action authorized by the provisions of this section may be
taken against amounts payable to a debtor who operates under more than
one name, provided there is identical ownership, or ASCS determines
that the debtor has established an entity for the purpose of avoiding
the payment of the claim or debt.
(m) The amount to be offset shall not exceed the actual or
estimated amount of the debt, including interest, administrative
charges, and penalties, unless the Department of Justice requests that
a larger specified amount be offset.
(n) Offset action will not be taken against payments when: (1) A
debt has been discharged as provided in Sec. 792.16.
(2) ASCS determines such action will unduly interfere with the
administration of an ASCS or CCC program.
(3) The debt has been delinquent for more than ten years or legal
action to enforce the debt due ASCS is barred by an applicable period
of limitation, whichever is later.
Sec. 792.8 Priorities of offsets versus assignments.
(a) No amounts payable to a debtor by ASCS shall be paid to an
assignee until there have been collected any amounts owed by the debtor
except as provided in this section.
(b) A payment which is assigned in accordance with part 1404 of
this title by execution of Form CCC-36 shall be subject to offset for
any debt owed to ASCS or CCC or any judgment in favor of the United
States without regard to the date notice of assignment was accepted by
ASCS or CCC.
(c) A payment which is assigned in accordance with part 1404 of
this title by execution of Form CCC-252 shall be offset: (1) Against
any debt of the assignor entered on the debt record of the applicable
ASCS office prior to the filing of such form with ASCS or CCC, or
(2) At anytime, regardless of the date of filing of such form with
ASCS or CCC, if the debt which is the basis for the offset arises from
a judgment in favor of the United States, or under the same contract
under which the payment is earned by the assignor.
(d) With respect to all other Federal agencies, offset shall be
made of any amounts due any other Federal agency which have not been
reduced to judgment, and which are entered on the debt record of the
appropriate ASCS office prior to the date the notice of assignment was
accepted by ASCS or CCC.
(e) Any amount due and payable to the assignor which remains after
deduction of amounts paid to the assignee shall be available for
offset.
Sec. 792.9 Withholding.
(a) Withholding of a payment prior to the completion of an
applicable offset procedure may be made from amounts payable to a
debtor by ASCS to ensure that the interests of ASCS and the United
States will be protected as provided in this section.
(b) A payment may be withheld to protect the interests of ASCS or
the United States only if ASCS determines that: (1) There has been a
serious breach of contract or violation of program requirements and the
withholding action is considered necessary to protect the financial
interests of ASCS;
(2) There is substantial evidence of violations of criminal or
civil frauds statutes and criminal prosecution or civil frauds action
is of primary importance to program operations of ASCS;
(3) Prior experience with the debtor indicates that collection will
be difficult if amounts payable to the debtor are not withheld;
(4) There is doubt that the debtor will be financially able to pay
a judgment on the claim of ASCS;
(5) The facts available to ASCS are insufficient to determine the
amount to be offset or the proper payee;
(6) A judgment on a claim of ASCS has been obtained; or
(7) Such action has been requested by the Department of Justice.
(c) Except for debts due ASCS or CCC, withholding action by ASCS on
amounts payable to debtors of other Government agencies may not be made
unless requested by the Department of Justice.
Sec. 792.10 Late payment interest, penalty and administrative charges.
(a) Late payment interest provisions of this section shall not
apply:
(1) To debts owed by Federal agencies and State and local
governments. Interest on debts owed by such entities shall be charged
to the extent authorized under the common law or applicable statutory
authority.
(2) If an applicable statute, regulation, agreement, or contract
either prohibits the charging of such interest or specifies the
interest or charges applicable to the debt involved;
(3) If the late payment interest is waived by ASCS in accordance
with Sec. 792.11.
(4) To administrative charges as set forth in paragraph (f) of this
section.
(b) ASCS will assess late payment interest on the full amount of
delinquent debts. For purposes of this section, the term ``full amount
of the delinquent debt'' means the sum of the principal, accrued
program interest, and any other charges which are otherwise due and
owing to ASCS on the delinquent debt at the time the late payment
interest is assessed, except as provided in paragraphs (a)(2) and
(d)(3) of this section.
(c) The late payment interest shall be expressed as an annual rate
of interest which ASCS charges on delinquent debts. The late payment
interest rate shall be equal to the higher of the Treasury Department's
current value of funds rate or the rate of interest assessed under the
Prompt Payment Act, determined as of the date specified in paragraphs
(d)(1) and (d)(2) of this section. The rate of interest assessed under
the Prompt Payment Act was chosen as an alternative rate to ensure that
the Government would recoup interest at a rate which was at least as
high as that which it pays for late payments.
(d) (1) When a debt results from a statute, regulation, contract,
or other agreement with specific provisions for late payment interest
and payment due date, late payment interest shall accrue on the amount
of the debt from the first day the debt became delinquent, unless
otherwise provided by statute.
(2) With respect to debts not resulting from a statute, regulation,
contract, or agreement containing specific provisions for late payment
interest and payment due date, late payment interest shall begin to
accrue from the date on which notice of the debt, including notice of
late payment interest, is first mailed or hand-delivered to the debtor.
(3) The rate of late payment interest initially assessed will be
fixed for the duration of the indebtedness, except when a debtor has
defaulted on a repayment agreement and seeks to enter into a new
agreement. ASCS may then set a new rate of interest which reflects the
late payment interest rate in effect at the time the new agreement is
executed. All charges which accrued, but which were not collected under
the defaulted agreement, shall be added to the principal to be paid
under a new repayment agreement.
(4) The late payment interest on delinquent debts will accrue on a
daily basis.
(e) Except as specified in paragraph (a)(2) of this section, a
penalty charge of three (3) percent per annum will be assessed on any
portion of a debt which remains unpaid ninety (90) days after the date
described in paragraph (d)(1) or (d)(2) of this section, if no
repayment schedule satisfactory to ASCS has been agreed upon. Such
penalty charge will be assessed retroactively from the date late
payment interest began to accrue and applied on a daily basis. Such
rate shall continue to accrue until the delinquent debt has been paid.
(f) ASCS shall assess as administrative charges the additional
costs of processing delinquent debts against the debtor, to the extent
such costs are attributable to the delinquency. Such costs include, but
are not limited to, costs incurred in obtaining a credit report, costs
of employing commercial firms to locate debtor, costs of employing
contractors for collection services, costs of selling collateral or
property to satisfy the debt.
(g) When a debt is paid in partial or installment payments,
payments will be applied first to administrative charges, second to the
penalty charge assessed in accordance with paragraph (e) of this
section and late payment interest, and third to outstanding principal.
Sec. 792.11 Waiver of late payment interest, penalty charge and
administrative charges.
(a) ASCS shall waive the collection of late payment interest and
administrative charges on a debt or any portion of a debt which is paid
within 30 days after the date on which late payment interest began to
accrue.
(b) ASCS may waive the assessment and collection of all or a
portion of the penalty charge on debts which are appealed in accordance
with 7 CFR part 780 or other applicable appeal procedures from either
the date of the appeal or the date such interest began to accrue,
whichever is later, until the date a final administrative determination
is issued. Such waiver shall not apply for any delay due to: (1) The
appellant's request for a postponement of the scheduled hearing;
(2) The appellant's request for an additional time following the
hearing to present additional information or a written closing
statement; or
(3) The appellant's failure to timely present information to the
reviewing authority.
(c) Assessment and collection of late payment interest, the penalty
charge and administrative charges under this part may be waived by ASCS
in full, or in part, if it is determined by the Controller, ASCS, or
his or her designee, that such action is in the best interest of ASCS.
Sec. 792.12 Administrative appeal.
If the opportunity to appeal the determination has not previously
been provided under part 24 of this title or part 780 of this chapter
or any other appeal procedure, a debtor may obtain an administrative
review under part 780 of this chapter, or other applicable appeal
procedures, of ASCS' determination concerning the existence or amount
of a debt, if a request is filed with the authority who made the
determination within 15 days of the date of ASCS' initial demand
letter, unless a longer period is specified in the initial demand
letter.
Sec. 792.13 Additional administrative collection action.
Nothing contained in this part shall preclude the use of any other
administrative or contractual remedy which may be available to ASCS to
collect debts owed to the Government.
Sec. 792.14 Contact with debtor's employing agency.
When a debtor is employed by the Federal Government or is a member
of the military establishment or the Coast Guard, and collection by
offset cannot be accomplished in accordance with 5 U.S.C. 5514, ASCS
may contact the employing agency to arrange for payment of the debt by
allotment or otherwise, in accordance with section 206 of Executive
Order No. 11222, May 8, 1965, 30 FR 6469, 3 CFR, 1964-1965 Comp., p
306.
Sec. 792.15 Prior provision of rights with respect to debt.
ASCS will not provide an administrative appeal with respect to
issues which were raised or should have been raised at any
administrative review requested by the debtor as provided under another
statute or regulation before: (a) Effecting administrative offset;
(b) Referring the debt to private collection or credit reporting
agencies;
(c) Referring the debt for salary offset against the current pay of
a present or former Government employee; or
(d) Referring the debt to IRS for tax refund offset.
Sec. 792.16 Discharge of debts.
(a) Except as required by other applicable regulation or statute, a
debt or part thereof owed ASCS shall be discharged with the concurrence
of the Department of Justice, if applicable, and the records and
accounts on that debt closed in the following situations: (1) When an
obligation or part thereof is discharged in bankruptcy;
(2) When an obligation or part thereof is the subject of a final
judgment entered by a court of competent jurisdiction which is adverse
to ASCS and no appeal will be taken by ASCS;
(3) When a debt or part thereof is compromised and paid, the amount
of such compromise;
(4) When collection of a debt by administrative offset is barred in
accordance with Sec. 792.7(b)(5).
(b) Debts discharged in accordance with this section may be
reported to the Internal Revenue Service pursuant to Sec. 792.20.
Sec. 792.17 Referral of delinquent debts to credit reporting agencies.
(a) This section specifies the procedures that will be followed by
ASCS and the rights that will be afforded to debtors when ASCS reports
delinquent debts to credit reporting agencies.
(b) Before disclosing information to a credit reporting agency in
accordance with this part, ASCS shall review the claim and determine
that it is valid and delinquent.
(c) Before a debt may be referred to a credit reporting agency, the
debtor must be notified, pursuant to Sec. 792.4, of ASCS' intent to
make such a report. Such notification shall include: (1) ASCS' intent
to disclose to a credit reporting agency that the debtor is responsible
for the debt, and that such disclosure will be made not less than 60
days after notification to such debtor.
(2) The information intended to be disclosed to the credit
reporting agency under paragraph (g)(1) of this section.
(3) The debtor's right to enter a repayment agreement on the debt,
including, at the discretion of ASCS, installment payments, and that if
such an agreement is reached, the debt will not be referred to a credit
reporting agency.
(4) The debtor's right to review of this action in accordance with
paragraph (i) of this section.
(d) The debtor shall be notified, in writing at the debtor's last
known address, when ASCS has reported any delinquent debt to a credit
reporting agency.
(e) (1) ASCS shall notify each credit reporting agency to which an
original disclosure of delinquent debt information was made of any
substantial change in the condition or amount of the claim.
(2) ASCS shall promptly verify or correct, as appropriate,
information about the debt on request of a credit reporting agency. The
records of the debtor shall reflect any correction resulting from such
request.
(f) Information reported to a credit reporting agency on delinquent
debts shall be derived from the system of records maintained by ASCS.
(g) ASCS shall limit delinquent debt information disclosed to
credit reporting agencies to: (1) The name, address, taxpayer
identification number, and other information necessary to establish the
identity of the debtor;
(2) The amount, status, and history of the claim; and
(3) The program under which the claim arose.
(h) Reasonable action shall be taken to locate a debtor for whom
ASCS does not have a current address before reporting delinquent debt
information to a credit reporting agency.
(i) (1) Before disclosing delinquent debt information to a credit
reporting agency, ASCS shall, upon request of the debtor, provide for a
review of the debt in accordance with Sec. 792.12. This review shall
only consider defenses or arguments which were not available or could
not have been available at any previous appeal proceeding permitted
under Sec. 792.12.
(2) Upon receipt of a request for review within 30 days from the
date of notice to the debtor of intent to refer delinquent debt
information to a credit reporting agency, ASCS shall suspend its
schedule for disclosure to a credit reporting agency until a final
decision regarding the appropriateness of disclosure to a credit
reporting agency is made.
(3) Upon completion of the review, the reviewing official shall
transmit to the debtor a written notification of the decision. If
appropriate, the debtor shall be notified of the scheduled date on or
after which the debt will be referred to the credit reporting agency.
The debtor will also be notified of any changes from the initial
notification in the information to be disclosed.
(j) (1) In accordance with guidelines established by the
Administrator, ASCS, the responsible claims official shall report to
credit reporting agencies delinquent debt information specified in
paragraph (g) of this section.
(2) The agreements entered into by USDA and credit reporting
agencies shall provide the necessary assurances to ASCS that the credit
reporting agencies to which information will be provided are in
compliance with the provisions of all the laws and regulations of the
United States relating to providing credit information.
(3) ASCS shall not report delinquent debt information to credit
reporting agencies when: (i) The debtor has entered a repayment
agreement covering the debt with ASCS, and such agreement is still
valid; or
(ii) ASCS has suspended its schedule for disclosure of delinquent
debt information pursuant to paragraph (i)(2) of this section.
(k) Disclosures made under this section shall be in accordance with
the requirements of the Privacy Act, as amended (5 U.S.C. 552a).
(l) The provisions of paragraphs (a) through (k) of this section
apply to commercial debts owed by farm producers and all personal
debts. All commercial debts owed by debtors other than farm producers
may be reported to credit reporting agencies without following the
provisions of paragraphs (a) through (k) of this section.
Sec. 792.18 Referral of debts to Department of Justice.
(a) Debts that exceed $100,000.00 exclusive of interest, penalties,
and administrative charges, or such higher amount as may be prescribed,
shall be referred to the Department of Justice before they can be
discharged.
(b) Debts which cannot be compromised or on which collection action
cannot be suspended or terminated, may be referred to the Department of
Justice for collection action. Claims of less than $600.00 exclusive of
interest, penalties, and administrative costs will not be referred to
the Department of Justice unless:
(1) Referral is important to a significant enforcement policy, or
(2) The debtor not only has the clear ability to pay the claim, but
the Government can effectively enforce payment, having due regard for
the exemptions available to the debtor under State and Federal law and
the judicial remedies available to the Government.
Sec. 792.19 Referral of delinquent debts to IRS for tax refund offset.
ASCS may refer legally enforceable delinquent debts to IRS to be
offset against tax refunds due to debtors under 26 U.S.C. 6402, in
accordance with the provisions of 31 U.S.C. 3720A and Treasury
Department regulations.
Sec. 792.20 Reporting discharged debts to IRS.
(a) In accordance with IRS regulations, ASCS may report to IRS as
discharged debts on IRS Form 1099-G the amounts specified in paragraph
(b) of this section.
(b) The following discharged debts may be reported to IRS: (1) The
amount of a debt discharged under a compromise agreement between ASCS
and the debtor, except for compromises made due to doubt about the
Government's ability to prove its case in court for the full amount of
the debt.
(2) The amount of a debt discharged by the running of the statutory
period of limitation for collecting the debt by administrative offset
specified in 31 U.S.C. 3716.
Sec. 792.21 Referral of debts to private collection agencies.
If ASCS' collection efforts have been unsuccessful after 90 days
from the date of delinquency, the head of the agency or his designee
may enter into a contract with any person or organization, under such
terms and conditions as the head of the agency or his designee
considers appropriate for collection services to recover debts owed to
ASCS.
Sec. 792.22 Collection and compromise.
The Administrator, ASCS, or his designee may compromise any claim
of the Government of not more than $100,000.00 exclusive of interest,
penalties, and administrative charges, or such higher amount as may be
prescribed, that has not been referred to another executive or
legislative agency for further collection action.
Signed at Washington, DC, on March 28, 1994.
Bruce R. Weber,
Acting Administrator, Agricultural Stabilization and Conservation
Service.
[FR Doc. 94-8089 Filed 4-4-94; 8:45 am]
BILLING CODE 3410-05-P
