[Title 28 CFR 11]
[Code of Federal Regulations (annual edition) - July 1, 2002 Edition]
[Title 28 - JUDICIAL ADMINISTRATION]
[Chapter I - DEPARTMENT OF JUSTICE]
[Part 11 - DEBT COLLECTION]
[From the U.S. Government Printing Office]
28JUDICIAL ADMINISTRATION12002-07-012002-07-01falseDEBT COLLECTION11PART 11JUDICIAL ADMINISTRATIONDEPARTMENT OF JUSTICE
PART 11--DEBT COLLECTION--Table of Contents
Subpart A--Retention of Private Counsel for Debt Collection
11.1 Delegation of authority.
11.2 Pilot program.
11.3 Compliance with existing laws.
Subpart B--Administration of Debt Collection
11.4 Purpose and scope.
11.5 Delegation of authority.
11.7 Salary adjustments.
11.8 Salary offset.
11.9 Administrative offset.
Subpart C--IRS Tax Refund Offset Provisions for Collection of Debts
Authority: 5 U.S.C. 301, 28 U.S.C. 509, 510, 31 U.S.C. 3718, 3720A.
Source: Order No. 1201-87, 52 FR 24449, July 1, 1987, unless
Subpart A--Retention of Private Counsel for Debt Collection
Sec. 11.1 Delegation of authority.
The Assistant Attorney General for Administration shall exercise the
full authority of the Attorney General to develop and administer the
Department of Justice pilot program for debt collection by private
counsel. This authority shall include, but is not limited to, the
authority to set policies and procedures for the program, and to enter
into contracts for the retention of private counsel. The Assistant
Attorney General for Adminstration can in turn delegate authority
regarding debt collection to subordinate officials as appropriate.
Existing delegations of authority with respect to settlement
determinations on disputed claims shall remain in force. See generally,
28 CFR 0.160 et seq.
Sec. 11.2 Pilot program.
The Assistant Attorney General for Administration, in consultation
the Executive Office for United States Attorneys, shall designate the
districts that will participate in the pilot program. U.S. Attorneys in
the districts chosen for the pilot program, shall direct the full
cooperation and assistance of their respective offices in implementing
the program. Among other things, the U.S. Attorneys shall designate an
Assistant U.S. Attorney to serve as the Contracting Officer's Technical
Representative (COTR) on the contracts with private debt collection
lawyers in their respective districts. The COTRs will be responsible for
assisting the contracting officer by supervising the work of the private
counsel in their respective districts and providing necessary approvals
with respect to the initiation or settlement of lawsuits or similar
Sec. 11.3 Compliance with existing laws.
The procurement of the services of private attorneys for debt
collection shall be accomplished in accordance with the competitive
procurement procedures mandated by Federal law, and set forth in the
Federal Property and Administrative Services Act of 1949, 41 U.S.C. 251
et seq. Best efforts shall be made to encourage extensive participation
by law firms owned and controlled by socially and economically
disadvantaged individuals in the competition for award of these
contracts in the pilot districts. Such efforts shall include, at
minimum, publication of the requirement for these services in the
Commerce Business Daily and in a selection of pertinent legal
publications likely to reach socially and economically disadvantaged
firms, as well as sending written notice of the requirements to bar
associations that have a significant socially and economically
disadvantaged membership in the pilot districts. These special
recruitment efforts will not authorize or permit preferential
consideration to any bidders in selection for award of these contracts.
The Department's Office of Small and Disadvantaged Business Utilization
shall also make its resources available to assist in encouraging broad
participation in this competition.
Subpart B--Administration of Debt Collection
Source: Order No. 1625-92, 57 FR 44107, Sept. 24, 1992, unless
Sec. 11.4 Purpose and scope.
(a) Purpose. The purpose of this subpart is to implement 5 U.S.C.
5514 and 31 U.S.C. 3716, which authorize the collection by salary or
administrative offset of debts owed by persons, organizations, or
entities to the federal government. Generally, however, a debt may not
be collected by such means if it has been outstanding for more than ten
years after the agency's right to collect the debt first accrued. This
subpart is consistent with the Office of Personnel Management (OPM)
regulations on salary offset, codified at 5 CFR part 550, subpart K, and
with regulations on administrative offset published jointly by the
General Accounting Office (GAO) and the Department of Justice
(Department), codified at 4 CFR part 102.
(b) Scope. (1) This subpart establishes Departmental procedures for
the collection of certain debts owed the government.
(2) This subpart applies to collections by the Department from:
(i) Federal employees who are indebted to the Department;
(ii) Employees of the Department who are indebted to other agencies;
(iii) Other persons, organizations, or entities that are indebted to
(3) This subpart does not apply:
(i) To debts or claims arising under the Internal Revenue Code of
1986 (26 U.S.C. et seq.), the Social Security Act (42 U.S.C. 301 et
seq.), or the tariff laws of the United States;
(ii) To a situation to which the Contract Disputes Act (41 U.S.C.
601 et seq.) applies; or
(iii) In any case where collection of a debt is explicitly provided
for or prohibited by another statute (e.g., travel advances in 5 U.S.C.
5705 and employee training expenses in 5 U.S.C. 4108).
(4) Nothing in this subpart precludes the compromise, suspension, or
termination of collection actions where appropriate under the standards
implementing the Federal Claims Collection
Act (31 U.S.C. 3711 et seq.), namely, 4 CFR chapter II and 38 CFR 1.900-
(5) This subpart does not govern debt collection procedures
implemented by other agencies.
Sec. 11.5 Delegation of authority.
Authority to conduct the following activities is hereby delegated to
heads of Department organizations with respect to debts arising in their
(a) Initiate and effectuate the administrative collection process.
(b) Accept or reject compromise offers and suspend or terminate
collection actions where the claim does not exceed $100,000 or such
higher amount as the Attorney General may from time to time prescribe,
exclusive of interest, administrative costs, and penalties as provided
herein, as set forth in 311 U.S.C. 3711(a)(2).
(c) Report to consumer reporting agencies certain data pertaining to
(d) Use offset procedures to effectuate collection.
(e) Take any other action necessary to facilitate and augment
collection in accordance with the policies contained herein and as
otherwise provided by law.
Sec. 11.6 Definitions.
Except where the context clearly indicates otherwise or where the
term is otherwise defined elsewhere in this subpart, the following
definitions shall apply to this subpart.
(a) Agency means:
(1) An executive agency as defined by 5 U.S.C. 105;
(2) A military department as defined by 5 U.S.C. 102;
(3) The United States Postal Service and the Postal Rate Commission;
(4) An agency of the judicial branch, including a court as defined
by 28 U.S.C. 610, the District Court for the Northern Mariana Islands,
and the Judicial Panel on Multidistrict Litigation;
(5) An agency of the legislative branch, including the U.S. Senate
and the U.S. House of Representatives; and
(6) Other entities that are establishments of the federal
(b) Bureau means the Bureau of Prisons, the Drug Enforcement
Administration, the Federal Bureau of Investigation (FBI), Federal
Prison Industries, the Immigration and Naturalization Service, the
Office of Justice Programs, and the United States Marshals Service
(c) Certification means a written statement received by a paying
agency from a creditor agency that requests the paying agency to offset
the salary of an employee and specifies that appropriate procedural
protections have been afforded the employee.
(d) Components means the bureaus, offices, boards, and divisions of
(e) Compromise means the forgiveness of a debt in accordance with 31
U.S.C. 3711(a)(2) and DOJ Order No. 2120.4E. (Copies of this order are
available in accordance with 28 CFR part 16, subpart A.)
(f) Creditor agency means an agency of the federal government to
which the debt is owed.
(g) Department or Justice Department means the Department of Justice
and its components.
(h) Disposable pay means that part of current basic pay, special
pay, incentive pay, retired pay, retainer pay, and, in the case of an
employee not entitled to basic pay, other authorized pay, remaining
after the deduction of any amount required by law to be withheld. The
Department shall allow the following deductions in determining the
amount of disposable pay that is subject to salary offset:
(1) Amounts withheld from benefits payable under title II of the
Social Security Act where the withholding is required the law;
(2) Federal employment taxes;
(3) Amounts mandatorily withheld for the United States Soldiers' and
(4) Fines and forfeiture ordered by a court-martial or by a
(5) Amounts deducted for Medicare;
(6) Federal, state, or local income taxes to the extent authorized
or required by law, but no greater than would be the case if the
employee claimed all dependents to which he or she is entitled and such
amounts for which the employee presents evidence of a tax obligation
supporting the additional withholding;
(7) Health insurance premiums;
(8) Normal retirement contributions (e.g., Civil Service Retirement
deductions, Survivor Benefit Plan payments, or Retired Servicemen's
Family Protection Plan payments), not including amounts deducted for
supplementary coverage; and
(9) Normal life insurance premiums (e.g., Serviceman's Group Life
Insurance and ``Basic Life'' Federal Employee's Group Life Insurance
premiums), not including amounts deducted for supplementary coverage.
(i) Employee means a current employee of the Justice Department or
other agency, including a current member of the Armed Forces or a
Reserve of the Armed Forces of the United States.
(j) Federal Claims Collection Standards (FCCS) means standards
jointly published by the Department and the General Accounting Office in
4 CFR chapter II.
(k) Hearing official means an individual responsible for conducting
any hearing with respect to the existence or amount of a debt claimed
and for rendering a decision on the basis of such hearing. A hearing
official may not be under the supervision or control of the Attorney
General when the Department is the creditor agency but may be an
administrative law judge.
(l) Notice of Intent to Offset or Notice of Intent means a written
notice from a creditor agency to an employee, organization, or entity
stating that the debtor is indebted to the creditor agency and apprising
the debtor of certain procedural rights.
(m) Notice of Salary Offset means a written notice from the paying
agency to an employee after a certification has been issued by a
creditor agency, informing the employee that salary offset will begin at
the next officially established pay interval.
(n) Organization means the bureaus individually and the offices,
boards, and divisions collectively.
(o) Organization head means any Director, Administrator, or
Commissioner of the respective Department bureaus, the Director of the
United States Trustee System, the Director of the Executive Office for
United States Attorneys, and the Assistant Attorney General for
Administration, who shall serve as the organization head for the
offices, boards, and divisions.
(p) Paying agency means the agency of the federal government that
employs the individual who owes a debt to an agency of the federal
government. In some cases, the Department may be both the creditor
agency and the paying agency.
(q)(1) Payroll office means the payroll office in the paying agency
that is primarily responsible for the payroll records and the
coordination of pay matters with the appropriate personnel office with
respect to an employee.
(2) Applicable payroll office means the Federal Bureau of
Investigation voucher and Payroll Section with respect to FBI employees
and the Justice Employee Data Service for all other employees of the
(r) Salary offset coordination officer means an official designated
by an organization head who is responsible for coordinating the debt
collection activities of that organization.
Sec. 11.7 Salary adjustments.
Any negative adjustment to pay arising out of an employee's election
of coverage, or a change in coverage, under a Federal benefits program
requiring periodic deductions from pay shall not be considered
collection of a ``debt'' for the purposes of this subpart if the amount
to be recovered was accumulated over four pay periods or less. In such
cases, the Department need not comply with Sec. 11.8, but it will
endeavor to provide a clear and concise statement in the employee's
earnings statement advising the employee of the previous overpayment at
the time the adjustment is made.
Sec. 11.8 Salary offset.
(a) Notice requirements before offset. Deductions under the
authority of 5 U.S.C. 5514 will not be made unless the creditor agency
provides the employee with a written Notice of Intent to Offset a
minimum of 30 calendar days before salary offset is initiated. When the
Department is the creditor agency, this
Notice of Intent shall be hand-delivered or sent by certified mail to
the Assistant Director, Justice Employee Data Service, or to the Section
Chief, Voucher and Payroll Section, Administrative Services Division,
FBI, who shall then transmit the Notice of Intent to the debtor-
employee. The Notice of Intent shall state:
(1) That the organization head has reviewed the records relating to
the claim and has determined that a debt is owed, including the amount
of the debt and the facts giving rise to the debt;
(2) The organization head's intention to collect the debt by means
of deduction from the employee's current disposable pay account until
the debt and all accumulated interest is paid in full;
(3) A repayment schedule that includes the amount, frequency,
proposed beginning date, and duration of the intended deductions;
(4) The opportunity for the employee to propose an alternative
written schedule for the voluntary repayment of the debt, in lieu of
offset, on terms acceptable to the Department. The employee shall
include a justification in the request for the alternative schedule. The
schedule shall be agreed to and signed by both the employee and the
(5) An explanation of the Department's policy concerning interest,
penalties, and administrative costs, including a statement that such
assessments must be made unless excused in accordance with the Federal
Claims Collection Standards;
(6) The employee's right to inspect and copy all records of the
Department pertaining to the debt claimed or to receive copies of such
records if the debtor is unable personally to inspect the records, due
to geographical or other constraints;
(7) The name, address, and telephone number of an officer or
employee of the Department to whom requests for access to Department
records relating to the debt must be sent;
(8) The employee's right to a hearing conducted by an impartial
hearing official (an administrative law judge or other hearing official
not under the supervision or control of the Attorney General) with
respect to the existence and amount of the debt claimed or the repayment
schedule (i.e., the percentage of disposable pay to be deducted each pay
period), so long as a petition is filed by the employee as prescribed in
paragraph (c)(1) of this section.
(9) The name, address, and telephone number of the officer or
employee of the Department to whom a proposal for voluntary repayment
must be sent; and the name, address, and telephone number of an officer
or employee of the Department who may be contacted concerning procedures
for requesting a hearing;
(10) The method and deadline for requesting a hearing;
(11) That the timely filing of a petition for a hearing on or before
the 15th calendar day following receipt of the Notice of Intent will
stay the commencement of collection proceedings;
(12) The name and address of the office to which the petition should
(13) That the Department will initiate certification procedures to
implement a salary offset not less than 30 days from the date of receipt
of the Notice of Intent to Offset, unless the employee files a timely
petition for a hearing;
(14) That a final decision on whether a hearing will be held (if one
is requested) will be issued at the earliest practical date, but not
later than 60 days after the filing of the petition requesting the
(15) That any knowingly false or frivolous statements,
representations, or evidence may subject the employee to:
(i) Disciplinary procedures appropriate under 5 U.S.C. chapter 75, 5
CFR part 752, or any other applicable statutes or regulations;
(ii) Penalties under the False Claims Act, 31 U.S.C. 3729-3731, or
under any other applicable statutory authority; or
(iii) Criminal penalties under 18 U.S.C. 286, 287, 1001, and 1002 or
under any other applicable statutory authority;
(16) Any other rights and remedies available to the employee under
statutes or regulations governing the program for which the collection
is being made;
(17) That unless there are applicable contractual or statutory
provisions to the contrary, amounts paid on or deducted from debts that
are later waived or found not to be owed to the United States will be
promptly refunded to the employee, and
(i) Interest shall be paid on any amount paid on or deducted from a
debt that is found not to be owed to the United States; and
(ii) Interest shall not be paid on any amount paid on or deducted
from a debt that is later waived; and
(18) That proceedings with respect to such debt are governed by 5
(b) Review of Departmental records related to the debt. (1) An
employee who desires to inspect or copy Department records related to
the debt must send a letter to the official designated in the Notice of
Intent requesting access to the relevant records. The letter must be
received in the office of the salary offset coordination official within
15 days after the employee's receipt of the Notice of Intent.
(2) In response to a timely request submitted by the debtor, the
designated salary offset coordination official will notify the employee
of the location and time when the employee may inspect and copy records
related to the debt.
(3) If the employee is unable personally to inspect the records, due
to geographical or other constraints, the salary offset coordination
official shall arrange to send copies of such records to the employee.
(c) Opportunity for a hearing where the Department is the creditor
agency. (1) Request for a hearing. (i) An employee who requests a
hearing on the existence or amount of the debt held by the Department or
on the offset schedule proposed by the Department must send such request
to the office designated in the Notice of Intent. The request or
petition for a hearing must be received by the designated office on or
before the 15th calendar day following receipt by the employer of the
(ii) The employee must specify whether an oral hearing is requested.
If an oral hearing is desired, the request should explain why the matter
cannot be resolved by review of the documentary evidence alone. The
request must be signed by the employee and must fully identify and
explain with reasonable specificity all the facts, evidence, and
witnesses, if any, that the employee believes support his or her
(2) Failure to timely submit. If the employee files a request or
petition for hearing after the expiration of the 15-calendar-day period
provided for in paragraph (c)(1) of this section, the organization head
may accept the request if the employee can show that the delay was the
result of circumstances beyond his or her control or that he or she
failed to receive actual notice of the filing deadline.
(3) Obtaining the services of hearing official. (i) When the debtor
is not a Department employee and the Department cannot provide a prompt
and appropriate hearing before an administrative law judge or other
hearing official, the Department may request a hearing official from an
agent of the paying agency, as designated in 5 CFR part 581, appendix A,
or as otherwise designated by the paying agency.
(ii) When the debtor is a Department employee, the Department may
contact any agent of another agency, as designated in 5 CFR part 581,
appendix A, or as otherwise designated by the agency, to request a
(4) Procedure--(i) Notice. After the employee requests a hearing,
the hearing official shall notify the employee of the form of the
hearing to be provided. If the hearing will be oral, the notice shall
set forth the date, time, and location of the hearing, which must occur
no more than 30 days after the request is received. If the hearing will
be conducted by examination of documents, the employee shall be notified
within 30 days that he or she should submit evidence and arguments in
writing to the hearing official.
(ii) Oral hearing. An employee who requests an oral hearing shall be
provided an oral hearing if the hearing official determines that the
matter cannot be resolved by review of documentary evidence alone (e.g.,
when an issue of credibility or veracity is involved). The hearing need
not be an adversarial adjudication, and rules of evidence need not
apply. Oral hearings may take the form of, but are not limited to:
(A) Informal conferences with the hearing official in which the
employee and agency representative are given full opportunity to present
evidence, witnesses, and argument;
(B) Informal meetings in which the hearing examiner interviews the
(C) Formal written submissions followed by an opportunity for oral
Witnesses who testify in oral hearings shall do so under oath or
(iii) Documentary hearing. If the hearing official determines that
an oral hearing is not necessary, he or she shall make the determination
based upon a review of the written record.
(iv) Record. The hearing official shall maintain a summary record of
any hearing conducted under this section.
(5) Date of decision. The hearing official shall issue a written
opinion stating his or her decision, based upon all evidence and
information developed at the hearing, as soon as practicable after the
hearing, but not later than 60 days after the date on which the petition
was received by the Department, unless the hearing was delayed at the
request of the employee, in which case the 60 day decision period shall
be extended by the number of days by which the hearing was postponed.
Decisions not timely rendered shall result in the waiver of penalty and
interest costs. The decision of the hearing official shall be final.
(6) Content of decision. The written decision shall include:
(i) A summary of the facts concerning the origin, nature, and amount
of the debt;
(ii) The hearing official's findings, analysis, and conclusions; and
(iii) The terms of any repayment schedules, if applicable.
(7) Failure to appear. If, in the absence of good cause shown (e.g.,
illness), the employee or the representative of the Department fails to
appear, the hearing official shall proceed with the hearing as
scheduled, and make his or her determination based upon the oral
testimony presented and the documentation submitted by both parties. At
the request of both parties, the hearing official may schedule a new
hearing date. Both parties shall be given reasonable notice of the time
and place of this new hearing.
(d) Certification where the Department is the creditor agency. (1)
The salary offset coordination officer shall provide a certification to
the appropriate payroll office in all cases where:
(i) The hearing official determines that a debt exists; or
(ii) The employee admits the existence and amount of the debt by
failing to request a hearing.
(2) The certification must be in writing and must state:
(i) That the employee owes the debt;
(ii) The amount and basis of the debt;
(iii) The date the government's right to collect the debt first
(iv) That the Department's regulations have been approved by OPM
pursuant to 5 CFR part 550, subpart K;
(v) If the collection is to be made by lump-sum payment, the amount
and data such payment will be collected;
(vi) If the collection is to be made in installments, the number of
installments to be collected, the amount of each installment, and the
commencing date of the first installment, if a date other than the next
officially established pay period; and
(vii) The date the employee was notified of the debt, the action(s)
taken under 5 U.S.C. 5514(a), and the dates such actions were taken.
(e) Voluntary repayment agreements as alternative to salary offset
where the Department is the creditor agency. (1) In response to a Notice
of Intent, an employee may propose to repay the debt in accordance with
scheduled installment payments. Any employee who wishes to repay a debt
without salary offset shall submit in writing a proposed agreement to
repay the debt. The proposal shall set forth a proposed repayment
schedule. Any proposal under this subsection must be received by the
office of the official designated in the notice within 15 calendar days
after receipt of the Notice of Intent.
(2) In response to a timely proposal by the debtor, the organization
head shall notify the employee whether the employee's proposed written
agreement for repayment is acceptable. It is within the organization
head's discretion to accept or reject a repayment agreement.
(3) If the organization head decides that the proposed repayment
agreement is unacceptable, the employee shall have 15 days from the date
he or she received notice of the decision in which to file a petition
for a hearing.
(4) If the organization head decides that the proposed repayment
agreement is acceptable, the arrangement shall be put in writing and
signed by both the employee and the organization head.
(f) Special review where the Department is the creditor agency. (1)
An employee subject to salary offset or a voluntary repayment agreement
may, at any time, request a special review by the Department of the
amount of the salary offset or voluntary payment, based on materially
changed circumstances, including but not limited to catastrophic
illness, divorce, death, or disability.
(2) In determining whether, as a result of materially changed
circumstances, an offset would prevent the employee from meeting
essential subsistence expenses (costs incurred for food, housing,
clothing, transportation, and medical care), the employee shall submit a
detailed statement and supporting documents for the employee, his or her
spouse, and dependents indicating:
(i) Income for all sources;
(iv) Number of dependents;
(v) Expenses for food, housing, clothing, and transportation;
(vi) Medical expenses; and
(vii) Exceptional expenses, if any.
(3) If the employee requests a special review under this paragraph,
the employee shall file an alternative proposed offset or payment
schedule and a statement, with supporting documents, showing why the
current salary offset or payments result in an extreme financial
hardship to the employee.
(4) The organization head shall evaluate the statement and
supporting documents and determine whether the original offset or
repayment schedule imposes an extreme financial hardship on the
employee. The organization head shall notify the employee in writing
within 30 days of such determination, including, if appropriate, his or
her acceptance of a revised offset or payment schedule.
(5) If the special review results in a revised offset or repayment
schedule, the salary offset coordination officer shall provide a new
certification to the paying agency.
(g) Notice of salary offset where the Department is the paying
agency. (1) Upon receipt of proper certification from the creditor
agency, the applicable payroll office shall send the employee a written
notice of salary offset. Such notice shall advise the employee that:
(i) The certification has been received from the creditor agency;
(ii) Salary offset will be initiated at the next officially
established pay interval.
(2) The applicable payroll office shall provide a copy of the notice
to the creditor agency and advise such agency of the dollar amount to be
offset and the pay period when the offset will begin.
(h) Procedures for salary offset where the Department is the paying
agency--(1) Generally. (i) The salary offset coordination officer shall
coordinate salary deductions under this section.
(ii) The applicable payroll office shall determine the amount of an
employee's disposable pay and offset salary.
(iii) Deductions shall begin the pay period following receipt by the
applicable payroll office of the certification or as soon thereafter as
(2) Types of collection--(i) Lump-sum payment. If the amount of the
debt is equal to or less than 15 percent of the employee's disposable
pay, such debt ordinarily will be collected in one lump-sum payment.
(ii) Installment deductions. Installment deductions will be made
over a period not greater than the anticipated period of employment. The
size and frequency of installment deductions will bear a reasonable
relation to the size of the debt and the employee's ability to pay.
However, the amount deducted from any period will not exceed 15 percent
of the disposable pay from which the deduction is made unless the
employee has agreed in writing to the deduction of a greater amount. The
installment payment should normally be sufficient in size and frequency
to liquidate the debt in no more than three
years. Installment payments of less than $50 should be accepted only in
the most unusual circumstances.
(iii) Lump-sum deductions from final check. A lump-sum deduction
exceeding 15 percent of disposable pay may be made pursuant to 31 U.S.C.
3716 from any final salary payment due a former employee in order to
liquidate a debt, whether the former employee was separated voluntarily
(iv) Lump-sum deductions from other sources. Whenever an employee
subject to salary offset is separated from the Department, and the
balance of the debt cannot be liquidated by offset of the final salary
check, the Department, pursuant to 31 U.S.C. 3716, may offset any later
payments of any kind against the balance of the debt.
(3) Multiple debts. Where two or more creditor agencies are seeking
salary offset, or where two or more debts are owed to a single creditor
agency, the applicable payroll office may, at its discretion, determine
whether one or more debts should be offset simultaneously within the 15
percent limitation. The best interests of the government shall be the
primary consideration in the determination by the payroll office of the
order of the debt collection.
(4) Precedence of salary deductions by the Department. (i) For
Department employees, debts owed shall be paid out of disposable pay in
the following order of precedence:
(A) Indebtedness due the Department.
(B) Indebtedness due other agencies.
(C) Garnishments for alimony and child support payments.
(D) Court-ordered bankruptcy payments under the Bankruptcy Code.
(E) Optional life insurance premiums.
(F) Other voluntary deductions including allotments and assignments,
in the order determined by the paying agency.
(ii) In the event that a debt to the Department is certified while
an employee is subject to salary offset to repay another agency, the
applicable payroll office may decide whether the debt to the other
agency should be repaid in full before collecting the Department's claim
or whether changes should be made in the salary deduction being sent to
the other agency. If debts owed to the Department can be collected in
one pay period, the payroll office may suspend the salary offset to the
other agency for that pay period in order to liquidate the Department's
(i) Coordinating salary offset with other agencies--(1)
Responsibility of the Department as the creditor agency. (i) The salary
offset coordination officer shall be responsible for:
(A) Arranging for hearing upon proper petition by a federal
(B) Preparing the Notice of Intent to Offset consistent with the
requirements of paragraph (a) of this section;
(C) Obtaining hearing officials from other agencies pursuant to
paragraph (c)(3) of this section; and
(D) Ensuring that each certification of debt is sent to a paying
agency pursuant to paragraph (d)(2) of this section.
(ii) Upon completion of the procedures established in paragraphs (a)
through (f) of this section, the salary offset coordination officer
shall submit a debt claim and an installment agreement or other
instruction on the payment schedule, if applicable, to the employee's
(iii) If the employee is in the process of separating from
government employment, the Department shall submit its debt claim to the
employee's paying agency for collection by lump-sum deductions from the
employee's final check. The paying agency shall certify the total amount
of its collection and furnish a copy of the certification to the
Department and to the employee.
(iv) If the employee is already separated and all payments due from
his or her former paying agency have been paid, the Department may,
unless otherwise prohibited, request that money due and payable to the
employee from the federal government be administratively offset to
collect the debt.
(v) When an employee transfers to another paying agency, the
Department shall not repeat the procedures described in paragraphs (a)
through (f) of this section in order to resume collecting the debt.
Instead, the Department shall review the debt upon receiving the former
paying agency's notice
of the employee's transfer and shall ensure the collection is resumed by
the new paying agency.
(2) Responsibility of the Department as the paying agency--(i)
Complete claim. When the Department receives a certified claim from a
creditor agency, the employee shall be given written notice of the
certification, the date salary offset will begin, and the amount of the
periodic deductions. Deductions shall be scheduled to begin at the next
officially established pay interval or as soon thereafter as possible.
(ii) Incomplete claim. When the Department receives an incomplete
certification of debt from a creditor agency, the Department shall
return the debt claim with notice that procedures under 5 U.S.C. 5514
and 5 CFR 550.1104 must be followed and that a properly certified debt
claim must be received before action will be taken to collect from the
employee's current pay account.
(iii) Review. The Department is not authorized to review the merits
of the creditor agency's determination with respect to the amount or
validity of the debt certified by the creditor agency.
(iv) Employees who transfer from one paying agency to another. If,
after the creditor agency has submitted the debt claim to the
Department, the employee transfers to an agency outside the Department
before the debt is collected in full, the Department must certify the
total amount collected on the debt. One copy of the certification shall
be furnished to the employee and one copy shall be sent to the creditor
agency along with notice of the employee's transfer.
(j) Interest, penalties, and administrative costs. Where the
Department is the creditor agency, it shall assess interest, penalties,
and administrative costs pursuant to 31 U.S.C. 3717 and 4 CFR 102.13.
(k) Refunds. (1) Where the Department is the creditor agency, it
shall promptly refund any amount deducted under the authority of 5
U.S.C. 5514 when:
(i) The debt is compromised or otherwise found not to be owing to
the United States; or
(ii) An administrative or judicial order directs the Department to
make a refund.
(2) Unless required by law or contract, refunds under this paragraph
(k) shall not bear interest.
(l) Request from a creditor agency for the services of a hearing
official. (1) The Department may provide a hearing official upon request
of the creditor agency when the debtor is employed by the Department and
the creditor agency cannot provide a prompt and appropriate hearing
before a hearing official furnished pursuant to another lawful
(2) The Department may provide a hearing offical upon request of a
creditor agency when the debtor works for the creditor agency and that
agency cannot arrange for a hearing official.
(3) The salary offset coordination officer shall arrange for
qualified personnel to serve as hearing officials.
(4) Services rendered under this paragraph (l) shall be provided on
a fully reimbursable basis pursuant to 31 U.S.C. 1535.
(m) Non-waiver of rights by payments. A debtor's payment, whether
voluntary or involuntary, of all or any portion of a debt being
collected pursuant to this section shall not be construed as a waiver of
any rights that the debtor may have under any statute, regulation, or
contract except as otherwise provided by law or contract.
Sec. 11.9 Administrative offset.
(a) Collection. The organization head may collect a claim pursuant
to 31 U.S.C. 3716 from a person, organization, or entity other than an
agency of the United States Government by administrative offset of
monies other than salaries payable by the government. Collection by
administrative offset shall be undertaken where the claim is certain in
amount, where offset is feasible and desirable and not otherwise
prohibited, where the applicable statute of limitations has not expired,
and where the offset is in the best interest of the United States.
(b) Withholding of payment. Prior to the completion of the
procedures described in paragraph (c) of this section, the Department
may withhold a payment to be made to a debtor, if:
(1) Failure to withhold payment would substantially prejudice the
Department's ability to collect the debt; and
(2) The time before the payment is to be made does not reasonably
permit completion of the procedures described in paragraph (c) of this
section. Such prior withholding shall be followed promptly by the
completion of the procedures described in paragraph (c) of this section.
(c) Debtor's rights. Unless the procedures described in paragraph
(b) of this section are used, prior to collecting any claim by
administrative offset, the organization head shall provide the debtor
with the following:
(1) Written notification of the nature and amount of the claim, the
intention of the organization head to collect the claim through
administrative offset, and a statement of the rights of the debtor under
(2) An opportunity to inspect and copy the records of the Department
with respect to the claim;
(3) An opportunity to have the Department's determination of
indebtedness reviewed by the organization head. Any request for review
by the debtor shall be in writing and be submitted to the Department
within 30 days of the date of the notice of the offset. The organization
head may waive the time limit for requesting review for good cause shown
by the debtor; and
(4) An opportunity to enter into a written agreement for the
repayment of the amount of the claim at the discretion of the
If the procedures described in paragraph (b) of this section are
employed, the procedures described in this paragraph shall be effected
(d) Interest. The Department is authorized to assess interest and
related charges on debts that are not subject to 31 U.S.C. 3717 to the
extent authorized under the common law or other applicable statutory
Subpart C--IRS Tax Refund Offset Provisions for Collection of Debts
Source: Order No. 1792-93, 58 FR 51223, Oct. 1, 1993, unless
Sec. 11.10 Scope.
The provisions of 26 U.S.C. 6402(d) and 31 U.S.C. 3720A authorize
the Secretary of the Treasury, acting through the Internal Revenue
Service (IRS), to offset a delinquent debt owed to the United States
Government from the tax refund due a taxpayer when other collection
efforts have failed to recover the amount due. The purpose of these
statutes is to improve the ability of the Government to collect money
owed it while granting the debtor notice and certain other protections.
This subpart authorizes the collection of debts owed to the United
States Government by persons, organizations, and entities by means of
offsetting any tax refunds due to the debtor by the IRS. It allows
referral to the IRS for collection of debts that are past due and
legally enforceable but not reduced to judgment and debts that have been
reduced to judgment.
Sec. 11.11 Definitions.
(a) Debt. Debt means money owed by an individual, organization or
entity from sources which include loans insured or guaranteed by the
United States and all other amounts due the United States from fees,
leases, services, overpayments, civil and criminal penalties, damages,
interest, fines, administrative costs, and all other similar sources. A
debt becomes eligible for tax refund offset procedures if it cannot
currently be collected pursuant to the salary offset procedures of 5
U.S.C. 5514(a)(1) and is ineligible for administrative offset under 31
U.S.C. 3716(a) by reason of 31 U.S.C. 3716(c)(2), or cannot currently be
collected by administrative offset under 31 U.S.C. 3716(a) against
amounts payable to the debtor by the Department of Justice. A non-
judgment debt is eligible for tax refund offset procedures if the
Department's or the referring agency's right of action accrued more than
three months but less than ten years before the offset is made. Judgment
debts are eligible for referral at any time. Debts that have been
referred to the Department of Justice by other agencies for collection
are included in this definition.
(b) Past due. All accelerated debts and all judgment debts are past
purposes of this section. Such debts remain past due until paid in full.
An accelerated debt is past due if, at the time of the notice required
by Sec. 11.12(b), any part of the debt had been due, but not paid, for
at least 90 days. Such an unaccelerated debt remains past due until paid
to the current amount of indebtedness.
(c) Notice. Notice means the information sent to the debtor pursuant
to Sec. 11.12(b). The date of the notice is the date shown on the notice
letter as its date of issuance.
(d) Dispute. A dispute is a written statement supported by
documentation or other evidence that all or part of an alleged debt is
not past due or legally enforceable, that the amount is not the amount
currently owed, that the outstanding debt has been satisfied, or, in the
case of a debt reduced to judgment, that the judgment has been satisfied
Sec. 11.12 Procedures.
(a) The Department may refer any past due, legally enforceable non-
judgment debt of an individual, organization or entity to the IRS for
offset if the Department's or the referring agency's rights of action
accrued more than three months but less than ten years before the offset
is made. Debts reduced to judgment may be referred at any time. Debts in
amounts lower than $25.00 are not subject to referral.
(b) The Department will provide the debtor with written notice of
its intent to offset before initiating the offset. Notice will be mailed
to the debtor at the current address of the debtor, as determined from
information obtained from the IRS pursuant to 26 U.S.C. 6103(m)(2), (4),
(5) or from information regarding the debt maintained by the Department
of Justice. The notice sent to the debtor will state the amount of the
debt and inform the debtor that:
(1) The debt is past due;
(2) The Department intends to refer the debt to the IRS for offset
from tax refunds that may be due to the taxpayer;
(3) The Department intends to provide information concerning the
delinquent debt exceeding $100 to a consumer reporting bureau (credit
bureau) unless such debt has already been disclosed; and
(4) The debtor has 65 days from the date of notice in which to
present evidence that all or part of the debt is not past due, that the
amount is not the amount currently owed, that the outstanding debt has
been satisfied, or, if a judgment debt, that the debt has been
satisfied, or stayed, before the debt is reported to a consumer
reporting agency, if applicable, and referred to the IRS for offset from
(c) If the debtor neither pays the amount due nor presents evidence
that the amount is not past due or is satisfied or stayed, the
Department will report the debt to a consumer reporting agency at the
end of the notice period, if applicable, and refer the debt to the IRS
for offset from the taxpayer's federal tax refund.
(d) A debtor may request a review by the Department if the debtor
believes that all or part of the debt is not past due or is not legally
enforceable, or, in the case of a judgment debt, that the debt has been
stayed or the amount satisfied, as follows:
(1) The debtor must send a written request for review to the address
provided in the notice.
(2) The request must state the amount disputed and the reasons why
the debtor believes that the debt is not past due, is not legally
enforceable, has been satisfied, or, if a judgment debt, has been
satisfied or stayed.
(3) The request must include any documents that the debtor wishes to
be considered or state that additional information will be submitted
within the time permitted.
(4) If the debtor wishes to inspect records establishing the nature
and amount of the debt, the debtor must request an opportunity for such
an inspection in writing. The office holding the relevant records shall
make them available for inspection during normal business hours.
(5) The request for review and any additional information submitted
pursuant to the request must be received by the Department at the
address stated in the notice within 65 days of the date of issuance of
(6) The Department will review disputes and shall consider its
any documentation and arguments submitted by the debtor. The
Department's decision to refer to the IRS any disputed portion of the
debt shall be made by the Assistant Attorney General for Administration
of his designee, who shall hold a position at least one supervisory
level above the person who made the decision to offset the debt. The
Department shall send a written notice of its decision to the debtor.
There is no administrative appeal of this decision.
(7) If the evidence presented by the debtor is considered by a non-
Departmental agent or other entities or persons acting on the
Department's behalf, the debtor will be accorded at least 30 days from
the date the agent or other entity or person determines that all or part
of the debt is past-due and legally enforceable to request review by an
officer or employee of the Department of any unresolved dispute.
(8) Any debt that previously has been reviewed pursuant to this
section or any other section of this part, or that has been reduced to a
judgment, may not be disputed except on the grounds of payments made or
events occurring subsequent to the previous review of judgment.
(e) The Department will notify the IRS of any change in the amount
due promptly after receipt of payments or notice of other reductions.
(f) In the event that more than one debt is owed, the IRS refund
offset procedure will be applied in the order in which the debts became