PART 845—FEDERAL EMPLOYEES RETIREMENT SYSTEM—DEBT COLLECTION Authority: 5 U.S.C. 8461. Source: 52 FR 5931, Feb. 27, 1987; 52 FR 23014, June 17, 1987, unless otherwise noted. Subpart A—General Provisions § 845.101 Purpose. (a) This part regulates— (1) The recovery of overpayments of FERS basic benefits; (2) The standards for waiver of recovery of overpayments of FERS basic benefits; and (3) The use of FERS basic benefits to recover debts due the United States. (b) This subpart states the rules of general applicability to this part. § 845.102 Definitions. In this subpart— FERS FERS basic benefits Fund § 845.103 Prohibition against collection of debts. (a) Debts may be collected from FERS basic benefits only to the extent expressly authorized by Federal statute. (b) When collection of a debt from FERS basic benefits is authorized under paragraph (a) of this section, the collection will be made in accordance with this part. § 845.104 Status of debts. A payment by OPM to a debtor because of an OPM error or the failure of the creditor agency to properly and/or timely submit a debt claim under subpart D of this part, does not erase the debt or affect the validity of the claim by the creditor agency. § 845.105 Termination and suspension of collection actions. The termination or suspension of a collection action, other than waiver of an overpayment under subparts B and C of this part, are controlled exclusively by the Federal Claims Collection Standards, chapter II of title 4, Code of Federal Regulations. Subpart B—Collection of Overpayment Debts § 845.201 Purpose. This subpart prescribes procedures to be followed by the Office of Personnel Management (OPM), which are consistent with the Federal Claims Collection Standards (FCCS) (Chapter II of title 4, Code of Federal Regulations), in the collection of debts owed to the Fund. § 845.202 Scope. This subpart covers the collection of debts due the Fund, with the exception of the collection of court-imposed judgments, amounts referred to the Department of Justice because of fraud, and amounts collected from back pay awards in accordance with § 550.805(e)(2) of this chapter. § 845.203 Definitions. In this subpart— Additional charges Annuitant Compromise Consumer reporting agency Debt Delinquent FCCS Offset Reconsideration (a) Proper application of law and regulation; and (b) Correctness of the mathematical computation. Repayment schedule Retirement fund Voluntary repayment agreement Waiver § 845.204 Processing. (a) Notice. (1) The reason for and the amount of the debt; (2) The date on which the full payment is due; (3) OPM's policy on interest, penalties, and administrative charges; (4) That offset is available, the types of payment(s) to be offset, the repayment schedule, the right to request an adjustment in the repayment schedule and the right to request a voluntary repayment agreement in lieu of offset; (5) The individual's right to inspect and/or receive a copy of the Government's records relating to the debt; (6) The method and time period (30 calendar days) for requesting reconsideration, waiver, and/or compromise and, in the case of offset, an adjustment to the repayment schedule; (7) The standards used by OPM for determining entitlement to waiver and compromise; (8) The right to a hearing by the Merit Systems Protection Board on a waiver request (if OPM's waiver decision finds the individual liable) in accordance with paragraph (c)(2) of this section; and (9) The fact that a timely filing of a request for reconsideration, waiver and/or compromise, or a later timely appeal of a reconsideration or waiver denial to the Merit Systems Protection Board, will stop collection proceedings, unless (i) failure to take the offset would substantially prejudice the Government's ability to collect the debt; and (ii) the time before the payment is to be made does not reasonably permit the completion of these procedures. (b) Requests for reconsideration, waiver, and/or compromise. (i) Were not notified of the time limit and were not otherwise aware of it; or (ii) Were prevented by circumstances beyond their control from making the request within the time limit. (2) When a request for reconsideration, waiver, and/or compromise covered by this paragraph is properly filed before the death of the debtor, it will be processed to completion unless the relief sought is nullified by the debtor's death. (3) Individuals requesting reconsideration, waiver, and/or compromise will be given a full opportunity to present any pertinent information and documentation supporting their position. (4) An individual's request for waiver will be evaluated on the basis of the standards set forth in subpart C of this part. An individual's request for compromise will be evaluated on the basis of standards set forth in the FCCS (4 CFR part 103). (c) Reconsideration, waiver, and/or compromise decisions. (2) After consideration of all pertinent information, OPM will issue a written decision. The decision will state the extent of the individual's liability, and, for waiver and compromise requests, whether the debt will be waived or compromised. If the individual is determined to be liable for all or a portion of the debt, the decision will reaffirm or modify the conditions for the collection previously proposed under paragraph (a) of this section. The decision will state the individual's right to appeal to the Merit Systems Protection Board as provided by § 1201.3 of this title, and, in the case of a denial of waiver or reconsideration request that a timely appeal will stop collection of the debt. § 845.205 Collection of debts. (a) Means of collection. (b) Additional charges. (1) Collection would be against equity and good conscience under the standards prescribed in §§ 845.303 through 845.305; or (2) Waiver would be in the best interest of the United States. (c) Collection in installments. (2) However, installments payments may be effected when— (i) The debtor establishes that he or she is financially unable to pay in one lump sum; or (ii)(A) The benefit payable is insufficient to make collection in one lump sum; (B) The debtor fails to respond to a demand for full payment; and (C) Offset is available. (3) The amount of the installment payments will be set in accordance with the criteria in 4 CFR 102.11. (d) Commencement of collection. (2) The procedures identified in § 845.204 will not be applied when the debt is caused by a retroactive adjustment in the periodic rate of annuity or any deduction taken from annuity when the adjustment is a result of the annuitant's election of different entitlements under law, if the adjustment is made within 120 days of the effective date of the election; or interim estimated payments made before the formal determination of entitlement to annuity, if the amount is recouped from the total annuity payable on the first day of the month following the last advance payment or the date the formal determination is made, whichever is later. § 845.206 Collection by administrative offset. (a) Offset from retirement payments. (b) Offset from other payments Administrative offset. et seq. (ii) In determining whether to collect claims by means of administrative offset after the expiration of the 6-year limitation provided in 5 U.S.C. 2415, the Director or his or her designee will determine the cost effectiveness of leaving a claim unresolved for more than 6 years. This decision will be based on such factors as the amount of the debt, the cost of collection, and the likelihood of recovering the debt. (2) Salary offset. et seq. § 845.207 Use of consumer reporting agencies. (a) Notice. (1) The payment is overdue; (2) OPM intends, after 60 days, to make a report as described in paragraph (b) of this section to a consumer reporting agency; (3) The debtor's right to dispute the liability has been exhausted under § 845.204; and (4) The debtor may suspend OPM action on referral by paying the debt in one lump sum or making payments current under a repayment schedule. (b) Report. (1) The individual's name, address, taxpayer identification number, and any other information necessary to establish the identity of the individual; (2) The amount, status, and history of the debt; and (3) The fact that the debt arose in connection with the administration of FERS or CSRS. (c) Subsequent reports. § 845.208 Referral to a collection agency. (a) OPM retains the responsibility for resolving disputes, compromising claims, referring the debt for litigation, or suspending or terminating collection action. (b) OPM may refer certain debts to commercial collection agencies under the following conditions: (1) All processing required by § 845.204 has been completed before the debt is released; and (2) A contract for collection services has been negotiated. § 845.209 Referral for litigation. From time to time and in a manner consistent with the General Accounting Office's and the Justice Department's instructions, OPM will refer certain overpayments to the Justice Department for litigation. Referral for litigation will suspend processing under this subpart. Subpart C—Standards for Waiver of Overpayments § 845.301 Conditions for waiver. Recovery of an overpayment from the Fund may be waived pursuant to section 8470(b), of title 5, United States Code, when (a) the annuitant is without fault and (b) recovery would be against equity and good conscience. When it has been determined that the recipient of an overpayment is ineligible for waiver, the individual is nevertheless entitled to an adjustment in the recovery schedule if he or she shows that it would cause him or her financial hardship to make payment at the rate scheduled. § 845.302 Fault. A recipient of an overpayment is without fault if he or she performed no act of commission or omission that resulted in the overpayment. The fact that the Office of Personnel Management (OPM) or another agency may have been at fault in initiating an overpayment will not necessarily relieve the individual from liability. (a) Considerations. (1) Whether payment resulted from the individual's incorrect but not necessarily fraudulent statement, which he or she should have known to be incorrect; (2) Whether payment resulted from the individual's failure to disclose material facts in his or her possession, which he or she should have known to be material; or (3) Whether he or she accepted a payment that he or she knew or should have known to be erroneous. (b) Mitigation factors. § 845.303 Equity and good conscience. Recovery is against equity and good conscience when— (a) It would cause financial hardship to the person from whom it is sought; (b) The recipient of the overpayment can show (regardless of his or her financial circumstances) that due to the notice that such payment would be made or because of the incorrect payment he or she either has relinquished a valuable right or has changed positions for the worse; or (c) Recovery would be unconscionable under the circumstances. § 845.304 Financial hardship. Financial hardship may be deemed to exist in, but not limited to, those situations when the annuitant from whom collection is sought needs substantially all of his or her current income and liquid assets to meet current ordinary and necessary living expenses and liabilities. (a) Considerations. (1) The individual's financial ability to pay at the time collection is scheduled to be made. (2) Income to other family member(s), if such member's ordinary and necessary living expenses are included in expenses reported by the annuitant. (b) Exemptions. § 845.305 Ordinary and necessary living expenses. An individual's ordinary and necessary living expenses include rent, mortgage payments, utilities, maintenance, transportation, food, clothing, insurance (life, health, and accident), taxes, installment payments, medical expenses, support expenses for which the annuitant is legally responsible, and other miscellaneous expenses that the individual can establish as being ordinary and necessary. § 845.306 Waiver precluded. Waiver of an overpayment cannot be granted when— (a) The overpayment was obtained by fraud; or (b) The overpayment was made to an estate. § 845.307 Burdens of proof. (a) Burden of OPM. (b) Burden of annuitant. Subpart D—Agency Requests to OPM for Recovery of a Debt From the Civil Service Retirement Fund § 845.401 Purpose. This subpart prescribes the procedures to be followed by a Federal agency when it requests the Office of Personnel Management (OPM) to recover a debt owed to the United States by administrative offset against money due and payable to the debtor from the Fund. This subpart also prescribes the procedures that OPM must follow to make these administrative offsets. § 845.402 Scope. This subpart applies to agencies and debtors, as defined by § 845.403. § 845.403 Definitions. In this subpart— Act et seq., Administrative offset Agency (a) An Executive agency as defined in § 105 of title 5, United States Code, including the U.S. Postal Service and the U.S. Postal Rate Commission; (b) A military department, as defined in § 102 of title 5, United States Code; (c) An agency or court in the judicial branch, including a court as defined in § 610 of title 28, United States Code, the District Court for the Northern Mariana Islands, and the Judicial Panel on Multidistrict Litigation; (d) An agency of the legislative branch, including the U.S. Senate and the U.S. House of Representatives; and (e) Other independent establishments that are entities of the Federal Government. Annuitant Annuity Compromise Consent Creditor agency Debt Debt claim Debtor Employee Fraud claim Individual Retirement Record Lump-sum credit Member Net annuity Paying agency Refund § 845.404 Conditions for requesting an offset. An agency may request that money payable from the Fund be offset to recover any valid debt due the United States when all of the following conditions are met: (a) The debtor failed to pay all of the debt on demand, or the creditor agency has collected as much as possible from payments due the debtor from the paying agency; and (b) The creditor agency sends a debt claim to OPM (under § 845.405(b) (1), (2), (3) or (4), as appropriate) after doing one of the following: (1) Obtaining a court judgment for the amount of the debt; (2) Following the procedures required by 31 U.S.C. 3716 and 4 CFR 102.4; (3) Following the procedures required by 5 U.S.C. 5514 and subpart K of part 550 of this chapter; or (4) Following the procedures agreed upon by the creditor agency and OPM, if it is excepted by § 845.405(b)(4) from the completion of procedures prescribed by § 845.405(b)(3). § 845.405 Creditor agency processing for non-fraud claims. (a) Where to submit the debt claim, judgment or notice of debt Creditor agencies that are not the debtor's paying agency. (ii) If some of the debt is unpaid after the debtor separates from the paying agency, the creditor agency should send the debt claim to OPM as described in paragraph (b) of this section. (2) Creditor agencies that are the debtor's paying agency. (b) Procedures for submitting debt claim, judgment or notice of debt to OPM Debt claims for which the agency has a court judgment. (2) Debt claims previously processed under 5 U.S.C. 5514. (i) Notify the debtor that the claim is being sent to OPM to complete collection from the Fund; and (ii) Send the debt claim to OPM with two copies of the paying agency's certification of the amount collected and one copy of the notice to the debtor that the claim was sent to OPM. (3) Debt claims not processed under 5 U.S.C. 5514, reduced to court judgment, or excepted by paragraph (b)(4) of this section. (A) Comply with the procedures required by 4 CFR 102.4 by issuing written notice to the debtor of the nature and amount of the debt, the agency's intention to collect by offset, the opportunity to obtain review within the agency of the determination of indebtedness, and the opportunity to enter into a written agreement with the agency to repay the debt; and (B) Complete the appropriate debt claim. (ii) If the debtor does not respond to the creditor agency's notice within the allotted time and there is no reason to believe that he or she did not receive the notice, the creditor agency may submit the debt claim to OPM after certifying that notice was issued and the debtor failed to reply. (iii) If the debtor responds to the notice by requesting a review (or hearing if one is available), the review (or hearing) must be completed before the creditor agency submits the debt claim. (iv) If the debtor receives the notice and responds by consenting to the collection, the creditor agency must send (to OPM) a copy of the debtor's consent along with the debt claim. (4) Debt claims excepted from procedures described in paragraph (b)(3) of this section. (i) Debts due because of the individual's failure to pay health benefits premiums while he or she was in nonpay status or while his or her salary was not sufficient to cover the cost of premiums; (ii) Unpaid Federal taxes to be collected by Internal Revenue Service levy; (iii) Premiums due because of the annuitant's election of Part B, Medicare coverage (retroactive collection limited to 6 months of premiums); or (iv) Overpaid military retired pay an annuitant elects in writing to have withheld from his or her annuity. (5) General certification requirements for debt claims. (i) That the debt is owed to the United States; (ii) The amount and reason for the debt and whether additional interest accrues; (iii) The date the Government's right to collect the debt first accrued; (iv) That the agency has complied with the applicable statutes, regulations, and OPM procedures; (v) That if a competent administrative or judicial authority issues an order directing OPM to pay a debtor an amount previously paid to the agency (regardless of the reasons behind the order), the agency will reimburse OPM or pay the debtor directly within 15 days of the date of the order. Note: OPM may, at its discretion, decline to collect other debt claims sent by an agency that does not abide by this certification. (vi) If the collection will be in installments, the amount or percentage of net annuity in each installment; and (vii) If the debtor does not (in writing) consent to the offset, or does not (in writing) acknowledge receipt of the required notices and procedures, or the creditor agency does not document a judgment offset or a previous salary offset, identify the action(s) taken to comply with 4 CFR 102.3, including any required hearing or review, and give the date(s) the action(s) was taken. (6) Notice of debt. (i) The notice to OPM must include a statement that the debt is owed to the United States, the date the debt first accrued, and the basis for and amount of the debt, if known. If the amount of the debt is not known, the agency must establish the amount and notify OPM in writing as soon as possible after submitting the notice. (ii) The creditor agency may either notify OPM by making a notation in column 8 [Remarks] under “Fiscal Record” on the Individual Retirement Record, if the Individual Retirement Record is in its possession, or if not, by submitting a separate document identifying the debtor by name, giving his or her date of birth, social security number, and date of separation, if known. (c) Time limits for sending records and debt claims to OPM Time limits for submitting debt claims. (2) Time limit for submitting retirement records to OPM. § 845.406 OPM processing for non-fraud claims. (a) Refunds—incomplete debt claims. (2) During the period allotted the creditor agency for sending OPM a complete debt claim, OPM will handle the debtor's application for refund under section 8424 of title 5, United States Code, in one of two ways: (i) If the amount of the debt is known, OPM will notify the debtor of the debt claim against his or her lump-sum credit, withhold the amount of the debt, and pay the balance to the debtor, if any. (ii) If the amount of the debt is not known, OPM will not pay any amount to the debtor until the creditor agency certifies the amount of the debt, submits a complete debt claim, or the time limit for submission of the debt claim expires, whichever comes first. (b) Refunds—complete debt claims OPM receives an application from the debtor prior to or at the same time as the agency's debt claim. (ii) If a refund is payable and the creditor agency submits a complete debt claim in accordance with § 845.405(b) (1), (2), (3), or (4), the debt will be collected from the refund and any balance paid to the debtor. OPM will send the debtor a copy of the debt claim, judgment, consent, or other document, and notify him or her that the creditor agency was paid. (2) If OPM has not received an application from the debtor when the agency's debt claim is received. Note: If the recovery action is successful, the creditor agency must notify OPM so it can void the debt claim. (3) Future recovery. (ii) If OPM receives an application for refund within 1 year of the date the agency's debt claim was received and the creditor agency indicates that interest accrues on the debt, when necessary, OPM will contact the creditor agency to confirm that the debt is outstanding and request submission in writing, of the total additional accrued interest. OPM will not make interest computations for creditor agencies. (iii) When OPM receives an application for refund more than 1 year after the creditor agency's debt claim was received, whether interest accrues or not, OPM will contact the creditor agency to see if the debt is still outstanding and, when necessary, request an update of the interest charges. If the debt is still due, the creditor agency must give the debtor an opportunity to establish that his or her changed financial circumstances, if any, would make the offset unjust. (See 4 CFR 102.4(c).) If the creditor agency determines that offset as requested in the debt claim would be unjust because of the debtor's changed financial circumstances, the agency should permit the debtor to offer a satisfactory repayment plan in lieu of offset. If the agency decides to pursue the offset, it must submit to OPM the requested information and any new instructions within 60 days of the date of OPM's request or the claim may be voided and the balance paid to the individual. (c) Annuities—incomplete debt claims. (i) The procedures in this subpart and 4 CFR 102.4 must be completed; and (ii) A debt claim must be completed and sent to OPM. (2) No time limit will be given for the submission of a debt claim against an annuity; however, a debt claim must be received within 10 years of the date the Government's right to collect first accrued (4 CFR 102.3(b)(3)). (d) Annuities—complete debt claims General Notice. (ii) Beginning deductions. (iii) Updating accrued interest. (2) Claims held for future recovery. (ii) If OPM receives an application for annuity more than 1 year after the agency's debt claim was submitted, OPM will contact the creditor agency to see if the debt is still outstanding. If the debt is still due, the creditor agency should permit the debtor to offer a satisfactory repayment plan in lieu of offset if the debtor establishes that his or her changed financial circumstances would make the offset unjust. (See 4 CFR 102.4(c).) If the agency decides to pursue the offset, it must submit the requested information and any new instructions about the collection to OPM. (e) Limitations on OPM review. (1) The merits of a creditor agency's decision regarding reconsideration, compromise, or waiver; or (2) The creditor agency's decision that a hearing was not required in any particular proceeding. § 845.407 Installment withholdings. (a) When possible, OPM will collect a creditor agency's full claim in one payment from the debtor's refund or annuity. (b) If collection must be made from an annuity and the debt is large, the creditor must generally accept payment in installments. The responsibility for establishing and notifying the debtor of the amount of the installments belongs to the creditor agency (see § 845.405(b)(5)). However, OPM will not make an installment deduction for more than 50 percent of net annuity, unless a higher percentage is needed to satisfy a judgment against a debtor within 3 years or the annuitant has consented to the higher amount in writing. All correspondence concerning installment deductions received by OPM will be referred to the creditor agency for consideration. § 845.408 Special processing for fraud claims. When an agency sends a claim indicating fraud, presentation of a false claim, misrepresentation by the debtor or any other party interested in the claim, or any claim based in whole or part on conduct violating the antitrust laws, to the Department of Justice (Justice) for possible treatment as a fraud claim (4 CFR 101.3), the following special procedures apply. (a) Agency processing. (b) Department of Justice processing. (i) The name, date of birth, and social security number of the debtor; (ii) The amount of the possible fraud claim, if known; (iii) The basis of the possible fraud claim; and (iv) A statement that the claim is being considered as a possible fraud claim, the collection of which is reserved to Justice. (2) When there is a pending refund application, the Attorney General or designee must file a complaint seeking a judgment on the claim and send a copy of the complaint to OPM; or as provided in 4 CFR 101.3, refer the claim to the agency where the claim arose and submit a copy of the referral to OPM within 180 days of the date of either notice from the agency that a claim is pending with Justice (paragraph (a) of this section) or notice from Justice that it has received a possible fraud claim (paragraph (b)(1) of this section) whichever is earlier. When the claim is referred to the agency where it arose, the agency must begin administrative collection action under 4 CFR 102.4 and send a complete debt claim to OPM as required in § 845.405. (c) OPM processing against refunds. (2) If the Attorney General files a complaint and notifies OPM within the applicable 180-day period, OPM will continue to withhold payment of the lump-sum credit until there is a final judgment. (3) If the Attorney General refers the claim to the agency where the claim arose (creditor agency) and notifies OPM within the applicable 180-day period, OPM will notify the creditor agency that (i) the procedures in this subpart and 4 CFR 102.4 must be completed; and (ii) a debt claim must be sent to OPM within 120 days of the date of OPM's notice to the creditor agency. At the request of the creditor agency, one extension of time of not more than 60 days will be granted, as provided by § 845.406(a). (4) If OPM is not notified that a complaint has been filed or that the claim has been referred to the creditor agency within the applicable 180-day period, OPM will pay the balance of the refund to the debtor. (d) OPM processing against annuities. (e) OPM collection and payment of the debt. (2) If the suit or the administrative proceeding results in a judgment for the debtor without establishing a debt to the United States, OPM will pay the balance of the refund to the debtor upon receipt of a certified copy of the judgment or administrative decision.