PART 204—RULES RELATING TO DEBT COLLECTION Subpart A—Administrative Offset Authority: 31 U.S.C. 3716, 31 CFR 901.3. Source: 58 FR 64370, Dec. 7, 1993, unless otherwise noted. § 204.1 Applicability and scope. (a) The procedures authorized for administrative offset are contained in Section 10 of the Debt Collection Act (codified at 31 U.S.C. 3716). The Act requires that notice procedures be observed by the agency. The debtor is also afforded an opportunity to inspect and copy government records pertaining to the claim, enter into an agreement for repayment, and to a review of the claim (if requested). Like salary offset, agencies may cooperate with one another in order to effectuate recovery of the claim. (b) The provisions of this subpart apply to the collection of debts owed to the United States arising from transactions with the Securities and Exchange Commission (Commission). These regulations are consistent with the Debt Collection Act and the Federal Claims Collection Standards on administrative offset issued jointly by the Department of Justice and the Department of the Treasury (31 CFR 901.3). [58 FR 64370, Dec. 7, 1993, as amended at 66 FR 54130, Oct. 26, 2001] § 204.2 Definitions. (a) Administrative offset (b) Person [58 FR 64370, Dec. 7, 1993, as amended at 66 FR 54130, Oct. 26, 2001] § 204.3 General. (a) The Chairperson (or designee) may initiate administrative offset with regard to debts owed by a person to another agency of the United States Government, upon receipt of a request from the head of another agency or his or her designee, and a certification that the debt exists and that the person has been afforded the necessary due process rights. (b) The Chairperson (or designee) may notify the Department of the Treasury of delinquent debts for purposes of administrative offset, and may request another agency which holds funds payable to a Commission debtor to offset that debt against the funds held; the Commission will provide certification that: (1) The debt is past due and legally enforceable; and (2) The person has been afforded the necessary due process rights. (c) No collection by administrative offset shall be made on any debt that has been outstanding for more than 10 years unless facts material to the Government's right to collect the debt were not known, and reasonably could not have been known, by the official or officials responsible for discovering the debt. This limitation does not apply to debts reduced to judgment. (d) Administrative offset under this subpart may not be initiated against: (1) A debt in which administrative offset of the type of debt involved is explicitly provided for or prohibited by another statute; (2) Debts owed by other agencies of the United States or by any State or local Government; or (3) Debts arising under the Internal Revenue Code of 1954; the Social Security Act; or the tariff laws of the United States. (e) The procedures for administrative offset in this subpart do not apply to the offset of Federal salaries under 5 U.S.C. 5514 or Federal tax refunds under 31 U.S.C. 3720A and 31 CFR 285.2. [58 FR 64370, Dec. 7, 1993, as amended at 66 FR 54130, Oct. 26, 2001] § 204.4 Demand for payment—notice. (a) Before offset is made, a written notice will be sent to the debtor. This notice will include: (1) The type and amount of the debt; (2) The date when payment is due (not less than thirty days from the date of mailing or hand delivery of the notice); (3) The agency's intention to collect the debt by administrative offset, including asking the assistance of other Federal agencies to help in the offset whenever possible, if the debtor has not made payment by the payment due date or has not made an arrangement for payment by the payment due date; (4) The right of the debtor to inspect and copy the Commission's records related to the claim; (5) The right of the debtor to request a review of the determination of indebtedness and, in the circumstances described in § 204.7, to request an oral hearing from the Commission's designee; and (6) The right of the debtor to enter into a written agreement with the agency to repay the debt in some other way. (b) Claims for payment of travel advances and employee training expenses require notification prior to administrative offset as described in this section. Because no oral hearing is required, notice of the right to a hearing need not be included in the notification. [58 FR 64370, Dec. 7, 1993, as amended at 66 FR 54130, Oct. 26, 2001] § 204.5 Debtor's failure to respond. If the debtor fails to respond to the notice described in § 204.4(a) by the proposed effective date specified in the notice, the Commission may take further action under this section or under the Federal Claims Collection Standards (31 CFR 901.3). The commission may collect by administrative offset if the debtor: (a) Has not made payment by the payment due date; (b) Has not requested a review of the claim within the agency as set out in § 204.6; or (c) Has not made an arrangement for payment by the payment due date. [58 FR 64370, Dec. 7, 1993, as amended at 66 FR 54130, Oct. 26, 2001] § 204.6 Agency review. (a) To the extent that a debt owed has not been established by judicial or administrative order, a debtor may request a hearing concerning the existence or amount of the debt or the terms of repayment. With respect to debts established by a judicial or administrative order, a debtor may request a hearing concerning the payment or other discharge of the debt. A request to review a disputed debt must be submitted to the Commission official who provided notification within 30 calendar days of the receipt of the written notice described in § 204.4(c). (b) The Commission will provide a copy of the record to the debtor and advise him/her to furnish available evidence to support his or her position. Upon receipt of the evidence, the written record of indebtedness will be reviewed and the debtor will be informed of the results of that review. (c) Pending the resolution of a dispute by the debtor, transactions in any of the debtor's accounts maintained by the Commission may be temporarily suspended. Depending on the type of transaction, the suspension could preclude its payment, removal, or transfer, as well as prevent the payment of interest or discount due thereon. Should the dispute be resolved in the debtor's favor, the suspension will be immediately lifted. (d) During the review period, interest, penalties, and administrative costs will continue to accrue. [58 FR 64370, Dec. 7, 1993, as amended at 66 FR 54131, Oct. 26, 2001] § 204.7 Hearing. (a) A debtor will be provided a reasonable opportunity for an oral hearing by the Commission's designee when: (1) (i) By statute, consideration must be given to a request to waive the indebtedness; (ii) The debtor requests waiver of the indebtedness; and (iii) The waiver determination rests on an issue of credibility or veracity; or (2) The debtor requests reconsideration and the Commission's designee determines that the question of indebtedness cannot be resolved by reviewing the documentary evidence. (b) In cases where an oral hearing is provided to the debtor, the Commission's designee will conduct the hearing, and provide the debtor with a written decision 30 days after the hearing. [58 FR 64370, Dec. 7, 1993, as amended at 66 FR 54131, Oct. 26, 2001] § 204.8 Written agreement for repayment. If the debtor requests a repayment agreement in place of offset, the Commission has discretion to determine whether to accept a repayment agreement in place of offset. If the debt is delinquent and the debtor has not disputed its existence or amount, the Commission will not accept a repayment agreement in place of offset unless the debtor is able to establish that offset would cause undue financial hardship or be unjust. No repayment arrangement will be considered unless the debtor submits a financial statement, executed under penalty of perjury, reflecting the debtor's assets, liabilities, income, and expenses. The financial statement must be submitted within ten business days of the Commission's request for the statement. At the Commission's option, a confess-judgment note or bond of indemnity with surety may be required for installment agreements. Notwithstanding the provisions of this section, any reduction or compromise of a claim will be governed by the Debt Collection Act, 31 U.S.C. 3711-3720E, and the Federal Claims Collection Standards, 31 CFR 900.1-904.4. [58 FR 64370, Dec. 7, 1993, as amended at 66 FR 54131, Oct. 26, 2001] § 204.9 Administrative offset procedures. (a) If the debtor does not exercise the right to request a review within the time specified in § 204.4, or if as a result of the review, it is determined that the debt is due and no written agreement is executed, then administrative offset shall be ordered in accordance with this subpart without further notice. (b) Travel advance. (c) Requests for offset to the Department of the Treasury or other Federal agencies. (1) The debtor owes the past due and legally enforceable debt; and (2) The debtor has been afforded the necessary due process rights. (d) Requests for offset from other Federal agencies. (1) Receipt of written certification from the crecitor agency that: (i) The debtor owes the past due and legally enforceable debt; and (ii) The debtor has been afforded the necessary due process rights. (2) A determination by the Commission that collection by offset against funds payable by the Commission would be in the best interest of the United States as determined by the facts and circumstances of the particular case, and that such offset would not otherwise be contrary to law. [58 FR 64370, Dec. 7, 1993, as amended at 66 FR 54131, Oct. 26, 2001] § 204.10 [Reserved] § 204.11 Jeopardy procedure. The Commission may effect an administrative offset against a payment to be made to the debtor prior to the completion of the procedures required by § 204.4(a) if failure to take the offset would substantially jeopardize the Commission's ability to collect the debt, and the time available before the payment is to be made does not reasonably permit the completion of those procedures. Such prior offset shall be promptly followed by the completion of those procedures. Amounts recovered by offset but later found not to be owed to the Commission shall be promptly refunded. This section applies only to administrative offset pursuant to 31 CFR 901.3(c), and does not apply when debts are referred to the Department of the Treasury for mandatory centralized administrative offset under 31 CFR 901.3(b)(1). [58 FR 64370, Dec. 7, 1993, as amended at 66 FR 54131, Oct. 26, 2001] §§ 204.12-204.29 [Reserved] Subpart B—Salary Offset Authority: 5 U.S.C. 5514, 5 CFR 550.1104. Source: 58 FR 38520, July 19, 1993, unless otherwise noted. § 204.30 Purpose and scope. (a) This regulation provides procedures for the collection by administrative offset against a federal employee's current pay account without his/her consent under 5 U.S.C. 5514 to satisfy certain debts owed to the Commission. This regulation does not apply when the employee consents to recovery from his/her current pay account. (b) This regulation does not preclude an employee from requesting a waiver or questioning the amount or validity of a debt by submitting a claim to the General Accounting Office in accordance with procedures prescribed by the General Accounting Office. (c) This Salary Offset plan is for internal use and Government-wide claims collections. 5 CFR 550.1104(a). This regulation implements 5 U.S.C. 5514; 5 CFR part 550, subpart K. § 204.31 Excluded debts or claims. This regulation does not apply to: (a) Debts or claims arising under the Internal Revenue Code of 1954 as amended (26 U.S.C. 1), or the tariff laws of the United States. (b) Any case where collection of a debt by salary offset is explicitly provided for or prohibited by another statute, such as travel advances in 5 U.S.C. 5705 and employee training expenses in 5 U.S.C. 4108. [58 FR 38520, July 19, 1993, as amended at 66 FR 54131, Oct. 26, 2001] § 204.32 Definitions. The following definitions apply to this regulation: Chairman Commission Creditor agency Debt Disposable pay Employee FCCS Hearing official Pay Program official Salary offset Waiver [58 FR 38520, July 19, 1993, as amended at 66 FR 54131, Oct. 26, 2001; 76 FR 60372, Sept. 29, 2011] § 204.33 Pre-offset notice. A program official must provide an employee with written notice at least 30 calendar days prior to offseting his/her salary. A program official need not notify an employee of: any 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, it the amount to be recovered was accumulated over four pay periods or less; a routine intra-agency adjustment of pay that is made to correct an overpayment of pay attributable to clerical or administrative errors or delays in processing pay documents, if the overpayment occurred within the four pay periods preceding the adjustment and, at the time of such adjustment, or as soon thereafter as practical, the individual is provided written notice of the nature and the amount of the adjustment and point of contact for contesting such adjustment; or any adjustment to collect a debt amounting to $50 or less, if, at the time of such adjustment, or as soon thereafter as practical, the individual is provided written notice of the nature and the amount of the adjustment and a point of contact for contesting such adjustment. When required, the written notice must include the following: (a) The nature, origin and amount of the indebtedness determined by the Commission to be due; (b) The intention of the Commission to collect the debt through deductions from the employee's current disposable pay account; (c) The frequency and amount of the intended deductions (stated as a fixed dollar amount or as a percentage of pay, not to exceed 15 percent of disposable pay) and the intention to continue the deductions until the debt is paid in full or otherwise resolved; (d) An explanation of the Commission's policy concerning interest, penalties, and administrative costs, including a statement that such assessments must be made unless excused in accordance with the FCCS; (e) The employee's right to inspect and copy Commission records relating to the debt (if copies of such records are not attached), or if the employee or his or her representative cannot personally inspect the records, the right to request and receive a copy of such records. The Commission will respond to a request for inspection and/or copying as soon as practicable; (f) The opportunity, under terms agreeable to the Commission, to enter into a written agreement to establish a schedule for repayment in lieu of offset. The agreement must be in writing, signed by both the employee and the Commission, and documented in the Commission's files (31 CFR 901.3(b)); (g) The employee's right to a hearing conducted by an official arranged by the Commission if a petition is filed as prescribed by § 204.35, Petition for pre-offset hearing. Such hearing official will be either an administrative law judge or at the chief administrative law judge's discretion, another hearing official who is also not under the control of the head of the agency; (h) The method and time period for petitioning for a hearing, including a statement that the timely filing of a petition for hearing will stay the commencement of collection proceedings; (i) If a hearing is requested, the hearing official will issue a final decision, based on information presented to the hearing official, at the earliest practicable date, but no later than 60 days after the petition for the hearing is filed unless the employee requests and the hearing official, for good cause or in the interests of justice, deems it necessary to extend that time period (5 CFR 550.1104(d)(10)); (j) That any knowingly false or frivolous statements, representations, or evidence may subject the employee to: (1) Disciplinary procedures appropriate under 5 U.S.C. chapter 75, 5 CFR part 752, or any other applicable statutes or regulations; (2) Penalties under the False Claims Act, 31 U.S.C. 3729-3731, or any other applicable statutory authority; and/or (3) Criminal penalties under 18 U.S.C. 286, 287, 1001, and 1002, or any other applicable statutory authority. (k) Any other rights and remedies available to the employee under statutes or regulations governing the program for which the collection is being made; (l) The employee's right to a prompt refund if amounts paid or deducted by salary offset are later waived or found not owed to the United States, unless otherwise provided by law or contract; and (m) The specific address to which all correspondence shall be directed regarding the debt. [58 FR 38520, July 19, 1993, as amended at 66 FR 54131, Oct. 26, 2001] § 204.34 Employee response. (a) Introduction. (b) Responses must be submitted in writing to the program official who signed the pre-offset notice. A timely response will stay the commencement of collection by salary offset, at least until the issuance of a written decision. (See § 204.37, Extensions of time). Failure to submit a timely response will be treated as an admission of indebtedness, and will result in salary offset in accordance with the terms specified in the pre-offset notice. (c) A response filed after expiration of the 15 day period may be accepted if the employee can show that the delay was due to circumstances beyond his or her control or failure to receive notice of the time limit (unless otherwise aware of it). (d) Voluntary repayment agreement. (e) Waiver. (f) Reconsideration. [58 FR 38520, July 19, 1993, as amended at 76 FR 60372, Sept. 29, 2011] § 204.35 Petition for pre-offset hearing. (a) The employee may petition for a pre-offset hearing. The petition must state with specificity why the employee believes the agency's determination is in error. To the extent that a debt has not been established by judicial or administrative order, a debtor may request a pre-offset hearing concerning the existence or amount of the debt or the terms of repayment. With respect to debts established by a judicial or administrative order, a debtor may request a pre-offset hearing concerning the payment or other discharge of the debt. (b) The petition must fully identify and explain, with reasonable specificity, all the facts, evidence and witnesses, if any, that the employee believes support his or her position. The petition must be signed by the employee. [58 FR 38520, July 19, 1993, as amended at 66 FR 54131, Oct. 26, 2001] § 204.36 Granting of a pre-offset hearing. (a) If the employee timely requests a pre-offset hearing or the timeliness is waived, the program official must: (1) arrange for a hearing official. If the hearing official is an administrative law judge, he or she shall be designated by the Chief Administrative Law Judge as set forth in 17 CFR 200.310(a)(2); and (2) provide the hearing official with a copy of all records on which the determination of the debt and any involuntary repayment schedule are based. (b) The hearing official shall notify the employee by personal service, by first class, registered or certified mail, or by a reliable commercial courier or overnight delivery service whether the employee is entitled to an oral or “paper” ( i.e. (c) If an oral hearing is scheduled, the hearing official shall notify the program official and the employee in writing of the date, time and location of the hearing. The place for the hearing shall be fixed by the hearing official with due regard for the public interest and the convenience and necessity of the parties, the participants, or their representatives. (d) If the employee is entitled to an oral hearing, but requests to have the hearing based only on the written submissions, the employee must notify the hearing official and the program official at least 3 calendar days before the date of the oral hearing. The hearing official may waive the 3-day requirement for good cause. (e) Failure of the employee to appear at the oral hearing may result in dismissal of the petition and affirmation of the program official's decision. [58 FR 38520, July 19, 1993, as amended at 66 FR 54131, Oct. 26, 2001] § 204.37 Extensions of time. The hearing official may for good cause or in the interests of justice postpone the commencement of the hearing, adjourn a convened hearing for a reasonable period of time or extend or shorten any other time limits prescribed under this section. This extension is not intended to abridge the 30 day initial notice or extend the 60 day decision requirement other than as provided for in 5 CFR 550.1104(d)(10). § 204.38 Pre-offset hearing. (a) The hearing official shall determine the form and content of hearings granted under this section, pursuant to 31 CFR 901.3(e). All oral hearings shall be on the record. Except as otherwise ordered by the hearing official, hearings shall be recorded or transcribed verbatim by shorthand, mechanical means, electronic sound recording, or any other method, subject to the discretion and approval of the hearing official, and a transcript thereof shall be made. (b) Oral hearings are informal in nature. The Commission, represented by an attorney from the Office of General Counsel, and accompanied by a program official and the employee, and/or the employee's representative, orally shall explain their respective positions using relevant documentation. The employee may testify on his or her own behalf, subject to cross examination. Other witnesses may be called to testify where the hearing official determines the testimony to be relevant and not redundant. The Federal Rules of Evidence serve as a guideline, but are not controlling. The employee bears the burdens of proof and persuasion. (c) The hearing official shall: (1) Conduct a fair and impartial hearing; (2) Preside over the course of the hearing, maintain decorum and avoid delay in the disposition of the hearing; and (3) Issue a decision in accordance with § 204.39, Written decision, on the basis of the oral hearing and the written record. (d) Oral hearings are normally open to the public. However, the hearing official may close all or any portion of the hearing at either the request of either party or upon the hearing official's initiative when doing so is in the best interest[s] of the employee or the public. (e) Oral hearings may be conducted by conference call at the request of the employee or at the discretion of the hearing official. (f) Pre-offset “paper” hearing. [58 FR 38520, July 19, 1993, as amended at 66 FR 54132, Oct. 26, 2001] § 204.39 Written decision. (a) If pre-offset hearing is held. (b) If the employee challenges the pre-offset notice under § 204.34, Employee response and/or § 204.35, Petition for pre-offset hearing, without requesting a hearing or a hearing is denied, the program official must notify the employee of his/her final determination in writing before offset can begin. The agency's execution of a voluntary repayment agreement satisfies this requirement. § 204.40 Deductions. (a) When deductions may begin: (1) If a pre-offset hearing is held, deductions shall be made in accordance with the hearing official's decision. (2) If parties execute a voluntary repayment agreement, deductions shall be made in accordance with the terms of that agreement. (3) If the employee requests a waiver or reconsideration or the program official refuses to accept a proposed alternate repayment schedule, deductions shall be made in accordance with the program official's written decision. (4) If the employee consents to the terms and conditions set forth in the Commission's Pre-offset Notice or fails to respond in timely fashion to the Pre-offset Notice, or waives his/her right to a hearing without otherwise challenging the terms of the Pre-offset Notice, deductions shall be made in accordance with the terms and conditions set forth therein. (b) Retired or separated employees. (1) To the extent possible, the remaining indebtedness will be liquidated from any final payment due the former employee as of the date of separation (e.g., final salary payment, lump-sum leave, etc.). See § 204.40d(3), Offset deductions from final salary and/or lump-sum leave payment. (2) Thereafter, the remaining indebtedness will be recovered from later payments of any kind due the former employee from the United States. See the FCCS. (c) Method of collection and source of deduction. (d) Amount and duration of deductions. (1) Installment deductions will be made over the shortest period possible. 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. (2) The amount deducted for 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. Installment payment of less than $100 per pay period will he accepted only in the most unusual circumstances. (3) Offset deductions from final salary and/or lump-sum leave payment. Such an offset deduction may exceed 15 percent of an employee's final salary and/or lump-sum leave payment pursuant to 31 U.S.C. 3716, 64 CG 907. (e) Interest, penalties and administrative costs on debts under this part will be assessed and/or waived according to the provisions of 31 CFR 901.9. [58 FR 38520, July 19, 1993, as amended at 66 FR 54132, Oct. 26, 2001] § 204.41 Non-waiver of rights. An employee's involuntary payment of all or any portion of a debt being collected under 5 U.S.C. 5514 shall not be construed as a waiver of any rights that the employee may have under 5 U.S.C. 5514 or any other provision of contract or law, unless there are statutory or contractual provisions to the contrary. § 204.42 Refunds. (a) The Commission will refund promptly to the appropriate individual amounts offset under this regulation when: (1) A debt is waived or otherwise found not owing the United States (unless expressly prohibited by statute or regulation); or (2) The Commission is directed by an administrative or judicial order to refund amounts deducted from the employee's current pay. (b) Refunds do not bear interest unless required or permitted by law or contract. § 204.43 Coordinating offset with another federal agency. (a) Responsibility of the Commission as the Creditor Agency. (1) Certify, in writing, that the employee owes the debt, the amount and basis of the debt, the date on which payment(s) is due, the date the Government's right to collect the debt first accrued and that the Commission's regulations implementing 5 U.S.C. 5514 have been approved by OPM. (2) If the collection must be made in installments, the Commission also must advise the paying agency of the amount or percentage of disposable pay to be collected in each installment, and if the Commission wishes, the number and the commencing date of the installments (if a date other than the next officially established pay period is required). (3) Advise the paying agency of the actions taken pursuant to 5 U.S.C. 5514(b) and give the date(s) the action(s) was taken (unless the employee has consented to the salary offset in writing or signed a statement acknowledging receipt of the required procedures and the written consent or statement is forwarded to the paying agency). (4) Except as otherwise provided in this paragraph (a)(4), the Commission must submit a debt claim containing the information specified in paragraphs (a)(1) through (3) of this section and an installment agreement (or other instruction on the payment schedule), if applicable, to the employee's paying agency. (5) If the employee is in the process of separating, the Commission must submit its debt claim to the employee's paying agency for collection as provided in 5 CFR 550.1104(l). Pursuant to 5 CFR 1101, the paying agency must certify the total amount of its collection and notify the creditor agency and employee. If the paying agency is aware that the employee is entitled to payments from the Civil Service Retirement and Disability Fund, or other similar payments, it must provide written notification to the agency responsible for making such payments that the debtor owes a debt (including the amount) and that the paying agency has fully complied with the provisions of this section. The Commission must submit a properly certified claim to the agency responsible for making such payments before the collection can be made. (6) If the employee is already separated and all payments due from his or her former paying agency have been paid, the Commission may request, unless otherwise prohibited, that money due and payable to the employee from the Civil Service Retirement and Disability Fund (5 CFR 831.1801) or other similar funds, be administratively offset to collect the debt (See 31 U.S.C. 3716 and the FCCS). (7) When an employee transfers to another paying agency, the Commission shall not repeat the due process procedures described in 5 U.S.C. 5514 and subpart B of this part to resume the collection. The Commission must review the debt upon receiving the former paying agency's notice of the employee's transfer to make sure the collection is resumed by the new paying agency. The Commission must submit a properly certified claim to the new paying agency before collection can be resumed. (b) Responsibility of the Commission as the paying agency Complete claim. (2) Incomplete claim. (3) Review. (4) Employees who transfer from one paying agency to another. (c) Responsibility of the Program Official. (i) Arrange for a hearing upon proper petition by a federal employee; and (ii) Prescribe, upon consultation with the General Counsel, such practices and procedures as may be necessary to carry out the intent of this regulation. (2) The Program Official shall be responsible for: (i) Ensuring that each certification of debt sent to a paying agency is consistent with the pre-offset notice (§ 204.33, Pre-offset notice). (ii) Obtaining hearing officials from other agencies pursuant to § 204.36, Granting of a pre-offset hearing. (iii) Ensuring that hearings are properly scheduled. [58 FR 38520, July 19, 1993, as amended at 66 FR 54132, Oct. 26, 2001] § 204.44 Interest, penalties, and administrative costs. Charges may be assessed for interest, penalties, and administrative costs in accordance with the Federal Claims Collection Standards, 31 CFR 901.9. [58 FR 38520, July 19, 1993, as amended at 66 FR 54132, Oct. 26, 2001] Subpart C—Tax Refund Offset Authority: 31 U.S.C. 3720A, 31 CFR 285.2(c). Source: 58 FR 64372, Dec. 7, 1993, unless otherwise noted. § 204.50 Purpose. This subpart establishes procedures for the Commission's referral of past-due legally enforceable debts to the Department of the Treasury's Financial Management Service (FMS) for offset against the income tax refunds of the debtor. [66 FR 54132, Oct. 26, 2001] § 204.51 [Reserved] § 204.52 Notification of intent to collect. (a) Notification before tax refund offset. (b) Contents of notice. (1) The amount of the debt; (2) That unless the debt is repaid within 60 days from the date of the Commission's Notice of Intent, the Commission intends to collect the debt by requesting a reduction of any amounts payable to the debtor as a Federal income tax refund by an amount equal to the amount of the debt and all accumulated interest and other charges; (3) A mailing address for forwarding any written correspondence and a contact name and a telephone number for any questions; and (4) That the debtor may present evidence to the Commission that all or part of the debt is not past due or legally enforceable by: (i) Sending a written request for a review of the evidence to the address provided in the notice; (ii) Stating in the request the amount disputed and the reasons why the debtor believes that the debt is not past due or is not legally enforceable; and (iii) Including in the request any documents that the debtor wishes to be considered or stating that the additional information will be submitted within the remainder of the 60-day period. (c) To the extent that a debt owed has not been established by judicial or administrative order, a debtor may dispute the existence or amount of the debt or the terms of repayment. With respect to debts established by a judicial or administrative order, Commission review will be limited to issues concerning the payment or other discharge of the debt. [58 FR 64372, Dec. 7, 1993, as amended at 66 FR 54132, Oct. 26, 2001; 66 FR 56383, Nov. 7, 2001] § 204.53 [Reserved] § 204.54 Commission action as a result of consideration of evidence submitted in response to the notice of intent. (a) Consideration of evidence. (1) Consider the evidence presented by the debtor; and (2) Determine whether or not all or a portion of the debt is still past due and legally enforceable; and (3) Notify the debtor of its determination. (b) Commission action on the debt. (2) The Commission will not refer the debt to the IRS for offset against the debtor's Federal income tax refund if it reverses its decision that the debt is past due and legally enforceable. [58 FR 64372, Dec. 7, 1993, as amended at 66 FR 54132, Oct. 26, 2001] § 204.55 Change in notification to Financial Management Service. After the Commission sends FMS notification of an individual's liability for a debt, the Commission will promptly notify FMS of any change in the notification, if the Commission: (a) Determines that an error has been made with respect to the information contained in the notification; (b) Receives a payment or credits a payment to the account of the debtor named in the notification that reduces the amount of the debt referred to FMS for offset; or (c) If the debt amount is otherwise incorrect, except that the amount of a debt referred to FMS will not be increased unless the Commission has complied with the due process requirements of this subpart and the Federal Claims Collection Standards as to the amount of the increase. [66 FR 54132, Oct. 26, 2001] § 204.56 Administrative charges. To the extent permitted by law, all administrative charges incurred in connection with the referral of the debts for tax refund offset will be assessed on the debt and thus increase the amount of the offset. [66 FR 54132, Oct. 26, 2001] §§ 204.57-204.59 [Reserved] Subpart D—Administrative Wage Garnishment Authority: 31 U.S.C. 3720D, 31 CFR 285.11(f). Source: 66 FR 54132, Oct. 26, 2001, unless otherwise noted. § 204.60 Purpose. This subpart provides procedures for the Commission to collect money from a debtor's disposable pay by means of administrative wage garnishment to satisfy a delinquent nontax debt owed to the United States. § 204.61 Scope. (a) The receipt of payments pursuant to this subpart does not preclude the Commission from pursuing other debt collection remedies, including the offset of Federal payments to satisfy a delinquent nontax debt owed to the United States. The Commission may pursue such debt collection remedies separately or in conjunction with administrative wage garnishment. (b) This subpart does not apply to the collection of delinquent nontax debt owed to the United States from the wages of Federal employees from their Federal employment. Federal pay is subject to the Federal salary offset procedures set forth in 5 U.S.C. 5514 and other applicable laws. § 204.62 Definitions. The following definitions apply to this subpart: Debt delinquent nontax debt Disposable pay Employer Garnishment Withholding order § 204.63 Notice. (a) At least 30 days before the initiation of garnishment proceedings, the Commission will mail, by first class mail to the debtor's last known address, a written notice informing the debtor of: (1) The nature and amount of the debt; (2) The Commission's intention to initiate proceedings to collect the debt through deductions from pay until the debt and all accumulated interest, penalties and administrative costs are paid in full; and (3) An explanation of the debtor's rights, including those set forth in paragraph (b) of this section, and the time frame within which the debtor may exercise these rights. (b) The debtor will be afforded the opportunity: (1) To inspect and copy records related to the debt; (2) To enter into a written repayment agreement with the Commission, under terms agreeable to the Commission; and (3) To the extent that a debt owed has not been established by judicial or administrative order, to request a hearing concerning the existence or amount of the debt or the terms of the debt's repayment schedule. With respect to debts established by a judicial or administrative order, a debtor may request a hearing concerning the payment or other discharge of the debt. The debtor is not entitled to a hearing concerning the terms of the proposed repayment schedule if these terms have been established by written agreement under paragraph (b)(2) of this section. (c) The notice required by this section may be included with the Commission's demand letter required by subpart A of this part. (d) The Commission will keep a copy of the certificate of service indicating the date of mailing of the notice. § 204.64 Hearing. (a) Request for hearing. (b) Type of hearing or review. (2) If the Commission determines that an oral hearing is appropriate, the time and location of the hearing shall be established by the Commission. An oral hearing may, at the debtor's option, be conducted either in-person or by telephone conference. All travel expenses incurred by the debtor in connection with an in-person hearing will be borne by the debtor. All telephonic charges incurred during the hearing will be the responsibility of the agency. (3) In those cases when an oral hearing is not required by this section, the Commission will nevertheless accord the debtor a “paper hearing,” that is, the Commission will decide the issues in dispute based upon a review of the written record. (c) Effect of timely request. (d) Failure to timely request a hearing. (e) Hearing official. (f) Procedure. (1) The date and time of a telephonic hearing; (2) The date, time, and location of an in-person oral hearing; or (3) The deadline for the submission of evidence for a written hearing. (g) Burden of proof. (2) Thereafter, if the debtor disputes the existence or amount of the debt, the debtor must prove by a preponderance of the evidence that no debt exists or that the amount of the debt is incorrect. In addition, the debtor may present evidence that the terms of the repayment schedule are unlawful, would cause a financial hardship to the debtor, or that collection of the debt may not be pursued due to operation of law. (h) Record. (i) Date of decision. (1) A withholding order will not be issued until the hearing is held and a decision rendered; or (2) If a withholding order had previously been issued to the debtor's employer, the withholding order will be suspended beginning on the 61st day after the receipt of the hearing request and continuing until a hearing is held and a decision is rendered. (j) Content of decision. (1) A summary of the facts presented; (2) The findings, analysis and conclusions; and (3) The terms of any repayment schedules, if applicable. (k) Finality of agency action. (l) Failure to appear. § 204.65 Wage garnishment order. (a) Unless the Commission receives information that the Commission believes justifies a delay or cancellation of the withholding order, the Commission will send, by first class mail, a withholding order to the debtor's employer within 30 days after the debtor fails to make a timely request for a hearing ( i.e. (b) The withholding order sent to the employer will be in the form prescribed by the Secretary of the Treasury, on the Commission's letterhead, and signed by the Chairperson or his or her delegatee. The order will contain the information necessary for the employer to comply with the withholding order. This information includes the debtor's name, address, and social security number, as well as instructions for withholding and information as to where payments should be sent. (c) The Commission will keep a copy of the certificate of service indicating the date of mailing of the order. (d) Certification by employer. (e) Amounts withheld. (2) Subject to the provisions of paragraphs (e)(3) and (e)(4) of this section, the amount of garnishment shall be the lesser of: (i) The amount indicated on the garnishment order up to 15% of the debtor's disposable pay; or (ii) The amount set forth in 15 U.S.C. 1673(a)(2) (Restriction on Garnishment). The amount set forth at U.S.C. 1673(a)(2) is the amount by which the debtor's disposable pay exceeds an amount equivalent to thirty times the minimum wage See (3) When a debtor's pay is subject to withholding orders with priority, the following shall apply: (i) Unless otherwise provided by Federal law, withholding orders issued under this section shall be paid in the amounts set forth under paragraph (e)(2) of this section and shall have priority over other withholding orders which are served later in time. However, withholding orders for family support shall have priority over withholding orders issued under this section. (ii) If amounts are being withheld from a debtor's pay pursuant to a withholding order served on an employer before a withholding order issued pursuant to this section, or if a withholding order for family support is served on an employer at any time, the amounts withheld pursuant to the withholding order issued under this section shall be the lesser of: (A) The amount calculated under paragraph (e)(2) of this section; or (B) An amount equal to 25% of the debtor's disposable pay less the amount(s) withheld under the withholding order(s) with priority. (iii) If a debtor owes more than one debt to the Commission, the Commission may issue multiple withholding orders. The total amount garnished from the debtor's pay for such orders will not exceed the amount set forth in paragraph (e)(2) of this section. (4) An amount greater than that set forth in paragraphs (e)(2) and (e)(3) of this section may be withheld upon the written consent of the debtor. (5) The employer shall promptly pay to the Commission all amounts withheld in accordance with the withholding order issued pursuant to this section. (6) An employer shall not be required to vary its normal pay and disbursement cycles in order to comply with the withholding order. (7) Any assignment or allotment by the employee of the employee's earnings shall be void to the extent it interferes with or prohibits execution of the withholding order under this section, except for any assignment or allotment made pursuant to a family support judgment or order. (8) The employer shall withhold the appropriate amount from the debtor's wages for each pay period until the employer receives notification from the Commission to discontinue wage withholding. The garnishment order shall indicate a reasonable period of time within which the employer is required to commence wage withholding. (f) Exclusions from garnishment. (g) Financial hardship. (2) A debtor requesting a review under this section shall submit the basis for claiming that the current amount of garnishment results in a financial hardship to the debtor, along with supporting documentation. (3) If a financial hardship is found, the Commission will downwardly adjust, by an amount and for a period of time agreeable to the Commission, the amount garnished to reflect the debtor's financial condition. The Commission will notify the employer of any adjustments to the amounts to be withheld. (h) Ending garnishment. (2) At least annually, the Commission will review its debtors' accounts to ensure that garnishment has been terminated for accounts that have been paid in full. (i) Actions prohibited by the employer. (j) Refunds. (2) Unless required by Federal law or contract, refunds under this section shall not bear interest. (k) Right of action. Subpart E—Miscellaneous: Credit Bureau Reporting, Collection Services Authority: 31 U.S.C. 3701, 3711, 3718. Source: 58 FR 64373, Dec. 7, 1993, unless otherwise noted. § 204.75 Collection services. Section 13 of the Debt Collection Act (31 U.S.C. 3718) authorizes agencies to enter into contracts for collection services to recover debts owed the United States. The Act requires that certain provisions be contained in such contracts, including: (a) The agency retains the authority to resolve a dispute, including the authority to terminate a collection action or refer the matter to the Attorney General for civil remedies; and (b) The contractor is subject to the Privacy Act of 1974, as it applies to private contractors, as well as subject to State and Federal laws governing debt collection practices. § 204.76 Use of credit bureau or consumer reporting agencies. (a) The Commission may report delinquent debts to consumer reporting agencies (See 31 U.S.C. 3701(a)(3), 3711). Sixty days prior to release of information to a consumer reporting agency, the debtor shall be notified, in writing, of the intent to disclose the existence of the debt to a consumer reporting agency. Such notice of intent may be a separate correspondence or included in correspondence demanding direct payment. The notice shall be in conformance with 31 U.S.C. 3711(e) and the Federal Claims Collection Standards. The Commission shall provide, in this notice, the debtor with: (1) An opportunity to inspect and copy agency records pertaining to the debt; (2) An opportunity for an administrative review of the legal enforceability or past due status of the debt; (3) An opportunity to enter into a repayment agreement on terms satisfactory to the Commission to prevent the Commission from reporting the debt as overdue to consumer reporting agencies, and provide deadlines and method for requesting this relief; (4) An explanation of the rate of interest that will accrue on the debt, that all costs incurred to collect the debt will be charged to the debtor, the authority for assessing these costs, and the manner in which the Commission will calculate the amount of these cost; (5) An explanation that the Commission will report the debt to the consumer reporting agencies to the detriment of the debtor's credit rating; and (6) A description of the collection actions that the agency may take in the future if those presently proposed actions do not result in repayment of the loan obligation, including the filing of a lawsuit against the borrower by the agency and assignment of the debt for collection by offset against Federal income tax refunds or the filing of a lawsuit against the debtor by the Federal Government. (b) The information that may be disclosed to the consumer reporting agency is limited to: (1) The debtor's name, address, social security number or taxpayer identification number, and any other information necessary to establish the identity of the individual; (2) The amount, status, and history of the claim; and (3) The Commission program or activity under which the claim arose. [58 FR 64373, Dec. 7, 1993, as amended at 66 FR 54135, Oct. 26, 2001] § 204.77 Referrals to collection agencies. (a) The Commission has authority to contract for collection services to recover delinquent debts in accordance with 31 U.S.C. 3718(a) and the Federal Claims Collection Standards (31 CFR 901.5). (b) The Commission will use private collection agencies where it determines that their use is in the best interest of the Government. Where the Commission determines that there is a need to contract for collection services, the contract will provide that: (1) The authority to resolve disputes, compromise claims, suspend or terminate collection action, or refer the matter to the Department of Justice for litigation or to take any other action under this part will be retained by the Commission; (2) Contractors are subject to the Privacy Act of 1974, as amended, to the extent specified in 5 U.S.C. 552a(m) and to applicable Federal and State laws and regulations pertaining to debt collection practices, such as the Fair Debt Collection Practices Act, 15 U.S.C. 1692; (3) The contractor is required to strictly account for all amounts collected; (4) The contractor must agree that uncollectible accounts shall be returned with appropriate documentation to enable Commission to determine whether to pursue collection through litigation or to terminate collection; and (5) The contractor must agree to provide any data in its files requested by the Commission upon returning the account to the Commission for subsequent referral to the Department of Justice for litigation. [58 FR 64373, Dec. 7, 1993, as amended at 66 FR 54135, Oct. 26, 2001]