PART 5—TREASURY DEBT COLLECTION Authority: 5 U.S.C. 5514; 26 U.S.C. 6402; 31 U.S.C. 321, 3701, 3711, 3716, 3717, 3718, 3720A, 3720B, 3720D. Source: 67 FR 65845, Oct. 28, 2002, unless otherwise noted. Subpart A—General Provisions § 5.1 What definitions apply to the regulations in this part? As used in this part: Administrative offset offset Administrative wage garnishment Agency Federal agency Creditor agency Debt et seq. Debtor Delinquent debt Delinquent Treasury debt Disposable pay Employee Federal employee FCCS Financial Management Service Payment agency Federal payment agency Person Salary offset Secretary Tax refund offset Treasury debt Treasury Department Treasury entity § 5.2 Why is the Treasury Department issuing these regulations and what do they cover? (a) Scope. (b) Applicability. (2) This part does not apply to tax debts nor to any debt for which there is an indication of fraud or misrepresentation, as described in § 900.3 of the FCCS, unless the debt is returned by the Department of Justice to the Treasury Department for handling. (3) This part does not apply to the Financial Management Service when acting on behalf of other Federal agencies and states to collect delinquent debt referred to the Financial Management Service for collection action as required or authorized by Federal law. See (4) Nothing in this part precludes collection or disposition of any debt under statutes and regulations other than those described in this part. See, for example, See, also, (c) Additional policies and procedures. (d) Duplication not required. (e) Use of multiple collection remedies allowed. § 5.3 Do these regulations adopt the Federal Claims Collection Standards (FCCS)? This part adopts and incorporates all provisions of the FCCS. This part also supplements the FCCS by prescribing procedures consistent with the FCCS, as necessary and appropriate for Treasury Department operations. Subpart B—Procedures To Collect Treasury Debts § 5.4 What notice will Treasury entities send to a debtor when collecting a Treasury debt? (a) Notice requirements. (1) The nature and amount of the debt, and the facts giving rise to the debt; (2) How interest, penalties, and administrative costs are added to the debt, the date by which payment should be made to avoid such charges, and that such assessments must be made unless excused in accordance with 31 CFR 901.9 ( see (3) The date by which payment should be made to avoid the enforced collection actions described in paragraph (a)(6) of this section; (4) The Treasury entity's willingness to discuss alternative payment arrangements and how the debtor may enter into a written agreement to repay the debt under terms acceptable to the Treasury entity ( see (5) The name, address, and telephone number of a contact person or office within the Treasury entity; (6) The Treasury entity's intention to enforce collection if the debtor fails to pay or otherwise resolve the debt, by taking one or more of the following actions: (i) Offset. see (ii) Private collection agency. see (iii) Credit bureau reporting. see (iv) Administrative wage garnishment. see (v) Litigation. see (vi) Treasury Department's Financial Management Service. see (7) That Treasury debts over 180 days delinquent must be referred to the Financial Management Service for the collection actions described in paragraph (a)(6) of this section ( see (8) How the debtor may inspect and copy records related to the debt; (9) How the debtor may request a review of the Treasury entity's determination that the debtor owes a debt and present evidence that the debt is not delinquent or legally enforceable ( see (10) How a debtor may request a hearing if the Treasury entity intends to garnish the debtor's private sector ( i.e., see (i) The method and time period for requesting a hearing; (ii) That the timely filing of a request for a hearing on or before the 15th business day following the date of the notice will stay the commencement of administrative wage garnishment, but not necessarily other collection procedures; and (iii) The name and address of the office to which the request for a hearing should be sent. (11) How a debtor who is a Federal employee subject to Federal salary offset may request a hearing ( see (i) The method and time period for requesting a hearing; (ii) That the timely filing of a request for a hearing on or before the 15th calendar day following receipt of the notice will stay the commencement of salary offset, but not necessarily other collection procedures; (iii) The name and address of the office to which the request for a hearing should be sent; (iv) That the Treasury entity will refer the debt to the debtor's employing agency or to the Financial Management Service to implement salary offset, unless the employee files a timely request for a hearing; (v) That a final decision on the hearing, if requested, will be issued at the earliest practical date, but not later than 60 days after the filing of the request for a hearing, unless the employee requests and the hearing official grants a delay in the proceedings; (vi) That any knowingly false or frivolous statements, representations, or evidence may subject the Federal employee to penalties under the False Claims Act (31 U.S.C. 3729-3731) or other applicable statutory authority, and criminal penalties under 18 U.S.C. 286, 287, 1001, and 1002, or other applicable statutory authority; (vii) That unless prohibited by contract or statute, amounts paid on or deducted for the debt which are later waived or found not owed to the United States will be promptly refunded to the employee; and (viii) That proceedings with respect to such debt are governed by 5 U.S.C. 5514 and 31 U.S.C. 3716; (12) How the debtor may request a waiver of the debt, if applicable ( see, for example, http://www.treas.gov/regs (13) How the debtor's spouse may claim his or her share of a joint income tax refund by filing Form 8379 with the Internal Revenue Service ( see http://www.irs.gov (14) How the debtor may exercise other statutory or regulatory rights and remedies available to the debtor; (15) That certain debtors may be ineligible for Federal Government loans, guaranties and insurance ( see (16) If applicable, the Treasury entity's intention to suspend or revoke licenses, permits or privileges ( see (17) That the debtor should advise the Treasury entity of a bankruptcy proceeding of the debtor or another person liable for the debt being collected. (b) Exceptions to notice requirements. (c) Respond to debtors; comply with FCCS. See § 5.5 How will Treasury entities add interest, penalty charges, and administrative costs to a Treasury debt? (a) Assessment and notice. (b) Waiver of interest, penalties, and administrative costs. See See http://www.treas.gov/regs. (c) Accrual during suspension of debt collection. See http://www.treas.gov/regs. § 5.6 When will Treasury entities allow a debtor to pay a Treasury debt in installments instead of one lump sum? If a debtor is financially unable to pay the debt in one lump sum, a Treasury entity may accept payment of a Treasury debt in regular installments, in accordance with the provisions of 31 CFR 901.8 and the Treasury entity's policies and procedures. § 5.7 When will Treasury entities compromise a Treasury debt? If a Treasury entity cannot collect the full amount of a Treasury debt, the Treasury entity may compromise the debt in accordance with the provisions of 31 CFR part 902 and the Treasury entity's policies and procedures. Legal counsel approval to compromise a Treasury debt is required as described in Treasury Directive 34-02 (Credit Management and Debt Collection), which may be found at http://www.treas.gov/regs. § 5.8 When will Treasury entities suspend or terminate debt collection on a Treasury debt? If, after pursuing all appropriate means of collection, a Treasury entity determines that a Treasury debt is uncollectible, the Treasury entity may suspend or terminate debt collection activity in accordance with the provisions of 31 CFR part 903 and the Treasury entity's policies and procedures. Legal counsel approval to terminate debt collection activity is required as described in Treasury Directive 34-02 (Credit Management and Debt Collection), which may be found at http://www.treas.gov/regs. § 5.9 When will Treasury entities transfer a Treasury debt to the Treasury Department's Financial Management Service for collection? (a) Treasury entities will transfer any eligible debt that is more than 180 days delinquent to the Financial Management Service for debt collection services, a process known as “cross-servicing.” See See (b) At least sixty (60) days prior to transferring a Treasury debt to the Financial Management Service, Treasury entities will send notice to the debtor as required by § 5.4 of this part. Treasury entities will certify to the Financial Management Service, in writing, that the debt is valid, delinquent, legally enforceable, and that there are no legal bars to collection. In addition, Treasury entities will certify their compliance with all applicable due process and other requirements as described in this part and other Federal laws. See (c) As part of its debt collection process, the Financial Management Service uses the Treasury Offset Program to collect Treasury debts by administrative and tax refund offset. See § 5.10 How will Treasury entities use administrative offset (offset of non-tax Federal payments) to collect a Treasury debt? (a) Centralized administrative offset through the Treasury Offset Program. See See (2) At least sixty (60) days prior to referring a debt to the Treasury Offset Program, in accordance with paragraph (a)(1) of this section, Treasury entities will send notice to the debtor in accordance with the requirements of § 5.4 of this part. Treasury entities will certify to the Financial Management Service, in writing, that the debt is valid, delinquent, legally enforceable, and that there are no legal bars to collection by offset. In addition, Treasury entities will certify their compliance with the requirements described in this part. (b) Non-centralized administrative offset for Treasury debts. See (2) At least thirty (30) days prior to offsetting a payment internally or requesting a Federal payment agency to offset a payment, Treasury entities will send notice to the debtor in accordance with the requirements of § 5.4 of this part. When referring a debt for offset under this paragraph (b), Treasury entities making the request will certify, in writing, that the debt is valid, delinquent, legally enforceable, and that there are no legal bars to collection by offset. In addition, Treasury entities will certify their compliance with these regulations concerning administrative offset. See (c) Administrative review. (d) Procedures for expedited offset. § 5.11 How will Treasury entities use tax refund offset to collect a Treasury debt? (a) Tax refund offset. See See (b) Notice. See (c) Administrative review. § 5.12 How will Treasury entities offset a Federal employee's salary to collect a Treasury debt? (a) Federal salary offset. (2) Nothing in this part requires a Treasury entity to collect a Treasury debt in accordance with the provisions of this section if Federal law allows otherwise. See, for example, (3) Treasury entities may use the administrative wage garnishment procedure described in § 5.13 of this part to collect a debt from an individual's non-Federal wages. (b) Centralized salary offset through the Treasury Offset Program. (c) Non-centralized salary offset for Treasury debts. See See (d) When prior notice not required. (1) Any adjustment to pay arising out of any employee's election of coverage or a change in coverage under a Federal benefits program requiring periodic deductions from pay, if the amount to be recovered was accumulated over four pay periods or less; (2) 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 (3) 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. (e) Hearing procedures Request for a hearing. See (2) Failure to submit timely request for hearing. (3) Hearing official. (4) Notice of hearing. (5) Oral hearing. (i) Informal conferences with the hearing official, in which the employee and agency representative will be given full opportunity to present evidence, witnesses and argument; (ii) Informal meetings with an interview of the employee by the hearing official; or (iii) Formal written submissions, with an opportunity for oral presentation. (6) Paper hearing. (7) Failure to appear or submit documentary evidence. (8) Burden of proof. (9) Record. (10) Date of decision. (11) Content of decision. (i) A statement of the facts presented to support 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. (12) Final agency action. (f) Waiver not precluded. Nothing in this part precludes an employee from requesting waiver of an overpayment under 5 U.S.C. 5584 or 8346(b), 10 U.S.C. 2774, 32 U.S.C. 716, or other statutory authority. (g) Salary offset process Determination of disposable pay. (2) When salary offset begins. (3) Amount of salary offset. (i) If the amount of the debt is equal to or less than 15 percent of the disposable pay, such debt generally will be collected in one lump sum payment; (ii) Installment deductions will be made over a period of no greater than the anticipated period of employment. An installment deduction 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 or the creditor agency has determined that smaller deductions are appropriate based on the employee's ability to pay. (4) Final salary payment. (h) Payment agency's responsibilities. (2) If the employee is already separated from employment and all payments due from his or her former payment agency have been made, Treasury entities may request that money due and payable to the employee from the Civil Service Retirement Fund and Disability Fund, the Federal Employee Retirement System, or other similar funds, be administratively offset to collect the debt. Generally, Treasury entities will collect such monies through the Treasury Offset Program as described in § 5.9(c) of this part. (3) When an employee transfers to another agency, Treasury entities should resume collection with the employee's new payment agency in order to continue salary offset. § 5.13 How will Treasury entities use administrative wage garnishment to collect a Treasury debt from a debtor's wages? (a) Treasury entities are authorized to collect debts from a debtor's wages by means of administrative wage garnishment in accordance with the requirements of 31 U.S.C. 3720D and 31 CFR 285.11. This part adopts and incorporates all of the provisions of 31 CFR 285.11 concerning administrative wage garnishment, including the hearing procedures described in 31 CFR 285.11(f). Treasury entities may use administrative wage garnishment to collect a delinquent Treasury debt unless the debtor is making timely payments under an agreement to pay the debt in installments (see § 5.6 of this part). At least thirty (30) days prior to initiating an administrative wage garnishment, Treasury entities will send notice to the debtor in accordance with the requirements of § 5.4 of this part, including the requirements of § 5.4(a)(10) of this part. For Treasury debts referred to the Financial Management Service under § 5.9 of this part, Treasury entities may authorize the Financial Management Service to send a notice informing the debtor that administrative wage garnishment will be initiated and how the debtor may request a hearing as described in § 5.4(a)(10) of this part. If a debtor makes a timely request for a hearing, administrative wage garnishment will not begin until a hearing is held and a decision is sent to the debtor. See 31 CFR 285.11(f)(4). If a debtor's hearing request is not timely, Treasury entities may suspend collection by administrative wage garnishment in accordance with the provisions of 31 CFR 285.11(f)(5). All travel expenses incurred by the debtor in connection with an in-person hearing will be borne by the debtor. (b) This section does not apply to Federal salary offset, the process by which Treasury entities collect debts from the salaries of Federal employees (see § 5.12 of this part). § 5.14 How will Treasury entities report Treasury debts to credit bureaus? Treasury entities shall report delinquent Treasury debts to credit bureaus in accordance with the provisions of 31 U.S.C. 3711(e), 31 CFR 901.4, and the Office of Management and Budget Circular A-129, “Policies for Federal Credit Programs and Nontax Receivables.” For additional information, see Financial Management Service's “Guide to the Federal Credit Bureau Program,” which may be found at http://www.fms.treas.gov/debt. § 5.15 How will Treasury entities refer Treasury debts to private collection agencies? Treasury entities will transfer delinquent Treasury debts to the Financial Management Service to obtain debt collection services provided by private collection agencies. See § 5.9 of this part. § 5.16 When will Treasury entities refer Treasury debts to the Department of Justice? (a) Compromise or suspension or termination of collection activity. See (b) Litigation. § 5.17 Will a debtor who owes a Treasury debt be ineligible for Federal loan assistance or Federal licenses, permits or privileges? (a) Delinquent debtors barred from obtaining Federal loans or loan insurance or guaranties. (b) Suspension or revocation of eligibility for licenses, permits, or privileges. See § 5.18 How does a debtor request a special review based on a change in circumstances such as catastrophic illness, divorce, death, or disability? (a) Material change in circumstances. (b) Inability to pay. (1) Income from all sources; (2) Assets; (3) Liabilities; (4) Number of dependents; (5) Expenses for food, housing, clothing, and transportation; (6) Medical expenses; and (7) Exceptional expenses, if any. (c) Alternative payment arrangement. § 5.19 Will Treasury entities issue a refund if money is erroneously collected on a debt? Treasury entities shall promptly refund to a debtor any amount collected on a Treasury debt when the debt is waived or otherwise found not to be owed to the United States, or as otherwise required by law. Refunds under this part shall not bear interest unless required by law. Subpart C—Procedures for Offset of Treasury Department Payments To Collect Debts Owed to Other Federal Agencies § 5.20 How do other Federal agencies use the offset process to collect debts from payments issued by a Treasury entity? (a) Offset of Treasury entity payments to collect debts owed to other Federal agencies. (2) This subpart C does not apply to Treasury debts. See (3) This subpart C does not apply to the collection of non-Treasury debts through tax refund offset. See (b) Administrative offset (including salary offset); certification. (c) Where a creditor agency makes requests for offset. (d) Incomplete certification. (e) Review. (f) When Treasury entities will not comply with offset request. (g) Multiple debts. (h) Priority of debts owed to Treasury entity. § 5.21 What does a Treasury entity do upon receipt of a request to offset the salary of a Treasury entity employee to collect a debt owed by the employee to another Federal agency? (a) Notice to the Treasury employee. (b) Amount of deductions from Treasury employee's salary. See (c) When the debtor is no longer employed by the Treasury entity Offset of final and subsequent payments. See (2) Notice to the creditor agency. (3) Notice to the debtor. (d) When the debtor transfers to another Federal agency Notice to the creditor agency. (2) Notice to the debtor. (e) Request for hearing official. See Appendix A to Part 5—Treasury Directive 34-01—Waiving Claims Against Treasury Employees for Erroneous Payments Treasury Directive 34-01 Date: Sunset Review: Subject: 1. Purpose This Directive establishes the Department of the Treasury's policies and procedures for waiving claims by the Government against an employee for erroneous payments of: (1) Pay and allowances (e.g., health and life insurance) and (2) travel, transportation, and relocation expenses and allowances. 2. Background a. 5 U.S.C. § 5584 authorizes the waiver of claims by the United States in whole or in part against an employee arising out of erroneous payments of pay and allowances, travel, transportation, and relocation expenses and allowances. A waiver may be considered when collection of the claim would be against equity and good conscience and not in the best interest of the United States provided that there does not exist, in connection with the claim, an indication of fraud, misrepresentation, fault, or lack of good faith on the part of the employee or any other person having an interest in obtaining a waiver of the claim. b. The General Accounting Office Act of 1996 (Pub. L. 104-316), Title I, § 103(d), enacted October 19, 1996, amended 5 U.S.C. § 5584 by transferring the authority to waive claims for erroneous payments exceeding $1,500 from the Comptroller General of the United States to the Office of Management and Budget (OMB). OMB subsequently redelegated this waiver authority to the executive agency that made the erroneous payment. The authority to waive claims not exceeding $1,500, which was vested in the head of each agency prior to the enactment of Pub. L. 104-316, was unaffected by the Act. c. 5 U.S.C. § 5514 authorizes the head of each agency, upon a determination that an employee is indebted to the United States for debts to which the United States is entitled to be repaid at the time of the determination, to deduct up to 15%, or a greater amount if agreed to by the employee, from the employee's pay at officially established pay intervals in order to repay the debt. 3. Delegation a. The Deputy Assistant Secretary (Administration), the heads of bureaus, the Inspector General, and the Inspector General for Tax Administration are delegated the authority to waive, in whole or in part, a claim of the United States against an employee for an erroneous payment of pay and allowances, travel, transportation, and relocation expenses and allowances, aggregating less than $5,000 per claim, in accordance with the limitations and standards in 5 U.S.C. § 5584. b. Treasury's Deputy Chief Financial Officer is delegated the authority to waive, in whole or in part, a claim of the United States against an employee for an erroneous payment of pay and allowances, travel, transportation, and relocation expenses and allowances, aggregating $5,000 or more per claim, in accordance with the limitations and standards in 5 U.S.C. § 5584. 4. Appeals a. Requests for waiver of claims aggregating less than $5,000 per claim which are denied in whole or in part may be appealed to the Deputy Chief Financial Officer for the Department of the Treasury. b. Requests for waiver of claims aggregating $5,000 or more per claim which are denied in whole or in part may be appealed to the Assistant Secretary (Management)/Chief Financial Officer. 5. Redelegation The Deputy Assistant Secretary (Administration), the heads of bureaus, the Inspector General, and the Inspector General for Tax Administration may redelegate their respective authority and responsibility in writing no lower than the bureau deputy chief financial officer unless authorized by Treasury's Deputy Chief Financial Officer. Copies of each redelegation shall be submitted to the Department's Deputy Chief Financial Officer. 6. Responsibilities a. The Deputy Assistant Secretary (Administration), the heads of bureaus, the Inspector General, and the Inspector General for Tax Administration shall: (1) Promptly notify an employee upon discovery of an erroneous payment to that employee; (2) Promptly act to collect the erroneous overpayment, following established debt collection policies and procedures; (3) Establish time frames for employees to request a waiver in writing and for the bureau to review the waiver request. These time frames must take into consideration the responsibilities of the United States to take prompt action to pursue enforced collection on overdue debts, which may arise from erroneous payments. (4) Notify employees whose requests for waiver of claims aggregating less than $5,000 per claim are denied in whole or in part of the basis for the denial and the right to appeal the denial to the Deputy Chief Financial Officer of the Department of the Treasury. All such appeals shall: (a) Be made in writing; (b) Specify the basis for the appeal; (c) Include a chronology of the events surrounding the erroneous payments; (d) Include a statement regarding any mitigating factors; and (e) Be submitted to the official who denied the waiver request no later than 60 days from receipt by the employee of written notice of the denial of the waiver; and (f) Attach at least the following documents: the employee's original request for a waiver; the bureau's denial of the request; any personnel actions, e.g., promotions, demotions, step increases, etc. that relate to the overpayment. (5) Forward to Treasury's Deputy Chief Financial Officer the appeal and supporting documentation, the bureau's recommendation as to why the appeal should be approved or denied; and a statement as to the action taken by the bureau to avoid a recurrence of the error. (6) Pay a refund when appropriate if a waiver is granted; (7) Fulfill all labor relations responsibilities when implementing this directive; and (8) Fulfill any other responsibility of the agency imposed by 5 U.S.C. § 5584, or other applicable laws and regulations. b. Treasury's Deputy Chief Financial Officer shall advise employees whose requests for waiver of claims aggregating $5,000 or more per claim are denied in whole or in part of the basis for the denial and the right to appeal the denial to the Assistant Secretary (Management)/Chief Financial Officer. All such appeals shall be in the format and contain the information and documentation described in subsection 6.a.(4), above. The Deputy Chief Financial Officer shall forward to Assistant Secretary (Management)/Chief Financial Officer the appeal and supporting documentation, his/her recommendation as to why the appeal should be approved or denied, and a statement obtained from the bureau from which the claim arose as to the action taken by the bureau to avoid a recurrence of the error. 7. Reporting Requirements a. Each bureau, the Deputy Assistant Secretary (Administration) for Departmental Offices, the Inspector General, and the Inspector General for Tax Administration shall maintain a register of waiver actions subject to Departmental review. The register shall cover each fiscal year and be prepared by December 31 of each year for the preceding fiscal year. The register shall contain the following information: (1) The total amount waived by the bureau; (2) The number and dollar amount of waiver applications granted in full; (3) The number and dollar amount of waiver applications granted in part and denied in part, and the dollar amount of each; (4) The number and dollar amount of waiver applications denied in their entirety; (5) The number of waiver applications referred to the Deputy Chief Financial Officer for initial action or for appeal; (6) The dollar amount refunded as a result of waiver action by the bureau; and (7) The dollar amount refunded as a result of waiver action by the Deputy Chief Financial Officer or the Assistant Secretary (Management)/Chief Financial Officer. b. Each bureau, the Deputy Assistant Secretary (Administration) for Departmental Offices, the Inspector General, and the Inspector General for Tax Administration shall retain a written record of each waiver action for 6 years and 3 months. At a minimum, the written record shall contain: (1) The bureau's summary of the events surrounding the erroneous payment; (2) Any written comments submitted by the employee from whom collection is sought; (3) An account of the waiver action taken and the reasons for such action; and (4) Other pertinent information such as any action taken to refund amounts repaid. 8. Effect of Request for Waiver A request for a waiver of a claim shall not affect an employee's opportunity under 5 U.S.C. § 5514(a)(2)(D) for a hearing on the determination of the agency concerning the existence or the amount of the debt, or the terms of the repayment schedule. A request by an employee for a hearing under 5 U.S.C. § 5514(a)(2)(D) shall not affect an employee's right to request a waiver of the claim. The determination whether to waive a claim may be made at the discretion of the deciding official either before or after a final decision is rendered pursuant to 5 U.S.C. § 5514(a)(2)(D) concerning the existence or the amount of the debt, or the terms of the repayment schedule. 9. Guidelines for Determining Requests a. A request for a waiver shall not (1) “Fault” exists if, in light of all the circumstances, it is determined that the employee knew or should have known that an error existed, but failed to take action to have it corrected. Fault can derive from an act or a failure to act. Unlike fraud, fault does not require a deliberate intent to deceive. Whether an employee should have known about an error in pay is determined from the perspective of a reasonable person. Pertinent considerations in finding fault include whether: (a) The payment resulted from the employee's incorrect, but not fraudulent, statement that the employee should have known was incorrect; (b) The payment resulted from the employee's failure to disclose material facts in the employee's possession which the employee should have known to be material; or (c) The employee accepted a payment, which the employee knew or should have known to be erroneous. (2) Every case must be examined in light of its particular facts. For example, where an employee is promoted to a higher grade but the step level for the employee's new grade is miscalculated, it may be appropriate to conclude that there is no fault on the employee's part because employees are not typically expected to be aware of and understand the rules regarding determination of step level upon promotion. On the other hand, a different conclusion as to fault potentially may be reached if the employee in question is a personnel specialist or an attorney who concentrates on personnel law. b. If the deciding official finds an indication of fraud, misrepresentation, fault, or lack of good faith on the part of the employee or any other person having an interest in obtaining a waiver of the claim, then the request for a waiver must be denied. c. If the deciding official finds no indication of fraud, misrepresentation, fault, or lack of good faith on the part of the employee or any other person having an interest in obtaining a waiver of the claim, the employee is not (1) Whether collection of the claim would cause serious financial hardship to the employee from whom collection is sought. (2) Whether, because of the erroneous payment, the employee either has relinquished a valuable right or changed positions for the worse, regardless of the employee's financial circumstances. (a) To establish that a valuable right has been relinquished, it must be shown that the right was, in fact, valuable; that it cannot be regained; and that the action was based chiefly or solely on reliance on the overpayment. (b) To establish that the employee's position has changed for the worse, it must be shown that the decision would not have been made but for the overpayment, and that the decision resulted in a loss. (c) An example of a “detrimental reliance” would be a decision to sign a lease for a more expensive apartment based chiefly or solely upon reliance on an erroneous calculation of salary, and the funds spent for rent cannot be recovered. (3) The cost of collecting the claim equals or exceeds the amount of the claim; (4) The time elapsed between the erroneous payment and discovery of the error and notification of the employee; (5) Whether failure to make restitution would result in unfair gain to the employee; (6) Whether recovery of the claim would be unconscionable under the circumstances. d. The burden is on the employee to demonstrate that collection of the claim would be against equity and good conscience and not in the best interest of the United States. 10. Authorities a. 5 U.S.C. § 5584, “Claims for Overpayment of Pay and Allowances, and of Travel, Transportation and Relocation Expenses and Allowances.” b. 31 U.S.C. § 3711, “Collection and Compromise.” c. 31 U.S.C. § 3716, “Administrative Offset.” d. 31 U.S.C. § 3717, “Interest and Penalty on Claims.” e. 5 CFR Part 550, subpart K, “Collection by Offset from Indebted Government Employees.” f. 31 CFR Part 5, subpart B, “Salary Offset.” g. Determination with Respect to Transfer of Functions Pursuant to Public Law 104-316, OMB, December 17, 1996. 11. Cancellation TD 34-01, “Waiver of Claims for Erroneous Payments,” dated October 25, 1995, is superseded. 12. Office of Primary Interest Office of Accounting and Internal Control.