§ 1.1912   Collection by administrative offset.

   (a) Scope. (1) The term administrative offset has the meaning provided in
   § 1.1901.

   (2) This section does not apply to:

   (i) Debts arising under the Social Security Act, except as provided in 42
   U.S.C. 404;

   (ii) Payments made under the Social Security Act, except as provided for in
   31 U.S.C. 3716(c) (see 31 CFR 285.4, Federal Benefit Offset);

   (iii) Debts arising under, or payments made under, the Internal Revenue Code
   (see 31 CFR 285.2, Tax Refund Offset) or the tariff laws of the United
   States;

   (iv) Offsets against Federal salaries to the extent these standards are
   inconsistent with regulations published to implement such offsets under 5
   U.S.C. 5514 and 31 U.S.C. 3716 (see 5 CFR part 550, subpart K, and 31 CFR
   285.7, Federal Salary Offset);

   (v) Offsets under 31 U.S.C. 3728 against a judgment obtained by a debtor
   against the United States;

   (vi) Offsets or recoupments under common law, State law, or Federal statutes
   specifically prohibiting offsets or recoupments of particular types of
   debts; or

   (vii) Offsets in the course of judicial proceedings, including bankruptcy.

   (3) Unless otherwise provided for by contract or law, debts or payments that
   are  not  subject to administrative offset under 31 U.S.C. 3716 may be
   collected by administrative offset under the common law or other applicable
   statutory authority.

   (4) Unless otherwise provided by law, administrative offset of payments
   under the authority of 31 U.S.C. 3716 to collect a debt may not be conducted
   more than 10 years after the Government's right to collect the debt first
   accrued, unless facts material to the Government's right to collect the debt
   were not known and could not reasonably have been known by the official or
   officials of the Government who were charged with the responsibility to
   discover and collect such debts. This limitation does not apply to debts
   reduced to a judgment.

   (5) In bankruptcy cases, the Commission will seek legal advice from its
   counsel concerning the impact of the Bankruptcy Code, particularly 11 U.S.C.
   106, 362, and 553, on pending or contemplated collections by offset.

   (b) Mandatory centralized administrative offset. (1) The Commission is
   required to refer past due, legally enforceable nontax debts which are over
   120  days  delinquent  to  the  Treasury for collection by centralized
   administrative offset. Debts which are less than 120 days delinquent also
   may  be  referred  to the Treasury for this purpose. See FCCS for debt
   certification requirements.

   (2) The names and taxpayer identifying numbers (TINs) of debtors who owe
   debts referred to the Treasury as described in paragraph (b)(1) of this
   section shall be compared to the names and TINs on payments to be made by
   Federal  disbursing  officials.  Federal  disbursing officials include
   disbursing officials of Treasury, the Department of Defense, the United
   States  Postal  Service, other Government corporations, and disbursing
   officials of the United States designated by the Treasury. When the name and
   TIN of a debtor match the name and TIN of a payee and all other requirements
   for offset have been met, the payment will be offset to satisfy the debt.

   (3) Federal disbursing officials will notify the debtor/payee in writing
   that an offset has occurred to satisfy, in part or in full, a past due,
   legally enforceable delinquent debt. The notice shall include a description
   of the type and amount of the payment from which the offset was taken, the
   amount  of  offset that was taken, the identity of the creditor agency
   requesting the offset, and a contact point within the creditor agency who
   will respond to questions regarding the offset.

   (4)(i) Before referring a delinquent debt to the Treasury for administrative
   offset, and subject to any agreement and/or waiver to the contrary by the
   debtor, the Commission shall ensure that offsets are initiated only after
   the debtor:

   (A) Has been sent written notice of the type and amount of the debt, the
   intention of the Commission to use administrative offset to collect the
   debt, and an explanation of the debtor's rights under 31 U.S.C. 3716; and

   (B) The debtor has been given:

   (1) The opportunity to request within 15 days of the date of the written
   notice, after which opportunity is deemed waived, by the debtor, to inspect
   and copy Commission records related to the debt;

   (2) The opportunity, unless otherwise waived by the debtor, for a review
   within the Commission of the determination of indebtedness; and

   (3) The opportunity to request within 15 days of the date of the written
   notice, after which the opportunity is deemed waived by the debtor, for the
   debtor to make a written agreement to repay the debt.

   (ii) The Commission may omit the procedures set forth in paragraph (b)(4)(i)
   of this section when:

   (A) The offset is in the nature of a recoupment;

   (B) The debt arises under a contract as set forth in Cecile Industries, Inc.
   v. Cheney, 995 F.2d 1052 (Fed. Cir. 1993) (notice and other procedural
   protections set forth in 31 U.S.C. 3716(a) do not supplant or restrict
   established procedures for contractual offsets accommodated by the Contracts
   Disputes Act); or

   (C) In the case of non-centralized administrative offsets conducted under
   paragraph (c) of this section, the Commission first learns of the existence
   of the amount owed by the debtor when there is insufficient time before
   payment would be made to the debtor/payee to allow for prior notice and an
   opportunity for review. When prior notice and an opportunity for review are
   omitted, the Commission shall give the debtor such notice and an opportunity
   for  review as soon as practicable and shall promptly refund any money
   ultimately found not to have been owed to the Government.

   (iii) When the Commission previously has given a debtor any of the required
   notice and review opportunities with respect to a particular debt (see 31
   CFR  901.2),  the Commission need not duplicate such notice and review
   opportunities before administrative offset may be initiated.

   (5) Before the Commission refers delinquent debts to the Treasury, the
   Office  of Managing Director must certify, in a form acceptable to the
   Treasury, that:

   (i) The debt(s) is (are) past due and legally enforceable; and

   (ii) The Commission has complied with all due process requirements under 31
   U.S.C. 3716(a) and its regulations.

   (6) Payments that are prohibited by law from being offset are exempt from
   centralized administrative offset. The Treasury shall exempt payments under
   means-tested programs from centralized administrative offset when requested
   in writing by the head of the payment certifying or authorizing agency.
   Also, the Treasury may exempt other classes of payments from centralized
   offset upon the written request of the head of the payment certifying or
   authorizing agency.

   (7) Benefit payments made under the Social Security Act (42 U.S.C. 301 et
   seq.), part B of the Black Lung Benefits Act (30 U.S.C. 921 et seq.), and
   any law administered by the Railroad Retirement Board (other than tier 2
   benefits), may be offset only in accordance with Treasury regulations,
   issued in consultation with the Social Security Administration, the Railroad
   Retirement Board, and the Office of Management and Budget. See 31 CFR 285.4.

   (8)  In  accordance with 31 U.S.C. 3716(f), the Treasury may waive the
   provisions of the Computer Matching and Privacy Protection Act of 1988
   concerning matching agreements and post-match notification and verification
   (5  U.S.C. 552a(o) and (p)) for centralized administrative offset upon
   receipt of a certification from a creditor agency that the due process
   requirements  enumerated  in  31  U.S.C.  3716(a)  have  been met. The
   certification of a debt in accordance with paragraph (b)(5) of this section
   will satisfy this requirement. If such a waiver is granted, only the Data
   Integrity Board of the Department of the Treasury is required to oversee any
   matching activities, in accordance with 31 U.S.C. 3716(g). This waiver
   authority does not apply to offsets conducted under paragraphs (c) and (d)
   of this section.

   (c) Non-centralized administrative offset. (1) Generally, non-centralized
   administrative offsets are ad hoc case-by-case offsets that the Commission
   conducts, at the Commission's discretion, internally or in cooperation with
   the  agency  certifying  or authorizing payments to the debtor. Unless
   otherwise prohibited by law, when centralized administrative offset is not
   available or appropriate, past due, legally enforceable nontax delinquent
   debts may be collected through non-centralized administrative offset. In
   these  cases,  a  creditor  agency  may  make  a request directly to a
   payment-authorizing agency to offset a payment due a debtor to collect a
   delinquent debt. For example, it may be appropriate for a creditor agency to
   request that the Office of Personnel Management (OPM) offset a Federal
   employee's lump-sum payment upon leaving Government service to satisfy an
   unpaid advance.

   (2) The Commission will make reasonable effort to ensure that such offsets
   may occur only after:

   (i) The debtor has been provided due process as set forth in paragraph
   (b)(4) of this section (subject to any waiver by the debtor); and

   (ii) The payment authorizing agency has received written certification from
   the  Commission that the debtor owes the past due, legally enforceable
   delinquent debt in the amount stated, and that the creditor agency has fully
   complied with its regulations concerning administrative offset.

   (3)  Payment authorizing agencies shall comply with offset requests by
   creditor agencies to collect debts owed to the United States, unless the
   offset would not be in the best interests of the United States with respect
   to the program of the payment authorizing agency, or would otherwise be
   contrary to law. Appropriate use should be made of the cooperative efforts
   of other agencies in effecting collection by administrative offset.

   (4) When collecting multiple debts by non-centralized administrative offset,
   agencies should apply the recovered amounts to those debts in accordance
   with the best interests of the United States, as determined by the facts and
   circumstances of the particular case, particularly the applicable statute of
   limitations.

   [ 69 FR 27848 , May 17, 2004, as amended at  76 FR 24393 , May 2, 2011;  80 FR 43031 , July 21, 2015]

   return arrow Back to Top