§ 1.1940   Assessment.

   (a) Except as provided in paragraphs (g), (h), and (i) of this section or
   § 1.1941, the Commission shall charge interest, penalties, and administrative
   costs on debts owed to the United States pursuant to 31 U.S.C. 3717. The
   Commission will mail, hand-deliver, or use other forms of transmission,
   including facsimile telecopier service, a written notice to the debtor, at
   the debtor's CORES contact address (see section 1.8002(b)) explaining the
   Commission's  requirements concerning these charges except where these
   requirements  are included in a contractual or repayment agreement, or
   otherwise provided in the Commission's rules, as may be amended from time to
   time. These charges shall continue to accrue until the debt is paid in full
   or otherwise resolved through compromise, termination, or waiver of the
   charges. This provision is not intended to modify or limit the terms of any
   contract, note, or security agreement from the debtor, or to modify or limit
   the Commission's rights under its rules with regard to the notice or the
   parties' agreement to waive notice.

   (b) The Commission shall charge interest on debts owed the United States as
   follows:

   (1) Interest shall accrue from the date of delinquency, or as otherwise
   provided  by  the  terms of any contract, note, or security agreement,
   regulation, or law.

   (2) Unless otherwise established in a contract, note, or security agreement,
   repayment agreement, or by statute, the rate of interest charged shall be
   the rate established annually by the Treasury in accordance with 31 U.S.C.
   3717. Pursuant to 31 U.S.C. 3717, an agency may charge a higher rate of
   interest if it reasonably determines that a higher rate is necessary to
   protect the rights of the United States. The agency should document the
   reason(s) for its determination that the higher rate is necessary.

   (3) The rate of interest, as initially charged, shall remain fixed for the
   duration  of  the  indebtedness. When a debtor defaults on a repayment
   agreement and seeks to enter into a new agreement, the agency may require
   payment of interest at a new rate that reflects the current value of funds
   to the Treasury at the time the new agreement is executed. Interest shall
   not be compounded, that is, interest shall not be charged on interest,
   penalties, or administrative costs required by this section. If, however, a
   debtor defaults on a previous repayment agreement, charges that accrued but
   were not collected under the defaulted agreement shall be added to the
   principal under the new repayment agreement.

   (c) The Commission shall assess administrative costs incurred for processing
   and handling delinquent debts. The calculation of administrative costs may
   be based on actual costs incurred or upon estimated costs as determined by
   the Commission. Commission administrative costs include the personnel and
   service costs (e.g., telephone, copier, and overhead) to notify and collect
   the debt, without regard to the success of such efforts by the Commission.

   (d) Unless otherwise established in a contract, repayment agreement, or by
   statute,  the  Commission will charge a penalty, pursuant to 31 U.S.C.
   3717(e)(2), currently not to exceed six percent (6%) a year on the amount
   due on a debt that is delinquent for more than 90 days. This charge shall
   accrue from the date of delinquency. If the rate permitted under 31 U.S.C.
   3717 is changed, the Commission will apply that rate.

   (e) The Commission may increase an administrative debt by the cost of living
   adjustment in lieu of charging interest and penalties under this section.
   Administrative debt includes, but is not limited to, a debt based on fines,
   penalties,  and overpayments, but does not include a debt based on the
   extension of Government credit, such as those arising from loans and loan
   guaranties. The cost of living adjustment is the percentage by which the
   Consumer Price Index for the month of June of the calendar year preceding
   the adjustment exceeds the Consumer Price Index for the month of June of the
   calendar year in which the debt was determined or last adjusted. Increases
   to administrative debts shall be computed annually. Agencies should use this
   alternative only when there is a legitimate reason to do so, such as when
   calculating interest and penalties on a debt would be extremely difficult
   because of the age of the debt.

   (f) When a debt is paid in partial or installment payments, amounts received
   by  the  agency  shall  be  applied first to outstanding penalties and
   administrative cost charges, second to accrued interest, and third to the
   outstanding principal.

   (g) The Commission will waive the collection of interest and administrative
   charges imposed pursuant to this section on the portion of the debt that is
   paid within 30 days after the date on which interest began to accrue. The
   Commission will not extend this 30-day period except for good cause shown of
   extraordinary  and compelling circumstances, completely documented and
   supported in writing, submitted and received before the expiration of the
   first  30-day  period.  The  Commission  may,  on  good cause shown of
   extraordinary  and compelling circumstances, completely documented and
   supported in writing, waive interest, penalties, and administrative costs
   charged under this section, in whole or in part, without regard to the
   amount of the debt, either under the criteria set forth in these standards
   for the compromise of debts, or if the agency determines that collection of
   these charges is against equity and good conscience or is not in the best
   interest of the United States.

   (h) The Commission retains the common law right to impose interest and
   related charges on debts not subject to 31 U.S.C. 3717.

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