[Federal Register: July 25, 2002 (Volume 67, Number 143)]
[&thnsp;Rules and Regulations]
[Page 48525-48537]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr25jy02-2]
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FEDERAL DEPOSIT INSURANCE CORPORATION
12 CFR Part 313
RIN 3064–AC40
Procedures for Corporate Debt Collection
AGENCY: Federal Deposit Insurance Corporation (FDIC).
ACTION: Final rule.
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SUMMARY: The FDIC is issuing a new regulation governing procedures for
corporate debt collection. The Debt Collection Improvement Act of 1996
requires agencies to promulgate regulations on this subject. The
regulation sets forth the procedures the FDIC will follow in collecting
debts owed to the United States. These procedures include collection of
debts through administrative offset, salary offset, administrative wage
garnishment and tax refund offset.
EFFECTIVE DATE: August 26, 2002.
FOR FURTHER INFORMATION CONTACT: Manuel A. Palau (202) 898–8829
of the Legal Division; Connie Brindle (202) 416–7224 of the
Division of Finance; or David Harrington (202) 942–3396 of the
Division of Administration. The FDIC's main office is located at 550
17th Street, NW., Washington, DC 20429.
SUPPLEMENTARY INFORMATION:
I. Background
This rule implements changes to the law made by the Debt Collection
Improvement Act of 1996 (DCIA). The DCIA requires federal agencies to
collect debts owed to the United States under regulations prescribed by
the head of the agency, and standards prescribed by the Department of
Justice and the Department of the Treasury. 31 U.S.C. 3711. These
standards, known as the Federal Claims Collection Standards (FCCS),
became effective on December 22, 2000. 31 CFR chapter IX and parts 900
through 904.
The DCIA also requires agencies, prior to collecting debts owed to
the United States by administrative offset, to: (1) adopt without
change regulations on collecting debts by administrative offset
promulgated by the Department of Justice or Department of the Treasury
(FCCS); or (2) prescribe agency regulations for collecting such debts
by administrative offset, which are consistent with the FCCS. 31 U.S.C.
3716. The agency regulations protect the minimum due process rights
that must be afforded to the debtor when an agency seeks to collect a
debt by administrative offset, including the ability to verify,
challenge, and compromise claims, and access to administrative appeals
procedures which are both reasonable and protect the interests of the
United States.
The FDIC has decided to issue its own agency regulations for debt
collection and administrative offset, in part to account for the FDIC's
status as an independent regulatory agency. The regulations are,
however, consistent with the FCCS, as required by the DCIA. The salary
offset portion of the regulations has been submitted to and approved by
the Office of Personnel Management (OPM), as required by 5 U.S.C. 5514.
In addition, the tax refund offset provisions of the regulations
satisfy the requirement in 31 CFR 285.2(c) that the FDIC adopt agency
regulations authorizing its collection of debts by administrative
offset in general and tax refund offset in particular. The
administrative wage garnishment provisions of the regulations satisfy
the requirement in 31 CFR 285.11(f) that the FDIC adopt regulations for
the conduct of administrative wage garnishment hearings consistent with
31 CFR 285.11.
In addition to these legal authorities, the FDIC is issuing these
regulations pursuant to 12 U.S.C. 1819(a), which authorizes the FDIC to
adopt such reasonable regulations as it deems necessary to carry out
its corporate functions and duties.
II. Discussion of the Rule
A. Subpart A—Scope, Purpose, Definitions and Delegations of
Authority
The regulations apply only to debts owed to the United States which
arise out of FDIC transactions and functions in its corporate capacity,
including, but not limited to: employee or former employee matters such
as travel-related claims, claims arising out of the travel card
program, and erroneous overpayments; agency contracting activities
involving corporate operations; and debts related to requests for
documents under the Freedom of Information Act (FOIA). These
regulations do not apply to debts owed to or payments made by the FDIC
in connection with the FDIC's receivership, liquidation, supervision,
enforcement, or insurance responsibilities, nor do they limit or affect
the FDIC's authority pursuant to 12 U.S.C. 1819(a) and 1820(a).
When the FDIC Director of the Division of Administration (DOA) or
Director of the Division of Finance (DOF) determines that it is
appropriate to initiate debt collection or seek administrative offset
to collect that debt, the Director shall conform to the procedural
standards for collecting debts set forth in the FCCS. 31 CFR parts 900
through 904. The FCCS establish standards governing the following areas
of the debt collection process: prompt demand of payment of the claim
from the debtor; review of the existence or amount of a debt claimed,
upon the debtor's demand for a final agency determination; standards
for collecting debts in installment payments; the required assessment
of
[[Page 48526]]
interest, penalties and administrative costs on debts claimed;
standards for compromise of claims due; standards to be followed in
determining whether to suspend or terminate collection action; the
required referral of delinquent debts to the Secretary of the Treasury,
for collection by means of centralized administrative offset under the
Treasury Offset Program; the reporting of debts to consumer reporting
agencies and the use of credit reports; and the sale of delinquent
debts. In addition, when the Director elects to pursue a specific debt
collection remedy such as salary offset, administrative wage
garnishment, offset against Civil Service Retirement and Disability
Fund payments or offset against tax refunds, the Director shall follow
the applicable procedures for that debt collection remedy set forth in
the regulations.
B. Subpart B—Administrative Offset
Pursuant to 31 U.S.C. 3716, the FDIC may collect debts owed to the
United States through administrative offset. Under the administrative
offset regulations, the FDIC is authorized to collect debts owed to the
United States by: (1) withholding money payable by the FDIC to the
debtor, or held by the FDIC for the debtor; or (2) by requesting that
another federal agency withhold money payable to the debtor, or held by
the agency for the debtor. Subpart B of the regulations meets the
requirement under 31 U.S.C. 3716(b) that the FDIC promulgate
regulations for administrative offset procedures and provide minimum
due process rights to the debtor, including the ability to verify,
challenge, and compromise claims, and access to administrative appeals
procedures which are both reasonable and protect the interests of the
FDIC. Subpart B of the regulations also meets the requirement under 4
CFR 901.3 that the FDIC prescribe administrative offset regulations
consistent with the FCCS prior to referring delinquent debts to the
Secretary of the Treasury for collection by centralized administrative
offset.
C. Subpart C—Salary Offset
Subpart C of the regulations provides that when the FDIC determines
it is appropriate to collect a debt by means of deductions from the
current pay account of an FDIC employee, or any individual employed by
the federal government (including a former FDIC employee), the FDIC
shall initiate salary offset under 5 U.S.C. 5514(a)(1). Salary offset
is a form of administrative offset governed by statute (5 U.S.C. 5514)
and by regulations issued by the OPM (5 CFR part 550, subpart K).
Salary offset may only be used to collect debts owed by persons
currently employed by the federal government. As noted above, the
statute requires agencies to promulgate regulations to carry out salary
offset subject to OPM approval. 5 U.S.C. 5514(b)(1). Subpart C
implements those statutory requirements.
D. Subpart D—Administrative Wage Garnishment
Subpart D of the regulations sets forth procedures that may be used
by the FDIC to collect debts by garnishing the wages of individuals
employed outside the federal government. This includes persons employed
by the private sector, as well as state and local governments. The
administrative wage garnishment regulations are issued in compliance
with 31 U.S.C. 3720D and 31 CFR 285.11(f). Administrative wage
garnishment regulations do not apply to the collection of delinquent
debts from the wages of federal employees. Federal pay is subject to
the federal salary offset procedures set forth in 5 U.S.C. 5514 and
other applicable laws.
E. Subpart E—Tax Refund Offset
Where collection by salary offset or administrative offset is not
feasible, the FDIC may also seek to recover a legally enforceable,
past-due debt owed the United States by requesting that the Financial
Management Service of the Department of the Treasury offset all or part
of a tax refund to a debtor by the amount of the debt and pay such
money to the FDIC. 31 U.S.C. 3720A; 26 CFR 301.6402 through 6406. In
order to collect a debt by means of tax refund offset, the FDIC is
required to promulgate its own regulations on salary offset,
administrative offset, and tax refund offset. 31 U.S.C. 3720A(b)(4); 31
CFR 285.2. Subpart E of the regulations implements this requirement.
F. Subpart F—Civil Service Retirement and Disability Fund Offset
Under certain circumstances, the FDIC may also request that money
payable from the Civil Service Retirement and Disability Fund be offset
by the OPM to recover a valid debt due to the United States. 5 CFR
831.1801 through 831.1808. The regulations governing such offsets
provide that creditor agencies may make such requests to OPM upon
compliance with the administrative offset procedures required under 31
U.S.C. 3716, or the salary offset procedures required under 5 U.S.C.
5514, and the corresponding regulations. Subpart F of the regulations
provides a process for such offset.
G. Subpart G—Mandatory Centralized Administrative Offset
When the FDIC is the creditor agency, it is required to refer all
legally enforceable, non-tax debts that are delinquent (over 180 days
past due), as defined in the FCCS, to the Secretary of the Treasury, to
enable the Secretary to seek collection by centralized administrative
offset. 31 U.S.C. 3716. Subpart G of the regulations implements this
requirement.
III. Administrative Procedure Act
No notice of proposed rulemaking is required under the
Administrative Procedure Act (APA) because these rules relate solely to
agency procedure and practice. 5 U.S.C. 553(b)(3)(A). Furthermore,
notice and an opportunity for public comment are not necessary prior to
issuance of this final rule because it implements a definitive
statutory scheme mandated by the DCIA.
IV. Regulatory Flexibility Act
Pursuant to the Regulatory Flexibility Act, the FDIC hereby
certifies that the rules set forth in this notice do not have a
significant economic impact on a substantial number of small business
entities. The rule applies primarily to federal agencies and employees
and a limited number of business entities. 5 U.S.C. 605(b).
V. Paperwork Reduction Act
These rules are not subject to the Paperwork Reduction Act (44
U.S.C. 3501), since they do not contain any new information collection
requirements.
VI. Assessment of Impact of Federal Regulation on Families
The FDIC has determined that the rule will not affect family well-
being within the meaning of section 654 of the Treasury and General
Government Appropriations Act, enacted as part of the Omnibus
Consolidated and Emergency Supplemental Appropriations Act, 1999 (Pub.
L. 105–277, 112 Stat. 2681).
VII. Small Business Regulatory Enforcement Fairness Act
The Small Business Regulatory Enforcement Fairness Act of 1996
(SBREFA) (Pub. L. 104–121) provides generally for agencies to
report rules to Congress for review. The reporting requirement is
triggered when the FDIC issues a final rule as defined by the APA at 5
U.S.C. 551. Because the FDIC is issuing a final rule as defined by the
APA, the FDIC will file the reports required by SBREFA. The Office of
[[Page 48527]]
Management and Budget has determined that this final rule does not
constitute a “major rule” as defined by SBREFA.
List of Subjects in 12 CFR Part 313
Administrative practice and procedure, Claims, Debt collection,
Government employees, Hearing procedures, Wages.
For the reasons set forth in the preamble, 12 CFR part 313 is added
as follows:
PART 313—PROCEDURES FOR CORPORATE DEBT COLLECTION
Subpart A—Scope, Purpose, Definitions and Delegations of
Authority
Sec.
313.1 Scope.
313.2 Purpose.
313.3 Definitions.
313.4 Delegations of authority.
313.5—313.19 [Reserved]
Subpart B—Administrative Offset
313.20 Applicability and scope.
313.21 Definitions.
313.22 Collection.
313.23 Offset prior to completion of procedures.
313.24 Omission of procedures.
313.25 Debtor's rights.
313.26 Interest.
313.27 Refunds.
313.28 No requirement for duplicate notice.
313.29 Requests for offset to other federal agencies.
313.30 Requests for offset from other federal agencies.
313.31—313.39 [Reserved]
Subpart C—Salary Offset
313.40 Scope.
313.41 Notice requirement where FDIC is creditor agency.
313.42 Procedures to request a hearing.
313.43 Failure to timely submit request for hearing.
313.44 Procedure for hearing.
313.45 Certification of debt by FDIC as creditor agency.
313.46 Notice of salary offset where FDIC is the paying
agency.
313.47 Voluntary repayment agreements as alternative to salary
offset where the FDIC is the creditor agency.
313.48 Special review of repayment agreement or salary offset
due to changed circumstances.
313.49 Coordinating salary offset with other agencies.
313.50 Interest, penalties, and administrative costs.
313.51 Refunds.
313.52 Request from a creditor agency for services of a
hearing official.
313.53 Non-waiver of rights by payments.
313.54 Exception to due process procedures.
313.55 Salary adjustments.
313.56–313.79 [Reserved]
Subpart D—Administrative Wage Garnishment
313.80 Scope and purpose.
313.81 Notice.
313.82 Debtor's rights.
313.83 Form of hearing.
313.84 Effect of timely request.
313.85 Failure to timely request a hearing.
313.86 Hearing official.
313.87 Procedure.
313.88 Format of hearing.
313.89 Date of decision.
313.90 Content of decision.
313.91 Finality of agency action.
313.92 Failure to appear.
313.93 Wage garnishment order.
313.94 Certification by employer.
313.95 Amounts withheld.
313.96 Exclusions from garnishment.
313.97 Financial hardship.
313.98 Ending garnishment.
313.99 Prohibited actions by employer.
313.100 Refunds.
313.101 Right of action.
313.102–313.119 [Reserved]
Subpart E—Tax Refund Offset
313.120 Scope.
313.121 Definitions.
313.122 Notification of debt to FMS.
313.123 Certification and referral of debt.
313.124 Pre-offset notice and consideration of evidence.
313.125 Referral of past-due, legally enforceable debt.
313.126 Correcting and updating referral.
313.127 Disposition of amounts collected.
313.128–313.139 [Reserved]
Subpart F—Civil Service Retirement and Disability Fund Offset
313.140 Future benefits.
313.141 Notification to OPM.
313.142 Request for administrative offset.
313.143 Cancellation of deduction.
313.144–313.159 [Reserved]
Subpart G—Mandatory Centralized Administrative Offset
313.160 Treasury notification.
313.161 Certification of debt.
313.162 Compliance with 31 CFR part 285.
313.163 Notification of debts of 180 days or less.
313.164–313.180 [Reserved]
Authority: 12 U.S.C. 1819(a); 5 U.S.C. 5514; Pub. L.
104–143, 110 Stat. 1321 (31 U.S.C. 3711, 3716).
Subpart A—Scope, Purpose, Definitions and Delegations of
Authority
§&thnsp;313.1 Scope.
This part establishes FDIC procedures for the collection of certain
debts owed to the United States.
(a) This part applies to collections by the FDIC from:
(1) Federal employees who are indebted to the FDIC;
(2) Employees of the FDIC who are indebted to other agencies; and
(3) Other persons, organizations, or entities that are indebted to
the FDIC, except those excluded in paragraph (b)(3) of this section.
(b) This part does not apply:
(1) To debts or claims arising under the Internal Revenue Code of
1986 (Title 26, U.S. Code), the Social Security Act (42 U.S.C. 301 et
seq.), or the tariff laws of the United States;
(2) To a situation to which the Contract Disputes Act (41 U.S.C.
601 et seq.) applies; or
(3) In any case where collection of a debt is explicitly provided
for or prohibited by another statute.
(c) This part applies only to debts owed to and payments made by
the FDIC acting in its corporate capacity; that is, in connection with
employee matters such as travel-related claims and erroneous
overpayments, contracting activities involving corporate operations,
debts related to requests to the FDIC for documents under the Freedom
of Information Act (FOIA) or where a request for an offset is received
by the FDIC from another federal agency. It does not apply to debts
owed to or payments made by the FDIC in connection with the FDIC's
liquidation, supervision, enforcement, or insurance responsibilities,
nor does it limit or affect the FDIC's authority with respect to debts
and/or claims pursuant to 12 U.S.C. 1819(a) and 1820(a).
(d) Nothing in this part 313 precludes the compromise, suspension,
or termination of collection actions, where appropriate, under:
standards implementing the Debt Collection Improvement Act (DCIA) (31
U.S.C. 3711 et seq.), the Federal Claims Collection Standards (FCCS)
(31 CFR chapter IX and parts 900 through 904); or any other applicable
law.
§&thnsp;313.2 Purpose.
(a) The purpose of this part is to implement federal statutes and
regulatory standards authorizing the FDIC to collect debts owed to the
United States. This part is consistent with the following federal
statutes and regulations:
(1) DCIA at 31 U.S.C. 3711 (collection and compromise of claims);
section 3716 (administrative offset), section 3717 (interest and
penalty on claims), and section 3718 (contracts for collection
services);
(2) 5 U.S.C. 5514 (salary offset);
(3) 5 U.S.C. 5584 (waiver of claims for overpayment);
(4) 31 CFR chapter IX and parts 900 through 904 (Federal Claims
Collection Standards);
(5) 5 CFR part 550, subpart K (salary offset);
(6) 31 U.S.C. 3720D, 31 CFR 285.11 (administrative wage
garnishment);
[[Page 48528]]
(7) 26 U.S.C. 6402(d), 31 U.S.C. 3720A and 31 CFR 285.2 (tax refund
offset); and
(8) 5 CFR 831.1801 through 1808 (U. S. Office of Personnel
Management (OPM) offset).
(b) Collectively, these statutes and regulations prescribe the
manner in which federal agencies should proceed to establish the
existence and validity of debts owed to the federal government and
describe the remedies available to agencies to offset valid debts.
§&thnsp;313.3 Definitions.
Except where the context clearly indicates otherwise or where the
term is defined elsewhere in this subpart, the following definitions
shall apply to this subpart.
(a) Agency means a department, agency, court, court administrative
office, or instrumentality in the executive, judicial, or legislative
branch of government, including government corporations.
(b) Board means the Board of Directors of the FDIC.
(c) Centralized administrative offset means the mandatory referral
to the Secretary of the Treasury by a creditor agency of a past due
debt which is more than 180 days delinquent, for the purpose of
collection under the Treasury's centralized offset program.
(d) Certification means a written statement transmitted from a
creditor agency to a paying agency for purposes of administrative or
salary offset, or to the Secretary of the Treasury for centralized
administrative offset. The certification confirms the existence and
amount of the debt and verifies that required procedural protections
have been afforded the employee. Where the debtor requests a hearing on
a claimed debt, the decision by a hearing official or administrative
law judge constitutes a certification.
(e) Chairman means the Chairman of the FDIC.
(f) Compromise means the settlement or forgiveness of a debt under
31 U.S.C. 3711, in accordance with standards set forth in the FCCS and
applicable federal law.
(g) Creditor agency means an agency of the federal government to
which the debt is owed, or a debt collection center when acting on
behalf of a creditor agency to collect a debt.
(h) Debt means an amount owed to the United States from loans
insured or guaranteed by the United States and all other amounts due
the United States from fees, leases, rents, royalties, services, sales
of real or personal property, overpayments, penalties, damages,
interest, fines and forfeitures, and all other similar sources. For
purposes of this part, a debt owed to the FDIC constitutes a debt owed
to the United States.
(i) Debt collection center means the Department of the Treasury or
other government agency or division designated by the Secretary of the
Treasury with authority to collect debts on behalf of creditor agencies
in accordance with 31 U.S.C. 3711(g).
(j) Director means the Director of the Division of Finance (DOF) or
the Director of the Division of Administration (DOA), as applicable, or
the applicable Director's delegate.
(k) Disposable pay means that part of current adjusted basic pay,
special pay, incentive pay, retired pay, retainer pay, and, in the case
of an employee not entitled to adjusted basic pay, other authorized
pay, remaining for each pay period after the deduction of any amount
required by law to be withheld. The FDIC shall allow the following
deductions in determining the amount of disposable pay that is subject
to salary offset:
(1) Federal employment taxes;
(2) Federal, state, or local income taxes to the extent authorized
or required by law, but no greater than would be the case if the
employee claimed all dependents to which he or she is entitled and such
additional amounts for which the employee presents evidence of a tax
obligation supporting the additional withholding;
(3) Medicare deductions;
(4) Health insurance premiums;
(5) Normal retirement contributions, including employee
contributions to the Thrift Savings Plan or the FDIC 401(k) Plan;
(6) Normal life insurance premiums (e.g., Serviceman's Group Life
Insurance and “Basic Life” Federal Employee's Group Life
Insurance premiums), not including amounts deducted for supplementary
coverage;
(7) Amounts mandatorily withheld for the United States Soldiers'
and Airmen's Home;
(8) Fines and forfeiture ordered by a court-martial or by a
commanding officer.
(l) Division of Administration (DOA) means the Division of
Administration of the FDIC.
(m) Division of Finance (DOF) means the Division of Finance of the
FDIC.
(n) Federal Claims Collection Standards (FCCS) means standards
published at 31 CFR chapter IX and parts 900 through 904.
(o) Garnishment means the process of withholding amounts from the
disposable pay of a person employed outside the federal government, and
the paying of those amounts to a creditor in satisfaction of a
withholding order.
(p) Hearing official means an administrative law judge or other
individual authorized to conduct a hearing and issue a final decision
in response to a debtor's request for hearing. A hearing official may
not be under the supervision or control of the Chairman or FDIC Board
when the FDIC is the creditor agency.
(q) Notice of Intent to Offset or Notice of Intent means a written
notice from a creditor agency to an employee, organization, or entity
that claims a debt and informs the debtor that the creditor agency
intends to collect the debt by administrative offset. The notice also
informs the debtor of certain procedural rights with respect to the
claimed debt and offset.
(r) Notice of Salary Offset means a written notice from a paying
agency to its employee informing the employee that salary offset to
collect a debt due to the creditor agency will begin at the next
officially established pay interval. The paying agency transmits this
notice to its employee after receiving a certification from the
creditor agency.
(s) Paying agency means the agency of the federal government that
employs the individual who owes a debt to an agency of the federal
government. The same agency may be both the creditor agency and the
paying agency.
(t) Salary offset means an administrative offset to collect a debt
under 5 U.S.C. 5514 by deduction(s) at one or more officially
established pay intervals from the current pay account of an employee
without his or her consent.
(u) Waiver means the cancellation, remission, forgiveness or non-
recovery of a debt allegedly owed by an employee to an agency, as
authorized or required by 5 U.S.C. 5584 or any other law.
(v) Withholding order means any order for withholding or
garnishment of pay issued by an agency, or judicial or administrative
body. For purposes of administrative wage garnishment, the terms
“wage garnishment order” and “garnishment
order” have the same meaning as “withholding order.”
§&thnsp;313.4 Delegations of authority.
Authority to conduct the following activities is delegated to the
Director of DOA or Director of DOF, as applicable, or the applicable
Director's delegate, to:
(a) Initiate and carry out the debt collection process on behalf of
the FDIC, in accordance with the FCCS;
(b) Accept or reject compromise offers and suspend or terminate
collection actions to the full extent of the FDIC's legal authority
under 12 U.S.C. 1819(a)
[[Page 48529]]
and 1820(a), 31 U.S.C. 3711(a)(2), and any other applicable statute or
regulation, provided, however, that no such claim shall be compromised
or collection action terminated, except upon the concurrence of the
FDIC General Counsel or his or her designee;
(c) Report to consumer reporting agencies certain data pertaining
to delinquent debts, where appropriate;
(d) Use administrative offset procedures, including salary offset,
to collect debts; and
(e) Take any other action necessary to promptly and effectively
collect debts owed to the United States in accordance with the policies
contained herein and as otherwise provided by law.
§§&thnsp;313.5–313.19 [Reserved]
Subpart B—Administrative Offset
§&thnsp;313.20 Applicability and scope.
The provisions of this subpart apply to the collection of debts
owed to the United States arising from transactions with the FDIC.
Administrative offset is authorized under the DCIA. This subpart is
consistent with the FCCS on administrative offset issued by the
Department of Justice.
§&thnsp;313.21 Definitions.
(a) Administrative offset means withholding funds payable by the
United States to, or held by the United States for, a person to satisfy
a debt.
(b) Person includes a natural person or persons, profit or
nonprofit corporation, partnership, association, trust, estate,
consortium, or other entity which is capable of owing a debt to the
United States Government except that agencies of the United States, or
any state or local government shall be excluded.
§&thnsp;313.22 Collection.
(a) The Director may collect a claim from a person by
administrative offset of monies payable by the Government only after:
(1) Providing the debtor with due process required under this part;
and
(2) Providing the paying agency with written certification that the
debtor owes the debt in the amount stated and that the FDIC, as
creditor agency, has complied with this part.
(b) Prior to initiating collection by administrative offset, the
Director should determine that the proposed offset is within the scope
of this remedy, as set forth in 31 CFR 901.3(a). Administrative offset
under 31 U.S.C. 3716 may not be used to collect debts more than 10
years after the federal government's right to collect the debt first
accrued, except as otherwise provided by law. In addition,
administrative offset may not be used when a statute explicitly
prohibits its use to collect the claim or type of claim involved.
(c) Unless otherwise provided, debts or payments not subject to
administrative offset under 31 U.S.C. 3716 may be collected by
administrative offset under common law, or any other applicable
statutory authority.
§&thnsp;313.23 Offset prior to completion of procedures.
The FDIC may collect a debt by administrative offset prior to the
completion of the procedures described in §&thnsp;313.25, if:
(a) Failure to offset a payment would substantially prejudice the
FDIC's ability to collect the debt; and
(b) The time before the payment is to be made does not reasonably
permit completion of the procedures described in §&thnsp;313.25.
Such prior offsetting shall be followed promptly by the completion of
the procedures described in §&thnsp;313.25.
§&thnsp;313.24 Omission of procedures.
The FDIC shall not be required to follow the procedures described
in §&thnsp;313.25 where:
(a) The offset is in the nature of a recoupment (i.e., the FDIC may
offset a payment due to the debtor when both the payment due to the
debtor and the debt owed to the FDIC arose from the same transaction);
or
(b) The debt arises under a contract as set forth in Cecile
Industries, Inc. v. Cheney, 995 F.2d 1052 (Fed. Cir. 1993), which
provides that procedural protections under administrative offset 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, the FDIC
first learns of the existence of a debt due when there would be
insufficient time to afford the debtor due process under these
procedures before the paying agency makes payment to the debtor; in
such cases, the Director shall give the debtor notice and an
opportunity for review as soon as practical and shall refund any money
ultimately found not to be due to the U.S. Government.
§&thnsp;313.25 Debtor's rights.
Unless the procedures described in §&thnsp;313.23 are used,
prior to collecting any claim by administrative offset or referring
such claim to another agency for collection through administrative
offset, the Director shall provide the debtor with the following:
(a) Written notification of the nature and amount of the claim, the
intention of the Director to collect the claim through administrative
offset, and a statement of the rights of the debtor under this
paragraph;
(b) An opportunity to inspect and copy the records of the FDIC with
respect to the claim, unless such records are exempt from disclosure;
(c) An opportunity to have the FDIC's determination of indebtedness
reviewed by the Director:
(1) Any request by the debtor for such review shall be in writing
and shall be submitted to the FDIC within 30 calendar days of the date
of the notice of the offset. The Director may waive the time limit for
requesting review for good cause shown by the debtor;
(2) Upon acceptance of a request for review by the debtor, the FDIC
shall provide the debtor with a reasonable opportunity for an oral
hearing when the determination turns on an issue of credibility or
veracity, or the Director determines that the question of the
indebtedness cannot be resolved by review of the documentary evidence
alone. Unless otherwise required by law, an oral hearing under this
section is not required to be a formal evidentiary hearing, although
the Director shall document all significant matters discussed at the
hearing. In cases where an oral hearing is not required by this
section, the Director shall make his determination based on a
documentary hearing consisting of a review of the written record; and
(d) An opportunity to enter into a written agreement for the
voluntary repayment of the amount of the claim at the discretion of the
Director.
§&thnsp;313.26 Interest.
Pursuant to 31 U.S.C. 3717, the FDIC shall assess interest,
penalties and administrative costs on debts owed to the United States.
The FDIC is authorized to assess interest and related charges on debts
that are not subject to 31 U.S.C. 3717 to the extent authorized under
the common law or other applicable statutory authority.
§&thnsp;313.27 Refunds.
Amounts recovered by administrative offset but later found not to
be owed to the Government shall be promptly refunded. Unless required
by law or contract, such refunds shall not bear interest.
§&thnsp;313.28 No requirement for duplicate notice.
Where the Director has previously given a debtor any of the
required notice and review opportunities with respect to a particular
debt, the Director is not required to duplicate such notice and
[[Page 48530]]
review opportunities prior to initiating administrative offset.
§&thnsp;313.29 Requests for offset to other federal agencies.
The Director may request that a debt owed to the FDIC be
administratively offset against funds due and payable to a debtor by
another federal agency. In requesting administrative offset, the FDIC,
as the creditor agency, will certify in writing to the federal agency
holding funds payable to the debtor:
(a) That the debtor owes the debt;
(b) The amount and basis of the debt; and
(c) That the FDIC has complied with the requirements of its own
administrative offset regulations and the applicable provisions of 31
U.S.C. 3716 with respect to providing the debtor with due process,
unless otherwise provided.
§&thnsp;313.30 Requests for offset from other federal agencies.
Any federal agency may request that funds due and payable to its
debtor by the FDIC be administratively offset by the FDIC in order to
collect a debt owed to such agency by the debtor. The FDIC shall
initiate the requested offset only upon:
(a) Receipt of written certification from the creditor agency
stating:
(1) That the debtor owes the debt;
(2) The amount and basis of the debt; and
(3) That the agency has complied with its own administrative offset
regulations and with the applicable provisions of 31 CFR 901.3,
including providing any required hearing or review.
(b) A determination by the creditor agency that collection by
offset against funds payable by the FDIC would be in the best interest
of the United States and that such offset would not otherwise be
contrary to law.
§§&thnsp;313.31—313.39 [Reserved]
Subpart C—Salary Offset
§&thnsp;313.40 Scope.
These salary offset regulations are issued in compliance with 5
U.S.C. 5514 and 5 CFR part 550, subpart K, and apply to the collection
of debts owed by employees of the FDIC or other federal agencies. These
salary offset procedures do not apply where an employee consents to the
recovery of a debt from his current pay account. These procedures do
not apply to debts arising under the Internal Revenue Code, the tariff
laws of the United States or to any case where collection of a debt by
salary offset is explicitly provided for or prohibited by another
statute (e.g., travel advances under 5 U.S.C. 5705 and employee
training expenses under 5 U.S.C. 4108). These procedures do not
preclude an employee from requesting waiver of an erroneous payment
under 5 U.S.C. 5584, or in any way questioning the amount or validity
of a debt, in the manner specified by law or these agency regulations.
This section also does not preclude an employee from requesting waiver
of the collection of a debt under any other applicable statutory
authority. When possible, salary offset through centralized
administrative offset procedures should be attempted before seeking
salary offset from a paying agency different than the creditor agency.
§&thnsp;313.41 Notice requirement where FDIC is creditor agency.
Where the FDIC seeks salary offset under 5 U.S.C. 5514 as the
creditor agency, the FDIC shall first provide the employee with a
written Notice of Intent to Offset at least 30 calendar days before
salary offset is to commence. The Notice of Intent to Offset shall
include the following information and statements:
(a) That the Director has determined that a debt is owed to the
FDIC and intends to collect the debt by means of deduction from the
employee's current disposable pay account until the debt and all
accumulated interest is paid in full or otherwise resolved;
(b) The amount of the debt and the factual basis for the debt;
(c) A salary offset schedule stating the frequency and amount of
each deduction, stated as a fixed dollar amount or percentage of
disposable pay (not to exceed 15%);
(d) That in lieu of salary offset, the employee may propose a
voluntary repayment plan to satisfy the debt on terms acceptable to the
FDIC, which must be documented in writing, signed by the employee and
the Director or the Director's designee, and documented in the FDIC's
files;
(e) The FDIC's policy concerning interest, penalties, and
administrative costs, and a statement that such assessments must be
made, unless excused in accordance with the FCCS;
(f) That the employee has the right to inspect and copy FDIC
records not exempt from disclosure relating to the debt claimed, or to
receive copies of such records if the employee or the employee's
representative is unable personally to inspect the records, due to
geographical or other constraints:
(1) That such requests be made in writing, and identify by name and
address the Director or other designated individual to whom the request
should be sent; and
(2) That upon receipt of such a request, the Director or the
Director's designee shall notify the employee of the time and location
where the records may be inspected and copied;
(g) That the employee has a right to request a hearing regarding
the existence and amount of the debt claimed or the salary offset
schedule proposed by the FDIC, provided that the employee files a
request for such a hearing with the FDIC in accordance with
§&thnsp;313.42 that such a hearing will be conducted by an
impartial official who is an administrative law judge or other hearing
official not under the supervision or control of the Board;
(h) The procedure and deadline for requesting a hearing, including
the name, address, and telephone number of the Director or other
designated individual to whom a request for hearing must be sent;
(i) That a request for hearing must be received by the FDIC on or
before the 30th calendar day following receipt of the Notice of Intent,
and that filing of a request for hearing will stay the collection
proceedings;
(j) That the FDIC will initiate salary offset procedures not less
than 30 days from the date of the employee's receipt of the Notice of
Intent to Offset, unless the employee files a timely request for a
hearing;
(k) That if a hearing is held, the administrative law judge or
other hearing official will issue a decision at the earliest practical
date, but not later than 60 days after the filing of the request for
the hearing, unless the employee requests a delay in the proceedings
which is granted by the hearing official;
(l) 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 through
3731, or under any other applicable statutory authority; or
(3) Criminal penalties under 18 U.S.C. 286, 287, 1001, and 1002 or
under any other applicable statutory authority;
(m) That the employee also has the right to request waiver of
overpayment pursuant to 5 U.S.C. 5584, and may exercise any other
rights and remedies available under statutes or regulations governing
the program for which the collection is being made; and
(n) That amounts paid on or deducted from debts that are later
waived or found not to be owed to the United States will be promptly
refunded to the
[[Page 48531]]
employee, unless there are applicable contractual or statutory
provisions to the contrary.
§&thnsp;313.42 Procedures to request a hearing.
(a) To request a hearing, an employee must send a written request
to the Director. The request must be received by the Director within 30
calendar days after the employee's receipt of the Notice of Intent.
(b) The request must be signed by the employee and 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 request for hearing must state whether the
employee is requesting an oral or documentary hearing. If an oral
hearing is requested, the request shall explain why the matter cannot
be resolved by a review of documentary evidence alone.
§&thnsp;313.43 Failure to timely submit request for hearing.
If the Director does not receive an employee's request for hearing
within the 30-day period set forth in §&thnsp;313.42(a), the
employee shall not be entitled to a hearing. However, the Director may
accept an untimely request for hearing if the employee can show that
the delay was the result of circumstances beyond his or her control or
that he or she failed to receive actual notice of the filing deadline.
§&thnsp;313.44 Procedure for hearing.
(a) Obtaining the services of a hearing official. When the FDIC is
the creditor agency and the debtor is an FDIC employee, the FDIC shall
designate an administrative law judge or contact any agent of another
agency designated in appendix A to 5 CFR part 581 to arrange for a
hearing official. When the FDIC is the creditor agency and the debtor
is not an FDIC employee (i.e., the debtor is employed by another
federal agency, also known as the paying agency), and the FDIC cannot
provide a prompt and appropriate hearing before an administrative law
judge or a hearing official furnished pursuant to a lawful arrangement,
the FDIC may contact an agent of the paying agency designated in
appendix A to 5 CFR part 581 to arrange for a hearing official. The
paying agency must cooperate with the FDIC to provide a hearing
official, as required by the FCCS.
(b) Notice and format of hearing. (1) Notice. The hearing official
shall determine whether the hearing shall be oral or documentary and
shall notify the employee of the form of the hearing. If the hearing
will be oral, the notice shall set forth the date, time, and location
of the hearing, which must be held within 30 calendar days after the
request is received, unless the employee requests that the hearing be
delayed. If the hearing will be documentary, the employee shall be
notified to submit evidence and written arguments in support of his or
her case to the hearing official within 30 calendar days.
(2) Oral hearing. The hearing official may grant a request for an
oral hearing if he or she determines that the issues raised by the
employee cannot be resolved by review of documentary evidence alone
(e.g., where credibility or veracity are at issue). An oral hearing is
not required to be an adversarial adjudication, and the hearing
official is not required to apply rules of evidence. Witnesses who
testify in oral hearings shall do so under oath or affirmation. Oral
hearings may take the form of, but are not limited to:
(i) Informal conferences with the hearing official in which the
employee and agency representative are given full opportunity to
present evidence, witnesses, and argument;
(ii) Informal meetings in which the hearing examiner interviews the
employee; or
(iii) Formal written submissions followed by an opportunity for
oral presentation.
(3) Documentary hearing. If the hearing official determines that an
oral hearing is not necessary, he or she shall decide the issues raised
by the employee based upon a review of the written record.
(4) Record. The hearing official shall maintain a summary record of
any hearing conducted under this section.
(c) Rescheduling of the hearing date. The hearing official shall
reschedule a hearing if requested to do so by both parties, who shall
be given reasonable notice of the time and place of this new hearing.
(d) Failure to appear. In the absence of good cause, an employee
who fails to appear at a hearing shall be deemed, for the purpose of
this subpart, to admit the existence and amount of the debt as
described in the Notice of Intent. If the representative of the
creditor agency fails to appear, the hearing official shall proceed
with the hearing as scheduled, and issue a decision based upon the oral
testimony presented and the documentation submitted by both parties.
(e) Date of decision. The hearing official shall issue a written
decision based upon the evidence and information developed at the
hearing, as soon as practicable after the hearing, but not later than
60 calendar days after the date on which the request for hearing was
received by the FDIC, unless the hearing was delayed at the request of
the employee. In the event of such a delay, the 60-day decision period
shall be extended by the number of days by which the hearing was
postponed. The decision of the hearing official shall be final.
(f) Content of decision. The written decision shall include:
(1) A summary of the facts concerning the origin, nature, and
amount of the debt;
(2) The hearing official's findings, analysis, and conclusions; and
(3) The terms of the repayment schedule, if applicable.
(g) Official certification of debt. The hearing official's decision
shall constitute an official certification regarding the existence and
amount of the debt for purposes of executing salary offset under 5
U.S.C. 5514. Where the FDIC is the creditor agency but not the current
paying agency, the FDIC may make a certification regarding the
existence and amount of the debt owed to the FDIC, based on the hearing
official's certification. The FDIC may make this certification to: the
Secretary of the Treasury so that Treasury may offset the employee's
current pay account by means of centralized administrative offset (5
CFR 550.1108); or to the current paying agency (5 CFR 550.1109). If the
hearing official determines that a debt may not be collected through
salary offset but the FDIC as the creditor agency determines that the
debt is still valid, the FDIC may seek collection of the debt through
other means, including administrative offset of other federal payments
or litigation.
§&thnsp;313.45 Certification of debt by FDIC as creditor agency.
The Director may also issue a certification of the debt where there
has not been a hearing, if the employee has admitted the debt, or
failed to contest the existence and amount of the debt in a timely
manner (e.g., by failing to request a hearing). The certification shall
be in writing and shall state:
(a) The amount and basis of the debt owed by the employee;
(b) The date the FDIC's right to collect the debt first accrued;
(c) That the FDIC's debt collection regulations have been approved
by OPM pursuant to 5 CFR part 550, subpart K;
(d) If the collection is to be made by lump-sum payment, the amount
and date such payment will be collected;
(e) If the collection is to be made in installments through salary
offset, the number of installments to be collected, the amount of each
installment, and the date of the first installment, if a date
[[Page 48532]]
other than the next officially established pay period; and
(f) The date the employee was notified of the debt, the action(s)
taken pursuant to the FDIC's regulations, and the dates such actions
were taken.
§&thnsp;313.46 Notice of salary offset where FDIC is the paying
agency.
(a) Upon issuance of a proper certification by the Director for
debts owed to the FDIC, or upon receipt of a proper certification from
a creditor agency, the Director shall send the employee a written
notice of salary offset. Such notice shall advise the employee:
(1) That certification has been issued by the Director or received
from another creditor agency;
(2) Of the amount of the debt and of the deductions to be made; and
(3) Of the initiation of salary offset at the next officially
established pay interval or as otherwise provided for in the
certification.
(b) Where appropriate, the Director shall provide a copy of the
notice to the creditor agency and advise such agency of the dollar
amount to be offset and the pay period when the offset will begin.
§&thnsp;313.47 Voluntary repayment agreements as alternative to
salary offset where the FDIC is the creditor agency.
(a) In response to a Notice of Intent, an employee may propose to
voluntarily repay the debt through scheduled voluntary payments, in
lieu of salary offset. An employee who wishes to repay a debt in this
manner shall submit to the Director a written agreement proposing a
repayment schedule. This proposal must be received by the Director
within 30 calendar days after receipt of the Notice of Intent.
(b) The Director shall notify the employee whether the employee's
proposed voluntary repayment agreement is acceptable. It is within the
discretion of the Director whether to accept or reject the debtor's
proposal, or whether to propose to the debtor a modification of the
proposed repayment agreement:
(1) If the Director decides that the proposed repayment agreement
is unacceptable, he or she shall notify the employee and the employee
shall have 30 calendar days from the date he or she received notice of
the decision in which to file a request for a hearing on the proposed
repayment agreement, as provided in §&thnsp;313.42; or
(2) If the Director decides that the proposed repayment agreement
is acceptable or the debtor agrees to a modification proposed by the
Director, the agreement shall be put in writing and signed by both the
employee and the Director.
§&thnsp;313.48 Special review of repayment agreement or salary
offset due to changed circumstances.
(a) An employee subject to a voluntary repayment agreement or
salary offset payable to the FDIC as creditor agency may request a
special review by the Director of the amount of the salary offset or
voluntary repayment, based on materially changed circumstances,
including, but not limited to, catastrophic illness, divorce, death, or
disability. A request for special review may be made at any time.
(b) In support of a request for special review, the employee shall
submit to the Director a detailed statement and supporting documents
for the employee, his or her spouse, and dependents indicating:
(1) Income from all sources;
(2) Assets;
(3) Liabilities;
(4) Number of dependents;
(5) Monthly expenses for food, housing, clothing, and
transportation;
(6) Medical expenses; and
(7) Exceptional expenses, if any.
(c) The employee shall also file an alternative proposed offset or
payment schedule and a statement, with supporting documents, showing
why the current salary offset or payments result in extreme financial
hardship to the employee.
(d) The Director shall evaluate the statement and supporting
documents and determine whether the original salary offset or repayment
schedule imposes extreme financial hardship on the employee, for
example, by preventing the employee from meeting essential subsistence
expenses such as food, housing, clothing, transportation, and medical
care. The Director shall notify the employee in writing within 30
calendar days of his or her determination.
(e) If the special review results in a revised salary offset or
repayment schedule, the Director shall provide a new certification to
the paying agency.
§&thnsp;313.49 Coordinating salary offset with other agencies.
(a) Responsibility of the FDIC as the creditor agency. Upon
completion of the procedures established in §&thnsp;313.40 through
§&thnsp;313.45, the Director shall take the following actions:
(1) Submit a debt claim to the paying agency, containing the
information described in paragraphs (a)(2) and (a)(3) of this section,
together with the certification of debt or an installment agreement (or
other instruction regarding the payment schedule, if applicable).
(2) If the collection must be made in installments, inform the
paying agency of the amount or percentage of disposable pay to be
collected in each installment. The Director may also inform the paying
agency of the commencement date and number of installments to be paid,
if a date other than the next officially established pay period is
required.
(3) Unless the employee has consented to the salary offset in
writing or has signed a statement acknowledging receipt of the required
procedures and the written consent or statement is forwarded to the
paying agency, the Director must also advise the paying agency of the
actions the FDIC has taken under 5 U.S.C. 5514 and state the dates such
action was taken.
(4) If the employee is in the process of separating from
employment, the Director shall submit the debt claim to the employee's
paying agency for collection by lump-sum deduction from the employee's
final check. The paying agency shall certify the total amount of its
collection and furnish a copy of the certification to the FDIC and to
the employee.
(5) If the employee is already separated and all payments due from
his or her former paying agency have been paid, the Director may,
unless otherwise prohibited, request that money due and payable to the
employee from the federal government, including payments from the Civil
Service Retirement and Disability Fund (5 CFR 831.1801), be
administratively offset to collect the debt.
(6) In the event an employee transfers to another paying agency,
the Director shall not repeat the procedures described in
§&thnsp;313.40 through §&thnsp;313.45 in order to resume
collecting the debt. Instead, the FDIC shall review the debt upon
receiving the former paying agency's notice of the employee's transfer
and shall ensure that collection is resumed by the new paying agency.
The FDIC must submit a properly certified claim to the new paying
agency before collection can be resumed.
(b) Responsibility of the FDIC as the paying agency. (1) Complete
claim. When the FDIC receives a properly certified claim from a
creditor agency, the employee shall be given written notice of the
certification, the date salary offset will begin, and the amount of the
periodic deductions. The FDIC shall schedule deductions to begin at the
next officially established pay interval or as otherwise provided for
in the certification.
[[Page 48533]]
(2) Incomplete claim. When the FDIC receives an incomplete
certification of debt from a creditor agency, the FDIC shall return the
debt claim with notice that procedures under 5 U.S.C. 5514 and 5 CFR
550.1104 must be followed and that a properly certified debt claim must
be received before action will be taken to collect from the employee's
current pay account.
(3) Review. The FDIC is not authorized to review the merits of the
creditor agency's determination with respect to the amount or validity
of the debt certified by the creditor agency.
(4) Employees who transfer from one paying agency to another
agency. If, after the creditor agency has submitted the debt claim to
the FDIC, the employee transfers to a different paying agency before
the debt is collected in full, the FDIC must certify the total amount
collected on the debt. One copy of the certification shall be furnished
to the employee, and one copy shall be sent to the creditor agency
along with notice of the employee's transfer. If the FDIC 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 requirements
set forth herein and in the OPM's regulation (5 CFR part 550, subpart
K) have been fully met.
§&thnsp;313.50 Interest, penalties, and administrative costs.
Where the FDIC is the creditor agency, it shall assess interest,
penalties, and administrative costs pursuant to 31 U.S.C. 3717 and 31
CFR parts 900 through 904.
§&thnsp;313.51 Refunds.
(a) Where the FDIC is the creditor agency, it shall promptly refund
any amount deducted under the authority of 5 U.S.C. 5514 when the debt
is compromised or otherwise found not to be owing to the United States,
or when an administrative or judicial order directs the FDIC to make a
refund.
(b) Unless required by law or contract, such refunds shall not bear
interest.
§&thnsp;313.52 Request from a creditor agency for services of a
hearing official.
(a) The FDIC may provide a hearing official upon request of the
creditor agency when the debtor is employed by the FDIC and the
creditor agency cannot provide a prompt and appropriate hearing before
a hearing official furnished pursuant to another lawful arrangement.
(b) The FDIC may provide a hearing official upon request of a
creditor agency when the debtor works for the creditor agency and that
agency cannot arrange for a hearing official.
(c) The Director shall arrange for qualified personnel to serve as
hearing officials.
(d) Services rendered under paragraph (a) of this section shall be
provided on a fully reimbursable basis pursuant to 31 U.S.C. 1535.
§&thnsp;313.53 Non-waiver of rights by payments.
A debtor's payment, whether voluntary or involuntary, of all or any
portion of a debt being collected pursuant to this section shall not be
construed as a waiver of any rights that the debtor may have under any
statute, regulation, or contract except as otherwise provided by law or
contract.
§&thnsp;313.54 Exception to due process procedures.
(a) The procedures set forth in this subpart shall not apply to
routine intra-agency salary adjustments of pay, including the
following:
(1) 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, if the amount to be recovered
was accumulated over four pay periods or less;
(2) A routine adjustment of pay that is made to correct an
overpayment 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 is practical, the individual is
provided written notice of the nature and amount of the adjustment and
the point of contact for contesting such adjustment; or
(3) Any adjustment to collect a debt amount to $50 or less, if, at
the time of such adjustment, or as soon thereafter as is practical, the
individual is provided written notice of the nature and amount of the
adjustment and the point of contact for contesting such adjustment.
(b) The procedure for notice to the employee and collection of such
adjustments is set forth in §&thnsp;313.55.
§&thnsp;313.55 Salary adjustments.
Any negative 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 shall not be considered
collection of a “debt” for the purposes of this section if
the amount to be recovered was accumulated over four pay periods or
less. In such cases, the FDIC shall not apply this subpart C, but will
provide a clear and concise statement in the employee's earnings
statement advising the employee of the previous overpayment at the time
the adjustment is made.
§§&thnsp;313.56—313.79 [Reserved]
Subpart D—Administrative Wage Garnishment
§&thnsp;313.80 Scope and purpose.
(a) These administrative wage garnishment regulations are issued in
compliance with 31 U.S.C. 3720D and 31 CFR 285.11(f). The subpart
provides procedures for the FDIC to collect money from a debtor's
disposable pay by means of administrative wage garnishment. The receipt
of payments pursuant to this subpart does not preclude the FDIC from
pursuing other debt collection remedies, including the offset of
federal payments. The FDIC may pursue such debt collection remedies
separately or in conjunction with administrative wage garnishment. This
subpart does not apply to the collection of delinquent debts 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.
§&thnsp;313.81 Notice.
At least 30 days before the initiation of garnishment proceedings,
the Director will send, by first class mail to the debtor's last known
address, a written notice informing the debtor of:
(a) The nature and amount of the debt;
(b) The FDIC's intention to initiate proceedings to collect the
debt through deductions from the debtor's pay until the debt and all
accumulated interest penalties and administrative costs are paid in
full;
(c) An explanation of the debtor's rights as set forth in
§&thnsp;313.82(c); and
(d) The time frame within which the debtor may exercise these
rights. The FDIC shall retain a stamped copy of the notice indicating
the date the notice was mailed.
§&thnsp;313.82 Debtor's rights.
The FDIC shall afford the debtor the opportunity:
(a) To inspect and copy records related to the debt;
(b) To enter into a written repayment agreement with the FDIC,
under terms agreeable to the FDIC; and
(c) To the extent that a debt owed has not been established by
judicial or
[[Page 48534]]
administrative order, to request a hearing concerning the existence or
amount of the debt or the terms of the 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.
§&thnsp;313.83 Form of hearing.
(a) If the debtor submits a timely written request for a hearing as
provided in §&thnsp;313.82(c), the FDIC will afford the debtor a
hearing, which at the FDIC's option may be oral or written. The FDIC
will provide the debtor with a reasonable opportunity for an oral
hearing when the Director determines that the issues in dispute cannot
be resolved by review of the documentary evidence, for example, when
the validity of the claim turns on the issue of credibility or
veracity.
(b) If the FDIC determines that an oral hearing is appropriate, the
time and location of the hearing shall be established by the FDIC. 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.
(c) In cases when it is determined that an oral hearing is not
required by this section, the FDIC will accord the debtor a
“paper hearing,” that is, the FDIC will decide the issues
in dispute based upon a review of the written record.
§&thnsp;313.84 Effect of timely request.
If the FDIC receives a debtor's written request for hearing within
15 business days of the date the FDIC mailed its notice of intent to
seek garnishment, the FDIC shall not issue a withholding order until
the debtor has been provided the requested hearing, and a decision in
accordance with §&thnsp;313.88 and §&thnsp;313.89 has been
rendered.
§&thnsp;313.85 Failure to timely request a hearing.
If the FDIC receives a debtor's written request for hearing after
15 business days of the date the FDIC mailed its notice of intent to
seek garnishment, the FDIC shall provide a hearing to the debtor.
However, the FDIC will not delay issuance of a withholding order unless
it determines that the untimely filing of the request was caused by
factors over which the debtor had no control, or the FDIC receives
information that the FDIC believes justifies a delay or cancellation of
the withholding order.
§&thnsp;313.86 Hearing official.
A hearing official may be any qualified individual, as determined
by the FDIC, including an administrative law judge.
§&thnsp;313.87 Procedure.
After the debtor requests a hearing, the hearing official shall
notify the debtor of:
(a) The date and time of a telephonic hearing;
(b) The date, time, and location of an in-person oral hearing; or
(c) The deadline for the submission of evidence for a written
hearing.
§&thnsp;313.88 Format of hearing.
The FDIC will have the burden of proof to establish the existence
or amount of the debt. 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. The hearing official shall maintain a
record of any hearing held under this section. Hearings are not
required to be formal, and evidence may be offered without regard to
formal rules of evidence. Witnesses who testify in oral hearings shall
do so under oath or affirmation.
§&thnsp;313.89 Date of decision.
The hearing official shall issue a written opinion stating his or
her decision as soon as practicable, but not later than sixty (60) days
after the date on which the request for such hearing was received by
the FDIC. If the FDIC is unable to provide the debtor with a hearing
and decision within sixty (60) days after the receipt of the request
for such hearing:
(a) The FDIC may not issue a withholding order until the hearing is
held and a decision rendered; or
(b) If the FDIC had previously issued a withholding order to the
debtor's employer, the withholding order will be suspended beginning on
the 61st day after the date the FDIC received the hearing request and
continuing until a hearing is held and a decision is rendered.
§&thnsp;313.90 Content of decision.
The written decision shall include:
(a) A summary of the facts presented;
(b) The hearing official's findings, analysis and conclusions; and
(c) The terms of any repayment schedule, if applicable.
§&thnsp;313.91 Finality of agency action.
Unless the FDIC on its own initiative orders review of a decision
by a hearing official pursuant to 17 CFR 201.431(c), a decision by a
hearing official shall become the final decision of the FDIC for the
purpose of judicial review under the Administrative Procedure Act.
§&thnsp;313.92 Failure to appear.
In the absence of good cause shown, a debtor who fails to appear at
a scheduled hearing will be deemed as not having timely filed a request
for a hearing.
§&thnsp;313.93 Wage garnishment order.
(a) Unless the FDIC receives information that it believes justifies
a delay or cancellation of the withholding order, the FDIC 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., within 15 business days after the mailing of the notice of the
FDIC's intent to seek garnishment) or, if a timely request for a
hearing is made by the debtor, within 30 days after a decision to issue
a withholding order becomes final.
(b) The withholding order sent to the employer will be in the form
prescribed by the Secretary of the Treasury, on the FDIC's letterhead,
and signed by the head of the agency or delegate. The order will
contain all information necessary for the employer to comply with the
withholding order, including 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 FDIC will keep a stamped copy of the order indicating the
date it was mailed.
§&thnsp;313.94 Certification by employer.
Along with the withholding order, the FDIC will send to the
employer a certification in a form prescribed by the Secretary of the
Treasury. The employer shall complete and return the certification to
the FDIC within the time frame prescribed in the instructions to the
form. The certification will address matters such as information about
the debtor's employment status and disposable pay available for
withholding.
[[Page 48535]]
§&thnsp;313.95 Amounts withheld.
(a) Upon receipt of the garnishment order issued under this
section, the employer shall deduct from all disposable pay paid to the
debtor during each pay period the amount of garnishment described in
paragraphs (b) through (d) of this section.
(b) Subject to the provisions of paragraphs (c) and (d) of this
section, the amount of garnishment shall be the lesser of:
(1) The amount indicated on the garnishment order up to 15% of the
debtor's disposable pay; or
(2) The amount set forth in 15 U.S.C. 1673(a)(2). The amount set
forth at 15 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 29 CFR 870.10.
(c) When a debtor's pay is subject to withholding orders with
priority, the following shall apply:
(1) Unless otherwise provided by federal law, withholding orders
issued under this section shall be paid in the amounts set forth under
paragraph (b) 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.
(2) 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:
(i) The amount calculated under paragraph (b) of this section; or
(ii) An amount equal to 25% of the debtor's disposable pay less the
amount(s) withheld under the withholding order(s) with priority.
(3) If a debtor owes more than one debt to the FDIC, the FDIC 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 (b) of this section.
(d) An amount greater than that set forth in paragraphs (b) and (c)
of this section may be withheld upon the written consent of the debtor.
(e) The employer shall promptly pay to the FDIC all amounts
withheld in accordance with the withholding order issued pursuant to
this section.
(f) An employer shall not be required to vary its normal pay and
disbursement cycles in order to comply with the withholding order.
(g) 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.
(h) The employer shall withhold the appropriate amount from the
debtor's wages for each pay period until the employer receives
notification from the FDIC to discontinue wage withholding. The
garnishment order shall indicate a reasonable period of time within
which the employer is required to commence wage withholding.
§&thnsp;313.96 Exclusions from garnishment.
The FDIC will not garnish the wages of a debtor it knows has been
involuntarily separated from employment until the debtor has been re-
employed continuously for at least 12 months. The debtor has the burden
of informing the FDIC of the circumstances surrounding an involuntary
separation from employment.
§&thnsp;313.97 Financial hardship.
(a) A debtor whose wages are subject to a wage withholding order
under this section, may, at any time, request a review by the FDIC of
the amount garnished, based on materially changed circumstances such as
disability, divorce, or catastrophic illness which result in financial
hardship.
(b) 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.
(c) If a financial hardship is found, the FDIC will downwardly
adjust, by an amount and for a period of time agreeable to the FDIC,
the amount garnished to reflect the debtor's financial condition. The
FDIC will notify the employer of any adjustments to the amounts to be
withheld.
§&thnsp;313.98 Ending garnishment.
(a) Once the FDIC has fully recovered the amounts owed by the
debtor, including interest, penalties, and administrative costs
consistent with the FCCS, the FDIC will send the debtor's employer
notification to discontinue wage withholding.
(b) At least annually, the FDIC will review its debtors' accounts
to ensure that garnishment has been terminated for accounts that have
been paid in full.
§&thnsp;313.99 Prohibited actions by employer.
The DCIA prohibits an employer from discharging, refusing to
employ, or taking disciplinary action against the debtor due to the
issuance of a withholding order under this subpart.
§&thnsp;313.100 Refunds.
(a) If a hearing official determines that a debt is not legally due
and owing to the United States, the FDIC shall promptly refund any
amount collected by means of administrative wage garnishment.
(b) Unless required by federal law or contract, refunds under this
section shall not bear interest.
§&thnsp;313.101 Right of action.
The FDIC may sue any employer for any amount that the employer
fails to withhold from wages owed and payable to its employee in
accordance with this subpart. However, a suit will not be filed before
the termination of the collection action involving a particular debtor,
unless earlier filing is necessary to avoid expiration of any
applicable statute of limitations. For purposes of this subpart,
“termination of the collection action” occurs when the
agency has terminated collection action in accordance with the FCCS (31
CFR 903.1 through 903.5) or other applicable standards. In any event,
termination of the collection action will have been deemed to occur if
the FDIC has not received any payments to satisfy the debt from the
particular debtor whose wages were subject to garnishment, in whole or
in part, for a period of one (1) year.
§§&thnsp;313.102—313.119 [Reserved]
Subpart E—Tax Refund Offset
§&thnsp;313.120 Scope.
The provisions of 26 U.S.C. 6402(d) and 31 U.S.C. 3720A authorize
the Secretary of the Treasury to offset a delinquent debt owed to the
United States Government from the tax refund due a taxpayer when other
collection efforts have failed to recover the amount due. In addition,
the FDIC is authorized to collect debts by means of administrative
offset under 31 U.S.C. 3716 and, as part of the debt collection
process, to notify the Financial Management Service (FMS), a bureau of
the Department of the Treasury, of the amount of such debt for
collection by tax refund offset.
§&thnsp;313.121 Definitions.
For purposes of this subpart E:
(a) Debt or claim means an amount of money, funds or property which
has been determined by the FDIC to be due
[[Page 48536]]
to the United States from any person, organization, or entity, except
another federal agency.
(b) Debtor means a person who owes a debt or a claim. The term
“person” includes any individual, organization or entity,
except another federal agency.
(c) Tax refund offset means withholding or reducing a tax refund
payment by an amount necessary to satisfy a debt owed by the payee(s)
of a tax refund payment.
(d) Tax refund payment means any overpayment of federal taxes to be
refunded to the person making the overpayment after the Internal
Revenue Service (IRS) makes the appropriate credits.
§&thnsp;313.122 Notification of debt to FMS.
The FDIC shall notify FMS of the amount of any past due, legally
enforceable non-tax debt owed to it by a person, for the purpose of
collecting such debt by tax refund offset. Notification and referral to
FMS of such debts does not preclude FDIC's use of any other debt
collection procedures, such as wage garnishment, either separately or
in conjunction with tax refund offset.
§&thnsp;313.123 Certification and referral of debt.
When the FDIC refers a past-due, legally enforceable debt to FMS
for tax refund offset, it will certify to FMS that:
(a) The debt is past due and legally enforceable in the amount
submitted to FMS and that the FDIC will ensure that collections are
properly credited to the debt;
(b) Except in the case of a judgment debt or as otherwise allowed
by law, the debt is referred for offset within ten years after the
FDIC's right of action accrues;
(c) The FDIC has made reasonable efforts to obtain payment of the
debt, in that it has:
(1) Submitted the debt to FMS for collection by administrative
offset and complied with the provisions of 31 U.S.C. 3716(a) and
related regulations;
(2) Notified, or has made a reasonable attempt to notify, the
debtor that the debt is past-due, and unless repaid within 60 days
after the date of the notice, will be referred to FMS for tax refund
offset;
(3) Given the debtor at least 60 days to present evidence that all
or part of the debt is not past-due or legally enforceable, considered
any evidence presented by the debtor, and determined that the debt is
past-due and legally enforceable; and
(4) Provided the debtor with an opportunity to make a written
agreement to repay the debt; and
(d) The debt is at least $25.
§&thnsp;313.124 Pre-offset notice and consideration of evidence.
(a) For purposes of §&thnsp;313.123(c)(2), the FDIC has made a
reasonable effort to notify the debtor if it uses the current address
information contained in its records related to the debt. The FDIC may,
but is not required to, obtain address information from the IRS
pursuant to 26 U.S.C. 6103(m)(2), (4), (5).
(b) For purposes of §&thnsp;313.123(c)(3), if evidence
presented by a debtor is considered by an agent of the FDIC, or other
entities or persons acting on behalf of the FDIC, the debtor must be
accorded at least 30 days from the date the agent or other entity or
person determines that all or part of the debt is past-due and legally
enforceable to request review by an officer or employee of the FDIC of
any unresolved dispute. The FDIC must then notify the debtor of its
decision.
§&thnsp;313.125 Referral of past-due, legally enforceable debt.
The FDIC shall submit past-due, legally enforceable debt
information for tax refund offset to FMS, as prescribed by FMS. For
each debt, the FDIC will include the following information:
(a) The name and taxpayer identification number (as defined in 26
U.S.C. 6109) of the debtor;
(b) The amount of the past-due and legally enforceable debt;
(c) The date on which the debt became past-due; and
(d) The designation of FDIC as the agency referring the debt.
§&thnsp;313.126 Correcting and updating referral.
If, after referring a past-due legally enforceable debt to FMS as
provided in §&thnsp;313.125, the FDIC determines that an error has
been made with respect to the information transmitted to FMS, or if the
FDIC receives a payment or credits a payment to the account of the
debtor referred to FMS for offset, or if the debt amount is otherwise
incorrect, the FDIC shall promptly notify FMS and make the appropriate
correction of the FDIC's records. FDIC will provide certification as
required under §&thnsp;313.123 for any increases to amounts owed.
In the event FMS rejects an FDIC certification for failure to comply
with §&thnsp;323.123, the FDIC may resubmit the debt with a
corrected certification.
§&thnsp;313.127 Disposition of amounts collected.
FMS will transmit amounts collected for past-due, legally
enforceable debts, less fees charged under this section, to the FDIC's
account. The FDIC will reimburse FMS and the IRS for the cost of
administering the tax refund offset program. FMS will deduct the fees
from amounts collected prior to disposition and transmit a portion of
the fees deducted to reimburse the IRS for its share of the cost of
administering the tax refund offset program. To the extent allowed by
law, the FDIC may add the offset fees to the debt.
§§&thnsp;313.128—313.139 [Reserved]
Subpart F—Civil Service Retirement and Disability Fund Offset
§&thnsp;313.140 Future benefits.
Unless otherwise prohibited by law, the FDIC may request that a
debtor's anticipated or future benefit payments under the Civil Service
Retirement and Disability Fund (Fund) be administratively offset in
accordance with regulations at 5 CFR 831.1801 through 831.1808.
§&thnsp;313.141 Notification to OPM.
When making a request for administrative offset under
§&thnsp;313.140, the FDIC shall provide OPM with a written
certification that:
(a) The debtor owes the FDIC a debt, including the amount of the
debt;
(b) The FDIC has complied with the applicable statutes,
regulations, and procedures of OPM; and
(c) The FDIC has complied with the requirements of 31 CFR parts 900
through 904, including any required hearing or review.
§&thnsp;313.142 Request for administrative offset.
The Director shall request administrative offset under
§&thnsp;313.140, as soon as practical after completion of the
applicable procedures in order to help ensure that offset be initiated
prior to expiration of the applicable statute of limitations. At such
time as the debtor makes a claim for payments from the Fund, if at
least a year has elapsed since the offset request was originally made,
the debtor shall be permitted to offer a satisfactory repayment plan in
lieu of offset upon establishing that changed financial circumstances
would render the offset unjust.
§&thnsp;313.143 Cancellation of deduction.
If the FDIC collects part or all of the debt by other means before
deductions are made or completed pursuant to §&thnsp;313.140, the
FDIC shall act promptly to modify or terminate its request for such
offset.
[[Page 48537]]
Subpart G—Mandatory Centralized Administrative Offset
§&thnsp;313.160 Treasury notification.
(a) In accordance with 31 U.S.C. 3716, the FDIC as a creditor
agency must notify the Secretary of the Treasury of all debts that are
delinquent (over 180 days past due), as defined in the FCCS, to enable
the Secretary to seek collection by centralized administrative offset.
This includes debts the FDIC seeks to recover from the pay account of
an employee of another agency by means of salary offset.
(b) For purposes of centralized administrative offset, a claim or
debt is not delinquent if:
(1) It is in litigation or foreclosure;
(2) It will be disposed of under an asset sale program within one
year after becoming eligible for sale;
(3) It has been referred to a private collection contractor for
collection;
(4) It has been referred to a debt collection center;
(5) It will be collected under internal offset, if such offset is
sufficient to collect the claim within three years after the date the
debt or claim is first delinquent; and
(6) It is within a specific class of claims or debts which the
Secretary of the Treasury has determined to be exempt, at the request
of an agency.
§&thnsp;313.161 Certification of debt.
Prior to referring a delinquent debt to the Secretary of the
Treasury, the Director must have complied with the requirements of 5
U.S.C. 5514, and 5 CFR part 550, subpart K, governing salary offset,
and the FDIC regulations. The Director shall certify, in a form
acceptable to the Secretary, that:
(a) The debt is past due and legally enforceable; and
(b) The FDIC has complied with all due process requirements under
31 U.S.C. 3716 and the FDIC's administrative offset regulations.
§&thnsp;313.162 Compliance with 31 CFR part 285.
The Director shall also comply with applicable procedures for
referring a delinquent debt for purposes of centralized offset which
are set forth at 31 CFR part 285 and the FCCS.
§&thnsp;313.163 Notification of debts of 180 days or less.
The Director, in his discretion, may also notify the Secretary of
the Treasury of debts that have been delinquent for 180 days or less,
including debts the FDIC seeks to recover by means of salary offset.
§§&thnsp;313.164—313.180 [Reserved]
Dated at Washington, DC, this 12th day of July, 2002.
By order of the Board of Directors.
Federal Deposit Insurance Corporation.
Valerie J. Best,
Assistant Executive Secretary/Supervisory Counsel.
[FR Doc. 02–18656 Filed 7–24–02; 8:45 am]
BILLING CODE 6714–01–P