RD Instruction 1951C Table Of Contents Page 1 PART

rd instruction 1951-c table of contents page 1 part 1951 - servicing and collections subpart c - offsets of federal payments to

RD Instruction 1951-C
Table of Contents
Page 1
PART 1951 - SERVICING AND COLLECTIONS
Subpart C - Offsets of Federal Payments to USDA Agency Borrowers
Table of Contents
-----------------
Sec. Page
1951.101 General. 1
1951.102 Standards and procedures for administrative
offset. 1
1
1951.103 - 1951.105 [Reserved]
1951.106 Offsets of payments to entities related to debtors. 1
(a) General. 1
(b) Offsetting entities. 2
(c) Other remedies. 2
(d) See 7 FLP, Part 3 2
1951.107 - 1951.110 [Reserved] 2
1951.111 Salary offset. 3
(a) Authorities. 3
(b) Definitions. 4
(c) Feasibility of salary offset. 6
(d) Notice to debtor. 6
(e) Notice requirement before salary offset. 7
(f) Debtor's request for records, offer to repay,
request for a hearing or request for information
concerning debt settlement. 8
(g) Hearings. 10
(h) Processing delinquent debts. 11
(i) Deduction percentage. 12
(j) Agency/NFC responsibility for other debts. 13
(k) Establishing employees or former employees
defalcation accounts and non-cash credits to
borrower accounts. 13
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RD Instruction 1951-C
Table of Contents
Page 2
Sec. Page
(l) Application of payments, refunds and overpayments. 14
(m) Cancellation of offset. 15
(n) Intra-departmental transfer. 15
(o) Liquidation from final checks. 15
(p) Coordination with other agencies. 15
(q) Deductions by the National Finance Center (NFC). 16
(r) Interest, penalties and administrative costs. 16
(s) Adjustment in rate of repayment. 16
1951.112 - 1951.135 [Reserved] 17
1951.136 Procedures for Offset and Cross-Servicing for the
Rural Housing Service (Community Facility Program only)
And the Rural Business-Cooperative Service. 17
1951.137 Procedures for Treasury Offset and Cross-Servicing
for the Farm Service Agency (FSA) Farm Loan Program 18
1951.138 - 1951.149 [Reserved] 19
1951.150 OMB control number. 19
oOo
RD Instruction 1951-C
PART 1951 - SERVICING AND COLLECTIONS
Subpart C - Offset of Federal Payments to USDA Agency Borrowers
§ 1951.101 General.
Federal debt collection statutes provide for the use of
administrative, salary, and Internal Revenue Service (IRS) offsets by
government agencies, including the Farm Service Agency (FSA), Rural
Housing Service (RHS) for its community facility program, and Rural
Business-Cooperative Service (RBS), herein referred to collectively as
"United States Department of Agriculture (USDA) Agency," to collect
delinquent debts. Any money that is or may become payable from the
United States to an individual or entity indebted to a USDA Agency may
be subject to offset for the collection of a debt owed to a USDA
Agency. In addition, money may be collected from the debtor's
retirement payments for delinquent amounts owed to the USDA Agency if
the debtor is an employee or retiree of a Federal agency, the U.S.
Postal Service, the Postal Rate Commission, or a member of the U.S.
Armed Forces or the Reserve. Amounts collected will be processed as
regular payments and credited to the borrower's account. USDA Agencies
will process requests by other Federal agencies for offset in
accordance with § 1951.102 of this subpart. This subpart does not
apply to direct single family housing loans, direct multi-family
housing loans, and the Rural Utilities Service. Section 1951.136 of
this subpart only applies to the RHS for its community facility
program and the RBS for the offset of Federal payments. Nothing in
this subpart affects the common law right of set off available to USDA
Agencies.
§ 1951.102 Standards and procedures for administrative offset.
General. Collections of delinquent debts through administrative offset
will be taken in accordance with 7 CFR part 3, subpart B and §
1951.106. See 7-FLP, Part 3
§§ 1951.103 - 1951.105 [Reserved]
§ 1951.106 Offsets of payments to entities related to debtors.
(a) General. Collections of delinquent debts through administrative
offset will be in accordance with 7 CFR part 3, subpart B, and
paragraphs (b) and (c) of this section.
_____________________________________________________________________________
DISTRIBUTION: WSAL Account Servicing
Servicing and Collections
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RD Instruction 1951-C
§ 1951.106 (Con.)
(b) Offsetting entities. Collections of delinquent debts through
administrative offset may be taken against a debtor’s pro rata share
of payments due any entity in which the debtor participates when:
(1) It is determined that FSA, FLP has a legally enforceable right
under state law or Federal law, including program regulations at 7 CFR
792.7(l) and 1403.7(q), to pursue the entity payment;
(2) A debtor has created a shell corporation before receiving a loan,
or after receiving a loan, established an entity, or has reorganized,
transferred ownership of, or otherwise changed in some manner the
debtor’s operation or the operation of a related entity for the
purpose of avoiding payment of the FSA, FLP debt or otherwise
circumventing Agency regulations;
(3) Assets used in the entity’s operation include assets pledged as
security to the Agency that have been transferred to the entity
without payment to the Agency of the value of the security or Agency
consent to transfer of the assets;
(4) A corporation to which a payment is due is the alter ego of a
debtor; or
(5) A debtor participates in, either directly or indirectly, in the
entity as determined by FSA.
(c) Other remedies. Nothing in this section shall be deemed to limit
remedies otherwise available to the Agency under other applicable law.
(d) See 7-FLP, Part 3
§§ 1951.107 - 1951.110 [Reserved]
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RD Instruction 1951-C
§ 1951.111 Salary offset.
Salary offset may be used to collect debts arising from delinquent
USDA Agency loans and other debts which arise through such activities
as theft, embezzlement, fraud, salary overpayments, under withholding
of amounts payable for life and health insurance, and any amount owed
by former employees from loss of federal funds through negligence and
other matters. Salary offset may also be used by other Federal
agencies to collect delinquent debts owed to them by employees of the
USDA Agency, excluding county committee members. Administrative
offset, rather than salary offset, will be used to collect money from
Federal employee retirement benefits. For delinquent FLP direct loans,
salary offset will not begin until the borrower has been notified of
servicing options in accordance with 7 CFR Part 766. In addition, for
FLP direct loans, salary offset will not be instituted if the Federal
salary has been considered on the farm operating plan, and it was
determined the funds were to be used for another purpose other than
payment on the USDA Agency loan. For FLP guaranteed debtors, salary
offset can not begin until a final loss claim has been paid. When
salary offset is used, payment for the debt will be deducted from the
employee's pay and sent directly to the creditor agency. Not more than
15 percent of the employee's disposable pay can be offset per pay
period, unless the employee agrees to a larger amount. The debt does
not have to be reduced to judgment or be undisputed, and the payment
does not have to be covered by a security instrument. This section
describes the procedures which must be followed before the USDA Agency
can ask a Federal agency to offset any amount against an employee's
salary.
(a) Authorities. The following authorities are granted to USDA Agency
employees in order that they may initiate and implement salary offset:
(1) Certifying Officials are authorized to certify to the debtor's
employing agency that the debt exists, the amount of the delinquency
or debt, that the procedures in the United States Department of
Agriculture's (USDA's) regulations regarding salary offsets have been
followed, that the actions required by the Debt Collection Act have
been taken; and to request that salary offset be initiated by the
debtor's employing agency. This authority may not be redelegated.
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RD Instruction 1951-C
§ 1951.111(a) (Con.)
(2) Certifying Officials are authorized to advise the Finance Office
to establish employee defalcation accounts and non-cash credits to
borrower accounts in cases involving other debts, such as those
arising from theft, fraud, embezzlement, loss of funds through
negligence, and similar actions involving Agency employees.
(3) The Finance Office is authorized to establish defalcation accounts
and non-cash credits to borrower accounts upon receipt of requests
from the Certifying Officials.
(b) Definitions.
(1) Certifying Officials - State Directors; State Executive Directors;
the Assistant Administrator, Finance Office; Financial Management
Director, Financial Management Division; and the Deputy Administrator
for Management, National Office.
(2) Debt or debts - A term that refers to one or both of the
following:
(i) Delinquent debts - A past due amount owed to the United States
from sources which include, but are not limited to, insured or
guaranteed loans, fees, leases, rents, royalties, services, sales of
real or personal property, overpayments, penalties, damages, interest,
fines and forfeitures (except those arising under the Uniform Code of
Military Justice).
(ii) Other debts - An amount owed to the United States by an employee
for pecuniary losses where the employee has been determined to be
liable due to the employee's negligent, willful, unauthorized or
illegal acts, including but not limited to:
(A) Theft, misuse, or loss of Government funds;
(B) False claims for services and travel;
(C) Illegal, unauthorized obligation and expenditures of Government
appropriations;
(D) Using or authorizing the use of Government owned or leased
equipment, facilities supplies, and services for other than official
or approved purposes;
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RD Instruction 1951-C
§ 1951.111(b)(2)(ii) (Con.)
(E) Lost, stolen, damaged, or destroyed Government property;
(F) Erroneous entries on accounting record or reports; and,
(G) Deliberate failure to provide physical security and control
procedures for accountable officers, if such failure is determined to
be the proximate cause for a loss of Government funds.
(3) Defalcation account - An account established in the Finance Office
for other debts owed the Federal government in the amount missing due
to the action of an employee or former employee.
(4) Disposable pay - Pay due an employee that remains after required
deductions for Federal, State and local income taxes; Social Security
taxes, including Medicare taxes; Federal retirement programs; premiums
for life and health insurance benefits, and such other deductions
required by law to be withheld.
(5) Hearing Officer - An Administrative Law Judge of the USDA or
another individual not under the control of the USDA, designated by
the Certifying Official to review the determination of the alleged
debt.
(6) Non-cash credit - The accounting action taken by the Finance
Office to credit and make a borrower's account whole for funds paid by
the borrower but missing due to an employee's or former employee's
actions.
(7) Salary offset - The collection of a debt due to the United States
by deducting a portion of the disposable pay of a Federal employee
without the employee's consent.
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RD Instruction 1951-C
§ 1951.111 (Con.)
(c) Feasibility of salary offset. The first step the Certifying
Official must take to use this offset procedure is to decide, on a
case by case basis, whether offset is feasible. If an offset is
feasible, the directions in the following paragraphs of this section
will be used to collect by salary offset. If the official making this
determination decides that salary offset is not feasible, the reasons
supporting this decision will be documented in the borrower's running
case record in the case of delinquent debts, or the "For Official Use
Only" file in cases of other debts. Ordinarily, and where possible,
debts should be collected in one lump-sum; but payments may be made in
installments. Installment deductions can be made over a period not
greater than the anticipated period of employment. However, the amount
deducted for a period will not exceed 15 percent of the disposable pay
from which the deduction is made. If possible, the installment payment
will be sufficient in size and frequency to liquidate the debt in
approximately 3 years. Based on the Comptroller General's decisions,
other debts by employees cannot be forgiven. If the employee retires
or resigns, or if employment ends before collection of the debt is
completed, final salary payment, lump sum leave, etc. may be offset to
the extent necessary to liquidate the debt. Salary offset is feasible
if:
(1) The cost to the Government of collecting salary offset does not
exceed the amount of the debt. County Committee members are exempt
from salary offset because the amount collected by salary offset would
be so small as to be impractical.
(2) There are not any legal restrictions to the debt, such as the
debtor being under the jurisdiction of a bankruptcy court, or the
statute of limitations having expired. The Debt Collection Act of 1982
permits offset of claims that have not been outstanding for more than
10 years.
(d) Notice to debtor.
(1) After the Certifying Official determines that collection by salary
offset is feasible, the debtor should be notified within 15 calendar
days after the salary offset determination. This notice will notify
the debtor of intended salary offset at least 30 days before the
salary offset begins. For FLP direct loans, this notice will be sent
after the borrower is over 90 days past due and immediately after
sending notification of servicing rights in accordance with 7 CFR 766.
For FLP guaranteed debtors, this notice will be sent after a final
loss claim has been paid. The salary offset determination notice will
be delivered to the debtor by regular mail. (Revised 01-09-08, PN
417.)
(2) The Debt Collection Act of 1982 requires that the hearing officer
issue a written decision not later than 60 days after the filing of
the petition requesting the hearing; thus, the evidence upon which the
decision to notify the debtor is based, to the extent possible, should
be sufficient for the Agency to proceed at a hearing, should the
debtor request a hearing under paragraph (f) of this section.
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RD Instruction 1951-C
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§ 1951.111 (Con.)
(e) Notice requirement before salary offset. Salary offset will not be
made unless the employee receives 30 calendar days written notice.
This Notice of Intent (Guide Letter 1951-C-4) will be addressed to the
debtor or the debtor's representative. The Notice of Intent must be
modified if it is addressed to the debtor's representative. In either
case, the Notice of Intent will state:
(1) It has been determined that the debt is owed, the amount of the
delinquency or debt, and the facts giving rise to the debt;
(2) The cost to the Government of collecting salary offset does not
exceed the amount of the debt;
(3) There are not any legal restrictions that would bar collecting the
debt;
(4) The debt will be collected by means of deduction of not more than
15 percent from the employee's current disposable pay until the debt
and all accumulated interest are paid in full;
(5) The amount, frequency, approximate beginning date, and duration of
the intended deductions;
(6) An explanation of the requirements concerning interest, penalties
and administrative costs, unless such payments are waived;
(7) The employee's right to inspect and request a copy of records
relating to the debt;
(8) The employee's right to voluntarily enter into a written agreement
for a repayment schedule with the agency different from that proposed
by the Agency, if the terms of the repayment proposed by the employee
are agreeable with the agency;
(9) That the employee has a right to a hearing conducted by an
Administrative Law Judge of USDA or a hearing official not under the
control of the Secretary of Agriculture, concerning the agency's
determination of the existence or amount of the debt and the
percentage of disposable pay to be deducted each pay period, if a
petition for a hearing is filed by the employee as prescribed by the
Agency;
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RD Instruction 1951-C
§ 1951.111(e) (Con.)
(10) The timely filing of a petition for hearing will stay the
collection proceedings;
(11) That a final decision will be issued at the earliest practical
date, but not later than 60 calendar days after the filing of petition
requesting the hearing;
(12) That any knowingly false or frivolous statements may subject the
employee to disciplinary procedures, or penalties, under the
applicable statutory authority;
(13) Any other rights and remedies available to the employee under
statutes or regulations governing the program for which the collection
is being made;
(14) That amounts paid on or deducted for the debt which are later
waived or found not owed to the United States will be promptly
refunded to the employee unless there are provisions to the contrary;
(15) The method and time period for requesting a hearing; and
(16) The name and address of an official of USDA to whom
communications should be directed.
(f) Debtor's request for records, offer to repay, request for a
hearing or request for information concerning debt settlement.
(1) If a debtor responds to RD Guide Letter 1951-C-4 by asking to
review and copy USDA Agency's records relating to the debt, the
Certifying Official will promptly respond by sending a letter which
tells the debtor the location of the debtor's USDA Agency files and
that the files may be reviewed and copied within the next 30 days.
Copying costs (see RD Instruction 2018-F) will be set out in the
letter, as well as the hours the files will be available each day. If
a debtor asks to have USDA Agency copy the records, a copy will be
made within 30 days of the request. (Revised 6-28-89, PN 111)
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RD Instruction 1951-C
§ 1951.111(f) (Con.)
(2) If a debtor responds to RD Guide Letter 1951-C-4 by offering to
repay the debt, the offer may be accepted by the Certifying Official,
if it would be in the best interest of the Government. RD Form Letter
1951-8 will be used if a repayment offer for an USDA Agency loan or
grant is accepted. Upon receipt of an offer to repay, the Certifying
Official will delay institution of a hearing proceeding until a
decision is made on the repayment offer. Within 60 days after the
initial offer to repay was made, the Certifying Official must decide
whether to accept or reject the offer. This decision will be
documented in the running case record or the "For Official Use Only"
file, as appropriate, and the debtor will be sent a letter which sets
out the decision to accept or reject the offer to repay. If the offer
is rejected, it should be based upon a realistic budget or Farm and
Home Plan and according to the servicing regulations for the type of
loan(s) involved.
(3) If a debtor responds to RD Guide Letter 1951-C-4 by asking for a
hearing on USDA Agency's determination that a debt exists and/or is
due, or on the percentage of net pay to be deducted each pay period,
the Certifying Official will notify the debtor in accordance with
paragraph (g)(3) of this section and request the debtor's case file or
the "For Official Use Only" file.
(4) If a debtor is willing to have more than 15 percent of the
disposable pay sent to USDA Agency, a letter prepared and signed by
the debtor clearly stating this must be placed in the debtor's case
file or the "For Official Use Only" file.
(5) If a debtor who is an USDA Agency borrower requests debt
settlement, the account must be in collection-only status or be an
inactive account for which there is no security. The Certifying
Official must inform the borrower of how to apply for debt settlement.
Any application will be considered independently of the salary offset.
A salary offset should not be delayed because the borrower applied for
debt settlement.
(6) The time limits set in RD Guide Letter 1951-C-4 and in paragraphs
(1), (2), and (3) of this section run concurrently. In other words, if
a debtor asks to review the USDA Agency file and offers to repay the
debt, the debtor cannot take 30 days to ask to review the file and
then take another 30 days to offer to repay. The request to review the
file and the offer to repay must both be made within 30 days of the
date the debtor receives the notification letter.
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RD Instruction 1951-C
§ 1951.111(f) (Con.)
(7) If an employee is included in a bargaining unit which has a
negotiated grievance procedure that does not specifically exclude
salary offset proceedings, the employee must grieve the matter in
accordance with the negotiated procedure. Employees who are not
covered by a negotiated procedure must utilize the salary offset
proceedings as outlined in RD Guide Letter 1951-C-4. The employee must
be informed, in writing, which procedure to follow and, as
appropriate, reference should be made to the appropriate sections of
the negotiated agreement.
(g) Hearings.
(1) A hearing officer must be a USDA Administrative Law Judge or a
person who is not a USDA employee. In order to ensure that a hearing
officer will be available promptly when needed, Certifying Officials
need to make appropriate arrangements with officials of nearby federal
agencies for the use of each other's employees as hearing officers.
(2) Not later than 30 days from the date the debtor receives the
Notice of Intent, (RD Guide Letter 1951-C-4), the employee must file
with the Certifying Official issuing the notice, a written petition
establishing his/her desire for a hearing on the existence and amount
of the debt or the proposed offset schedule. The employee's petition
must fully identify and explain all the information and evidence that
supports his/her position. In addition, the petition must bear the
employee's original signature and be dated upon receipt by the
Certifying Official.
(3) Certifying Officials are responsible for determining if the
employee's petition for a hearing has been submitted in a timely
fashion. Petitions received from employees after the 30-day time
limitation expires will be accepted only if the employee can show the
delay was because of circumstances beyond his/her control or because
of failure to receive notice of the time limitation. Certifying
Officials are required to provide written notification to the employee
of the acceptance or non-acceptance of the employee's petitions for
hearing.
(4) For those petitions accepted, USDA Agency will arrange for a
hearing officer and notify the employee of the time and place of the
hearing. The hearing location should be convenient to all parties
involved. The employee will also be notified that the acceptance of
the petition for hearing will stay the commencement of collection
proceedings. Any payments collected in error due to untimely or
delayed filing beyond the employee's control will be refunded unless
there are applicable contractual or statutory provisions to the
contrary.
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RD Instruction 1951-C
§ 1951.111(g) (Con.)
(5) The hearing will be based on written submissions and documentation
provided by the debtor and USDA Agency unless:
(i) A statute authorizes or requires consideration of waiving the
debt, the debtor requests waiver of the debt, and the waiver
determination turns on an issue of credibility or truth.
(ii) The debtor requests reconsideration of the debt and the hearing
officer determines that the question of the indebtedness cannot be
resolved by a review of the documentary evidence; for example, when
the validity of the debt turns on an issue of credibility or truth.
(iii) The hearing officer determines that an oral hearing is
appropriate.
(6) Oral hearings may be conducted by conference call at the request
of the debtor or at the discretion of the hearing officer. The hearing
officer's determination that the offset hearing is on the written
record is final and is not subject to review.
(7) The hearing officer will issue a written decision not later than
60 days after the filing of the petition requesting the hearing,
unless the employee requests and the Certifying Official grants a
delay in the proceedings. The written decision will state the facts
supporting the nature and origin of the debt, the hearing officer's
analysis, findings and conclusions as to the amount and validity of
the debt, and repayment schedule. Both the employee and USDA Agency
will be provided with a copy of the hearing officer's written decision
on the debt.
(h) Processing delinquent debts.
(1) Form AD-343, "Payroll Action Request," and RD Form Letter
1951-6 will be prepared and submitted by the Certifying Official to
the National Office, Financial and Management Analysis Staff (FMAS),
for coordination and forwarding to the debtor's employing agency if:
(i) The borrower does not respond to RD Guide Letter 1951-C-4 within
30 days.
(ii) The borrower responds to RD Guide Letter 1951-C-4 within 30 days
and
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RD Instruction 1951-C
§ 1951.111(h)(1)(ii) (Con.)
(A) has had an opportunity to review the file, if requested,
(B) has received a hearing, if requested, and
(C) a decision has been made by the hearing officer to uphold the
offset.
(2) A copy of Form AD-343 and RD Form Letter 1951-6 will be sent to
the Finance Office, St. Louis, MO 63103, Attn: Account Settlement
Unit.
(3) If the debtor is an USDA Agency employee, Form Ad-343 will be sent
to the National Office, FMAS, and a copy to the Finance Office, St.
Louis, MO 63103, Attn: Account Settlement Unit. This form can be
signed for the Certifying Official by an employment officer, an
Administrative Officer, or a personnel management specialist, or
signed by the Certifying Official. (Revised 6-28-89, PN 111)
(4) If the debtor has agreed to have more or less than 15 percent of
the disposable pay sent to USDA Agency, a copy of the debtor's letter
(RD Form Letter 1951-8) authorizing this must be attached to Form
AD-343.
(5) Field offices will be notified of payments received from salary
offset by receipt of a transaction record from the Finance Office.
(i) Deduction percentage.
(1) Generally, installment deductions will be made over a period not
greater than the anticipated period of employment. If possible, the
installment payment will be sufficient in size and frequency to
liquidate the debt in approximately 3 years. The size and frequency of
installment deductions will bear a reasonable relation to the size of
the debt and the employee's ability to pay. Certifying Officials are
responsible for determining the size and frequency of the deductions.
However, the amount deducted for any period will not exceed 15 percent
of the disposable pay from which the deduction is made, unless the
employee has agreed in writing to the deduction of a greater amount.
Installment payments of less than $25 per pay period or $50 a month
will be accepted only in the most unusual circumstances.
(2) Deductions will be made only from basic pay, incentive pay,
retired pay, retainer pay, or, in the case of an employee not entitled
to basic pay, other authorized pay. If there is more than one salary
offset, the maximum deduction for all salary offsets against an
employee's disposable pay is 15 percent unless the employee has agreed
in writing to a greater amount. (Revised 11-2-88, PN 97)
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RD Instruction 1951-C
§ 1951.111 (Con.)
(j) Agency/NFC responsibility for other debts.
(1) USDA Agency will inform NFC about other indebtedness by
transmitting to NFC an AD-343. NFC will process the documents through
the Payroll/Personnel System, calculate the net amount of the
adjustment and generate a salary offset notice. This notice will be
sent to the employee's employing office along with a duplicate copy
for the USDA Agency's records. USDA Agency is responsible for
completing the necessary information and forwarding the employee's
notice to the employee.
(2) Other indebtedness falls into two categories:
(i) An agency-initiated indebtedness (i.e. personal telephone calls,
property damages, etc.).
(ii) An NFC-initiated indebtedness (i.e. duplicate salary payments,
etc.). NFC will send the salary offset notice to the employing office.
(k) Establishing employees-or former employees defalcation accounts
and non-cash credits to borrower accounts. In cases where a borrower
made a payment on an USDA Agency account(s) and, due to theft,
embezzlement, fraud, negligence, or some other action on the part of
an USDA Agency employee or employees, the payment is not transmitted
to the Finance Office for application to the borrower's account(s),
certain accounting actions must be taken by the Finance Office to
establish non-cash credits to the borrower's account and an employee
defalcation account.
(1) The Certifying Official will advise the Assistant Administrator,
Finance Office by memorandum to establish a defalcation account. The
memorandum must state the following information:
(i) Employee's name (or former),
(ii) Social Security Number,
(iii) Present or last known address,
(iv) Date of Payment, and
(v) Amount of the defalcation account.
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RD Instruction 1951-C
§ 1951.111(k)(Con.)
(2) If a non-cash credit to a borrower's account(s) is required, the
letter to the Finance Office will include:
(i) Borrower's name and case number,
(ii) Fund Code and Loan Code,
(iii) Date and amount of missing payment,
(iv) Copy of receipt issued for the missing payment, and
(v) Name of employee who last had custody of the missing funds.
(3) To assist and assure proper accounting for defalcation accounts
and non-cash credits, the request should be made at the same time.
Should requests be made separately, be sure to identify appropriately.
(4) The Certifying Official shall furnish a copy of the memorandum and
supporting documentation for paragraphs (k)(l) and (2) of this section
to the Deputy Administrator for Management for distribution to the
Financial and Management Analysis Staff and Employee Relations Branch,
Personnel Division.
(l) Application of payments, refunds and overpayments.
(1) If a debtor is delinquent or indebted on more than one USDA Agency
loan or debt, amounts collected by offset will be applied as specified
on Form AD-343, based on the advantage to agency or debtor. The check
date will be used as the date of credit in applying payments to the
borrower's accounts.
(2) If a court or agency orders USDA Agency to refund the amount
obtained by salary offset, a refund will be requested promptly by the
Certifying Official in accordance with the order by sending RD Form
Letter 1951-5 to the Finance Office. Processing RD Form Letter 1951-5
in the Finance Office will cause a refund to be sent to the debtor
through the county office or other appropriate USDA Agency office. The
debtor is not entitled to any payment of interest on the refunded
amount.
(3) If a debtor does not request a hearing within the required time
and it is later determined that the delay was due to circumstances
beyond the debtor's control, any amount collected before the hearing
decision is made will be refunded promptly by the Certifying Official
in accordance with paragraph (1)(2) above.
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RD Instruction 1951-C
§ 1951.111(l) (Con.)
(4) If USDA Agency receives money through an offset but the debtor is
not delinquent or indebted at the time or the amount received is in
excess of the delinquency or indebtedness, the entire amount or the
amount in excess of the delinquency or indebtedness will be refunded
promptly to the debtor by the Certifying Official in accordance with
paragraphs (1) and (2) above.
(m) Cancellation of offset. If a debtor's name has been submitted to
another agency for offset and the debtor's account is brought current
or otherwise satisfied, the Certifying Official will complete Form
AD-343 and send it to the National Office, FMAS. FMAS will notify the
paying agency with Form AD-343 that the debtor is no longer delinquent
or indebted and to cancel the offset. A copy of the cancellation
document will be sent to the debtor and the Finance Office, Attn:
Account Settlement Unit.
(n) Intra-departmental transfer. When an USDA Agency employee who is
indebted to one agency in USDA transfers to another agency within
USDA, a copy of the repayment schedule should be forwarded by the
agency personnel office to the new employing agency. The NFC will
continue to make deductions until full recovery is effected.
(o) Liquidation from final checks. Upon the determination that an
employee owing a debt to USDA Agency is to retire, resign, or
employment otherwise ends, the Certifying Official should forward a
telegram with the appropriate employee identification and amount of
the debt to the NFC. The telegram should request that the debt be
collected from final salary/lump sum leave or other funds due the
employee, and, if necessary, to put a hold on the retirement funds.
The telegram information should be confirmed by completion of Form
AD-343. Collection from retirement funds will be in accordance with
Departmental Administrative Offset procedures (7 CFR, Part 3, Subpart
B, Section 3.32). (Revised 11-2-88, PN 97)
(p) Coordination with other agencies.
(1) If USDA Agency is the creditor agency but not the paying agency,
the Certifying Official will submit Form AD-343 to the National
Office, FMAS, to begin salary offset against an indebted employee. The
request will include a certification as to the determination of
indebtedness, and that USDA Agency has complied with applicable
regulations and instructions for submitting the funds to the Finance
Office. (See RD Form Letter 1951-6.) (Revised 6-28-89, PN 111)
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RD Instruction 1951-C
§1951.111(p) (Con.)
(2) When an employee of USDA Agency owes a debt to another Federal
agency, salary offset may be used only when the Federal agency
certifies that the person owes the debt and that the Federal agency
has complied with its regulations. The request must include the
creditor agency's certification as to the indebtedness, including the
amount, and that the employee has been given the due process
entitlements guaranteed by the Debt Collection Act of 1982. When a
request for offset is received, USDA Agency will notify the employee
and NFC and arrange for offset. (See RD Form Letter 1951-7).
(q) Deductions by the National Finance Center (NFC). The NFC will
automatically deduct the full amount of the delinquency or
indebtedness if less than 15 percent of disposable pay or 15 percent
of disposable pay if the delinquency or indebtedness exceeds 15
percent, unless the creditor agency advises otherwise. Deductions will
begin the second pay period after the 30-day notification period has
expired unless FSA/RD issues the notice. If FSA/RD issues the notice,
the NFC will begin deductions on the first pay period after receipt of
the Form AD-343.
(r) Interest, penalties and administrative costs. Interest and
administrative costs will normally be assessed on outstanding claims
being collected by salary offset. However, penalties should not be
charged routinely on debts being collected in installments by salary
offset, since it is not to be construed as a failure to pay within a
given time period. Additional interest, penalties, and administrative
costs will not be assessed on delinquent loans until FSA/RD publishes
regulations permitting such charges.
(s) Adjustment in rate of repayment.
(1) When an employee who is indebted receives a reduction in basic pay
that would cause the current deductions to exceed 15 percent of
disposable pay, and the employee has not consented in writing to a
greater amount, FSA/RD must take action to reduce the amount of the
deductions to 15 percent of the new amount of disposable pay. Upon an
increase in basic pay which results in the current deductions to be
less than the specified percentage, FSA/RD may increase the amount of
the deductions accordingly. In either case, when a change is made the
employee will be notified in writing.
(2) When an employee has an existing reduced repayment schedule
because of financial hardship, the creditor agency may arrange for a
new repayment schedule.
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RD Instruction 1951-C
§ 1951.112 - 1951.135 [Reserved]
§ 1951.136 Procedures for Department of Treasury Offset and
Cross-Servicing for the Rural Housing Service (Community Facility
Program only) and the Rural Business-Cooperative Service.
(a) The National Offices of the Rural Housing Service (RHS), Community
Facilities (CF) and the Rural Business-Cooperative Service (RBS) will
refer past due, legally enforceable debts which are over 180 days
delinquent to the Secretary of the Treasury for collection by
centralized administrative offset (TOP), Internal Revenue Service
offset administered through TOP and Treasury's Cross-Servicing
(Cross-Servicing) Program, which centralizes all Government debt
collection actions. A borrower with a workout agreement in place, in
bankruptcy or litigation, or meeting other exclusion criteria, will be
excluded from TOP or Cross-Servicing.
(b) A 60 day due process notice will be sent to borrowers subject to
TOP or Cross-Servicing. The borrower will be given 60 days to resolve
any delinquency before the debt is reported to Treasury. The notice
will include:
(1) The nature and amount of the debt, the intention of the Agency to
collect the debt through TOP or Cross-Servicing, and an explanation of
the debtor’s rights;
(2) An opportunity to inspect and copy the records related to the debt
from the Agency;
(3) An opportunity to review the matter within the Agency or the
National Appeals Division if there has not been a previous opportunity
to appeal the offset; and
(4) An opportunity to enter into a written repayment agreement.
(c) In referring debt to the Department of Treasury the Agency will
certify that:
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RD Instruction 1951-C
§ 1951.136(c) (Con.)
(1) The debt is past due and legally enforceable in the amount
submitted and the Agency will ensure that collections are properly
credited to the debt;
(2) Except in the case of a judgment debt or as otherwise allowed by
law, the debt is referred for offset within 10 years after the
Agency's right of action accrues;
(3) The Agency has made reasonable efforts to obtain payment; and
(4) Payments that are prohibited by law from being offset are exempt
from centralized administrative offset.
§ 1951.137 Procedures for Treasury Offset and Cross-Servicing for the
Farm Service Agency (FSA) Farm Loan Program
(a) The Farm Service Agency, Farm Loan Programs, will refer past due,
legally enforceable debts which are over 180 days delinquent to the
Secretary of the Treasury for collection by centralized administrative
offset (TOP), Internal Revenue Service offset administered through TOP
and Treasury's Cross-Servicing (Cross-Servicing) Program, which
centralizes all Government debt collection actions. A borrower with a
workout agreement in place, in bankruptcy or litigation, or meeting
other exclusion criteria, will be excluded from TOP or
Cross-Servicing. Guaranteed debtors will only be referred to TOP upon
confirmation of payment on a final loss claim.
(b) A 60 day due process notice will be sent to borrowers subject to
TOP or Cross-Servicing by the Director of Kansas City Finance Office.
The borrower will be given 60 days to resolve any delinquency before
the debt is reported to Treasury. The notice will include:
(1) The nature and amount of the debt, the intention of the Agency to
collect the debt through TOP or Cross-Servicing, and an explanation of
the debtor’s rights;
(2) An opportunity to inspect and copy the records related to the
debt, from the Agency;
(3) An opportunity to review the matter within the Agency; and
(4) An opportunity to enter into a written repayment agreement.
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RD Instruction 1951-C
§ 1951.137 (Con.)
(c) In referring debt to the Department of Treasury the Agency will
certify that:
(1) The debt is past due and legally enforceable in the amount
submitted and the Agency will ensure that collections are properly
credited to the debt;
(2) Except in the case of a judgment debt or as otherwise allowed by
law, the debt is referred for offset within 10 years after the
Agency's right of action accrues;
(3) The Agency has made reasonable efforts to obtain payment; and
(4) Payments that are prohibited by law from being offset are exempt
from centralized administrative offset.
(d) See 7 FLP, Part 4 and 8.
§§ 1951.138 - 1951.149 [Reserved]
§ 1951.150 OMB control number.
The collection of information requirements in this regulation have
been approved by the Office of Management and Budget and assigned OMB
control number 0575-0119.
oOo
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