§ 1.1912   Collection by administrative offset.

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

   (2) This section does not apply to:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

   (B) The debtor has been given:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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