§ 1.1940   Assessment.

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

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

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

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

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

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

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

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

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

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

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

   [ 69 FR 27848 , May 17, 2004, as amended at  83 FR 47097 , Sept. 18, 2018]

   return arrow Back to Top