Date: October 12, 1995
Part 263: Debt Recovery
Originating Office: Division of Finance
3.1 Services of Debt Collection Agencies. The Service may use collection agencies to collect delinquent Government debts.
3.2 Department of the Interior Debt Collection Contract. Debt collection services are available to collect debts between $100 and $10,000 each. The debt collection contractor is paid a commission on net collections (total deposited collections less returned checks). The Debt Collection Coordinator (Division of Finance) acts on behalf of the Service with respect to matters concerning debts referred to the contractor such as establishing priorities for debt collection, responding to complaints from debtors, determining the accuracy of requested payments, and considering proposals for alternative methods of debt resolution.
3.3 Contractor's Monthly Transaction Report. This report is prepared by the contractor and sent to the Chief, Division of Finance no later than the 10th of each month. It shows actions taken during the month on debts referred and commissions due, if any.
3.4 Referral of Delinquent Debts to Collection Contractor. The debt collection service is intended to supplement rather than replace the basic collection responsibility of the Service. An aggressive but methodic collection program will minimize the number of accounts requiring referral. The decision to refer a debt must be weighed on a case-by-case basis depending upon the debtor's reaction to billing and demand notices and either personal or telephone contacts. For example, failure to respond to an initial billing and follow-up demand notices is usually indicative that debt referral is in order. Referral should not be delayed beyond a 90-day delinquent period barring extenuating or unusual circumstances.
A. Submission of Delinquent Debts to the Service. The Finance Center shall submit case reports on delinquent debts to Headquarters Division of Finance promptly upon the determination that further collection effort at these levels will not be productive and/or upon expiration of the 90-day delinquency period.
B. Delinquent Debt Case Reports. Case reports should be sent to the Chief, Division of Finance, Attn: Debt Collection Coordinator (DCC). A Case File Control Number assigned by the Finance Center will serve as the cross-reference to the billing office individual Bill for Collection. Care should be taken that billing offices retain a complete case file, including original documents where available, and that copies only be submitted to the DCC.
3.5 Disposition of Collections made by Collection Contractor. The collection contractor deposits gross collections for credit for the agency. Deposits are made at least weekly or when the balance reaches $1,000, whichever occurs first. Agency copies of the Certificate of Deposit, along with sufficient information to identify the case files included in the deposit, are forwarded to the DCC. The DCC annotates the collection data to provide a cross-reference from the Case File Control Number to the FWS Bill for Collection number. The Certificate of Deposit and annotated list are forwarded to the Finance Center for recording the collection(s) into FFS. If the collection is for an uncollectible account arising from a Bill for Collection issued by a Regional or Field Office, the DCC will send an information copy of the collection to the appropriate Regional Office.
3.6 Compromise of Claims. A compromise agreement to settle an indebtedness must be distinguished from a waiver, suspension or termination action and is based on one or a combination of the following:
A. The Government cannot collect the full amount because of the debtor's inability to pay the full amount within a reasonable time, or refusal of the debtor to pay the claim in full within a reasonable time by enforced collection action.
B. Doubt exists as to the Government's ability to prove its case in court for the full amount claimed, either because of legal issues involved or a bona fide dispute as to the facts.
C. The cost of collecting the claim does not justify the enforced collection of the full amount.
D. Authority to compromise claims arising out of Departmental activities is limited to the Solicitor, Department of the Interior and/or Department of Justice. Only the Comptroller General may effect the compromise of a claim that arises out of an exception made by GAO. Referrals to Department of Justice or GAO must be made using the Claims Collection Litigation Report and specify the reasons for the agency's recommendation.
3.7 Claim Does Not Exceed $20,000. The Associate, Regional and Field Solicitors may accept compromise of claims which do not exceed $20,000, exclusive of interest. Referrals of compromise offers to the Solicitor's office must be authorized and approved by the Assistant Director - Policy, Budget and Administration and contain recommendations on the following points:
A. Debtor's ability/inability to pay in full;
B. Possible exemption under the law to enforce collection;
C. Whether the Service's enforcement policy is adequately served by the offer (if applicable);
D. Credit information obtained from the debtor showing assets, liabilities, income and expenses;
E. Estimated cost of collecting the claim in full; and,
F. Litigation probabilities in event that payment in full is disputed in court.
3.8 Claim Exceeds $20,000. The Department of Justice has sole authority to accept compromise offers when a claim exceeds $20,000 exclusive of interest, penalties, and administrative costs. Claims of $100,000 or less are referred to the U.S. Attorney in whose judicial district the debtor can be found. Claims exceeding $100,000 are referred to the Department of Justice, Commercial Litigation Branch, Civil Division, Washington, D.C. Claims referred to the Department of Justice must be acceptable to the agency and have concurrence of the Solicitor.
3.9 Suspension or Termination of Collection Action.
A. A suspension is a temporary discontinuance or interruption of collection action with expectation and purpose of resuming collection action in the future. It is distinguished from termination in that the latter is a cessation of all collection action and effectively closes the file on the claim.
B. The Assistant Director - Policy, Budget and Administration is authorized to suspend or terminate collection action on claims which do not exceed $20,000, exclusive of interest, penalties, and administrative costs. However, the advice of the Solicitor must be first obtained when the amount of the claim to be suspended or terminated exceeds $600. The Department of Justice has sole authority to suspend or terminate collection action when the claim exceeds $20,000. Referrals to the Justice Department or GAO must be made using the Claims Collection Litigation Report and contain the Service's reason and Solicitor's recommendation for the proposed action. Referrals must be made within 1 year of the determination of the fact and amount of debt.
C. Suspension of Collection Action.
(1) Collection action may be suspended temporarily on a claim when the debtor cannot be located after diligent effort and there is reason to believe that future collection action may not be sufficiently productive to justify periodic review and action, giving consideration to the size of the debt and amount which may be realized thereon. Every reasonable effort must be made to locate missing debtors sufficiently in advance of the statute of limitations.
(2) Collection action may be suspended temporarily on a claim when the debtor owns no substantial equity in realty and is unable to make payments on the claim or effect a compromise at the time but future prospects justify retention of the claim for periodic review and action.
(3) Collection action must be suspended if the statute under which a waiver or an administrative review is sought prohibits collection action pending consideration of the requested waiver or review. In the absence of such statutory prohibition, a collection action may be suspended on a case-by-case basis if there is a reasonable possibility a waiver will be granted or the debt found not owing or collection of the debt will cause undue hardship during consideration of and response to a review request.
(4) Collection action should ordinarily be suspended if applicable statutes and regulations would not authorize a refund in event of a favorable action on the debtor's request for waiver or review. This action should not be taken if the request appears frivolous and made primarily to delay collection action.
D. Termination of Collection Action. Claims terminated under the following authority shall be recorded in a manner sufficient to support writeoff on accounting records and no further control or collection effort is required.
(1) Claims Under $20,000. The Assistant Director - Policy, Budget and Administration may terminate collection action and close the files on a claim under the following standards:
(a) When it becomes clear that the Government cannot collect or enforce collection of any significant sum having due regard for judicial remedies, debtor's future financial prospects and exemptions available under State or Federal law;
(b) When the debtor cannot be located, and either there is no security to be liquidated or the statute of limitations has run out and collection by offset is too remote to justify retention of the claim;
(c) When it is likely the cost of further collection will exceed amount recoverable;
(d) When it is determined that the claim is legally without merit; or,
(e) When it is determined that the evidence necessary to prove the claim cannot be produced and efforts to induce voluntary payments are unavailing.
(2) Claims of $20,000 and Over. Referrals to the Department of Justice, or GAO, if appropriate, shall be made as early as possible, consistent with aggressive collection action but well within the period for bringing a timely suit against the debtor. Ordinarily referrals should be made within 1 year of determination of the debt. Claims referred to Department of Justice must remain under Service accounting control unless the Department advises the agency they have closed its file on the claim.
3.10 Administrative Accounting for Uncollectible Debts.
A. The Service shall writeoff as uncollectible any receivables which are determined to be uncollectible (after using all means available to the agency, including the debt collection contractor). This will leave under accounting control only those debts upon which collection efforts have been temporarily suspended or are being pursued, including debt matters referred to the Department of the Interior.
B. Uncollectible claims, including those terminated pursuant to agency authority, shall be recorded in the financial records in a manner sufficient to support the writeoff. No further control or collection effort is required except in those instances where the debtor becomes employed by the Service. In this event, the debt should be reestablished on the financial records and collection action resumed. Delinquent debts greater than $100 must be referred to the Department's debt collection contractor prior to being written off. This procedure will not only enhance the ability to collect the debt, but also strengthen documentation for writeoff should this be necessary. At calendar yearend, 1099-G's, Miscellaneous Income, (to be claimed as income) will be sent to IRS for debts determined to be uncollectible.
3.11 Collections Received on Debts Referred to the Department of Justice or General Accounting Office.
A. The Department of Justice or U.S. Attorney should be notified promptly of collections made or contemplated on debts referred to them.
B. The Claims Group, GAO, Washington, D.C., should be notified promptly of collections made or contemplated on debts referred to them. Collections need not be reported when collection is made under the Hold-Up List or if the Service has been advised that the GAO has closed its files on the debt.
3.12 Disposition of Collections made by GAO.
A. Collections to trust or deposit funds are deposited by GAO and credit the appropriation account. A copy of the certificate of deposit is furnished to the Service.
B. All other collections are deposited by GAO to the miscellaneous receipt account without notification to the Service.
For additional information about this policy, contact the Division of Financial Management. For more information regarding this Web page, contact Krista Bibb, in the Division of Policy and Directives Management.