(a) The provisions of 31 U.S.C. 3716 allow the head of an agency to collect a debt through administrative offset. The provisions of 31 U.S.C. 3716 and 3720A authorize the Secretary of the Treasury, acting through the Bureau of the Fiscal Service (BFS) and other Federal disbursing officials, to offset certain payments to collect delinquent debts owed to the United States. This subpart authorizes the collection of debts owed to the United States by persons, organizations, and other entities by offsetting Federal and certain state payments due to the debtor. It allows for collection of debts that are past due and legally enforceable through offset, regardless of whether the debts have been reduced to judgment.

(b) Nothing in this subpart precludes the Department from pursuing other debt collection procedures to collect a debt that has been submitted to the Department of the Treasury under this subpart. The Department may use such debt collection procedures separately or in conjunction with the offset procedures of this subpart.

[AG Order 3689-2016, 81 FR 43944, July 6, 2016]

(a) Debt. Debt means any amount of funds or property that an appropriate official of the Federal Government or a court of competent jurisdiction determines is owed to the United States, including any amounts owed to the United States for the benefit of a third party, by a person, organization, or entity other than another Federal agency. For purposes of this section, the term debt does not include debts arising under the Internal Revenue Code of 1986 (26 U.S.C. 1 et seq.), the tariff laws of the United States, or the Social Security Act (42 U.S.C. 301 et seq.), except that “delinquent amounts” as defined in sections 204(f) and 1631(b)(4) of such Act (42 U.S.C. 404(f) and 1383(b)(4)(A), respectively) are included in the term debt, as are “administrative offset[s]” collectible pursuant to 31 U.S.C. 3716(c). Debts that have been referred to the Department of Justice by other agencies for collection are included in this definition.

(b) Past due. A past due debt means a debt that has not been paid or otherwise resolved by the date specified in the initial demand for payment, or in an applicable agreement or other instrument (including a post-delinquency repayment agreement), unless other payment arrangements satisfactory to the Department have been made. Judgment debts remain past due until paid in full.

(c) Notice. Notice means the information sent to the debtor pursuant to § 11.12(b). The date of the notice is the date shown on the notice letter as its date of issuance.

(d) Dispute. A dispute is a written statement supported by documentation or other evidence that all or part of an alleged debt is not past due or legally enforceable, that the amount is not the amount currently owed, that the outstanding debt has been satisfied, or, in the case of a debt reduced to judgment, that the judgment has been satisfied or stayed.

(e) Legally enforceable. Legally enforceable means that there has been a final agency or court determination that the debt, in the amount stated, is due, and there are no legal bars to collection by offset.

[Order No. 1792-93, 58 FR 51223, Oct. 1, 1993, as amended by AG Order 3689-2016, 81 FR 43944, July 6, 2016]

(a) The Department must refer any legally enforceable debt more than 120 days past-due to BFS for administrative offset under 31 U.S.C. 3716(c)(6). The Department must refer any past-due, legally enforceable debt to BFS for tax refund offset purposes pursuant to 31 U.S.C. 3720A(a) at least once a year. Before referring debts for offset, the Department must certify to BFS compliance with the provisions of 31 U.S.C. 3716(a) and 3720A(b). There is no time limit on when a debt can be collected by offset.

(b) The Department will provide the debtor with written notice of its intent to offset before initiating the offset. Notice will be mailed to the debtor at the current address of the debtor, as determined from information obtained from the IRS pursuant to 26 U.S.C. 6103(m)(2), (4), (5) or from information regarding the debt maintained by the Department of Justice. The notice sent to the debtor will state the amount of the debt and inform the debtor that:

(1) The debt is past due;

(2) The Department intends to refer the debt to BFS for offset purposes;

(3) Before the debt is referred to BFS for offset purposes, the debtor has 60 days from the date of notice to present evidence that all or part of the debt is not past due, that the amount is not the amount currently owed, that the outstanding debt has been satisfied, or, if the debt is a judgment debt, that the debt has been satisfied, or that collection action on the debt has been stayed.

(c) If the debtor neither pays the amount due nor presents evidence that the amount is not past due or is satisfied or that collection action is stayed, the Department will refer the debt to BFS for offset purposes.

(d) A debtor may request a review by the Department if the debtor believes that all or part of the debt is not past due or is not legally enforceable, or, in the case of a judgment debt, that the debt has been stayed or the amount satisfied, as follows:

(1) The debtor must send a written request for review to the address provided in the notice.

(2) The request must state the amount disputed and the reasons why the debtor believes that the debt is not past due, is not legally enforceable, has been satisfied, or, if a judgment debt, has been satisfied or stayed.

(3) The request must include any documents that the debtor wishes to be considered or state that additional information will be submitted within the time permitted.

(4) If the debtor wishes to inspect records establishing the nature and amount of the debt, the debtor must request an opportunity for such an inspection in writing. The office holding the relevant records shall make them available for inspection during normal business hours.

(5) The request for review and any additional information submitted pursuant to the request must be received by the Department at the address stated in the notice within 60 days of the date of issuance of the notice.

(6) The Department will review disputes and shall consider its records and any documentation and arguments submitted by the debtor. The Department's decision to refer to the BFS any disputed portion of the debt shall be made by the Assistant Attorney General for Administration or his designee, who shall hold a position at least one supervisory level above the person who made the decision to offset the debt. The Department shall send a written notice of its decision to the debtor. There is no administrative appeal of this decision.

(7) If the evidence presented by the debtor is considered by a non-Departmental agent or other entities or persons acting on the Department's behalf, the debtor will 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 Department of any unresolved dispute.

(8) Any debt that previously has been reviewed pursuant to this section or any other section of this part, or that has been reduced to a judgment, may not be disputed except on the grounds of payments made or events occurring subsequent to the previous review of judgment.

(e) The Department will notify the BFS of any change in the amount due promptly after receipt of payments or notice of other reductions.

(f) If more than one debt is owed, payments eligible for offset will be applied in the order in which the debts became past due.

[Order No. 1792-93, 58 FR 51223, Oct. 1, 1993, as amended by AG Order 3689-2016, 81 FR 43944, July 6, 2016]

(a) When offset under § 11.12 of this part is not available or appropriate, the Department may collect past-due, legally enforceable debts through non-centralized administrative offset. See 31 CFR 901.3(c). In these cases, the Department may offset a payment internally or make an offset request directly to a Federal payment agency.

(b) At least 30 days before offsetting a payment internally or requesting a Federal payment agency to offset a payment, the Department will send notice to the debtor in accordance with the requirements of 31 U.S.C. 3716(a). When referring a debt for offset under this paragraph (b), the Department will certify, in writing, that the debt is valid, delinquent, legally enforceable, and that there are no legal bars to collection by offset. In addition, the Department will certify its compliance with these regulations concerning administrative offset. See 31 CFR 901.3(c)(2)(ii).

[AG Order 3689-2016, 81 FR 43944, July 6, 2016]