HUD Debt Collection: Revisions and Update to the Procedures for the Collection of Claims, 39222-39229 [2011-16499]

Agencies

• DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Federal Register Volume 76, Number 128 (Tuesday, July 5, 2011)]
[Proposed Rules]
[Pages 39222-39229]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-16499]



[[Page 39221]]

Vol. 76

Tuesday,

No. 128

July 5, 2011

Part IV





Department of Housing and Urban Development





-----------------------------------------------------------------------





24 CFR Part 17





HUD Debt Collection: Revisions and Update to the Procedures for the 
Collection of Claims; Proposed Rule

Federal Register / Vol. 76, No. 128 / Tuesday, July 5, 2011 / 
Proposed Rules

[[Page 39222]]


-----------------------------------------------------------------------

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 17

[Docket No. FR-5166-P-01]
RIN 2501-AD36


HUD Debt Collection: Revisions and Update to the Procedures for 
the Collection of Claims

AGENCY: Office of the Chief Financial Officer, HUD.

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: This proposed rule would revise and update HUD's regulations 
governing the procedures for the collection of claims by HUD. This 
proposed rule would primarily revise HUD's debt collection regulations 
to implement the Debt Collection Improvement Act of 1996 (DCTA) and the 
revised Federal Claims Collection Standards (FCCS). The DCTA and FCCS 
generally apply to the collection of nontax debt owed to the Federal 
Government and require referral of all eligible delinquent nontax debt 
to the Department of the Treasury for collection by centralized offset 
and to a designated debt collection center for debt servicing when a 
debt becomes 180 days delinquent. This proposed rule would also update 
and make technical corrections to HUD's salary offset provisions to 
conform to the changes made to HUD's debt collection regulations.

DATES: Comment Due Date: September 6, 2011.

ADDRESSES: Interested persons are invited to submit comments regarding 
this proposed rule to the Regulations Division, Office of General 
Counsel, 451 Seventh Street, SW., Room 10276, Department of Housing and 
Urban Development, Washington, DC 20410-0001. Communications must refer 
to the above docket number and title. There are two methods for 
submitting public comments.
    1. Submission of Comments by Mail. Comments may be submitted by 
mail to the Regulations Division, Office of General Counsel, Department 
of Housing and Urban Development, 451 Seventh Street, SW., Room 10276, 
Washington, DC 20410-0001.
    2. Electronic Submission of Comments. Interested persons may submit 
comments electronically through the Federal eRulemaking Portal at 
https://www.regulations.gov. HUD strongly encourages commenters to 
submit comments electronically. Electronic submission of comments 
allows the commenter maximum time to prepare and submit a comment, 
ensures timely receipt by HUD, and enables HUD to make them immediately 
available to the public. Comments submitted electronically through the 
https://www.regulations.gov website can be viewed by other commenters 
and interested members of the public. Commenters should follow the 
instructions provided on that site to submit comments electronically.

    Note: To receive consideration as public comments, comments must 
be submitted through one of the two methods specified above. Again, 
all submissions must refer to the docket number and title of the 
rule. No Facsimile Comments. Facsimile (FAX) comments are not 
acceptable.

    Public Inspection of Public Comments. All comments and 
communications properly submitted to HUD will be available for public 
inspection and copying between 8 a.m. and 5 p.m. weekdays at the above 
address. Due to security measures at the HUD Headquarters building, an 
advance appointment to review the public comments must be scheduled by 
calling the Regulations Division at 202-708-3055 (this is not a toll-
free number). Individuals with speech or hearing impairments may access 
this number via TTY by calling the Federal Information Relay Service at 
800-877-8339. Copies of all comments submitted are available for 
inspection and downloading at https://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Scott Moore, Financial Operations 
Analyst, Financial Policy and Procedures Division, Office of the Chief 
Financial Officer, Department of Housing and Urban Development, 451 
Seventh Street, SW., Room 3210, Washington, DC 20410; telephone number 
202-402-2277 (this is not a toll-free number). Persons with hearing or 
speech challenges may access this number via TTY by calling the toll-
free Federal Information Relay Service at 1-800-877-8339.

SUPPLEMENTARY INFORMATION: 

I. Background

Introduction

    The Debt Collection Improvement Act of 1996 (DCIA), Public Law 104-
134, 110 Stat. 1321, 1358 (approved April 26, 1996) (codified in 
scattered sections of 31 U.S.C. ch. 37), consolidated within the 
Department of the Treasury responsibility for the collection of most 
delinquent nontax debts owed to the Federal Government. Prior to 
passage of the DCIA, the Department of the Treasury, through its 
Financial Management Service, assisted the Office of Management and 
Budget in providing Federal agencies with guidance on collecting nontax 
debt owed to the government. Methods for agencies' collection of nontax 
debt include administrative offset, which is authorized at 31 U.S.C. 
3716, and tax refund offset under 26 U.S.C. 6402(d), 31 U.S.C. 3720A, 
and implementing regulations at 31 CFR 285.2. The passage of the DCIA 
represented a comprehensive effort to reform the management of federal 
nontax receivables, while responding to the increase in the amount of 
delinquent nontax debt owed to the United States. The DCIA is 
implemented through the Treasury's regulations promulgated at 31 CFR 
part 285 and the revised Federal Claims Collection Standards (FCCS), 
issued jointly by the Secretary of the Treasury and the Attorney 
General, which are codified at 31 CFR parts 900 through 904.\1\
---------------------------------------------------------------------------

    \1\ The Federal Claims Collection Standards (FCCS) are issued 
jointly by the Secretary of the Treasury and the Attorney General. 
These regulations prescribe the standards for the administrative 
collection, compromise, termination of agency collection, and the 
referral to the Department of Justice for litigation of civil claims 
by the Federal Government for money or property.
---------------------------------------------------------------------------

    The DCIA and FCCS establish a framework for improved Federal 
Governmentwide debt collection by centralizing the management of debts 
that are over 180 days delinquent within the Department of the Treasury 
and by providing federal agencies with more effective debt collection 
tools, including recovery through centralized administrative offsets 
and administrative wage garnishments. Generally, the DCIA requires 
federal agencies to take prompt action to recover debts, aggressively 
monitor all accounts, properly screen potential borrowers in the case 
of credit programs, and resolve the outstanding debt through a variety 
of options, including referring the debt to the Department of Justice 
for litigation, notifying the Department of the Treasury of all debts 
that are 180 days delinquent for purposes of offset, and, unless exempt 
by law, transferring all eligible debts that are over 180 days 
delinquent to a designated debt collection center. To further 
facilitate the collection of debts, the 10-year statute of limitations 
that applied to collection of debt through administrative offset under 
the DCIA was eliminated by Congress in 2008 (Pub. L. 110-234, sec. 
14219) through amendment to 31 U.S.C. 3716(e).

[[Page 39223]]

The Treasury Offset Program and Cross-Servicing

    The Treasury Offset Program (TOP) is a centralized debt collection 
program that matches information about delinquent debts with 
information about payments being disbursed by federal and state 
disbursing officials, including the Department of the Treasury, the 
Department of Defense and the U.S. Postal Service payment files. When 
an eligible match occurs, the payment to the debtor is intercepted, and 
the payment is offset up to the amount of the debt or up to the maximum 
amount allowed by law. Cross-servicing is the designated debt 
collection center operated by the Treasury Department.
    In order to effectively collect debts referred by federal agencies, 
the Department of the Treasury takes all appropriate steps to collect 
the debt on behalf of the agency to which the debt is owed. As part of 
that process, it issues demand letters, conducts telephone follow-up, 
initiates skip tracing, refers debts for administrative offset, 
performs administrative wage garnishment, and refers debts to the 
Department of Justice and to private collection agencies.

II. This Proposed Rule--Proposed Amendments to Part 17

    The purpose of this proposed rule is to revise and replace HUD's 
regulations in subpart C of 24 CFR part 17, which govern the procedures 
for the collection of claims by the government, to conform to the DCIA 
and the revised FCCS, which apply to the collection of debt owed to 
HUD. The revised regulations in subpart C of part 17 would be further 
grouped under four headings. The first heading, General Provisions, 
would include the purpose and scope of, as well as definitions that 
apply to, subpart C. The second heading, Administrative Offset and 
Other Actions, would include the procedures that apply when HUD seeks 
satisfaction of debts owed to HUD by administrative offset of nonsalary 
payments by the Federal Government and when HUD takes other 
administrative actions for nonpayment of debt. The third heading, 
Administrative Wage Garnishment, would include the procedures that 
apply when HUD seeks to satisfy a debt owed to HUD out of the debtor's 
compensation from an employer other than the Federal Government. The 
fourth heading, Salary Offset, would include procedures that apply in 
certain cases when HUD seeks to satisfy a debt owed to it through 
offset of the salary of a Federal Government employee.
    The revisions proposed by this rule primarily apply to regulations 
under the second heading under subpart C, Administrative Offset and 
Other Actions, to conform to the DCIA and the revised FCCS, which apply 
to the collection of debt owed to HUD. As part of this streamlining 
effort, this proposed rule would eliminate provisions in HUD 
regulations that no longer conform to the DCIA and FCCS or that simply 
repeat requirements under the DCIA and FCCS. The revisions in this 
proposed rule will enable HUD to streamline its procedures for 
collecting debts, consequently enabling it to collect debts more 
efficiently, in less time, and with less costs incurred. HUD estimates 
that a substantial amount of debt will be transferred to the Department 
of the Treasury for debt collection through cross-servicing or TOP. By 
transferring debt to an agency with significant expertise and 
infrastructure to operate as a debt collector, HUD will benefit by 
decreasing its expenditures of time and funds on debt collection.
    This proposed rule also eliminates throughout subpart C references 
to the 10-year statute of limitations for administrative offset that 
Congress repealed in 2008 (the 10-year limitation for tax refund 
offset, which was not required by statute following an earlier 
amendment of the Debt Collection Act of 1982 (see Pub. L. 110-234, 
section 14219, 22 Stat. 923 (approved May 22, 2008)), was repealed by 
regulation on December 28, 2009 (see 74 FR 68537)). Finally, this 
proposed rule redesignates, updates, and makes technical corrections to 
provisions under the fourth heading under subpart C, Salary Offset, to 
conform to the changes made to HUD's regulations under the heading 
Administrative Offset and Other Actions.
    The revisions proposed to be made to HUD's regulations in subpart C 
of 24 CFR part 17 are as follows:

A. General Provisions

1. Purpose and Scope
    Proposed Sec.  17.61 addresses the general purpose and scope of 
subpart C, cross-references the FCCS, and cites other statutes and 
regulations that remain applicable to the collection of debt owed to 
HUD. Proposed Sec.  17.61(a) provides that HUD will undertake debt 
collection pursuant to the DCIA and the revised FCCS, and such other 
additional provisions as noted in subpart C. Proposed Sec.  17.61(b) 
provides that, while generally applicable to the collection of all 
federal debt, the DCIA does not preclude other authority to collect, 
settle, compromise, or close claims; for example, the authority to take 
such action under Title I and section 204(g) of Title II of the 
National Housing Act (12 U.S.C. 1703(c)(2) and 1710(g)) and the 
authority to take such action against debts arising out of the business 
operations of the Government National Mortgage Association. This rule 
acknowledges, at Sec.  17.61(b), such other authorities. Proposed 
17.61(c) describes the organization of subpart C.
2. Definitions
    Proposed Sec.  17.63 contains the definitions of ``Department or 
HUD,'' ``Office,'' ``Secretary,'' ``Office of Appeals,'' ``Treasury,'' 
and ``United States.'' The definition of ``Department or HUD'' is 
provided to include a person authorized to act for HUD. This definition 
will allow for flexibility in the administrative assignment of 
responsibility within HUD for debt collection activities. The 
definitions solely applicable to the Department's salary offset 
procedures are contained at Sec.  17.83(f).

B. Administrative Offset and Other Actions

1. Demand and Notice of Intent To Collect
    Proposed Sec.  17.65 contains the procedures HUD will follow when 
notifying the debtor that an amount is past due and payable to the 
Department. With respect to the timing of actions taken under the DCIA, 
although a 180-day delinquency triggers the requirement to transfer a 
debt, a federal agency is not required to wait until that threshold is 
reached and may transfer a delinquent debt sooner. The implementing 
regulations issued jointly by the Treasury Department and the 
Department of Justice require that federal agencies ``aggressively 
collect all debts,'' (see 31 CFR 901.1(a)) and specifically provide 
that ``[a]gencies should consider referring debts that are less than 
180 days delinquent to Treasury or to Treasury-designated `debt 
collection centers' to accomplish efficient, cost effective debt 
collection.'' (See 31 CFR 901.1(d)).
    To address the Treasury's mandate of aggressive debt collection, 
proposed Sec.  17.65 codifies the Department's current practice, 
consistent with the DCIA and 31 CFR parts 900-904, of providing 
appropriate notice to the debtor and referring unpaid debts to the 
Treasury Department for collection.
2. Review of Departmental Records Related to the Debt
    Proposed Sec.  17.67 outlines the process for debtors who intend to 
inspect or copy departmental records related to the debt, as allowed 
under the Treasury's

[[Page 39224]]

regulations at 31 CFR 901.3. Proposed Sec.  17.67 requires the debtor 
to send a letter to HUD stating his or her intention to review the 
departmental records and requires HUD to respond to the debtor with 
information concerning the location and time that such records may be 
inspected or copied. HUD may charge the debtor a reasonable fee to 
compensate for the cost of providing a copy of the departmental records 
relating to the debt.
3. Procedures and Standards for Review and Collection of Claims
    Proposed Sec.  17.69 permits a debtor to request review of a 
determination that an amount is past due and payable to the Department. 
The debtor must notify the HUD Office of Appeals (OA) that he or she 
intends to present evidence showing that all or part of the debt is not 
past due. The OA must make a determination based upon a review of the 
evidence and, as appropriate, provide an oral hearing. In order to 
request a hearing, proposed Sec.  17.71 requires the debtor to file the 
request with the OA. The hearing procedures set forth in 24 CFR part 26 
will apply to hearings in administrative offset cases.
    Proposed Sec.  17.73 requires an administrative judge of the OA to 
issue a written decision that includes the supporting rationale 
concerning whether a debt is past due and legally enforceable. Such a 
written decision constitutes final agency action. If a determination by 
an administrative judge of the OA is made in HUD's favor, HUD may refer 
the debt to the Treasury Department for collection.
    In addition to offering debtors due process protections, including 
the opportunity for review within HUD, proposed Sec. Sec.  17.75 and 
17.79 also permit HUD to postpone or withdraw referral of the debt to 
the Treasury Department and provide for a stay of the offset when the 
debtor exercises his or her right to review HUD's initial determination 
that the debtor owes to HUD an amount which is past due and 
enforceable.
4. Administrative Actions for Nonpayment of Debt
    Proposed Sec.  17.79 requires HUD to take administrative action 
against a contractor, grantee, or other participant in a HUD-sponsored 
program if such contractor, grantee, or other participant fails to pay 
its debt to HUD within a reasonable time after demand. HUD must refer 
such party to the Office of General Counsel for investigation and 
possible debarment or suspension, and, in the case of fraud or 
suspected fraud, refer such party to HUD's Office of Inspector General 
for investigation. However, the failure to pay HUD within a reasonable 
time after demand is not a prerequisite for referral for fraud or 
suspected fraud. Depending on the outcome of a referral to the Office 
of General Counsel or Office of Inspector General, proposed Sec.  17.79 
also requires HUD to ensure that such party is placed on the Excluded 
Parties List System, which is maintained by the General Services 
Administration.

C. Administrative Wage Garnishment

    Proposed Sec.  17.81 of subpart C permits HUD to collect a debt by 
using administrative wage garnishment. Section 17.81 authorizes HUD to 
use the regulations in 31 CFR 285.11 to collect money from a debtor's 
disposable pay to satisfy delinquent debt owed to HUD. To the extent 
that 31 CFR 285.11 does not apply, HUD is governed by its hearing 
procedures in 24 CFR part 26.

D. Salary Offset

    Proposed Sec. Sec.  17.83 through 17.113 of subpart C contain HUD's 
procedures to implement salary offset. This proposed rule redesignates 
the salary offset provisions and makes technical changes to the cross-
references contained within. It more specifically describes the 
applicability of HUD's salary offset provisions in Sec.  17.83(b), in 
recognition of the fact that salary offset is now generally carried out 
through centralized procedures by the Treasury Department's Financial 
Management Service. (See 5 CFR 550.1108 and 31 CFR 285.7.) Section 
17.83(d) is revised to reference the employee's right to propose a 
repayment agreement in lieu of offset, which the Secretary may accept 
upon balancing of the Department's interest in collecting the debt 
against hardship to the employee under Sec.  17.99. (Financial hardship 
may also be a factor that the hearing official considers under Sec.  
17.91 in reviewing the Secretary's proposed offset schedule.) The 
proposed rule makes five additional changes.
    First, proposed Sec.  17.89(d) requires the Department to include, 
in its Notice of Intent to Offset Salary, an explanation of the 
Department's requirements concerning interest. Prior to the proposed 
rule, the Department's requirements contained an exception if payments 
were excused in accordance with Sec.  17.72. However, because this 
proposed rule revises HUD's debt collection regulations to implement 
the DCIA, Sec.  17.72 is no longer applicable. As such, proposed Sec.  
17.89(d) requires that HUD provide an explanation of the interest, 
penalties, and administrative costs, including a statement that such 
assessments must be made unless excused in accordance with the FCCS.
    Second, proposed Sec.  17.101(c) provides that, if the employee 
retires or resigns before collection of the amount of the indebtedness 
is complete, the remaining indebtedness will be collected from the 
employee under the procedures for collecting claims owed to the 
Department, as provided in Sec. Sec.  17.61 through 17.69 of this 
proposed rule. Prior to the proposed rule, the Department collected 
remaining indebtedness according to the procedures for administrative 
offset under Sec. Sec.  17.100 through 17.118, which have subsequently 
been amended by this proposed rule.
    Third, proposed Sec.  17.103 would clarify that debts for travel 
advances and training expenses will be collected in a lump sum, rather 
than in installments. Collection of such debts in lump sum is in 
conformance with 5 U.S.C. 4108, 5 U.S.C. 5705, and Financial Management 
Service guidance. (See Managing Federal Receivables, May 2005, p. 6-
41.)
    Fourth, proposed Sec.  17.107 requires that the Department charge 
interest on indebtedness in accordance with the FCCS. Previously, the 
salary offset regulations required interest to be collected in 
accordance with Sec.  17.72. However, because this proposed rule 
revises HUD's debt collection regulations to implement the DCIA, Sec.  
17.72 is no longer applicable.
    Finally, the 10-year statute of limitations previously implemented 
in Sec.  17.114 is eliminated in accordance with Section 14219(a) of 
the Food, Conservation, and Energy Act of 2008 (Pub. L. 110-234, 
approved May, 22, 2008), which amended the Debt Collection Improvement 
Act at 31 U.S.C. 3716(e) to remove the statute of limitations.

III. Findings and Certifications

Environmental Impact

    This proposed rule does not direct, provide for assistance or loan 
and mortgage insurance for, or otherwise govern or regulate, real 
property acquisition, disposition, leasing, rehabilitation, alteration, 
demolition, or new construction; or establish, revise, or provide for 
standards for construction or construction materials, manufactured 
housing, or occupancy. Accordingly, under 24 CFR 50.19(c)(1), this 
proposed rule is categorically excluded from environmental review under 
the National Environmental Policy Act of 1969 (42 U.S.C. 4321).

[[Page 39225]]

Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.) 
generally requires an agency to conduct a regulatory flexibility 
analysis of any rule subject to notice and comment rulemaking 
requirements unless the agency certifies that the rule will not have a 
significant economic impact on a substantial number of small entities. 
This proposed rule revises HUD's regulations at 24 CFR part 17, subpart 
C, which govern HUD's procedures for the collection of claims owed to 
HUD or to another federal agency. These revisions to HUD's regulations 
are mandated by the DCIA, which directs federal agencies to update 
their regulations, and are directed to all entities, small or large, in 
addition to individuals such as federal employees. The revisions impose 
no significant economic impact on a substantial number of small 
entities. Therefore, the undersigned certifies that this rule will not 
have a significant impact on a substantial number of small entities.
    Notwithstanding HUD's view that this rule will not have a 
significant effect on a substantial number of small entities, HUD 
specifically invites comments regarding any less burdensome 
alternatives to this rule that will meet HUD's objectives as described 
in this preamble.

Federalism

    Executive Order 13132 (entitled ``Federalism'') prohibits an agency 
from publishing any rule that has federalism implications if the rule 
either imposes substantial direct compliance costs on state and local 
governments and is not required by statute, or the rule preempts state 
law, unless the agency meets the consultation and funding requirements 
of section 6 of the Executive Order. This rule does not have federalism 
implications and does not impose substantial direct compliance costs on 
state and local governments nor preempts state law within the meaning 
of the Executive Order.

Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 
1531-1538) (UMRA) establishes requirements for federal agencies to 
assess the effects of their regulatory actions on state, local, and 
tribal governments and the private sector. This rule will not impose 
any federal mandates on any state, local, or tribal governments or the 
private sector within the meaning of UMRA.

List of Subjects in 24 CFR Part 17

    Administrative practice and procedure, Claims, Government 
employees, Income taxes, Wages.

    Accordingly, for the reasons described in the preamble, HUD 
proposes to amend 24 CFR part 17 to read as follows:

PART 17--ADMINISTRATIVE CLAIMS

    1. The authority citation for part 17 continues to read as follows:

    Authority:  5 U.S.C. 5514; 31 U.S.C. 3701, 3711, 3716-3720E; and 
42 U.S.C. 3535(d).

    2. Revise subpart C to read as follows:
Subpart C--Procedures for the Collection of Claims by the Government

General Provisions

17.61 Purpose and scope.
17.63 Definitions.

Administrative Offset and Other Actions

17.65 Demand and notice of intent to collect.
17.67 Review of departmental records related to the debt.
17.69 Review within HUD of a determination that an amount is past 
due and legally enforceable.
17.71 Request for hearing.
17.73 Determination of the HUD Office of Appeals.
17.75 Postponements, withdrawals, and extensions of time.
17.77 Stay of referral for offset.
17.79 Administrative actions for nonpayment of debt.

Administrative Wage Garnishment

17.81 Administrative wage garnishment.

Salary Offset

17.83 Scope and definitions.
17.85 Coordinating offset with another federal agency.
17.87 Determination of indebtedness.
17.89 Notice requirements before offset.
17.91 Request for a hearing.
17.93 Result if employee fails to meet deadlines.
17.95 Written decision following a hearing.
17.97 Review of departmental records related to the debt.
17.99 Written agreement to repay debt as an alternative to offset.
17.101 Procedures for salary offset: when deductions may begin.
17.103 Procedures for salary offset: types of collection.
17.105 Procedures for salary offset: methods of collection.
17.107 Procedures for salary offset: imposition of interest.
17.109 Nonwaiver of rights.
17.111 Refunds.
17.113 Miscellaneous provisions: correspondence with the Department.

Subpart C--Procedures for the Collection of Claims by the 
Government

General Provisions


Sec.  17.61  Purpose and scope.

    (a) In general. HUD will undertake debt collection pursuant to this 
subpart in accordance with the Debt Collection Improvement Act of 1996, 
codified in scattered sections of 31 U.S.C. chapter 37; the revised 
Federal Claims Collection Standards, codified at 31 CFR parts 900 
through 904; the Treasury debt collection regulations set forth in 31 
CFR part 285; and such additional provisions as provided in this 
subpart.
    (b) Applicability of other statutes and regulations. (1) Nothing in 
this subpart precludes the authority under statutes and regulations 
other than those described in this subpart to collect, settle, 
compromise, or close claims, including, but not limited to:
    (i) Debts incurred by contractors under contracts for supplies and 
services awarded by HUD under the authority of subpart 32.6 of the 
Federal Acquisition Regulation (FAR);
    (ii) Debts arising out of the business operations of the Government 
National Mortgage Association; and
    (iii) Debts arising under Title I or section 204(g) of Title II of 
the National Housing Act (12 U.S.C. 1701 et seq.).
    (2) This subpart is not applicable to tax debts or to any debt for 
which there is an indication of fraud or misrepresentation, unless the 
debt is returned by the Department of Justice to HUD for handling.
    (c) Scope. Sections 17.65 through 17.79, under the heading 
Administrative Offset and Other Actions, includes the procedures that 
apply when HUD seeks satisfaction of debts owed to HUD by 
administrative offset of payments by the Federal Government other than 
federal salary payments, and when HUD takes other administrative 
actions for nonpayment of debt. Section 17.81, under the heading 
Administrative Wage Garnishment, includes the procedures that apply 
when HUD seeks to satisfy a debt owed to HUD out of the debtor's 
compensation from an employer other than the Federal Government. 
Sections 17.83 through 17.113, under the heading Salary Offset, include 
procedures that apply when HUD or another federal agency seeks to 
satisfy a debt owed to it through offset of the salary of a current 
federal employee.


Sec.  17.63  Definitions.

    As used in this subpart:
    Department or HUD means the Department of Housing and Urban 
Development, and includes a person authorized to act for HUD.
    Office means the organization of each Assistant Secretary of HUD or 
other HUD official at the Assistant Secretary level, and each Field 
Office.
    Office of Appeals or OA means the HUD Office of Appeals within the 
HUD Office of Hearings and Appeals.

[[Page 39226]]

    Secretary means the Secretary of HUD.
    Treasury means the Department of the Treasury.
    United States includes an agency of the United States.

Administrative Offset and Other Actions


Sec.  17.65  Demand and notice of intent to offset.

    HUD will make written demand upon the debtor pursuant to the 
requirements of 31 CFR 901.2 and send written notice of intent to 
offset to the debtor pursuant to the requirements of 31 CFR 901.3 and 
31 CFR part 285, subpart A. The Secretary shall mail the demand and 
notice of intent to offset to the debtor, at the most current address 
that is available to the Secretary. HUD may refer the debt to the 
Treasury for collection and shall request that the amount of the debt 
be offset against any amount payable by the Treasury as a federal 
payment, at any time after 60 days from the date such notice is sent to 
the debtor.


Sec.  17.67  Review of departmental records related to the debt.

    (a) Notification by the debtor. A debtor who intends to inspect or 
copy departmental records related to the debt pursuant to 31 CFR 901.3 
must, within 20 calendar days after the date of the notice in Sec.  
17.65, send a letter to HUD, at the address indicated in the notice of 
intent to offset, stating his or her intention. A debtor may also 
request, within 20 calendar days from the date of such notice, that HUD 
provide the debtor with a copy of departmental records related to the 
debt.
    (b) HUD's response. In response to a timely notification by the 
debtor as described in paragraph (a) of this section, HUD shall notify 
the debtor of the location and the time when the debtor may inspect or 
copy departmental records related to the debt. If the debtor requests 
that HUD provide a copy of departmental records related to the debt, 
HUD shall send the records to the debtor within 10 calendar days from 
the date that HUD receives the debtor's request. HUD may charge the 
debtor a reasonable fee to compensate for the cost of providing a copy 
of the departmental records related to the debt.


Sec.  17.69  Review within HUD of a determination that an amount is 
past due and legally enforceable.

    (a) Notification by the debtor. A debtor who receives notice of 
intent to offset pursuant to Sec.  17.65 has the right to a review of 
the case and to present evidence that all or part of the debt is not 
past due or not legally enforceable. The debtor may send a copy of the 
notice with a letter notifying the Office of Appeals of his or her 
intention to present evidence. Failure to give this notice shall not 
jeopardize the debtor's right to present evidence within the 60 
calendar days provided for in paragraph (b) of this section. If the 
Office of Appeals has additional procedures governing the review 
process, a copy of the procedures shall be mailed to the debtor after 
the request for review is received and docketed by the Office of 
Appeals.
    (b) Submission of evidence. If the debtor wishes to submit evidence 
showing that all or part of the debt is not past due or not legally 
enforceable, the debtor must submit such evidence to the Office of 
Appeals within 60 calendar days after the date of the notice of intent 
to offset. Failure to submit evidence will result in a dismissal of the 
request for review by the OA.
    (c) Review of the record. After timely submission of evidence by 
the debtor, the OA will review the evidence submitted by the Department 
that shows that all or part of the debt is past due and legally 
enforceable. The decision of an administrative judge of the OA will be 
based on a preponderance of the evidence as to whether there is a debt 
that is past due and whether it is legally enforceable. The 
administrative judge of the OA shall make a determination based upon a 
review of the evidence that comprises the written record, except that 
the OA may order an oral hearing if the administrative judge of the OA 
finds that:
    (1) An applicable statute authorizes or requires the Department to 
consider a waiver of the indebtedness and the waiver determination 
turns on credibility or veracity; or
    (2) The question of indebtedness cannot be resolved by review of 
the documentary evidence.
    (d) Previous decision by an administrative judge of the Office of 
Appeals. The debtor is not entitled to a review of the Department's 
intent to offset if an administrative judge of the OA has previously 
issued a decision on the merits that the debt is past due and legally 
enforceable, except when the debt has become legally unenforceable 
since the issuance of that decision, or the debtor can submit newly 
discovered material evidence that the debt is presently not legally 
enforceable.


Sec.  17.71  Request for hearing.

    The debtor shall file a request for a hearing with the OA at the 
address specified in the notice or at such other address as the OA may 
direct in writing to the debtor.


Sec.  17.73  Determination of the HUD Office of Appeals.

    (a) Determination. An administrative judge of the OA shall issue a 
written decision that includes the supporting rationale for the 
decision. The decision of the administrative judge of the OA concerning 
whether a debt or part of a debt is past due and legally enforceable is 
the final agency decision with respect to the past due status and 
enforceability of the debt.
    (b) Copies. Copies of the decision of the administrative judge of 
the OA shall be distributed to HUD's General Counsel, HUD's Chief 
Financial Officer (CFO), or other appropriate HUD program official, the 
debtor, and the debtor's attorney or other representative, if any.
    (c) Notification to the Department of the Treasury. If the decision 
of the administrative judge of the OA affirms that all or part of the 
debt is past due and legally enforceable, HUD shall notify the Treasury 
after the date that the determination of the OA has been issued under 
paragraph (a) of this section and a copy of the determination has been 
received by HUD's CFO or other appropriate HUD program official. No 
referral shall be made to the Treasury if the review of the debt by an 
administrative judge of the OA subsequently determines that the debt is 
not past due or not legally enforceable.


Sec.  17.75  Postponements, withdrawals, and extensions of time.

    (a) Postponements and withdrawals. HUD may, for good cause, 
postpone or withdraw referral of the debt to the Treasury.
    (b) Extensions of time. At the discretion of an administrative 
judge of the OA, time limitations required in these procedures may be 
extended in appropriate circumstances for good cause.


Sec.  17.77  Stay of referral for offset.

    If the debtor timely submits evidence in accordance with Sec.  
17.69(b), the referral to the Treasury in Sec.  17.65 shall be stayed 
until the date of the issuance of a written decision by an 
administrative judge of the OA that determines that a debt or part of a 
debt is past due and legally enforceable.


Sec.  17.79  Administrative actions for nonpayment of debt.

    (a) Referrals for nonpayment of debt. When a contractor, grantee, 
or other participant in a program sponsored by HUD, fails to pay its 
debt to HUD within

[[Page 39227]]

a reasonable time after demand, HUD shall take such measures to:
    (1) Refer such contractor, grantee, or other participant to the 
Office of General Counsel for investigation of the matter and possible 
suspension or debarment pursuant to 2 CFR part 2424, 2 CFR 180.800, and 
subpart 9.4 of the Federal Acquisition Regulation (FAR); and
    (2) In the case of matters involving fraud or suspected fraud, 
refer such contractor, grantee, or other participant to the Office of 
Inspector General for investigation. However, the failure to pay HUD 
within a reasonable time after demand is not a prerequisite for 
referral for fraud or suspected fraud.
    (b) Excluded Parties List System (EPLS). Depending upon the outcome 
of the referral in paragraph (a), HUD shall take such measures to 
insure that the contractor, grantee, or other participant is placed on 
the EPLS.
    (c) Report to the Treasury. The failure of any surety to honor its 
obligations in accordance with 31 U.S.C. 9304 shall be reported to the 
Chief Financial Officer, who shall inform the Treasury.

Administrative Wage Garnishment


Sec.  17.81  Administrative wage garnishment.

    (a) In general. HUD may collect a debt by using administrative wage 
garnishment pursuant to 31 CFR 285.11. To the extent that situations 
arise that are not covered by 31 CFR 285.11, those situations shall be 
governed by 24 CFR part 26, subpart A.
    (b) Hearing official. Any hearing required to establish HUD's right 
to collect a debt through administrative wage garnishment shall be 
conducted by an administrative judge of the OA under 24 CFR part 26, 
subpart A of part 26.

Salary Offset


Sec.  17.83  Scope and definitions.

    (a) The provisions set forth in Sec. Sec.  17.83 through 17.113 are 
the Department's procedures for the collection of delinquent nontax 
debts by salary offset of a federal employee's pay to satisfy certain 
debts owed the government, including centralized salary offsets in 
accordance with 31 CFR part 285.
    (b)(1) This section and Sec. Sec.  17.85 through 17.99 apply to 
collections by the Secretary through salary offset from current 
employees of the Department and other agencies who owe debts to the 
Department; and
    (2) This section, Sec.  17.85, and Sec. Sec.  17.101 through 17.113 
apply to HUD's offset of pay to current employees of the Department and 
of other agencies who owe debts to HUD or other agencies under 
noncentralized salary offset procedures, in accordance with 5 CFR 
550.1109.
    (c) This subpart does not apply to debts or claims arising under 
the Internal Revenue Code of 1954 (26 U.S.C. 1-9602), the Social 
Security Act (42 U.S.C. 301-1397f), the tariff laws of the United 
States, or to any case where collection of a debt by salary offset is 
explicitly provided for or prohibited by another statute.
    (d) This subpart identifies the types of salary offset available to 
the Department, as well as certain rights provided to the employee, 
which include a written notice before deductions begin, the opportunity 
to petition for a hearing, receiving a written decision if a hearing is 
granted, and the opportunity to propose a repayment agreement in lieu 
of offset. These employee rights do not apply to any adjustment to pay 
arising out of an employee's election of coverage or a change in 
coverage under a federal benefits program requiring periodic deductions 
from pay, if the amount to be recovered was accumulated over four pay 
periods or less.
    (e) Nothing in this subpart precludes the compromise, suspension, 
or termination of collection actions where appropriate under the 
Department's regulations contained elsewhere in this subpart (see 24 
CFR 17.61 through 17.79).
    (f) As used in the salary offset provisions at Sec. Sec.  17.83 
through 17.113:
    Agency means:
    (i) An Executive department, military department, Government 
corporation, or independent establishment as defined in 5 U.S.C. 101, 
102, 103, or 104, respectively;
    (ii) The United States Postal Service; or
    (iii) The Postal Regulatory Commission.
    Debt means an amount owed to the United States and past due, from 
sources which include loans insured or guaranteed by the United States 
and all other amounts due the United States from assigned mortgages or 
deeds of trust, direct loans, advances, repurchase demands, fees, 
leases, rents, royalties, services, sale of real or personal property, 
overpayments, penalties, damages, interest, fines and forfeitures 
(except those arising under the Uniform Code of Military Justice), and 
all other similar sources.
    Determination means the point at which the Secretary or his 
designee decides that the debt is valid.
    Disposable pay means that part of current basic pay, special pay, 
incentive pay, retired pay, retainer pay, or in the case of an employee 
not entitled to basic pay, other authorized pay remaining after 
deductions required by law. Deductions from pay include:
    (i) Amounts owed by the individual to the United States;
    (ii) Amounts withheld for federal employment taxes;
    (iii) Amounts properly withheld for federal, state, or local income 
tax purposes, if the withholding of the amount is authorized or 
required by law and if amounts withheld are not greater than would be 
the case if the individual claimed all dependents to which he or she 
were entitled. The withholding of additional amounts under 26 U.S.C. 
3402(i) may be permitted only when the individual presents evidence of 
tax obligation that supports the additional withholding;
    (iv) Amounts deducted as health insurance premiums, including, but 
not limited to, amounts deducted from civil service annuities for 
Medicare where such deductions are requested by the Health Care 
Financing Administration;
    (v) Amounts deducted as normal retirement contributions, not 
including amounts deducted for supplementary coverage. Amounts withheld 
as Survivor Benefit Plan or Retired Serviceman's Family Protection Plan 
payments are considered to be normal retirement contributions. Amounts 
voluntarily contributed toward additional civil service annuity 
benefits are considered to be supplementary;
    (vi) Amounts deducted as normal life insurance premiums from salary 
or other remuneration for employment, not including amounts deducted 
for supplementary coverage. Both Servicemembers' Group Life Insurance 
and ``Basic Life'' Federal Employees' Group Life Insurance premiums are 
considered to be normal life insurance premiums; all optional Federal 
Employees' Group Life Insurance premiums and life insurance premiums 
paid for by allotment, such as National Service Life Insurance, are 
considered to be supplementary;
    (vii) Amounts withheld from benefits payable under title II of the 
Social Security Act where the withholding is required by law;
    (viii) Amounts mandatorily withheld for the U.S. Soldiers' and 
Airmen's Home; and
    (ix) Fines and forfeitures ordered by a court-martial or by a 
commanding officer.
    Employee means a current employee of a federal agency, including a 
current member of the Armed Forces or Reserve of the Armed Forces of 
the United States.
    Pay means basic pay, special pay, income pay, retired pay, retainer 
pay,

[[Page 39228]]

or, in the case of an employee not entitled to basic pay, other 
authorized pay.
    Salary offset means a deduction from the pay of an employee without 
his or her consent to satisfy a debt. Salary offset is one type of 
administrative offset that may be used by the Department in the 
collection of claims.
    Waiver means the cancellation, remission, forgiveness, or 
nonrecovery of a debt allegedly owed by an employee of an agency as 
permitted or required by 5 U.S.C. 5584, 10 U.S.C. 2774, 32 U.S.C. 716, 
or 5 U.S.C. 8346(b), or any other law.


Sec.  17.85  Coordinating offset with another federal agency.

    (a) When HUD is owed the debt. When the Department is owed a debt 
by an employee of another agency, the other agency shall not initiate 
the requested offset until the Department provides the agency with a 
written certification that the debtor owes the Department a debt 
(including the amount and basis of the debt and the due date of the 
payment) and that the Department has complied with this subpart.
    (b) When another agency is owed the debt. The Department may use 
salary offset against one of its employees who is indebted to another 
agency if requested to do so by that agency. Such a request must be 
accompanied by a certification by the requesting agency that the person 
owes the debt (including the amount) and that the employee has been 
given the procedural rights required by 5 U.S.C. 5514 and 5 CFR part 
550, subpart K.


Sec.  17.87  Determination of indebtedness.

    In determining that an employee is indebted to HUD, the Secretary 
will review the debt to make sure that it is valid and past due.


Sec.  17.89  Notice requirements before offset.

    Except as provided in Sec.  17.83(d), deductions will not be made 
unless the Secretary first provides the employee with a minimum of 30 
calendar days written notice. This Notice of Intent to Offset Salary 
(Notice of Intent) will state:
    (a) That the Secretary has reviewed the records relating to the 
claim and has determined that a debt is owed, the amount of the debt, 
and the facts giving rise to the debt;
    (b) The Secretary's intention to collect the debt by means of 
deduction from the employee's current disposable pay account until the 
debt and all accumulated interest are paid in full;
    (c) The amount, frequency, approximate beginning date, and duration 
of the intended deductions;
    (d) An explanation of the Department's requirements concerning 
interest, penalties, and administrative costs, including a statement 
that such assessments must be made unless excused in accordance with 
the Federal Claims Collection Standards as provided in 31 CFR 901.9 
(although this information may alternatively be provided in the demand 
notice pursuant to 24 CFR 17.65);
    (e) The employee's right to inspect and copy Department records 
relating to the debt or, if the employee or his or her representative 
cannot personally inspect the records, to request and receive a copy of 
such records;
    (f) The employee's right to enter into a written agreement with the 
Secretary for a repayment schedule differing from that proposed by the 
Secretary, so long as the terms of the repayment schedule proposed by 
the employee are agreeable to the Secretary;
    (g) The right to a hearing, conducted in accordance with subpart A 
of part 26 of this chapter by an administrative law judge of the 
Department or a hearing official of another agency, on the Secretary's 
determination of the debt, the amount of the debt, or percentage of 
disposable pay to be deducted each pay period, so long as a petition is 
filed by the employee as prescribed by the Secretary;
    (h) That the timely filing of a petition for hearing will stay the 
collection proceedings (See Sec.  17.91);
    (i) That a final decision on the hearing will be issued at the 
earliest practical date, but not later than 60 calendar days after the 
filing of the petition requesting the hearing, unless the employee 
requests and the hearing officer grants a delay in the proceedings;
    (j) That any knowingly false or frivolous statements, 
representations, or evidence may subject the employee to:
    (1) Disciplinary procedures appropriate under 5 U.S.C. Ch. 75, 5 
CFR part 752, or any other applicable statutes or regulations;
    (2) Penalties under the False Claims Act, 31 U.S.C. 3729-3731, or 
any other applicable statutory authority; or
    (3) Criminal penalties under 18 U.S.C. 286, 287, 1001, and 1002 or 
any other applicable statutory authority.
    (k) Any other rights and remedies available to the employee under 
statutes or regulations governing the program for which the collection 
is being made;
    (l) Unless there are applicable contractual or statutory provisions 
to the contrary, 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; and
    (m) The method and time period for requesting a hearing, including 
the address of the Office of Appeals to which the request must be sent.


Sec.  17.91  Request for a hearing.

    (a) Except as provided in paragraph (d) of this section, an 
employee must file a petition for a hearing that is received by the 
Office of Appeals not later than 20 calendar days from the date of the 
Department's notice described in Sec.  17.89 if an employee wants a 
hearing concerning--
    (1) The existence or amount of the debt; or
    (2) The Secretary's proposed offset schedule.
    (b) The petition must be signed by the employee, must include a 
copy of HUD's Notice of Intent to Offset Salary, and should admit or 
deny the existence of or the amount of the debt, or any part of the 
debt, briefly setting forth any basis for a denial. If the employee 
objects to the percentage of disposable pay to be deducted from each 
check, the petition should state the objection and the reasons for it. 
The petition should identify and explain with reasonable specificity 
and brevity the facts, evidence, and witnesses that the employee 
believes support his or her position.
    (c) Upon receipt of the petition, the Office of Appeals will send 
the employee a copy of the Salary Offset Hearing Procedures Manual of 
the Department of Housing and Urban Development.
    (d) If the employee files a petition for hearing later than the 20 
calendar days as described in paragraph (a) of this section, the 
hearing officer may accept the request if the employee can show that 
the delay was because of circumstances beyond his or her control or 
because of failure to receive notice of the filing deadline (unless the 
employee has actual notice of the filing deadline).


Sec.  17.93  Result if employee fails to meet deadlines.

    An employee waives the right to a hearing, and will have his or her 
disposable pay offset in accordance with the Secretary's offset 
schedule, if the employee:
    (a) Fails to file a petition for a hearing as prescribed in Sec.  
17.91; or
    (b) Is scheduled to appear and fails to appear at the hearing.


Sec.  17.95  Written decision following a hearing.

    Written decisions provided after a request for a hearing will 
include:
    (a) A statement of the facts presented to support the nature and 
origin of the alleged debt;

[[Page 39229]]

    (b) The hearing officer's analysis, findings, and conclusions, in 
light of the hearing, concerning the employee's or the Department's 
grounds;
    (c) The amount and validity of the alleged debt; and
    (d) The repayment schedule, if applicable.


Sec.  17.97  Review of departmental records related to the debt.

    (a) Notification by employee. An employee who intends to inspect or 
copy departmental records related to the debt must send a letter to the 
Secretary stating his or her intention. The letter must be received by 
the Secretary within 20 calendar days of the date of the Notice of 
Intent.
    (b) Secretary's response. In response to timely notice submitted by 
the debtor as described in paragraph (a) of this section, the Secretary 
will notify the employee of the location and time when the employee may 
inspect and copy Department records related to the debt.


Sec.  17.99  Written agreement to repay debt as alternative to salary 
offset.

    (a) Notification by employee. The employee may propose, in response 
to a Notice of Intent, a written agreement to repay the debt as an 
alternative to salary offset. Any employee who wishes to do this must 
submit a proposed written agreement to repay the debt, which is 
received by the Secretary within 20 calendar days of the date of the 
Notice of Intent.
    (b) Secretary's response. In response to timely notice by the 
debtor as described in paragraph (a) of this section, the Secretary 
will notify the employee whether the employee's proposed written 
agreement for repayment is acceptable. It is within the Secretary's 
discretion to accept a repayment agreement instead of proceeding by 
offset. In making this determination, the Secretary will balance the 
Department's interest in collecting the debt against hardship to the 
employee. If the debt is delinquent and the employee has not disputed 
its existence or amount, the Secretary will accept a repayment 
agreement instead of offset only if the employee is able to establish 
that offset would result in undue financial hardship or would be 
against equity and good conscience.


Sec.  17.101  Procedures for salary offset: When deductions may begin.

    (a) Deductions to liquidate an employee's debt will be by the 
method and in the amount stated in the Secretary's Notice of Intent to 
collect from the employee's current pay.
    (b) If the employee filed a petition for hearing with the Secretary 
before the expiration of the period provided for in Sec.  17.91, then 
deductions will begin after:
    (1) The hearing officer has provided the employee with a hearing; 
and
    (2) The hearing officer has issued a final written decision in 
favor of the Secretary.
    (c) If an employee retires or resigns before collection of the 
amount of the indebtedness is completed, the remaining indebtedness 
will be collected according to the procedures for the collection of 
claims under Sec. Sec.  17.61 through 17.79.


Sec.  17.103  Procedures for salary offset: Types of collection.

    A debt will be collected in a lump sum or in installments. 
Collection will be by lump-sum collection unless the debt is for other 
than travel advances and training expenses, and the employee is 
financially unable to pay in one lump sum, or the amount of the debt 
exceeds 15 percent of disposable pay. In these cases, deduction will be 
by installments.


Sec.  17.105  Procedures for salary offset: Methods of collection.

    (a) General. A debt will be collected by deductions at officially 
established pay intervals from an employee's current pay account, 
unless the employee and the Secretary agree to alternative arrangements 
for repayment. The alternative arrangement must be in writing, signed 
by both the employee and the Secretary.
    (b) Installment deductions. Installment deductions will be made 
over a period not greater than the anticipated period of employment. 
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. 
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. If 
possible, the installment payment will be sufficient in size and 
frequency to liquidate the debt in 3 years. Installment payments of 
less than $25 per pay period or $50 a month will be accepted only in 
the most unusual circumstances.
    (c) Sources of deductions. The Department will make deductions only 
from basic pay, special pay, incentive pay, retired pay, retainer pay, 
or, in the case of an employee not entitled to basic pay, other 
authorized pay.


Sec.  17.107  Procedures for salary offset: Imposition of interest.

    Interest will be charged in accordance with the Federal Claims 
Collection Standards as provided in 31 CFR 901.9.


Sec.  17.109  Nonwaiver of rights.

    So long as there are no statutory or contractual provisions to the 
contrary, no employee involuntary payment (of all or a portion of a 
debt) collected under this subpart will be interpreted as a waiver of 
any rights that the employee may have under 5 U.S.C. 5514 or any other 
provision of contract or law.


Sec.  17.111  Refunds.

    The Department will refund promptly to the appropriate individual 
amounts offset under this subpart when:
    (a) A debt is waived or otherwise found not owing the United States 
(unless expressly prohibited by statute or regulation); or
    (b) The Department is directed by an administrative or judicial 
order to refund amounts deducted from the employee's current pay.


Sec.  17.113  Miscellaneous provisions: Correspondence with the 
Department.

    The employee shall file a request for a hearing with the Clerk, OA, 
409 3rd Street, SW., 2nd Floor, Washington, DC 20024, on official work 
days between the hours of 8:45 a.m. and 5:15 p.m. (or such other 
address as HUD may provide by notice from time to time). All other 
correspondence shall be submitted to the Departmental Claims Officer, 
Office of the Chief Financial Officer, Department of Housing and Urban 
Development, 451 Seventh Street, SW., Washington, DC 20410 (or such 
other officer or address as HUD may provide by notice from time to 
time). Documents may be filed by personal delivery or mail.

    Dated: June 1, 2011.
Shaun Donovan,
Secretary.
[FR Doc. 2011-16499 Filed 7-1-11; 8:45 am]
BILLING CODE 4210-67-P