New Debt-Collection Regulations, 24779-24789 [2015-09999]

Agencies

• Federal Labor Relations Authority

[Federal Register Volume 80, Number 84 (Friday, May 1, 2015)]
[Rules and Regulations]
[Pages 24779-24789]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-09999]



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Rules and Regulations
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Federal Register / Vol. 80, No. 84 / Friday, May 1, 2015 / Rules and 
Regulations

[[Page 24779]]



FEDERAL LABOR RELATIONS AUTHORITY

5 CFR Part 2418


New Debt-Collection Regulations

AGENCY: Federal Labor Relations Authority.

ACTION: Final rule.

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SUMMARY: Pursuant to the Debt Collection Improvement Act of 1996, the 
Federal Labor Relations Authority (``FLRA'') is issuing a regulation 
governing procedures for collecting debts owed to the federal 
government by present and former FLRA employees. The regulation sets 
forth the procedures that the FLRA will follow in collecting debts owed 
to the United States arising from activities under FLRA jurisdiction. 
These procedures include collection of debts through administrative 
offset and salary offset. These regulations supersede the FLRA's debt-
collection procedures applied under FLRA Internal Regulation 2790, 
dated December 29, 1986.

DATES: Effective May 1, 2015.

FOR FURTHER INFORMATION CONTACT: Gina Grippando, Counsel for Regulatory 
and Public Affairs, Federal Labor Relations Authority, Washington, DC 
20424, (202) 218-7776.

SUPPLEMENTARY INFORMATION:

Background

    This final rule implements the Debt Collection Improvement Act of 
1996 (DCIA). The DCIA requires federal agencies to collect debts owed 
to the United States under regulations prescribed by the head of the 
agency, and standards prescribed by the Department of Justice and the 
Department of the Treasury. 31 U.S.C. 3711(d)(2). These standards, 
known as the Federal Claims Collection Standards (FCCS), became 
effective on December 22, 2000. 31 CFR chapter IX, parts 900 through 
904.
    The DCIA also requires agencies, prior to collecting debts owed to 
the United States, to: (1) Adopt, without change, regulations on 
collecting debts by offset promulgated by the Department of Justice or 
Department of the Treasury (FCCS); or (2) prescribe agency regulations 
for collecting such debts by offset, which are consistent with the 
FCCS. 31 U.S.C. 3716. Agency regulations protect the minimum due-
process rights that must be afforded to the debtor when an agency seeks 
to collect a debt by administrative offset, including the ability to 
verify, challenge, and compromise claims, and access to administrative-
appeals procedures which are both reasonable and protect the interests 
of the United States. Nothing in this regulation precludes the use of 
collection remedies not contained in this regulation.
    The final rule is consistent with the FCCS, as required by the 
DCIA. The salary-offset portion of the rule has been submitted to and 
approved by the Office of Personnel Management (OPM), as required by 5 
U.S.C. 5514(b)(1).

Section Analysis of the Final Rule

A. Subpart A--General Provisions, Definitions, Scope, Applicability

    Subpart A of the final rule sets out the definitions, scope, and 
applicability of the FLRA's debt-collection procedures. The final rule 
provides procedures for the collection of FLRA debts as well as 
procedures for collection of other debts owed to the United States when 
the FLRA receives, from another agency, a request for offset of an FLRA 
payment. The FLRA shall follow the procedural standards for collecting 
debts set forth in the FCCS when it determines that it is appropriate 
to initiate debt collection or seek offset to collect a debt. 31 CFR 
parts 900 through 904. The rule does not apply to tax debts or to any 
debt for which there is an indication of fraud or misrepresentation, as 
described in Sec.  900.3 of the FCCS. Additionally, the final rule does 
not preclude the FLRA from collecting debts under statutes and 
regulations other than those described in the final rule.

B. Subpart B--Procedures To Collect FLRA Debts

    Subpart B of the final rule provides the procedures that the FLRA 
will use to collect debts. Among other things, subpart B outlines the 
due-process procedures that the FLRA is required to follow when using 
offset (administrative, tax refund, and salary) to collect a debt, when 
garnishing a debtor's wages, or before reporting a debt to a credit 
bureau. More specifically, the final rule describes the notice that the 
FLRA will send to a debtor when collecting the debt, including the 
FLRA's responsibilities and the debtor's associated rights and 
obligations related to the notice. The FLRA shall assess interest, 
penalties, and administrative costs on such debts in accordance with 
the provisions of 31 U.S.C. 3717 and 31 CFR 901.9. Subpart B also 
explains that the FLRA may waive those assessments, and it provides for 
situations in which the FLRA may accept payments in regular 
installments, in accordance with 31 CFR 901.8. The subpart also 
provides that the FLRA may suspend or terminate a debt and when it will 
transfer an FLRA debt to the Treasury Department's Financial Management 
Service for collection under 31 U.S.C. 3711(g) and 31 CFR 285.12. This 
subpart provides that an employee may request a waiver of the debt, if 
applicable, and references Appendix A of the final rule, which 
describes ``Waiving Claims Against FLRA Employees for Erroneous 
Payments.''

C. Subpart C--Procedures for Offset of FLRA Payments To Collect Debts 
Owed to Other Federal Agencies

    Subpart C of the final rule authorizes the FLRA to collect debts 
owed to other federal agencies, and it describes the procedures to be 
followed when another agency would like to use the offset process to 
collect a debt from a nontax payment issued by the FLRA, as a payment 
agency. For example, any federal agency may request that the FLRA 
collect a debt owed to such agency by offsetting funds payable to a 
debtor by the FLRA, including salary payments issued to FLRA employees. 
This subpart describes where to send a request and provides that 
certification of the debt is required. Subpart C also describes what 
the FLRA will do upon receipt of a request to offset the salary of an 
FLRA employee, including, among other things, the notice given to the 
employee and the limits on the amount

[[Page 24780]]

that the FLRA will deduct from an employee's salary.

Administrative Procedure Act--Regulatory Analysis

    The FLRA has determined that this rule pertains to agency practice 
and procedure and is interpretative in nature. The procedures contained 
in the rule for salary offset and administrative offset are mandated by 
law and by regulations promulgated by OPM, jointly by the Department of 
the Treasury and the Department of Justice, and by the IRS. Notice of 
proposed rulemaking is not required under the Administrative Procedure 
Act (APA) because the rule pertains solely to agency procedure and 
practice. 5 U.S.C. 553(b)(3)(A). Notice and an opportunity for public 
comment are not necessary prior to issuance of this final rule because 
it implements a definitive statutory scheme mandated by the DCIA. 
Likewise, pursuant to 5 U.S.C. 553(d)(3), the agency finds that good 
cause exists for not providing a delayed effective date.

Regulatory Flexibility Act

    Because no notice of proposed rulemaking is required for this rule, 
the provisions of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) 
do not apply. Moreover, the rule will affect only persons who owe 
delinquent nontax debts to the Treasury Department and other federal 
agencies. Accordingly, a regulatory-flexibility analysis is not 
required.

Paperwork Reduction Act

    The final rule is not subject to the Paperwork Reduction Act (44 
U.S.C. 3501), since it does not contain any new information-collection 
requirements.

E.O. 12866, Regulatory Review

    This rule is not a significant regulatory action as defined in 
Executive Order 12866. Because no notice of proposed rulemaking is 
required for this rule, the provisions of the Regulatory Flexibility 
Act do not apply.

List of Subjects in 5 CFR Part 2418

    Administrative practice and procedure, Claims, Debts, Garnishment 
of wages, Government employees, Hearing procedures, Pay administration, 
Salaries, Wages.

    By the Federal Labor Relations Authority on April 24, 2015.
Carol Waller Pope,
Chairman.

Authority and Issuance

    For the reasons set forth in the preamble, the FLRA adds 5 CFR part 
2418 to read as follows:

PART 2418--FLRA DEBT COLLECTION

Subpart A--General Provisions

Sec.
2418.1 What definitions apply to the regulations in this part?
2418.2 Why is the FLRA issuing these regulations, and what do they 
cover?
2418.3 Do these regulations adopt the Federal Claims Collection 
Standards (FCCS)?
Subpart B--Procedures to Collect FLRA Debts
2418.4 What notice will the FLRA send to a debtor when collecting an 
FLRA debt?
2418.5 How will the FLRA add interest, penalty charges, and 
administrative costs to an FLRA debt?
2418.6 When will the FLRA allow a debtor to pay an FLRA debt in 
installments instead of one lump sum?
2418.7 When will the FLRA compromise an FLRA debt?
2418.8 When will the FLRA suspend or terminate debt collection on an 
FLRA debt?
2418.9 When will the FLRA transfer an FLRA debt to the Treasury 
Department's Financial Management Service for collection?
2418.10 How will the FLRA use administrative offset (offset of non-
tax Federal payments) to collect an FLRA debt?
2418.11 How will the FLRA use tax refund offset to collect an FLRA 
debt?
2418.12 How will the FLRA offset a Federal employee's salary to 
collect an FLRA debt?
2418.13 How will the FLRA use administrative wage garnishment to 
collect an FLRA debt from a debtor's wages?
2418.14 How will the FLRA report FLRA debts to credit bureaus?
2418.15 How will the FLRA refer FLRA debts to private collection 
agencies?
2418.16 When will the FLRA refer FLRA debts to the Department of 
Justice?
2418.17 How does a debtor request a special review based on a change 
in circumstances such as catastrophic illness, divorce, death, or 
disability?
2418.18 Will the FLRA issue a refund if money is erroneously 
collected on a debt?
Subpart C--Procedures for Offset of FLRA Payments to Collect Debts Owed 
to Other Federal Agencies
2418.19 How do other Federal agencies use the offset process to 
collect debts from payments issued by the FLRA?
2418.20 What does the FLRA do upon receipt of a request to offset 
the salary of an FLRA employee to collect a debt owed by the 
employee to another Federal agency?

Appendix A To Part 2418--Waiving Claims Against Flra Employees For 
Erroneous Payments

    Authority: 5 U.S.C. 5514; 5 U.S.C. 5584; 5 U.S.C. 6402; 31 
U.S.C. 3701, 3711; 3716, 3717, 3718, 3720A, 3720D.

Subpart A--General Provisions


Sec.  2418.1  What definitions apply to the regulations in this part?

    As used in this part:
    Administrative offset or offset means withholding funds payable by 
the United States (including funds payable by the United States on 
behalf of a State Government) to, or held by the United States for, a 
person to satisfy a debt owed by the person. The term ``administrative 
offset'' includes, but is not limited to, the offset of Federal salary, 
vendor, retirement, and Social-Security-benefit payments. The terms 
``centralized administrative offset'' and ``centralized offset'' refer 
to the process by which the Treasury Department's Financial Management 
Service offsets Federal payments through the Treasury Offset Program.
    Administrative wage garnishment means the process by which a 
Federal agency orders a non-Federal employer to withhold amounts from a 
debtor's wages to satisfy a debt, as authorized by 31 U.S.C. 3720D, 31 
CFR 285.11, and this part.
    Agency or federal agency means a department, agency, court, court 
administrative office, or instrumentality in the executive, judicial, 
or legislative branch of the Federal Government, including government 
corporations.
    Chairman means the Chairman of the FLRA or his or her designee.
    Creditor agency means any Federal agency that is owed a debt.
    Debt means any amount of money, funds, or property that has been 
determined by an appropriate official of the Federal Government to be 
owed to the United States by a person. As used in this part, the term 
``debt'' does not include, as described in 31 U.S.C. 3701(d), debts 
arising under: The Internal Revenue Code of 1986 (26 U.S.C. 1 et seq.); 
the Social Security Act (42 U.S.C. 301 et seq.), except to the extent 
provided under sections 204(f) and 1631(b)(4) of such Act [42 U.S.C. 
404(f) and 1383(b)(4)] and section 3716(c) [31 U.S.C. 3716(c)], or the 
tariff laws of the United States.
    Debtor means a person who owes a debt to the United States.

[[Page 24781]]

    Delinquent debt means a debt that has not been paid by the date 
specified in the agency's initial written demand for payment or 
applicable agreement or instrument (including a post-delinquency 
payment agreement) unless other satisfactory payment arrangements have 
been made.
    Delinquent FLRA debt means a delinquent debt owed to the FLRA.
    Disposable pay has the same meaning as that term is defined in 5 
CFR 550.1103.
    Employee or Federal employee means a current employee of the FLRA 
or other Federal agency, including a current member of the Armed 
Forces, Reserve of the Armed Forces of the United States, or the 
National Guard.
    Executive Director means the Executive Director of the FLRA or his 
or her designee.
    FCCS means the Federal Claims Collection Standards, which were 
jointly published by the Departments of the Treasury and Justice and 
codified at 31 CFR parts 900 through 904.
    Financial Management Service means the Financial Management 
Service, a bureau of the Treasury Department, which is responsible for 
the centralized collection of delinquent debts through the offset of 
Federal payments and other means.
    FLRA means the Federal Labor Relations Authority and all of its 
components.
    FLRA debt means a debt that a person owes the FLRA.
    Payment agency or Federal payment agency means any Federal agency 
that transmits payment requests in the form of certified payment 
vouchers, or other similar forms, to a disbursing official for 
disbursement. The ``payment agency'' may be the agency that employs the 
debtor. In some cases, the FLRA may be both the creditor agency and the 
payment agency.
    Person means an individual, corporation, partnership, association, 
organization, State or local government, or any other type of entity 
other than a Federal agency.
    Salary offset means a type of administrative offset to collect, 
from the current pay account of a Federal employee, a debt that the 
employee owes.
    Tax refund offset is defined in 31 CFR 285.2(a).
    Treasury Department means the United States Department of the 
Treasury. Waiver means the cancellation, remission, forgiveness, or 
non-recovery of a debt allegedly owed by an employee to an agency as 
permitted or required by 5 U.S.C. 5584, 10 U.S.C. 2774, 32 U.S.C. 716, 
5 U.S.C. 8346(b), 42 U.S.C. 404(b), or any other law.


Sec.  2418.2  Why is the FLRA issuing these regulations, and what do 
they cover?

    (a) Scope. This part provides procedures for the collection of FLRA 
debts. This part also provides procedures for collection of other debts 
owed to the United States when the FLRA receives, from another agency, 
a request for offset of an FLRA payment (for example, when an FLRA 
employee owes a debt to the United States Department of Education).
    (b) Applicability. (1) This part applies to the FLRA when 
collecting an FLRA debt, to persons who owe FLRA debts, and to Federal 
agencies requesting offset of a payment issued by the FLRA as a payment 
agency (including salary payments to FLRA employees).
    (2) This part does not apply to tax debts or to any debt for which 
there is an indication of fraud or misrepresentation, as described in 
31 CFR 900.3 of the FCCS, unless the Department of Justice returns the 
debt to the FLRA for handling.
    (3) Nothing in this part precludes collection or disposition of any 
debt under statutes and regulations other than those described in this 
part. See, for example, 5 U.S.C. 5705, Advancements and Deductions, 
which authorizes agencies to recover travel advances by offset of up to 
100% of a Federal employee's accrued pay. See, also, 5 U.S.C. 4108, 
governing the collection of training expenses. To the extent that the 
provisions of laws and other regulations differ from the provisions of 
this part, those provisions of law and other regulations--and not the 
provisions of this part--apply to the remission or mitigation of fines, 
penalties, and forfeitures, as well as debts arising under the tariff 
laws of the United States.
    (c) Duplication not required. Nothing in this part requires the 
FLRA to duplicate notices or administrative proceedings required by 
contract, this part, or other laws or regulations.
    (d) Use of multiple collection remedies allowed. The FLRA and other 
Federal agencies may simultaneously use multiple collection remedies to 
collect a debt, except as prohibited by law. This part is intended to 
promote aggressive debt collection, using for each debt all available 
collection remedies. These remedies are not listed in any prescribed 
order, so that the FLRA may have flexibility in determining which 
remedies will be most efficient in collecting the particular debt.


Sec.  2418.3  Do these regulations adopt the Federal Claims Collection 
Standards (FCCS)?

    This part adopts and incorporates all provisions of the FCCS. This 
part also supplements the FCCS by prescribing procedures consistent 
with the FCCS, as necessary and appropriate for FLRA operations.

Subpart B--Procedures to Collect FLRA Debts


Sec.  2418.4  What notice will the FLRA send to a debtor when 
collecting an FLRA debt?

    (a) Notice requirements. The FLRA shall aggressively collect FLRA 
debts. The FLRA shall promptly send at least one written notice to a 
debtor informing the debtor of the consequences of failing to pay or 
otherwise resolve an FLRA debt. The notice(s) shall be sent to the 
debtor at the most current address of the debtor in the FLRA's records. 
Generally, before starting the collection actions described in 
Sec. Sec.  2418.5 and 2418.9 through 2418.16, the FLRA will send no 
more than two written notices to the debtor. The purpose of the 
notice(s) is to explain why the debt is owed, the amount of the debt, 
how a debtor may pay the debt or make alternative payment arrangements, 
how a debtor may review documents related to the debt, how a debtor may 
dispute the debt, the collection remedies available to the FLRA if the 
debtor refuses to pay the debt, and other consequences to the debtor if 
the debt is not paid. Except as otherwise provided in paragraph (b) of 
this section, the written notice(s) shall explain to the debtor:
    (1) The nature and amount of the debt, and the facts giving rise to 
the debt;
    (2) How interest, penalties, and administrative costs are added to 
the debt, the date by which payment should be made to avoid such 
charges, and that such assessments must be made unless excused in 
accordance with 31 CFR 901.9 (see Sec.  2418.5);
    (3) The date by which payment should be made to avoid the enforced 
collection actions described in paragraph (a)(6) of this section;
    (4) The FLRA's willingness to discuss alternative payment 
arrangements and how the debtor may enter into a written agreement to 
repay the debt under terms acceptable to the FLRA (see Sec.  2418.6);
    (5) The name, address, and telephone number of a contact person or 
office within the FLRA;
    (6) The FLRA's intention to enforce collection if the debtor fails 
to pay or otherwise resolve the debt, by taking one or more of the 
following actions:
    (i) Offset. Offset the debtor's Federal payments, including income-
tax

[[Page 24782]]

refunds, salary, certain benefit payments (such as Social Security), 
retirement, vendor, travel reimbursements and advances, and other 
Federal payments (see Sec. Sec.  2418.10 through 2418.12);
    (ii) Private collection agency. Refer the debt to a private 
collection agency (see Sec.  2418.15);
    (iii) Credit-bureau reporting. Report the debt to a credit bureau 
(see Sec.  2418.14);
    (iv) Administrative wage garnishment. Garnish the debtor's wages 
through administrative wage garnishment (see Sec.  2418.13);
    (v) Litigation. Refer the debt to the Department of Justice to 
initiate litigation to collect the debt (see Sec.  2418.16);
    (vi) Treasury Department's Financial Management Service. Refer the 
debt to the Financial Management Service for collection (see Sec.  
2418.9);
    (7) That Treasury debts over 180 days delinquent must be referred 
to the Financial Management Service for the collection actions 
described in paragraph (a)(6) of this section (see Sec.  2418.9);
    (8) How the debtor may inspect and copy records related to the 
debt;
    (9) How the debtor may request a review of the FLRA's determination 
that the debtor owes a debt and present evidence that the debt is not 
delinquent or legally enforceable (see Sec. Sec.  2418.10(c) and 
2418.11(c));
    (10) How a debtor may request a hearing if the FLRA intends to 
garnish the debtor's private-sector (i.e., non-Federal) wages (see 
Sec.  2418.13(a)), including:
    (i) The method and time period for requesting a hearing;
    (ii) That the timely filing of a request for a hearing on or before 
the 15th business day following the date of the notice will stay the 
commencement of administrative wage garnishment, but not necessarily 
other collection procedures; and
    (iii) The name and address of the office to which the request for a 
hearing should be sent.
    (11) How a debtor who is a Federal employee subject to Federal 
salary offset may request a hearing (see Sec.  2418.12(e)), including:
    (i) The method and time period for requesting a hearing;
    (ii) That the timely filing of a request for a hearing on or before 
the 15th calendar day following receipt of the notice will stay the 
commencement of salary offset, but not necessarily other collection 
procedures;
    (iii) The name and address of the office to which the request for a 
hearing should be sent;
    (iv) That the FLRA will refer the debt to the debtor's employing 
agency or to the Financial Management Service to implement salary 
offset, unless the employee files a timely request for a hearing;
    (v) That a final decision on the hearing, if requested, will be 
issued at the earliest practical date, but not later than 60 days after 
the filing of the request for a hearing, unless the employee requests 
and the hearing official grants a delay in the proceedings;
    (vi) That any knowingly false or frivolous statements, 
representations, or evidence may subject the Federal employee to 
penalties under the False Claims Act (31 U.S.C. 3729-3731) or other 
applicable statutory authority, and criminal penalties under 18 U.S.C. 
286, 287, 1001, and 1002, or other applicable statutory authority;
    (vii) That, unless prohibited by contract or statute, amounts paid 
on or deducted for the debt that are later waived or found not owed to 
the United States will be promptly refunded to the employee; and
    (viii) That 5 U.S.C. 5514 and 31 U.S.C. 3716 govern proceedings 
with respect to such debt.
    (12) How the debtor may request a waiver of the debt, if applicable 
(see Appendix A of this part);
    (13) How the debtor's spouse may claim his or her share of a joint-
income-tax refund by filing Form 8379 with the Internal Revenue Service 
(see https://www.irs.gov);
    (14) How the debtor may exercise other statutory or regulatory 
rights and remedies available to the debtor;
    (15) That an employee's involuntary payment of all or any portion 
of a debt being collected will not be construed as a waiver of any 
rights that the employee may have under any provision of contract or 
law, unless there are statutory, regulatory, or contractual provisions 
to the contrary; and
    (16) That the debtor should advise the FLRA of a bankruptcy 
proceeding of the debtor or another person liable for the debt being 
collected.
    (b) Exceptions to notice requirements. The FLRA may omit from a 
notice to a debtor one or more of the provisions contained in 
paragraphs (a)(6) through (16) of this section if the FLRA, in 
consultation with its legal counsel, determines that any provision is 
not legally required given the collection remedies to be applied to a 
particular debt.
    (c) Respond to debtors; comply with FCCS. The FLRA will respond 
promptly to communications from debtors and comply with other FCCS 
provisions applicable to the administrative collection of debts. See 31 
CFR part 901.


Sec.  2418.5  How will the FLRA add interest, penalty charges, and 
administrative costs to an FLRA debt?

    (a) Assessment and notice. The FLRA shall assess interest, 
penalties, and administrative costs on FLRA debts in accordance with 
the provisions of 31 U.S.C. 3717 and 31 CFR 901.9. Interest shall be 
charged in accordance with the requirements of 31 U.S.C. 3717(a). 
Penalties shall accrue at the rate of 6% per year, or such other higher 
rate as authorized by law. The FLRA shall determine administrative 
costs, that is, the costs of processing and handling a delinquent debt. 
In the notice to the debtor described in Sec.  2418.4, the FLRA must 
explain how interest, penalties, costs, and other charges are assessed, 
unless the requirements are included in a contract or repayment 
agreement.
    (b) Waiver of interest, penalties, and administrative costs. Unless 
otherwise required by law, the FLRA may not charge interest if the 
amount due on the debt is paid within 30 days after the date from which 
the interest accrues. See 31 U.S.C. 3717(d). The FLRA may waive 
interest, penalties, and administrative costs, or any portion thereof, 
when it would be against equity and good conscience or not in the 
FLRA's best interest to collect such charges, in accordance with FLRA 
guidelines for waiving claims against FLRA employees for erroneous 
overpayments. See appendix A of this part.
    (c) Accrual during suspension of debt collection. In most cases, 
interest, penalties, and administrative costs will begin and continue 
to accrue 30 days after notice is given to the employee and during any 
period when collection has been suspended for any reason (for example, 
when the debtor has requested a hearing). The FLRA may suspend accrual 
of any or all of these charges when accrual would be against equity and 
good conscience or not in the FLRA's best interest, in accordance with 
FLRA guidelines for waiving claims against FLRA employees for erroneous 
overpayments. See appendix A of this part.


Sec.  2418.6  When will the FLRA allow a debtor to pay an FLRA debt in 
installments instead of one lump sum?

    If a debtor is financially unable to pay the debt in one lump sum, 
then the FLRA may accept payment of an FLRA debt in regular 
installments, in accordance with 31 CFR 901.8.

[[Page 24783]]

Sec.  2418.7   When will the FLRA compromise an FLRA debt?

    If the FLRA cannot collect the full amount of an FLRA debt, then 
the FLRA may compromise the debt in accordance with 31 CFR part 902.


Sec.  2418.8  When will the FLRA suspend or terminate debt collection 
on an FLRA debt?

    If, after pursuing all appropriate means of collection, the FLRA 
determines that an FLRA debt is uncollectible, then the FLRA may 
suspend or terminate debt-collection activity in accordance with the 
provisions of 31 CFR part 903 and the FLRA's policies and procedures.


Sec.  2418.9   When will the FLRA transfer an FLRA debt to the Treasury 
Department's Financial Management Service for collection?

    (a) The FLRA will transfer any eligible debt that is more than 180 
days delinquent to the Financial Management Service for debt-collection 
services, a process known as ``cross-servicing.'' See 31 U.S.C. 3711(g) 
and 31 CFR 285.12. The FLRA may transfer debts delinquent 180 days or 
less to the Financial Management Service in accordance with the 
procedures described in 31 CFR 285.12. The Financial Management Service 
takes appropriate action to collect or compromise the transferred debt, 
or to suspend or terminate collection action thereon, in accordance 
with the statutory and regulatory requirements and authorities 
applicable to the debt and the collection action to be taken. See 31 
CFR 285.12(c)(2). Appropriate action includes, but is not limited to: 
Contact with the debtor; referral of the debt to the Treasury Offset 
Program, private collection agencies, or the Department of Justice; 
reporting of the debt to credit bureaus; and administrative wage 
garnishment.
    (b) At least sixty (60) days before transferring an FLRA debt to 
the Financial Management Service, the FLRA will send notice to the 
debtor as required by Sec.  2418.4. The FLRA will certify to the 
Financial Management Service, in writing, that the debt is valid, 
delinquent, legally enforceable, and that there are no legal bars to 
collection. In addition, the FLRA will certify its compliance with all 
applicable due-process and other requirements as described in this part 
and other Federal laws. See 31 CFR 285.12(i) regarding the 
certification requirement.
    (c) As part of its debt-collection process, the Financial 
Management Service uses the Treasury Offset Program to collect Treasury 
debts by administrative and tax-refund offset. See 31 CFR 285.12(g). 
The Treasury Offset Program is a centralized offset program 
administered by the Financial Management Service to collect delinquent 
debts owed to Federal agencies and states (including past-due child 
support). Under the Treasury Offset Program, before a Federal payment 
is disbursed, the Financial Management Service compares the name and 
taxpayer identification number (TIN) of the payee with the names and 
TINs of debtors that have been submitted by Federal agencies and states 
to the Treasury Offset Program database. If there is a match, the 
Financial Management Service (or, in some cases, another Federal 
disbursing agency) offsets all or a portion of the Federal payment, 
disburses any remaining payment to the payee, and pays the offset 
amount to the creditor agency. Federal payments eligible for offset 
include, but are not limited to, income-tax refunds, salary, travel 
advances and reimbursements, retirement and vendor payments, and Social 
Security and other benefit payments.


Sec.  2418.10  How will the FLRA use administrative offset (offset of 
non-tax Federal payments) to collect an FLRA debt?

    (a) Centralized administrative offset through the Treasury Offset 
Program. (1) In most cases, the Financial Management Service uses the 
Treasury Offset Program to collect Treasury debts by the offset of 
Federal payments. See Sec.  2418.9(c). If not already transferred to 
the Financial Management Service under Sec.  2418.9, the FLRA will 
refer any eligible debt over 180 days delinquent to the Treasury Offset 
Program for collection by centralized administrative offset. See 31 
U.S.C. 3716(c)(6); 31 CFR part 285, subpart A; and 31 CFR 901.3(b). The 
FLRA may refer any eligible debt less than 180 days delinquent to the 
Treasury Offset Program for offset.
    (2) At least sixty (60) days prior to referring a debt to the 
Treasury Offset Program, in accordance with paragraph (a)(1) of this 
section, the FLRA will send notice to the debtor in accordance with the 
requirements of Sec.  2418.4. The FLRA will certify to the Financial 
Management Service, in writing, that the debt is valid, delinquent, 
legally enforceable, and that there are no legal bars to collection by 
offset. In addition, the FLRA will certify its compliance with the 
requirements described in this part.
    (b) Non-centralized administrative offset for FLRA debts. (1) When 
centralized administrative offset through the Treasury Offset Program 
is not available or appropriate, the FLRA may collect past-due, legally 
enforceable FLRA debts through non-centralized administrative offset. 
See 31 CFR 901.3(c). In these cases, the FLRA may offset a payment 
internally or make an offset request directly to a Federal payment 
agency.
    (2) At least thirty (30) days prior to offsetting a payment 
internally or requesting a Federal payment agency to offset a payment, 
the FLRA will send notice to the debtor in accordance with the 
requirements of Sec.  2418.4. (For debts outstanding more than ten (10) 
years on or before June 11, 2009, the FLRA will comply with the 
additional notification requirements of 31 CFR 285.7(d).) When 
referring a debt for offset under this paragraph (b), the FLRA 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 FLRA will certify its compliance with these 
regulations concerning administrative offset. See 31 CFR 
901.3(c)(2)(ii).
    (c) Administrative review. The notice described in Sec.  2418.4 
shall explain to the debtor how to request an administrative review of 
the FLRA's determination that the debtor owes an FLRA debt and how to 
present evidence that the debt is not delinquent or legally 
enforceable. In addition to challenging the existence and amount of the 
debt, the debtor may seek a review of the terms of repayment. In most 
cases, the FLRA will provide the debtor with a ``paper hearing'' based 
upon a review of the written record, including documentation provided 
by the debtor. The FLRA shall provide the debtor with a reasonable 
opportunity for an oral hearing when the debtor requests 
reconsideration of the debt and the FLRA determines that the question 
of the indebtedness cannot be resolved by review of the documentary 
evidence, for example, when the validity of the debt turns on an issue 
of credibility or veracity. Unless otherwise required by law, an oral 
hearing under this section is not required to be a formal evidentiary 
hearing, although the FLRA will carefully document all significant 
matters discussed at the hearing. The FLRA may suspend collection 
through administrative offset and/or other collection actions pending 
the resolution of a debtor's dispute.
    (d) Procedures for expedited offset. Under the circumstances 
described in 31 CFR 901.3(b)(4)(iii), the FLRA may effect an offset 
against a payment to be made to the debtor prior to sending a notice to 
the debtor, as described in Sec.  2418.4, or completing the procedures

[[Page 24784]]

described in paragraph (b)(2) and (c) of this section. The FLRA shall 
give the debtor notice and an opportunity for review as soon as 
practicable and promptly refund any money ultimately found not to have 
been owed to the Government.


Sec.  2418.11  How will the FLRA use tax-refund offset to collect an 
FLRA debt?

    (a) Tax-refund offset. In most cases, the Financial Management 
Service uses the Treasury Offset Program to collect FLRA debts by the 
offset of tax refunds and other Federal payments. See Sec.  2418.9(c). 
If not already transferred to the Financial Management Service under 
Sec.  2418.9, the FLRA will refer to the Treasury Offset Program any 
past-due, legally enforceable debt for collection by tax-refund offset. 
See 26 U.S.C. 6402(d), 31 U.S.C. 3720A and 31 CFR 285.2.
    (b) Notice. At least sixty (60) days before referring a debt to the 
Treasury Offset Program, the FLRA will send notice to the debtor in 
accordance with the requirements of Sec.  2418.4. The FLRA will certify 
to the Financial Management Service's Treasury Offset Program, in 
writing, that the debt is past due and legally enforceable in the 
amount submitted and that the FLRA has made reasonable efforts to 
obtain payment of the debt as described in 31 CFR 285.2(d). In 
addition, the FLRA will certify its compliance with all applicable due-
process and other requirements described in this part and other Federal 
laws. See 31 U.S.C. 3720A(b) and 31 CFR 285.2.
    (c) Administrative review. The notice described in Sec.  2418.4 
shall provide the debtor with at least 60 days prior to the initiation 
of tax-refund offset to request an administrative review as described 
in Sec.  2418.10(c). The FLRA may suspend collection through tax-refund 
offset and/or other collection actions pending the resolution of the 
debtor's dispute.


Sec.  2418.12  How will the FLRA offset a Federal employee's salary to 
collect an FLRA debt?

    (a) Federal salary offset. (1) Salary offset is used to collect 
debts that FLRA employees and other Federal employees owe to the United 
States. If a Federal employee owes an FLRA debt, then the FLRA may 
offset the employee's Federal salary to collect the debt in the manner 
described in this section. For information on how a Federal agency 
other than the FLRA may collect debt from the salary of an FLRA 
employee, see Sec. Sec.  2418.19 and 2418.20.
    (2) Nothing in this part requires the FLRA to collect an FLRA debt 
in accordance with this section if Federal law allows otherwise. See, 
for example, 5 U.S.C. 5705 (travel advances not used for allowable 
travel expenses are recoverable from the employee or his estate by 
setoff against accrued pay and other means) and 5 U.S.C. 4108 (recovery 
of training expenses).
    (3) The FLRA may use the administrative-wage-garnishment procedure 
described in Sec.  2418.13 to collect a debt from an individual's non-
Federal wages.
    (b) Centralized salary offset through the Treasury Offset Program. 
As described in Sec.  2418.9(a), the FLRA will refer FLRA debts to the 
Financial Management Service for collection by administrative offset, 
including salary offset, through the Treasury Offset Program. When 
possible, the FLRA will attempt salary offset through the Treasury 
Offset Program before applying the procedures in paragraph (c) of this 
section. See 5 CFR 550.1109.
    (c) Non-centralized salary offset for FLRA debts. When centralized 
salary offset through the Treasury Offset Program is not available or 
appropriate, the FLRA may collect delinquent FLRA debts through non-
centralized salary offset. See 5 CFR 550.1109. In these cases, the FLRA 
may offset a payment internally or make a request directly to a Federal 
payment agency to offset a salary payment to collect a delinquent debt 
that a Federal employee owes. At least thirty (30) days prior to 
offsetting internally or requesting a Federal agency to offset a salary 
payment, the FLRA will send notice to the debtor in accordance with the 
requirements of Sec.  2418.4. (For debts outstanding more than ten (10) 
years on or before June 11, 2009, the FLRA will comply with the 
additional notification requirements of 31 CFR 285.7(d).) When 
referring a debt for offset, the FLRA will certify to the payment 
agency, in writing, that the debt is valid, delinquent, and legally 
enforceable in the amount stated, and that there are no legal bars to 
collection by salary offset. In addition, the FLRA will certify that 
all due-process and other prerequisites to salary offset have been met. 
See 5 U.S.C. 5514, 31 U.S.C. 3716(a), and this section for a 
description of the due-process and other prerequisites for salary 
offset.
    (d) When prior notice not required. The FLRA is not required to 
provide prior notice to an employee when the FLRA makes the following 
adjustments to an FLRA employee's pay:
    (1) Any adjustment to pay arising out of any 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;
    (2) A routine intra-agency adjustment of pay that is made to 
correct an overpayment of pay attributable to clerical or 
administrative errors or delays in processing pay documents, if the 
overpayment occurred within the four pay periods preceding the 
adjustment, and, at the time of such adjustment, or as soon thereafter 
as practical, the individual is provided written notice of the nature 
and the amount of the adjustment and the point of contact for 
contesting such adjustment; or
    (3) Any adjustment to collect a debt amounting to $ 50 or less, if, 
at the time of such adjustment, or as soon thereafter as practical, the 
individual is provided written notice of the nature and the amount of 
the adjustment and a point of contact for contesting such adjustment.
    (e) Hearing procedures--(1) Request for a hearing. A Federal 
employee who has received a notice that his or her FLRA debt will be 
collected by means of salary offset may request a hearing concerning 
the existence or amount of the debt. The Federal employee also may 
request a hearing concerning the amount proposed to be deducted from 
the employee's pay each pay period. The employee must send any request 
for hearing, in writing, to the office designated in the notice 
described in Sec.  2418.4. See Sec.  2418.4(a)(11). The request must be 
received by the designated office on or before the 15th calendar day 
following the employee's receipt of the notice. The employee must sign 
the request and specify whether an oral or paper hearing is requested. 
If an oral hearing is requested, then the employee must explain why the 
matter cannot be resolved by review of the documentary evidence alone. 
An oral hearing may, at the debtor's option, be conducted either in-
person or by telephone conference. All travel expenses incurred by the 
Federal employee in connection with an in-person hearing will be borne 
by the employee. All telephonic charges incurred during the hearing 
will be the responsibility of the agency.
    (2) Failure to submit timely request for hearing. If the employee 
fails to submit a request for hearing within the time period described 
in paragraph (e)(1) of this section, then the employee will have waived 
the right to a hearing, and salary offset may be initiated. However, 
the FLRA will accept a late request for hearing if the employee can 
show that the late request was the result of circumstances beyond the 
employee's control or because of a failure to receive actual notice of 
the filing deadline.

[[Page 24785]]

    (3) Hearing official. The FLRA must obtain the services of a 
hearing official who is not under the supervision or control of the 
Chairman. The FLRA may contact an agent of any agency designated in 
appendix A to 5 CFR part 581 (List of Agents Designated to Accept Legal 
Process) to request a hearing official.
    (4) Notice of hearing. After the employee requests a hearing, the 
designated hearing official shall inform the employee of the form of 
the hearing to be provided. For oral hearings, the notice shall set 
forth the date, time, and location of the hearing. For paper hearings, 
the notice shall notify the employee of the date by which he or she 
should submit written arguments to the designated hearing official. The 
hearing official shall give the employee reasonable time to submit 
documentation in support of the employee's position. The hearing 
official shall schedule a new hearing date if requested by both 
parties. The hearing official shall give both parties reasonable notice 
of the time and place of a rescheduled hearing.
    (5) Oral hearing. The hearing official will conduct an oral hearing 
if he or she determines that the matter cannot be resolved by review of 
documentary evidence alone (for example, when an issue of credibility 
or veracity is involved). The hearing need not take the form of an 
evidentiary hearing, but may be conducted in a manner determined by the 
hearing official, including but not limited to:
    (i) Informal conferences with the hearing official, in which the 
employee and agency representative will be given full opportunity to 
present evidence, witnesses, and argument;
    (ii) Informal meetings with an interview of the employee by the 
hearing official; or
    (iii) Formal written submissions, with an opportunity for oral 
presentation.
    (6) Paper hearing. If the hearing official determines that an oral 
hearing is not necessary, then he or she will make the determination 
based upon a review of the available written record, including any 
documentation submitted by the employee in support of his or her 
position.
    (7) Failure to appear or submit documentary evidence. In the 
absence of good cause shown (for example, excused illness), if the 
employee fails to appear at an oral hearing or fails to submit 
documentary evidence as required for a paper hearing, then the employee 
will have waived the right to a hearing, and salary offset shall be 
initiated. If the FLRA representative fails to appear at an oral 
hearing, then the hearing official shall proceed with the hearing as 
scheduled, and make his or her determination based upon the oral 
testimony presented and the documentary evidence submitted by both 
parties.
    (8) Burden of proof. The FLRA will have the initial burden to prove 
the existence and amount of the debt. Thereafter, if the employee 
disputes the existence or amount of the debt, then the employee must 
prove by a preponderance of the evidence that no debt exists or that 
the amount of the debt is incorrect. In addition, the employee may 
present evidence that the proposed terms of the repayment schedule are 
unlawful, would cause a financial hardship to the employee, or that 
collection of the debt may not be pursued due to operation of law.
    (9) Record. The hearing official shall maintain a summary record of 
any hearing provided by this part. Witnesses will testify under oath or 
affirmation in oral hearings.
    (10) Date of decision. The hearing official shall issue a written 
opinion stating his or her decision, based upon documentary evidence 
and information developed at the hearing, as soon as practicable after 
the hearing, but not later than 60 days after the date on which the 
FLRA received the request for hearing. If the employee requests a delay 
in the proceedings, then the deadline for the decision may be postponed 
by the number of days by which the hearing was postponed. When a 
decision is not timely rendered, the FLRA shall waive penalties applied 
to the debt for the period beginning with the date the decision is due 
and ending on the date the decision is issued.
    (11) Content of decision. The written decision shall include:
    (i) A statement of the facts presented to support the origin, 
nature, and amount of the debt;
    (ii) The hearing official's findings, analysis, and conclusions; 
and
    (iii) The terms of any repayment schedules, if applicable.
    (12) Final agency action. The hearing official's decision shall be 
final.
    (f) Waiver not precluded. Nothing in this part precludes an 
employee from requesting waiver of an overpayment under 5 U.S.C. 5584 
or 8346(b), 10 U.S.C. 2774, 32 U.S.C. 716, or other statutory 
authority.
    (g) Salary-offset process--(1) Determination of disposable pay. The 
FLRA's Office of the Executive Director will determine the amount of an 
FLRA employee's disposable pay (as defined in Sec.  2418.1) and will 
implement salary offset when requested to do so by the FLRA, as 
described in paragraph (c) of this section, or another agency, as 
described in Sec.  2418.19. If the debtor is not employed by the FLRA, 
then the agency employing the debtor will determine the amount of the 
employee's disposable pay and will implement salary offset upon 
request.
    (2) When salary offset begins. Deductions shall normally begin 
within three official pay periods following receipt of the creditor 
agency's request for offset.
    (3) Amount of salary offset. The amount to be offset from each 
salary payment will be up to 15 percent of a debtor's disposable pay, 
as follows:
    (i) If the amount of the debt is equal to or less than 15 percent 
of the disposable pay, then such debt generally will be collected in 
one lump-sum payment;
    (ii) Installment deductions will be made over a period of no 
greater than the anticipated period of employment. An installment 
deduction 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, or a higher deduction has been ordered 
by a court under section 124 of Public Law 97-276 (96 Stat. 1195), or 
the creditor agency has determined that smaller deductions are 
appropriate based on the employee's ability to pay.
    (4) Final salary payment. After the employee has separated either 
voluntarily or involuntarily from the payment agency, the payment 
agency may make a lump-sum deduction exceeding 15 percent of disposable 
pay from any final salary or other payments pursuant to 31 U.S.C. 3716 
in order to satisfy a debt.
    (h) Payment agency's responsibilities. (1) As required by 5 CFR 
550.1109, if the employee separates from the payment agency from which 
the FLRA has requested salary offset, then the payment agency must 
certify the total amount of its collection and notify the FLRA and the 
employee of the amounts collected. If the payment agency is aware that 
the employee is entitled to payments from the Civil Service Retirement 
Fund and Disability Fund, the Federal Employee Retirement System, or 
other similar payments, then it must provide written notification to 
the payment agency responsible for making such payments that the debtor 
owes a debt, the amount of the debt, and that the FLRA has complied 
with the provisions of this section. The FLRA must submit a properly 
certified claim to the new payment agency before the collection can be 
made.
    (2) If the employee is already separated from employment and all

[[Page 24786]]

payments due from his or her former payment agency have been made, then 
the FLRA may request that money due and payable to the employee from 
the Civil Service Retirement Fund and Disability Fund, the Federal 
Employee Retirement System, or other similar funds, be administratively 
offset to collect the debt. Generally, the FLRA will collect such 
monies through the Treasury Offset Program as described in Sec.  
2418.9(c).
    (3) When an employee transfers to another agency, the FLRA should 
resume collection with the employee's new payment agency in order to 
continue salary offset.


Sec.  2418.13  How will the FLRA use administrative wage garnishment to 
collect an FLRA debt from a debtor's wages?

    (a) The FLRA is authorized to collect debts from a debtor's wages 
by means of administrative wage garnishment in accordance with the 
requirements of 31 U.S.C. 3720D and 31 CFR 285.11. This part adopts and 
incorporates all of the provisions of 31 CFR 285.11 concerning 
administrative wage garnishment, including the hearing procedures 
described in 31 CFR 285.11(f). The FLRA may use administrative wage 
garnishment to collect a delinquent FLRA debt unless the debtor is 
making timely payments under an agreement to pay the debt in 
installments (see Sec.  2418.6). At least thirty (30) days before 
initiating an administrative wage garnishment, the FLRA will send 
notice to the debtor in accordance with the requirements of Sec.  
2418.4 of this part, including the requirements of Sec.  2418.4(a)(10). 
(For debts outstanding more than ten (10) years on or before June 11, 
2009, the FLRA will comply with the additional notification 
requirements of 31 CFR 285.7(d).) For FLRA debts referred to the 
Financial Management Service under Sec.  2418.9, the FLRA may authorize 
the Financial Management Service to send a notice informing the debtor 
that administrative wage garnishment will be initiated and how the 
debtor may request a hearing as described in Sec.  2418.4(a)(10). If a 
debtor makes a timely request for a hearing, administrative wage 
garnishment will not begin until a hearing is held and a decision is 
sent to the debtor. See 31 CFR 285.11(f)(4). If a debtor's hearing 
request is not timely, then the FLRA may suspend collection by 
administrative wage garnishment in accordance with the provisions of 31 
CFR 285.11(f)(5). All travel expenses incurred by the debtor in 
connection with an in-person hearing will be borne by the debtor. If a 
hearing is conducted telephonically, all telephonic charges incurred 
during the hearing will be the responsibility of the agency.
    (b) This section does not apply to Federal salary offset, the 
process by which the FLRA collects debts from the salaries of Federal 
employees (see Sec.  2418.12).


Sec.  2418.14  How will the FLRA report FLRA debts to credit bureaus?

    The FLRA shall report delinquent FLRA debts to credit bureaus in 
accordance with 31 U.S.C. 3711(e), 31 CFR 901.4, and the Office of 
Management and Budget Circular A-129, ``Policies for Federal Credit 
Programs and Nontax Receivables.'' For additional information, see 
Financial Management Service's ``Guide to the Federal Credit Bureau 
Program,'' which may be found at https://www.fms.treas.gov/debt. At 
least sixty (60) days prior to reporting a delinquent debt to a 
consumer-reporting agency, the FLRA will send notice to the debtor in 
accordance with the requirements of Sec.  2418.4. Before disclosing 
information to a consumer-reporting agency, the FLRA shall provide, on 
request of a person alleged to be responsible for the delinquent debt, 
for a review of the obligation of the debtor, including an opportunity 
for reconsideration of the initial decision on the debt. The FLRA may 
authorize the Financial Management Service to report to credit bureaus 
those delinquent FLRA debts that have been transferred to the Financial 
Management Service under Sec.  2418.9.


Sec.  2418.15  How will the FLRA refer FLRA debts to private collection 
agencies?

    The FLRA will transfer delinquent FLRA debts to the Financial 
Management Service to obtain debt-collection services provided by 
private collection agencies. See Sec.  2418.9.


Sec.  2418.16  When will the FLRA refer FLRA debts to the Department of 
Justice?

    (a) Compromise or suspension or termination of collection activity. 
The FLRA shall refer FLRA debts having a principal balance over $ 
100,000, or such higher amount as authorized by the Attorney General, 
to the Department of Justice for approval of any compromise of a debt 
or suspension or termination of collection activity. See Sec. Sec.  
2418.7 and 2418.8; 31 CFR 902.1; 31 CFR 903.1.
    (b) Litigation. The FLRA shall promptly refer to the Department of 
Justice for litigation delinquent FLRA debts on which aggressive 
collection activity has been taken in accordance with this part and 
that should not be compromised, and on which collection activity should 
not be suspended or terminated. See 31 CFR part 904. The FLRA may 
authorize the Financial Management Service to refer to the Department 
of Justice for litigation those delinquent FLRA debts that have been 
transferred to the Financial Management Service under Sec.  2418.9.


Sec.  2418.17  How does a debtor request a special review based on a 
change in circumstances such as catastrophic illness, divorce, death, 
or disability?

    (a) Material change in circumstances. A debtor who owes an FLRA 
debt may, at any time, request a special review by the FLRA of the 
amount of any offset, administrative wage garnishment, or voluntary 
payment, based on materially changed circumstances beyond the control 
of the debtor such as, but not limited to, catastrophic illness, 
divorce, death, or disability.
    (b) Inability to pay. For purposes of this section, in determining 
whether an involuntary or voluntary payment would prevent the debtor 
from meeting essential subsistence expenses (costs incurred for food, 
housing, clothing, transportation, and medical care), the debtor shall 
submit a detailed statement and supporting documents for the debtor, 
his or her spouse, and dependents, indicating:
    (1) Income from all sources;
    (2) Assets;
    (3) Liabilities;
    (4) Number of dependents;
    (5) Expenses for food, housing, clothing, and transportation;
    (6) Child-care or elder-care expenses;
    (7) Medical expenses; and
    (8) Exceptional expenses, if any.
    (c) Alternative payment arrangement. If the debtor requests a 
special review under this section, the debtor shall submit an 
alternative proposed payment schedule and a statement to the FLRA, with 
supporting documents, showing why the current offset, garnishment, or 
repayment schedule imposes an extreme financial hardship on the debtor. 
The FLRA will evaluate the statement and documentation and determine 
whether the current offset, garnishment, or repayment schedule imposes 
extreme financial hardship on the debtor. The FLRA shall notify the 
debtor in writing of such determination, including, if appropriate, a 
revised offset, garnishment, or payment schedule. If the special review 
results in a revised offset, garnishment, or repayment schedule, then 
the FLRA will notify the appropriate agency or other persons about the 
new terms.


Sec.  2418.18  Will the FLRA issue a refund if money is erroneously 
collected on a debt?

    The FLRA shall promptly refund to a debtor any amount collected on 
an

[[Page 24787]]

FLRA debt when the debt is waived or otherwise found not to be owed to 
the United States, or as otherwise required by law. Refunds under this 
part shall not bear interest unless required by law.

Subpart C--Procedures for Offset of FLRA Payments to Collect Debts 
Owed to Other Federal Agencies


Sec.  2418.19  How do other Federal agencies use the offset process to 
collect debts from payments issued by the FLRA?

    (a) Offset of FLRA payments to collect debts owed to other Federal 
agencies. (1) In most cases, Federal agencies submit eligible debts to 
the Treasury Offset Program to collect delinquent debts from payments 
issued by the FLRA and other Federal agencies, a process known as 
``centralized offset.'' When centralized offset is not available or 
appropriate, any Federal agency may ask the FLRA (when acting as a 
``payment agency'') to collect a debt owed to such agency by offsetting 
funds payable to a debtor by the FLRA, including salary payments issued 
to FLRA employees. This section and Sec.  2418.20 apply when a Federal 
agency asks the FLRA to offset a payment issued by the FLRA to a person 
who owes a debt to the United States.
    (2) This subpart does not apply to FLRA debts. See Sec. Sec.  
2418.10 through 2418.12 for offset procedures applicable to FLRA debts.
    (3) This subpart does not apply to the collection of non-FLRA debts 
through tax refund offset. See 31 CFR 285.2 for tax-refund-offset 
procedures.
    (b) Administrative offset (including salary offset); certification. 
The FLRA will initiate a requested offset only upon receipt of written 
certification from the creditor agency that the debtor owes the past-
due, legally enforceable debt in the amount stated, and that the 
creditor agency has fully complied with all applicable due-process and 
other requirements contained in 31 U.S.C. 3716, 5 U.S.C. 5514, and the 
creditor agency's regulations, as applicable. Offsets will continue 
until the debt is paid in full or otherwise resolved to the 
satisfaction of the creditor agency.
    (c) Where a creditor agency makes requests for offset. Requests for 
offset under this section shall be sent to the Federal Labor Relations 
Authority, ATTN: Office of the Executive Director, 1400 K Street NW., 
Washington, DC 20424.
    (d) Incomplete certification. The FLRA will return an incomplete 
debt certification to the creditor agency with notice that the creditor 
agency must comply with paragraph (b) of this section before action 
will be taken to collect a debt from a payment issued by the FLRA.
    (e) Review. The FLRA is not authorized to review the merits of the 
creditor agency's determination with respect to the amount or validity 
of the debt certified by the creditor agency.
    (f) When the FLRA will not comply with offset request. The FLRA 
will comply with the offset request of another agency unless the FLRA 
determines that the offset would not be in the best interests of the 
United States, or would otherwise be contrary to law.
    (g) Multiple debts. When two or more creditor agencies are seeking 
offsets from payments made to the same person, or when two or more 
debts are owed to a single creditor agency, the FLRA may determine the 
order in which the debts will be collected or whether one or more debts 
should be collected by offset simultaneously.
    (h) Priority of debts owed to FLRA. For purposes of this section, 
debts owed to the FLRA generally take precedence over debts owed to 
other agencies. The FLRA may determine whether to pay debts owed to 
other agencies before paying a debt owed to the FLRA. The FLRA will 
determine the order in which the debts will be collected based on the 
best interests of the United States.


Sec.  2418.20  What does the FLRA do upon receipt of a request to 
offset the salary of an FLRA employee to collect a debt owed by the 
employee to another Federal agency?

    (a) Notice to the FLRA employee. When the FLRA receives proper 
certification of a debt owed by one of its employees, the FLRA will 
begin deductions from the employee's pay at the next officially 
established pay period. The FLRA will send a written notice to the 
employee indicating that a certified debt claim has been received from 
the creditor agency, the amount of the debt that the creditor agency 
claims is owed, the date deductions from salary will begin, and the 
amount of such deductions.
    (b) Amount of deductions from FLRA employee's salary. The amount 
deducted under Sec.  2418.19(b) will be the lesser of the amount of the 
debt certified by the creditor agency or an amount up to 15% of the 
debtor's disposable pay. Deductions shall continue until the FLRA knows 
that the debt is paid in full or until otherwise instructed by the 
creditor agency. Alternatively, the amount offset may be an amount that 
the debtor and the creditor agency agree upon in writing. See Sec.  
2418.12(g) (salary-offset process).
    (c) When the debtor is no longer employed by the FLRA--(1) Offset 
of final and subsequent payments. If an FLRA employee retires or 
resigns or if his or her employment otherwise ends before collection of 
the debt is complete, then the FLRA will continue to offset, under 31 
U.S.C. 3716, up to 100% of an employee's subsequent payments until the 
debt is paid or otherwise resolved. Such payments include a debtor's 
final salary payment, lump-sum leave payment, and other payments 
payable to the debtor by the FLRA. See 31 U.S.C. 3716 and 5 CFR 
550.1104(l) and 550.1104(m).
    (2) Notice to the creditor agency. If the employee is separated 
from the FLRA before the debt is paid in full, then the FLRA will 
certify to the creditor agency the total amount of its collection. If 
the FLRA is aware that the employee is entitled to payments from the 
Civil Service Retirement and Disability Fund, Federal Employee 
Retirement System, or other similar payments, then the FLRA will 
provide written notice to the agency making such payments that the 
debtor owes a debt (including the amount) and that the provisions of 5 
CFR 550.1109 have been fully complied with. The creditor agency is 
responsible for submitting a certified claim to the agency responsible 
for making such payments before collection may begin. Generally, 
creditor agencies will collect such monies through the Treasury Offset 
Program as described in Sec.  2418.9(c).
    (3) Notice to the debtor. The FLRA will provide to the debtor a 
copy of any notices sent to the creditor agency under paragraph (c)(2) 
of this section.
    (d) When the debtor transfers to another Federal agency--(1) Notice 
to the creditor agency. If the debtor transfers to another Federal 
agency before the debt is paid in full, then the FLRA will notify the 
creditor agency and will certify the total amount of its collection on 
the debt. The FLRA will provide a copy of the certification to the 
creditor agency. The creditor agency is responsible for submitting a 
certified claim to the debtor's new employing agency before collection 
may begin.
    (2) Notice to the debtor. The FLRA will provide to the debtor a 
copy of any notices and certifications sent to the creditor agency 
under paragraph (d)(1) of this section.
    (e) Request for hearing official. The FLRA will provide a hearing 
official upon the creditor agency's request with respect to an FLRA 
employee. See 5 CFR 550.1107(a).

Appendix A to Part 2418--Waiving Claims Against FLRA Employees for 
Erroneous Payments

Date: May 1, 2015.

[[Page 24788]]

Subject: Waiving Claims Against FLRA Employees for Erroneous 
Payments.

1. Purpose

    This appendix establishes the FLRA's policies and procedures for 
waiving claims by the Government against an employee for erroneous 
payments of: (1) Pay and allowances (e.g., health and life 
insurance) and (2) travel, transportation, and relocation expenses 
and allowances.

2. Background

    a. 5 U.S.C. 5584 authorizes the waiver of claims by the United 
States in whole or in part against an employee arising out of 
erroneous payments of pay and allowances, travel, transportation, 
and relocation expenses and allowances. A waiver may be considered 
when collection of the claim would be against equity and good 
conscience and not in the best interest of the United States, 
provided that there does not exist, in connection with the claim, an 
indication of fraud, misrepresentation, fault, or lack of good faith 
on the part of the employee or any other person having an interest 
in obtaining a waiver of the claim.
    b. The General Accounting Office Act of 1996 (Pub. L. 104-316), 
Title I, section 103(d), enacted October 19, 1996, amended 5 U.S.C. 
5584 by transferring the authority to waive claims for erroneous 
payments exceeding $1,500 from the Comptroller General of the United 
States to the Office of Management and Budget (OMB). OMB 
subsequently redelegated this waiver authority to the executive 
agency that made the erroneous payment. The authority to waive 
claims not exceeding $1,500, which was vested in the head of each 
agency prior to the enactment of Public Law 104-316, was unaffected 
by the Act.
    c. 5 U.S.C. 5514 authorizes the head of each agency, upon a 
determination that an employee is indebted to the United States for 
debts to which the United States is entitled to be repaid at the 
time of the determination, to deduct up to 15%, or a greater amount 
if agreed to by the employee or a higher deduction has been ordered 
by a court under section 124 of Public Law 97-276 (96 Stat. 1195), 
from the employee's pay at officially established pay intervals in 
order to repay the debt.

3. Delegation

    The Executive Director is delegated the authority to waive, in 
whole or in part, a claim of the United States against an employee 
for an erroneous payment of pay and allowances, travel, 
transportation, and relocation expenses and allowances, in 
accordance with the limitations and standards in 5 U.S.C. 5584.

4. Responsibilities

    The Office of the Executive Director shall:
    (1) Promptly notify an employee upon discovery of an erroneous 
payment to that employee;
    (2) Promptly act to collect the erroneous overpayment, following 
established debt-collection policies and procedures;
    (3) Establish time frames for employees to request a waiver in 
writing and for the Executive Director to review the waiver request. 
These time frames must take into consideration the responsibilities 
of the United States to take prompt action to pursue enforced 
collection on overdue debts, which may arise from erroneous 
payments.
    (4) Notify employees whose requests for waiver of claims are 
denied in whole or in part of the basis for the denial.
    (5) Pay a refund when appropriate if a waiver is granted;
    (6) Fulfill all labor-relations responsibilities when 
implementing the provisions of this appendix; and
    (7) Fulfill any other responsibility of the agency imposed by 5 
U.S.C. 5584 or other applicable laws and regulations.
    Additionally, the Office of the Executive Director may initiate 
a waiver application during the processing of a claim under 5 CFR 
part 2418.

5. Reporting Requirements

    a. The FLRA shall maintain a register of waiver actions. The 
register shall cover each fiscal year and be prepared by December 31 
of each year for the preceding fiscal year. The register shall 
contain the following information:
    (1) The total amount waived by the FLRA;
    (2) The number and dollar amount of waiver applications granted 
in full;
    (3) The number and dollar amount of waiver applications granted 
in part and denied in part, and the dollar amount of each;
    (4) The number and dollar amount of waiver applications denied 
in their entirety; and
    (5) The number of waiver applications referred to the Executive 
Director for initial action.
    b. The FLRA shall retain a written record of each waiver action 
for 6 years and 3 months. At a minimum, the written record shall 
contain:
    (1) The FLRA's summary of the events surrounding the erroneous 
payment;
    (2) Any written comments submitted by the employee from whom 
collection is sought;
    (3) An account of the waiver action taken and the reasons for 
such action; and
    (4) Other pertinent information such as any action taken to 
refund amounts repaid.

6. Effect of Request for Waiver

    A request for a waiver of a claim shall not affect an employee's 
opportunity under 5 U.S.C. 5514(a)(2)(D) for a hearing on the 
determination of the agency concerning the existence or the amount 
of the debt, or the terms of the repayment schedule. A request by an 
employee for a hearing under 5 U.S.C. 5514(a)(2)(D) shall not affect 
an employee's right to request a waiver of the claim. The 
determination whether to waive a claim may be made at the discretion 
of the deciding official either before or after a final decision is 
rendered pursuant to 5 U.S.C. 5514(a)(2)(D) concerning the existence 
or the amount of the debt, or the terms of the repayment schedule.

7. Guidelines for Determining Requests

    a. A request for a waiver shall not be granted if the deciding 
official determines there exists, in connection with the claim, an 
indication of fraud, misrepresentation, fault, or lack of good faith 
on the part of the employee or any other person having an interest 
in obtaining a waiver of the claim. There are no exceptions to this 
rule for financial hardship or otherwise.
    (1) ``Fault'' exists if, in light of all the circumstances, it 
is determined that the employee knew or should have known that an 
error existed, but failed to take action to have it corrected. Fault 
can derive from an act or a failure to act. Unlike fraud, fault does 
not require a deliberate intent to deceive. Whether an employee 
should have known about an error in pay is determined from the 
perspective of a reasonable person. Pertinent considerations in 
finding fault include whether:
    (a) The payment resulted from the employee's incorrect, but not 
fraudulent, statement that the employee should have known was 
incorrect;
    (b) The payment resulted from the employee's failure to disclose 
material facts that were in the employee's possession and that the 
employee should have known to be material; or
    (c) The employee accepted a payment, that the employee knew or 
should have known to be erroneous.
    (2) Every case must be examined in light of its particular 
facts. For example, where an employee is promoted to a higher grade 
but the step level for the employee's new grade is miscalculated, it 
may be appropriate to conclude that there is no fault on the 
employee's part because employees are not typically expected to be 
aware of and understand the rules regarding determination of step 
level upon promotion. On the other hand, a different conclusion as 
to fault potentially may be reached if the employee in question is a 
personnel specialist or an attorney who concentrates on personnel 
law.
    b. If the deciding official finds an indication of fraud, 
misrepresentation, fault, or lack of good faith on the part of the 
employee or any other person having an interest in obtaining a 
waiver of the claim, then the request for a waiver must be denied.
    c. If the deciding official finds no indication of fraud, 
misrepresentation, fault, or lack of good faith on the part of the 
employee or any other person having an interest in obtaining a 
waiver of the claim, then the employee is not automatically entitled 
to a waiver. Before a waiver can be granted, the deciding official 
must also determine that collection of the claim against an employee 
would be against equity and good conscience and not in the best 
interests of the United States. Factors to consider when determining 
whether collection of a claim against an employee would be against 
equity and good conscience and not in the best interests of the 
United States include, but are not limited to:
    (1) Whether collection of the claim would cause serious 
financial hardship to the employee from whom collection is sought.
    (2) Whether, because of the erroneous payment, the employee 
either has relinquished a valuable right or changed positions for 
the worse, regardless of the employee's financial circumstances.
    (a) To establish that a valuable right has been relinquished, it 
must be shown that the right was, in fact, valuable; that it cannot 
be

[[Page 24789]]

regained; and that the action was based chiefly or solely on 
reliance on the overpayment.
    (b) To establish that the employee's position has changed for 
the worse, it must be shown that the decision would not have been 
made but for the overpayment, and that the decision resulted in a 
loss.
    (c) An example of a ``detrimental reliance'' would be a decision 
to sign a lease for a more expensive apartment based chiefly or 
solely upon reliance on an erroneous calculation of salary, and the 
funds spent for rent cannot be recovered.
    (3) The cost of collecting the claim equals or exceeds the 
amount of the claim;
    (4) The time elapsed between the erroneous payment and discovery 
of the error and notification of the employee;
    (5) Whether failure to make restitution would result in unfair 
gain to the employee;
    (6) Whether recovery of the claim would be unconscionable under 
the circumstances.
    d. The burden is on the employee to demonstrate that collection 
of the claim would be against equity and good conscience and not in 
the best interest of the United States.

8. Authorities

    a. 5 U.S.C. 5584, ``Claims for Overpayment of Pay and 
Allowances, and of Travel, Transportation and Relocation Expenses 
and Allowances.''
    b. 31 U.S.C. 3711, ``Collection and Compromise.''
    c. 31 U.S.C. 3716, ``Administrative Offset.''
    d. 31 U.S.C. 3717, ``Interest and Penalty on Claims.''
    e. 5 CFR part 550, subpart K, ``Collection by Offset from 
Indebted Government Employees.''
    f. 31 CFR part 5, subpart B, ``Salary Offset.''
    g. Determination with Respect to Transfer of Functions Pursuant 
to Public Law 104-316, OMB, December 17, 1996.

9. Cancellation

    FLRA Internal Regulation 2790, dated December 29, 1986, is 
superseded.

[FR Doc. 2015-09999 Filed 4-30-15; 8:45 am]
BILLING CODE 6727-01-P