4 FAM 490
DEBT COLLECTION
(CT:FIN-449; 05-30-2019)
(Office of Origin: CGFS/FPRA/FP)
4 FAM 491 GENERAL
4 FAM 491.1 Purpose
(CT:FIN-378; 05-03-2006)
This subchapter contains policies and procedures for the
Department of State for the collection of claims owed to the United States Government. These policies and procedures supplement the regulations
contained in 22 CFR 34.
4 FAM 491.2 Authority
(CT:FIN-434; 11-06-2013)
a. Under the provisions of the Federal Claims
Collection Act of 1966, 31 U.S.C. 3701 - 3720E, as amended through the Debt
Collection Improvement Act of 1996 (Public Law 104-134), the Department of
State must try to collect claims of the United States for money or property
arising out of the activities of or referred to the Department of State.
b. Other key guidance and regulations related to debt
collection include:
(1) Office of Management and Budget (OMB) Circular
A-129; and
(2) Federal Claims Collection Standards (FCCS).
c. The Departments regulations relating to the
collection of debts owed to the Department of State are found at 22 CFR 34.
4 FAM 491.3 Definitions
(CT:FIN-444; 11-30-2017)
The following terms are used in debt management at the
Department of State. Additional terms are identified in 22 CFR 34.4.
Accounts Receivable: Office
within the Bureau of the Comptroller and Global Financial Services that manages
and collects debts owed to the Department of State.
Administrative costs: The
expenses associated with processing and handling a debt from the date of the
delinquency.
Advance decision: A
determination as to the propriety of a debt collection action requested from
and rendered by an authorized official prior to the action being taken.
Bankruptcy: A legal proceeding
in Federal court for dealing with debt problems of individuals and businesses.
Close-out: The accounting
classification that reflects the discharge of a debt after the Department of
State determines that further debt collection actions are prohibited (for
example, a debt released from liability in bankruptcy court) or that it does
not plan to take any future actions (either active or passive) to try to
collect the debt.
Currently not collectible (CNC):
The accounting classification for writing-off a debt that indicates that the
Department of State will continue debt collection actions after write-off.
Day: Calendar day.
Debt (or claim): An amount of
money that has been determined to be owed to the Department of State from any
person as defined in 22 CFR 34.4.
Initial notice: The first
demand letter from the management, financial management, or program/grants officer
at the post, bureau, or office responsible for the allotment, activity or
program under which the debt arises notifying an individual, vendor, or a
Federal assistance award recipient of a debt owed to the Department of State.
The notice informs the debtor of their due process/rights in accordance with 22
CFR 34.8.
Discharge: A release of a
debtor from personal liability for a debt or, in the context of compromise,
part of a debt.
Employee: A current employee
of the Department of State, including members of the Civil Service, Foreign
Service, and Locally Employed Staff.
Interest: A charge assessed
under 31 U.S.C. 3717 that compensates the Government for the loss of use of
funds when the debt is not paid timely. It accrues from the date of the
delinquency.
Penalty: An amount assessed
under 31 U.S.C. 3717 on the amount due on a claim that is delinquent for more
than 90 days to discourage delinquencies and encourage early payment of the
delinquent debt in full.
Principal officer: The officer
in charge of a diplomatic mission, a consular mission (other than a consular
agency), or other Foreign Service post.
Settlement: A resolution to
litigation or to an administrative grievance, complaint or claim preceding that
is mutually agreed upon by the parties involved rather than imposed by a judge
or other deciding official.
Suspension: The temporary
cessation of collection action in accordance with the FCCS at 31 CFR 903.2.
Termination: The cessation of
active and/or passive collection action on a debt in accordance with the FCCS
at 31 CFR 903.3.
Write-off: An accounting
procedure that results in reporting a debt or receivable as having no value on
the agencys accounting and financial reports.
4 FAM 492 DEBT MANAGEMENT
4 FAM 492.1 Debt Determinations
(CT:FIN-444; 11-30-2017)
a. The management, financial management, or program/grants
officer at the post, bureau, or office responsible for the allotment, activity
or program under which the debt arises is responsible for:
(1) Determining whether a debt exists, and if so the
amount owed;
(2) Undertaking appropriate initial collection
measures in accordance with 4 FAM 493.1;
(3) Maintaining records of the debt and monitoring
uncollected debts (i.e., open receivables) until the debt is referred to
Accounts Receivable;
(4) Timely referral under 4 FAM 493.1 of
uncollected debts with the necessary documentation to Accounts Receivable;
(5) Referring the debt to the appropriate official
under 4 FAM 494
for compromise, suspension, termination of collection, advance decision,
settlement and/or waiver of claims; and
(6) Paying for any required outside hearing costs.
b. The Office of Inspector General may provide findings
to the Department of State that indicates a debt may exist. All initial debt
determinations, however, must be made by the post, bureau, or office within the
Department of State responsible for the allotment, activity or program under
which the debt arises. A post, bureau, or office may determine that a debt
exists irrespective of the outcome of any disciplinary action or criminal
prosecution.
c. Once a debt is determined to exist, any further
decision regarding compromise, suspension, termination of collection, advance
decision, settlement and/or waiver of the debt or any part thereof may only be
made by an appropriate official under 4 FAM 494.
4 FAM 492.2 Types of Debt
(CT:FIN-444; 11-30-2017)
Examples of debt include, but are not limited to:
(1) Loss or damage related to shipments of supplies
and equipment (see 14 FAM 500 and 600);
(2) Loss, damage, or destruction of Government
property (see 14 FAM 500 and 600);
(3) Overpayment to an employee of pay or allowances;
(4) Overpayment to an annuitant under the Foreign
Service Retirement and Disability System or the Foreign Service Pension System;
(5) Overpayment or refund of travel, transportation
and relocation expenses or allowances;
(6) Contractual claims, such as an overpayment, as
determined by a contracting officer, and any interest, administrative charge,
or penalty relevant to the contract from which the claim arose (41 U.S.C.
Chapter 71);
(7) Any negotiable instrument (e.g., check) proffered
to the Department of State for any reason (e.g., accommodation exchange, loan
or advance repayment, refund or reimbursement of services, or simple check
cashing) that is returned as non-negotiable by a financial institution or that
creates a debit voucher to U.S. disbursing officer accountability;
(8) Any claim against an individual (i.e., U.S.
citizen, Government employee, contractor) for a service, advance, overpayment
or loan (i.e., nonpayment of rent, utilities, telephone charges, medical payments
or services, repatriation loans, emergency evacuation assistance to private
citizens) where a payment has been made by the U.S. Government that requires
the individual to repay or reimbursement to the Government;
(9) Any claim based on a fiscal irregularity; or
(10) A determination by the program/grants officer that
the expenditure made by a Federal assistance award recipient were not
authorized, and are therefore disallowed; that expenditures were outside the
authorized period of performance, and are therefore not allowed; that the scope
of work was not completed, and authorized funds for that portion of the program
must be repaid; or that unused funds must be returned.
4 FAM 493 COLLECTION ACTIONS
4 FAM 493.1 Notices to Debtors
4 FAM 493.1-1 Initial Notices
(CT:FIN-444; 11-30-2017)
a. All debtors must be notified of their indebtedness.
The management, financial management, or program/grants officer at the post,
bureau, or office responsible for the allotment, activity or program under
which the debt arises must take the initial collection effort. The promissory
note associated with a repatriation loan, an evacuation, or an emergency
medical and dietary assistance loan must be forwarded immediately to Accounts
Receivable for processing and collection.
b. The debtor is provided initial notice in accordance
with the provisions of 22 CFR 34.8. See 4 FAM Exhibit 493,
Template for Initial Notices of Indebtedness. Notices issued by post should
also conform to local law in cases of debts owed by local entities (i.e.,
foreign nationals, individuals, contractors, and vendors).
c. When the Department of State accepts a written
installment repayment schedule, the responsible office should ensure that the
written arrangement reflects an acknowledgment of the debt and a promise to pay
it in full in accordance with the installment schedule (22 CFR 34.7). The
responsible office should also ensure that the size and frequency of
installment payments bear a reasonable relation to the size of the debt and
ability of the debtor to repay.
d. Repayment agreements should include administrative
costs, if appropriate, and the accrual of interest. In accordance with 22 CFR
34.7, repayment agreements should be written so as to fully collect the debt in
no more than 3 years (36 months) if possible.
4 FAM 493.1-2 Follow-Up Notices
(CT:FIN-444; 11-30-2017)
a. Overseas: If payment has
not been recovered within 30 days after the initial notice, the management or
financial management or program/grants officer at post must (except as
specified in paragraph b, below) send a second notice. In addition, the post
may contact the debtor by personal visit or telephone. The responsible officer
must document all contacts (i.e., personal visits, telephone) made and send a
follow-up letter to the debtor noting the interest due on the debt.
b. As an alternative, post may forward the debt and
supporting documentation to Accounts Receivable for further collection
activity. Whether or not the post issues the second notice depends on factors
such as the location of the debtor. If, for example, the debtor is not at post
and is a U.S. citizen employee, the debt should be referred to Accounts
Receivable. On the other hand, if the debtor is a host country national or
vendor, post is in a better position to collect the debt and should send a
second notice.
4 FAM 493.1-3 Referral for
Further Action
(CT:FIN-444; 11-30-2017)
a. Overseas: Except in cases
where post referred the debt to Accounts Receivable, if the debtor does not
respond to follow-up notices and telephone calls within 60 days of the initial
notice, the post management or financial management officer will send a third
notice to the debtor restating the information previously provided, including
the cumulative interest, administrative charges, and penalties. The
program/grants officer will defer to the post management or financial
management officer in sending the third notice. The third notice will inform
the debtor that all further collection action will be undertaken by Accounts Receivable.
If the debtor does not respond within 10 days after the mailing of the third
notice, the post management or financial management officer must forward the
debt to Accounts Receivable for further collection action. In no case should a
debt delinquent for more than 90 days remain with post for collection.
b. Domestically: If payment
has not been received within 30 days after the initial notice, the bureau or
office management, financial management officer, or program/grants officer must
forward the debt to Accounts Receivable.
4 FAM 493.2 Referral to Accounts
Receivable Office for Collection
(CT:FIN-444; 11-30-2017)
a. Accounts Receivable is responsible for collection of
debts referred by posts and domestic bureaus and offices. Debt collection
techniques used by Accounts Receivable are outlined in 22 CFR 34.10 and may
include administrative offset, salary offset, administrative wage garnishment
and/or referral to a private collection agency or to the U.S. Department of the
Treasury. Debt referral information should be sent to the Accounts Receivable
Branch applicable e-mail address (salary/travel/SLRP/vendor/grant: ARSalaryDebts@state.gov; Medical: CGFSARMED@state.gov; REPAT Loans/EMDAs/evacuations: FMPARD@state.gov).
Only the Bureau of the Comptroller and Global Financial Services (CGFS) may use
the methods of collection set forth in 22 CFR 34.10.
b. When a debt is referred to Accounts Receivable for
collection or for negotiation of a repayment agreement, the bureau, office or
post management, financial management, or program/grants officer submits the
appropriate documentation with a cover memorandum to Accounts Receivable. The
bureau, office or post management, financial management, or program officer
requests Accounts Receivable to set up a receivable account to monitor the
collection or to process the claim for referral to the U.S. Department of the
Treasury for collection. All accounts/claims transferred to Accounts
Receivable for collection must include:
(1) All background documentation that verifies the
debt;
(2) Accounting data;
(3) Social Security Number or Tax Identification
Number of debtor (if applicable);
(4) Amount to be collected;
(5) Last known street address; and
(6) A record of all efforts to recover the debt to
date (including copies of all notices sent to the debtor and documentation of
any responses received).
c. If a post or domestic bureau or office receives an
inquiry from a debtor, a debtor's representative, or a congressional office
after a debt has been referred to Accounts Receivable, that inquiry must be
directed to Accounts Receivable. After the debt is referred to Accounts
Receivable for collection, the officer who referred the debt may be contacted
by CGFS for additional information. If an issue arises that affects
collection, the responsible officer must immediately inform Accounts
Receivable.
d. For overseas/domestic Federal assistance
awards/grants in accordance with 2 CFR 200.345, if payment from a Federal
assistance/grant recipient has not been received within 90 days after the
initial notice, the Federal agency may reduce the debt by an administrative
offset against other requests for reimbursement; withholding advance payments
otherwise due to the non-Federal entity; or other action permitted by Federal statute.
4 FAM 493.3 Assessment of Charges
4 FAM 493.3-1 Interest,
Penalties, and Administrative Costs
(CT:FIN-444; 11-30-2017)
a. Accounts Receivable assesses interest, penalties,
and administrative charges according to Federal debt collection regulations.
The bureau, office or post responsible for the allotment or program under which
the debt arose may also assess these charges, if applicable, prior to referral
to Accounts Receivable. Even if the bureau, office, or post responsible for
the initial notice under 4 FAM 493.1-1 will not be assessing these charges, the
appropriate notice of these charges as per 22 CFR 34.8(b)(3)-(4) must be
included in the initial notice.
b. Accounts Receivable will prepare a request to the
Comptroller to waive interest, penalty, and administrative charges on a
case-by-case basis in accordance with 31 CFR 901.9g.
c. In the case of obligations covered by contracts,
agreements, or other formal arrangements the terms of which govern the
imposition of interest, penalties, and administrative costs, the initial notice
under 4 FAM
493.1-1 will specify that interest and
penalties will accrue and become payable from a stipulated due date established
in accordance with those terms.
d. In the case of debtors with obligations not covered
by contracts, Federal assistance awards agreements, or other formal
arrangements, the initial notice under 4 FAM 493.1-1 will inform the debtor that if repayment is not
made within 30 days of the date of the notice, the Department will assess and
collect interest on the debt at the Treasury Department Current Value of Funds
Rate (prescribed and published annually by
the Secretary of the Treasury in the Federal Register and available on the
Treasury website), penalties on the debt at the rate of 6 percent on any
portion that is delinquent more than 90 days, and an administrative cost in
accordance with 22 CFR 34.6. The rate of interest remains fixed for the
duration of the delinquency. Although interest accrues from the date of
delinquency, it will automatically be waived if the debt is paid in full within
30 days from the date of notification.
e. Accounts Receivable or the responsible post, bureau,
or office in relation to delinquent debts that are not immediately referred to
Accounts Receivable, will calculate the administrative costs of processing and
handling a delinquent claim based on the actual costs incurred or upon
estimated costs and add these costs to the debt. Such costs may include, but
are not limited to:
(1) Obtaining a credit report;
(2) Telephone, mail or cable costs; and/or
(3) A fee paid to a collection service.
f. Accounts Receivable will review all open
receivables for which it maintains the receivable records, to ensure interest
assessment, penalty, and payments are correctly noticed, computed, and
applied. Accounts Receivable will notify the debtor of any revisions or
adjustments to their account(s).
g. In the case of obligations covered by Federal
assistance award/grants, and in accordance with 2 CFR 200.345(b), except where
otherwise provided by statutes or regulations, the Federal awarding agency will
charge interest on the overdue debt in accordance with the Federal Claims
Collection Standards (FCCS) (31 CFR Parts 900 through 999). The date from
which interest is computed is not extended by litigation or the filing of any
form of appeal.
4 FAM 493.3-2 Charges Collected
(CT:FIN-434; 11-06-2013)
Amounts collected for interest, penalty, and
administrative charges are credited as follows:
(1) Interest, penalty, and administrative charges for
repatriation loans are posted to 19X4107, Repatriation Loans, Financing
Account, State or to 19X0600, Repatriation Loans, Liquidating Account, State;
or
(2) Interest, penalty, and administrative charges
other than repatriation loans are posted to 19 3220, General Fund Proprietary
Receipts, Not Otherwise Classified (NOC).
4 FAM 493.4 Internal Administrative
Review
(CT:FIN-449; 05-30-2019)
a. If a debtor wishes to contest the existence or
amount of the debt, he or she may request an internal administrative review of
the debt.
b. Overseas, a post official at an appropriate level
who was not involved in the initial debt determination must conduct an internal
administrative review under 22 CFR 34.9 if such a review is requested prior to
a debt being referred to Accounts Receivable. If a debt is referred to
Accounts Receivable after an internal administrative review is conducted, a
copy of the decision memo and letter must be provided to Accounts Receivable.
c. Domestically, the Comptroller or his or her
designee must conduct internal administrative reviews under 22 CFR 34.9. No
one who was involved in the initial debt determination may be designated to
conduct an internal administrative review.
d. Requests for an administrative review by the Comptroller
should be submitted either by e-mail at ComptrollerDebtReviews@state.gov or by mail at Global Financial Service Center, 2010 Bainbridge Avenue, North Charleston, SC 29405.
Review requests should explain with reasonable specificity and brevity, the facts,
evidence, and witnesses that are relevant to the existence or amount of the
debt.
e. An administrative review may not be requested until
after the debtor has received the initial notification of the debt under 4 FAM 493.1-1.
f. All administrative review decisions are final.
Decisions may only be reconsidered upon the presentation of newly discovered or
previously unavailable material evidence.
4 FAM 494 COMPROMISE, SUSPENSION,
TERMINATION OF COLLECTION, ADVANCE DECISION, SETTLEMENT AND WAIVER OF CLAIMS
4 FAM 494.1 Delegation of Authority
(CT:FIN-444; 11-30-2017)
a. Delegation of Authority No. 354, signed April 23,
2013, delegated authority from the Under Secretary for Management for the
compromise, suspension, termination of Department of State collection, advance
decision, settlement and waiver of claims of or against debtors of the
Department of State to the Department's Comptroller.
b. The Comptroller has delegated this full authority to
the Associate Comptroller.
c. The Comptroller has further delegated this
authority to the principal officer at post to exercise these authorities for
claims up to and including $500 arising at post.
d. This dollar threshold refers to the total amount
owed, excluding interest, penalties and administrative costs. This authority
granted to principal officers may not be redelegated except by permission of
the Comptroller.
e. All actions taken under Delegation of Authority No.
354 or any redelegation of the authorities therein must be recorded in writing.
f. If a debtor requests a compromise, suspension, or
termination the Department of State will follow the standards set forth in the
Federal Claims Collection Standards (FCCS) 31 CFR Chapter IX Parts 900, 902,
and 903 and in this subchapter.
4 FAM 494.2 Exceptions
4 FAM 494.2-1 Claims Over
$100,000 and/or Debts Based on Fraud
(CT:FIN-434; 11-06-2013)
a. Unless otherwise provided by law, when the principal
balance of a debt, exclusive of interest, penalties, and administrative costs,
exceeds $100,000 or any higher amount authorized by the Attorney General, the
authority to compromise, suspend or terminate collection rests with the U.S.
Department of Justice (DOJ).
b. The Department of State does not need to refer a
debt for concurrence for termination of collection action if the Department of
State referred the debt to DOJ for litigation or if DOJ determines that
litigation is not appropriate and returns the debt to the Department of State.
The Department of State will not refer debts to DOJ where it determines that the
debt is legally without merit or cannot be substantiated.
c. Compromise, suspension or termination of debts
based on fraud, the presentation of a false claim, or misrepresentation on the
part of the debtor or anyone having an interest in the claim must be approved
by the Attorney General regardless of the dollar amount.
d. All debt collection related requests and referrals
to DOJ must be submitted through the Office of the Legal Adviser.
e. Final authority for waiver of debts remains within
the Department of State as set out in section 4 FAM 494.1
regardless of the dollar amount.
4 FAM 494.2-2 Authority to
Relieve Accountable Officials and Agents From Liability
(CT:FIN-434; 11-06-2013)
Pursuant to 31 U.S.C. 3527 and 31 U.S.C. 3528, the
Comptroller General or designee may relieve accountable officials from
liability related to fiscal irregularities, which include the physical loss or
deficiency of public money as well as illegal or improper payments. In certain
situations, the Department of State may be able to directly relieve accountable
officials of liability without seeking a decision from the Comptroller
General. (Refer to: DOJ Order 2110.39A, dated November 15, 1995, Legality of
and liability for obligation and payment of government funds by Accountable
Officers.) The Departments policies and procedures concerning fiscal
irregularities and the relief of accountable officials are contained in 4 FAM 370.
4 FAM 494.3 Suspension of
Collection Activity Pending Waiver and Internal Administrative Review
(CT:FIN-444; 11-30-2017)
a. The Department of State official delegated the
authority stated in 4 FAM 494 may suspend collection activity in accordance
with 31 CFR 903.2.
b. When a debtor requests a waiver and/or internal
administrative review of his or her debt, collection activity, including the
accrual of interest, penalties, and administrative costs, will be suspended
until a decision is rendered. However, if an employee separates from the
Department while a waiver and/or review request is pending, the amount of the
employees indebtedness will be withheld from the employees final salary and
lump sum annual leave payments in accordance with 4 FAM 494.9.
The Global Compensation Directorate in CGFS (CGFS/GC) will refund any amounts
later waived or found not to be owed.
c. Accounts Receivable, or post financial management
office if collection is suspended by the principal officer, must retain
permanent records of all suspended debts.
d. Accounts Receivable, or post as applicable, must
periodically review all suspended debts, to determine if the debts should
continue in a suspense status.
4 FAM 494.4 Compromise
(CT:FIN-434; 11-06-2013)
a. The Department of State official delegated the
authority stated in 4 FAM 494 may compromise a debt in accordance with 31 CFR
902, upon determination that the full amount cannot be collected.
b. Accounts Receivable, or post financial management
office if a debt is compromised by the principal officer at a post, must retain
permanent records of all compromised debts.
c. When the Department of State compromises a debt,
Accounts Receivable determines if the portion of the debt the Department has
agreed to discharge must be reported to the Internal Revenue Service (IRS) as potential income to the debtor under
Section 6050P of the Internal Revenue Code (26 U.S.C. 6050P). If necessary, Accounts Receivable will report
the portion of the debt that was discharged to the IRS as potential taxable
income to the debtor as set forth in 4 FAM 495.2,
paragraphs c through d.
4 FAM 494.5 Termination
(CT:FIN-434; 11-06-2013)
a. The Department of State official delegated the
authority stated in
4 FAM 494 may terminate active and/or passive collection
of the debt in accordance with 31 CFR 903.3.
b. Accounts Receivable, or post financial management
office if collection is terminated by the principal officer, must retain
permanent records of all terminations of active and/or passive collection of
debts.
4 FAM 494.6 Waivers
(CT:FIN-449; 05-30-2019)
a. The Department of State official delegated the
authority in 4
FAM 494 may waive a debt only as provided for in 22 CFR 34.18. Specific
waiver authority exists for debts arising out of:
(1) Erroneous payments of pay and allowances (5 U.S.C.
5584);
(2) Advances in pay (5 U.S.C. 5524a);
(3) Advances in situations of authorized or ordered
departures (5 U.S.C. 5522);
(4) Advances of allowances and differentials for
employees stationed abroad (5 U.S.C. 5922);
(5) Employee training expenses (5 U.S.C. 4108);
(6) Under-withholding of life insurance premiums (5
U.S.C. 8707(d));
(7) Overpayments of the Foreign Service annuities (see
22 CFR Part 17); and
(8) Student Loan Repayment Program service agreements
(see 5 U.S.C. 5379).
b. Pursuant to the Secretary's authorities under 22
U.S.C. Sections 2669(c) and 3925, waiver standards under the provisions of
Title 5 of the United States Code set forth in paragraph a, above, must be
applied equally to all Civil Service, Foreign Service, and Locally Employed
Staff.
c. The debtor, his or her representative, or a Department
of State official on behalf of the debtor must submit a request for waiver in
writing to either the principal officer at post for debts up to and including
$500 originating at post that have not yet been referred to Accounts Receivable
or to the Comptroller for all other debts. Requests for the Comptroller should
be submitted either by e-mail at ComptrollerDebtReviews@state.gov or by mail at Global Financial Service Center, 2010 Bainbridge Avenue, North Charleston, SC 29405.
d. A waiver may not be requested by a debtor, or his or
her representative, until after the debtor has received the initial
notification of the debt under 4 FAM 493.1-1.
e. CGFS, and post financial management office as
applicable, must retain permanent records of all waived debts.
f. All waiver decisions are final. Decisions may only
be reconsidered upon the presentation of newly discovered or previously
unavailable material evidence.
4 FAM 494.7 Actions for Suspension,
Termination, Compromise, Advance Decision, Settlement, and Waiver of Claims
4 FAM 494.7-1 Overseas
(CT:FIN-444; 11-30-2017)
a. Claims not in excess of $500.
Decisions of the principal officer at post to approve the compromise,
suspension, termination of Department of State collection, advance decision,
settlement or waiver of claims of or against debtors of the Department of State
not in excess of $500 must be in writing and contain:
(1) The debtors name;
(2) Amount of the claim;
(3) Basis for the claim;
(4) Brief statement of collection efforts;
(5) Legal basis for the action taken (e.g., specific
ground for Compromise under 31 CFR 902, Suspension or Termination under 31 CFR
903, settlement, or waiver under 5 U.S.C. 5584); and
(6) Statement as to how the legal standard was met in
this case.
b. The post management officer should request legal
guidance as needed from the Office of the Legal Adviser to determine the legal
basis and legal standard during a compromise, suspension, termination of
Department of State collection, advance decision, settlement or waiver of
claims of or against debtors of the Department of State.
c. The post financial management office will maintain
a record of all such requests and decisions. Posts must report to CGFS on the
number of each type, specific legal bases, and dollar amounts of the actions
taken during each fiscal year. These reports should be submitted no later than
October 15 for the prior fiscal year by e-mail to: CGFS Audit Requests.
d. Claims in excess of $500.
For debts over $500 that have not yet been referred to Accounts Receivable, the
post management officer may recommend compromise, suspension, termination of
collection, settlement or waiver by memorandum to the Comptroller at
ComptrollerDebtReviews@state.gov. The memorandum must at a minimum, include:
(1) The debtor's name;
(2) Amount of the claim;
(3) Basis for the claim with supporting documentation;
(4) Brief statement of collection efforts;
(5) The action recommended (e.g., specific ground for
Compromise under 31 CFR 902, Suspension or Termination under 31 CFR 903,
settlement, or waiver under 5 U.S.C. 5584); and
(6) Statement as to how the legal standard is met in
this case.
4 FAM 494.7-2 Domestically
(CT:FIN-434; 11-06-2013)
For claims originating in the United States that have not
yet been referred to Accounts Receivable, the bureau or office management
officer may recommend compromise, suspension, termination of Department of
State collection, advance decision, settlement or waiver by memorandum to the
Comptroller at ComptrollerDebtReviews@state.gov. Such memorandum should
include complete documentation as outlined in 4 FAM 494.7-1,
paragraph d.
4 FAM 494.8 Decision Notification
and Refunds
4 FAM 494.8-1 Decision
Notification
(CT:FIN-434; 11-06-2013)
The authorized official conducting an internal administrative
review or issuing a decision regarding waiver of a debt must notify the debtor
in writing of his or her decision. If the debtor is due a refund based on the
decision, the deciding official will initiate the refund to the debtor.
4 FAM 494.8-2 Refunds
(CT:FIN-444; 11-30-2017)
a. Where a partial or full refund is to be made to a
debtor for repayment of a previously collected debt that was later waived or
found not to be owed, CGFS or the post must make such refund as outlined below:
(1) Current employees: For
refunds of repayments of pay and/or allowances, the office maintaining the
employees pay records must process the refund on a subsequent regular payroll,
or, if more convenient, on a supplemental payroll;
(2) Separated employees: For
employees separated from the Department of State, CGFS/GC must process refunds
of repayments of pay and/or allowances; and
(3) Other than pay: The
Global Financial Operations Directorate in CGFS (CGFS/F) must process refunds
of repayments of travel, transportation and relocation expenses, allowances and
all other types of payments.
b. When a debtor is due a refund, it should be
processed as follows:
(1) Refunds must be charged to the appropriation and
allotment to which the repayment was credited;
(2) Refund amounts that exceed the original debt
balance must be deposited into a Treasury receipt account and the refund must
be returned to the debtor from that appropriation; and
(3) Refunds should not be issued from the suspense
account. Collections that cannot be readily identified with the obligating
appropriation and allotment must be deposited into a suspense account until the
appropriation or receipt account is identified. These collections can only be
retained in the suspense account for no more than 30 days.
4 FAM 494.9 Employees Separating
From the Government
(CT:FIN-444; 11-30-2017)
An employee separating from the government will have
withheld from their final salary and lump sum annual leave payments any debts
owed to the Department, including any amount of indebtedness involved in any
pending debt cases. The employees post of assignment, or the bureau or office
executive office in the case of domestically assigned employees, will advise CGFS/GC
and Accounts Receivable by memorandum of any pending indebtedness cases
pertaining to employees who are to receive their final salary payment. CGFS/GC
will refund any amounts later waived or found not to be owed.
4 FAM 495 Write-off of Debt
(CT:FIN-444; 11-30-2017)
a. A write-off is an accounting procedure that results
in reporting a debt or receivable as having no value on the agencys accounting
and financial reports.
b. The Department of State will follow the policies
outlined in OMB Circular A-129, Policies for Federal Credit Programs and Non-Tax
Receivables, and the Federal Claims Collection Standards (FCCS) (see 31 CFR
903.5) with regard to write-offs.
c. Accounts Receivable is responsible for reviewing
delinquent debt on a monthly basis and identifying debts for write-off. CGFS may
delegate authority to write-off delinquent debt to other domestic bureaus or
offices or posts as appropriate.
d. In accordance with OMB Circular A-129, Accounts
Receivable will write-off delinquent debts as soon as they are determined to be
uncollectible. Accounts Receivable will write-off any delinquent debt over two
years old and classify it as currently not collectible (CNC) unless justified
to OMB in consultation with Treasury. Accounts Receivable will write-off the
delinquent debt prior to two years if termination of collection has been
authorized.
e. Before Accounts Receivable, other domestic office or
post writes off a debt, the responsible officer(s) within the Department of
State will take the appropriate steps to collect the debt in accordance with 31
U.S.C. 3711(g) and as outlined in 4 FAM 490.
f. When Accounts Receivable, another domestic office
or post writes off a debt, it must evaluate the probability of collecting on
the delinquent debt and either classifies the debt as CNC or closed-out.
g. The office that writes off a debt must document and
justify the reason(s) for write-off and enter the transactions for write-off.
In accordance with OMB Circular A-129, all write-offs must be made through an
allowance account. Under no circumstances are debts to be written off directly
to expense.
4 FAM 495.1 Currently Not
Collectible (CNC)
(CT:FIN-444; 11-30-2017)
a. CNC is the classification for writing-off a debt
that indicates that the Department of State will continue debt collection
actions after write-off.
b. Accounts Receivable should continue debt collection
activities, such as referral to the Department of the Treasurys Financial
Management Service for collection action through cross-servicing or the
Treasury Offset Program, for debts with a CNC classification.
4 FAM 495.2 Closed-Out
(CT:FIN-434; 11-06-2013)
a. A debt is classified as closed-out if the Department
of State determines either that further debt collection actions are prohibited
(for example, a debt released from liability in bankruptcy court) or when the
Department of State does not plan to take any future actions (either active or
passive) to try to collect the debt. Once a debt is closed-out, it has been
officially discharged meaning that no debt is owed. The Department of State no
longer maintains a claim against the individual or entity previously indebted.
b. Classification of a debt as closed-out may occur
concurrently with the write-off of an account, or at a later date.
c. To close out a debt, the debt must be written off
for accounting purposes and collection terminated under an appropriate
authority. When the Department of State classifies the debt as closed-out,
Accounts Receivable determines if the amount discharged must be reported to the
Internal Revenue Service (IRS) as potential income to the debtor under Section
6050P of the Internal Revenue Code (26 U.S.C. 6050P). If necessary, Accounts
Receivable will report the amount of the discharged debt to the IRS on Form
IRS-1099-C, Cancellation of Debt, as potential taxable income to the debtor.
d. If a Form IRS-1099-C is issued, the debtor must be
notified and sent a copy by January 31 of the following year. The IRS must
receive its copy of the Form IRS-1099-C by February 28 of the same year in
which the Form IRS-1099-C is sent to the debtor.
4 FAM 495.3 Bankruptcy
(CT:FIN-434; 11-06-2013)
a. When the Department of State is notified that a
bankruptcy petition has been filed with respect to a debtor of the Department
of State, in most cases the collection on that debt must be suspended.
b. When a notification is received from a bankruptcy
court as to the disposition of a petition for bankruptcy, Accounts Receivable
will notify the Office of the Legal Adviser immediately for guidance on how to
handle the debt. The Department of States particular claim may or may not be
discharged based on the courts disposition of the bankruptcy petition.
c. When the Department of State claims are discharged
in bankruptcy court, they do not need to be approved by DOJ or the appropriate
Department of State official for termination prior to being closed-out.
4 FAM 496 THROUGH 499 UNASSIGNED
4 FAM Exhibit 490
Basic Facts for Termination and Write Off of Debt
(CT:FIN-434; 11-06-2013)
The following charts provide basic information concerning
termination of collection action, write-off, and the classification of debts as
currently not collectible (CNC) and closed-out (see U.S. Treasurys Managing
Federal Receivables, Chapter 7, Termination of Collection Action, Write-Off and
Close-Out/Cancellation of Indebtedness). These are separate legal and
accounting actions associated with debt.
DEBT COLLECTION PROCESS ACTION
|
|
Description
|
Authority
|
Timing
|
Comment
|
|
TERMINATION/ SUSPENSION OF COLLECTION
ACTION
|
Termination: Agency stops all active debt collection action; may continue passive collection.
Suspension: Agency is likely to
resume active collection action at a future time.
|
31 U.S.C. 3711(a)(3);
31 CFR Part 903
|
Not tied to write-off, but must occur before debt is
closed-out.
|
Agency decision to terminate/sus-pend must comply with
Federal Claims Collection Standards (31 CFR Part 903). DOJ concurrence
required for some debts.
|
ACCOUNTING ACTION
|
|
Description
|
Authority
|
Timing
|
Comment
|
|
WRITE-OFF
|
Agency reports debt as having no value on financial and
management reports.
|
OMB Circular A-129
|
No later than 2 years after debt delinquency, unless
approved by OMB; not tied to termination or suspension.
|
At time of write-off, agency must classify the debt as
currently not collectible (CNC) or closed-out.
|
|
CURRENTLY NOT COLLECTIBLE
(CNC)
|
A classification after write-off when the agency has
determined that debt collection efforts should continue.
|
OMB Circular A-129
|
Determined at the time the debt is written-off.
|
CNC classification does not affect agencies statutory
and regulatory responsibilities to pursue debt collection.
|
|
CLOSE-OUT
|
A classification after write-off when the agency has
determined that no further active or passive debt collection action will be
taken.
|
OMB Circular A-129
|
Must occur after write-off and termination of
collection action. Can occur after CNC classification, if debt was initially
classified as CNC at time of write-off.
|
Agency may not take any collection action after
close-out; if required by Internal Revenue Code and regulation, agency must
report closed-out debt to IRS on Form IRS-1099-C as potential income to the
debtor.
|
4 FAM Exhibit 493
Template for Initial Notices of Indebtedness
(CT:FIN-449; 05-30-2019)
The following template may be used by the responsible
official under 4
FAM 493.1-1 as a basis for the initial
notice of indebtedness. All of the bracketed sections should be adapted as appropriate
depending on the nature of the indebtedness. Other modifications may be made,
as long as they conform to the provisions of 22 CFR 34.8. Notices issued by
post should also conform to local law in cases of debt owed by local entities
(i.e., foreign nationals, individuals, contractors, and vendors).
NOTICE OF INDEBTEDNESS
The [POST, BUREAU, OR OFFICE WITHIN THE DEPARTMENT
RESPONSIBLE FOR THE ALLOTMENT, ACTIVITY OR PROGRAM UNDER WHICH THE DEBT ARISES]
has determined that you [were overpaid/are indebted to the Department
of State] in the amount of [AMOUNT]. The Department's records indicate
that this [erroneous payment/debt] resulted from
[SPECIFIC REASON]. [Supporting documentation/An itemization
of the amount owed] is provided for your reference.
The amount due must be paid no later than 30 days from the
date of this letter in order to avoid the assessment interest at the Treasury
Department Current Value of Funds Rate (prescribed
and published annually by the Secretary of the Treasury in the Federal Register
and available on the Treasury website), penalties at the rate of 6 percent on
any portion that is delinquent more than 90 days, and an administrative cost in
accordance with 22 CFR 34.6.
You may [return the erroneous
payment/pay the amount due] by submitting a check made payable to the
U.S. Department of State for [AMOUNT DUE] to:
[ADDRESS OF ENTITY SENDING
THE LETTER
OR
U.S.
Department of State
Accounts Receivable Branch
PO Box 979005
St Louis MO 63197-9000]
Please include with the check a copy of this letter.
Having this will expedite the process of correctly crediting your account.
You can also seek to establish a written agreement to set
up a repayment schedule, under terms agreeable to the Department. Requests to
establish a written agreement or evidence of bankruptcy (if you have file
bankruptcy and the automatic stay is in effect) should be sent along with a
copy of this letter to:
[CONTACT INFO OF ENTITY
SENDING THE LETTER
OR
AR
Chief, U.S. Department of State,
Accounts Receivable Branch
2010
Bainbridge Avenue,
North
Charleston, SC 29405
Note: The AR Chief can also be e-mailed at
GFSCARChief@state.gov.]
It is your responsibility to notify the Department of any
bankruptcy proceedings.
Please know that in the event of your failure to pay or
otherwise resolve this debt, the Department may enforce collection by taking
one or more of the following actions in accordance with its debt collection
regulations at 22 CFR 34.10:
(i) Offset from Federal payments otherwise due you,
including income tax refunds, salary, certain benefit payments, retirement,
vendor payments, travel reimbursement and advances, and other Federal payments
due from the Department, other Federal agencies, or through centralized
disbursing from the Department of the Treasury;
(ii) Referral to a private collection agency
(iii) Report to credit bureaus
(iv) Administrative wage garnishment
(v) Litigation by the Department of Justice
(vi) Referral to the Financial Management Service of the Department of Treasury for collection
(vii) Liquidation of collateral
(viii) Other actions as permitted by the Federal Claims
Collection Standards and applicable law
You have a right to inspect and copy the Department's
records of this claim. You can exercise this right by contacting [POINT OF
CONTACT WITHIN ENTITY SENDING THE LETTER].
You also have right to an internal review with respect to
the existence of the debt or the amount of the debt [and to
request a waiver of this debt]. In order to exercise this right you
must file a signed request with [NAME AND CONTACT INFO FOR APPROPRIATE
REVIEWING OFFICIAL AS PER 4 FAM 493.4]
within 30 days from the date of this letter. Your request should [identify if you are requesting an internal review, waiver or both
and] explain with reasonable specificity and brevity, the facts,
evidence, and witnesses that you believe are relevant to the existence or
amount of the debt [and/or explain how the applicable
standard to waive the debt has been met in this case]. A copy of your
debt notice should be included with your request. Any amount paid on this debt
which is later found not owed to the United States will be promptly refunded.
If you have any questions regarding this matter, please
contact [POINT OF CONTACT WITHIN ENTITY SENDING THE LETTER].