[Code of Federal Regulations]
[Title 17, Volume 2]
[Revised as of April 1, 2001]
From the U.S. Government Printing Office via GPO Access
[CITE: 17CFR204.40]

[Page 211]
 
              TITLE 17--COMMODITY AND SECURITIES EXCHANGES
 
             CHAPTER II--SECURITIES AND EXCHANGE COMMISSION
 
PART 204--RULES RELATING TO DEBT COLLECTION--Table of Contents
 
                        Subpart B--Salary Offset
 
Sec. 204.40  Deductions.

    (a) When deductions may begin:
    (1) If a pre-offset hearing is held, deductions shall be made in 
accordance with the hearing official's decision.
    (2) If parties execute a voluntary repayment agreement, deductions 
shall be made in accordance with the terms of that agreement.
    (3) If the employee requests a waiver or reconsideration or the 
program official refuses to accept a proposed alternate repayment 
schedule, deductions shall be made in accordance with the program 
official's written decision.
    (4) If the employee consents to the terms and conditions set forth 
in the Commission's Pre-offset Notice or fails to respond in timely 
fashion to the Pre-offset Notice, or waives his/her right to a hearing 
without otherwise challenging the terms of the Pre-offset Notice, 
deductions shall be made in accordance with the terms and conditions set 
forth therein.
    (b) Retired or separated employees. If the employee retires, 
resigns, or is terminated before the debt is fully repaid, the remaining 
indebtedness will be offset pursuant to 31 U.S.C. 3716 and 4 CFR part 
101.
    (1) To the extent possible, the remaining indebtedness will be 
liquidated from any final payment due the former employee as of the date 
of separation (e.g., final salary payment, lump-sum leave, etc.). See 
Sec. 204.40d(3), Offset deductions from final salary and/or lump-sum 
leave payment.
    (2) Thereafter, the remaining indebtedness will be recovered from 
later payments of any kind due the former employee from the United 
States. See 4 CFR 102.13.
    (c) Method of collection and source of deduction. The method of 
collecting debts under these regulations shall be by salary offset. 
Deductions will be made from the employee's current disposable pay 
account except as provided for in Sec. 204.34b, Employee response.
    (d) Amount and duration of deductions. Debts must be collected in 
one lump sum where possible. If the employee demonstrates financial 
hardship to the Commission's satisfaction or the amount of the debt 
exceeds 15 percent of the indebted employee's current disposable pay, 
collection must be made in installments over a period not greater than 
the anticipated period of active employment, except as provided in 
Section 34b, Employee Response.
    (1) Installment deductions will be made over the shortest period 
possible. The size and frequency of installment deductions will bear a 
reasonable relation to the size of the debt and the employee's ability 
to pay.
    (2) The amount deducted for any period will not exceed 15 percent of 
the disposable pay from which the deduction is made, unless the employee 
has agreed in writing to the deduction of a greater amount. Installment 
payment of less than $100 per pay period will he accepted only in the 
most unusual circumstances.
    (3) Offset deductions from final salary and/or lump-sum leave 
payment. Such an offset deduction may exceed 15 percent of an employee's 
final salary and/or lump-sum leave payment pursuant to 31 U.S.C. 3716, 
64 CG 907.
    (e) Interest, penalties and administrative costs on debts under this 
part will be assessed and/or waived according to the provisions of 4 CFR 
102.13.