[Code of Federal Regulations]
[Title 7, Volume 7]
[Revised as of January 1, 2002]
From the U.S. Government Printing Office via GPO Access
[CITE: 7CFR792.7]

[Page 491-492]
 
                          TITLE 7--AGRICULTURE
 
                            CHAPTER VII--FARM
                SERVICE AGENCY, DEPARTMENT OF AGRICULTURE
 
PART 792--DEBT SETTLEMENT POLICIES AND PROCEDURES--Table of Contents
 
Sec. 792.7  Collection by administrative offset.

    (a) The provisions of this section shall apply to all debts due FSA 
except as otherwise provided in this part and part 1404 of this title. 
This section is not applicable to:
    (1) FSA requests for administrative offset against money payable to 
a debtor from the Civil Service Retirement and Disability Fund and FSA 
requests for salary offset against a present, former or retired employee 
of the Federal Government which shall be made in accordance with 
regulations at part 3 of this title;
    (2) FSA requests for administrative offset against a Federal income 
tax refund payable to a debtor which shall be made in accordance with 
Sec. 792.19;
    (3) Cases in which FSA must adjust, by increasing or decreasing, a 
payment which is to be paid under a contract in order to properly make 
other payments due by FSA; and
    (4) Any case in which a statute explicitly provides for or prohibits 
using administrative offset to collect the debt for the type of debt 
involved.
    (b) Debts due FSA or CCC may be collected by administrative offset 
from amounts payable by FSA when:
    (1) The debtor has been provided written notification of the basis 
and amount of the debt and has been given an opportunity to make 
payment. Such written notification and opportunity includes notice of 
the right to pursue an administrative appeal in accordance with part 780 
of this chapter or any other applicable appeal procedures, if not 
previously provided;
    (2) The debtor has been provided an opportunity to request to 
inspect and copy the records of FSA related to the debt;
    (3) The debtor has been given the opportunity to enter into a 
written agreement which is acceptable to FSA for repayment of the debt;
    (4) The debtor has been notified in writing that the debt will be 
collected by administrative offset if not paid; and
    (5) The debt has not been delinquent for more than ten years or 
legal action to enforce the debt has not been barred by an applicable 
period of limitation, whichever is later.
    (c) Administrative offset shall also be effected against amounts 
payable by FSA:
    (1) When requested or approved by the Department of Justice; or
    (2) When a person is indebted under a judgment in favor of FSA or 
the United States.
    (d) A payment due any person may be offset when there is a breach of 
a contract or a violation of FSA program requirements, and offset is 
considered necessary by FSA to protect the financial interests of the 
Government.
    (e) FSA may effect administrative offset against a payment to be 
made to a debtor prior to completion of the procedures required by 
paragraphs (b)(1) through (b)(4) of this section if:
    (1) Failure to take the offset would substantially prejudice FSA' 
ability to collect the debt; and
    (2) The time before the payment is to be made does not reasonably 
permit the completion of those procedures.
    (f)(1) Judgments in favor of the United States may be offset against 
any amounts payable by FSA based on information provided by or obtained 
from the Department of Justice. Debts due any agency other than FSA 
which have not been reduced to judgment shall be offset against amounts 
payable by FSA to a debtor when an agency of the U.S. Government has 
submitted a written request for offset which is mailed or hand-delivered 
to the appropriate FSA State office, Kansas City Financial Management 
Office, Kansas City Management Office, or Kansas City Commodity Office. 
Such written request must:
    (i) Bear the signature of an authorized representative of the 
requesting agency;
    (ii) Include a certification that all requirements of the law and 
the regulations for collection of the debt and for requesting offset 
have been complied with;

[[Page 492]]

    (iii) State the name, address (including county), and, where legally 
available, the Social Security number or employer ID number of the 
debtor, and a brief description of the basis of the debt, including 
identification of the judgment, if any;
    (iv) State the amount of the debt separately as to principal, 
interest, penalties, and administrative costs. Interest, if any, shall 
be computed on a daily basis to a date shown in the request. The amount 
to be offset shall not exceed the principal sum owed by the debtor, plus 
interest computed in accordance with the request, and any late payment 
interest, penalties and administrative costs that have been assessed;
    (v) Certify that the debtor has not filed for bankruptcy. If the 
debtor has filed for bankruptcy, a copy of the order of the bankruptcy 
court relieving the agency from the automatic stay must be included; and
    (vi) State the name, address, and telephone number of a contact 
person within the agency and the address to which payment should be 
sent.
    (2) Unless prohibited by law, the head of an agency, or a designee, 
may defer or subordinate in whole or in part the right of the agency to 
recover through offset all or part of any indebtedness to such agency, 
or may withdraw a request for offset. Notice of such action must be sent 
to the appropriate FSA office.
    (g)(1) After FSA has complied with the provisions of this part, FSA 
may request other agencies of the Government to offset amounts payable 
by them to persons indebted to FSA.
    (2) In the case of a request to IRS for a tax refund offset, the 
provisions at Sec. 792.19 shall apply.
    (h)(1) Debts shall be collected by offset in the following order of 
priority without regard to the date of the request for such collection:
    (i) Debts to FSA.
    (ii) Debts to other agencies of USDA as determined by FSA.
    (iii) Debts to other government agencies as determined by FSA.
    (2) In the case of multiple debts involving the same debtor, FSA 
may, at its discretion, deviate from the usual order of priority in 
applying recovered amounts to debts owed other agencies when considered 
to be in the Government's best interest. Such decision shall be made by 
FSA based on the facts and circumstances of the particular case.
    (i) Amounts recovered by offset for FSA and CCC debts but later 
found not to be owed to the Government shall be promptly refunded.
    (j) The debtor shall be notified whenever any offset action has been 
taken.
    (k) Offsets made pursuant to this section shall not deprive a debtor 
of any right he or she might otherwise have to contest the debt involved 
in the offset action either by administrative appeal or by legal action.
    (l) Any action authorized by the provisions of this section may be 
taken:
    (1) Against a debtor's pro rata share of payments due any entity 
which the debtor participates in, either directly or indirectly, as 
determined by FSA.
    (2) When FSA determines that the debtor has established an entity, 
or reorganized, transferred ownership of, or changed in some other 
manner, their operation, for the purpose of avoiding the payment of the 
claim or debt.
    (m) The amount to be offset shall not exceed the actual or estimated 
amount of the debt, including interest, administrative charges, and 
penalties, unless the Department of Justice requests that a larger 
specified amount be offset.
    (n) Offset action will not be taken against payments when:
    (1) A debt has been discharged as provided in Sec. 792.16.
    (2) FSA determines such action will unduly interfere with the 
administration of an FSA or CCC program.
    (3) The debt has been delinquent for more than ten years or legal 
action to enforce the debt due FSA is barred by an applicable period of 
limitation, whichever is later.

[59 FR 15829, Apr. 5, 1994, as amended at 60 FR 43706, Aug. 23, 1995]