[Code of Federal Regulations]
[Title 31, Volume 2]
[Revised as of July 1, 2002]
From the U.S. Government Printing Office via GPO Access
[CITE: 31CFR205.15]

[Page 32]
 
                  TITLE 31--MONEY AND FINANCE: TREASURY
 
         CHAPTER II--FISCAL SERVICE, DEPARTMENT OF THE TREASURY
 
PART 205--RULES AND PROCEDURES FOR EFFICIENT FEDERAL-STATE FUNDS TRANSFERS--Table of Contents
 
Subpart A--Rules Applicable to Federal Assistance Programs Included in a 
                        Treasury-State Agreement
 
Sec. 205.15  When does State interest liability accrue?

    (a) General rule. State interest liability may accrue if Federal 
funds are received by a State prior to the day the State pays out the 
funds for Federal assistance program purposes. State interest liability 
accrues from the day Federal funds are credited to a State account to 
the day the State pays out the Federal funds for Federal assistance 
program purposes.
    (b) Refunds. (1) A State incurs interest liability on refunds of 
Federal funds from the day the refund is credited to a State account to 
the day the refund is either paid out for Federal assistance program 
purposes or credited to the Federal government.
    (2) We and a State may agree, in a Treasury-State agreement, that a 
State does not incur an interest liability on refunds in refund 
transactions under $50,000.
    (c) Exception to the general rule. A State does not incur an 
interest liability to the Federal government if a Federal statute 
requires the State to retain or use for Federal assistance program 
purposes the interest earned on Federal funds, notwithstanding any other 
provision in this section.
    (d) Mandatory matching of Federal funds. In programs utilizing 
mandatory matching of Federal funds with State funds, a State must not 
arbitrarily assign its earliest costs to the Federal government. A State 
incurs interest liabilities if it draws Federal funds in advance and/or 
in excess of the required proportion of agreed upon levels of State 
contributions in programs utilizing mandatory matching of Federal funds 
with State funds.