[Code of Federal Regulations]
[Title 41, Volume 3]
[Revised as of July 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 41CFR105-55.016]

[Page 411-412]
 
           TITLE 41--PUBLIC CONTRACTS AND PROPERTY MANAGEMENT
 
              CHAPTER 105--GENERAL SERVICES ADMINISTRATION
 
PART 105-55_COLLECTION OF CLAIMS OWED THE UNITED STATES--Table of Contents
 
Sec. 105-55.016  Interest, penalties, and administrative costs.

    (a) Except as provided in paragraphs (g), (h), and (i) of this 
section, the General Services Administration (GSA) will charge interest, 
penalties, and administrative costs on debts owed to the United States 
pursuant to 31 U.S.C. 3717. GSA will send by U.S. mail, overnight 
delivery service, or hand-delivery a written notice to the debtor, at 
the debtor's most recent address available to the Agency, explaining the 
Agency's requirements concerning these charges, except where these 
requirements are included in a contractual or repayment agreement. These 
charges will continue to accrue until the debt is paid in full or 
otherwise resolved through compromise, termination, or waiver of the 
charges.
    (b) GSA will charge interest on debts owed the United States as 
follows:
    (1) Interest will accrue from the date of delinquency, or as 
otherwise provided by law.
    (2) Unless otherwise established in a contract, repayment agreement, 
or by statute, the rate of interest charged will be the rate established 
annually by the Secretary in accordance with 31 U.S.C. 3717(a)(1). 
Pursuant to 31 U.S.C. 3717, GSA may charge a higher rate of interest if 
it is reasonably determined that a higher rate is necessary to protect 
the rights of the United States. GSA will document the reason(s) for a 
determination that the higher rate is necessary.
    (3) The rate of interest, as initially charged, will remain fixed 
for the duration of the indebtedness. When a debtor defaults on a 
repayment agreement and seeks to enter into a new agreement, GSA may 
require payment of interest at a new rate that reflects the Current 
Value of Funds Rate (CVFR) at the time the new agreement is executed. 
Interest will not be compounded, that is, interest will not be charged 
on interest, penalties, or administrative costs required by this 
section. If a debtor defaults on a previous repayment agreement, charges 
that accrued but were not collected under the defaulted agreement will 
be added to the principal under the new repayment agreement.
    (c) GSA will assess administrative costs incurred for processing and 
handling delinquent debts. The calculation of administrative costs will 
be based on actual costs incurred or upon estimated costs as determined 
by the Agency.
    (d) Unless otherwise established in a contract, repayment agreement, 
or by statute, GSA will charge a penalty, pursuant to 31 U.S.C. 
3717(e)(2), not to exceed six percent a year on the amount due on a debt 
that is delinquent for more than 90 days. This

[[Page 412]]

charge will accrue from the date of delinquency.
    (e) GSA may increase an ``administrative debt'' by the cost of 
living adjustment in lieu of charging interest and penalties under this 
section. ``Administrative debt'' includes, but is not limited to, a debt 
based on fines, penalties, and overpayments, but does not include a debt 
based on the extension of Government credit, such as those arising from 
loans and loan guaranties. The cost of living adjustment is the 
percentage by which the Consumer Price Index for the month of June of 
the calendar year preceding the adjustment exceeds the Consumer Price 
Index for the month of June of the calendar year in which the debt was 
determined or last adjusted. Increases to administrative debts will be 
computed annually. GSA will use this alternative only when there is a 
legitimate reason to do so, such as when calculating interest and 
penalties on a debt would be extremely difficult because of the age of 
the debt.
    (f) When a debt is paid in partial or installment payments, amounts 
received by GSA will be applied first to outstanding penalties, second 
to administrative charges, third to interest, and last to principal.
    (g) GSA will waive the collection of interest, penalty and 
administrative charges imposed pursuant to this section on the portion 
of the debt that is paid within 30 days after the date on which interest 
began to accrue. GSA may extend this 30-day period on a case-by-case 
basis. In addition, GSA may waive interest, penalties, and 
administrative costs charged under this section, in whole or in part, 
without regard to the amount of the debt, either under the criteria set 
forth in these standards for the compromise of debts, or if the Agency 
determines that collection of these charges resulted from Agency error, 
is against equity and good conscience, or is not in the best interest of 
the United States.
    (h) Unless a statute or regulation specifically prohibits 
collection, interest, penalties and administrative costs will continue 
to accrue for periods during which collection activity has been 
suspended pending Agency review or waiver consideration.
    (i) GSA is authorized to impose interest and related charges on 
debts not subject to 31 U.S.C. 3717, in accordance with the common law.