[Code of Federal Regulations]

[Title 31, Volume 3]

[Revised as of July 1, 2005]

From the U.S. Government Printing Office via GPO Access

[CITE: 31CFR901.9]



[Page 966-967]

 

                  TITLE 31--MONEY AND FINANCE: TREASURY

 

   CHAPTER IX--FEDERAL CLAIMS COLLECTION STANDARDS (DEPARTMENT OF THE 

                    TREASURY--DEPARTMENT OF JUSTICE)

 

PART 901_STANDARDS FOR THE ADMINISTRATIVE COLLECTION OF CLAIMS--Table 

of Contents

 

Sec. 901.9  Interest, penalties, and administrative costs.



    (a) Except as provided in paragraphs (g), (h), and (i) of this 

section, agencies shall charge interest, penalties, and administrative 

costs on debts owed to the United States pursuant to 31 U.S.C. 3717. An 

agency shall mail or hand-deliver 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 shall continue to accrue until the debt is paid in full or 

otherwise resolved through compromise, termination, or waiver of the 

charges.

    (b) Agencies shall charge interest on debts owed the United States 

as follows:

    (1) Interest shall 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 shall be the rate 

established annually by the Secretary in accordance with 31 U.S.C. 3717. 

Pursuant to 31 U.S.C. 3717, an agency may charge a higher rate of 

interest if it reasonably determines that a higher rate is necessary to 

protect the rights of the United States. The agency should document the 

reason(s) for its determination that the higher rate is necessary.

    (3) The rate of interest, as initially charged, shall remain fixed 

for the duration of the indebtedness. When a debtor defaults on a 

repayment agreement and seeks to enter into a new agreement, the agency 

may require payment of interest at a new rate that reflects the current 

value of funds to the Treasury at the time the new agreement is 

executed. Interest shall not be compounded, that is, interest shall not 

be charged on interest, penalties, or administrative costs required by 

this section. If, however, a debtor defaults on a previous repayment 

agreement, charges that accrued but were not collected under the 

defaulted agreement shall be added to the principal under the new 

repayment agreement.



[[Page 967]]



    (c) Agencies shall assess administrative costs incurred for 

processing and handling delinquent debts. The calculation of 

administrative costs should be based on actual costs incurred or upon 

estimated costs as determined by the assessing agency.

    (d) Unless otherwise established in a contract, repayment agreement, 

or by statute, agencies shall 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 charge shall accrue from 

the date of delinquency.

    (e) Agencies 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 shall be 

computed annually. Agencies should 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 the agency shall be applied first to outstanding penalties, 

second to administrative charges, third to interest, and last to 

principal.

    (g) Agencies shall waive the collection of interest 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. Agencies may extend this 30-day period on a case-by-

case basis. In addition, agencies 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 is against equity and good 

conscience or is not in the best interest of the United States.

    (h) Agencies shall set forth in their regulations the circumstances 

under which interest and related charges will not be imposed for periods 

during which collection activity has been suspended pending agency 

review.

    (i) Agencies are authorized to impose interest and related charges 

on debts not subject to 31 U.S.C. 3717, in accordance with the common 

law.