[Code of Federal Regulations]
[Title 45, Volume 1]
[Revised as of October 1, 2007]
From the U.S. Government Printing Office via GPO Access
[CITE: 45CFR30.12]

[Page 89-91]
 
                        TITLE 45--PUBLIC WELFARE
 
                           AND HUMAN SERVICES
 
PART 30_CLAIMS COLLECTION--Table of Contents
 
     Subpart B_Standards for the Administrative Collection of Debts
 
Sec. 30.12  Administrative offset.

    (a) Scope. (1) Administrative offset is the withholding of funds 
payable by the United States to, or held by the United States for, a 
person to satisfy a debt.
    (2) This section does not apply to:
    (i) Debts arising under the Social Security Act, except as provided 
in 42 U.S.C. 404;
    (ii) Payments made under the Social Security Act, except as provided 
for in 31 U.S.C. 3716(c), and implementing regulation at 31 CFR 285.4;
    (iii) Debts arising under, or payments made under, the Internal 
Revenue Code or the tariff laws of the United States;
    (iv) Offsets against Federal salaries to the extent these standards 
are inconsistent with regulations published to implement such offsets 
under 5 U.S.C. 5514 and 31 U.S.C. 3716 (see 5 CFR part 550, subpart K; 
31 CFR 285.7; and part 33 of this chapter);
    (v) Offsets under 31 U.S.C. 3728 against a judgment obtained by a 
debtor against the United States;
    (vi) Offsets or recoupments under common law, State law, or Federal 
statutes specifically prohibiting offsets or recoupments for particular 
types of debts; or
    (vii) Offsets in the course of judicial proceedings, including 
bankruptcy.
    (3) Unless otherwise provided for by contract or law, debts or 
payments that are not subject to administrative offset under 31 U.S.C. 
3716 may be collected by administrative offset under the common law or 
other applicable statutory authority.
    (4) Unless otherwise provided by law, collection by administrative 
offset under the authority of 31 U.S.C. 3716

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may not be conducted more than 10 years after the Department's right to 
collect the debt first accrued, unless facts material to the 
Department's right to collect the debt were not known and could not 
reasonably have been known by the Secretary. This limitation does not 
apply to debts reduced to judgment.
    (5) Where there is reason to believe that a bankruptcy petition has 
been filed with respect to a debtor, the Office of the General Counsel 
should be contacted for legal advice concerning the impact of the 
Bankruptcy Code, particularly 11 U.S.C. 106, 362 and 553, on pending or 
contemplated collections by offset.
    (b) Centralized administrative offset. (1) Except as provided in the 
exceptions listed in Sec. 30.10(c)(1), legally enforceable debts which 
are 180 days delinquent shall be referred to the Secretary of the 
Treasury for collection by centralized administrative offset pursuant to 
and in accordance with 31 CFR 901.3(b). Debts which are less than 180 
days delinquent, including debts referred to the Department by another 
agency, also may be referred to the Secretary of the Treasury for 
collection by centralized administrative offset.
    (2) When referring delinquent debts to the Secretary of the Treasury 
for centralized administrative offset, the Department must certify, in a 
form acceptable to the Secretary of the Treasury, that:
    (i) The debt is past due and legally enforceable; and
    (ii) The Department has complied with all due process requirements 
under 31 U.S.C. 3716(a) and paragraph (c)(2) of this section.
    (3) Payments that are prohibited by law from being offset are exempt 
from centralized administrative offset. The Secretary of the Treasury 
shall exempt payments under means-tested programs from centralized 
administrative offset when requested in writing by the head of the 
payment certifying or authorizing agency. Also, the Secretary of the 
Treasury may exempt other classes of payments from centralized offset 
upon the written request of the head of the payment certifying or 
authorizing agency.
    (c) Non-centralized administrative offset. (1) Unless otherwise 
prohibited by law, when centralized administrative offset under 
paragraph (b) of this section is not available or appropriate, the 
Secretary may collect a delinquent debt by conducting non-centralized 
administrative offset internally or in cooperation with the agency 
certifying or authorizing payments to the debtor.
    (2) Except as provided in paragraph (c)(3) of this section, 
administrative offset may be initiated only after:
    (i) The debtor has been sent written notice of the type and amount 
of the debt, the intention of the Department to initiate administrative 
offset to collect the debt, and an explanation of the debtor's rights 
under 31 U.S.C. 3716; and
    (ii) The debtor has been given:
    (A) The opportunity to inspect and copy Department records related 
to the debt;
    (B) The opportunity for a review within the Department of the 
determination of indebtedness; and
    (C) The opportunity to make a written agreement to repay the debt.
    (3) The due process requirements under paragraph (c)(2) of this 
section may be omitted when:
    (i) Offset is in the nature of a recoupment, i.e., the debt and the 
payment to be offset arise out of the same transaction or occurrence;
    (ii) The debt arises under a contract as set forth in Cecile 
Industries, Inc. v. Cheney, 995 F.2d 1052 (Fed. Cir. 1993) (notice and 
other procedural protections set forth in 31 U.S.C. 3716(a) do not 
supplant or restrict established procedures for contractual offsets 
covered by the Contracts Disputes Act); or
    (iii) In the case of non-centralized administrative offset conducted 
under paragraph (c)(1) of this section, the Department first learns of 
the existence of the amount owed by the debtor when there is 
insufficient time before payment would be made to the debtor/payee to 
allow for prior notice and an opportunity for review. When prior notice 
and an opportunity for review are omitted, the Secretary shall give the 
debtor such notice and an opportunity for review as soon as practical 
and shall promptly refund any money ultimately found not to have been 
owed to the Government.

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    (4) When the debtor previously has been given any of the required 
notice and review opportunities with respect to a particular debt, such 
as under Sec. 30.11 of this part, the Department need not duplicate 
such notice and review opportunities before administrative offset may be 
initiated.
    (5) Before requesting that a payment authorizing agency to conduct 
non-centralized administrative offset, the Department shall:
    (i) Provide the debtor with due process as set forth in paragraph 
(c)(2) of this section; and
    (ii) Provide the payment authorizing agency written certification 
that the debtor owes the past due, legally enforceable delinquent debt 
in the amount stated, and that the Department has fully complied with 
this section.
    (6) When a creditor agency requests that the Department, as the 
payment authorizing agency, conduct non-centralized administrative 
offset, the Secretary shall comply with the request, unless the offset 
would not be in the best interest of the United States with respect to 
the program of the Department, or would otherwise be contrary to law. 
Appropriate use should be made of the cooperative efforts of other 
agencies in effecting collection by administrative offset, including 
salary offset.
    (7) When collecting multiple debts by non-centralized administrative 
offset, the Department will apply the recovered amounts to those debts 
in accordance with the best interests of the United States, as 
determined by the facts and circumstances of the particular case, 
particularly the applicable statute of limitations.
    (d) Requests to OPM to offset a debtor's anticipated or future 
benefit payments under the Civil Service Retirement and Disability Fund 
and the Federal Employee Retirement System. Upon providing OPM written 
certification that a debtor has been afforded the procedures provided in 
paragraph (c)(2) of this section, the Department may request OPM to 
offset a debtor's anticipated or future benefit payments under the Civil 
Service Retirement and Disability Fund (Fund) in accordance with 5 CFR 
part 831, subpart R, or under the Federal Employee Retirement System 
(FERS) in accordance with 5 CFR part 845, subpart D. Upon receipt of 
such a request, OPM will identify and ``flag'' a debtor's account in 
anticipation of the time when the debtor requests, or becomes eligible 
to receive, payments from the Fund or under FERS. This will satisfy any 
requirement that offset be initiated prior to the expiration of the time 
limitations referenced in 31 CFR 901.3(b)(4).
    (e) Review requirements. (1) For purposes of this section, whenever 
the Secretary is required to afford a debtor a review within the 
Department, the debtor shall be provided with a reasonable opportunity 
for an oral hearing when the debtor requests reconsideration of the debt 
and the Secretary determines that the question of the indebtedness 
cannot be resolved by review of the documentary evidence, for example, 
when the validity of the debt turns on an issue of credibility or 
veracity.
    (2) Unless otherwise required by law, an oral hearing under this 
section is not required to be a formal evidentiary hearing, although the 
Department will carefully document all significant matters discussed at 
the hearing.
    (3) An oral hearing is not required with respect to debt collection 
systems where determinations of indebtedness rarely involve issues of 
credibility or veracity, and the Secretary has determined that a review 
of the written record is adequate to correct prior mistakes.
    (4) In those cases when an oral hearing is not required by this 
section, the Secretary shall accord the debtor a ``paper hearing,'' that 
is, a determination of the request for reconsideration based upon a 
review of the written record.