[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: 45CFR30.18]

[Page 94-95]
 
                        TITLE 45--PUBLIC WELFARE
 
                           AND HUMAN SERVICES
 
PART 30_CLAIMS COLLECTION--Table of Contents
 
     Subpart B_Standards for the Administrative Collection of Debts
 
Sec. 30.18  Interest, penalties, and administrative costs.

    (a) Generally. Except as provided in paragraphs (g), (h), and (i) of 
this section, the Department shall charge interest, penalties, and 
administrative costs on delinquent debts owed to the United States. 
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) Interest. The Department shall charge interest on delinquent 
debts owed the United States as follows:
    (1) Interest shall accrue from the date of delinquency, or as 
otherwise provided by law. For debts not paid by the date specified in 
the written demand for payment made under Sec. 30.11, the date of 
delinquency is the date of mailing of the notice. The date of 
delinquency for an installment payment is the due date specified in the 
payment agreement.
    (2) Unless a different rate is prescribed by statute, contract, or a 
repayment agreement, the rate of interest charged shall be the rate 
established annually by the Secretary of the Treasury pursuant to 31 
U.S.C. 3717. The Department may charge a higher rate if necessary to 
protect the rights of the United States and the Secretary has determined 
and documented a higher rate for delinquent debt is required to protect 
the Government's interests. Any such higher rate of interest charged 
will be based on Treasury's quarterly rate certification to the U.S. 
Public Health Service for delinquencies in the National Research 
Services Awards and the National Health Services Corps Scholarship 
Program. The Department publishes this rate in the Federal Register 
quarterly.
    (3) Unless prescribed by statute or contract, 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 Department may require payment of 
interest at a new rate that reflects the Treasury rate in effect 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, unless prescribed by 
statute or contract. If, however, the 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.
    (c) Administrative costs. The Department shall assess administrative 
costs incurred for processing and handling delinquent debts. The 
calculation of administrative costs should be based on actual costs 
incurred or a valid estimate of the actual costs. Calculation of 
administrative costs shall include all direct (personnel, supplies, 
etc.) and indirect collection costs, including the cost of providing a 
hearing or any other form of administrative review requested by a 
debtor, and any costs charged by a collection agency under Sec. 30.14. 
These charges will be assessed monthly, or per payment period, 
throughout the period that the debt is overdue. Such costs may also be 
in addition to other administrative costs if collection is being made 
for another Federal agency or unit.
    (d) Penalty. Unless otherwise established by contract, repayment 
agreement, or statute, the Secretary will charge a penalty of six 
percent a year on the amount due on a debt that is delinquent for more 
than 90 days. This

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charge shall accrue from the date of delinquency.
    (e) Cost of living adjustment. 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, an administrative 
debt may be increased 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. Such 
increases to administrative debts shall be computed annually.
    (f) Priority. When a debt is paid in partial or installment 
payments, amounts received shall be applied first to outstanding 
penalties, second to administrative charges, third to interest, and last 
to principal.
    (g) Waiver. (1) The Secretary 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. The Secretary may extend this 30-day period on 
a case-by-case basis if the Secretary determines that such action is in 
the best interest of the Government, or otherwise warranted by equity 
and good conscience.
    (2) The Secretary also may waive interest, penalties, and 
administrative charges charged under this section, in whole or in part, 
without regard to the amount of the debt, based on:
    (i) The criteria set forth at Sec. 30.22(a)(1) through (4) for the 
compromise of debts; or
    (ii) A determination by the Secretary that collection of these 
charges is:
    (A) Against equity and good conscience; or
    (B) Not in the best interest of the United States.
    (h) Review. (1) Except as provided in paragraph (h)(2) of this 
section, administrative review of a debt will not suspend the assessment 
of interest, penalties, and administrative costs. While agency review of 
a debt is pending, the debtor either may pay the debt or be liable for 
interest and related charges on the uncollected debt. When agency review 
results in a final determination that any amount was properly a debt and 
the debtor chose to retain the amount in dispute, the Secretary shall 
collect from the debtor the amount determined to be due, plus interest, 
penalties and administrative costs on such debt amount, as calculated 
under this section, starting from the date the debtor was first made 
aware of the debt and ending when the debt is repaid.
    (2) Exception. Interest, penalties, and administrative cost charges 
will not be imposed on a debt for periods during which collection 
activity has been suspended under Sec. 30.29(c)(1) pending agency 
review or consideration of waiver if statute prohibits collection of the 
debt during this period.
    (i) Common law or other statutory authority. The Department may 
impose and waive interest and related charges on debts not subject to 31 
U.S.C. 3717 in accordance with the common law or other statutory 
authority.