[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: 45CFR30.32]

[Page 99-100]
 
                        TITLE 45--PUBLIC WELFARE
 
                           AND HUMAN SERVICES
 
PART 30_CLAIMS COLLECTION--Table of Contents
 
       Subpart D_Suspending and Terminating Collection Activities
 
Sec. 30.32  Discharge of indebtedness; reporting requirements.

    (a)(1) Before discharging a delinquent debt, also referred to as 
close out of the

[[Page 100]]

debt, the Secretary shall take all appropriate steps to collect the debt 
in accordance with 31 U.S.C. 3711(g)(9), and parts 30 through 33 of this 
chapter, including, as applicable, administrative offset; tax refund 
offset; Federal salary offset; credit bureau reporting; administrative 
wage garnishment; litigation; foreclosure; and referral to Treasury, 
Treasury-designated debt collection centers, or private collection 
contractors.
    (2) Discharge of indebtedness is distinct from termination or 
suspension of collection activity under this subpart, and is governed by 
the Internal Revenue Code. When collection action on a debt is suspended 
or terminated, the debt remains delinquent and further collection action 
may be pursued at a later date in accordance with the standards set 
forth in this part and 31 CFR parts 900 through 904.
    (3) When the Department discharges a debt in full or in part, 
further collection action is prohibited. Therefore, before discharging a 
debt, the Secretary must:
    (i) Make the determination that collection action is no longer 
warranted; and
    (ii) Terminate debt collection action.
    (b) In accordance with 31 U.S.C. 3711(i), the Secretary shall use 
competitive procedures to sell a delinquent debt upon termination of 
collection action if the Secretary of the Treasury determines such a 
sale is in the best interests of the United States. Since the discharge 
of a debt precludes any further collection action, including the sale of 
a delinquent debt, the Secretary may not discharge a debt until the 
requirements of 31 U.S.C. 3711(i) have been meet.
    (c) Upon discharge of an indebtedness, the Secretary must report the 
discharge to the IRS in accordance with the requirements of 26 U.S.C. 
6050P and 26 CFR 1.6050P-1. The Secretary may request that Treasury or 
Treasury-designated debt collection centers file such a discharge report 
to the IRS on the Department's behalf.
    (d) When discharging a debt, the Secretary must request that 
litigation counsel release any liens of record securing the debt.