B-207997, AUG 8, 1983, OFFICE OF GENERAL COUNSEL

B-207997: Aug 8, 1983

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

WE HAVE HELD UP OUR REPLY TO YOUR QUESTIONS PENDING THE PASSAGE OF LEGISLATION AND REGULATIONS WHICH ARE GERMANE TO THE ISSUES YOU RAISED. MANY OF THE AIR TRAFFIC CONTROLLERS WERE SEPARATED WITH AN OUTSTANDING INDEBTEDNESS TO THE GOVERNMENT. IN THE INSTANCES WHERE OTHER AMOUNTS DUE THESE EMPLOYEES WERE INSUFFICIENT TO RECOUP THE INDEBTEDNESS. YOU HAVE WRITTEN TO US FOR CLARIFICATION ON OFFSETS AGAINST RETIREMENT FUNDS AND OTHER COLLECTION EFFORTS. THE QUESTIONS YOU ASKED WERE DIVIDED INTO TWO GENERAL CATEGORIES. WE HAVE HELD THAT INTEREST MAY BE ASSESSED PURSUANT TO THOSE STANDARDS ONLY AFTER PROPER NOTICE OF THE DEBT (INCLUDING THE INTENT TO CHARGE INTEREST) IS GIVEN. THE DEBT IS LIQUIDATED (THE AMOUNT HAS BEEN MADE CERTAIN).

B-207997, AUG 8, 1983, OFFICE OF GENERAL COUNSEL

PRECIS-UNAVAILABLE

E.M. KEELING, DIRECTOR OF ACCOUNTING:

THIS LETTER RESPONDS TO THE QUESTIONS YOU RAISED IN YOUR LETTER OF JUNE 18, 1982, AS TO THE PROPER METHOD OF COLLECTING DEBTS OWED BY AIR TRAFFIC CONTROLLERS TO THE FAA. AS WE INFORMED YOUR STAFF MEMBER HANDLING THE CASE, MR. PETER VERDIN, WE HAVE HELD UP OUR REPLY TO YOUR QUESTIONS PENDING THE PASSAGE OF LEGISLATION AND REGULATIONS WHICH ARE GERMANE TO THE ISSUES YOU RAISED. THAT LEGISLATION, THE DEBT COLLECTION ACT OF 1982, HAS AN EFFECTIVE DATE OF OCTOBER 25, 1982. FN1 RECENT PROPOSED REGULATIONS CONCERNING THAT ACT CAN BE FOUND AT 48 FED.REG. 23249, MAY 24, 1983.

AS A RESULT OF THE ILLEGAL STRIKE BY THE PROFESSIONAL AIR TRAFFIC CONTROLLERS ORGANIZATION ON AUGUST 3, 1981, MANY OF THE AIR TRAFFIC CONTROLLERS WERE SEPARATED WITH AN OUTSTANDING INDEBTEDNESS TO THE GOVERNMENT. IN THE INSTANCES WHERE OTHER AMOUNTS DUE THESE EMPLOYEES WERE INSUFFICIENT TO RECOUP THE INDEBTEDNESS, THE FAA TOOK ACTION TO ESTABLISH OFFSETS AGAINST THEIR RETIREMENT CONTRIBUTION BALANCES HELD BY THE OFFICE OF PERSONNEL MANAGEMENT (OPM). YOU HAVE WRITTEN TO US FOR CLARIFICATION ON OFFSETS AGAINST RETIREMENT FUNDS AND OTHER COLLECTION EFFORTS. THE QUESTIONS YOU ASKED WERE DIVIDED INTO TWO GENERAL CATEGORIES. THE FIRST SET OF QUESTIONS INVOLVES THE CHARGING OF INTEREST AND PROCEDURES FOR NOTIFYING OPM CONCERNING COLLECTION OF THE DEBT PLUS INTEREST FROM EMPLOYEES' RETIREMENT ACCOUNTS.

IN ORDER TO COLLECT INTEREST ON THE AMOUNT OWED BY THE EMPLOYEES OR FORMER EMPLOYEES OF THE GOVERNMENT, ADEQUATE NOTICE MUST BE GIVEN TO THESE EMPLOYEES. FOR THE PERIOD PRIOR TO THE EFFECTIVE DATE OF THE DEBT COLLECTION ACT. INTEREST CAN BE CHARGED IN ACCORDANCE WITH THE FEDERAL CLAIMS COLLECTION STANDARDS, PART 102, TITLE 4 OF THE CODE OF FEDERAL REGULATIONS. WE HAVE HELD THAT INTEREST MAY BE ASSESSED PURSUANT TO THOSE STANDARDS ONLY AFTER PROPER NOTICE OF THE DEBT (INCLUDING THE INTENT TO CHARGE INTEREST) IS GIVEN, AND THE DEBT IS LIQUIDATED (THE AMOUNT HAS BEEN MADE CERTAIN). PHILIP A. JARMACK, B-206258, JUNE 16, 1982; B-197679, 59 COMP.GEN. 359, 362 (1980). THE RATE OF INTEREST PRIOR TO OCTOBER 25, 1982, SHOULD BE AT THE PERCENTAGE RATES DESCRIBED AT 1 TREASURY FISCAL REQUIREMENTS MANUAL 6-8020.20, AND INTEREST SHOULD BE ASSESSED FOR EACH 30 -DAY PERIOD OR PORTION THEREOF FROM THE DUE DATE SPECIFIED IN THE NOTICE TO OCTOBER 25, 1982. SEE ALSO, 4 C.F.R. SEC. 102.2 (1983).

FOR THE PERIOD AFTER OCTOBER 25, 1982, THE PROVISIONS OF THE DEBT COLLECTION ACT APPLY. UNDER THAT ACT, INTEREST SHOULD BE CHARGED FROM THE DATE ON WHICH NOTIFICATION OF THE AMOUNT DUE ON THE CLAIM IS FIRST MAILED TO THE DEBTOR. HOWEVER, IF SUCH NOTIFICATION WAS FIRST MAILED BEFORE OCTOBER 25, 1982, THE DATE OF THE ENACTMENT OF THE DEBT COLLECTION ACT, INTEREST SHALL ACCRUE FROM THE DATE ON WHICH SUCH NOTIFICATION IS FIRST MAILED AFTER THE DATE OF ENACTMENT. 31 U.S.C. SEC. 3717, AS RECODIFIED. THE AMOUNT OF INTEREST, ADMINISTRATIVE COSTS, AND PENALTIES TO BE CHARGED IS ALSO SET FORTH IN SECTION 3717. NOTICE TO THE DEBTOR SHOULD INFORM THE DEBTOR OF SUCH ASSESSMENTS. SEE ALSO THE PROPOSED AMENDMENTS TO 4 C.F.R. SEC. 102 AT 48 FED.REG. 23249, 23253, MAY 24, 1983.

YOU HAVE ALSO RAISED SEVERAL QUESTIONS CONCERNING OPM'S PROCEDURES FOR COLLECTING DEBTS BY AN ADMINISTRATIVE OFFSET FROM THE CIVIL SERVICE RETIREMENT FUND. SINCE THESE OFFSETS WILL BE MADE AFTER THE EFFECTIVE DATE OF THE DEBT COLLECTION ACT, WE WILL ONLY DISCUSS PROCEDURES UNDER THAT ACT.

SECTION 3716 OF TITLE 31, U.S.C., AS RECODIFIED, CONTAINS PROCEDURES FOR COLLECTING DEBTS BY ADMINISTRATIVE OFFSET. THE PROPOSED AMENDMENTS TO 4 C.F.R. SEC. 102.4 AT 48 FED.REG. 23522, MAY 24, 1983, CONTAIN PROPOSED PROCEDURES FOR COLLECTING DEBTS BY ADMINISTRATIVE OFFSET AGAINST AMOUNTS PAYABLE FROM THE CIVIL SERVICE RETIREMENT AND DISABILITY FUND. WHEN COLLECTING A DEBT THROUGH ADMINISTRATIVE OFFSET FROM THE CIVIL SERVICE RETIREMENT FUND THESE STATUTORY AND REGULATORY PROVISIONS (WHEN FINALIZED) MUST BE FOLLOWED. TO INFORM OPM THAT THE DEBT WILL BE COLLECTED BY OFFSET FROM THE CIVIL SERVICE RETIREMENT FUND, OPM HAS ISSUED SF-2805. BY THAT FORM, AN AGENCY INFORMS OPM WHEN A POTENTIAL ANNUITANT OWES THE GOVERNMENT A DEBT. IF INTEREST IS TO BE COLLECTED ON THE DEBT, THE SF-2805 SHOULD STATE THE AMOUNT OF THE DEBT AND THE WORDS "PLUS INTEREST." THE INTEREST ACCRUES UPON THE PROPER NOTIFICATION TO AN EMPLOYEE AS DESCRIBED ABOVE AND TERMINATES UPON THE DATE THE AGENCY RECEIVES THE MONEY OWED, EITHER BY OFFSET OR OTHER MEANS. IF A SF-2805 DOES NOT INFORM OPM THAT INTEREST IS TO BE CHARGED, THE SF-2805 CAN BE AMENDED TO PROVIDE FOR OFFSET OF THE DEBT PLUS INTEREST. NO INTEREST CHARGES ARE LOST AS LONG AS PROPER NOTIFICATION WAS GIVEN TO THE DEBTOR AS DISCUSSED ABOVE.

THE SECOND SET OF QUESTIONS POSED BY FAA ASKS IF IT IS APPROPRIATE FOR YOUR AGENCY TO PURSUE OTHER COLLECTION EFFORTS SUCH AS REFERRAL TO GAO, TO A PRIVATE DEBT COLLECTION AGENCY, OR SEEKING A COURT ORDERED JUDGMENT. YOU ALSO ASK HOW THE STATUTE OF LIMITATIONS IMPACTS ON COLLECTION EFFORTS.

THERE ARE TWO STATUTES OF LIMITATIONS WHICH MUST BE CONSIDERED IN EVALUATING THE APPROPRIATE COLLECTION EFFORTS. THE STATUTE OF LIMITATIONS FOR SEEKING A COURT-ORDERED JUDGMENT IS 6 YEARS FROM THE DATE THE DEBT BECAME OUTSTANDING. 28 U.S.C. SEC. 2415. ONLY THE INITIATION OF A COURT ACTION BY THE DEPARTMENT OF JUSTICE WILL TOLL (STOP THE RUNNING OF) THIS STATUTE OF LIMITATIONS. REFERRAL TO GAO DOES NOT TOLL 28 U.S.C. SEC. 2415.

THE OTHER PROVISIONS RELATE TO THE NEW STATUTE OF LIMITATIONS FOR ADMINISTRATIVE OFFSETS. THE DEBT COLLECTION ACT AMENDS 28 U.S.C. SEC. 2415 BY ADDING A NEW SUBSECTION (I). THAT SUBSECTION PROVIDES THAT THE 6- YEAR STATUTE OF LIMITATIONS FOR SEEKING COURT-ORDERED JUDGMENTS DOES NOT PREVENT THE UNITED STATES FROM COLLECTING ANY CLAIM BY MEANS OF ADMINISTRATIVE OFFSET, IN ACCORDANCE WITH 31 U.S.C. SEC. 3716, AS RECODIFIED. SEE 28 U.S.C. SEC. 2415(I). THEN, 31 U.S.C. SEC. 3716(C)(1), AS RECODIFIED, PROVIDES THAT A HEAD OF AN AGENCY OR HIS DESIGNEE MAY, AFTER ATTEMPTING TO COLLECT A CLAIM FROM A PERSON UNDER 31 U.S.C. SEC. 3711(A), COLLECT A CLAIM BY MEANS OF ADMINISTRATIVE OFFSET, EXCEPT NO ADMINISTRATIVE OFFSET MAY BE MADE AFTER THE CLAIM HAS BEEN OUTSTANDING FOR MORE THAN 10 YEARS. THEREFORE, THE DEBT COLLECTION ACT OF 1982 ESTABLISHES A 10-YEAR STATUTE OF LIMITATIONS FOR AN AGENCY TO COLLECT A DEBT BY ADMINISTRATIVE OFFSET.

ONCE THE CLAIM HAS BEEN OUTSTANDING FOR MORE THAN 10 YEARS, THE AGENCY MAY NOT COLLECT THE MONEY OWED BY MEANS OF ADMINISTRATIVE OFFSET. LEGAL ACTION IS INITIATED TO TOOL THE 6-YEAR STATUTE OF LIMITATIONS UNDER 28 U.S.C. SEC. 2415, IT HAS NO EFFECT ON THE 10-YEAR TIME PERIOD ESTABLISHED FOR ADMINISTRATIVE OFFSETS.

HOWEVER, IF THE CLAIMS CANNOT BE COMPROMISED, SUSPENDED, OR TERMINATED PURSUANT TO THE FEDERAL CLAIMS COLLECTION STANDARDS, 4 C.F.R. PARTS 101- 105 (1983) AND IF THE FAA DOES NOT BELIEVE IT WILL BE ABLE TO COLLECT THESE DEBTS BY ADMINISTRATIVE OFFSET WITHIN THE 10-YEAR PERIOD, IT SHOULD CONSIDER THE OTHER COLLECTION METHODS AUTHORIZED BY THE DEBT COLLECTION ACT.

THE MAIN PURPOSE OF THE DEBT COLLECTION ACT IS TO IMPROVE THE GOVERNMENT'S DEBT COLLECTION PROCEDURES BY FACILITATING THE USE OF PRIVATE SECTOR COLLECTION TOOLS AND TECHNIQUES. S.REP. NO. 97-378, 97TH CONG. 2D SESS (1982). ONE SUCH TOOL THE FAA SHOULD EVALUATE IS REPORTING THE DEBTS TO PRIVATE CREDIT BUREAUS. THE AVAILABILITY OF DELINQUENCY INFORMATION TO PRIVATE SECTOR CREDIT GRANTORS MAY INDUCE DEBTORS TO PAY THEIR OBLIGATIONS TO THE GOVERNMENT SINCE, IF THEY DO NOT, THEY MAY FIND THAT OTHER CREDIT IS UNAVAILABLE. S.REP. NO. 97-378, SUPRA, AT PAGE 8. SEE 31 U.S.C. SEC. 3711(F)(1), AS RECODIFIED, FOR THE REQUIREMENTS WHICH APPLY TO SUCH DISCLOSURES. SEE ALSO, SECTION 2 OF PUBLIC LAW 97-365, 96 STAT. 1749, WHICH PROVIDES THAT PRIVATE CREDIT BUREAUS WILL NOT BECOME SUBJECT TO THE PRIVACY ACT BY VIRTUE OF ACCEPTING CREDIT INFORMATION DISCLOSED IN ACCORDANCE WITH 31 U.S.C. SEC. 3711(F)(1).

THE DEPT COLLECTION ACT ALSO ENCOURAGES THE USE OF PRIVATE DEPT COLLECTION SERVICES WHERE APPROPRIATE AND AUTHORIZES THE HEAD OF AN AGENCY TO ENTER INTO A CONTRACT WITH A PERSON OR ORGANIZATION FOR COLLECTION SERVICES TO RECOVER INDEBTEDNESS OWED TO THE UNITED STATES. 31 U.S.C. SEC. 3718, AS RECODIFIED, SETS FORTH TERMS AND CONDITIONS REQUIRED IN THE CONTRACT BETWEEN THE HEAD OF THE AGENCY AND THE COLLECTION AGENT. SEE ALSO THE PROPOSED AMENDMENTS TO 4 C.F.R. SEC. 102.6 AT 48 FED.REG. 23252, MAY 24, 1983.

HOWEVER, AGENCIES WERE NOT GIVEN THE RIGHT UNDER THE DEBT COLLECTION ACT TO DIRECTLY PURSUE LEGAL REMEDIES SUCH AS COURT-ORDERED JUDGMENTS. COURT ACTIONS MAY BE FILED ONLY BY THE DEPARTMENT OF JUSTICE. PROMPT REFERRAL TO JUSTICE IN ACCORDANCE WITH THE CLAIMS COLLECTION LITIGATION REPORT IMPLEMENTED BY THE DEPARTMENT OF JUSTICE AND THE GENERAL ACCOUNTING OFFICE ON JANUARY 20, 1983, IS ESSENTIAL TO SUCCESSFUL LITIGATION.

WE NOTE THAT 4 C.F.R. SEC. 105.1 (1983) CURRENTLY PROVIDES THAT CLAIMS MUST FIRST BE REFERRED TO GAO UNLESS GAO HAS GRANTED AN EXCEPTION PERMITTING DIRECT REFERRAL TO THE DEPARTMENT OF JUSTICE. GAO HAS LIBERALLY AUTHORIZED EXCEPTIONS IN RECENT YEARS, EXCEPT WHEN THERE IS A DOUBT AS TO THE MERITS OF THE CLAIM, THE AMOUNT OWED OR THE PROPRIETY OF ACCEPTING A PROPOSED COMPROMISE, SUSPENSION OR TERMINATION. SEE 48 FED.REG. 23250, MAY 24, 1983. ACCORDINGLY, IF THE CLAIMS IN QUESTION ARE NOT IN DOUBT, FAA IS AUTHORIZED TO REFER THEM DIRECTLY TO JUSTICE FOR LITIGATION WHERE APPROPRIATE.

THAT CONCLUDES OUR DISCUSSION OF THE QUESTIONS YOU RAISED. IF YOU HAVE ANY FURTHER QUESTIONS, YOU MAY CONTACT MR. DANIEL SCHWIMER OF MY STAFF AT 275-6410.

FN1 THE DEBT COLLECTION ACT OF 1982, PUBLIC LAW 97-365, OCTOBER 25, 1982, 96 STAT. 1749-1758, AMENDED THE FEDERAL CLAIMS COLLECTION ACT OF 1966 WHICH HAD BEEN CODIFIED AT 31 U.S.C. SEC. 952 (1970). ON SEPTEMBER 13, 1982, A GENERAL RECODIFICATION OF TITLE 31 WAS ENACTED AND THE OLD 31 U.S.C. SEC. 952 WAS RECODIFIED AT 31 U.S.C. SEC. 3711. PUBLIC LAW 97-258, 96 STAT. 877, 971. IN ORDER TO CONFORM THE DEBT COLLECTION ACT OF 1982 TO THE RECODIFICATION OF TITLE 31, PUBLIC LAW 97 452, JANUARY 12, 1983, 96 STAT. 2467-2480, WAS ENACTED. WHEN THE RECODIFICATION OF TITLE 31 IS ISSUED IN CODE FORM, THOSE PORTIONS OF THE DEBT COLLECTION ACT WHICH ARE CONTAINED IN TITLE 31 WILL BE FOUND AT SUBCHAPTER II, CHAPTER 37 OF TITLE 31. REFERENCES HEREIN WILL BE TO THE ACT AS RECODIFIED, WHERE APPLICABLE.