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The Department of Agriculture (USDA) requested an opinion on the propriety of deferring the collection of debts that arose as a result of overpayments made in advance to farmers participating in agricultural programs. GAO noted that: (1) if advance payments exceeded actual deficiency payments, participating farmers were required to refund the excess amounts to USDA; (2) USDA revised its instructions which prohibited local offices from demanding payments, assessing interest, or taking any action other than offset to collect advance deficiency payments; (3) local offices were to recover advance payments owed by those farmers who did not participate;; and (4) farmers who did not participate in the 1984 crop programs were sent demand notices and assessed interest on the first day their debts were past due. GAO held that: (1) the Omnibus Budget Reconciliation Act does not preclude USDA from choosing the best method to collect debts; (2) the unpaid refunds constituted delinquent debts; (3) USDA could accept installment payments, but had to obtauin written repayment agreements and assess interest; (4) it was not clear that USDA evaluated the financial condition of debtors when it decided to collect debts through administrative offset; (5) the interest assessment policies USDA followed were not entirely consistent with Federal Claims Collection Standards; and (6) even though USDA failed to send appropriate notices which advised debtors of their liability for interest charges, it was legally entitled to recover interest assessments on those debts. Accordingly, USDA policies governing the collection of debts arising from advance deficiency payments did not violate the act.


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