Sec.

3.62 Procedures for salary offset: when deductions may begin.

3.63 Procedures for salary offset: types of collection.

3.64 Procedures for salary offset: methods of collection.

3.65 Procedures for salary offset: imposition of interest, penalties and administrative costs.

3.66 Non-waiver of rights. 3.67 Refunds.

3.68 Agency regulations.

Subpart D-Cooperation with the Internal Revenue Service

3.81 Reporting discharged debts to the Internal Revenue Service.

3.82 Offset against tax refunds.

Subpart A-Settlement of Small or Old Debts

AUTHORITY: Sec. 1, 58 Stat. 836; 12 U.S.C.

1150.

SOURCE: 10 FR 807, Jan. 23, 1945, unless otherwise noted. Redesignated at 13 FR 6903, Nov. 24, 1948.

§3.1 Purposes of the act and regulations.

The principal purposes of the act and of the regulations in this part are to provide means of: (a) Settling, by compromise, adjustment or cancellation relatively small debts long past due and owing to the Government arising from loans or payments made under farm programs administered by the Department; (b) recovering by the Department of substantial sums which are found uncollectible when the indebtednesses are treated as full obligations, and which otherwise would probably never be collected; (c) clearing the accounts of balances so small as not to warrant continued efforts of collection; and (d) the clearing of the accounts of the records of indebtedness made uncollectible by reason of the death or disappearance of the debtors. The existence of the act will neither serve as grounds for any relaxation in the general collection policy of the Department nor should it serve as grounds for any lessening of the efforts of farmers to pay their indebted

ness.

§ 3.2 Definitions.

(a) Department means Department of Agriculture.

(b) Indebtedness with respect to any person, means a debt to the Government under each of the acts and programs listed in § 3.10.

(c) Compromise means final liquidation of the indebtedness through the immediate payment of a portion thereof, and acceptance by the United States of such payment in full satisfaction of the indebtedness.

(d) Adjustment means the scaling down of the amount of the indebtedness including interest, conditioned upon the payment of the adjusted amount at some specified future time or times; such adjustment is not to be considered as effective as a settlement under this act until the provisions of the adjustment arrangement have been carried out.

(e) Cancellation means the complete discharge, without payment, of the indebtedness and the debtor.

[10 FR 807, Jan. 23, 1945, as amended at 11 FR 11984, Oct. 15, 1946. Redesignated at 13 FR 6903, Nov. 24, 1948; 55 FR 38662, Sept. 20, 1990]

§ 3.3

Settlement of indebtedness.

(a) Indebtedness will be compromised, adjusted, or canceled, upon applicability by the debtor except in those cases where it is found that it is legally impossible for the debtor to make application, and upon the making of all the following findings:

(1) That said indebtedness has been due and payable for five years or more;

(2) That the debtor is unable to pay said indebtedness in full and has no reasonable prospect of being able to do so; officers of the Department shall not make such findings on the basis of mere unwillingness to pay on the part of the debtor, or mere financial disadvantage to him, but should find that the settlement is the most advantageous arrangement possible from the standpoint of the Government under the findings prescribed in this part. In no event shall cancellation be made unless, in addition to the foregoing requirements, there is an advantage in removing the indebtedness from the accounts.

(3) That the debtor has acted in good faith in an effort to meet his obligation; and

(4) That the principal amount of said indebtedness is not in excess of $1,000.

(b) Indebtedness may also be canceled without application when any one of the following circumstances is found:

(1) The amount of said indebtedness, including interest, is less than $10; such efforts of collection have been made as are warranted under the circumstances, and the cost of collection or of continued maintenance of accounts is deemed greater than the amount of the indebtedness;

(2) The debtor is deceased and there is no reasonable prospect of recovering from his estate;

(3) The debtor's whereabouts has remained unknown for two years and there is no reasonable prospect of obtaining collection; heads of agencies designated in § 3.5 will prescribe procedures which will assure that cancellations on this ground will be made only after a diligent effort has been made to locate the debtor, including such contact with other agencies of the Department or otherwise as the amount of the indebtedness and the circumstances warrant;

(4) The debtor has been discharged of the indebtedness in any proceeding under "An act to establish a uniform system of bankruptcy throughout the United States."

(5) It is impossible or impracticable for legal or other reasons to obtain the debtor's application but all of the findings required by paragraph (a) of this section are made.

[10 FR 807, Jan. 23, 1945, as amended at 12 FR 441, Jan. 22, 1947. Redesignated at 13 FR 6903, Nov. 24, 1948, and amended at 21 FR 3213, May 16, 1956]

§ 3.4 Investigations and findings.

The heads of agencies designated in § 3.5 shall prescribe procedures for the conduct of investigations to determine the facts incident to the settlement of any indebtedness. These procedures should include, among other things, provisions for consultations with local authorities, businessmen, or local rep

resentatives of other Government agencies, or for obtaining the recommendations of committees or other groups or persons designated by each agency for assistance in its regular program, or otherwise. The file relating to each debtor shall contain the formal findings required by § 3.3, together with such evidence as has been obtained in support of such findings.

In order to effect uniformity in settlements, agency procedures should also provide that, where it appears from the application of the debtor or from investigation that the debtor is otherwise indebted to the United States, to the extent practicable consultation should be had (other than in cases under § 3.3(b) (1) and (4) with any other creditor agencies, to ascertain pertinent information as to the status of such other obligation or obligation Such information shall be considered in connection with the settlement and for inclusion in the findings.

The head of each agency shall provide for review of proposed indebtedness settlements within his agency by officers or employees designated for that purpose under such conditions as he shall determine to be adequate to insure the protection of the interests of the United States.

§3.5 Delegations of authority.

The heads of any administration or other agency having jurisdiction over any of the acts or programs listed in § 3.10 (including those of Federal Crop Insurance Corporation) are hereby authorized, within their respective jurisdictions, to exercise any or all of the functions prescribed by this part. The head of each of such agencies may delegate and authorize the redelegation of any of the functions vested in him by this part: Provided, That the determination of any settlement shall not be delegated beyond the head of the highest field office having jurisdiction, except that in the case of the Agricultural Stabilization and Conservation State Offices, such authority may also be delegated to the State Administrative Officers and except that in the case of the Farmers Home Administration, such authority may also be delegated to Assistant State Directors and

Chiefs, Production Loan Operations, in State offices of that administration.

[21 FR 3213, May 16, 1956, as amended at 55 FR 18591, May 3, 1990)

§ 3.6 Forms and records.

The Office of Management and Budget may prescribe or approve forms for applications for settlement of indebtedness under this part; and shall require each agency to establish records to insure the immediate availability of necessary information of operations under this part. Each agency shall furnish to the Office of Management and Budget a report of operations under this part quarterly, or for such other periods as the Director of Finance may designate.

[21 FR 3213, May 16, 1956, as amended at 55 FR 38662, Sent. 20, 1990]

§ 3.8 Penalties.

The act prescribes the punishment by a fine of not more than $1,000 or imprisonment for not more than one year, or both, upon conviction, for anyone making any material representation, knowing it to be false, for the purpose of influencing in any way the action of the Secretary or of any person acting under his authority in connection with any compromise, adjustment, or cancellation of indebtedness provided for in the act. The act also prohibits the acceptance by any officer, employee, or other person to whom is delegated any power or function under the act, of any fee, commission, gift, or other consideration, directly or indirectly, for or in connection with any transaction or business relating to the compromise, adjustment, or cancellation of indebtedness under the act.

§ 3.9 Indebtedness referred to the Comptroller General or the Attorney General.

No settlement shall be effected under this part if the indebtedness is pending before the Comptroller General for compromise, or the Attorney General for collection.

[10 FR 807, Jan. 23, 1945. Redesignated at 13 FR 6903, Nov. 24, 1948, and amended at 55 FR 38662, Sept. 20, 1990]

§ 3.10 Scope of the act.

The authorities prescribed in this part are applicable to indebtedness arising from loans or payments made or credit extended pursuant to the following acts and programs:

1. Act of July 1, 1918 (40 Stat. 635), Loans for seed.

2. Act of March 3, 1921 (41 Stat. 1347), Loans for seed.

3. Act of March 20, 1922 (42 Stat. 467), Loans for seed.

4. Act of April 26, 1924 (43 Stat. 110), Loans for seed and feed.

5. Act of February 25, 1927 (44 Stat. 1245), Loans for seed, feed and fertilizer.

6. Act of February 28, 1927 (44 Stat. 1251), Hurricane damage loans.

7. Act of February 25, 1929 (45 Stat. 1306), as amended May 17, 1929 (46 Stat. 3), Loans for seed, feed and fertilizer and to vegetable and fruit growers.

8. Act of March 3, 1930 (46 Stat. 78-79), as amended April 24, 1930 (46 Stat. 254). Loans for seed, feed, fertilizer, fuel and oil.

9. Act of December 20, 1930 (46 Stat. 1032), as amended February 14, 1931 (46 Stat. 1160). Loans for seed, feed, fertilizer, fuel and oil and crop production, and for assisting in forming local agricultural credit corporations, livestock loan companies, or

like organizations.

10. Act of February 23, 1931 (46 Stat. 1276), Loans for seed, feed, fertilizer, fuel and oil.

11. Act of January 22, 1932 (47 Stat. 5), Loans for crop production.

12. Act of March 3, 1932 (47 Stat. 60), Loans for agricultural credit corporations, livestock loan companies, or like organizations.

13. Act of February 4, 1933 (47 Stat. 795), Loans for crop production and harvesting. 14. Act of February 23, 1934 (48 Stat. 354), Loans for crop production and harvesting.

15. Act of June 19, 1934 (48 Stat. 1056), Loans for emergency relief and for seed, feed, freight, summer fallowing and similar purposes.

16. Act of February 20, 1935 (49 Stat. 28), Loans for crop production and harvesting. 17. Act of March 21, 1935 (49 Stat. 50), appropriation to effectuate Act of February 20, 1935.

18. Act of April 8, 1935 (49 Stat. 115), E. O. 7305, Loans for crop production and harvesting.

19. Act of January 29, 1937 (50 Stat. 5), Loans for crop production and harvesting.

20. Act of February 4, 1938 (52 Stat. 27), Loans for crop production and harvesting. 21. Agricultural Adjustment Act (of 1933), as heretofore amended.

22. Bankhead Cotton Act of April 21, 1934, as heretofore amended, on account of the

several cotton tax-exemption certificate pools.

23. Jones-Connally Cattle Act of April 7, 1934, as heretofore amended.

24. Emergency Appropriation Act, fiscal year 1935, approved June 19, 1934 (48 Stat. 1056), as heretofore amended, (amendment to Agricultural Adjustment Act of 1933, relating to cotton option contracts.)

25. Kerr Tobacco Act of June 28, 1934 and Public Resolution No. 76 of March 14, 1936, as heretofore amended.

26. Section 32 of the Act of August 24, 1935 and related legislation, as heretofore amended.

27. Supplemental Appropriation Act, fiscal year 1936, as heretofore amended, (rental and benefit payments and cotton price adjustment payments).

28. Sections 7 to 17 of the Soil Conservation and Domestic Allotment Act, as heretofore amended.

29. Sugar Act of 1937, as heretofore amended.

30. Sections 303 and 381(a) of the Agricultural Adjustment Act of 1938 and related or subsequent legislation, as heretofore amended, authorizing parity or adjustment payments.

31. Title IV and Title V of the Agricultural Adjustment Act of 1938 and related legislation, as heretofore amended, (Cotton Pool Participation Trust Certificates (Title IV), and crop insurance (Title V)).

32. Any other Act of Congress heretofore enacted authorizing payments to farmers under programs administered through the Agricultural Adjustment Agency.

33. Act of April 8, 1935 (49 Stat. 115), Loan for rural rehabilitation and relief.

34. Act of June 22, 1936 (49 Stat. 1608), Loan for rural rehabilitation and relief.

35. Act of February 9, 1937 (50 Stat. 8), Loans for rural rehabilitation and relief. 36. Act of June 29, 1937 (50 Stat. 352), Loans for rural rehabilitation and relief. 37. The Bankhead-Jones Farm Tenant Act (50 Stat. 522 et seq.).

38. The Water Facilities Act of August 28, 1937 (50 Stat. 869 et seq.).

39. Act of March 2, 1938 (52 Stat. 83, Pub. Res. 80), Loans for rural rehabilitation and relief.

40. Act of June 21, 1938 (52 Stat. 809), Loans for rural rehabilitation and relief.

41. Act of June 30, 1939 (53 Stat. 927), Loans for rural rehabilitation and relief. 42. Act of June 26, 1940 (54 Stat. 611), Loans for rural rehabilitation and relief. 43. Act of July 1, 1941 (55 Stat. 408), Loans for rural rehabilitation.

44. Act of July 22, 1942 (56 Stat. 664), Loans for rural rehabilitation.

45. Act of July 12, 1943 (57 Stat. 392), Loans for rural rehabilitation.

46. Act of June 28, 1944 (58 Stat. 425), Loans for rural rehabilitation.

47. Flood restoration loans, Second Deficiency Appropriation Act, 1943 (57 Stat. 537, 542)

48. Subsequent legislation appropriating or making available funds for such loans as those listed under numbers 33 through 47, made by or through Resettlement Administration or the Farm Security Administration.

49. Crop-insurance programs formulated pursuant to Title V of the Agricultural Adjustment Act of 1938 (the Federal Crop Insurance Act), and any amendment or supplement thereto heretofore or hereafter enacted.

50. Any indebtedness of farmers evidenced by notes or accounts receivable, title to which has been acquired in the liquidation of loans to cooperative associations made under the provisions of the Act of June 15, 1929 (46 Stat. 11).

(Sec. 2, 58 Stat. 836; 12 U.S.C. 1150a)

[10 FR 807, Jan. 23, 1945. Redesignated at 13 FR 6903, Nov. 24, 1948, and amended at 55 FR 38662, Sept. 20, 1990]

Subpart B-Debt Collection

AUTHORITY: 31 U.S.C. 3701, 3711, 37163719, 3728; 4 CFR Part 102; 4 CFR 105.4. SOURCE: 50 FR 7722, Feb. 26, 1985, unless otherwise noted.

§ 3.21 Debt collection standards.

(a) The regulations in this subpart are issued under the Federal Claims Collection Act of 1966, as amended by the Debt Collection Act of 1982 (31 U.S.C. 3701, 3711, 3716-3719), and the Joint Regulations issued under the Act by the Attorney General and the Comptroller General (4 CFR Parts 101-105), prescribing Governmentwide standards for administrative collection, compromise, suspension or termination of agency collection action, disclosure of debt information to consumer reporting agencies, referral of claims to private collection contractors for resolution, and referral to the General Accounting Office and to the Department of Justice for litigation of civil claims by the Government for money or property.

(b) The head of each agency of the Department may carry out the duties and exercise the authority of the Secretary under 31 U.S.C. 3701, 3711, 3716-3719, 3728, the Joint Regulations of the Attorney General and the

Comptroller General, and the regulations in this part, with respect to the claims of the agency. An agency head may adopt regulations, in accordance with the Debt Collection Act and the Joint Regulations, setting out agency procedures for the collection by administrative offset of such claims and debts. If the head of an agency of the Department adopts regulations separate from this subpart, the procedures thereby established, rather than those set out in this part, shall be followed for the collection of the claims and debts to which the separate regulations apply. If an agency does not adopt separate regulations, the Director of the Office of Finance and Management may carry out the duties and exercise the authority of the Secretary on behalf of agency heads.

(c) Except where administrative offset is explicitly prohibited by statute or where other procedures are explicitly provided for by statute, all contracts and other written agreements which are executed after the effective date of these regulations between an agency and any person or entity must include the following or substantially similar language:

Any monies that are payable or may become payable from the United States under this agreement to any person or legal entity not an agency or subdivision of a State or local government may be subject to administrative offset for the collection of a delinquent debt the person or legal entity owes to the United States, under the Federal Claims Collection Act of 1966, as amended by the Debt Collection Act of 1982 (31 U.S.C. 3701, 3711, 3716-3719); 4 CFR Part 102 and Subpart B of this part. Information on the person's or legal entity's responsibility for a commercial debt or delinquent consumer debt owed the United States will be disclosed to consumer or commercial credit reporting agencies.

[50 FR 7722, Feb. 26, 1985, as amended at 55 FR 38662, Sept. 20, 1990]