(a) Payments otherwise due the debtor from the United States shall be offset from the debt in accordance with 31 CFR 901.3. These may be funds under the control of USADF or other Federal agencies. Collection may be through centralized offset by the Bureau of Fiscal Service (BFS) of the Department of the Treasury.

(b) Such payments include but are not limited to vendor payments, salary, retirement, lump sum payments due upon Federal employment separation, travel reimbursements, tax refunds, loans or other assistance. Offset of Federal salary payments will be in accordance with 5 U.S.C. 5514.

(c) Before administrative offset is instituted by another Federal agency or the BFS, USADF shall certify in writing to that entity that the debt is past due and legally enforceable and that USADF has complied with all applicable due process and other requirements as described in this part and other Federal law and regulations.

Any amount advanced to an employee for allowable travel expenses but not used for such purposes is recoverable from the employee, in accordance with 5 U.S.C. 5705,by.22. This section does not apply to debts where collection by salary offset is explicitly prohibited by another statute. Collection of debt by salary offset will be in accordance with 5 U.S.C. 5514.

(a) Due process requirements—Notice, hearing, written response and decision. (1) Prior to initiating collection action through salary offset, the Agency will provide all employees that owe a debt to the Government an opportunity to repay in full the amount owed, unless such opportunity will compromise the Government's ultimate ability to collect the debt.

(2) Except as provided otherwise, each employee from whom the Agency proposes to collect a debt by salary offset will receive a written notice 30 days prior to any deductions from pay. The notification will include the Agency's determination that a debt is owed, the amount of the debt, the Agency's intention to collect the debt by means of deductions from the employee's pay account, and the employee's right to request a hearing on the claim.

(3) An employee facing collection of debt by salary offset is entitled to request a hearing on the claim. The request must be filed in writing and signed by the employee. It must be received by the Agency within 15 days of the employee's receipt of the notification of proposed deduction. Late request for a hearing may be accepted if the employee can show that the delay in filing the request was due to circumstances beyond the employee's control.

(4) The Agency will make hearing arrangements that are consistent with law and regulations. Where a hearing is held, the employee is entitled to a written decision on the following:

(i) A determination of the Agency concerning the existence and amount of the debt; and

(ii) A repayment schedule.

(b) Exceptions to the due process requirements—pay and allowances. The procedural requirements of paragraph (a) of this section are not applicable to overpayments of salary or allowances in the following situations:

(1) Adjustments of pay arising out of an employee's election of coverage or a change in coverage under a Federal benefits program requiring periodic deduction from payment, if the amount to be recovered accumulated over four pay periods or less;

(2) Routine intra-agency adjustments in pay or allowances that are made to correct overpayments of pay attributable to clerical or administrative errors or delays in processing pay documents, if the overpayments accrued over four pay periods or less; and

(3) Any adjustment to collect a debt amounting to $50 or less.

(c) Form of hearing, written response and final decision. (1) The hearing official will make a decision based upon a review of the claim and any additional material submitted by the debtor. Where the hearing official determines that the validity of the debt turns on an issue of veracity or credibility which cannot be resolved through a review of documentary evidence, the hearing official at his discretion may afford the debtor an opportunity for an oral hearing. An oral hearing will consist of an informal conference before a hearing official in which the employee and the Agency may present evidence, witnesses and arguments. The employee may be represented by an individual of his/her choosing. The Agency shall maintain a summary record of all oral hearings provided under the procedures of this section.

(2) Written decisions rendered pursuant to a hearing will include the hearing official's analysis, findings and conclusions. The decision will be final and binding on the parties.

(d) Request for waiver. In certain circumstances, an employee may have a statutory right to request a waiver of overpayment of pay or allowances, e.g., 5 U.S.C. 5584 or 5 U.S.C. 5724(i). When an employee requests a waiver consideration under a right authorized by statue, further collection on the debt will be suspended until a final administrative decision is made on the waiver request.

(e) Non-waiver of right by payment. An employee's payment of all or any portion of a debt does not waive any rights that the employee may have under either the procedures in this section or any other provision of law.

A debt will be collected in a lump sum or by installment deductions at established pay intervals from an employee's current pay account. If the employee is financially unable to pay a debt in a lump sum or the amount of debt exceeds 15 percent of disposable pay, collection will be made in installments, unless the employee and the Agency agree to alternative arrangements for payment. Alternative payment schedules must be in writing, signed by both the employee and the CFO and will be documented in the Agency's files.

Installment deduction will be made over the period of active duty or employment. The size and frequency of the installment deductions generally will bear a reasonable relation to the size of the debt and the employee's ability to pay. However, an amount deducted for any period may not exceed 15 percent of the disposable pay from which the deduction is made, unless the employee has agreed in writing to the deduction of a greater amount. If possible, the installment payments should be in amounts sufficient to liquidate the debt within a period of three years or less. Installment payments of less than $50 will be accepted only in the most unusual circumstances.

(a) Deductions to liquidate an employee's debt will begin on the date stated in the Agency's Bill for Collection or demand letter notice of intention to collect from the employee's current pay, unless the debt has been repaid in full or the employee has filed a timely request for hearing.

(b) If an employee files a timely request for hearing, deductions will begin after the hearing official has provided the employee with a final written decision indicating the amount owed to the Government. Following the decision by the hearing official, the employee will be given 30 days to repay the amount owed prior to collection through salary offset, unless otherwise provided by the hearing official.

If the employee retires, resigns, or the period of employment ends before collection of the debt is completed, the remainder of the debt will be offset from subsequent payments of any nature due the employee (e.g. final salary payment, lump-sum leave, etc.).

USADF will assess interest, penalties and administrative costs on debts collected under the procedures in this section. Interest, penalty and administrative costs will continue to accrue during the period that the debtor is seeking formal or informal review of the debt or requesting a waiver. The following guidelines apply to the assessment of these costs on debts collected by salary offset:

(a) Interest will be assessed on all debts not collected by the payment due date specified in the Bill for Collection or demand letter. USADF will waive the interest and administrative charges on the portion of the debt that is paid within 30 days after the date on which interest begins to accrue.

(b) Administrative costs will be assessed if the debt is referred to Treasury for cross-servicing.

(c) Deductions by administrative offset normally begin prior to the time for assessment of a penalty. Therefore, a penalty charge will not be assessed unless deductions occur more than 90 days from the due date in the Bill for Collection or demand letter.

USADF will promptly refund to the employee any amounts paid or deducted pursuant to this section that are subsequently waived or found not owing to the United States Government. Refunds do not bear interest unless specifically authorized by law.

USADF will not initiate salary offset to collect a debt more than 1 year after the Government's right to collect the debt first accrued, unless facts material to the right to collect the debt were not known and could not have been known through the exercise of reasonable care by the Government official responsible for discovering and collecting such debt.

(a) USADF will use salary offset means of collecting debt against one of its employees that is indebted to another agency if requested to do so by that agency. The requesting agency must certify that the USADF employee owes a debt and that the procedural requirements of 5 U.S.C. 5514 and 5 CFR part 550, subpart K, have been met. The creditor agency must also advise USADF of the amount of debt, and the number and amount of the installments to be collected.

(b) Request for salary offset must be submitted to the CFO of USADF.

(c) Processing of the claim by USADF—

(1) Incomplete claims. A creditor agency will be required to supply USADF with all the required information prior to any salary offset from the employee's current pay account.

(2) Complete claims. If the claim procedures in paragraph (a) of this section have been properly completed, deduction will begin on the next established pay period. USADF will not review the merits of the creditor agency's determinations with respect to the amount or validity of the debt as stated in the debt claim form. USADF will not assess a handling or any other related charge to cover the cost of its processing the claim.

(d) Employees separating from USADF before a debt to another agency is collected—

(1) Employees separating from Government service. If an employee begins separation action before USADF collects the total debt due the creditor agency, the following actions will be taken:

(i) To the extent possible, the balance owed the creditor agency will be liquidated from subsequent payments of any nature due the employee from USADF;

(ii) If the total amount of the debt cannot be recovered, USADF will certify to the creditor agency and the employee the total amount of USADF's collection; and

(iii) If USADF is aware that the employee is entitled to payments from the Civil Service Retirement and Disability Fund, or other similar payments, it will provide such information to the creditor agency so that it can file a certified claim against the payments.

(2) Employees who transfer to another Federal agency. If an USADF employee transfers to another Federal agency before USADF collects the total amount due the creditor agency, USADF will certify the total amount of the collection made on the debt. It is the responsibility of the creditor agency to ensure that the collection is resumed by the new employing agency.