31 Cfr 902.2

§ 901.12

31 CFR Ch. IX (7–1–11 Edition)

(b) Agencies are authorized to use
mailing addresses obtained under paragraph (a) of this section to enforce collection of a delinquent debt and may
disclose such mailing addresses to
other agencies and to collection agencies for collection purposes.
§ 901.12

Exemptions.

(a) The preceding sections of this
part, to the extent they reflect remedies or procedures prescribed by the
Debt Collection Act of 1982 and the
Debt Collection Improvement Act of
1996, such as administrative offset, use
of credit bureaus, contracting for collection agencies, and interest and related charges, do not apply to debts
arising under, or payments made
under, the Internal Revenue Code of
1986, as amended (26 U.S.C. 1 et seq.);
the Social Security Act (42 U.S.C. 301
et seq.), except to the extent provided
under 42 U.S.C. 404 and 31 U.S.C. 3716(c);
or the tariff laws of the United States.
These remedies and procedures, however, may be authorized with respect to
debts that are exempt from the Debt
Collection Act of 1982 and the Debt Collection Improvement Act of 1996, to the
extent that they are authorized under
some other statute or the common law.
(b) This section should not be construed as prohibiting the use of these
authorities or requirements when collecting debts owed by persons employed by agencies administering the
laws cited in paragraph (a) of this section unless the debt arose under those
laws.

PART 902—STANDARDS FOR THE
COMPROMISE OF CLAIMS

§ 902.1

§ 902.2

Sec.
902.1 Scope and application.
902.2 Bases for compromise.
902.3 Enforcement policy.
902.4 Joint and several liability.
902.5 Further review of compromise offers.
902.6 Consideration of tax consequences to
the Government.
902.7 Mutual releases of the debtor and the
Government.
AUTHORITY: 31 U.S.C. 3711.
SOURCE: 65 FR 70402, Nov. 22, 2000, unless
otherwise noted.

Scope and application.

(a) The standards set forth in this
part apply to the compromise of debts
pursuant to 31 U.S.C. 3711. An agency
may exercise such compromise authority for debts arising out of activities
of, or referred or transferred for collection services to, that agency when the
amount of the debt then due, exclusive
of interest, penalties, and administrative costs, does not exceed $100,000 or
any higher amount authorized by the
Attorney General. Agency heads may
designate officials within their respective agencies to exercise the authorities in this section.
(b) Unless otherwise provided by law,
when the principal balance of a debt,
exclusive of interest, penalties, and administrative costs, exceeds $100,000 or
any higher amount authorized by the
Attorney General, the authority to accept the compromise rests with the Department of Justice. The agency should
evaluate the compromise offer, using
the factors set forth in this part. If an
offer to compromise any debt in excess
of $100,000 is acceptable to the agency,
the agency shall refer the debt to the
Civil Division or other appropriate litigating division in the Department of
Justice using a Claims Collection Litigation Report (CCLR). Agencies may
obtain the CCLR from the Department
of Justice’s National Central Intake
Facility. The referral shall include appropriate financial information and a
recommendation for the acceptance of
the compromise offer. Justice Department approval is not required if the
agency rejects a compromise offer.
Bases for compromise.

(a) Agencies may compromise a debt
if the Government cannot collect the
full amount because:
(1) The debtor is unable to pay the
full amount in a reasonable time, as
verified through credit reports or other
financial information;
(2) The Government is unable to collect the debt in full within a reasonable
time by enforced collection proceedings;
(3) The cost of collecting the debt
does not justify the enforced collection
of the full amount; or

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Federal Claims Collection Standards, Treas.–DOJ
(4) There is significant doubt concerning the Government’s ability to
prove its case in court.
(b) In determining the debtor’s inability to pay, agencies should consider
relevant factors such as the following:
(1) Age and health of the debtor;
(2) Present and potential income;
(3) Inheritance prospects;
(4) The possibility that assets have
been concealed or improperly transferred by the debtor; and
(5) The availability of assets or income that may be realized by enforced
collection proceedings.
(c) Agencies should verify the debtor’s claim of inability to pay by using
a credit report and other financial information as provided in paragraph (g)
of this section. Agencies should consider the applicable exemptions available to the debtor under state and Federal law in determining the Government’s ability to enforce collection.
Agencies also may consider uncertainty as to the price that collateral or
other property will bring at a forced
sale in determining the Government’s
ability to enforce collection. A compromise effected under this section
should be for an amount that bears a
reasonable relation to the amount that
can be recovered by enforced collection
procedures, with regard to the exemptions available to the debtor and the
time that collection will take.
(d) If there is significant doubt concerning the Government’s ability to
prove its case in court for the full
amount claimed, either because of the
legal issues involved or because of a
bona fide dispute as to the facts, then
the amount accepted in compromise of
such cases should fairly reflect the
probabilities of successful prosecution
to judgment, with due regard given to
the availability of witnesses and other
evidentiary support for the Government’s claim. In determining the
litigative risks involved, agencies
should consider the probable amount of
court costs and attorney fees pursuant
to the Equal Access to Justice Act, 28
U.S.C. 2412, that may be imposed
against the Government if it is unsuccessful in litigation.
(e) Agencies may compromise a debt
if the cost of collecting the debt does
not justify the enforced collection of

§ 902.3

the full amount. The amount accepted
in compromise in such cases may reflect an appropriate discount for the
administrative and litigative costs of
collection, with consideration given to
the time it will take to effect collection. Collection costs may be a substantial factor in the settlement of
small debts. In determining whether
the cost of collecting justifies enforced
collection of the full amount, agencies
should consider whether continued collection of the debt, regardless of cost,
is necessary to further an enforcement
principle, such as the Government’s
willingness to pursue aggressively defaulting and uncooperative debtors.
(f) Agencies generally should not accept compromises payable in installments. This is not an advantageous
form of compromise in terms of time
and administrative expense. If, however, payment of a compromise in installments
is
necessary,
agencies
should obtain a legally enforceable
written agreement providing that, in
the event of default, the full original
principal balance of the debt prior to
compromise, less sums paid thereon, is
reinstated. Whenever possible, agencies
also should obtain security for repayment in the manner set forth in part
901 of this chapter.
(g) To assess the merits of a compromise offer based in whole or in part
on the debtor’s inability to pay the full
amount of a debt within a reasonable
time, agencies should obtain a current
financial statement from the debtor,
executed under penalty of perjury,
showing the debtor’s assets, liabilities,
income and expenses. Agencies also
may obtain credit reports or other financial information to assess compromise offers. Agencies may use their
own financial information form or may
request suitable forms from the Department of Justice or the local United
States Attorney’s Office.
§ 902.3

Enforcement policy.

Pursuant to this part, agencies may
compromise statutory penalties, forfeitures, or claims established as an aid
to enforcement and to compel compliance, if the agency’s enforcement policy in terms of deterrence and securing
compliance, present and future, will be

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