Appendix A - 7 CFR 273.18

Appendix A - 7 CFR 273.18.pdf

Federal Collection Methods for Supplemental Nutrition Assistance Program Recipient Claims

Appendix A - 7 CFR 273.18.pdf

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ELECTRONIC CODE OF FEDERAL REGULATIONS
e-CFR data is current as of June 18, 2019
Title 7 → Subtitle B → Chapter II → Subchapter C → Part 273 → Subpart F → §273.18
Title 7: Agriculture
PART 273—CERTIFICATION OF ELIGIBLE HOUSEHOLDSUSCIS
Subpart F—Disqualification and Claims
§273.18 Claims against households.
(a) General. (1) A recipient claim is an amount owed because of:
(i) Benefits that are overpaid or
(ii) Benefits that are trafficked. Trafficking is defined in 7 CFR 271.2.
(2) This claim is a Federal debt subject to this and other regulations governing Federal debts. The State agency must
establish and collect any claim by following these regulations.
(3) As a State agency, you must develop a plan for establishing and collecting claims that provides orderly claims
processing and results in claims collections similar to recent national rates of collection. If you do not meet these standards, you
must take corrective action to correct any deficiencies in the plan.
(4) The following are responsible for paying a claim:
(i) Each person who was an adult member of the household when the overpayment or trafficking occurred;
(ii) A person connected to the household, such as an authorized representative, who actually trafficks or otherwise causes
an overpayment or trafficking.
(b) Types of claims. There are three types of claims:
An . . .
(1) Intentional Program violation (IPV) claim
(2) Inadvertent household error (IHE) claim
(3) Agency error (AE) claim

is . . .
any claim for an overpayment or trafficking resulting from an individual committing an IPV. An IPV is defined in §273.16.
any claim for an overpayment resulting from a misunderstanding or unintended error on the part of the household.
any claim for an overpayment caused by an action or failure to take action by the State agency.

(c) Calculating the claim amount—(1) Claims not related to trafficking.
(i) As a State agency, you
must calculate a claim . . .
and . . .
back to at least twelve months prior to when you become aware of the
for an IPV claim, the claim must be
overpayment
calculated back to the month the act
of IPV first occurred
(ii) The actual steps for calculating a claim are
you . . .
unless . . .
(A) determine the correct amount of benefits for each month that a household
received an overpayment
(B) do not apply the earned income deduction to that part of any earned
the claim is an AE claim
income that the household failed to report in a timely manner when this act is
the basis for the claim
(C) subtract the correct amount of benefits from the benefits actually received. this answer is zero or negative
The answer is the amount of the overpayment
(D) reduce the overpayment amount by any EBT benefits expunged from the you are not aware of any expunged
household's EBT benefit account in accordance with your own procedures.
benefits
The difference is the amount of the claim

and . . .
for all claims, don't include any amounts that
occurred more than six years before you
became aware of the overpayment.
then . . .

apply the earned income deduction.
dispose of the claim referral.
the amount of the overpayment calculated in
paragraph (c)(1)(ii)(C) of this section is the
amount of the claim.

(2) Trafficking-related claims. Claims arising from trafficking-related offenses will be the value of the trafficked benefits as
determined by:
(i) The individual's admission;
(ii) Adjudication; or
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(iii) The documentation that forms the basis for the trafficking determination.
(d) Claim referral management.
(1) As a State agency, you
and you . . .
will ensure that no less than 90 percent of all claim
referrals are either established or disposed of
according to this time frame

must . . .
establish a claim before the last day of the quarter
following the quarter in which the overpayment or
trafficking incident was discovered

unless . . .
you develop and use your own standards and
procedures that have been approved by us (see
paragraph (d)(2) of this section).

(2) Instead of using the standard in paragraph (d)(1) of this section, you may opt to develop and follow your own plan for
the efficient and effective management of claim referrals.
(i) This plan must be approved by us.
(ii) At a minimum, this plan must include:
(A) Justification as to why your standards and procedures will be more efficient and effective than our claim referral
standard;
(B) Procedures for the detection and referral of potential overpayments or trafficking violations;
(C) Time frames and procedures for tracking claim referrals through date of discovery to date of establishment;
(D) A description of the process to ensure that these time frames are being met;
(E) Any special procedures and time frames for IPV referrals; and
(F) A procedure to track and follow-up on IPV claim referrals when these referrals are referred for prosecutorial or similar
action.
(3) States must establish claims even if they cannot be established within the timeframes outlined under paragraph (d) of
this section.
(e) Initiating collection action and managing claims—(1) Applicability. State agencies must begin collection action on all
claims unless the conditions under paragraph (e)(2) of this section apply.
(2) Pre-establishment cost effectiveness determination. A State agency may opt not to establish and subsequently collect
an overpayment that is not cost effective. The following is our cost-effectiveness policy for State agencies:
opt not to establish any claim if . . .
you determine that the claim referral is not cost
effective to pursue
opt not to establish any claim if . . .
you determine that the claim referral is $125 or
less

(i) You may follow your own cost effectiveness plan and
unless . . .
or . . .
you do not have a cost-effectiveness plan you already established the claim or discovered the overpayment in a
approved by us
quality control review.
(ii) Or you may follow the FNS threshold and
unless . . .
or . . .
the household is currently participating in you already established the claim or discovered the overpayment in a
the Program
quality control review.

(3) Notification of claim. (i) Each State agency must develop and mail or otherwise deliver to the household written
notification to begin collection action on any claim.
(ii) The claim will be considered established for tracking purposes as of the date of the initial demand letter or written
notification.
(iii) If the claim or the amount of the claim was not established at a fair hearing, the State agency must provide the
household with a one-time notice of adverse action. The notice of adverse action may either be sent separately or as part of the
demand letter.
(iv) The initial demand letter or notice of adverse action must include language stating:
(A) The amount of the claim.
(B) The intent to collect from all adults in the household when the overpayment occurred.
(C) The type (IPV, IHE, AE or similar language) and reason for the claim.
(D) The time period associated with the claim.
(E) How the claim was calculated.
(F) The phone number to call for more information about the claim.
(G) That, if the claim is not paid, it will be sent to other collection agencies, who will use various collection methods to collect the claim.
(H) The opportunity to inspect and copy records related to the claim.
(I) Unless the amount of the claim was established at a fair hearing, the opportunity for a fair hearing on the decision related to the claim. The household will have 90

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days to request a fair hearing.
(J) That, if not paid, the claim will be referred to the Federal government for federal collection action.
(K) That the household can make a written agreement to repay the amount of the claim prior to it being referred for Federal collection action.
(L) That, if the claim becomes delinquent, the household may be subject to additional processing charges.
(M) That the State agency may reduce any part of the claim if the agency believes that the household is not able to repay the claim.
(N) A due date or time frame to either repay or make arrangements to repay the claim, unless the State agency is to impose allotment reduction.
(O) If allotment reduction is to be imposed, a due date or time frame to either repay or make arrangements to repay the claim in the event that the household stops
receiving benefits.
(P) If allotment reduction is to be imposed, the percentage to be used and the effective date.

(v) The due date or time frame for repayment must be not later than 30 days after the date of the initial written notification
or demand letter.
(vi) Subsequent demand letters or notices may be sent at the discretion of the State agency. The language to be used and
content of these letters is left up to the State agency.
(4) Repayment agreements. (i) Any repayment agreement for any claim must contain due dates or time frames for the
periodic submission of payments.
(ii) The agreement must specify that the household will be subject to involuntary collection action(s) if payment is not
received by the due date and the claim becomes delinquent.
(5) Determining Delinquency. (i) Unless specified in paragraph (e)(5)(iv) of this section, a claim must be considered
delinquent if:
(A) The claim has not been paid by the due date and a satisfactory payment arrangement has not been made; or
(B) A payment arrangement has been established and a scheduled payment has not been made by the due date.
(ii) The date of delinquency for a claim covered under paragraph (e)(5)(i)(A) of this section is the due date on the initial
written notification/demand letter. The claim will remain delinquent until payment is received in full, a satisfactory payment
agreement is negotiated, or allotment reduction is invoked.
(iii) The date of delinquency for a claim covered under paragraph (e)(5)(i)(B) of this section is the due date of the missed
installment payment unless the claim was delinquent prior to entering into a repayment agreement, in which case the due date
will be the due date on the initial notification/demand letter. The claim will remain delinquent until payment is received in full,
allotment reduction is invoked, or if the State agency determines to either resume or re-negotiate the repayment schedule.
(iv) A claim will not be considered delinquent if another claim for the same household is currently being paid either through
an installment agreement or allotment reduction and you, as a State agency, expect to begin collection on the claim once the
prior claim(s) is settled.
(v) A claim is not subject to the requirements for delinquent debts if the State agency is unable to determine delinquency
status because collection is coordinated through the court system.
(6) Fair hearings and claims. (i) A claim awaiting a fair hearing decision must not be considered delinquent.
(ii) If the hearing official determines that a claim does, in fact, exist against the household, the household must be renotified of the claim. The language to be used in this notice is left up to the State agency. The demand for payment may be
combined with the notice of the hearing decision. Delinquency must be based on the due date of this subsequent notice and not
on the initial pre-hearing demand letter sent to the household.
(iii) If the hearing official determines that a claim does not exist, the claim is disposed of in accordance with paragraph (e)
(8) of this section.
(7) Compromising claims. (i) As a State agency, you may compromise a claim or any portion of a claim if it can be
reasonably determined that a household's economic circumstances dictate that the claim will not be paid in three years.
(ii) You may use the full amount of the claim (including any amount compromised) to offset benefits in accordance with
§273.17.
(iii) You may reinstate any compromised portion of a claim if the claim becomes delinquent.
(8) Terminating and writing-off claims—(i) A terminated claim is a claim in which all collection action has ceased. A writtenoff claim is no longer considered a receivable subject to continued Federal and State agency collection and reporting
requirements.
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(ii) The following is our claim termination policy:
As a State agency, if . . .
(A) you find that the claim is invalid

Then you . . .
must discharge the claim and reflect the
event as a balance adjustment rather than a
termination
must terminate and write-off the claim
must terminate and write-off the claim

(B) all adult household members die
(C) the claim balance is $25 or less and the claim has been
delinquent for 90 days or more
(D) you determine it is not cost effective to pursue the claim any must terminate and write-off the claim
further
(E) the claim is delinquent for three years or more
must terminate and write-off the claim
(F) you cannot locate the household
(G) a new collection method or a specific event (such as
winning the lottery) substantially increases the likelihood of
further collections

may terminate and write-off the claim
may reinstate a terminated and written-off
claim

Unless . . .
it is appropriate to pursue the overpayment as a
different type of claim (e.g., as an IHE rather than an
IPV claim).
you plan to pursue the claim against the estate.
other claims exist against this household resulting in
an aggregate claim total of greater than $25.
we have not approved your overall cost-effectiveness
criteria.
you plan to continue to pursue the claim through
Treasury's Offset Program.
you decide not to pursue this option.

(f) Acceptable forms of payment.
You may collect a claim by:
(1) Reducing benefits prior to issuance. This includes allotment reduction and offsets to restored benefits
(2) Reducing benefits after issuance. These are benefits from electronic benefit transfer (EBT) accounts
(3) Accepting cash or any of its generally accepted equivalents. These equivalents include check, money order,
and credit or debit cards
(4) Conducting your own offsets and intercepts. This includes but is not limited to wage garnishments and
intercepts of various State payments. These collections are considered “cash” for FNS claim accounting and
reporting purposes
(5) Requiring the household to perform public service
(6) Participating in the Treasury collection programs

However . . .
You must follow the instructions and limits found in
paragraphs (g)(1) and (g)(3) of this section.
You must follow the instructions and limits found in
paragraph (g)(2) of this section.
You do not have to accept credit or debit cards if
you do not have the capability to accept these
payments.
You must follow any limits that may apply in
paragraph (g) of this section.
This form of payment must be ordered by a court
and specifically be in lieu of paying any claim.
You must follow the procedures found in paragraph
(n) of this section.

(g) Collection methods—(1) Allotment reduction. The following is our allotment reduction policy:
As a State agency, you must . . .
(i) Automatically collect payments for any claim by reducing the
amount of monthly benefits that a household receives

Unless . . .
the claim is being collected at regular intervals at a higher amount or another household is
already having its allotment reduced for the same claim (see paragraph (g)(1)(vi) of this
section).
(ii) For an IPV claim, limit the amount reduced to the greater of $20 per the household agrees to a higher amount.
month or 20 percent of the household's monthly allotment or
entitlement
(iii) For an IHE or AE claim, limit the amount reduced to the greater of the household agrees to a higher amount.
$10 per month or 10 percent of the household's monthly allotment
(iv) Not reduce the initial allotment when the household is first certified the household agrees to this reduction.
(v) Not use additional involuntary collection methods against
the additional payment is voluntary; or the source of the payment is irregular and unexpected
individuals in a household that is already having its benefit reduced
such as a State tax refund or lottery winnings offset.
You may . . .
(vi) Collect using allotment reduction from two separate households for the same claim. However, you are not required to perform this simultaneous reduction.
(vii) Continue to use any other collection method against any individual who is not a current member of the household that is undergoing allotment reduction.

(2) Benefits from EBT accounts. (i) As a State agency, you must allow a household to pay its claim using benefits from its
EBT benefit account.
(ii) You must comply with the following EBT benefit claims collection and adjustment requirements:
(A) For collecting from active (or reactivated) EBT benefits . . .
You . . .
or . . .
need written permission which may be obtained in advance and done in oral permission for one time reductions with you sending the
accordance with paragraph (g)(2)(iv) of this section;
household a receipt of the transaction within 10 days
(B) For collecting from stale EBT benefits . . .
You . . .
and . . .
must mail or otherwise deliver to the household written notification that
give the household at least 10 days to notify you that it doesn't
you intend to apply the benefits to the outstanding claim
want to use these benefits to pay the claim
(C) For making an adjustment with expunged EBT benefits . . .
You . . .
and . . .
must adjust the amount of any claim by subtracting any expunged
this can be done anytime
amount from the EBT benefit account for which you become aware

and . . .
the retention rules do apply
to this collection.
and . . .
the retention rules apply to
this collection.
and . . .
the retention rules do not
apply to this adjustment.

(iii) A collection from an EBT account must be non-settling against the benefit drawdown account.
(iv) At a minimum, any written agreement with the household to collect a claim using active EBT benefits must include:
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(A) A statement that this collection activity is strictly voluntary;
(B) The amount of the payment;
(C) The frequency of the payments (i.e., whether monthly or one time only);
(D) The length (if any) of the agreement; and
(E) A statement that the household may revoke this agreement at any time.
(3) Offsets to restored benefits. You must reduce any restored benefits owed to a household by the amount of any
outstanding claim. This may be done at any time during the claim establishment and collection process.
(4) Lump sum payments. You must accept any payment for a claim whether it represents full or partial payment. The
payment may be in any of the acceptable formats.
(5) Installment payments. (i) You may accept installment payments made for a claim as part of a negotiated repayment
agreement.
(ii) As a household, if you fail to submit a payment in accordance with the terms of your negotiated repayment schedule,
your claim becomes delinquent and it will be subject to additional collection actions.
(6) Intercept of unemployment compensation benefits. (i) As a State agency, you may arrange with a liable individual to
intercept his or her unemployment compensation benefits for the collection of any claim. This collection option may be included
as part of a repayment agreement.
(ii) You may also intercept an individual's unemployment compensation benefits by obtaining a court order.
(iii) You must report any intercept of unemployment compensation benefits as “cash” payments when they are reported to
us.
(7) Public service. If authorized by a court, the value of a claim may be paid by the household performing public service. As
a State agency, you will report these amounts in accordance with our instructions.
(8) Other collection actions. You may employ any other collection actions to collect claims. These actions include, but are
not limited to, referrals to collection and/or other similar private and public sector agencies, state tax refund and lottery offsets,
wage garnishments, property liens and small claims court.
(9) Unspecified joint collections. When an unspecified joint collection is received for a combined public assistance/SNAP
recipient claim, each program must receive its pro rata share of the amount collected. An unspecified joint collection is when
funds are received in response to correspondence or a referral that contained both the SNAP and other program claim(s) and
the debtor does not specify to which claim to apply the collection.
(h) Refunds for overpaid claims. (1) As a household, if you overpay a claim, the State agency must provide a refund for the
overpaid amount as soon as possible after the State agency finds out about the overpayment. You will be paid by whatever
method the State agency deems appropriate considering the circumstances.
(2) You are not entitled to a refund if the overpaid amount is attributed to an expunged EBT benefit.
(i) Interstate claims collection. (1) Unless a transfer occurs as outlined in paragraph (i)(2) of this section, as a State agency,
you are responsible for initiating and continuing collection action on any SNAP recipient claim regardless of whether the
household remains in your State.
(2) You may accept a claim from another State agency if the household with the claim moves into your State. Once you
accept this responsibility, the claim is yours for future collection and reporting. You will report interstate transfers to us in
accordance with our instructions.
(j) Bankruptcy. A State agency may act on our behalf in any bankruptcy proceeding against a bankrupt household with
outstanding recipient claims.
(k) Retention rates. (1) The retention rates for State agencies are as follows:
If you collect an . . .
(i) IPV claim
(ii) IHE claim
(iii) IHE claim by reducing a person's unemployment compensation benefit
(iv) AE claim

then the retention rate is . . .
35 percent.
20 percent.
35 percent.
nothing.

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(2) These rates do not apply to:
(i) Any reduction in benefits when you disqualify someone for an IPV;
(ii) The value of court-ordered public service performed in lieu of the payment of a claim; or
(iii) Payments made to a court that are not subsequently forwarded as payment of an established claim.
(l) Submission of payments to us. A State agency must send us the value of funds collected for IHE, IPV or AE claims
according to our instructions. We must pay you for claims collection retention by electronic funds transfer.
(m) Accounting procedures. (1) As a State agency, you must maintain an accounting system for monitoring recipient claims
against households. This accounting system shall consist of both the system of records maintained for individual debtors and
the accounts receivable summary data maintained for these debts.
(2) At a minimum, the accounting system must document the following for each claim:
(i) The date of discovery;
(ii) The reason for the claim;
(iii) The calculation of the claim;
(iv) The date you established the claim;
(v) The methods used to collect the claim;
(vi) The amount and incidence of any claim processing charges;
(vii) The reason for the final disposition of the claim;
(viii) Any collections made on the claim;
(ix) Any correspondence, including follow-up letters, sent to the household.
(3) At a minimum, your accounting or certification system must also identify the following for each claim:
(i) Those households whose claims have become delinquent;
(ii) Those situations in which an amount not yet restored to a household can be used to offset a claim owed by the
household; and
(iii) Those households with outstanding claims that are applying for benefits.
(4) When requested and at intervals determined by us, your accounting system must also produce:
(i) Accurate and supported outstanding balances and collections for established claims; and
(ii) Summary reports of the funds collected, the amount submitted to FNS, the claims established and terminated, any
delinquent claims processing charges, the uncollected balance and the delinquency of the unpaid debt.
(5) On a quarterly basis, unless otherwise directed by us, your accounting system must reconcile summary balances
reported to individual supporting records.
(n) Treasury's Offset Programs (TOP)—(1) Referring debts to TOP. (i) As a State agency, you must refer to TOP all
recipient claims that are delinquent for 180 or more days.
(ii) You must certify that all of these claims to be referred to TOP are 180 days delinquent and legally enforceable.
(iii) You must refer these claims in accordance with our and the Department of the Treasury's (Treasury) instructions.
(iv) You must not refer claims to TOP that:
(A) You become aware that the debtor is a member of a participating household that is having its allotment reduced to
collect the claim; or

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(B) Fall into any other category designated by us as non-referable to TOP.
(2) Notifying debtors of referral to TOP. (i) As a State agency, you must notify the debtor of the impending referral to TOP
according to our instructions relating to:
(A) What constitutes an adequate address to send the notice;
(B) What specific language will be included in the TOP referral notice;
(C) What will be the appropriate time frames and appeal rights; and
(D) Any other information that we determine necessary to fulfill all due process and other legal requirements as well as to
adequately inform the debtor of the impending action.
(ii) You must also follow our instructions regarding procedures connected with responding to inquiries, subsequent reviews
and hearings, and any other procedures determined by us as necessary in the debtor notification process.
(3) Effect on debtors. (i) If you, as a debtor, have your claim referred to TOP, any eligible Federal payment that you are
owed may be intercepted through TOP.
(ii) You may also be responsible for paying any collection or processing fees charged by the Federal government to
intercept your payment.
(4) Procedures when a claim is in TOP. (i) As a State agency, you must follow FNS and Treasury procedures when the
claim is in TOP.
(ii) You must remove a claim from TOP if:
(A) FNS or Treasury instruct you to remove the debt; or
(B) You discover that:
(1) The debtor is a member of a SNAP household undergoing allotment reduction;
(2) The claim is paid up;
(3) The claim is disposed of through a hearing, termination, compromise or any other means;
(4) The claim was referred to TOP in error; or
(5) You make an arrangement with the debtor to resume payments.
(5) Receiving and reporting. As a State agency, you must follow our procedures on receiving and reporting TOP payments.
(6) Security or confidentiality agreements. As a State agency, you must follow our procedures regarding any security or
confidentiality agreements or processes necessary for TOP participation.
[Amdt. 389, 65 FR 41775, July 6, 2000; 65 FR 47587, Aug. 2, 2000, as amended at 75 FR 78153, Dec. 15, 2010; 82 FR 2043, Jan. 6,
2017]
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