Goto Section: 1.1936 | 1.1941 | Table of Contents
Revised as of October 1, 2019
Goto Year:2018 |
§ 1.1940 Assessment.
(a) Except as provided in paragraphs (g), (h), and (i) of this section
or § 1.1941, the Commission shall charge interest, penalties, and
administrative costs on debts owed to the United States pursuant to 31
U.S.C. 3717. The Commission will mail, hand-deliver, or use other forms
of transmission, including facsimile telecopier service, a written
notice to the debtor, at the debtor's CORES contact address (see
section 1.8002(b)) explaining the Commission's requirements concerning
these charges except where these requirements are included in a
contractual or repayment agreement, or otherwise provided in the
Commission's rules, as may be amended from time to time. These charges
shall continue to accrue until the debt is paid in full or otherwise
resolved through compromise, termination, or waiver of the charges.
This provision is not intended to modify or limit the terms of any
contract, note, or security agreement from the debtor, or to modify or
limit the Commission's rights under its rules with regard to the notice
or the parties' agreement to waive notice.
(b) The Commission shall charge interest on debts owed the United
States as follows:
(1) Interest shall accrue from the date of delinquency, or as otherwise
provided by the terms of any contract, note, or security agreement,
regulation, or law.
(2) Unless otherwise established in a contract, note, or security
agreement, repayment agreement, or by statute, the rate of interest
charged shall be the rate established annually by the Treasury in
accordance with 31 U.S.C. 3717. Pursuant to 31 U.S.C. 3717, an agency
may charge a higher rate of interest if it reasonably determines that a
higher rate is necessary to protect the rights of the United States.
The agency should document the reason(s) for its determination that the
higher rate is necessary.
(3) The rate of interest, as initially charged, shall remain fixed for
the duration of the indebtedness. When a debtor defaults on a repayment
agreement and seeks to enter into a new agreement, the agency may
require payment of interest at a new rate that reflects the current
value of funds to the Treasury at the time the new agreement is
executed. Interest shall not be compounded, that is, interest shall not
be charged on interest, penalties, or administrative costs required by
this section. If, however, a debtor defaults on a previous repayment
agreement, charges that accrued but were not collected under the
defaulted agreement shall be added to the principal under the new
(c) The Commission shall assess administrative costs incurred for
processing and handling delinquent debts, unless otherwise prohibited
by statute. The calculation of administrative costs may be based on
actual costs incurred or upon estimated costs as determined by the
Commission. Commission administrative costs include the personnel and
service costs (e.g., telephone, copier, and overhead) to notify and
collect the debt, without regard to the success of such efforts by the
(d) Unless otherwise established in a contract, repayment agreement, or
by statute, the Commission will charge a penalty, pursuant to 31 U.S.C.
3717(e)(2), currently not to exceed six percent (6%) a year on the
amount due on a debt that is delinquent for more than 90 days. This
charge shall accrue from the date of delinquency. If the rate permitted
under 31 U.S.C. 3717 is changed, the Commission will apply that rate.
(e) The Commission may increase an administrative debt by the cost of
living adjustment in lieu of charging interest and penalties under this
section. Administrative debt includes, but is not limited to, a debt
based on fines, penalties, and overpayments, but does not include a
debt based on the extension of Government credit, such as those arising
from loans and loan guaranties. The cost of living adjustment is the
percentage by which the Consumer Price Index for the month of June of
the calendar year preceding the adjustment exceeds the Consumer Price
Index for the month of June of the calendar year in which the debt was
determined or last adjusted. Increases to administrative debts shall be
computed annually. Agencies should use this alternative only when there
is a legitimate reason to do so, such as when calculating interest and
penalties on a debt would be extremely difficult because of the age of
(f) When a debt is paid in partial or installment payments, amounts
received by the agency shall be applied first to outstanding penalties
and administrative cost charges, second to accrued interest, and third
to the outstanding principal.
(g) The Commission will waive the collection of interest and
administrative charges imposed pursuant to this section on the portion
of the debt that is paid within 30 days after the date on which
interest began to accrue. The Commission will not extend this 30-day
period except for good cause shown of extraordinary and compelling
circumstances, completely documented and supported in writing,
submitted and received before the expiration of the first 30-day
period. The Commission may, on good cause shown of extraordinary and
compelling circumstances, completely documented and supported in
writing, waive interest, penalties, and administrative costs charged
under this section, in whole or in part, without regard to the amount
of the debt, either under the criteria set forth in these standards for
the compromise of debts, or if the agency determines that collection of
these charges is against equity and good conscience or is not in the
best interest of the United States.
(h) The Commission retains the common law right to impose interest and
related charges on debts not subject to 31 U.S.C. 3717.
[ 69 FR 27848 , May 17, 2004, as amended at 83 FR 47097 , Sept. 18, 2018]
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Goto Section: 1.1936 | 1.1941
Goto Year: 2018 |
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