§ 1.1911   Demand for payment.

   (a) Written demand as described in paragraph (b) of this section, and
   which may be in the form of a letter, order, memorandum, or other form
   of written communication, will be made promptly upon a debtor of the
   United States in terms that inform the debtor of the consequences of
   failing to cooperate to resolve the debt. The specific content, timing,
   and number of demand letters depend upon the type and amount of the
   debt, including, e.g., any notes and the terms of agreements of the
   parties, and the debtor's response, if any, to the Commission's letters
   or telephone calls. One demand letter will be deemed sufficient. In
   determining the timing of the demand letter(s), the Commission will
   give due regard to the need to refer debts promptly to the Department
   of Justice for litigation, in accordance with the FCCS. When necessary
   to protect the Government's interest (for example, to prevent the
   expiration of a statute of limitations), written demand may be preceded
   by other appropriate actions under the FCCS, including immediate
   referral for litigation. The demand letter does not provide an
   additional period within to challenge the existence of, or amount of
   the non-tax debt if such time period has expired under Commission rules
   or other applicable limitation periods. Nothing contained herein is
   intended to limit the Commission's authority or discretion as may
   otherwise be permitted to collect debts owed.

   (b) The demand letter will inform the debtor of:

   (1) The basis for the indebtedness and the opportunities, if any, of
   the debtor to request review within the Commission;

   (2) The applicable standards for assessing any interest, penalties, and
   administrative costs (§ § 1.1940 and 1.1941);

   (3) The date by which payment is to be made to avoid late charges and
   enforced collection, which normally will not be more than 30 days from
   the date that the initial demand letter was mailed or hand-delivered;
   and

   (4) The name, address, and phone number of a contact person or office
   within the Commission.

   (c) The Commission will expend all reasonable effort to ensure that
   demand letters are mailed or hand-delivered on the same day that they
   are dated. As provided for in any agreement among parties, or as may be
   required by exigent circumstances, the Commission may use other forms
   of delivery, including, e.g., facsimile telecopier or electronic mail.
   There is no prescribed format for demand letters. The Commission
   utilizes demand letters and procedures that will lead to the earliest
   practicable determination of whether the debt can be resolved
   administratively or must be referred for litigation.

   (d) The Commission may, as circumstances and the nature of the debt
   permit, include in demand letters such items as the Commission's
   willingness to discuss alternative methods of payment; its policies
   with respect to the use of credit bureaus, debt collection centers, and
   collection agencies; the Commission's remedies to enforce payment of
   the debt (including assessment of interest, administrative costs and
   penalties, administrative garnishment, the use of collection agencies,
   Federal salary offset, tax refund offset, administrative offset, and
   litigation); the requirement that any debt delinquent for more than 120
   days be transferred to the Department of the Treasury for collection;
   and, depending on applicable statutory authority, the debtor's
   entitlement to consideration of a waiver. Where applicable, the debtor
   will be provided with a period of time (normally not more than 15
   calendar days) from the date of the demand in which to exercise the
   opportunity to request a review.

   (e) The Commission will respond promptly to communications from the
   debtor, within 30 days whenever feasible, and will advise debtors who
   dispute the debt that they must furnish available evidence to support
   their contentions.

   (f) Prior to the initiation of the demand process or at any time during
   or after completion of the demand process, if the Commission determines
   to pursue, or is required to pursue, offset, the procedures applicable
   to offset in § § 1.1912 and 1.1913, as applicable, will be followed. The
   availability of funds or money for debt satisfaction by offset and the
   Commission's determination to pursue collection by offset shall release
   the Commission from the necessity of further compliance with paragraphs
   (a), (b), (c), and (d) of this section.

   (g) Prior to referring a debt for litigation, the Commission will
   advise each person determined to be liable for the debt that, unless
   the debt can be collected administratively, litigation may be
   initiated. This notification will follow the requirements of Executive
   Order 12988 (3 CFR, 1996 Comp., pp. 157-163) and may be given as part
   of a demand letter under paragraph (b) of this section or in a separate
   document. Litigation counsel for the Government will be advised that
   this notice has been given.

   (h) When the Commission learns that a bankruptcy petition has been
   filed with respect to a debtor, before proceeding with further
   collection action, the Commission may immediately seek legal advice
   from its counsel concerning the impact of the Bankruptcy Code on any
   pending or contemplated collection activities. Unless the Commission
   determines that the automatic stay imposed at the time of filing
   pursuant to 11 U.S.C. 362 has been lifted or is no longer in effect, in
   most cases collection activity against the debtor should stop
   immediately.

   (1) After seeking legal advice, a proof of claim will be filed in most
   cases with the bankruptcy court or the Trustee. The Commission will
   refer to the provisions of 11 U.S.C. 106 relating to the consequences
   on sovereign immunity of filing a proof of claim.

   (2) If the Commission is a secured creditor, it may seek relief from
   the automatic stay regarding its security, subject to the provisions
   and requirements of 11 U.S.C. 362.

   (3) Offset is stayed in most cases by the automatic stay. However, the
   Commission will determine from its counsel whether its payments to the
   debtor and payments of other agencies available for offset may be
   frozen by the Commission until relief from the automatic stay can be
   obtained from the bankruptcy court. The Commission will also determine
   from its counsel whether recoupment is available.

   [ 69 FR 27848 , May 17, 2004, as amended at  80 FR 43030 , July 21, 2015]

   return arrow Back to Top