Frequently Asked Questions about the Cross-Servicing Program for Federal Agencies

Through the Cross-Servicing program, Fiscal Service provides delinquent debt collection services to federal agencies. We work with debtors based on their ability to pay. We send letters, get and place telephone calls, refer debts to the Treasury Offset Program, garnish wages, report debts to credit bureaus, and refer debts to private collection agencies.

For information about debt collection laws that govern the Cross-Servicing program, see our Legal Authorities, which lists several relevant legal authorities, and I TFM 3-5000, which describes the roles and responsibilities of federal agencies under the Cross-Servicing program.

The requirement to “transfer” or "refer" a debt means the agency must send the debt to Fiscal Service's Cross-Servicing program (or, in some cases, another Treasury-designated debt collection center) for debt collection services. After referral, Fiscal Service (or the debt collection center) becomes responsible for collecting the debt.

In general, federal agencies must refer any debt that is between 60- and 121- days delinquent to the Cross-Servicing program. Although agencies generally must refer debts by no later than the 121st day of delinquency, agencies may refer older debts even if they have missed this timeframe.

Yes, the following types of debt are excluded from mandatory transfer Fiscal Service:

• Debts that are in litigation or foreclosure
• Debts that will be disposed of within 1 year of becoming eligible for sale under an asset sales program.
• Debts that will be disposed of later than 1 year under an asset sales program, and that is consistent with an asset sales program.
• Debts that will be disposed of later than 1 year under an asset sales program, and that is on a schedule established by the agency and approved by the Director of the Office of Management and Budget (OMB).
• Debts referred to one of Fiscal Service’s private collection contractors for collection for a period time determined by Fiscal Service.
• Debts referred to a Treasury-designated debt collection center with the consent of Fiscal Service and for a period determined by Fiscal Service.
• Debts that will be collected by an agency through internal offset if that offset is enough to collect the debt within 3 years of time the debt first became delinquent.
• Debts exempted by the Secretary of the Treasury.

A debt is “in litigation” if:

• The agency has referred the debt to the Department of Justice for litigation.
• The debt is the subject of pending court proceedings (including bankruptcy proceedings), regardless of whether the debtor, the agency or another party started the proceedings.
• The agency has independent authority to litigate and has filed a complaint.

A debt is “in foreclosure” if (1) collateral securing the debt is subject to foreclosure proceedings in court or the agency has issued a foreclosure notice for the collateral; AND (2) the agency expects the proceeds from sale of the collateral will pay off the debt.

If the debt is still valid and delinquent, the agency must transfer the debt to Fiscal Service within 30 days of the conclusion of the litigation or foreclosure.

If the debt is still valid and delinquent at the end of an administrative appeals process, the agency must transfer the debt to Fiscal Service within 30 days of the final decision.

On referral of a debt, the agency must certify to several facts so that Fiscal Service knows it can take appropriate action to collect the debt in the Cross-Servicing program. Among other things, an agency must certify that:

• the debt is valid, delinquent, and legally enforceable,
• there are no bars to collecting the debt, and
• the agency has provided all required due process to the debtor.

Each year, the agency signs an agreement with Fiscal Service that covers both the Cross-Servicing program and the Treasury Offset Program. The agreement sets forth the facts that the agency is certifying on referral of the delinquent debt. Generally, the agency's Chief Financial Officer or equivalent officer should sign the agreement. A sample copy of the annual certification agreement is listed in our Debt Collection Resources for Federal Agencies.

An agency profile form provides basic information about a class of debts owed to the agency, including specific rules that apply to the agency’s debts and contact information in the agency for questions that may arise about a referred debt. The agency should periodically review its agency profile for updates needed. Unless otherwise noted, updates to the profile will govern all debts referred under that profile, whether the debts were referred before or after the profile update.

Agencies generally must refer debts to Fiscal Service for collection when the debt is between 60 and 121 days overdue (delinquent). On referral, Fiscal Service acts for the agency. Fiscal Service then has the same authority over that debt as the head of the referring agency has, including the authority to compromise (negotiate a settlement or forgive the debt). See I TFM 3-5000 and 31 U.S.C. § 3711(g)(1)(A)(5). Agencies generally may not impose limitations on Fiscal Service’s compromise authority.

If the agency has legal reasons why it cannot grant full compromise authority to Fiscal Service, the agency must cite the relevant law on the Agency Profile Form. If the agency is not legally precluded from delegating full compromise authority, but has compelling policy reasons, the agency must discuss those policy reasons with Fiscal Service.

Fiscal Service's goal is to collect the full amount of the debt. We compromise a debt only if it is the best interest of the government and is consistent with relevant law, including the Federal Claims Collection Standards.

Yes. Fiscal Service's private collection agencies (PCAs) have limited authority to negotiate a compromise with a debtor. Any compromise offers between a PCA and a debtor above 50 percent (or for debts with a principal balance above $500,000) must have Fiscal Service (and, for debts with a principal balance above $500,000, DOJ) approval.

It depends. Generally, agencies must authorize Fiscal Service to use all available debt collection tools, including administrative wage garnishment (AWG). If your agency believes the use of a specific tool is not authorized or otherwise appropriate, you should give us your reasons. We will work with you to evaluate your concerns.

See I TFM 3-5030.30 (Comply with Relevant Laws and Authorize Use of All Appropriate Debt Collection Tools).

At the time of referral or as soon after that as practicable, an agency must provide Fiscal Service with accurate, appropriate information, in the way that Fiscal Service directs, including, if applicable:

• Copies of signed promissory notes,
• Copies of citations and notifications of fines or penalties,
• Copies of the first demand letters establishing debts,
• Copies of due-process notices, and
• Any other supporting documentation, as appropriate or as may be requested by Fiscal Service.

If an agency cannot provide this documentation at the time of referral, it must be able to provide it in 30 business days of a request by Fiscal Service for that information.

In other words, the agency must ensure that it has enough documentation to establish the existence of a debt before it refers the debt to the Cross-Servicing program.

See I TFM 3-5030.40b.

Yes. Agencies must update Fiscal Service with any new information. For example, agencies must notify us if a debtor files for bankruptcy so we can avoid violating the automatic stay and discharge injunction. Agencies are responsible for keeping accurate records about the debts, including accurate debt balances, even after they refer the debts to Fiscal Service for collection. See I TFM 3-5035.50c (Maintain Records).

If the debtor is still in bankruptcy, debts owed by the debtor generally should not be referred to Cross-Servicing even if the debt is not included in the bankruptcy, unless the agency has obtained relief from the automatic stay. Although the Bankruptcy Code does not extend the same protections from collection to post-petition debts as it does to pre-petition debts, there may still be restrictions in place about how post-petition debts may be collected.

For questions about 1099-C reporting requirements, please visit the IRS website, including Instructions for Forms 1099-A and 1099-C.

If the debt is still valid and legally enforceable, DDM may try to collect the debt. In general, there is no time limit on the collection of federal debts. But, if the debtor has not received notification about the debt for an extended period , the creditor agency should consider sending another notice.

What do the following terms mean as they relate to collecting debts: "write off," "close out," termination of collection action," or "discharge"?

• “Write-off” is an accounting concept governed by OMB Circular A-129 that requires agencies to accurately show the value of their receivables on their books. The write-off of a debt is simply the removal of the debt from the agency’s accounting and records.

  Generally, write-off is mandatory for debts delinquent more than two years. Agencies should continue collection work after the agency writes off a debt unless it determines that suspension or termination of debt collection action is appropriate. When writing off a debt, agencies classify the debts as either “currently not collectible” or “closed-out.”

  • “Currently not collectible” is a classification of write-off that means that the agency will continue its collection work after write-off.
  • “Closed-out” is a classification of write off that means that the agency has ended both active and passive debt collection work.
• “Termination of collection action” means that the agency has determined that it has authority under the Federal Claims Collection Standards to stop active collection work for the foreseeable future. Termination of active collection does not preclude passive collection work, such as offset or credit bureau reporting. It also does not prevent an agency from pursuing active collection if there is a change in the debtor’s status or if a new collection tool becomes available.
• “Discharge” is a term which can have different meanings, depending on the context.
  • A discharge in bankruptcy generally means that the agency no longer has a right to pursue the collection of the debt from the debtor who received the discharge, and that collection action should be terminated.
  • For the requirement to report a discharge of indebtedness to the Internal Revenue Service on a Form 1099-C, “discharge” generally means that an “identifiable event” has occurred. The reporting of a discharge of indebtedness on a Form 1099-C generally does not affect the rights of a creditor to collect a debt.

For more information about these terms, see Chapter 7 of Managing Federal Receivables or Part IV: Chapter F of the Treatise on Federal Nontax Debt Collection Law.

For the standards under which Fiscal Service will evaluate an agency’s request to be designated as a debt collection center, please consult our Treasury Financial Manual. See I TFM 3-5400.

In general, the Cross-Servicing program referrals all debts to the Treasury Offset Program (TOP). TOP works by matching debt records with payment records. Partial matches can happen in the TOP when there is an incomplete match between the name and taxpayer identification number (TIN) on a debt record and the name and TIN on a payment record. (For individuals, the TIN is usually the social security number. For entities, the TIN is usually an employer identification number.)

When the TIN matches, but the name does not, we have a partial match. There may be a match on TINs, but not on names because of a typo on the payment or debt record, or because the debtor uses (or has used) more than one name or different versions of the name. We do not offset payments based on a partial match. But, we research partial matches to see if more names (alias names) need to be added to that debtor's records. In this research, Fiscal Service uses established criteria and only adds an alias name if we are reasonably confident that the name is really another name of that debtor.

The situations that most often cause partial matches where there should be a full match include:

• change from a maiden name to a married name;
• a business using an acronym sometimes and full name sometimes; and
• a typo or transcription error in the debtor's name.

See I TFM 3-5030.30 Comply with Relevant Laws and Authorize Use of All Appropriate Debt Collection Tools) and I TFM 3-5035.30 (Modify Records).