(3) Has not made an arrangement for payment by the payment due date; (e) Except for information that may properly be withheld under 49 CFR part 7, the debtor may inspect and copy the records of the agency related to the claim. Any reasonable costs associated with the copying and inspection of the records shall be borne by the debtor. (Payment of cost is governed by 49 CFR part 7, subpart I.) The debtor shall give reasonable notice in advance to the agency of the date on which it intends to inspect and copy the records involved; (X1) Except for debts established by settlement agreement, court order or judgment, or final administrative decision, the debtor may request review of the validity or amount of a claim. To do so, the debtor shall make a request in writing for review of the claim prior to it becoming delinquent. (See 4 CFR 101.2 for definition of when a debt is considered delinquent.) The debtor's written response shall state the basis for the dispute, and provide all factual information, documents, citation to authority, argument and any other matters to be considered. If only part of the claim is disputed, the undisputed portion shall be paid by the delinquency date stated in the initial demand. During the period that the claim is being reviewed, the amount of the debt is owed, but the accrual of interest and accrual of time to delinquency may be suspended on the disputed portion of the debt. (2) Review of claims shall be based upon the written record unless an oral hearing is required by 4 CFR 102.3(c). Upon completion of review, within 30 days whenever feasible, the Department shall advise the debtor whether the debt has been found to be valid in any amount, or that collection will be terminated. If the claim is found to be valid in any amount, the accrual of interest and time to delinquency shall commence 15 days after mailing of the notification of the review results. The notification of the review may also include notice of a specific collection action to be undertaken if payment is not received. (g) The debtor may offer to make a written agreement to pay the amount of the claim. The acceptance of such an agreement is discretionary with DOT. If the debtor requests an installment payment arrangement because a lump sum payment would create a financial hardship, DOT may agree to a written installment payment schedule with the debtor (see 4 CFR 102.11(a)). The debtor shall execute a confessjudgment note which specifies all of the terms of the arrangement and includes a provision accelerating the debt in the event the debtor defaults. The size and frequency of installment payments chall bear a reasonable relation to the size of the debt and the debtor's ability to pay. Interest shall be provided in the note (see § 89.23). The debtor shall be provided with a written explanation of the consequences of signing a confess-judgment note. The debtor shall sign a statement acknowledging receipt of the written explanation, which shall recite that the statement was read and understood before execution of the note and that the note is being signed knowingly and voluntarily. Evidence of these facts shall be maintained in DOT's file on the debtor in accordance with the practice of the DOT operating element. § 89.23 Interest, late payment penalties, and collection charges. (a) DOT shall charge interest on an outstanding debt at the Treasury Current Value of Funds Rate published by the Secretary of the Treasury in accordance with 31 U.S.C. 3717 and 4 CFR 102.13(c), unless DOT determines that a higher rate is necessary to protect the interests of the United States. DOT shall charge a late payment penalty at a rate of six percent a year on any portion of a debt that is more than 90 days past due. DOT shall also assess administrative charges to cover additional cost incurred in processing and handling the debt beyond the payment due date. The imposition of interest, collection charges, and late payment penalty charges shall be made in accordance with 31 U.S.C. 3717, 4 CFR 102.13 (see § 89.3(c) regarding payment of such charges by Federal, state and local government agencies). (b) Interest on debt shall begin to accrue on the date on which the debtor is mailed or delivered notice of the debt and the interest requirements or, in the case of advance billings, on the calendar day following the specified due date of the debt, provided the advance billing gives notice of the interest requirements for late payment. Interest on the debt shall continue to accrue until payment is received. Interest shall be calculated only on the principal of the debt (simple interest). The rate of interest assessed shall be the rate in effect on the date from which interest begins to accrue, and will remain fixed for the duration of the indebtedness. The rate of interest assessed will generally be the Treasury Current Value of Funds Rate. (c) The Department shall waive interest on debt that is paid within 30 calendar days after the date on which interest began to accrue. (d) Collection charges on debt shall be computed to cover the cost of processing and handling the delinquent debt. It shall be either the actual cost to process the particular delinquent debt to which it is applied, or operating elements may set the amount of such monthly charge by cost analysis establishing the average of actual additional costs incurred by the operating element in processing similar debts. Collection charges may also include the expense of obtaining credit reports and of using a professional debt collection contractor. (e) DOT may waive interest, collection charges, or late payment penalty charges if it finds that: (1) The debtor would be eligible for compromise under standards set forth in 4 CFR 103.2 with regard to the amount of the debt; (2) Collection of interest, administrative charges, or penalties will jeopardize collection of the principal of the debt; or (3) It is otherwise in the best interests of the United States, including the situation in which an offset or installment payment agreement is in effect. § 89.25 Collection by administrative offset. (a) Whenever feasible, after a debtor fails to pay a claim, request a review of a claim, or make an arrangement for payment following a demand made in accordance with § 89.21, DOT shall collect claims under this part by means of administrative offset against obligations of the United States to the debtor pursuant to 31 U.S.C. 3716 and 4 CFR 102.3. Salary offset against present or former employees of the United States is not governed by this part (see 49 CFR part 92). (b) The Department shall notify the debtor in writing in conformance with 31 U.S.C. 3716 and the FCCS of its intent to collect the debt by offset, unless the debtor pays the debt in full, including all interest, administrative charges, and penalties, or executes an agreement to pay the debt by installment at terms acceptable to DOT. (c) In making collection by administrative offset under 31 U.S.C. 3716. DOT must do so in accordance with the requirements set forth in § 89.21(b)(1-6). (See also procedures for recovery of debts to the United States by salary offset, 49 CFR part 92.) § 89.27 Referral for litigation. Claims that are not settled or for which collection action is not compromised, suspended or terminated under 4 CFR parts 103 and 104 or collected by collection agencies shall be referred to the General Accounting Office or the Department of Justice for litiga. tion in accordance with the procedures in 4 CFR part 105. § 89.29 Disclosure to commercial credit bureaus and consumer reporting agen cies. (a) Data on all delinquent commercial and consumer debts may be reported to commercial credit bureaus and consumer reporting agencies (see 31 U.S.C. 3701(a)(3)). Sixty days prior to release of information to a consumer reporting agency, the debtor shall be notified, in writing, of the intent to disclose the existence of the debt to a consumer reporting agency. Such notice of intent may be by sepa rate correspondence or included in correspondence demanding direct payment. The notice shall be in conformance with 31 U.S.C. 3711(f) and the Federal Claims Collection Standards. (b) The information that may be disclosed is the debtor's name, address, social security number or taxpayer identification number, and any other information to establish the identify and location of the individual, the amount of the claim, status and history of the claim, and the program under which the claim arose. § 89.31 Use of professional debt collection agencies. Debts over 90 days delinquent (see § 89.21(b)(4)) may be turned over to professional debt collection agencies except for those debts owed by State and local governments, other Federal agencies, current employees, and other debts prohibited by statute from being turned over to commercial collection agencies. § 89.33 [Reserved] Subpart C-Referral of Debts to IRS for Tax Refund Offset SOURCE: 54 FR 28681, July 7, 1989, unless otherwise noted. § 89.37 Applicability and scope. (a) This subpart implements 31 U.S.C. 3720A which authorizes the IRS to reduce a tax refund by the amount of a past-due legally enforceable debt owed to the United States. (b) For purposes of this subpart, a past-due legally enforceable debt referable to the IRS is: (1) A debt which: (i) Is owed to the United States; (ii) Is at least $25.00; (iii) Except in the case of a judgment debt, has been delinquent for at least three months but has not been delinquent for more than ten years at the time the offset is made; (iv) Cannot be currently collected pursuant to the salary offset provisions of 5 U.S.C. 5514(a)(1); (v) Is ineligible for administrative offset under 31 U.S.C. 3716(a) by reason of 31 U.S.C. 3716(c)(2) or cannot be collected by administrative offset under 31 U.S.C. 3716(a) by the Department against amounts payable to or on behalf of the debtor by or on behalf of the Department; (vi) Has been disclosed by the Department to a consumer reporting agency as authorized by 31 U.S.C. 3711(f), unless a consumer reporting agency would be prohibited from using such information by 15 U.S.C. 1681c, or unless the amount of the debt does not exceed $100.00; and (2) A debt for which the Department has: (i) Notified or has made reasonable attempt to notify the taxpayer that the debt is past-due and, that the debt, unless repaid within 60 days thereafter, will be referred to the IRS for offset against any overpayment of tax; § 89.41 Notice requirement before offset. A request for offset from an IRS tax refund will be made only after the Department has made a determination that an amount is owed and past-due and provides the debtor with 60 days written notice. The Department's notice of intention to collect by IRS tax refund offset (Notice of Intent) includes: (a) The amount of the debt; (b) That unless the debt is repaid within 60 days from the date of the Department's Notice of Intent, the Department will refer the debt to the IRS for offset against any amount due the debtor as a tax refund; (c) That the debtor has a right to present information that all or part of the debt is not past-due or legally enforceable; and (d) A mailing address for forwarding any written correspondence and a contact name and telephone number for any questions. § 89.43 Review within the Department. (a) Notification by debtor. A debtor who receives a Notice of Intent may present, for 60 days from the date of the Notice of Intent, information that all or part of the debt is not past-due or legally enforceable. (However, this does not extend the regulatory period for submitting written statements or for requesting an administrative hearing on the merits of an alleged violation, nor does it extend the period to appeal an assessed civil penalty.) To comply with this procedure, the debtor must: (1) Send a written request for a review of the information to the address provided in the notice. (2) State in the request the amount disputed and the reasons why the debtor believes that the debt is not past-due or legally enforceable. (3) Include in the request any documents which the debtor wishes to be considered or state that additional information will be submitted within the remainder of the 60 day period. (b) Submission of information. The debtor may submit information showing that all or part of the debt is not past-due or not legally enforceable along with the notification required by paragraph (a) of this section. Failure to submit the information within the remainder of the 60 day period will be interpreted as there is no additional information for consideration. (c) Review of the information. The Department considers all available information related to the issue of whether the debt is past-due and the issue of whether the debt is legally enforceable. After a decision has been reached, the Department notifies the debtor whether the Department has sustained amended, or cancelled its determination that the debt is past-due and legally enforceable. § 89.45 Department determination. (a) Following review of the information, the Department notifies the debtor with a written decision that includes the supporting rationale. (b) If the Department either sustains or amends its determination, it shall notify the debtor that the debt is being referred to the IRS for offset against the debtor's Federal income tax refund. If the Department determines that there is no legally enforceable debt or that full payment has been made, the case will be closed. § 89.47 Stay of offset. If the debtor timely notifies the Department that he or she is complying with the procedures in § 89.43(a) of this subpart and timely submits additional information in accordance with § 89.43(b) of this subpart, the debt will not be referred to the IRS while the matter is under review by the Department. Referral will not be made until the issuance of a written decision, in accordance with § 89.45 of this subpart, which sustains or amends the Department's original determination. PART 90-AUDITS OF STATE AND LOCAL GOVERNMENTS Sec. 90.1 Policy and scope. 90.3 Authority. APPENDIX A-OMB CIRCULAR A-128, AUDITS OF STATE AND LOCAL GOVERNMENTS AUTHORITY: 31 U.S.C. 7501 and 49 U.S.C. 322. § 90.1 Policy and scope. The regulation in this part implements the Single Audit Act of 1984 (Pub. L. 98-502), 31 U.S.C. 7501. All State and local government organizations that receive Federal assistance funds from the Department of Transportation, including funds received indirectly through other units of State and local governments, are required to meet the audit requirements of Appendix A (Office of Management and Budget Circular A-128, Audits of State and Local Governments). Specific guidance for individual assistance programs in the Department are contained in program guidance issued by the operating administrations in the Department that award Federal assistance funds. [50 FR 33340, Aug. 19, 1985, as amended at Amdt. 1, 50 FR 49931, Dec. 6, 1985] § 90.3 Authority. This part is authorized by 49 U.S.C. 322, which allows the Secretary to make such rules and regulations as may be necessary to carry out the Secretary's functions, powers, and duties. [50 FR 33340, Aug. 19, 1985, as amended at Amdt. 1, 50 FR 49931, Dec. 6, 1985] APPENDIX A-OMB CIRCULAR A-128, AUDITS OF STATE AND LOCAL GovERNMENTS EXECUTIVE OFFICE OF THE PRESIDENT Office of Management and Budget Circular No. A-128 To the Heads of Executive Departments and Establishments. Subject: Audits of State and Local Governments. 1. Purpose. This Circular is issued pursuant to the Single Audit Act of 1984, Pub. L. 98-502. It establishes audit requirements for State and local governments that receive Federal aid, and defines Federal responsibilities for implementing and monitoring those requirements. 2. Supersession. The Circular supersedes Attachment P, "Audit Requirements," of Circular A-102, "Uniform requirements for grants to State and local governments." 3. Background. The Single Audit Act builds upon earlier efforts to improve audits of Federal aid programs. The Act requires State or local governments that receive $100,000 or more a year in Federal funds to have an audit made for that year. Section 7505 of the Act requires the Director of the Office of Management and Budget to prescribe policies, procedures and guidelines to implement the Act. It specifies that the Director shall designate "cognizant" Federal agencies, determine criteria for making appropriate charges to Federal programs for the cost of audits, and provide procedures to assure that small firms or firms owned and controlled by disadvantaged individuals have the opportunity to participate in contracts for single audits. 4. Policy. The Single Audit Act requires the following: a. State or local governments that receive $100,000 or more a year in Federal financial assistance shall have an audit made in accordance with this Circular. b. State or local governments that receive between $25,000 and $100,000 a year shall have an audit made in accordance with this Circular, or in accordance with Federal laws and regulations governing the programs they participate in. c. State or local governments that receive less than $25,000 a year shall be exempt from compliance with the Act and other Federal audit requirements. These State and local governments shall be governed by audit requirements prescribed by State or local law or regulation. d. Nothing in this paragraph exempts State or local governments from maintaining records of Federal financial assistance or from providing access to such records to Federal agencies, as provided for in Federal law or in Circular A-102, “Uniform requirements for grants to State or local governments." 5. Definitions. For the purposes of this Circular the following definitions from the Single Audit Act apply: a. Cognizant agency means the Federal agency assigned by the Office of Management and Budget to carry out the responsibilities described in paragraph 11 of this Circular. b. Federal financial assistance means assistance provided by a Federal agency in the form of grants, contracts, cooperative agreements, loans, loan guarantees, property, interest subsidies, insurance, or direct appropriations, but does not include direct Federal cash assistance to individuals. It includes awards received directly from Federal agencies, or indirectly through other units of State and local governments. c. Federal agency has the same meaning as the term agency in section 551(1) of Title 5, United States Code. d. Generally accepted accounting principles has the meaning specified in the generally accepted government auditing standards. e. Generally accepted government auditing standards means the Standards For Audit of Government Organizations, Programs, Activities, and Functions, developed by the Comptroller General, dated Febuary 27, 1981. f. Independent auditor means: (1) A State or local government auditor who meets the independence standards specified in generally accepted government auditing standards; or (2) A public accountant who meets such independence standards. g. Internal controls means the plan of organization and methods and procedures adopted by management to ensure that: (1) Resource use is consistent with laws, regulations, and policies; (2) Resources are safeguarded against waste, loss, and misuse; and (3) Reliable data are obtained, maintained, and fairly disclosed in reports. h. Indian tribe means any Indian tribe, band, nations, or other organized group or community, including any Alaskan Native village or regional or village corporations (as defined in, or established under, the Alaskan Native Claims Settlement Act) that is recognized by the United States as eligible |