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NASA Procedures and Guidelines |
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| | TOC | Preface | Chapter1 | Chapter2 | Chapter3 | Chapter4 | Chapter5 | Chapter6 | AppendixA | AppendixB | AppendixC | ALL | | |||||
6.1.1 NASA officials may consider compromising a debt when they agree to accept less than the full amount of the outstanding debt in full satisfaction of the entire amount.
6.1.2 NASA may compromise a debt if they cannot collect the full amount due to the following:
a. The debtor is unable to pay the full amount in a reasonable time, as verified through credit reports or other financial information.
b. NASA is unable to collect the debt in full within a reasonable time by enforced collection proceedings.
c. The cost of collecting the debt does not justify the enforced collection of the full amount.
d. There is significant doubt concerning NASA's ability to prove its case in court.
6.1.3 NASA shall verify the debtor's claim of inability to fully pay his/her claim by using a credit report and other financial information. A compromise accepted under this section should be for an amount that bears a reasonable relation to the amount that can be recovered by enforced collection procedures, with regard to the exemptions available to the debtor and the time that collection will take.
6.1.4 Written Agreements. Whenever feasible, compromise agreements should be in writing and signed by the debtor and NASA. NASA should discourage the use of installment agreements to pay compromises. If NASA chooses to accept an installment agreement for a compromise, the agreement will provide that, in the event of default, the full amount of the debt will be reinstated.
6.1.5 Request and approval of compromise will be tracked in NASA's core financial system.
6.1.6 Other factors to consider when considering compromise are the precedent collecting or failure to collect would have on other cases, and the cost of collection.
6.1.7 Accounting for Compromise. Once NASA accepts a compromise for a debt and receives payment NASA shall write-off and close-out the debt because further collection activity is prohibited.
6.1.8 Release of Indebtedness. Upon receipt of full payment of a claim or the amount in compromise of a claim, NASA will prepare and execute, on behalf of the United States, an appropriate release, which should include the provision that the claim release will be void if procured by fraud, misrepresentation, the presentation of a false claim, or mutual mistake of fact.
6.2.1 NASA may suspend collection on a debt if factors exist that lead NASA to believe collection activity may be resumed at a future date. NASA may suspend collection activity on a debt when:
a. NASA cannot locate the debtor.
b. The debtor's financial condition is expected to improve.
c. The debtor has requested a waiver or review of the debt.
6.2.2 Based on the current financial condition of the debtor, NASA may suspend collection if the debtor's financial condition is expected to improve or future prospects justify retention of the debt for periodic review and collection activity and any of the following conditions are met:
a. The applicable statute of limitations has not expired.
b. Future collection can be effected by administrative offset with due regard to the 10-year limitation for administrative offset prescribed by 31 U.S.C. § 3716(e)(1).
c. The debtor agrees to pay interest on the amount of the debt on which the collection will be suspended, and such suspension is likely to enhance the debtor's ability to pay the full amount of the principal of the debt with interest at a later date.
6.2.3 NASA shall suspend collection activity during the time required for consideration of the debtor's request for waiver or administrative review of the debt if the statute under which the request is sought prohibits the agency from collecting the debt during that time. In accordance with Section 5.3.5 of this NPR, when NASA learns that a bankruptcy petition has been filed with respect to the debtor, in most cases the collection activity on a debt will be suspended.
6.2.4 Accounting for Suspensions. Once NASA decides to suspend a debt it should be placed in CNC status until a determination is made to either continue collections at a future date or to closeout the debt permanently.
6.3.1 Before terminating collection activity, NASA should have pursued all appropriate means of collection and determined, based upon the results of the collection activity, that the debt is uncollectible.
6.3.2 Generally, NASA's decision to terminate collection activity coincides with NASA's decision to write-off the receivable. For example, when NASA refers debts to Treasury BFS for cross-servicing NASA should write-off the debt, terminate NASA's collection activity, and classify the debt as CNC, while Treasury continues to attempt collection. The Agency, OCFO, Director, Financial Management Division would need to expressly approve requests for NASA to write off the debt, but continue collection efforts at the agency-level.
6.3.3 Termination of collection activity ceases active collection of the debt at the agency-level. The termination of collection activity does not preclude the agency from retaining a record of the account for purposes of:
a. Selling the debt, if the Secretary of the Treasury determines that such sale is in the best interests of the United States.
b. Pursuing collection at a subsequent date in the event there is a change in the debtor's status or a new collection tool becomes available.
c. Offsetting against future income or assets not available at the time of termination of collection activity.
d. Screening future applicants for prior indebtedness.
6.3.4 NASA may terminate collection activity when:
a. NASA is unable to collect any substantial amount through its own efforts or through the efforts of others.
b. NASA is unable to locate the debtor.
c. It is no longer cost effective to pursue debt collection.
d. The debt is legally without merit or enforcement or the debt is barred by any applicable statute of limitations.
e. The debt cannot be substantiated because of a lack of evidence or witnesses to validate a claim (such debt cannot be referred to IRS as taxable income).
f. The debt against the debtor has been discharged in bankruptcy and no further prospects for worthwhile recovery are available.
6.3.5 Accounting for Termination of Collections. Once NASA decides to terminate collections on a debt, they will place the debt in CNC status until a decision is made to close-out the debt.
6.4.1 Closeout of a debt may occur concurrently with writeoff, but NASA shall terminate collection action on a debt before closing it out. Close-out of indebtedness is distinct from terminating collection activity and closeout will be reported to the IRS. When NASA closesout a debt in full or in part, all further collection action is prohibited. Therefore, NASA should make a determination that collection action will not be warranted again in the future before closingout a debt.
6.4.2 NASA shall closeout a debt when any of the following conditions are met:
a. No assets that can be liquidated to pay the debt can be found.
b. The Federal statute of limitations has expired for litigation (6 years) and administrative offset (10 years) and the statutes of the State in which the debtor resides preclude further collection.
c. The NSSC has been advised by Treasury BFS that all reasonable efforts to enforce collection have been exhausted and the balance of the debt should be closed out.
d. A judgment has been obtained and the application of all collection techniques failed to produce full collection.
e. A collection agency has been unable to collect the debt and has returned it with sufficient documentation to demonstrate the debt is uncollectible.
6.4.3 A closeout of debt under this section is final and conclusive unless obtained by fraud, misrepresentation, presenting a false claim, or mutual mistake of fact.
6.4.4 Reinstituted Collection Action.
6.4.4.1 Collection action cannot be reinstituted if the debt has been officially closed-out with an IRS form.
6.4.4.2 Once collection action has been terminated collection should only be reinstituted if evidence subsequently obtained indicates that a debtor has the ability to repay a substantial portion of the debt (25 percent or more) and the statute of limitations has not yet expired.
6.4.5 Accounting for Close-Out. When NASA closes-out a debt it should be classified as "closed-out" in the accounting records and a 1099C should be submitted to the IRS.
6.5.1 NASA Centers and the NSSC shall aggressively pursue the collection of all delinquent debts. The authority granted in this section may only be used when the situation meets the criteria established in 5 U.S.C. § 5584(a) that reads, "The collection of which would be against equity and good conscience and not in the best interest of the United States." NASA NPD 9645.2 delegates authority for the waiver of claims resulting from erroneous payments of pay and allowances, travel, transportation, and relocation expenses and allowances made to or on behalf of NASA employees. The NPD identifies the officials authorized to grant waivers, the amounts they may approve as well as the offices that should review and coordinate on each proposed waiver. Additional guidance concerning claims for erroneous payment of pay and allowances, travel, transportation, and relocation expenses and allowances is found in NPR 9645.1.
6.6.1 NASA's authority to compromise, suspend, or terminate collection of public receivables with a principal balance not greater than $100,000 is identified in 31 U.S.C. §3711, OMB Circular No. A-129, 31 CFR pt. 902.1, and NPR 9645.1. The following explains the authority required within NASA to compromise, suspend, or terminate collections following write-off:
a. Debts less than $100. Regardless of age (more or less than two-years old) debts whose outstanding balance, including interest, penalties, or administrative charges is $100 or less and that have been substantially previously collected can be grouped for review and submitted to the Center Deputy CFO for approval to terminate collection on the debt. The review should include an analysis for each debt of the original debt amount, how much has been collected to-date, and the remaining balance. Such a review will be done periodically, but not less frequently than quarterly. In order to avoid continued collection efforts, including additional assessments of interest, the review and write-off of that debt should be accomplished monthly prior to month-end close. Although debts whose principal is $100 or less are not individually significant, under no circumstances should internal controls be compromised by the write-off or reclassification of debt.
b. Debts not greater than $100,000. Regardless of age (more or less than two years old), delinquent debts meeting the conditions for suspension of termination of collection having principal amounts not greater than $100,000 will be individually reviewed by the Center CFO. The Center CFO will forward the request to suspend, terminate, or close-out the debt to the Center Director for approval. The Agency OCFO Director, Financial Management Division shall be informed when these actions are approved.
c. Debts greater than $100,000. The authority to compromise, suspend, or terminate collection of debts having principal balance greater than $100,000 rests solely with the DOJ. Requests to compromise, suspend or terminate collection efforts of accounts greater than $100,000 should still be submitted to Agency Deputy Chief Financial Officer (DCFO) (Finance) for approval before the matter is forwarded to DOJ. Although the NASA, Agency Director, Financial Management Division has the authority approve the write-off of a debt greater than $100,000, the authority to compromise, suspend or terminate collection on the debt rests with the DOJ. The debt can be written-off without referral to DOJ, but the debt will remain in CNC status indicating that collection efforts are continuing.
6.6.2 If an offer to compromise a debt greater than $100,000 is acceptable to NASA, or NASA believes that suspension or termination of a debt greater than $100,000 is appropriate, NASA will refer the debt to the Civil Division or other appropriate litigating division in the DOJ using a CCLR. The referral should specify the reasons for NASA's recommendation. If, prior to referral to the DOJ, NASA determines that a debt is plainly erroneous or without legal merit, NASA may terminate collection activity regardless of the amount involved without obtaining DOJ concurrence.
6.6.3 Following consultation with the local supporting legal counsel for the particular Center, the compromise, termination, or suspension of debts not greater than $100,000 exclusive of interest and related charges may be approved as follows:
a. For NASA field Centers, the Center Director or a designee who reports directly to the Center Director.
b. For Headquarters, the Associate Administrator for Mission Support or a designee who reports directly to the Associate Administrator for Management.
c. Copies of designations, if any, issued pursuant to this authority will be sent to the Agency OCFO, Director Financial Management.
6.6.4 The authority identified in the preceding paragraph is qualified as follows:
a. With respect to claims against contractors or grantees arising in connection with contracts or grants the approving official will consult with the contracting officer and the Center CFO of the Center concerned prior to issuing a determination.
b. With respect to claims against commercial carriers for loss of or damage to NASA freight shipment, the approving official will consult with the cognizant transportation officer or the official who determined the amount of the claim, , and the Center CFO of the Center concerned prior to issuing a determination.
c. With respect to claims against employees of NASA, incident to their employment other than the repayment of overpayments of erroneous payments of pay and allowances, travel, transportation, and related expenses, the approving official will consult with the personnel officer and the Center CFO of the Center concerned prior to issuing a determination.
6.6.5 Documentation. The NSSC shall maintain appropriate documentation to substantiate termination and closeout actions including evidence of the applicable reviews and approvals. This information will be reported on the TROR for the entire fiscal year during which the debt was written off. Documentation should also be maintained in the event the debtor pays NASA in the future.
6.6.6 Close-Out. Before discharging a delinquent debt, NASA shall take all appropriate steps to collect or discharge the debt in accordance with 31 U.S.C. § 3711 (g), including, , administrative offset, tax refund offset, Federal salary offset, referral to Treasury, Treasury-designated debt collection centers or private collection contractors, credit bureau reporting, wage garnishment, litigation, and foreclosure. Close-out is different from compromise, termination, or suspension of collection activity and is governed by the IRS code. When collection activity on a debt is compromised, suspended, or terminated, the debt remains delinquent and further collection action may be pursued at a later date. Therefore, NASA should determine that collection action is no longer warranted before closing out a debt. Before closing out the debt, NASA will terminate collection action.
6.6.6.1 Approval Authority Required for Close-Out. Since closeout is a result of write-off, compromise, suspension, or termination, NASA should follow the approval authority for each of those respective sections before closing out a debt.
6.6.6.2 CNC debts will be continuously reviewed and, as required, reclassified and closed-out.
will, where practicable, conduct such investigations as may assist in the collection, compromise, or referral of claims of the United States, including investigations to determine the location and financial resources of the debtors. Any claim which may indicate fraud, presentation of a false claim, or misrepresentation on the part of the debtor or any other party having an interest in the claim, will be referred to the NASA OIG. After conducting an investigation, the IG will notify the official as to the findings and disposition of the claim. Claims with evidence of such wrongdoing will be referred to the DOJ. If the IG finds there is no indication of such wrongdoing, the IG will return the claim to the official from whom it was received for processing as prescribed in this Chapter.
6.8.1 Upon discharge of indebtedness, NASA shall annually report the discharge of the debt to the IRS and to the debtor. Relevant IRS guidance (particularly IRS Publication 1220) should be consulted each year for reporting requirements.
6.8.2 IRS Form 1099-C, Cancellation of Debt. The IRS recognizes amounts of closed-out debts as potential taxable income for debtors classified as individuals, partnerships, or sole proprietorships. When collection actions are terminated and the outstanding debt meets the minimum dollar threshold, currently $600 or more, a Tax Form 1099-C, will be completed and forwarded to the customer and to the IRS after the calendar year end. Debts closed out will be recorded with debtor identifying information in an IRS referral log, accumulated for the calendar year, and forwarded to the IRS via IRS Form 1099-C.
6.8.3 The amount covered by an IRS 1099-C (including for determining whether the IRS dollar threshold is exceeded for producing an IRS Form 1099-C) could represent debt associated with multiple bills that have been closed-out and could represent uncollectible interest or penalties, as well as uncollectible principal. All filing requirements apply to each reporting entity as defined by its separate TIN, which may be a Social Security Number (SSN), Employer Identification Number (EIN), or Individual Taxpayer Identification Number (ITIN). For example, if a corporation with several branches or locations uses the same EIN, NASA shall aggregate the total volume of returns to be filed for that EIN and apply the filing requirements to each type of return accordingly.
6.8.4 IRS Form 1099-C Reporting Criteria. The NSSC shall consult IRS regulations to determine whether IRS Form 1099-C reporting is required. The following is a description of some of the general rules that apply to IRS Form 1099-C reporting:
a. A debt will be reported after all collection efforts have been exhausted; there is no obligation to wait to report a debt until the statute of limitation has expired.
b. Amounts greater than $600 will be reported; amounts less than $600 may be reported.
c. In addition to the principal amount owed, administrative costs and interest will be reported.
d. Amounts discharged in a Title 11 bankruptcy case are not to be reported; the bankruptcy will be documented in the files.
6.8.5 In cases other than Title 11 bankruptcy, a Center will not report amounts discharged to the extent that the debtor is insolvent (i.e., liabilities exceed assets). For example, if a debtor owes $100 and his liabilities exceed his assets by $25 (i.e., negative net worth of $25) before the debt is discharged; $75 will be reported upon the discharge. The files will document that a debtor is insolvent through an assets/liabilities analysis certified by the debtor as correct under penalties of perjury.
6.8.6 If the debt is compromised because (1) the debtor is unable to pay the debt within a reasonable period of time or refuses to pay the debt in full and the Government is unable to enforce collection in full within a reasonable time or (2) the cost of collecting the claim does not justify the enforced collection of the full amount, then the amount discharged in the compromise is reportable. If the debt is compromised because there is real doubt as to the Government's ability to prove its case in court for the full amount claimed, then the amount discharged in the compromise will not be reported.
6.8.7 The debtor will be provided a copy of Form 1099-C or a written statement of the impending 1099-C report by January 31 of the year following the determination that no further collection action will be taken on the debt. The 1099-C will be sent to the IRS by February 28 of that same year.
6.8.8 As this reporting requirement is not a statutory one, a Center will not report on
Form 1099-C if the reporting of such information is determined to be prohibited by a Federal law. For debts being cross-serviced by Treasury, Centers should indicate on the Treasury's BFS Agency Profile Form that Treasury should send Form 1099-C's to the IRS for debts that are closed out. Shortly after calendar year-end, Treasury will send each Center a list of debts returned as uncollectible. Centers will send Treasury confirmation of debts written off so
Form 1099-C's can be sent. Centers may reinstitute collection action on closed-out accounts if there is subsequent evidence that a debtor has new ability to pay.
6.8.9 The generation of the IRS Form 1099-C should be for the year in which the indebtedness was discharged (i.e., closed-out) and not when the receivable was written-off (which could have been earlier).
6.8.10 If the number of IRS Forms 1099-C for the year being reported exceed the threshold for electronic reporting as established by the IRS, electronic filing is required (IRS Publication 1220). The regulations under section 6011(e)(2)(A) of the Internal Revenue Code provide that 250 or more information returns will file such returns electronically/magnetically. The 250 or more requirement applies separately for each type of return and separately to each type of corrected return.
6.8.11 Amounts included in IRS Forms 1099-C should not include debts that are reversed because of corrections or if it was determined that debts did not have legal merit.
6.9.1 Report on Receivables Due from the Public. NSSC shall submit a completed TROR to the NASA OCFO at the end of each month. Requirements for the preparation of this report can be found in NPR 9310.1, Financial Management Reports - Accounting.
6.9.2 Reporting Receivables in the Audited Financial Statements. Accounts receivable are reported on the annual audited financial statements of the Agency. Public and intragovernmental receivables are reported separately. Receivable amounts are identified on the Balance Sheet and information concerning the composition and aging of receivables is disclosed in the Notes to the Financial Statements.
6.9.2.1 Reconciliation of Financial Statement Balances with Government-wide Treasury Account Symbol Adjusted Trial Balance System (GTAS). Public accounts receivable balances reported on the annual audited financial statements will be reconciled with the GTAS accounts receivable from the public balances (attribute non-Federal).
6.9.2.2 Reconciliation of Public Receivables. Accounts receivable balances due from the public reported on the annual audited financial statements will be reconciled with receivables reported on the TROR.
6.9.2.3 Intragovernmental Eliminations. The consolidated annual audited financial statements eliminate intragovernmental accounts receivable balances. Accounts receivable balances will be eliminated against the trading partner's accounts payable balances. NASA Centers will include the trading partner identity on all reimbursable agreements with other Federal Agencies, as well as any other receivable or payable involving another Federal Agency. With identification of partner codes on each receivable transaction, elimination of intragovernmental accounts receivable against applicable accounts payable can be accomplished accurately and efficiently.
6.10.1 Continuous Monitoring Controls Performed by Centers. The CMP contains periodic monitoring and reporting requirements for Accounts Receivable.
6.10.2 Unsupportable Receivables. Receivables should be reviewed for supportability and validity. . If a receivable is found to be unsupportable, that receivable will be removed from the accounting records within ten workdays of its identification as erroneous, invalid, or unsupportable.
6.10.3 Receivables Referred to DOJ. Exempt from annual review are public receivables under review by the DOJ, and debt in the process of being collected as required by the Federal Acquisition Regulation, Part 32.6, Contract Debt. However, such exempt debt will be aggressively managed and monitored for status of collection by the responsible accounting office.
| TOC | Preface | Chapter1 | Chapter2 | Chapter3 | Chapter4 | Chapter5 | Chapter6 | AppendixA | AppendixB | AppendixC | ALL | |
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