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Write-Off and OMB Circular A-129

Write-Off and OMB Circular A-129. Office of Management and Budget Office of Federal Financial Management Debt Collection Conference May 12, 2004. Agenda. Write-Off and OMB Circular A-129 Delinquent Debt OMB Circular A-129 Provisions Delinquent Debt Collection Process

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Write-Off and OMB Circular A-129

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  1. Write-Off and OMB Circular A-129 Office of Management and Budget Office of Federal Financial Management Debt Collection Conference May 12, 2004

  2. Agenda • Write-Off and OMB Circular A-129 • Delinquent Debt • OMB Circular A-129 Provisions • Delinquent Debt Collection Process • Memorandum M-04-10 (dated April 19, 2004)

  3. Delinquent Debt • Direct Loans • A payment has not been made by the date specified in the agreement • Guaranteed Loans • Borrower breaches the loan agreement with the private sector lender • Other Debt • Debtor does not pay or resolve the debt by the date specified in the agency’s initial written demand for payment

  4. OMB Circular A-129 Provisions • Refer debts 180 days delinquent to Treasury • Establish Currently Not Collectible (CNC) as a reporting category • Write-off all debt older than two years • Review (continuously) delinquent debt

  5. Write-Off • Accounting Action Close- Out? No • Report on TROR • Continue all cost-effective collection tools CNC Yes 1099C? No Close-Out • Report on TROR • Cease all collection action Yes • Issue 1099C • Report on TROR • Cease all collection action Close-Out Delinquent Debt Collection Process Write-Off

  6. Delinquent Debt Collection Process Write-Off • Occurs when the agency determines that the likelihood of collection is less than 50% • Mandatory (unless documented and justified to OMB in consultation with Treasury) for delinquent debt that • Has no value for accounting purposes or • Is older than two years • Once the debt is written-off, the agency must classify the debt as either one of the following: • Currently Not Collectible (CNC) • Closed-Out

  7. Delinquent Debt Collection Process Write-Off • Accounting Action Close- Out? No • Report on TROR • Continue all cost-effective collection tools CNC Yes 1099C? No Close-Out • Report on TROR • Cease all collection action Yes • Issue 1099C • Report on TROR • Cease all collection action Close-Out

  8. Delinquent Debt Collection Process Close-Out • After mandatory write-off, an agency determines that it is no longer cost effective to pursue collection • File a 1099C with the Internal Revenue Service • Notify the debtor in accordance with IRS Code • Report closed-out debts on the Treasury Report on Receivables • Stop all collection activity, including the sale of debts, once debts are closed

  9. Delinquent Debt Collection Process Write-Off • Accounting Action Close- Out? No • Report on TROR • Continue all cost-effective collection tools CNC Yes 1099C? No Close-Out • Report on TROR • Cease all collection action Yes • Issue 1099C • Report on TROR • Cease all collection action Close-Out

  10. Delinquent Debt Collection Process Currently Not Collectible • Continued collection efforts are likely to yield higher return for the government than the 1099C process • Maintain the debt for administrative offset and other collection tools until one of the following occur: • Debt is paid; • Debt is closed-out; or • All collection activities are legally precluded; or • The debt is sold, whichever occurs first.

  11. Memorandum M-04-10 • Purpose • Establish a new reporting requirement pursuant to the DCIA of 1996 • Remind Federal agencies of current and ongoing responsibilities under the debt collection provisions of the DCA of 1992, as amended by DCIA, and OMB Circular A-129

  12. Memorandum M-04-10 New Requirements • Review and report annually on internal standards and policies regarding compromising, writing-down, forgiving, or discharging debt • Description of agency policies • Description of policy deficiencies and corrective actions • Statement whether policies are consistently implemented • Statement whether all eligible discharged / closed-out debt has been reported to the IRS on Form 1099-C and on the Treasury Report on Receivables

  13. Memorandum M-04-10 Current / Ongoing Requirements • Fully participate in centralized offset, that is, the Treasury Offset Program • Aggressively service and collect delinquent debts • Denial of direct and indirect loans to delinquent debtors • Accurately and timely report on receivables

  14. Contact Information Adam Goldberg Office of Federal Financial Management Financial Integrity and Analysis Branch 202-395-7583 agoldber@omb.eop.gov

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