TN 31 (09-06)

SI 02220.019 Debtor Reactions to the Collection of Title XVI Debts by Federal Salary Offset (FSO)

A. Background

The debtor may make a number of requests and allegations in response to an FSO collection. The debtor may request reduction of the amount of offset each pay day due to hardship or a special FSO review. The requests and allegations pertaining to FSO can be made at any time during the FSO process, from the initial due process notice until the debt is paid in full.

Therefore, this section is organized according to the following three logical groups of debtor requests and allegations:

B. Due Process Requests

1. Request for Explanation of Overpayment

When the debtor requests an explanation of the overpayment, proceed as follows:

a. TSC Action

If a request for an explanation of the overpayment is received, use the SSID and/or an Inquiry Response Query to provide an explanation of the overpayment. Keep explanations generic to the extent possible and try to provide explanations immediately.

Proceed as follows if online queries contain insufficient information or unresolvable discrepancies:

  • On the MSSICS Update Sequence Data (UOSD) screen in Direct SSR Update, select “EXPLANATION OF OVERPAYMENT” to suspend billing (see MSOM BUSSR 004.006).

  • Refer the case to the FO via a priority Modernized Development Worksheet (MDW) for non-MSSICS cases or via the DW01 for MSSICS cases. Request that the FO provide an explanation to the debtor.

  • Annotate the referral “Necessary Action – TOP/ECO Case-Do Not Backlog”.

  • Include the debtor's current address and a daytime telephone number, if different from the address and telephone number shown on our records.

  • If necessary update all records with the new address and telephone number.

  • If asked, advise the caller that he/she should receive a response within 30 days. If necessary, update the record with the new address and telephone number.

b. FO Action

If a request for an explanation of the overpayment is received, use the SSID and/or an Inquiry Response Query to provide an explanation of the overpayment. Keep explanations generic to the extent possible and try to provide explanations immediately.

Proceed as follows if online queries contain insufficient information or unresolvable discrepancies. If the request for explanation is received in writing:

  • On the MSSICS Update Sequence Data (UOSD) screen select “EXPLANATION OF OVERPAYMENT” to suspend billing (see MSOM BUSSR 004.006) unless this action has already been taken by the TSC or PC.

  • Once the a satisfactory explanation has been provided to the debtor, remove the suspend billing code via the MSSICS Update Sequence Data (UOSD) screen. (See MSOM BUSSR 004.006.)

c. PC Action

If a request for an explanation of the overpayment is received, use the SSID and/or an Inquiry Response Query to provide an explanation of the overpayment. Keep explanations generic to the extent possible and try to provide explanations immediately.

Proceed as follows if online queries contain insufficient information or unresolvable discrepancies. If the request for explanation is received in writing:

  • On the MSSICS Update Sequence Data (UOSD) screen select “EXPLANATION OF OVERPAYMENT” to suspend billing (see MSOM BUSSR 004.006).

  • Call the servicing FO and attempt to get an immediate answer.

  • If the information cannot be readily given over the phone, refer to the FO to provide the explanation to the debtor.

  • If necessary update all records with the new address and telephone number

  • If asked, advise the caller that he/she should receive a response from the local Social Security field office within 30 days.

2. Request for Waiver

If a request for waiver is received, obtain an SSA-632-BK in accordance with current instructions in SI 02260.001 and SI 02260.005. Advise the debtor that FSO remains in effect until SSA receives a completed and signed SSA-632-BK or its equivalent.

a. TSC action

If the TSC receives the request, proceed as follows:

  • Tell the debtor that we will need a signed statement of their allegation of being without fault and their inability to repay and that proof of income, assets and expenses may be required.

  • Advise the debtor that a timely request for waiver made within 60 days of the notice will prevent FSO from being initiated.

  • Send the debtor an SSA-632-BK. In the upper right-hand corner of the form, show “TOP/ECO CASE”, the date and your office code.

  • Include a courtesy return envelope addressed to the FO that services the address on the ECO query or the debtor's current address, if different.

  • Advise the debtor to complete the SSA-632-BK and return it to the servicing FO.

b. FO action

If the FO receives the waiver request:

  • Input the waiver request only when the form (or other written request) is received. A timely request for waiver made within 60 days of the notice will prevent FSO from being initiated.

  • Input the waiver request via the MSSICS Waiver (UOWV) screen in Direct SSR Update (see MSOM BUSSR 004.009).

  • Process the waiver request in accordance with instructions in SI 02260.001.

c. PC Action

If the PC receives the waiver request:

  • Follow the instructions in GN 02210.219A.4.b. for necessary actions.

  • Input the waiver request only when the form (or other written request) is received. A timely request for waiver made within 60 days of the notice will prevent FSO from being initiated.

NOTE: A request for waiver after FSO has begun will result in stopping FSO until the waiver decision is made.

3. Right to Inspect and Copy Records Related to the Debt

The individual has the right to inspect and copy SSA's records related to the debtor's overpayment. See GN 02201.044B.3 for specific instructions.

4. Request for Review

The law and regulations governing FSO allow the debtor to request a review of the debt. This review by SSA is an opportunity for the debtor to present evidence showing that he/she does not owe the debt or does not owe the amount stated in SSA’s 30 day notice. This review is not the same as reconsideration of the overpayment determination. The debtor cannot appeal SSA’s decision on the request for review.

(See GN 02201.043A.6.a. for more information.)

a. FO Action

  • Inform the debtor that the request for review must be in writing

  • Tell debtor that he/she can submit the request and any available evidence to the FO or mail it directly to MAMPSC –DMS at PO BOX 15531, Kansas City MO, 64106.

    If Debtor provides signed written request and evidence at FO:

  • Advise the debtor that he/she will receive a decision in the mail.

  • On MSSICS Update Sequence data (UOSD) screen select “Federal Salary Offset Request for Review”. (See MSOM BUSSR 004.006)

  • Annotate SSR Remarks —“FSO CASE - Debtor requested review”

  • Complete and print FSO overpayment track sheet posted to the KC Region’s RSI and SSI sites, with all applicable information: If there is no available appeal information, track sheet must at least include:

    • debtor’s name

    • debtor’s SSN

    • overpayment rational

    • folder location, when not available indicate unable to locate

  • Print Initial Overpayment Notice and/or any other overpayment notices available in the Online Retrieval System (ORS) (see MSOM ORS 005.001)

  • Photocopy all documentation and prepare a coversheet indicating: “FSO-CASE”/TOEL: OPMT/FSO REV.

  • Fax all documentation to MAMPSC-DMS paperless fax at 816-936-5470 for control. (See note below.)

  • Prepare a paper folder containing all the documentation and mail it to:

    OCALJ
    5107 Leesburg Pike
    Suite 1500
    Falls Church, VA 22041-3255

    – no later than the next business day.

  • Retain copies of documents in an office pending file for 10 days.

  • Within the 10 days, query PCACS or Paperless Read Only Query System (PPL ROQS) for FSO action pending in Paperless. If an action exists then material in FO holding file can be destroyed.

  • If there is no pending action for review on PCACS or in PPL ROQS, call the MAMPSC-Debt Management Section (DMS) (816-936-3212) to verify that the request for review was received. If not received, re-fax material and re-file in FO holding file for another 10 days.

    NOTE: The DMS in MAMPSC is responsible for follow up with OCALJ on adjudication of all FSO reviews.

b. TSC/PC Action

  • Inform the debtor that the request has to be in writing.

  • Direct the debtor to his/her local field office or have him/her mail any available evidence and signed statement to:

    MAMPSC-DMS
    PO BOX 15531
    Kansas City MO, 64106

5. Request for Lower Offset Due to Hardship

A debtor whose pay is subject to FSO may, at any time, request a review of the amount offset based on financial hardship. See GN 02201.044B.5. for detailed processing instructions.

IMPORTANT: SSA will not reduce the amount the federal employer withholds from someone’s pay if the debt was caused by intentional false statement or willful concealment of or failure to furnish material information. (Willful concealment means an intentional, knowing and purposeful delay in providing or failure to furnish material information.) Do not take action on a request for lower offset amount due to hardship when the debt was caused by intentional false statement or willful concealment of or failure to furnish material information.

Do not honor any requests to lower the offset amount when the overpayment was caused for the reasons above.

6. Request for Reconsideration

Debtors may attempt to request reconsideration of two different aspects of SSA's use of Federal Salary Offset: (1) the overpayment determination (fact/amount of the debt); and (2) the Agency's decision to use FSO to collect the delinquent overpayment.

7. Reconsideration of the Overpayment Determination

Debtors subject to Federal Salary Offset are beyond the 60-day period for requesting reconsideration of the overpayment determination (fact/amount of the debt). Consequently, the TOP/ECO notice that informs debtors about SSA's intent to use collection tools such as FSO, AWG, TOP and credit bureau reporting does not contain language explaining the right to request reconsideration.

In response to the FSO notice individuals might question the overpayment determination and request reconsideration on debts subject to FSO. Since overpayments subject to FSO are delinquent and by definition beyond the 60-day period for requesting reconsideration of the overpayment determination, these requests must first be handled in accordance with policy and procedure in SI 04020.020, Requests for SSI Reconsideration.

Proceed as follows when the person requests reconsideration of the overpayment determination:

a. TSC Action

  • Tell the debtor that he/she had 60 days from the date of SSA's initial notice of overpayment to request reconsideration of the overpayment determination.

  • Tell the debtor that he/she must show good cause for late filing in order for SSA to extend the time to appeal the initial overpayment determination. Good cause for late filing can be found by SSA when, for example, the person was seriously ill and was prevented from contacting SSA in person, in writing, or through a friend, relative, or other person.

See SI 04020.020, Requests for SSI Reconsideration, for more information on what constitutes good cause for late filing.

  • Advise the debtor that he/she needs to submit a signed statement explaining the reason for the delay and documentation to support the explanation.

  • Provide the debtor with the address of the servicing FO and tell the person to send or deliver the signed statement to that office.

  • Record the action taken on DMS Remarks.

IMPORTANT: Do not send the caller a form SSA-561-U2 (Request for Reconsideration).

b. FO Action

  • Obtain a signed statement from the debtor explaining the reason for the delay in filing the request for reconsideration and obtain documentation to support the explanation.

  • Explain to the debtor that SSA will decide whether he/she has shown good cause for late filing and determine whether to honor the late appeal request or dismiss the appeal.

  • Make the determination on the issue of good cause for late filing.

  • If good cause for late filing is found, input the request on the Appeal (UOAP) screen, selecting “RECONSIDERATION” to document an appeal request. (See MSOM BUSSR 004.010)

  • Process the reconsideration determination according to instructions in SI 02220.017A.4. If the reconsideration decision did not wholly reverse the initial overpayment determination, the Overpayment Decisions (UOPD) screen in Direct SSR Update should be used to post the partial overpayment decision. (See MSOM BUSSR 004.008).

  • When a suspend bill code, appeal request or waiver request is posted, a 30 day diary is set for the resumption of offset.

  • If good cause for late filing is not found, dismiss the request for reconsideration.

  • If the dismissed request for reconsideration was previously input on the UOAP screen, input a denial on the UOAP screen. See MSOM BUSSR 004.010. The system will resume offset activity.

c. PC Action

  • Tell the debtor that he/she had 60 days from the date of SSA's initial notice of overpayment to request reconsideration of the overpayment determination.

  • Tell the debtor that he/she must show good cause for late filing in order for SSA to reopen the initial overpayment determination. Good cause for late filing can be found by SSA when, for example, the person was seriously ill and was prevented from contacting SSA in person, in writing, or through a friend, relative, or other person. See GN 03101.020, Good Cause for Extending Time Limit, for more information on what constitutes good cause for late filing.

  • Advise the debtor that he/she needs to submit a signed statement explaining the reason for the delay and documentation to support the explanation.

  • Provide the debtor with the address of the servicing FO and tell the person to send or deliver the signed statement to that office.

  • Requests for Reconsiderations will be referred to the servicing FO for the decision.

  • Record the action taken on DMS Remarks.

8. Reconsideration of SSA’s Decision to Use FSO

SSA's regulations at 20 CFR 416.1403 for Title XVI cases and 20 CFR 404.903 for Title II cases include Federal Salary Offset in the list of administrative actions that are not initial determinations. Therefore, the debtor has no right to a reconsideration of SSA’s decision to use FSO.

TSC/FO/PC should proceed as follows when the person requests reconsideration of SSA's decision to use FSO:

  • Tell the debtor that SSA's regulations state that FSO is not an initial determination subject to appeal and that SSA cannot act on any such request.

  • Tell the debtor SSA will continue to use FSO to collect the overpayment.

IMPORTANT: Do not solicit a form SSA-561-U2 (Request for Reconsideration) regarding SSA's decision to use Federal Salary Offset. If the SSA-561-U2 is received by mail, dispose of it according to the instructions in SI 04020.020B.10.a.

C. Procedure – Debtor Offers to Repay

1. Full Refund

Offers to make full refund of overpayments are processed the same way for Title II and Title XVI debts. For detailed instructions when the debtor offers to repay the overpayment in full, refer to GN 02201.044C.1.

2. Installment Payments

Regular monthly installment payments will prevent FSO if it has not yet started. Installment payments will not stop FSO if it has begun.

FSO is an enforced collection that guarantees the recovery of some or all of the debt while the debtor remains a Federal employee. We want to prevent manipulation of the system by people who do not make good faith offers to repay. Also, FSO is a complex process requiring communication among the debtor, SSA, and the Department of Treasury. Therefore, to prevent repeated efforts to stop and resume this complex process, we have decided that installment payments after FSO has begun will not stop that collection method.

IMPORTANT: In any discussion with a debtor who wants to make installment payments in the hope of stopping FSO, advise the person that installment payments will not stop FSO if it has begun. In addition advise the person that if an installment agreement is submitted but a payment is not received before FSO begins, SSA will not stop FSO. SSA will still accept the payments but FSO will continue.

If FSO has not begun, stress to the debtor that regular monthly payments are required to prevent SSA's use of FSO. Any lapse in regular payments can result in SSA's use of FSO.

Take the following action to process an installment agreement when FSO has not begun:

a. TSC Action

  • Refer the request to the servicing FO via MDW (non-MSSICS cases) or via DW01 (MSSICS cases).

  • Advise the caller that someone from the FO will contact him/her about the request.

  • Record the action taken on DMS Remarks.

b. FO Action

  • Attempt to negotiate a rate of repayment which would permit full recovery within 12 months.

  • If that is not possible, try to establish a rate of repayment which will permit full recovery within 36 months.

  • If that is not possible, minimum payments of at least $10 per month are required unless there are unusual circumstances.

  • If you negotiate an agreement (person agrees to pay back $10 per month or more): (1) Complete the Overpayment Decisions (UOPD) screen in Direct SSR Update (MSOM BUSSR 004.008) to reflect the negotiated agreement. (2) Tell the debtor to send the payment(s) in the envelope that was provided with the overpayment notice. (3) If the debtor does not have the envelope, give him/her the address for sending in remittances:

    MATPSC
    P.O. Box 3430
    Philadelphia, PA 19122

    (4) Record the action taken on DMS Remarks.

  • If the debtor wishes to pay back less than $10 per month and/or unusual circumstances apply, refer to GN 02210.214B. and SI 02220.025B.2.

  • Tell the debtor that an immediate payment, followed by regular monthly payments, could result in the prevention of SSA's use of FSO.

  • If the debtor is present in the FO and makes a payment, process the remittance per instructions in GN 02403.006.

c. PC Action

  • Follow the instructions in GN 02210.214B. and SI 02220.025B.2.

  • Tell the debtor that an immediate payment, followed by regular monthly payments, could result in the prevention of SSA's use of FSO.

3. Debtor Makes a Compromise Offer

If the debtor makes a compromise offer, proceed as follows:

a. TSC Action

  • Advise the debtor to contact the servicing FO to arrange a compromise settlement.

  • Give the debtor the name, address and telephone number of the FO that services his/her current address.

  • Document the request for compromise offer on the DMS Remarks.

  • Do not make any input to stop FSO withholding.

b. FO Action

  • Follow the instructions in SI 02220.030, SSI Overpayment Compromise Settlement. (See SM 01311.290 for instructions on posting the NY TAC.)

  • See SM 01311.290 for instructions for posting the NY TAC.

  • Tell the debtor that FSO will continue unless we receive the compromised amount.

c. PC Action

  • Follow the instructions in GN 02210.215, Debtor Offers to Compromise.

  • See SM 01311.290 for instructions for posting the NY TAC.

  • Tell the debtor that FSO will continue unless we receive the compromised amount

D. Other Reports That Could Affect FSO

1. Debtor Alleges Nonreceipt of the Overpaid Amount

If a debtor alleges nonreceipt of the overpaid amount, obtain an SSID and/or an Inquiry Response Query. If the query shows no record of nonreceipt of the payment(s) in question, proceed as follows:

TSC/FO/PC Action

  • If the debtor had a representative payee, explain that the payment(s) was sent to the payee and there is no indication that payment(s) was not received.

  • If there was no representative payee, explain that our records do not show any evidence of a nonreceipt allegation at the time the initial overpayment notice was sent.

  • If the debtor insists that we provide a photocopy of the check(s) in question, explain that we will investigate but the debt will still be subject to TOP/ECO collection tools (Treasury Offset Program, credit bureau reporting, AWG and FSO).

  • If the investigation supports the nonreceipt allegation and the debt is found not to exist, explain that SSA will repay any amounts collected by FSO and/or TOP, and will also delete the debt from the person's credit report.

  • If the investigation does NOT support the nonreceipt allegation, and the debtor still maintains that he/she never received the overpayment amount, follow the instructions in SI 02220.019B.4., Request for Review.

  • Follow GN 02406.117 to handle the nonreceipt allegation for a check and GN 02406.007 for a direct deposit payment (these references apply to Titles II and XVI payments). DO NOT make any systems input.

2. Debtor Alleges Nonreceipt of FSO 30- Day Notice

If the debtor alleges never receiving the FSO 30-day notice, proceed as follows:

a. TSC/PC Action

  • Advise the debtor to submit a statement regarding nonreceipt of the notice along with his/her current address and telephone number to the FO in person or by mail.

  • Provide the address and telephone number of the FO that services the debtor.

  • Explain to the debtor that applicable TOP/ECO collection tools (Treasury Offset Program, credit bureau reporting and AWG) will continue to apply unless we can confirm his/her allegation.

b. FO Action

  • Get a statement from the debtor regarding nonreceipt of the notice along with his/her current address.

  • Explain to the debtor that TOP/ECO will continue to apply unless we can confirm his/her allegation through a folder review.

  • If the claims folder is in the FO, check for an undeliverable notice and process according to the following instructions.

c. PC Action - Undeliverable FSO 30-Day Notice Was Remailed

Review the claims folder to determine if the notice was returned as undeliverable. If the FSO 30-day notice was remailed, take the following actions:

  • Tell the debtor the date the new notice was mailed.

  • Tell the debtor that the overpayment is still subject to collection by TOP/ECO tools.

d. PC Action - Undeliverable FSO 30-Day Notice Was Not Remailed

If a subsequent notice was not mailed, the debtor has the right to a full administrative review process. Take the following actions if the original notice was returned as undeliverable and a subsequent notice was not mailed:

  • Send an FSO 30-day notice to the debtor's current address and overlay the old notice date with the new notice date using the MSSICS Update Sequence Data (UOSD) screen Direct SSR Update (see MSOM BUSSR 004.006). If the debtor is in the FO, give him/her the FSO 30-day notice.

  • If there is a disposition code on the SSR, delete the old disposition code by completing the MSSICS Add/Change/Delete Overpayment Decisions Direct SSR Update (UODC) screen. (See MSOM BUSSR 004.007).

  • The new notice date will overlay the old and an unresolved overpayment will be computed.

NOTE: The above actions will delete the debt from the Treasury Offset Program and from FSO until the debt becomes delinquent and meets all TOP/ECO selection criteria. The preceding actions will not, however, delete the debt from the credit bureau if it was previously reported as delinquent. Advise the debt management program analyst regarding the need to delete the debt from the credit bureau report.

e. PC Action - No Evidence to Support Allegation of Nonreceipt of Notice

If there is no evidence to support the debtor's allegations about not receiving the notice or the FSO 30-day notice, take the following actions:

  • Advise the debtor (by telephone, if possible) accordingly.

  • Explain that since there is no evidence that the notice was returned as undeliverable by the post office, we must proceed on the assumption that the notice was received.

  • Document the DMS Remarks (RMKS) screen with the information about the debtor contact.

NOTE: If the debtor alleges non-receipt of the initial TOP/ECO notice follow the instructions in GN 02201.030D.8.

3. Report of Bankruptcy Proceeding

Reports of bankruptcy proceedings on FSO cases are handled the same way as on all other overpayment cases. Proceed as follows when you receive a report that a bankruptcy petition is pending or that a debt has been discharged in bankruptcy:

a. TSC Action

  • Tell the caller to submit the bankruptcy petition or discharge order to the servicing FO.

  • Provide the address and telephone number of the servicing FO.

  • Explain that all debt collection processes will continue until SSA receives and reviews the bankruptcy information and determines that recovery effor