TN 58 (07-23)

GN 02604.150 Collection of Penalties

Collect a penalty only from benefits due the beneficiary who incurred the violation. A penalty is not an overpayment subject to adjustment against another beneficiary.

A. Procedure for adjusting benefits

1. Adjustment of benefits

a. Beneficiaries currently entitled to monthly benefits.

Withhold the entire amount of the penalty from the beneficiary’s benefits unless they request a partial withholding of an overpayment. If a beneficiary requests partial withholding, assume that the request is for partial withholding of the penalty as well, unless otherwise specified. (See GN 02210.045 for information on Rate of Overpayment Adjustment.)

b. Prior entitlement to benefits

If benefits terminate before a penalty is fully collected, (see GN 02604.150.3.b. in this section) withhold the penalty from any subsequent benefits payable to the beneficiary (e.g., a spouse converts to a widow).

2. Refund

Do not ask the beneficiary to refund a penalty. However, if they volunteer a refund, accept it. If the refund amount is less than the sum of the overpayment and the penalty, apply the refund to the overpayment first; i.e., recover an overpayment before collecting a penalty.

3. Representative payee considerations

a. Payee changes

When a representative payee for a child fails to report an event timely, we impose a penalty unless:

  • the payee dies and they did not change the representative payee during their lifetime or

  • the child unknowingly conceals the deduction event from the representative payee.

b. Entitlement terminates

If entitlement for a child with a representative payee terminates before we completely adjust the penalty, we will not adjust subsequent benefits payable to the child unless the child:

  • remains entitled on another earnings record, or

  • knowingly concealed the event from the representative payee.

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GN 02604.150 - Collection of Penalties - 07/18/2023
Batch run: 07/18/2023