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Chapter 3100

CERTIFYING PAYMENTS AND RECORDING CORRESPONDING INTRAGOVERNMENTAL RECEIVABLES IN THE FEDERAL GOVERNMENT'S JUDGMENT FUND (T/L 649)

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This chapter provides guidance, procedures, and forms necessary to process certifications from the Judgment Fund for settlement of administrative and litigative claims against the U.S. Government.

Section 3110—Scope and Applicability

This chapter supplements the Department of the Treasury's (Treasury's) regulations at 31 CFR Part 256, Obtaining Payments from the Judgment Fund and Under Private Relief Bills (see the Web site at http://www.fms.treas.gov/judgefund/regulations.html). It also provides detailed information on the forms required to request certifications from the Judgment Fund, the process for collecting reimbursements of payments made from the Judgment Fund, and the recording and reporting of intragovermental receivables related to payments from the Judgment Fund.

Section 3115—Authority

The following authorities and regulations govern the policies set forth in this chapter:

  • Titles 31 U.S.C. § 1304, 41 U.S.C. § 612, 5 U.S.C. § 2301 note;

    AND

  • Title 31 CFR Part 256.

Section 3120—The Financial Management Service's (FMS's) Role in Certifying Payments From the Judgment Fund

Congress established the Judgment Fund, which is a permanent, indefinite appropriation, to pay:

  • Certain judicially and administratively ordered monetary awards against the United States;

    AND

  • Amounts owed under compromise agreements negotiated by the U.S. Department of Justice in settlement of claims arising under actual or imminent litigation.

FMS is the Treasury Department bureau that administers and certifies payments from the Judgment Fund. As stated in Treasury regulations at 31 CFR § 256.1, FMS certifies payments from the Judgment Fund when the following four tests have been met:

  • Awards or settlements are final;

  • Awards or settlements are monetary (that is, require payment of specific sums of money awarded against the United States);

  • One of the authorities specified in 31 U.S.C. § 1304(a)(3) provides for payment of the award or settlement;

    AND

  • Payment may not legally be made from any other source of funds.

Section 3125—General Guidance for Certification of Payments

3125.10—Core Requirements for Agency Submission to FMS To Obtain Payment From the Judgment Fund

Responsible agencies must submit FMS forms and supporting documentation required by Treasury regulations at 31 CFR Part 256 and this chapter to request certification of payments from the Judgment Fund. See the Web site at http://www.fms.treas.gov/judgefund/regulations.html for the full text of 31 CFR Part 256.

Agencies may submit payment requests using one of the following methods:

  • Mail (to include Federal Express and courier services);

  • Esker Fax (a secure fax system);

    OR

  • The Judgment Fund Internet Claims System (JFICS).

If requests are submitted through mail or Esker Fax, agencies must record the information on the FMS forms and must provide supporting documentation. The required FMS forms for requests submitted by mail or Esker Fax are identified below and are included in Appendices 1 through 3.

  • FMS 194: Judgment Fund Transmittal (see Appendix 1);

  • FMS 196: Judgment Fund Award Data Sheet (see Appendix 2);

    AND

  • FMS 197: Judgment Fund Voucher for Payment (see Appendix 3).

These forms also are available on the Judgment Fund Web site at http://www.fms.treas.gov/judgefund.

No forms are needed if the payment request is submitted directly through JFICS. For JFICS submission, the responsible agency enters the information into JFICS and submits the request electronically. Until incorporated directly into JFICS, the supporting documentation for the request should be submitted by Esker Fax. Esker Fax is a digital fax that interfaces with the Judgment Fund's document storage system.

The supporting documentation that must accompany agencies' payment requests is detailed in Treasury regulations at 31 CFR § 256.12. Also, as stated in 31 CFR § 256.13, agencies must include a valid taxpayer identification number (TIN) on all requests for payments, unless the situation meets one of the exceptions listed in the FMS TIN Policy, which may be found on the FMS Web site at http://www.fms.treas.gov/tinpolicy/regulations.html.

The "responsible agency" for litigative awards is the agency responsible for defending the United States in court. For administrative awards, the "responsible agency" is the agency authorized to settle the claim. See 31 CFR § 256.10.

3125.20—Additional Information for Payments to or on Behalf of Insured Claimants or Insurers

In addition to the supporting documentation specified in 31 CFR § 256.12, agencies, for payments made on behalf of an insured claimant or an insurer, must be able to support the payee's authority to receive such a payment, as specified below.

  • If an insurance company or some other insurer for a claim has not made payment to or on behalf of the insured claimant (for instance, an unreimbursed deductible amount) before it presents the claim to the U.S. Government, the responsible agency must document the insurer's authority to collect that amount on behalf of the insured claimant.

  • If an insurance company or some other insurer has made payment to or on behalf of an insured claimant before the insured presents the claim to the U.S. Government, the responsible agency must document the insured claimant's authority to collect the insured portions of the claim on behalf of the insurer.

Section 3130—Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten To Commit, or Support Terrorism

Executive Order 13224 prohibits transactions with persons who commit, threaten to commit, or support terrorism. The Department of the Treasury's Office of Foreign Assets Control (OFAC) maintains the Specially Designated Nationals (SDN) and Blocked Persons list, which provides a list of individuals and entities covered by Executive Order 13224. The SDN and Blocked Persons list also includes the additional restrictions found in the Foreign Assets Control regulations at 31 CFR Chapter V.

The Judgment Fund Branch does not make or certify payments, or draw checks or warrants, payable to an individual or organization listed on the SDN and Blocked Persons list. The Judgment Fund Branch consults the SDN and Blocked Persons list at http://www.ustreas.gov/offices/enforcement/ofac/sdn before making payments.

Direct questions concerning Executive Order 13224 or the SDN and Blocked Persons list to OFAC. See the contact information at http://www.ustreas.gov/offices/enforcement/ofac/contacts.html or call 202-622-2490.

Section 3135—Agencies' Reimbursement Obligations

As stated in 31 CFR § 256.40, agencies are required to reimburse the Judgment Fund for payments made pursuant to the Contract Disputes Act, 41 U.S.C. § 612, and payments made pursuant to the Notification and Federal Employees Antidiscrimination and Retaliation (No FEAR) Act of 2002, 5 U.S.C. § 2301 note. In such cases, FMS makes demands for reimbursement to the responsible agency within 30 business days from the date of the payment to the claimant/plaintiff for payments made in accordance with the Contract Dispute Act and 15 business days from the date of the payment to the claimant/plaintiff for payments made in accordance with the No FEAR Act.

3135.10—Contract Disputes Act – Agencies' Reimbursement Obligations

Upon receipt of a reimbursement notice in a Contract Disputes Act case, an agency has 45 business days to repay the Judgment Fund or contact the Judgment Fund Branch to make written arrangements for reimbursement. An agency is deemed noncompliant with the reimbursement provisions of the Contract Disputes Act if it fails to reimburse or make timely arrangements for reimbursement. An agency that fails to respond to a Contract Disputes Act reimbursement notice is identified as nonresponsive in any reports on Contract Disputes Act reimbursements requested or required by Congress.

3135.20—No FEAR Act – Agencies' Reimbursement Obligations

Upon receipt of a reimbursement notice in a No FEAR Act case, an agency has 45 business days to repay the Judgment Fund or contact the Judgment Fund Branch to make written arrangements for reimbursement. An agency is deemed noncompliant with the reimbursement provisions of the No FEAR Act if it fails to reimburse or make timely arrangements for reimbursement, as required by Office of Personnel Management (OPM) regulations at 5 CFR § 724.104. Also, as required by OPM regulations at 5 CFR § 724.105, FMS posts an annual report on the FMS Web site of agencies that have failed to reimburse the Judgment Fund or to contact FMS within 45 business days after receipt of a reimbursement notice. The agency remains on this noncompliance list until it repays the Judgment Fund or makes written arrangements for reimbursement.

Section 3140—Accounting Requirements for Judgment Fund Payments and Reimbursements

The Interpretation of Federal Financial Accounting Standards, Interpretation No. 2, Accounting for Treasury Judgment Fund Transactions: An Interpretation of Statement on Federal Financing Accounting Standards (SFFAS) No. 4 and SFFAS No. 5, requires agencies to recognize liabilities and expenses when unfavorable litigation outcomes are probable and the amount can be estimated. To retrieve the interpretation, visit the FASAB Web site at http://www.fasab.gov/interpretations/intprt2.htm.

3140.10—Accounting for Non-Reimbursable Payments

In accordance with SFFAS No. 4, as amended by SFFAS No. 30, Inter-Entity Cost Implementation, the costs of program outputs must include the costs of services provided by other entities, whether or not the providing entity is fully reimbursed, such as losses in litigation proceedings (Judgment Fund transactions). SFFAS No. 30, issued in August 2005, requires full implementation of the inter-entity cost provision in SFFAS No. 4.

In accounting for unreimbursed costs, reporting entities should refer to the following for guidance:

  • Relevant SFFAS, such as SFFAS Nos. 4, 5, and 30 (http://www.fasab.gov/standards.html);

  • Relevant SFFAS Interpretations, such as Interpretation No. 2 and No. 6, (http://www.fasab.gov/interprt.html);

  • U.S. Government Standard General Ledger (http:// www.fms.treas.gov/ussgl);

    AND

  • FMS's Federal Intragovernmental Transactions Accounting Policies Guide (http://www.fms.treas.gov/factsi/regulations.html).

Reporting entities also should consult the FMS Financial Accounting and Services Division (see the Contacts page) for information needed to properly record inter-entity costs for the Judgment Fund.

The following is a brief scenario for recording transactions related to a non-reimbursable Judgment Fund payment.

  • An agency has determined that the probability of a legal claim ending in a loss against the Federal agency is probable and the loss is estimable. The agency recognizes an expense and contingent liability for the full amount of the expected loss.

  • The Judgment Fund is determined to be the appropriate source for payment of the claim. The agency reverses the contingent liability and recognizes an imputed cost and imputed financing source with Treasury as the trading partner. The agency should use trading partner "20." FMS records a non-Federal expense.

3140.20—Accounting for Reimbursable Payments (Contract Disputes Act and No FEAR Act Payments)

The following is a brief scenario for recording transactions related to a reimbursable Judgment Fund payment:

  • An agency has determined that the probability of a legal claim ending in a loss against the Federal agency is probable and the loss is estimable. The agency recognizes an expense and contingent liability for the full amount of the expected loss.

  • The Judgment Fund is determined to be the appropriate source for payment of the claim. The agency reverses the contingent liability and records a payable to the Judgment Fund (trading partner "20"). FMS records an expense in the permanent indefinite account (that is, the Judgment Fund), records the receivable from the agency in a miscellaneous receipt account, and posts the revenue.

  • If the agency does not have available funds and is seeking a supplemental appropriation or is pursuing a payment plan with Treasury, then the Federal agency reverses the contingent liability and records an accrued liability and future-funded expense.

  • If the agency has arranged a reimbursement plan with FMS, then the Federal agency reverses the contingent liability and records an accrued liability and operating expense.

  • When an agency reimburses the Judgment Fund, the agency reduces the liability to Treasury and its fund balance with Treasury. FMS records the reimbursement in a miscellaneous receipt account. The receivable with the agency is reduced.

For information on the accounting for the Judgment Fund, contact the Financial Accounting and Services Division (see the Contacts page).

3140.30—Confirmation Process

The Federal Intragovernmental Transactions Accounting Policies Guide provides the policies for Federal program agencies to account for and reconcile transactions occurring within and between each other. This guide is available on the FMS Web site at http://www.fms.treas.gov/factsi/regulations.html. On a quarterly basis, FMS posts the outstanding receivables and revenue posted for that period for both Contract Disputes Act and No FEAR Act payments to its Web site. In addition, at the close of every quarter, FMS sends the agency intragovernmental contacts confirmation notices that reflect outstanding receivables and revenue posted for that period. With the exception of the confirmation notice for the final quarter, agencies have 30 calendar days from the end of the quarter to respond to FMS via fax at 202-874-8372, regarding the accuracy of the amounts reported by FMS. With respect to the confirmation notice for the final quarter, agencies must respond to the September 30th notice by October 24 of that year. Agencies must provide supporting documentation (for example, Intra-Governmental Payment and Collection System transactions, canceled checks, etc.) for any changes they want made to the posted balances. This process facilitates the reconciliation and reporting of these receivable balances and improves the quality of agency reporting.

Agencies' outstanding balances are available on the following Web sites:

  • The No FEAR Act – http://fms.treas.gov/tma/fear-act.html;

  • The Contract Disputes Act – http://fms.treas.gov/tma/contract.html.

3140.40—Financial Statement Accounting and Disclosure Requirements for Judgment Fund Receivables

FMS reports receivables arising from payments under the Contract Disputes Act and No FEAR Act on its financial statements and includes them in the appropriate disclosures in accordance with OMB Circular No. A-136, Financial Reporting Requirements. The receivables are presented on the Balance Sheet at their net realizable value. They are reported in the asset section under intragovernmental receivables.

An allowance for loss is established based on the history of collections and responses or non-responses from debtor agencies. While FMS recognizes a loss based on the uncollected intragovernmental debt, the responsible agency remains liable for reimbursement in accordance with the applicable laws (Contract Disputes Act and No FEAR Act).


CONTACTS

For information on the accounting for the Judgment Fund, contact:

Judgment Fund Branch
Financial Accounting and Services Division
Comptroller Directorate
Management
Financial Management Service
Department of the Treasury
3700 East-West Highway, Room 6D37
Hyattsville, MD 20782
Telephone: 202-874-6664; toll free 1-866-277-1046
Fax: 202-874-9522
Web site: http://www.fms.treas.gov/judgefund

For information concerning Executive Order 13224 or the SDN and Blocked Persons list, contact:

The Department of the Treasury's Office of Foreign Assets Control (OFAC) at http://www.ustreas.gov/offices/enforcement/ofac/contacts.html or call 202-622-2490.


APPENDICES LISTING

Appendix No. Form Title
1 FMS 194 Judgment Fund Transmittal
2 FMS 196 Judgment Fund Award Data Sheet
3 FMS 197 I
FMS 197
Judgment Fund Instructions for FMS Form 197: Voucher for Payment
Judgment Fund Voucher for Payment

Chapter appendices are only available in the PDF version.


Transmittal Letter No. 649

Volume I

To: Heads of Government Departments, Agencies and Others Concerned

1. Purpose

This transmittal letter releases I TFM 6-3100: Certifying Payments and Recording Corresponding Intragovernmental Receivables in the Federal Government's Judgment Fund. This chapter provides guidance, procedures, and forms necessary to process certifications from the Judgment Fund for settlement of administrative and litigative claims against the U.S. Government.

2. Page Changes

Insert Remove
Table of Contents for Part 6 Table of Contents for Part 6
I TFM 6-3100 I TFM 6-3100

3. Effective Date

This transmittal letter is effective immediately.

4. Inquiries

Direct questions concerning this transmittal letter to:

Judgment Fund Branch
Financial Accounting and Services Division
Comptroller Directorate
Management
Financial Management Service
Department of the Treasury
3700 East-West Highway, Room 6D37
Hyattsville, MD 20782
Telephone: 202-874-6664; toll free 1-866-277-1046
Fax: 202-874-9522
Web site: http://www.fms.treas.gov/judgefund

David A. Lebryk's Signature

David A. Lebryk (Acting)
Commissioner
Date: April 6, 2009