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This chapter provides information to Federal Program Agencies (FPAs) on policies, procedures, and reports issued by the Bureau of the Fiscal Service (Fiscal Service) regarding the processing of check reclamations.

Section 7110—Scope and Applicability

Fiscal Service is responsible for reclamation of funds on improperly negotiated U.S. Treasury checks. This chapter includes reports and guidance FPAs use to track and monitor the check reclamation process.

Section 7115—Authority

The applicable regulations governing this chapter are:

• 31 Code of Federal Regulations (CFR) Parts 5 and 240, and 4 CFR Parts 101-105 (Federal Claims Collection Standards); and
• 31 United States Code 3302 (b).
  

Section 7120—Definition of Terms

Administrative Fee—A fee assessed to cover administrative costs incurred as a result of delinquent debt.

Administrative Offset—The withholding of money payable to a financial institution or held by the U.S. Federal Government to satisfy a debt the financial institution owes the U.S. Federal Government.

Check—A check drawn on the U.S. Treasury.

Delinquent Debt—An overdue debt, including administrative fees, interest, and penalties, that a presenting bank owes as a result of the reclamation that is not paid within 60 days from the date on the reclamation ticket.

Direct Debit—A process that debits the financial institution’s Federal Reserve master account for the full amount of the reclamation on the 31st calendar day, provided the financial institution has not submitted a protest and has not paid the reclamation by an authorization before the 30th calendar day from the reclamation date.

Financial Institution—Any bank, savings bank, savings and loan association, Federal or State chartered credit union, or similar institution.

Interest—A charge assessed when a debt is considered delinquent for 60 days. The interest rate assessed is that of the current value of funds to the U.S. Treasury; that is, the U.S. Treasury tax and loan rate.

Partial Credit—A credit for funds received on check reclamations that do not cover the total outstanding balance of principal, interest charge, penalty charge, and administrative fee.

Penalty—A charge assessed after a debt is delinquent for more than 90 calendar days. The rate is set at 6 percent per annum.

Receivable—A debt owed to the U.S. Federal Government.

Reclamation—A demand made by the U.S. Treasury for refund of the amount of a check payment.

Reclamation Date—The date that the Notice of Direct Debit (U.S. Treasury Check Reclamation) was prepared.

Section 7125—Check Reclamations

Fiscal Service reclaims amounts on improperly negotiated U.S. Treasury checks, as provided for in 31 CFR Part 240.8. When Fiscal Service receives a credit that equals full principal, Fiscal Service forwards the credit to the FPA, if the FPA is holding the receivable.

Fiscal Service forwards partial credits received to the FPA with an indicator that the credit is partial. Fiscal Service continues collection action and forwards the balance to the FPA when received. Fiscal Service processes credits daily.

Section 7130—Interest, Penalty Charges, and Administrative Fees

Interest on any unpaid reclamation starts accruing on the 61st day after the reclamation date. Fiscal Service also assesses an administrative fee at that time. Fiscal Service calculates the administrative fee per the requirements of the Federal Claims Collection Standards.

Fiscal Service charges a penalty on any reclamation that remains delinquent over 90 calendar days. Fiscal Service may refer any reclamation that is unpaid for 120 calendar days after the reclamation date for administrative offset. If interest, penalty charges, and administrative fees were collected, Fiscal Service deposits those charges and fees monthly into the U.S. Treasury’s General Account 20A8183. Fiscal Service’s reports the activity for the accounts on the Statement of Transactions 224.  

Section 7135—Collection Action

Fiscal Service continues collection action on check reclamations until the balance outstanding becomes $25 or less, or all collection steps have been attempted and the cost of further collection would likely exceed the amount to be recovered.

Fiscal Service does not terminate collection action if a protest or legal issue is pending resolution. Fiscal Service refunds any amount recovered on FPA receivables to the FPA.

Section 7140—Electronic Transmission of Partial Credits

The U.S. Department of Veterans Affairs, U.S. Railroad Retirement Board, Internal Revenue Service (IRS), and Office of Personnel Management receive their data via Connect:Direct. The indicator “CP” (Credit Partial) appears in the record layout at position 177 and 178. The summary information is transmitted to these agencies by an Intra-governmental Payment and Collection (IPAC) credit document.

Section 7145—Abandoned Reclamations

Fiscal Service notifies FPAs that a reclamation was abandoned. In addition to the initial notification that a reclamation was abandoned, each month Fiscal Service reports to FPAs reclamations abandoned during the accounting month (see Appendix 1).

Section 7150—Reporting to the IRS on IRS Form 1099-C: Cancellation of Debt

FPAs are responsible for reporting only the principal amount of their uncollectible receivables to the IRS on IRS Form 1099-C. To assist FPAs, Fiscal Service sends the FPAs a report on the uncollected principal amount of receivables at the end of the calendar year (see Appendix 2) and again at the end of February with any modifications to the data (see Appendix 3).

Fiscal Service reports to the IRS:

• The principal amount of the U.S. Treasury’s uncollectible receivables; and
• Interest, penalty charges, and fees for all uncollectible receivables related to check reclamations.
  

Direct questions concerning this chapter to:

Customer Service Branch
Philadelphia Financial Center
Bureau of the Fiscal Service
Department of the Treasury
P.O. Box 603
Bensalem, PA  19020
Telephone: 855-868-0151 (option #1)
Email: Phyllis.Daniels@fiscal.treasury.gov

Appendices are available in the PDF version only.