GFEBS Debt Management
Debt eligible for referral to the U.S. Treasury must have an amount, including interest fees and penalties, that is equal to or greater than _________
$25.00
Delinquent debts are organized into seven aging categories:
(1) 1 - 90 days (5) 2 - 6 years (2) 91 - 180 days (6) 6 - 10 years (3) 181 - 365 days (7) Over 10 years (4) 1 - 2 years
Customer Line Item Display (FBL5N)
This report lists customer line items. Items can be displayed for more than one customer by selection by open, cleared, or all items. Details can be displayed for specific line items using drill down capabilities. Users have the ability to create user-defined report layouts for future use. Fields can be sorted and subtotaled at various levels.
Salary Offset Information
A debtor or employee must be informed that a salary offset could occur in order to pay a debt. Salary and wage offset is the process of collecting delinquent Federal non-tax debts from a civilian or military employee's current pay without his or her consent
The U.S. Treasury (Cross- Servicing) fee schedule for debt collection services includes
1. Treasury Offset Program (TOP) - $17 per offset collection transaction. 2. Treasury's private collection agency (PCA) and debt less than 2 years delinquent - 28% of the total payment received after the referral. 3. Treasury's PCA and debt 2 years and greater delinquent - 30% of the total payment received after the referral. 4. Treasury and Department of Justice (DoJ) - 3% DoJ fee plus 28% or 30% Treasury fee of the payment received after the referral
Day 31 deadline
1st billing notice and demand letter
Day 61 deadline
2nd billing notice and demand letter
The interest calculation program run every day and updates each amount every ______
30 Days
After using all appropriate collection tools, a write-off of a receivable occurs when it is more than _______ likely that the receivable is uncollectible
50%
Currently Not Collectible (CNC)
A debt is classified as CNC when the net value of the debt is equal to zero. For a CNC debt, the debt moves from active collection to passive collection. A CNC debt is still eligible for Cross-Servicing and offset by the U.S. Treasury. CNC debt must be continuously reviewed and as required, reclassified as closed out.
Remit to Instructions:
A debtor must have clear instructions on how and where to send payment. Processing a debtor's payment (e.g., personal check) on a collection voucher without knowing the debt reference number could result in delays in posting the collections. Remit TO instructions could change during the lifecycle of the debt (e.g., within the first 90 days, mail to a GFEBS address; after 90 days, remit to a U. S. Treasury address). If the debtor does not know who or where to pay, GFEBS will most likely not collect the accounts receivables in a timely manner
A: Adjustment Reason Status Codes
A is used to classify debts that have been adjusted
U.S. Treasury and IPAC Collections
A summary of the collections received by the U.S. Treasury (Cross-Servicing) for debts referred by GFEBS is processed by Intra-Governmental Payment Collection System (IPAC) and sent to the Defense Cash Accountability System (DCAS). The summary collection file is transmitted by DCAS to GFEBS and posted as unmatched collections
Documentation
All available documentation that substantiates the indebtedness should be provided upon the debtor's request. Documentation may be stored in the originating entitlement and / or revenue system or maintained in the system of record (e.g., GFEBS). A debtor documentation request (e.g., proof of debt) is made to the POC
C: Collection Reason Status Codes
C is used to classify debts in the process of collection
Debtor Notification
Contact with debtor is critical. Debtor notification in the form of a billing notice and demand letter provides the debtor with notification of the debt existence and with information on how to repay the debt. Debtor notification is required by law.
What is cross servicing?
Cross-Servicing is the process whereby federal agencies refer delinquent debts to the U.S. Treasury for collection. The Debt Collection Improvement Act of 1996 (DCIA) makes the U.S. Treasury responsible for collecting delinquent debts Government- wide
CVFR
Current Value of Funds
Four of the more commonly used reports are:
Customer Open Item Analysis by Balance of Overdue Items, Customer Line item Display, Customer Account Analysis, and the Due Date Analysis for Open Items.
Which role is able to run the interest Calculation Program?
Debt Management Processor
Day 91 deadline
Debt is Treasury referral eligible
Treasury Referral Process Key Points 1
Debts referred by GFEBS to the U.S. Treasury (Cross-Servicing) for collection remain at the U.S. Treasury (Cross-Servicing) unless the debt is requested for return to GFEBS
Treasury Referral Process Key Points 4
Debts referred to the U.S. Treasury and later found to be not eligible must be called (e.g. a debt not legally enforceable due to bankruptcy)
Treasury Referral Process Key Points 3
Debts scheduled for the Write-off process and closed out must be recalled. Once a debt is closed out, all collection actions (active and passive) must stop
Closed Out
Debts that are classified as closed out are no longer available for further collection activity. Depending on the amount of the closed out debt, GFEBS may be required to report the amount to the IRS as potential income to the debtor on IRS Form 1099-C (cancellation of debt). Debts equal to or greater than $600 require a 1099-C. Debts less than $600 do not require a 1099-C
DLA
Defense Logistics Agency
Delinquent Receivables
Delinquent accounts receivables are receivables that were not paid by the date specified in the initial debt notice for payment (e.g., billing form, demand letter, or other applicable agreement).
Which Debt Management Report displays customer open items in 30 day intervals?
Due Date Analysis for Open Items (S_ALR_87012168)
Transaction code to create an invoice
FB70
Customer Line Item Display Transaction Code
FBL5N
True or false: Debts in Currently not Collectible (CNC) status are no longer eligible for collection by the U.S. Treasury
False
True or false: Reason status codes remain the same throughout the debt lifecycle
False
Installment plans guidelines
First, installment guidelines include documentation from the debtor that he / she is financially unable to pay in a lump sum. Second, installment plans require monthly payments with an overall repayment period not to exceed 3 years, unless an exception is granted. Last, installment payments should be at least $50 each month.
Referral Eligibility
For an account to be eligible for referral to the U.S. Treasury (Cross-Servicing), certain requirements must be met: 1. The total amount of the debt, including interest, fees, and penalties, must be equal to or greater than $25; in addition, the amount must be delinquent for at least 91 days. 2. The account must have a reason status code that is eligible for referral. Reason status codes are discussed later in this lesson. 3. The account must be legally enforceable. For purpose of referral, this occurs when there has been a final agency determination that the debt is due and there are no legal bars to one or more of the collection actions (e.g., a debt in bankruptcy status).
Treasury Referral Process Key Points 2
GFEBS may recall a debt referred to the U.S. Treasury (Cross-Servicing) using an action code transmitted on the U.S. Treasury outbound file
Outbound File to U.S. Treasury
GFEBS sends outbound files to the U.S. treasury (Cross-Servicing) that contains: 1. Updates for Customer Master Records (debtors) previously referred to the U.S. Treasury (Cross-Servicing). 2. New Accounts receivable records (debts) for referral to the U.S. Treasury (Cross-Servicing). 3. Updates for accounts receivable records previously referred to the U.S. Treasury (Cross-Servicing). 4. Resubmissions of failed records
Who processes installment plans and when?
If a debtor requests an installment plan and Defense Finance and Accounting Services (DFAS) receives the request before or by the due date, the required documents are evaluated to determine whether the customer meets the requirements for an installment plan. The Debt Management Processor receives the installment plan decision and if the installment plan request is approved, enters the required information in GFEBS
When is interest applied?
Interest is applied 30 days after the debit notice due date (i.e., day 31). Additional interest will accrue for each 30 day period until payment is received. The interest calculation program is automatically executed on a daily basis, but only updates the account every 30 days. In the process of fully collecting a debt that includes principal, interest, fees, and penalties the remittances received are first applied to reduce penalties, fees, interest, and then principal.
Non-Delinquent Receivables
Non-delinquent debts are categorized as current and non-current assets. The portion of non-delinquent debt scheduled to be collected in the next 12 months is recorded as current. The remaining non-delinquent debt appears as non-current assets
P: Principal Debt Reason Status Codes
P is used to classify principal debts
A Debt becomes delinquent when
Payment is not made (i.e., collection posted) by the due date or end of the "grace period." Payment is not made by the due date specified in the initial debt notice. The date of delinquency for a debt generated in an entitlement or revenue system is based upon the delivery or mailed date of the bill / invoice notice (e.g, a travel debt payment due date: is day 1, with a 30 day "grace period" for interest calculation).
Treasury Reporting: Reason Status Codes
Reason Status codes assist with the preparation of the TROR. Reason Status codes indicate the state of the debt throughout the debt lifecycle and assist the accounting system with determining how to categorize the debt. Changes in the reason status code occur through business events or are manually entered into the accounting system. These changes also occur via interfaces from entitlement and revenue systems
Due Date Analysis for Open Items Transaction Code
S_ALR_87012168
Customer Account Analysis Transaction Code
S_ALR_87012169
Estimating Allowance for Doubtful Accounts
The Army calculates an allowance for doubtful accounts and completes the needed General Ledger (GL) entries to account for the allowance calculation. The allowance for doubtful accounts reduces the gross receivables to reflect the net realizable value of the Army's total receivables portfolio. By doing so, the Army recognizes that it is unlikely to affect recovery on a portion of its portfolio and that the estimated uncollectible amount constitutes a "bad debt" expense to the government. The recording of the allowance for doubtful accounts is prorated and recorded monthly
Federal Debt System
The Federal Debt System is used by the U.S. Treasury (Cross-Servicing) to manage cases of referred debt. The Federal Debt System maintains information about the debtors, referred debts, and actions being taken by the U.S. Treasury (Cross-Servicing) to facilitate the collection
How is interest applied?
The Run Interest Calculation Program is run automatically. It can be manually run by the Debt Management Processor if needed. Interest accrues continually until the debt is collected or written off.
Facts about Treasury Reporting
The Treasury Report on Receivables (TROR) is a report that informs Federal decision makers of the gross book value of the receivables owed to Federal agencies and the status of the Federal Government's debt portfolio. The Army must provide information concerning its debts for inclusion in the TROR on a quarterly basis
Inbound Files from U.S. Treasury
The U.S. Treasury (Cross-Servicing) transmits a detailed collection record for debts referred to the U.S. Treasury (Cross-Servicing) by GFEBS on a weekly basis. The inbound file from the U.S. Treasury is reconciled with the unmatched IPAC collections from the summary collection file received from DCAS. The Cash Balancing Processor oversees and works all unmatched collections. The Debt Interface Monitor reviews errors received in the transmission of the inbound file from the U.S. Treasury
Who determines the applied interest amount?
The U.S. Treasury requires the Current Value of Funds Rate (CVFR) to be used as the interest rate. When the debt record is created the interest rate (%) is assigned to the accounts receivables record. The rate is fixed for the life of the debt.
Agency Willingness
The demand letter must state the agency's willingness to discuss alternative methods of payment (e.g., installment plans) and any rights the debtor may have for request of waiver or remission
Due Date Analysis for Open Items (S_ALR_87012168)
This report is used for displaying customer open items in 30 day intervals. Selections can be for multiple customers and can be filtered by various selection criteria
Customer Open Item Analysis by Balance of Overdue Items (S_ ALR_ 87012178)
This report is used to display customer open items by user-defined aging categories (e.g; every 20 days, 30 days days, etc.). Selections and filtering capabilities can be made for multiple customers. Items can also be summed at various levels. This aging report can be used to determine receivables that are eligible for write-off and to validate that the required debt fees have been applied to delinquent receivables.
True or False An allowance for doubtful accounts is estimated and posted to the General Ledger of the accounting system
True
True or false: Government employees are subject to interest, fee, and penalty charges assessed on debt to the government that are overdue.
True
True or false: It is possible for debtors to make payments in accordance with approved installment plans.
True
W: Write-off and Close Out Reason Status Codes
W is used to classify debts that are written off or closed out. •W1 is used for CNC debts that are written off but not closed out •W2 is used for closed out debts where a 1099-C should be generated for the IRS. •W3 is used for closed out debts where a 1099-C is not generated for the IRS as the amount is less than $600.
Contact Information
Within the first 30 days, Points of Contact (POCs) will be related to the entitlement or revenue system that generated the debt (e.g., TPOCs debts will have MEDCOM POCs, DTS debts will have the traveler's Debt management monitor role for his / her organization as a POC). After 30 days, the debt will have a GFEBS POC, which is listed on the first demand letter
What is a write-off?
an accounting action that results in reporting the receivable as having no value on the financial statements. Receivables that are written off are classified with a status of Currently Not Collectible (CNC) or Closed Out
Fees
are assessed to cover the additional costs incurred in handling a debt beyond the date on which payment was due. They are applied only if payment is not made by the due date specified on the billing form and / or demand letter. The DoD components calculate fees based upon actual costs incurred. If the actual cost is not available, fees may be determined by historical costs or by the cost analysis method that supports determination of the charge.
Penalties
are charges on delinquent debt to discourage delinquencies and encourage early payment of the debt in full. The rate to be assessed is set by law at more than six percent per year and is assessed on the portion of a debt remaining delinquent for more than 90 days. The charges will accrue and be assessed from the date of delinquency.