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U.S. Department of Health and Human Services

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SMG 2610.15

FDA STAFF MANUAL GUIDES, VOLUME III - GENERAL ADMINISTRATION

PROCUREMENT AND SUPPLY MANAGEMENT

PROCUREMENT

DEBT COLLECTION POLICY

Effective Date: 10/14/2008
Change: 04/15/2014

[PDF Version]

 1. Purpose
 2. Policy
 3. Responsibilities
 4. Effective Date
 5. History

1. PURPOSE 

To ensure adherence to the Debt Collection Improvement Act of 1996.

2. POLICY 

All debt collection actions taken by the FDA must comply with the Debt Collection Improvement Act of 1996. According to The Debt Collection Improvement Act of 1996 and The Code Of Federal Regulations (45 CFR Part 30), the following requirements exist when collecting a delinquent debt:

1) Finance charges begin accruing once a debt becomes past due. The interest rates for finance charges are determined based on the following chart: http://www.hhs.gov/asfr/of/finpollibrary/chronorates.html

2) Dunning letters are sent to customers with delinquent debt according to the following schedule:

Location1st Letter2nd Letter3rd Letter
Domestic30 days after due date60 days after due date90 days after due date
International45 days after due date60 days after due date90 days after due date

The 1st dunning letter alerts the customer that their account is overdue. The 2nd dunning letter indicates that the debt will be sent to collections if payment is not received within 90 days of the due date. The 3rd dunning letter informs the customer that the debt has been sent to collections. A copy of the invoice is sent with the 1st and 2nd dunning letters.

3) Administrative charges are added after a debt is 30 days past due. Administrative charges can be negotiated by the Chief Financial Officer (CFO) with permission from DHHS.

4) Late payment penalties are added after a debt is 90 days past due.

5) Debts that are delinquent more than 90 days past the due date may be sent to PSC for debt collection. PSC utilizes the Treasury Offset Program and the Department of Justice to collect the debt.

6) PSC issues a monthly report to the FDA indicating which debts have been collected and which need to be written off.

3. RESPONSIBILITIES 

Individual A/R Offices

Individual A/R Offices who initially create the invoice in the Accounting System are responsible for creating and sending dunning letters.

Director of Accounting, OFM

OFM and ultimately the Director of Accounting, OFM oversees the process of sending dunning letters and reporting on delinquent debts.

4. EFFECTIVE DATE 

This policy was signed by John P. Gentile, Associate Commissioner for Operations, effective October 14, 2008.

 5. Document History -- SMG 2610.15, Debt Collection Policy

STATUS (I, R, C)DATE APPROVEDLOCATION OF CHANGE HISTORYCONTACTAPPROVING OFFICIAL
Initial10/14/2008N/aOC/OO/OM/OFMJohn P. Gentile, Associate Commissioner for Operations
Change04/15/20142. POLICY, paragraph 1)OO/OFBA/OFO/OFMWilliam Collinson, Financial Advisor, OC