§3717 Interest and Penalty on Claims

Summary

Federal agencies must charge a minimum yearly interest rate on money people owe the U.S. government. That rate equals the average investment rate for the Treasury tax and loan accounts for the 12-month period ending September 30 each year, rounded to the nearest whole percent. The Secretary of the Treasury must publish the rate before November 1 and it starts on the first day of the next calendar quarter. The Secretary can change the rate for a quarter if the 12-month average ending at the close of the prior quarter differs from the published rate by 2 percentage points or more. Interest starts from the date a notice is mailed: if the first notice was sent before October 25, 1982, interest begins on the notice mailed after October 25, 1982; if the first notice was sent after October 24, 1982, interest begins when the amount-due notice is mailed to the debtor’s most current address. The rate in effect when interest starts stays fixed for the life of the debt. No interest is charged if the debt is paid within 30 days after interest starts; the agency head may extend that 30-day period. Agencies must add a processing charge and may add a penalty of up to 6 percent per year for amounts more than 90 days past due. Interest does not run on those extra charges. The rule does not apply where another law, regulation, loan agreement, or contract forbids or fixes interest or charges, or to contracts made before October 25, 1982 that were in effect that day. Following standards set by the Attorney General, the Secretary of the Treasury, and the Comptroller General, agencies may make rules to waive interest and charges. Instead of interest and penalties, an agency may increase an administrative claim yearly by a cost-of-living adjustment based on the Consumer Price Index for June; administrative claims include debts not from government loans, such as fines, penalties, and overpayments.