§3720C Debt Collection Improvement Account

Summary

Creates a special Treasury fund called the Debt Collection Improvement Account and lets agencies put certain delinquent-debt collections into it. Within 30 days after a fiscal year ends, an agency may transfer a calculated amount: 5 percent of the delinquent debt it collected that year minus the larger of (a) 5 percent of the delinquent non-tax debt it collected in the prior year or (b) 5 percent of the average annual delinquent non-tax debt collected in the prior four years. Transfers can come from things like salary or tax-refund offsets, work with the Department of Justice, private collection agencies, sales of delinquent loans, and contracts to find or recover assets. The Treasury Secretary manages the Account and makes sure agencies get credit for amounts they send. Treasury may only pay money out to reimburse agencies for qualified credit-management and debt-recovery costs, such as account servicing, computer systems, collecting or selling debt, disposing of assets, and staff training; for agencies with franchise funds, payments may go to debt-collection subaccounts. The Office of Management and Budget, after consulting Treasury, can adjust an agency’s amount based on how quickly and effectively it refers debts and lowers delinquencies (looking at referral delay and delinquent-to-receivable ratios). Money can be spent only as Congress appropriates it. Any unspent balance must be moved to the Treasury’s general fund after the end of the third fiscal year after funds first became available and every three years after that. For covered direct-loan and loan-guarantee programs, credited amounts count as administrative costs. The Treasury Secretary must set rules to run the Account.