CHAPTER 11. VENDOR DEBTS

11.01 GENERAL

This chapter provides policy for the collection of vendor debts resulting from overpayments, duplicate payments, return of merchandise, contract defaults, and other activities whereby a vendor may become indebted to VA.

11.02 COLLECTION PROCEDURES

a. A VA Form Letter 4-521 will be sent to a vendor upon discovery that a transaction resulting in a debt to VA has occurred. The letter will state that:

(1) Payment must be received no later than 30 days from the date of the collection letter.

(2) Interest, administrative costs, and other charges will be assessed if payment is not received within 30 days from date of initial notification. However, interest and other charges will not be assessed debts owed by the Canteen Service.

(3) Additionally, penalty charges will be assessed if the debt is not paid in full or in a current repayment plan within 120 days from the date of initial notification.

(4) If payment is not made timely, the amount owed, plus interest and other payment charges will be offset from future payments owed the vendor by VA. Procedures for offset are contained in MP-4, Part V, Chapter 12, Section G. Inclusion of contractor debts in the Department of the Army "Holdup List," can be found in chapter 24A.08 of this manual.

b. Second and third follow up letters will be sent in 30-day intervals if payment is not received unless offset is initiated.

11.03 INTEREST, ADMINISTRATIVE COST OF COLLECTION & PENALTY CHARGES

Interest, administrative costs, penalties and other charges will be assessed on vendor debts in accordance with 4 CFR 102.13. Interest accrues from the date of initial notification. Administrative costs accrue beginning 31 days from the date of initial notification. Penalty charges will be assessed if a debt is not paid in full or in a current repayment plan within 90 days of delinquency, counted from 31 days from the date of the initial demand letter.

11.04 COMPROMISE AUTHORITY

(Reference chapter 22). The Chief of the Fiscal activity has compromise authority on vendor debts not in excess of $1,000, exclusive of interest and other late payment charges, to:

(1) Reject any offer of compromise, or

(2) Accept compromise offers of 50 percent or more on the total debt, or

(3) Recommend that the Committee on Waiver and Compromises (COWC) accept a compromise offer of less than 50 percent.

11.05 IRS REFERRALS

Vendor debts cannot be referred to IRS for tax refund offset at this time.

11.06 REFERRAL FOR ENFORCED COLLECTION

Vendor debts with a balance of at least $600, will be referred for enforced collection to the United States Attorney in whose judicial district the debtor can be found.

11.07 WRITEOFF

a. The Chief of the Fiscal activity may write off vendor debts not in excess of $40,000, exclusive of interest and other charges, where the criteria for write off of debts have been met. The action taken, reasons for the decision, and the applicable standard(s) that were applied, will be documented on the appropriate accounts receivable record.

b. Debts over $40,000 and up to $100,000, exclusive of interest and other charges, are to be submitted to Central Office (047G4) for approval. Requests are to be signed by the Director and are to include a statement of facts summarizing collection action(s) taken and copies of all pertinent documentation, except that a Claims Collection Litigation Report (CCLR) is not required.

c. Debts in excess of $100,000 are to be submitted to (047G4), together with a CCLR. VACO (047G4) will review the requests and submit them to DOJ for approval.