Some DCIA-authorized debt collection tools are mandatory, while others  are discretionary. The package includes a Letter to Employer &  Important Notice to Employer, Wage Garnishment Order, Wage  Garnishment Worksheet, and Employer Certification. In February 1999,  FMS issued “Instructions to Federal Agencies for Preparing AWG Forms.”
As is the case with other debt collection tools, Treasury’s regulations  dealing with AWG provide for due process for debtors. Objective, Scope, and Methodology

The objective of our review was to determine the extent to which certain  CFO Act agencies use or plan to use AWG as authorized by DCIA to collect  delinquent nontax federal debts. Agencies gave various reasons  for the delay in implementing AWG, including their need to focus priorities  on the mandatory provisions of DCIA, to develop the required AWG  regulations, and to complete the systems changes necessary to implement  AWG. FMS’s Use of AWG Could Be Limited

Depending on the nature of an agency’s delinquent debt, relying on FMS to  apply AWG as part of cross-servicing may be the best approach. More than 5 years  after the enactment of DCIA, which authorized but did not mandate use of  AWG, and more than 3 years after Treasury issued implementing  regulations for AWG, however, none of the large CFO Act agencies we  surveyed had begun using AWG as authorized by DCIA, either in-house or  through FMS. By failing to implement AWG, agencies have clearly missed opportunities to  maximize collection of delinquent debts. Even when agencies do begin  implementing AWG, those that rely primarily on FMS may find that the  tool’s effectiveness—particularly its usefulness in leveraging full or  compromise payments from debtors who wish to avoid wage  garnishment—is limited because agencies have in the past failed to  promptly refer a significant portion of eligible debts to FMS for cross- servicing and because FMS intends to use AWG as a collection tool of last  resort, thus allowing debts (that may already be more than 180 days  delinquent) to age significantly before sending an AWG notice to the  debtor. Moreover, agencies are not required to send debts to FMS until  they are more than 180 days delinquent. Comments from the Department of Health and Human Services

	GAO Comments

1.
Why GAO Did This Study

To improve federal debt collection, the Debt Collection Improvement Act of 1996 established a framework of debt collection tools, including administrative wage garnishment (AWG). This report discusses the extent to which nine agencies use or plan to use AWG to collect delinquent nontax federal debt and provides GAO's perspective on ways to make AWG more widespread and effective.

What GAO Found

GAO found that none of the nine agencies had yet implemented AWG. Although AWG is not mandatory, by failing to use this tool--more than five years after the act's enactment and more than three years after the Department of the Treasury issued implementing regulations--agencies have missed an opportunity to maximize collection of delinquent debt. Agencies identified various reasons for not yet implementing AWG or for deciding not to do so, including the need to focus their resources on implementing the act's mandatory provisions. Although some agencies or programs may have valid reasons for not implementing wage garnishment, all of the larger programs that deal with individuals and that have a demonstrated risk of financial loss resulting from unpaid debt should have AWG as a viable debt collection option. Reliance on the Financial Management Service (FMS) to perform AWG as part of cross-servicing might be prudent for some agencies, provided the collection tool is used as early as practicable to maximize its collection potential. However, the act does not require that agencies refer debts for cross-servicing until they are more than 180 days delinquent, and FMS, which views wage garnishment as a tool of last resort, does not contemplate initiating AWG in most cases until the debt has been with FMS for at least 90 days. As a result, FMS's use of AWG could be significantly limited and delayed.