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OAM 35.05.00 1 of 1

Statewide Policy

OREGON ACCOUNTING MANUAL

Subject: Accounting and Financial Reporting Number: 35.05.00

Division: Chief Financial Office Effective date: March 1, 2013

Chapter: Accounts Receivable Management

Part: Introduction

Approved: George Naughton, Chief Financial Officer Signature on file

PURPOSE: This chapter provides an overview of legal remedies and recommended practices that agencies should apply to the collection of accounts receivable.

AUTHORITY: ORS 291.015 ORS 293.590

APPLICABILITY: This policy applies to all state agencies included in the state’s annual financial statements, except for those agencies specifically exempted by OAM 01.05.00.

POLICY:

101. Agency management must ensure that agency personnel employ appropriate practices in themanagement of accounts receivables.

102. The state’s policy is to collect all receivables due to state agencies and to establish proceduresto effect the timely collection of all amounts owed. Agency personnel should be familiar with thefederal and state laws referenced within this chapter regarding legal collection practices.

103. Agency personnel are responsible for interpreting the specific statutory authority applicable totheir agency. Some agencies’ statutes allow for a wider range of collection activities than thoseactions normally available to agencies under general statutory authority. Examples includeactions and authority related to interest, penalties, late fees, warrants, and garnishments.

http://www.oregon.gov/das/Financial/Acctng/Documents/01.05.00.po.pdf

OAM 35.20.20 1 of 1

Statewide Policy


SUBJECT: Accounting and Financial Reporting Number: 35.20.20

DIVISION: Chief Financial Office Effective date: April 15, 2013


Part: Account Establishment

Section: Debtor Information Gathering

APPROVED: George Naughton, Chief Financial Officer Signature on file

PURPOSE: This policy provides guidance on gathering debtor information. AUTHORITY: ORS 291.015

ORS 293.590 APPLICABILITY: This policy applies to all state agencies included in the State’s annual financial

statements, except for those agencies specifically exempted by OAM 01.05.00. POLICY: 101. Agency management must ensure that agency personnel employ appropriate practices in the

management and collection of accounts receivables. 102. Agencies shall, to the extent possible, collect or verify debtor information when they establish

receivables or receive checks for services. Debtor information is essential for skip tracing or asset location (refer to OAM 35.30.70) when an account remains unpaid and further collection actions are required.

PROCEDURES:

103. Debt collectors use debtor information to locate or "skip-trace" the debtor in the event of

payment default. On the first contact with the debtor, and on each subsequent contact, agencies shall, to the extent possible, collect, and record debtor information. The minimum amount of data to collect may be a driver’s license number, phone number, and check/bank information when payment is accepted and other information that is not required at the time of the transaction (i.e., a surplus purchase where no other paperwork is completed). The driver’s license is useful to verify spelling of the customer’s name and their address.

104. Agencies may obtain debtor information through a written application form or an interview or both. Agencies must define in their policies and procedures the minimum information that they will obtain on the application form. The information obtained must be sufficient to ensure there will not be a delay in the collection of the account due to lack of information. When obtaining information from a business, it is important to obtain a list of owners and officers as well as phone numbers to reach them.


http://www.oregon.gov/das/Financial/Acctng/Documents/35.30.70.pdf

OAM 35.20.30 1 of 2

Statewide Policy





Part: Account Establishment

Section: Ability to Pay/Deny Services


PURPOSE: This policy provides an overview of how to determine a customer’s ability to pay and when to deny services when a customer has not paid, when applicable.

AUTHORITY: ORS 291.015


statements, except for those agencies specifically exempted by OAM 01.05.00. POLICY:

101. Agency management must ensure that agency personnel employ appropriate practices in the

management and collection of accounts receivables.

102. Do not interpret this guidance as conflicting with the policies of any state-supported hospital or any other state or federal statute or regulation and do not use it as the basis for denying necessary medical healthcare or medical assistance. If in doubt as to your right to withhold services because of unpaid debt, consult your assigned legal counsel.

103. When an agency has a choice in the customers with whom it does business, the agency must

develop policies and procedures for determining a customer’s ability to pay as well as policies and procedures addressing if and/or when to delay or withhold services to delinquent debtors.

PROCEDURES:

Determining Customer’s Ability to Pay 104. Credit reporting bureaus can furnish information concerning the paying habits of individuals and

the extent of their credit buying. Agencies may use credit ratings in judging the customer’s reliability to pay.

105. Agencies may use financial statement analyses for businesses to determine the financial stability of the business.

106. When a customer does not appear financially stable, the agency may still transact business by providing the goods and/or services on a cash basis.


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107. Agencies may grant credit based on the financial condition of a co-signer or guarantor, provided the agency analyzes the co-signor or guarantor in the same manner as the customer, and can hold the co-signor or guarantor responsible for unpaid debt.

When to Deny Services

108. In general, the State may not continue to do business with an individual who is not fulfilling his or her obligations to a state agency. Examples of services that may be denied include:

Diplomas, transcripts, and grade reports

Future services

Driving privileges

Professional licenses

109. Each agency must develop a way to identify when an individual's account becomes delinquent or when a debtor is non-compliant with a requirement set by statute. The agency must develop an automated or manual system to flag a debtor's record when past due. The agency must check the record before each provision of goods or services to ensure that they do not provide goods or services to delinquent debtors who have not fulfilled all of their prior obligations.

110. The action of a debtor filing bankruptcy may prohibit the State from withholding goods or services. Agencies should review such situations with the Civil Recovery Section of the Department of Justice.

OAM 35.30.10 1 of 3

Statewide Policy





Part: Account Activity

Section: Scheduling Collection Activity / Due Process


PURPOSE: This policy provides guidance on the scheduling of collection activity. AUTHORITY: ORS 291.015 ORS 293.250

ORS 293.590 ORS 646.639

APPLICABILITY: This policy applies to all state agencies included in the State’s annual financial



management of accounts receivable.

102. Each agency must have clear, written internal policies and procedures for the billing and collection of accounts receivable. These policies and procedures must be specific as to what action the agency will take, when the agency will take action, and how the agency will initiate and document the action.

103. Agency staff must review their collection policies and procedures on a regular basis to ensure

compliance with state and federal laws. PROCEDURES:

Collection Procedures 104. Collection activity procedures should be formal and detailed. The expected cost of the collection

activity generally should not exceed the expected dollar recovery from the collected account. However, in some cases, the public policy benefit is more important than the cost, warranting aggressive collection efforts even though they are not cost effective. Examples include payments mandated by the Legislature or by the courts. Each agency needs to develop a schedule of collection efforts the agency will take that best fits its own business needs. See paragraph 114 for an example schedule of collection efforts that an agency may use to assist with development of its own schedule.


OAM 35.30.10 2 of 3

105. Due process procedures are essential, and statute requires the debtor the opportunity to be heard. A notice sent by mail is a sufficient way to inform a debtor of a pending action. The notice must adequately communicate the following information to the debtor:

a) how to contact the agency b) the time period the debtor has to submit the request to be heard c) what the pending action will be if the debtor does not respond d) whether the request can be made verbally or must be in writing e) any other information such as forms and information that the debtor may

need to submit at the time of the request.

106. To eliminate confusion for agency personnel, an agency’s internal procedures need to include the appeal process that a debtor may use to dispute the debt. While some agencies will have fewer cases of disputes than others, it is still a requirement of due process to provide the debtor a chance to argue their case. This opportunity to dispute is a requirement for an account to become liquidated debt.

107. Agencies must develop collection procedures with the restrictions of ORS 293.231 in mind. If an agency receives no payment on an account for a period of 90 days after liquidation, the agency must refer the account to the Department of Revenue or a private collection firm, unless the agency has an exemption under OAM 35.40.10. Refer to OAM 35.30.30 for the definition of a liquidated account.

Penalties and Interest

108. Agencies may add late fees or penalties if this was included in a written agreement prior to performing services or if applicable to the agency by statute. Each agency must educate its staff on the agency’s authority to include penalty charges on accounts not paid by the due date and the process to follow in charging a late fee or penalty.

109. Agencies that are permitted to charge fees and/or interest may elect to include a statement on the invoice or in the agreement, such as: “I agree that in the event of default, or the return of my check for insufficient funds (NSF), I will be responsible for all reasonable administrative costs, collection costs, attorney’s fees, and all other costs and charges necessary for the collection of any amount not paid when due, including but not limited to collection charges assessed by the Department of Revenue or by a private collection firm.” Refer to OAM 35.30.20 for more information.

110. Agencies must first apply payments received towards interest and penalties owed, and only after all interest and penalties are paid, may they apply payments to reduce the principal owed.

Record Keeping

111. Each agency must maintain accurate documentation of all contact made on each account. If an agency does not have an automated collection tracking database, manual records need to include the following information (see the format provided on form OAM 75.35.05.FO):

The date contact was made with the debtor

The person contacted (debtors and/or others)

Any promises to pay (amounts and dates)

Any other relevant information




http://www.oregon.gov/das/Financial/Acctng/Documents/75.35.05.fo.pdf

OAM 35.30.10 3 of 3

112. Agencies need to be sure to follow up on broken promises to pay. Record payment promises on the daily calendar as a reminder to follow up on broken promises. Keep a record of the follow up call and the results in the same manner as the first call. In this case, the letter may need to address consequences if the debtor does not pay as agreed.

113. Documented information is necessary to provide support for writing off the account in the event the account is later determined to be uncollectible (see OAM 35.50.10).

Example of Past Due Account Contact Schedule 114. Agencies may use the example schedule below to develop their own schedule of collection

efforts. Account Balance Action to be Taken $1 - $999 1-30 days past due: Mail first past due letter. 31-60 days past due: Mail second past due letter; make phone contact and get a

promise to pay. 61-90 days past due*: Make phone contact, remind of broken promise, and send a new

payment agreement confirmation letter. Over 90 days past due: Refer account to Department of Revenue Other Agency Account

Unit or private collection firm; consider debt offset. $1,000 + 1-30 days past due: Mail first past due letter, make phone contact, and get a promise

to pay. 31-60 days past due: Mail second past due letter, make phone contact, remind of

previous broken promise, get a new agreement to pay, and send agreement confirmation letter.

61-90 days past due*: Make phone contact; submit account to management for review**. Over 90 days past due: Refer account to Department of Revenue Other Agency Account

Unit or private collection firm; consider debt offset. *Accounts in these categories have a serious risk of becoming uncollectible. Agency management needs to review these accounts and, in light of documented past payment history, make an evaluation as to what actions would be most cost effective. **Once a promise to pay has been broken twice, management should consider assignment to the Department of Revenue or a private collection firm prior to the 90-day requirement.


OAM 35.30.20 1 of 2

Statewide Policy






Section: Invoicing and Interest


PURPOSE: This policy provides general guidelines on invoicing and interest requirements associated with the collection of accounts receivable.





management and collection of accounts receivable.

102. Invoices must be mailed promptly and contain clear and detailed information regarding the debt, who to contact with questions, and where to send the payment.

103. If there is no written agreement regarding interest rates, an agency may elect to charge interest

according to ORS 82.010, which regulates interest at 9 percent per year. The debtor must receive specific notification regarding potential interest charges before an agency may charge interest (see paragraph 106 below).

PROCEDURES:

Invoicing Customers 104. Each agency’s billing invoice must be clear and informative and should conform as closely as

practicable to the format suggested by the sample invoice in OAM 75.35.10.FO. At a minimum, include the following components on the invoice:

a. Header: Include the name and address of the billing agency and the debtor; the invoice number; invoice date; customer number; due date; and the total amount due.

b. Body: Include specialized contract or agreement numbers and the billing period that

the invoice covers; detail about the debt and, if the invoice lists more than one item, provide a total amount due. Include a statement indicating when any penalty,



OAM 35.30.20 2 of 2

interest, or other charges will begin to accrue on late payments, NSF checks, collection actions, etc.

c. Footer: Include R*STARS billing information, if applicable, and a contact name and

phone number for the debtor to call if they have questions regarding the invoice, including TTY information.

d. For multiple accounts with multiple due dates, the balances are to be aged from the

original due date. e. Agencies should consider including a statement such as; "We appreciate customers

who pay promptly" or "Thank you for your prompt payment" somewhere on the invoice.

Interest on Accounts Receivable 105. Agencies determine the interest rate to charge based on the source of the debt. If the debt

arises from a promissory note or contract, the note or contract may state the amount of interest that applies and when it begins to accrue. Some agencies may have specific statutes regulating interest rates. If no specific statutory authority exists, then an agency may elect to charge interest according to ORS 82.010, which currently provides for interest at the rate of 9 percent per year on monies owed.

106. The agency must notify the debtor before the agency may charge interest. A written agreement

with the debtor is the best documentation of the notice given. Other forms of notification include information on the agency’s website, signs displayed in visible locations and counters where transactions take place, or additional information provided on the invoice (see 101.b). The following is an example of the notification language for charging interest: Any account that is not paid in full by the due date identified on the invoice will accrue interest of {X} % per year as authorized by ORS {statute}.

107. Interest is calculated as follows: Principal (only) X Interest Rate divided by 365 X number of

days delinquent or since the last interest calculation = Accrued Interest.

OAM 35.30.30 1 of 3

Statewide Policy



DIVISION: Chief Financial Office Effective date: July 1, 2013



Section: Definitions – Liquidated and Delinquent


PURPOSE: This policy provides a description of a liquidated debt and the definition of a delinquent account.

AUTHORITY: ORS 291.015 ORS 293.233 ORS 293.250 ORS 293.590


statements, except for those agencies specifically exempted by OAM 01.05.00. DEFINITIONS: Administrative proceedings, as used below, refers to proceedings that: (a)

afforded the debtor a hearing or an opportunity to request a hearing, whether denominated as a hearing, appeal, petition for review, or otherwise; and (b) are final, because the debtor either failed to timely request a hearing or exhausted or failed to exercise any applicable rights of appeal. This definition covers final orders in contested cases and final orders in other than contested cases. A delinquent account is a receivable for which payment has not been received by the due date (refer to OAM 35.30.20 for information regarding invoicing). Judgments and judicial proceedings, as used below, refer to judgments and proceedings that are final (because the debtor has exhausted or failed to exercise any applicable rights of appeal) or that the Department of Justice has approved for referral to the Department of Revenue Other Agency Accounts Unit.

Liquidated debt: For purposes of ORS 293.229 - 293.233 and ORS 293.250, a liquidated debt is one for which:

a. An agency has determined an exact past due amount owing; and b. An agency has made a reasonable attempt to notify the debtor in

writing of the amount owing and nature of the debt, and has requested payment; and

c. The debt meets one of the following conditions:



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1) Judgment has been entered on the debt.

2) The debt is a tax debt for which a distraint warrant has been issued or the prerequisites of issuance have been met.

3) Liability for, and the amount of, the debt have been established

through an administrative proceeding.

4) The debt is a non-complying employer’s debt for claim and administrative costs eligible for referral under criteria identified by the Department of Justice.

5) The debt arises from a promissory note.

6) The debt is an account stated under a preexisting written agreement

between the agency and the debtor. A statement of account has been mailed or delivered to the debtor, and the debtor has not objected within a reasonable time, which should be specified by the agency. Example: A student signs a revolving account agreement with a university, an invoice for a laboratory fee is mailed to the student, and the student does not object. (See note below.)

7) The debtor has, in writing, unconditionally acknowledged the debt,

both as to liability and amount, or an agreement has been reached in writing between the agency and the debtor regarding the debt, both as to liability and amount. Once acknowledged, a debtor’s claim of inability to pay does not, by itself, affect whether the debt is liquidated.

8) The amount due is derived by an arithmetical calculation of fees

(including renewal fees), collection costs, charges, penalties, or the like, from a report or an application for a permit or license submitted by the debtor in accordance with a regulatory system administered by the agency, and the debtor has not disputed liability or the amount.

9) Liability for a debt, but not its amount, has been established by an

administrative or judicial proceeding, or by written acknowledgement of the debtor. The amount of the debt is determined by arithmetical calculation. The calculation has been mailed or delivered to the debtor in the manner of an account stated and the debtor has not objected within a reasonable time, which should be specified by the agency. Example: Balances due the Department of Consumer and Business Services for a non-complying employer as a result of an injury to a subject worker. (See note below.)

Note: Expiration of the time specified by an agency for objection to a billing, such

as a debt that meets the criteria in c.6 or c.9 above, does not necessarily extinguish the debtor’s right to object. It means that the agency can act on the assumption the debtor does not dispute the debt. If the debtor thereafter disputes the debt, the debt will no longer be considered liquidated.

OAM 35.30.30 3 of 3

POLICY:

101. Agency management must ensure that agency personnel employ appropriate practices in the management and collection of accounts receivable.

102. ORS 293.231 requires state agencies to offer liquidated and delinquent accounts to a private collection firm or to the Department of Revenue Other Agency Accounts Unit. Refer to OAM 35.40.30 for information regarding the assignment of liquidated accounts to the Department of Revenue Other Agency Accounts Unit. Refer to OAM 35.40.40 for information regarding the assignment of liquidated accounts to a Private Collection Firm.




OAM 35.30.40 1 of 5

Statewide Policy






Section: Telephone Collections


PURPOSE: This policy provides state agencies with information regarding the effective use of the telephone as a collection tool. It also alerts collection staff to various restrictions placed on telephone collection techniques by federal and state laws.

AUTHORITY: ORS 291.015 ORS 293.250 ORS 293.590



101. Agency management must ensure that agency personnel employ appropriate and lawful

practices in the collection of accounts receivable.

102. State agencies must comply with the Oregon Unlawful Debt Collection Practices statute, ORS 646.639, related to consumer debt. Agency staff undertaking telephone collections must read, understand, and comply with the provisions of ORS 646.639 (see paragraph 121)

103. State employees who collect debt during the performance of their official duties are specifically exempt from coverage under the Federal Debt Collections Practices law (15 U.S.C. §§1692a (6)(C)). This law does not bind state employees whose specific job entails collecting debt; however, the State of Oregon sees the value of the Federal Debt Collections Practices law and recommends that all agencies voluntarily comply (see paragraph 122). Many provisions of the state and federal laws overlap.

104. State agencies are required to make telephone contact an integral part of their collection effort.

105. Agencies should train their collection staff in areas of telephone etiquette and customer service.

106. The collector must document, in the account record (manual or electronic), any contact or attempt to make contact with a debtor.


OAM 35.30.40 2 of 5

PROCEDURES: Collecting by Telephone 107. A telephone call is a cost-effective measure for soliciting payment and often prompts debtors to

remit payment. The collector on the telephone has an opportunity to: a. Update existing debtor data and gather additional information

b. Find out who has the authority to pay, and when identified, focus calling activity on that responsible person

c. Respond to new information

d. Obtain an immediate answer

e. Persuade the individual to make payment

f. Get a commitment from the individual to make a specific payment on a specific date

108. The collector must know their agency’s guidelines concerning debt collections, since the agency’s guidelines may be more stringent than Oregon Accounting Manual guidelines.

109. When speaking on the telephone, the collector projects not only an image of the agency, but

also that of the State as a whole. To be effective, the collector must sound confident. The following are tips that can help a collector to present a positive image: a. Courtesy. The collector should be courteous and professional while talking with the debtor.

The purpose of calling the debtor is to get a commitment to pay the debt, not to upset them. If the debtor gets upset on the phone, it may be better to politely break off the conversation and call back later. However, the collector should not allow the debtor to use emotional outbursts to avoid dealing with the debt repayment.

b. Tone. The collector should keep a clear, pleasant sound to their voice. Some collectors recommend smiling while talking, since the difference it makes in voice tone is noticeable.

c. Inflection. The collector’s voice should have a natural tone, and not be monotone. The collector should speak firmly, but not shout.

d. Speed. The collector should use a normal rate of speech, not over-emphasizing words, or speaking too fast.

e. Clarity. The collector should speak distinctly, and not use acronyms or complicated terminology that the debtor may not understand. Remarks of hesitation, such as "uh" should be avoided.

f. Acknowledgement. The collector must strive to get the debtor to acknowledge the debt before the he can persuade the person to pay.

g. Subject. The collector must stay focused on the debt and not allow unrelated issues to sidetrack him. Some debtors may attempt to antagonize, but collectors must avoid arguing and maintain control at all times.

h. Accuracy. The collector must never say they will do something they cannot do, or do not intend to do. If the collector cannot make a payment arrangement, the collector needs to be specific as to what they intend to do and are required to do (see paragraph 102).

OAM 35.30.40 3 of 5

Before Making the Call 110. Suggested actions to prepare for a collection call to a debtor include:

a. Examine all previous records of the account.

b. Identify the general category of the account, that is, traditional slow pay, intermittent delinquent, disputed account, temporary financial problems, or delinquent non-payment.

c. Review previous collection efforts.

d. Ensure records are up-to-date, reflecting all account receipts, to avoid making unwarranted calls.

111. Rehearsing the opening statements for the telephone call will enable the collector to sound

confident and professional.

Telephone Contact

112. It is important for the collector to know to whom they are speaking and for the debtor to know exactly who is calling. If a third party asks what the call is in regards to, the collector should not reveal the debt, instead they should say that they must discuss that with Mr. or Ms. <LAST NAME>. When the debtor is on the phone, the collector should:

a. State who they are and why they are calling (see paragraph 107i).

b. Ask for immediate payment in full or a partial payment.

c. Remind the debtor if there was a previous broken promise to pay.

d. Wait for the debtor to respond. It may take more than a few seconds for the debtor to respond, but be patient. An uncomfortable debtor may be compelled to fill in the pause, and make a commitment to pay.

e. Be interested and attentive to what the debtor has to say, and stay focused on the debtor not on what the collector wants to say next. If the debtor does not answer a question, ensure the question has been understood by repeating it another way. Be positive to avoid blaming the debtor for not understanding.

113. If the debtor becomes antagonistic, remain calm and stay in control. Do not let the tone of the

conversation heighten.

114. If the debtor says he/she never received the invoice, take his/her word for it. Verify the name and address, and mail a duplicate copy of the invoice that day. Ask for a commitment for immediate payment and provide the specific date by which the agency must receive payment. Call back if the agency does not received payment by the new agreed upon date.

115. If the debtor says that he/she has already paid the account, gather the payment information such as where the debtor sent the payment, the date the debtor sent the payment, and how much the debtor paid. Ask for copies of the front and the back of any cancelled checks. At a set time, review the account. If the agency receives payment, call to express appreciation for the payment. If the agency does not receive payment, call to verify non-payment.

116. If the debtor says the agency has made an error, or if the debtor disputes the amount or existence of the debt, gather appropriate information and follow applicable procedures.

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117. Some debtors may play on the collector’s sympathy by explaining their problems; the collector

should: a. Listen to the debtor's story, and be empathetic.

b. Ask questions to obtain the facts, while expressing an understanding and caring attitude.

c. Repeat the request for payment in full, or for the debtor to bring the account current.

118. If the debtor has filed for, or is in bankruptcy, the collector must follow certain procedures under Title 11 of the U.S. Code. Information concerning who has filed for bankruptcy is available at the following web site: http://www.pacer.gov/. (Note: Registration is required to access this site.)

Documentation 119. Conversations with a debtor must be documented and filed (manual or electronic) with the

account. A sample of an Account Contact Record form can be found at OAM 75.35.05.FO. The form needs to contain the following key components: a. Account Number. Identify the account by the agency’s account assignment number. If this

document is separated from the debtor file, having the account number should make it easy to unite it with the correct file.

b. Debtor Name. Indicate who is responsible for the debt. If there is a joint responsibility, include both names.

c. Phone Number. Indicate on what number the call took place. Particularly where the debtor has multiple phones, this information can help identify the best number to reach the debtor, should follow-up be necessary. If the debtor has multiple phones, note all the numbers and include a reference to identify their location.

d. Date of contact. Reference to any debtor contact by the date provides clear evidence of the contact (or attempt) with the debtor.

120. Refer to OAM 35.30.10 for more information on documentation and record keeping.

Telephone Regulations

121. The provisions of ORS 646.639 indicate that the following actions are considered unlawful

collection practices: a. Use or threatened use of force or violence

b. Threatening the arrest or criminal prosecution of the debtor

c. Threatening seizure, attachment, or sale of property without disclosing the required legal proceedings

d. Use of profane, obscene, or abusive language with the debtor or the debtor’s family

e. Communication with the debtor or debtor’s family repeatedly or at inconvenient times with the intent to harass or annoy (after 8:00 a.m. and before 9:00 p.m. is acceptable)

f. Communication or threatened communication with the debtor’s employer concerning the nature or existence of a debt

g. Some types of communication at the debtor’s place of employment

http://www.pacer.gov/



http://www.leg.state.or.us/ors/646.html

OAM 35.30.40 5 of 5

h. Communication with the debtor without clearly identifying the collector’s name and the name of the entity where the debt was originated

i. Oral communications without disclosure of the collector’s name and the purpose of the contact within 30 seconds

j. Causing any expense to the debtor through communication mediums by concealing the true purpose of the contact

k. Attempting or threatening to enforce a right or remedy that does not exist, or one that the collector would not normally take

l. Using any form of communication that simulates a legal process where such a legal process has not been approved or authorized

m. Representing that additional charges may be imposed when those charges may not be legally included

n. Collecting or attempting to collect interest or other charges in excess of the debt, unless the fees are authorized by the agreement or by law; and

o. Threatening to assign or sell the account in a manner that misrepresents to the debtor that they may lose their defense to the debt or be subjected to harsh collection tactics

The above represent only a general summary of the law. State agency collection personnel must read and be familiar with the full context of ORS 646.639.

122. The Federal Trade Commission enforces The Fair Debt Collection Practices Act found at http://www.ftc.gov/os/statutes/fdcpa/fdcpact.htm, which makes the following practices illegal: a. Threats of violence, obscene language, harassing phone calls, and publication of debtors

b. Calling the debtor at work, if the debtor objects

c. Impersonating government officials or misrepresenting the identity of the collector

d. Revealing the fact of the past due debt to a third party, such as a neighbor or employer, however, allowance is made to report the debt to spouses, credit bureaus, or the agency’s attorney

e. Calling at unusual times (federal law suggests the hours of 8:00 a.m. to 9:00 p.m. as acceptable times for communicating with a debtor)

f. Circumventing an attorney, if it is known that an attorney represents the debtor

http://www.ftc.gov/os/statutes/fdcpa/fdcpact.htm

OAM 35.30.50 1 of 6

Statewide Policy






Section: Letter Collections


PURPOSE: This policy provides standards for the proper use of letters and mailings as tools for collection of accounts receivable. In addition, the policy emphasizes the importance of providing proper notification of a debt in order to meet the legal requirements of due process and of following through with further collection actions as stated in collection letters.

AUTHORITY: ORS 291.015 ORS 293.240 ORS 293.250 ORS 293.590




practices in the collection of accounts receivable. 102. State agencies must comply with the Oregon Unlawful Debt Collection Practices statute, ORS

646.639, related to consumer debt. Agency staff undertaking letter collections must read, understand, and comply with the provisions of ORS 646.639.

103. State employees who collect debt during the performance of their official duties are specifically exempt from coverage under the Federal Debt Collections Practices law (15 U.S.C. §§1692a (6)(C)). This law does not bind state employees whose specific job entails collecting debt; however, the State of Oregon sees the value of the Federal Debt Collections Practices law and recommends that all agencies voluntarily comply. Many provisions of the state and federal laws overlap.

104. State agencies are required to make letter contact an integral part of their collection effort.


http://www4.law.cornell.edu/uscode/html/uscode15/usc_sec_15_00001692---a000-.html

http://www4.law.cornell.edu/uscode/html/uscode15/usc_sec_15_00001692---a000-.html

OAM 35.30.50 2 of 6

PROCEDURES: Using Letters in the Collection Process 105. The letter is a cost effective measure for soliciting payment and an essential component for

providing proper notification to the debtor before an agency begins more stringent action.

106. Notification is a paramount component to meeting legal due process requirements. Each agency’s mailing practices should address proper notification, including the use of certified mailings and the handling of returned mail. Letters serve to document the contact and place the debtor on notice. The letter may also serve as a gentle reminder of an obligation that the debtor may have simply forgotten.

107. Agencies should check records and unprocessed receipts before contact to avoid contacting a debtor who has already made payment. The use of electronic payment methods, such as automated clearinghouse (ACH) transfers, eliminates the possibility of unrecorded payments. Agencies must keep a copy or record of letters sent to debtors in the debtor’s file. Agencies must maintain a file on each past due account, including documentation of all correspondence and all telephone contacts or meetings.

108. In making the demand for payment, it is important to be aware of any provisions of the debt documents that specify a length of time for the debtor to make payments. For example, many contracts require 30 days written notice before considering the contract terminated or the debtor in default. In this case, the date indicated for payment in a collection letter may not be earlier than the period set forth in the contract.

109. Follow through on the demand for payment. If the time set forth in the collection letter expires without a response from the debtor, or if the debtor has not made payment, proceed with the action promised. Any delays in collection actions may make the debt more difficult to collect. Establish a system to ensure the agency will review the matter if the agency does not receive a response by the date specified.

110. If the account holder has moved and left no forwarding address, or if the address provided proves to be inaccurate, see OAM 35.30.70 for information on skip tracing. It is important to follow up on all returned mail promptly.

Collection Letter Content 111. Collection letters should be as simple and concise as possible while still communicating the

required information. The debtor will be more inclined to read a short letter.

112. When developing collection letters, it is important to use a business letter format and to compose the content using professional language that the reader will easily understand. All letters must be on agency letterhead and need to include the full name and address of the debtor. Salutations should be businesslike in nature such as Dear Mr. Jones or Dear Ms. Smith, rather than informal such as Dear Joe.

113. An agency must send a collection letter before they may take any legal action to collect the debt. The collection letter needs to contain the following elements, depending on the level of progressive action (refer to OAM 35.30.30 for notification requirements to classify a debt as liquidated):



OAM 35.30.50 3 of 6

a. The name, address, and phone number of the state agency making the demand for payment

b. The amount owed by the debtor, including principal, interest, and penalties, if any

c. A request for action (payment)

d. The pertinent facts leading to the existence of the obligation

e. The date payment is due and the address to send the payment to

f. A statement explaining what will happen if the debtor does not make payment by the date set forth in the letter

g. An encouragement for the debtor to take action (i.e., continue as a customer, preserve credit rating, avoid penalty and interest charges, avoid withholding of services, etc.)

h. Information on how the debtor may correct any errors, and the existence and application of any appeal rights that the debtor may have

114. The collector must know their agency’s guidelines concerning debt collections, since the

agency’s guidelines may be more stringent than Oregon Accounting Manual guidelines.

115. The severity in tone of the letter should increase the longer an account remains outstanding. The tone and style of the letter can also vary depending on the type of account and the debtor's relationship with the agency. Due to legal considerations, avoid humor or threats. It is important to know the options that the agency may pursue if a debtor does not make a payment. When the collector suggests refusal of future service or reporting the account to a credit bureau, he should do so in a positive manner. For example, the collector may ask the debtor to keep the account current so the collector may continue to offer full services, or the collector may remind the debtor that immediate payment will avoid jeopardizing the debtor’s credit record.

Adding the Cost of Collection to the Debt; Debtor Notification

116. ORS 293.231 (12) authorizes state agencies to add the cost of collection to the debt when using a private collection firm, as long as proper notification has been given to the debtor:

a. Of the existence of the debt;

b. That the debt may be assigned to a private collection firm for collection; and

c. Of the amount of the fee that may be added to the debt under ORS 293.231.

117. The Department of Justice has provided the following language to be incorporated into agency

collection letters when state agencies add the cost of collection under ORS 293.231 (12):

“As of {Date}, you owe [state creditor-agency] the sum of $ _____________ (principal amount plus interest accrued to date) for _____________ [describe the nature of the debt, fine, restitution, judgment, or other liability, etc.]. The amount you owe will increase [over time/monthly/other period to be recomputed] as interest accrues at a rate of {Interest Rate} on the unpaid principal amount. Under ORS 293.231, [state creditor-agency] must refer your account to the Oregon Department of Revenue or a private collection firm for collection if it has received no payment on the account for more than [prescribed statutory period]. If the [state creditor-agency] does not receive a payment from you by [date], then the [state creditor-agency]

OAM 35.30.50 4 of 6

will assign your account to collection. At that time, you also will become responsible for the payment of an additional collection fee of (*or up to) {**Collection Rate} percent of the amount you owe. This additional percentage will apply to any increase in the amount you owe due to the accrual of interest on the unpaid principal amount.” *Notices using the “up to” terminology should only be used when absolutely necessary, and only to cover the highest contractor collection fee possible in the case of a creditor-agency that has multiple collection contractors. ** Collection Rate: When at all possible, a specific collection fee percentage should be stated using the formula “rate/(1-rate)”. (Rate= Private Collection Firm contracted collection fee.)

Examples of Collection Letters

118. The following examples provide language for the body of the collection letter. Combine this information with the required elements identified in paragraph 111 through 115.

First Past Due Letter. For accounts less than 30 days past due, a friendly reminder tone is appropriate. Following are two examples of letters that may be used (only content is illustrated):

a. Example 1: A formal letter, suitable for correspondence with a large company

Our records indicate that your account is now past due in the amount of $_________for invoice No._________ which was due on <month><day>, <year>. (The letter could also show multiple invoices less previous payments made with a net amount owed and a date of the last payment, if any.) The invoice is for (state the service or reason for the invoice, such as license renewal request on December 15, 2012). Please send your payment today. If you have questions regarding your account, you may contact us at ____-_______ between the hours of ____a.m. and ____p.m.

b. Example 2: A letter that is less formal than Example 1, but still businesslike in tone

This is a friendly reminder that is usually effective for an individual. RE: Invoice No. _____________ Amount due $___________ We have not received payment on your account for (state the service or reason for the invoice, such as license renewal request on December 15, 2012). Have we overlooked it? If you have made a payment, please contact us with information regarding when, to whom, for what amount, and whether the check has cleared.

If you have not made a payment, please make your payment today. If you have questions or concerns, you may contact us at ____-_________ between the hours of ____a.m. and ____p.m.

OAM 35.30.50 5 of 6

119. Second Past Due Letter: For accounts between 30 and 60 days past due, use a letter with

slightly stronger tone. In addition, this letter must address the subjects of hearing/dispute rights and deadlines to meet the definition of liquidated (OAM 35.30.30). Following are two examples of letters that may be used (only content is illustrated):

a. Example 1

RE: Invoice No: _______ Invoice Date: ________ Amount due $ _______ We are concerned about your failure to reply to our previous notice dated {date of first letter} concerning your account which is past due in the amount of {amount due}. Our records currently reflect that (no payment has been made on your account or the last payment made on your account was in the amount of $________ on _________). If you dispute the balance, {insert agency dispute resolution policy}. If we do not hear from you by {dispute deadline}, we will consider the debt liquidated and proceed with collection actions as required by ORS 293.231. If you would like to discuss possible payment arrangements or if you have a question or concern, you may contact us immediately at ____-_____ between the hours of _____a.m. and _____p.m. Please send your payment promptly to avoid further collection actions.

b. Example 2

RE: Invoice No: _________ Invoice Date: __________ Amount due $________ Our records indicate your account still has an outstanding balance. We have not received a response on previous attempts to call your attention to this matter. Your payment must be received by <month><day>, <year> in order for our agency to continue providing you service. If you dispute the balance, {insert agency dispute resolution policy}. If we do not hear from you by {dispute deadline}, we will consider the debt liquidated and proceed with collection actions as required by ORS 293.231. If you would like to discuss possible payment arrangements or if you have questions regarding this account, you may contact me at _____- _________ between _____a.m. and _____p.m. Please send your payment promptly to avoid further collection actions.

120. Third Past Due Letter: For accounts over 60 days past due that have not responded to the two previous reminders, an even stronger tone is required. A reason to take action becomes very important; however, do not make statements about what the agency will do unless the agency intends to carry them out. For example, if the letter indicates the agency will forward the account to a collection firm if the agency does not receive payment by a certain date, the agency must take this action by the date expressed in the letter. Below are three examples of letters that may be used (only content is illustrated):


OAM 35.30.50 6 of 6

a. Example 1

Since we have not received your response to our first two letters dated {letter dates}, we are now considering your account liquidated according to ORS 293.231. {State Agency Name} must receive payment in full of your past due account by <month><day>, <year> to prevent us from forwarding your account to collection without further notification to you. {Insert language from paragraph 117 if your agency adds the cost of collection according to ORS 293.231 (12) when using a private collection firm} You may contact me at _____-_______ between _____a.m. and _____p.m.

b. Example 2

Your account is now _____ days past due. Since we have not received your response to our first two letters dated {letter dates}, we are now considering your account liquidated according to ORS 293.231. {State agency name} is now authorized under {agency statute or ORS 82.010} to charge interest of {interest rate} and penalties of {amount and statute}. {State Agency Name} must receive payment in full of your past due account by <month><day>, <year> to prevent us from forwarding your account to collection without further notification to you. {Insert language from paragraph 117 if your agency adds the cost of collection according to ORS 293.231 (12) when using a private collection firm} You may contact me at ____-_______ between ____a.m. and ____p.m.

c. Example 3

Our records indicate that your account is seriously past due. Since we have not received your response to our first two letters dated {letter dates}, we are now considering your account liquidated according to ORS 293.231. {State agency name} is now authorized under {agency statute or ORS 82.010} to charge interest of {interest rate} and penalties of {amount and statute}. {State Agency Name} must receive payment in full of your past due account by <month><day>, <year> to prevent us from forwarding your account to collection without further notification to you. {Insert language from section 117 if your agency adds the cost of collection according to ORS 293.231 (12) when using a private collection firm} You may contact me at ____-_______ between ____a.m. and ____p.m.

121. Rehearsing the opening statements for the telephone call will enable the collector to sound confident and professional.

OAM 35.30.60 1 of 4

Statewide Policy






Section: Payment Plans


PURPOSE: This policy provides guidelines to assist agencies in developing payment plan agreements with debtors, including payment schedules.






PROCEDURES:

102. When communicating with a debtor, attempt to verify debtor information and request additional information as necessary. This will ensure agency records are current and will ensure timely delivery of written notifications. Information regarding a debtor’s financial situation is also useful in establishing payment plan agreements.

103. Agencies must always request payment in full from a debtor. The debtor may be able to pay in full if the debtor uses a credit card or a debit card, or acquires a loan to fully payoff the debt.

104. In cases where the debtor does not pay in full, the debtor may request to repay the debt over time through installment payments. Alternatively, the agency may initiate establishment of an agreed upon payment plan, depending upon the circumstances of individual situations.

105. Agencies should create payment plans with the intent to receive full payment from the debtor as soon as possible. Agencies need to document their general guidelines for staff, including procedures to handle a debtor’s request for payment plans that do not match the general guidelines. Agency guidelines must establish a standard for the maximum length of time over which a debtor can make payments. For example, Agency guidelines provide for full payment of the account within twelve (12) months.

106. Agencies must always document, in writing, payment plan agreements between the agency and the debtor. A letter that is signed by an agency representative must be sent to the debtor with a


OAM 35.30.60 2 of 4

space for the debtor to sign and return to the agency. Receiving this written agreement with the debtor’s signature will ensure the account meets the requirement for becoming liquidated.

107. Agencies should explore alternative payment methods, such as ACH, when establishing payment plans. Using ACH allows the agency to receive notices of insufficient funds much sooner than similar notices for checks.

108. Agencies are required to use a mathematical formula (such as the Loan Amortization template in Excel) to calculate a debtor’s payments over the term of the payment plan.

109. After a payment plan has been agreed upon, request a payment be made that day, and then establish due dates for the remainder of the payments. Establish the payment schedule to coincide as closely as possible to a debtor’s payday.

110. The documentation provided to the debtor needs to include the following: a. Debtor’s name and account/ID number

b. Account balance

c. Payment amount and due dates

d. Address to remit the payment to

e. Rate of interest (if charged)

f. Procedure to acquire an account balance, if the debtor wishes to pay off the balance early

g. Steps that will be taken by the agency if the terms of the payment plan are not strictly followed by the debtor

h. Agency contact name and phone number

111. The agency may retain the right to do an offset (tax, vendor or other) even if the agency enters into a payment plan agreement with the debtor.

112. Sample Payment Plan Letter: Below is an example of a payment plan letter that agencies may use to clarify agency expectations in regards to a payment plan.

(date) (debtor name) (address) (city, state, zip) RE: Payment Plan for {liabilities} Dear (debtor name): You have requested to pay the liabilities listed above to {Agency Name} in installment payments. Enclosed are two copies of the Payment Plan Agreement that we discussed on (date) and includes penalty and interest that is required by law. Interest continues to accrue as required by law on the unpaid balance. Please sign the original and return to {Agency Name} in the enclosed, prepaid envelope. The second copy is for your files.

OAM 35.30.60 3 of 4

WE MUST RECEIVE YOUR PAYMENT ON OR BEFORE THE DUE DATE. THERE IS NO GRACE PERIOD. Any failure to meet the payment terms will result in immediate submission of your account to the Oregon Department of Revenue or a private collection form for collection, at which time you may also be responsible for collection fees of up to {X}%. This agreement will be reviewed on {Review Date} for possible increase of payment. At that time, we may ask you to provide us with updated financial statements that we may need to re-evaluate this agreement. We would appreciate your efforts in paying off the account as quickly as possible and making payments in a timely manner. If you have any questions, please call me at {Phone #}. Sincerely, {name}, {title} Enclosures

113. Sample Payment Plan Agreement: Below is an example of a payment plan agreement that

agencies may use to communicate payment plan details to the debtor, including payment dates, interest, and account balance information.

Sample Payment Plan Agreement

This Agreement between {debtor name) and the {Agency Name} is made for the purpose of paying in full {debtor name) account balance of $(balance). Execution of this Agreement does not constitute a waiver by the State of Oregon or {Agency Name} to any rights and remedies under law. The terms and conditions of this agreement include interest at a rate of {interest rate} % per annum.

Monthly payments of $(payment) or more are due on the (date)th of each month starting (date). Any payment that is not received at {Agency Name} by the respective due date will result in the balance of your account being assigned to the Oregon Department of Revenue or a private collection firm for collection. If {Agency Name} assigns the account to collection, you may also be responsible for any collection fees of {collection fee} % that are associated with collecting this debt.

Pmt

No.

Payment

Date

Beginning

Balance

Scheduled

Payment

Principal Interest

Ending

Balance

1 8/5/2013 5,000.00 $ 437.26 $ 399.76 $ 37.50 $ 4,600.24 $

2 9/5/2013 4,600.24 437.26 402.76 34.50 4,197.49

3 10/5/2013 4,197.49 437.26 405.78 31.48 3,791.71

4 11/5/2013 3,791.71 437.26 408.82 28.44 3,382.89

5 12/5/2013 3,382.89 437.26 411.89 25.37 2,971.01

6 1/5/2014 2,971.01 437.26 414.97 22.28 2,556.03

7 2/5/2014 2,556.03 437.26 418.09 19.17 2,137.94

8 3/5/2014 2,137.94 437.26 421.22 16.03 1,716.72

9 4/5/2014 1,716.72 437.26 424.38 12.88 1,292.34

10 5/5/2014 1,292.34 437.26 427.56 9.69 864.77

11 6/5/2014 864.77 437.26 430.77 6.49 434.00

12 7/5/2014 434.00 437.26 430.75 3.26 0.00

OAM 35.30.60 4 of 4

Debtor {Agency Name} Signatures Printed Name Title (Owner/Partner/Officer) Date

OAM 35.30.70 1 of 4

Statewide Policy


Subject: Accounting and Financial Reporting Number: 35.30.70

Division: Chief Financial Office Effective date: July 1, 2013



Section: Skip Tracing and Asset Location

Approved: George Naughton, Chief Financial Officer Signature on file

PURPOSE: This policy provides agencies with suggestions and tools for skip tracing and asset location to enhance the effectiveness and efficiency of the accounts receivable collection process.

AUTHORITY: ORS 291.015 ORS 646.639 APPLICABILITY: This policy applies to all state agencies included in the State’s annual financial

statements, except for those agencies specifically exempted by OAM 01.05.00. DEFINITIONS: Skip tracing is the process of locating a debtor when the information an agency

has on file is determined to be outdated or inaccurate. Asset location is the process of discovering a debtor’s assets of value that might be seized or on which a lien may be placed to effect collection of a debt.

POLICY:


collection of accounts receivable.

102. Agencies are encouraged to incorporate some form of skip tracing and/or asset location into their collection procedures. Determine the extent of actions to take based on factors such as the balance of the account, account history (prior payments), the age of the debt, and cost of skip tracing activities. Accounts with minimal balances and lower probability of collection may only utilize free internet based skip tracing actions. Accounts with higher balances and/or higher probability of collection warrant more aggressive skip tracing actions, including the use of a fee based service.


OAM 35.30.70 2 of 4

PROCEDURES:

Guidelines for Skip Tracing and Asset Location 103. Control the amount of investigation time by making a judgment on the extent of tracing efforts in

comparison to the potential recovery. Use professional judgment to determine how much time and effort can be spent on tracing a skip, or searching for assets and then choose the most effective and economical method of tracing.

104. If tracing by mail, pay attention to what has been marked on any returned envelopes. If it is marked "not here", it is likely that whoever lives at that address wrote the information and may be the person you are looking for. If the letter is marked "moved, left no forwarding", it is likely that the post office provided this and it is correct; thus, the address is not the debtor’s address. Refusal of a registered or certified letter does not necessarily indicate the person is not at that address.

105. If the telephone is used to trace a debtor, remember these important points:

Be confident and professional. Be friendly and courteous. Be a good listener. Someone other than the debtor may intercept a telephone message. If leaving a

message, keep the message generic and do not divulge that you are calling about a collection matter.

Tools and Resources for Skip Tracing and Asset Location

106. There are several tools available to agencies for skip tracing and asset location; some are free services available through the internet, while others are fee-based services such as credit reports and consumer database services. Some examples of free skip tracing services available through the internet include:

http://www.addresses.com/ http://www.worldpages.com/ http://find.person.superpages.com/

Some examples of fee-based services include:

Credit bureaus (such as Equifax and Trans Union) LexisNexis http://www.usatrace.com http://www.experian.com http://www.555-1212.com http://www.skipease.com/ Oregon Department of Motor Vehicles

107. The telephone directory assistance operator may be able to provide a new address if the caller

knows the correct name and phone number as well as the old address for the debtor.

108. The Department of Motor Vehicles (DMV) can provide the last known address of the debtor if given the debtor's complete name and, if possible, the date of birth. DMV does not identify by social security number. DMV lists the spouse's name separately, so do not overlook this possibility. The DMV maintains two separate files, one for the driver's license and the other for

http://www.addresses.com/

http://www.worldpages.com/

http://find.person.superpages.com/

http://www.usatrace.com/

http://www.experian.com/

http://www.555-1212.com/

http://www.skipease.com/

OAM 35.30.70 3 of 4

registered vehicles. A person who has moved may have purchased another vehicle but may not have submitted a change of address for his/her personal driver's license. The vehicle registration also lists the legal owner of the vehicle, which may be helpful, so request this information when calling.

109. The Department of Transportation (ODOT) can be helpful if the debtor operates a truck. ODOT files contain extensive information about trucking operations.

110. The Corporation Division of the Secretary of State can provide the date on which a corporation filed the Articles of Incorporation, if the corporation is in good standing and if the corporation has filed corporate tax returns. The Corporation Division can furnish the names and addresses of the corporate officers. If the corporation has not filed corporate tax returns, they can provide the name of the registered agent. Many out-of-state corporations operate in Oregon, and each one must have a registered agent in this state to operate.

111. Licensing information is available by searching online at: http://licenseinfo.oregon.gov/. Several of the searches include both phone number and address information.

112. The Bureau of Labor and Industries can provide information regarding required licenses for different types of businesses, as well as which entities businesses must register with and which entities will inspect businesses.

113. The Bureau of Labor Wage and Hour Division handles wage claims against employers.

114. The Secretary of State maintains the UCC-2 (Uniform Commercial Code) filings, which are recorded liens against businesses for specific goods or equipment. These lien holders may be of assistance in locating the debtor or in locating potential assets that can aid the collector should he need to file a lien.

115. The Oregon Health Licensing Agency maintains licenses for barbers and cosmetologists as well as for multiple other health and related professions.

116. The county clerk has information on vital records such as marriage licenses and death certificates.

117. Local water districts could indicate if they have service for an individual or what name they list for service at a particular address.

118. Municipalities may be able to provide information, if they provide service for the particular person or company.

119. The collector may call the credit department of power companies for assistance with locating a debtor.

120. Retail businesses and local merchants can be helpful. If they carry their own credit accounts, the applications will list employment, relatives, and other valuable information. In small towns, the competitors often know a great deal about the debtor.

121. Banks and finance companies may be able to provide information. Their policies vary concerning the type and amount of information they are willing to provide, but their information is usually current.

http://licenseinfo.oregon.gov/

OAM 35.30.70 4 of 4

122. Neighbors are usually a good source of information. If the neighbor called is not familiar with the debtor, he/she may know of another neighbor who knows the debtor. The reverse directory may be helpful in this situation.

123. Relatives and in-laws generally know where the debtor is, but may guard this information. Many debt matters are oversights and the debtor will appreciate efforts to contact him.

124. Voter registration at the county courthouse will show the address of the debtor and will indicate where a voter's records are transferred if the debtor registers to vote in a new location. The information is most current during the election season.

125. Local law enforcement agencies can also be helpful. The local sheriff's office or police station maintains a number of files for civil and criminal activities. In smaller communities, they may have firsthand knowledge concerning citizens. By law, they are extremely limited in what information they can provide.

126. County assessors can provide a list of real property owned by the debtor. The assessor’s office also maintains lists of contract sales for property, which will reveal the names of both parties of the contract.

127. Local trade unions maintain files on their members. For example, if the debtor is a musician, try contacting the musicians’ union. If the debtor is a plumber, contact the plumbers' union. These unions also maintain records on employers.

Policy No: 35.30.80 | Effective: February 9, 2018 Page 1 of 7


STATEWIDE POLICY

NUMBER

35.30.80

SUPERSEDES

N/A – New OAM

EFFECTIVE DATE

02/09/2018

PAGE NUMBER

Pages 1 of 7 Division

Chief Financial Office

REFERENCE/AUTHORITY

ORS 293.240 ORS 293.590

Policy Owner

Statewide Accounting and Reporting Services SUBJECT

Accounts Receivable Management- Account Activity: Offers in Compromise

APPROVED SIGNATURE

George Naughton, Chief Financial Officer Signature on file

PURPOSE This policy incorporates into the Oregon Accounting Manual (OAM) guidelines established by the Department of Administrative Services (DAS) and the Attorney General (AG) for agencies when adopting criteria for determining when offers in compromise may be made. APPLICABILITY This policy applies to all state agencies as defined in OAM 01.05.00. FORMS/EXHIBITS/INSTRUCTIONS None

DEFINITIONS Claim: A demand for payment, reimbursement, or compensation for injury or damage under law or contract, including but not limited to a demand for payment due for delivery of goods or services. Debt: A fixed and certain obligation to pay money, now or in the future. Offer in Compromise, as used below, refers to: (1) a person who is indebted to a state agency and offers to make a partial payment in full satisfaction of a debt or (2) when a state agency that is owed money offers to accept a partial payment in full satisfaction of a debt. Reasonable effort: The employment of all available, legal, and cost-effective means that are appropriate to the circumstances of the collection effort. A means of collection may be considered cost-effective when it is reasonable to expect the costs of collection to be less than the debt. If the anticipated recovery would be only marginally in excess of the cost of collection, it may be reasonable to exert little or no effort to collect the debt.



EXCLUSIONS AND SPECIAL SITUATIONS

These criteria do not apply to debts owed to a state agency for which a procedure for compromise, release, discharge, waiver, cancellation or other form of settlement for the debt for reasons other than uncollectability is by law made specially applicable to the state agency. Reference Statewide Policy number: 107-001-002.

POLICY:

101. Agency management must ensure that agency personnel employ appropriate and lawful practices in the management and collection of accounts receivable.

102. Except as otherwise provided below, DAS and the AG have approved the following criteria for determining when an offer in compromise may be proposed or accepted by state agencies. These criteria do not apply to the state courts and all commissions, departments and divisions in the judicial branch of state government.

CRITERIA FOR DETERMINING WHETHER TO PROPOSE OR ACCEPT AN OFFER TO COMPROMISE STATE DEBT

A state agency, as defined in ORS 293.235, may propose or accept an offer in compromise for settlement of a debt owed to the agency, if it has made reasonable efforts to collect the debt and one or more of the following is true: 1. The debt has not been liquidated and it is reasonably estimated that the cost of liquidating the debt, through a judicial or administrative process, is likely to exceed the amount of the debt. 2. The debt has not been liquidated and the state agency reasonably determines that the debtor may be able to successfully assert factual or legal defenses to its liability for the debt. 3. The debtor has a potentially valid claim against the state agency in connection with the debt and the debtor agrees to release this claim as part of the offer in compromise. 4. The state agency reasonably concludes that the cost of collecting the entire debt would equal or exceed the amount of the debt. 5. The state agency makes reasonable efforts to identify assets belonging to the debtor and determines that the debtor does not, and will not for the foreseeable future, own or have the right to own assets from which the state agency could collect the entire debt. 6. The debtor submits a financial statement or other documentation which demonstrates that the debtor’s liabilities exceed his assets and future earnings potential to such an extent that collection of the entire debt is unlikely. 7. The debtor is deceased, and there are insufficient assets in the debtor’s estate from which the state agency could collect the entire debt.


8. The debtor is a corporation or a limited liability company that is not and, for the foreseeable future, will not be engaged in any income-producing activity, and there are insufficient assets from which the agency could fully collect the entire debt. 9. The Oregon Department of Revenue Other Agency Accounts (DOR-OAA) and/or a private collection firm (PCF) has unsuccessfully attempted to collect the debt pursuant to ORS 293.231. 10. The debt has been liquidated with a judgment, administrative order or distraint warrant that was recorded in the county clerk lien record, and which has subsequently expired. 11. The debtor’s assets are exempt from execution or garnishment.

These criteria do not apply to debts owed to a state agency for which a procedure for compromise, release, discharge, waiver, cancellation or other form of settlement for the debt for reasons other than uncollectability is by law made specially applicable to the state agency.

PROCEDURES: Agency Criteria

103. For the purpose of accepting or offering a compromise, Agency management must

adopt criteria for determining when offers in compromise may be made. The criteria must be approved by DAS and the AG for Executive branch agencies. An agency does not need to submit its compromise criteria to DAS or the AG for approval if it adopts the criteria that DAS and the AG have approved in section 102. Any executive branch agency may adopt these criteria for determining whether to propose or accept an offer in compromise. The agency shall document the adoption of such criteria within their policies and procedures.

104. If the Secretary of State and State Treasurer adopt criteria that are different than the criteria identified in section 102, they shall submit such criteria to the AG for approval. Any other Executive branch agency that adopts criteria that is different than the criteria identified above shall submit such criteria to DAS for approval. DAS shall work with the AG to decide if the submitted criteria is sufficient and shall approve or deny the agency criteria.

Offers in Compromise 105. Agencies shall make reasonable efforts to collect the debt before an offer in

compromise is made or accepted.

106. The state agency to which a debt is owed retains the sole discretion to determine whether to propose or accept an offer in compromise in each particular case. However, an accepted offer in compromise should generally correspond to the debtor’s ability to pay the debt and/or the agency’s ability to collect the debt. Agencies may require the debtor to provide such information as deemed necessary for the agency to determine the debtor’s ability to pay. Such information may include, but is not limited to: Household information including listing of residents, employment verification such as


pay stubs or tax returns, listing of debtor’s expenses, proof of eligibility for a state benefit assistance program.

107. Agencies shall document the specific criteria by which the account is determined to qualify for the compromise. This documentation shall be kept with the account or documented in the agencies system of record to be used for future reference or audit support (See section 110 for sample format).

108. If a PCF, or DOR-OAA, is collecting a debt owed to another state agency, it may only accept an offer in compromise for settlement of that debt: a. In accordance with the criteria adopted by the state agency to which the

debt is owed; and

b. With the authorization of the state agency to which the debt is owed.

109. ORS 209.240(3)(c) does not allow the compromise of a criminal money judgment that requires a defendant to pay restitution or a compensatory fine.

110. Sample Format to Document Criteria for Approval of an Offer to Compromise State Debt Under ORS 293.240 AGENCY: DATE: DEBTOR NAME:

I, ______________________________, hereby certify that:

This account qualifies for compromise of a debt owed to this agency in accordance with:

criteria previously adopted by the agency and approved by the Department of Administrative Services and the Attorney General or

criteria adopted by the agency as provided in OAM 35.30.80

☐ The debt has not been liquidated and it is reasonably estimated that the cost of

liquidating the debt, through a judicial or administrative process, is likely to exceed the amount of the debt. ☐ The debt has not been liquidated and the state agency has reasonably determined that the debtor may be able to successfully assert factual or legal defenses to its liability for the debt. ☐ The debtor has a potentially valid claim against the state agency in connection with the debt and the debtor has agreed to release this claim as part of the offer in compromise.

☐ The state agency has reasonably concluded that the cost of collecting the entire

debt would equal or exceed the amount of the debt.

☐ The state agency has made reasonable efforts to identify assets belonging to the

debtor and determined that the debtor does not, and will not for the foreseeable future, own or have the right to own assets from which the state agency could collect the entire debt.


☐ The debtor has submitted a financial statement or other documentation which

demonstrates that the debtor’s liabilities exceed his assets and future earnings potential to such an extent that collection of the entire debt is unlikely.

☐ The debtor is deceased, and there are insufficient assets in the debtor’s estate

from which the state agency could collect the entire debt. ☐ The debtor is a corporation or a limited liability company that is not and for the foreseeable future will not be engaged in any income-producing activity, and there are insufficient assets from which the agency could fully collect the entire debt.

☐ The Oregon Department of Revenue and/or a private collection firm has

unsuccessfully attempted to collect the debt pursuant to ORS 293.231. ☐ The debt has been liquidated with a judgment, administrative order or distraint warrant that was recorded in the county clerk lien record, and which has subsequently expired. ☐ The debtor’s assets are exempt from execution or garnishment.

Approved: ______________________________________________ (signature & title)

Original debt amount: $ Amount compromised: $ Balance remaining: $ 111. Any approved offer in compromise shall be subject to the debtor’s completed payment

of the remaining balance. If the debtor does not make the required payment(s), then the compromise agreement shall be nullified.

112. Agencies approving a compromise offer shall provide the debtor with a compromise

letter (sample provided in section 115) that includes (but not limited to) the following information: a. Debtor name b. Description of the debt c. Original balance d. Amount compromised by agency e. Balance owed by debtor f. Deadline for payment of balance or any special terms or conditions of the

compromise g. Statement that failure to abide by the terms or deadlines will result in agreement

being nullified and the full amount of the debt remaining due and owing.

113. Agencies shall document the terms of the compromise using a written agreement (sample provided in section 116) that includes the terms as stated in the letter required under section 112. Both the agency and the debtor are required to sign and the agreement is to be returned to the agency with payment. The compromise agreement must include notification of the actions the agency will take if the debtor does not fulfill the requirements of the agreement, such as; the accrual of interest, the assignment of the account to DOR-OAA or a PCF and the addition of collection fees if assigned.

114. Agencies may choose (if requested by the debtor) to allow the debtor to establish a payment plan for the balance owed by debtor in accordance with OAM 35.30.60.



However, this should not be allowed if the debtor has previously agreed to a payment plan and did not submit all of the required payments.

115. Sample Debt Compromise Letter: Below is a sample of a letter that agencies may use

to clarify agency expectations in regards to a debt compromise. {date} {debtor name} {address} {city, state, zip} RE: Debt compromise for {liabilities} Dear {debtor name}: The {agency name} has reviewed the circumstances regarding your account for {description of the debt} in the amount of {original balance}. Per our conversations on {date}, {agency name} hereby agrees to compromise your debt in the amount of {amount compromised by agency}. The balance of ${balance owed by debtor} is to be paid by {deadline for payment or special terms}. WE MUST RECEIVE YOUR PAYMENT ON, OR BEFORE, {THE DUE DATE}. THERE IS NO GRACE PERIOD. Any failure to meet the payment terms will result in this agreement being nullified and {agency Name} shall collect the full balance of your debt and may result in immediate submission of your account to the Oregon Department of Revenue, or a private collection firm, for collection without further notice to you. If your account is assigned for collection you may also be responsible for collection fees of up to {x}%. Enclosed are two copies of the Compromise Agreement. Please sign the original and return to {agency name} by {date}, the second copy is for your records. Failure to return the original with your signature by the deadline shall nullify this agreement. Please note that this debt compromise only applies to the specific debt owed to {agency name} in the amount of {original balance}. It does not apply to any other debts that you may owe to this agency, or to any other agency, department, commission, board or instrumentality of the State of Oregon. You shall remain fully liable for any such other debts. If you have any questions, please call me at {phone number}. {signature block} Enclosures

116. Sample Compromise Agreement: Below is a sample of an agreement that agencies may use to document the debt compromise including the signatures of both the agency and the debtor.


{Agency name), referred to as CREDITOR and {debtor name}, referred to as DEBTOR, agree to compromise the indebtedness between them. CREDITOR, hereby agrees to compromise the indebtedness due from the CREDITOR on the following terms and conditions: The CREDITOR and the DEBTOR agree that the present debt due is ${original balance}. The parties agree that the CREDITOR shall accept the sum of ${balance owed by DEBTOR} as full payment on the debt. The acceptance of the payment will serve as a complete discharge of all monies due to CREDITOR. The payment shall be made in {note the form of payment}. This compromise is expressly conditioned upon DEBTOR signing this agreement and returning to CREDITOR with the payment of ${balance owed by DEBTOR} being received by {payment due date}. If the DEBTOR fails to pay the compromised amount by {payment due date}, the DEBTOR acknowledges that the original debt amount owed by the DEBTOR will be reinstated in full, and immediately due. At which time the DEBTOR shall be responsible for interest at the rate of (insert interest rate)% per (insert statutory reference for interest) and any additional collection fees of up to {X}% per ORS 293.231. In addition the CREDITOR may assign the debt to the Department of Revenue and/or a private collection firm for collection action. This agreement shall be binding upon and inure to the benefit of the parties, their successors and assigns. This agreement only applies to the DEBTOR’S debt owed to CREDITOR in the amount of ${the amount of the debt}. It does not apply to any other debts that you may owe to this agency, or to any other agency, department, commission, board or instrumentality of the State of Oregon. DEBTOR REMAINS FULLY LIABLE FOR ANY SUCH OTHER DEBTS.

Debtor Creditor Signature Printed Name Title (Owner/Partner/Officer)

Date



STATEWIDE POLICY

NUMBER

35.40.10

SUPERSEDES

35.40.10 dated 07/01/2013

EFFECTIVE DATE

02/09/2018

PAGE NUMBER



REFERENCE/AUTHORITY

ORS 291.015 ORS 293.231 ORS 293.233 ORS 293.250 ORS 293.590

Policy Owner


Accounts Receivable Management- Account Assignments: Assignments and Exemptions

APPROVED SIGNATURE


PURPOSE This policy provides criteria to determine when Mandatory Collection Agency Transfer (MCAT) accounts are subject to assignment to either the Department of Revenue Other Agency Accounts Unit (DOR-OAA) or a private collection firm (PCF) or are exempt from assignment. This policy also provides information on how an agency may request an exemption from the assignment timeframe statutorily placed at 90 days. The provisions of this policy do not affect or limit the authority of an agency to assign accounts to a PCF. APPLICABILITY This policy applies to all state agencies included in the State’s annual financial statements, except for those agencies specifically exempted by OAM 01.05.00. FORMS/EXHIBITS/INSTRUCTIONS

• OAM 75.35.01.FO -Documentation for Self-Exempting Accounts

• OAM 75.35.02.FO- Request for Exemption from Assignment

• OAM 75.35.11.FO- Exemption From 90-day Turnover Request DEFINITIONS Account: A debt relationship between a state agency and an individual or an entity, which may include multiple obligations and time periods

Consensual Security Interest: An enforceable interest in real or personal property voluntarily created by a debtor to secure an obligation to pay a debt (i.e., a mortgage, trust deed, security agreement, or pledged securities)

Delinquent (account): A receivable for which payment has not been received by the initial due date. (The establishment of a payment agreement does not change the status of the delinquency)

Hardship: Adverse circumstances, which significantly reduce a debtor’s ability to pay; Examples include, but are not limited to, interruptions of income due to family or medical emergencies, job layoff or job skill retraining, long-term/permanent disability, social security, , or terminal illness.



Imprisoned: An individual who is currently incarcerated

Litigation: A dispute is in "litigation" when it:

• Has been referred to the Department of Justice,

• Is in the administrative appeal or hearing process, or

• Is in arbitration, mediation, or in the state(s) or federal court system, including bankruptcy

Liquidated (account): See OAM 35.30.30 for a complete definition.

Mandatory Collection Agency Transfer account (MCAT account) An account that is:

• Liquidated,

• Delinquent, and

• Not prohibited by law from being transferred to a collection firm

Non-Consensual lien: A lien established by operation of law, such as a judgment with a financial obligation or the recording of an administrative record (agency warrant or civil penalty final order). POLICY:


practices in the management and collection of accounts receivable.

102. Agencies shall ensure liquidated and delinquent accounts receivables are collected as effectively and efficiently as possible. Agencies shall ensure accounts are assigned to external collections within the required time periods established in ORS 293.231 and this OAM. Timely assignment of accounts will help maximize the collectability.

PROCEDURES:

MCAT Accounts 103. The MCAT eligibility date of an MCAT account is the latter of any of the following dates that

apply to the account: a. The first day the account became both liquidated and delinquent,

b. The date an exemption under paragraphs 111, 114 or 118 has expired. Assignment Requirements 104. If an agency does not receive any payments on an MCAT account during any 90-day period

following the MCAT eligibility date for that account, the agency must review the account for assignment to DOR-OAA Unit for full collections (OAM 35.40.30) or a PCF (OAM 35.40.40) currently under contract with the State of Oregon.

105. The agency must assign accounts under paragraphs 104 for outside collection unless

the account is subject to an exemption under paragraph 111 or 118.

106. If an agency assigns an MCAT account to DOR-OAA, and the account is later returned

by DOR-OAA then the agency must offer the account for assignment to a PCF (ORS 293.231(4)).



107. The 90-day period in section 104 is not applicable to accounts that originate from the Department of Revenue or Employment Department accounts, which are required to be assigned one year from the date of liquidation or the date of last payment whichever is later.

108. The 90-day period does not apply to agencies that the Department of Administrative Services

Chief Financial Office (DAS CFO) has granted a time period exemption, as per paragraph 114.

109. Before an agency may write off an account using the procedures authorized by ORS 293.240 and OAM 35.50.10, the agency must refer the account to a PCF, unless the law prohibits the account from assignment to a PCF or the agency has exempted the account from assignment as provided in paragraph 111 or 118.

110. Notwithstanding paragraph 104, an agency may not make an offer for assignment contrary to applicable state or federal laws or regulations governing offers for assignment.

Accounts Exempt from Assignment 111. An agency may, at its discretion, choose not to offer for assignment to a PCF any MCAT

account that:

a. Is secured by a consensual security interest in real or personal property

b. Is a court judgment that includes restitution or a payment to the Department of Justice Crime Victims Assistance Section

c. Is in litigation, including bankruptcy, arbitration or mediation

d. Is a student loan owed by a student who is attending school

e. Is owed to a state agency by a local or state government or by the federal government

f. Is owed by a debtor who is hospitalized in a state hospital as defined in ORS 162.135, or who is on public assistance as defined in ORS 411.010 or who receives medical assistance as defined in ORS 414.025

g. Is owed by a debtor who is imprisoned

h. Is less than $100 including penalties

i. Would, if assigned, result in a loss of federal funding or a loss of funding under a federal program

j. Is owed by an estate and the state agency has received notice that the estate has closed

k. Is eligible for suspension of collections as provided in ORS 305.155

l. Would constitute a hardship if assigned, and assignment would be inconsistent with an agency goal

m. Is secured by a non-consensual lien against specific real or personal property identified by the agency

n. Is secured by a bond

o. Is one of multiple accounts owed to the agency by the same debtor, any one of which has received a payment within the preceding 90-day period, including accounts created and paid at the same time

p. Is within the scope of an agency specific exemption approved under paragraph 118


q. Would result in the referral of a monetary penalty, fee, or tax under ORS Chapters 825 or 826 related to a motor carrier operating authority unless the closing audit of the motor carrier operating authority is final

r. Arises when a wage garnishment has been served on the debtor’s employer and no funds are available to the agency because a wage garnishment or order to withhold earnings of higher priority currently prevents any funds from being applied to the agency debt

s. Arises from an administrative or judicial support order, judgment, or decree

t. Is owed by a corporation that is not and, for the foreseeable future, will not be engaged in any income-producing activity, and there are no assets from which the debt could be collected

(Agencies shall evaluate each account to determine the appropriate collection actions for accounts under this section. While the exemptions identified under this paragraph allow an agency to exempt an account from assignment, it doesn’t prohibit the agency from assigning the account. Agencies must exercise reasonable effort and due diligence to collect debts owed to the agency.)

112. When an agency determines an MCAT account can be exempt from assignment (based on the criteria in paragraph 111), the agency should document their conclusions on OAM 75.35.01.FO -Documentation for Self-Exempting Accounts (or equivalent). An agency is not required to file this form with the DAS CFO, but the form is useful to explain the reasoning for exempting accounts in the event of an inquiry or in response to an audit of the agency’s liquidated and delinquent accounts.

113. If an agency exercises the option available in paragraph 111 to exempt an account from assignment, the agency is responsible to continue to pursue reasonable efforts to collect the account and monitor the account exemption status. If the agency later determines that the exemption no longer applies, the agency must proceed with assignment of the account as required in paragraph 104.

Request for Exemption From 90-day Timeframe

114. To request an exemption from the 90-day turnover timeframe required in section 104, an

agency must complete OAM 75.35.11.FO, Exemption From 90-day Turnover Request. If approved, the exemption request will permit either a 180-day turnover period or a 365-day turnover period.

115. Agencies must submit requests for the exemption from the 90-day turnover timeframe to the DAS CFO no later than March 31. Each approved request will begin the following July 1 and will be valid until June 30 of the subsequent fiscal year. For example, an approved request submitted in March 2016 will become effective from July 1, 2016 through June 30, 2018.

116. An agency may not use such exemption until approved by the DAS CFO and only accounts with an MCAT eligibility date within the approved period apply.

117. The agency’s right to use the exemption terminates upon expiration of approved period. If the exemption expires and the agency has not received approval from DAS CFO for another exemption for the subsequent two year period, all accounts must be assigned as required in paragraph 103.



http://www.oregon.gov/das/Financial/Acctng/Pages/OAM.aspx#chapter75


Agency Specific Exemptions 118. An agency may request that the DAS CFO approve one or more agency specific exemptions

under ORS 293.233 for classifications of accounts that are not exempted under paragraph .111. An agency must submit a request for an agency specific exemption from assignment on OAM 75.35.02.FO- Request for Exemption from Assignment.

119. An agency may not use such exemption until approved by the DAS CFO and the exemption only applies to accounts with an MCAT eligibility date after the approval. In its written approval of the request, the DAS CFO may specify that the exemption is for a limited duration (not to exceed two fiscal years),

120. The agency’s right to use the exemption terminates upon expiration of the limited duration period.

Policy No: OAM 35.40.20 | Effective: February 9, 2018 Page 1 of 3


STATEWIDE POLICY

NUMBER

35.40.20

SUPERSEDES

35.40.20 dated 04/15/2013

EFFECTIVE DATE

02/09/2018

PAGE NUMBER



REFERENCE/AUTHORITY

ORS 291.015 ORS 293.231 ORS 293.250 ORS 646.639

Policy Owner


Accounts Receivable Management- Account Assignment: Collection Fees

APPROVED SIGNATURE


PURPOSE This policy provides information and guidelines for adding the cost of collection when assigning accounts to the Department of Revenue Other Agency Accounts Unit (DOR-OAA) or a Private Collection Firm (PCF) for collection in accordance with ORS 293.231. APPLICABILITY This policy applies to all state agencies included in the State’s annual financial statements, except for those agencies specifically exempted by OAM 01.05.00. FORMS/EXHIBITS/INSTRUCTIONS

• OAM 35.40.10 Assignments and Exemptions

• OAM 35.40.30 Assignments- Department of Revenue

• OAM 35.40.40 Assignments- Private Collection Firms DEFINITIONS None POLICY



102. Agencies, unless prohibited by state or federal law or regulation may add collection costs to a debt when it is assigned to DOR-OAA or a PCF. Agencies are encouraged to pass the fee as a means of reducing agency costs and encouraging debtors to make payment to avoid the additional fee.



PROCEDURES Debtor Notification

103. ORS 293.231 (12) and (13) authorize state agencies to add the cost of collection to the debt

when using DOR-OAA or a PCF, as long as proper notification has been given to the debtor:

a. Of the existence of the debt;

b. That the debt may be assigned to DOR-OAA or a PCF for collection; and

c. Of the amount of the fee that may be added to the debt under ORS 293.231.

104. The Department of Justice has provided the following language for agencies to incorporate into agency collection letters when state agencies add the cost of collection under ORS 293.231 (12) and (13).

“As of {Date}, you owe [state creditor-agency] the sum of $ _____________ (principal amount plus interest accrued to date) for _____________ [describe the nature of the debt, fine, restitution, judgment, or other liability, etc.]. The amount you owe will increase [over time/monthly/other period to be recomputed] as interest accrues at a rate of {Interest Rate} on the unpaid principal amount.

Under Oregon Revised Statute (ORS) 293.231, [state creditor-agency] must refer your account to collection if it has received no payment on the account for more than [prescribed statutory period]. If the [state creditor-agency] does not receive a payment from you by [date], then the [state creditor-agency] will assign your account to the Oregon Department of Revenue or a private collection agency for collection. At that time, you also will become responsible for the payment of an additional collection fee of (*or up to) {**Collection Rate} percent of the amount you owe. This additional percentage will apply to any increase in the amount you owe due to the accrual of interest on the unpaid principal amount.” *Notices including the “up to” terminology should only be used when absolutely necessary, and only to cover the highest contractor collection fee possible in the case of a creditor-agency that has multiple collection contractors. ** Collection Rate: When at all possible, a specific collection fee percentage should be stated using the formula “rate/(1-rate)”. (Rate= DOR-OAA or PCF contracted collection fee.)

Payment of Collection Fees 105. Upon collection of funds:

a. The PCF must follow the terms of the contract and purchase order to remit the funds to

the state agency. Agencies may choose to have the contractor remit collected funds in gross and invoice the agency for the collection fee or may choose to have the net funds remitted after the contractor has retained the collection fee.

b. DOR-OAA will retain the collection fee and remit the remaining funds collected to the state agency through ACH.


106. The statewide collection contract identifies that payment be made to the contractor no later than 45 days from date of acceptance of service. After 45 days, the contractor may assess interest at the rate of 8% per annum (see ORS 293.462).

Accounting Entries for Collection Fees 107. Refer to OAM 15.35.00 for guidance on accounting entries for the collection fees associated

with the use of DOR-OAA or a PCF.


Policy No: 35-40-30 | Effective: February 9, 2018 Page 1 of 6


STATEWIDE POLICY

NUMBER

35.40.30

SUPERSEDES

35.40.30 dated 07/01/2013

EFFECTIVE DATE

02/09/2018

PAGE NUMBER



REFERENCE/AUTHORITY

ORS 183.413 ORS 183.502 ORS 291.015 ORS 293.226 ORS 293.231 ORS 293.233 ORS 293.250 ORS 293.590

Policy Owner


Accounts Receivable Management- Account Assignments: Department of Revenue Assignments

APPROVED SIGNATURE


PURPOSE This policy provides state agencies with guidelines for using the Department of Revenue Other Agency Accounts Unit (DOR-OAA) for the collection of liquidated and delinquent debt. APPLICABILITY This policy applies to all state agencies included in the State’s annual financial statements, except for those agencies specifically exempted by OAM 01.05.00. FORMS/EXHIBITS/INSTRUCTIONS None DEFINITIONS Apportionment: When a couple files a joint tax return and either partner has an outstanding debt with DOR-OAA, any refund will apply to the debt. The partner without the debt is the “injured spouse”. The injured spouse can file a request to receive their portion of a tax refund. DOR will apportion the refund based on the adjusted gross income of each person.

Automated Clearing House (ACH) Transfer: Electronic funds transfer through the Federal Reserve Fedline system. Collection Unit: As used in ORS 293.250, the Other Agency Accounts Unit in the DOR. Full Collection Services Program: Liquidated and delinquent debts that agencies assign to DOR-OAA for collections using a full range of collection services including; letters, phone calls, garnishments, as well as offset. Offset Only Program: Liquidated and delinquent debts that agencies assign to DOR-OAA for collections through application of amounts due the debtor from the DOR or any other state agency. Restricted: See Offset Only Program for definition. Setoff: As used in ORS 293.250, more commonly referred to as offset; see Offset Only Program for definition.



SOIL: Acronym for Set-Off Individual Liability Program; see Offset Only Program for definition. Unrestricted: See Full Collection Services Program for definition. POLICY:


management and collection of accounts receivable.

102. The State’s policy is to collect all receivables due to state agencies and to establish procedures to effect the timely collection of all amounts owed. Where a state agency has exhausted their own collection activity, or the statutory time permitted for an agency’s self-collection on a debt has expired (see ORS 293.231 and/or OAM 35.40.10), the agency must assign the account to a Private Collection Firm (PCF) or DOR-OAA. If DOR-OAA returns the account to the agency, the agency must immediately assign the account to a PCF.

PROCEDURES: Use of DOR-OAA Unit

103. The agency assigning a debt to DOR-OAA and the debtors are subject to the laws, rules, and

procedures adopted by and governing DOR-OAA for the Offset Only or Full Collection Services Programs.

104. DOR-OAA can only collect liquidated and delinquent debt per ORS 293.250; (see the definition of liquidated and delinquent debt in OAM 35.30.30).

105. An agency that charges interest on collection accounts (see OAM 35.30.20) must identify the rate of interest on the Service Agreement with DOR-OAA. DOR-OAA shall maintain the balance of the collection fees at any time interest is calculated and applied to an account by using the formula: ((principal + interest) divided by (1- collection percentage from Service Agreement)) less (principal + interest) = collection fee.

106. The debtor must receive proper notice as referenced in OAM 35.30.50, ORS 183.413, or ORS 183.502. In order to meet due process requirements, DOR-OAA will send a notice of demand for payment prior to proceeding to garnishment on debts assigned by other state agencies.

107. If required under ORS 183.635, the agency must utilize the Office of Administrative Hearings, or pursue alternative means of dispute resolution as authorized in ORS 183.675 and as described in ORS 183.502.

108. DOR-OAA may collect debt that agencies assign to the Offset Only Program through application of amounts due the debtor from DOR or any other state agencies by offsets only.

109. Agencies may not assign a debt to both the DOR-OAA Full Collection Services Program and Offset Only Program at the same time.

110. Agencies may not assign a debt to both the DOR-OAA Full Collection Services Program and a PCF at the same time.

111. Agencies may assign a debt to the DOR-OAA Offset Only Program and a PCF at the same

time.





Assignment of Liquidated and Delinquent Debt

112. Before DOR-OAA will conduct business with an agency, the agency must complete and return a Service Agreement to DOR-OAA. The agreement outlines the type of debt that the agency is assigning, the collection services that DOR-OAA will provide, and the collection fee. Debt assigned to DOR-OAA for collection services must meet certain criteria. For example, the debt must be liquidated and delinquent, and the debt must be defined as to whether DOR-OAA may issue warrants and garnishments as determined by the client agency (see paragraph 129.c).

113. Since agencies may assign only liquidated and delinquent debt to DOR-OAA for collection, the

assigning agency must determine whether their debt is liquidated and delinquent according to the definitions in OAM 35.30.30.

114. At the time an account is assigned to DOR-OAA or a PCF, agencies will need to provide the

following information to DOR-OAA or the PCF regarding the account balance:

a. Principal balance

b. Accrued interest (if agency charges interest, refer to OAM 35.30.20 for more information on charging interest)

c. Collection fees: At the time of assignment to DOR-OAA, if the agency has provided notice to the debtor as required in ORS 293.231 and OAM 35.40.20 that they will be responsible for collection fees, then the agency must calculate the amount of the DOR-OAA collection fee using the following formula as provided in OAM 35.40.20.

115. An agency will notify DOR-OAA of any disputes on an assigned debt and DOR-OAA will notify

the agency of any disputes. DOR-OAA will place disputed debt in a non-collection status until the agency satisfies the dispute. The agency must review the dispute and provide determination to DOR-OAA within 30 days of notification. If the agency does not notify DOR-OAA, DOR-OAA may return the debt to the agency.

116. For debt that an agency submits with a social security number, the agency must have received

informed consent from the individual when they obtained the social security number as per ORS 293.226.

117. Agencies may assign debt of incarcerated debtors to DOR-OAA. The agency needs to indicate

the anticipated release date when assigning the debt.

118. Agencies may not assign debt of bankrupt debtors to DOR-OAA. If a debtor files bankruptcy after the agency assigns the debt to DOR-OAA, upon discovery DOR-OAA will return the debt to the assigning agency. The agency may reassign the debt to DOR-OAA after the agency determines that the debt survived bankruptcy.

DOR Collection Fee

119. DOR-OAA charges assigning agencies a fee for collection based on services designated in the service agreement. DOR-OAA does not add any fees to the assigned debt, nor does DOR-OAA charge a fee to the debtor. DOR-OAA retains a collection fee from the gross amount collected, and remits the net amount to the agency. Agencies that do not add a collections fee must always credit the gross amount collected to the debtor’s liability. If an assigning agency does not credit the gross amount collected to the debtor, the liabilities assigned to OAA will be out of balance. OAA’s legislative authority for charging a collection fee is ORS 293.250. Per ORS 293.231 (12), if the assigning agency passes DOR-OAA’s collection fee on to the debtor, the


http://www4.law.cornell.edu/uscode/html/uscode05/usc_sec_05_00000552---a000-notes.html

http://www4.law.cornell.edu/uscode/html/uscode05/usc_sec_05_00000552---a000-notes.html


assigning agency needs to notify the debtor of this fee, then add that additional amount to the debt and send the total balance to DOR-OAA for collection.

Agency Responsibilities

120. Agencies must review DOR-OAA inventory and collections reports for accuracy and resolve any

discrepancies promptly. 121. Agencies must maintain information on the accounts assigned to DOR-OAA for reporting to the

Legislative Fiscal Office (LFO) for the annual Liquidated and Delinquent Account Report (see ORS 293.229 and OAM 35.60.10).

Offset Only Program

122. Agencies submit debt for possible offsets of amounts due the debtor from the DOR or any other state agency. Note: The Offset Only Program is not an active collection process therefore assignment of a debt to the Offset Only Program only does not meet the requirements of ORS 293.231(1).

123. Debt that agencies assign to the Offset Only Program must include a social security number. The agency must have received informed consent from the individual when they obtained the social security number as per ORS 293.226.

124. Agencies must submit Offset Only Program debt via data transfer only. Contact DOR-OAA for further information on submission requirements.

125. Agencies must maintain debt balances. Agencies shall make adjustments via the account maintenance tools for balance changes.

126. The DOR will inform a debtor of any offset either through a letter that DOR-OAA sends with the refund check or with a letter sent independently where DOR-OAA offsets the entire refund.

127. The DOR will review any apportionment request and make a determination as to whether an apportionment is appropriate. Where appropriate, they will calculate the amount and send a refund. DOR-OAA will charge any resultant change in the refund amount back to the assigning agency’s account. DOR-OAA will send notification of the apportionment request to the assigning agency.

128. The agency submitting debt that is subject to offset will hold any hearings as required by OAM 35.30.30 and will inform DOR-OAA of its findings. Any claims that the agency finds to be not due, or not liquidated and delinquent, must be withdrawn from the Offset Only Program by the assigning agency.

129. DOR-OAA shall refer debtors to the assigning agency for questions regarding debt balances.

Full Collection Services Program

130. Agencies may submit debts to the Full Collection Services Program via paper or electronically.

131. DOR-OAA may set up debts assigned for the Full Collection Services Program without a social security number.

https://www.oregon.gov/DOR/programs/gov-research/Pages/oaa.aspx





132. DOR-OAA has no restrictions as to the collection methods they may use for debt assigned to the Full Collection Services Program. a. In order to be successful in collecting from debtors, DOR-OAA shall have full authority over

the assigned debt. If the assigning agency intervenes without consent, DOR-OAA may discontinue its efforts, assess the collection fee, and return the assigned debt.

b. Assigning agencies must not continue to pursue collection from a debtor after assigning the

debt to DOR-OAA’s Full Collection Services Program. c. Each agency must determine whether they can request DOR-OAA to issue warrants and

garnishments as part of the Full Collection Services Program. The definition of liquidated debt in OAM 35.30.30 includes nine conditions under which a debt qualifies as liquidated. For those debts that meet conditions 1-4, DOR-OAA has the authority to utilize all potential collection tools, including warrants. For those debts that meet conditions 5-9, DOR-OAA does not have authority to issue warrants. If warrant authority is necessary for effective collection, the agency must take appropriate action to qualify the debt under conditions 1-4.

133. The following are guidelines for agencies in submitting liquidated and delinquent debt for

collection under the Full Collection Services Program:

a. Agencies must submit the entire balance of a liquidated and delinquent debt, not just a portion.

b. Comments identifying the nature of the liability will assist DOR-OAA in answering

debtors’ questions and reduce the number of calls to the assigning agency.

c. Agencies may receive a request to provide necessary and appropriate supporting documents including, but not limited to:

• Credit/loan application

• Copy of promissory note

• Copies of agency orders (i.e. civil penalty final orders)

• Credit information statement

• Invoices or billings

• Negotiable instruments, including NSF checks

• Narrative statements of prior collection activity

• Copies of key collection letters

• Detailed statement of the debt showing beginning balance, payments made, ending balance, dates, interest, charges, etc.

• Substantiation of collection charges or fees made against the debt prior to assignment

• Details of any other debt with debtor

• Proof of informed consent

• Information obtained with regard to bankruptcy filings

• Estate/asset information for deceased debtors

• Estimated date of release for incarcerated debtors

134. Agencies must maintain debt balances. Agencies make adjustments via the account maintenance tools for balance changes.

135. Agencies may withdraw an assigned debt by submitting notice to DOR-OAA. DOR-OAA reserves the right to request additional information from the agency requesting the return to


determine if they will charge the agency a collection fee. Refer to the service agreement for situations in which a collection fee may still apply.

136. DOR-OAA will return to the submitting agency, with no collection fees charged, debts that DOR-OAA determines are uncollectible. DOR-OAA will also return debts where the statutory time permitted for DOR-OAA’s collection activity has expired (see ORS 293.231(4) and ORS 1.197). If DOR-OAA returns the account to the agency, the agency must immediately assign the account to a PCF.

137. The assigning agency’s name will appear in the offset notification letters to the debtors, and the DOR is the agency listed to receive the dispute request (see ORS 293.250 (d)).

Reporting

138. DOR-OAA will provide monthly reports to each agency regarding the agency’s debts. The assigning agency must update their records monthly based on the status reports that DOR-OAA sends.

139. An assigning agency must notify DOR-OAA of all payments received from the debtor or any other adjustment to a debt balance. For DOR-OAA’s records, agencies should include the reason for changes to the balance in the notification.

Remittances and Refunds

140. DOR-OAA accumulates any moneys collected and remits them, minus a collection fee, to the respective agencies monthly.

141. DOR-OAA makes all payments to an agency by ACH transfer. DOR-OAA will not issue checks.

142. Agencies should refer to OAM 15.35.00 for information on recording payments collected and remitted to them by DOR-OAA.

143. If a debtor is due a refund for overpayment of the debtor’s liability, DOR-OAA or the agency will issue the refund according to the terms of the service agreement. An exception to this is if a garnishment overpays a debt or a garnishment payment or other payment is misapplied. According to DOR policy, DOR-OAA must refund any overpayment received for a DOR-OAA issued garnishment.




STATEWIDE POLICY

NUMBER

35.40.40

SUPERSEDES

35.40.40 dated 07/01/2013

EFFECTIVE DATE

02/09/2018

PAGE NUMBER



REFERENCE/AUTHORITY

ORS 291.015 ORS 293.231 ORS 293.462 ORS 293.590 ORS 295.002 ORS 646.639 ORS 697.058

Policy Owner


Accounts Receivable Management- Account Assignments: Private Collection Firm Assignments

APPROVED SIGNATURE


PURPOSE This policy provides state agencies with guidelines on the use of private collection firms (PCF) for the collection of liquidated and delinquent debt. APPLICABILITY This policy applies to all state agencies included in the State’s annual financial statements, except for those agencies specifically exempted by OAM 01.05.00. FORMS/EXHIBITS/INSTRUCTIONS None DEFINITIONS Private collection firms (PCF) - are organizations that furnish a service to their clients by providing trained full-time staff to collect delinquent accounts. POLICY:



102. The State’s policy is to collect all receivables due to state agencies and to establish procedures to effect the timely collection of all amounts owed. Where a state agency has exhausted their own collection activity, or the statutory time permitted for an agency’s self-collection on a debt has expired (see ORS 293.231 and/or OAM 35.40.10), the agency must assign the account to a Private Collection Firm (PCF) or DOR-OAA. If DOR-OAA returns the account to the agency, the agency must immediately assign the account to a PCF.

103. The agency assigning a debt to a PCF and the debtors are subject to the contract provisions related to collection services. Collection agencies under contract with the State of Oregon are subject to state and federal laws including but not limited to the Oregon Unlawful Debt Collection Practices Act (ORS 646.639) and the Federal Debt Collection Practices Act (FDCPA, 15 U.S. Code 1692).





104. Agencies may assign a debt to the DOR-OAA Offset Only Program (OAM 35.40.30) and a PCF at the same time.

PROCEDURE: Use of Private Collection Firms 105. Where a state agency has exhausted their own collection activity, or the statutory time permitted

for an agency’s self-collection on an account has expired (see ORS 293.231 and/or OAM 35.40.10), the agency must assign the account to a PCF or the Department of Revenue Other Agency Accounts (DOR-OAA) Unit. If the DOR-OAA Unit does not collect a payment and returns the account to the agency, the agency must immediately assign the account to a PCF.

106. The Department of Administrative Services (DAS) maintains a statewide contract with PCFs for collection services. Agencies may enter into a collection agreement with a PCF currently under contract by submitting a purchase order that references the statewide contract. Consult with agency procurement staff for current purchase order format. Agencies should use the purchase order to highlight critical aspects of the agreement between an agency and a PCF. While agencies’ purchase order formats may differ somewhat, it is important that certain elements be conveyed in the agreement. Refer to the debt collection contract for mandatory purchase order language.

107. Accounts must be both liquidated and delinquent (see OAM 35.30.30 for definitions) before an agency may assign them to a PCF. Some accounts may qualify as exempt from assignment to a PCF in accordance with criteria outlined in paragraph 111 of OAM 35.40.10.

108. An agency may use multiple PCFs at the same time; however, an agency may not assign a single liquidated and delinquent account to more than one PCF at the same time.

109. Agencies may submit a liquidated and delinquent account to a PCF and to the Offset Only Program of DOR-OAA for collection at the same time (per OAM 35.40.30). However, an agency may not assign an account to both the Full Collection Services Program of DOR-OAA Unit and a PCF at the same time.

110. A public official entering into an agreement for collection services is obligated to consider due diligence in the preservation of public funds. ORS 295.002 indicates the measures that, when followed, protect a public official from personal liability in the event of the loss of public funds.

111. Agencies should educate the PCFs they work with as to the type of accounts their agency generates. In addition, it is important to share with PCFs the statutory citations, legal filings that have transpired, findings of hearings, etc., that substantiate a clear lawful claim. The better a PCF understands the type of debt they are collecting, the better able to collect it they will be.

Assignment to the Private Collection Firm 112. At the time an account is assigned to a PCF, agencies will need to provide the following

information to the PCF regarding the account balance: a. Principal balance

b. Accrued interest (if agency charges interest, refer to OAM 35.30.20 for more information on

charging interest)





c. Collection fees: At the time of assignment to a PCF, if the agency has provided notice to the debtor as required in ORS 293.231 that they will be responsible for collection fees, then the agency must calculate the amount of the PCF collection fee using the following formula: ((Principal + Interest) divided by (1- Collection Percentage charged by PCF)) less (Principal + Interest) = Collection Fee

113. An agency that charges interest on collection accounts (see OAM 35.30.20) must identify the

rate and calculation method on the agency Purchase Order when assigning to a PCF or on the Service Agreement with DOR-OAA. See the Collection Contract for more information on purchase order requirements. The contractor must adhere to the language of the contract to maintain the balance of the collection fees using the formula below at any time interest is calculated and applied to an account. The contract Account Assignment Requirements indicate: a. If the authorized purchaser has indicated in the purchase order that the authorized

purchaser passes along the cost of collection, the authorized purchaser may require the contractor to, at the time of assignment, calculate the collection fee amount using the following calculation: ((principal + interest) divided by (1- collection percentage charged by PCF)) less (principal + interest) = collection fee. This calculation will ensure that the authorized purchaser has recovered all costs of collection once account is paid in full.

b. If the authorized purchaser has indicated in the purchase order that the authorized

purchaser passes along the cost of collection and contractor pricing is a flat fee, the authorized purchaser may require contractor to, at the time of assignment, add the flat fee to the total amount assigned by the authorized purchaser.

PCF Collections Processing

114. PCFs must hold amounts they collect in a special trust account for the benefit of the State of

Oregon in accordance with ORS 697.058 until the PCF remits payment to the assigning agency.

115. The statewide collection contract, as well as the terms and conditions the agency specifies in the purchase order prescribe reporting and payment remittance by the PCF.

116. After depositing collection receipts, processing account payments, and reconciling the amounts collected and remitted by a PCF, the agency may need to forward payments to the appropriate party, as applicable (i.e., third party reimbursements, courts, etc.). The agency’s procedures need to provide for payment of the PCF’s collection fees within 45 days (refer to ORS 293.462 and the collection contract for more information).

117. If within a reasonable time (defined in the agency purchase order, and shall not be less than 12 months), a PCF has been unable to collect an account, the PCF should contact the assigning agency to determine the most appropriate action based on the specifics of the account. Appropriate actions may include but are not limited to: cancellation (return), legal action or account monitoring.

118. For accounts that are returned by the PCF, the agency should perform periodic follow-up to confirm that the PCF performed adequate collection efforts. An agency needs to be diligent in this regard with accounts of a significant dollar amount. Accounts returned by a PCF should be reviewed by the agency to ensure all reasonable efforts have been made to collect. Refer to OAM 35.50.10 for information on criteria for uncollectibility and determining if the account is eligible for write-off.






Collection Fees

119. Refer to OAM 35.40.20 for information regarding collection fees.

120. The PCFs may remit amounts collected in gross or net of the collection fee, as specified in the agency purchase order. See OAM 15.35.00 for accounting treatment of collection fees.

Agency Responsibilities

121. Agencies must review PCF inventory and collections reports for accuracy and resolve any discrepancies promptly.

122. When using a PCF, an agency needs to review contractor reports as well as the collection history of the accounts that the agency has assigned. The PCF must follow the terms of both the contract and the purchase order at all times.

123. Agencies must report any PCF contract violations or other concerns to the DAS Chief Financial Office.

124. Agency management must review the performance of the PCF at least annually to evaluate its overall effectiveness. If the PCF is not performing up to agency management's expectations, the agency should consider obtaining a new PCF.

125. Agencies must maintain information on the accounts assigned to the PCF for reporting to the Legislative Fiscal Office (LFO) for the annual Liquidated and Delinquent Account Report (see ORS 293.229 and OAM 35.60.10).

OAM 35.50.10 1 of 4

Statewide Policy



DIVISION: Chief Financial Office Effective date: November 14, 2013


Part: Uncollectible Accounts

Section: Write-off Guidelines


PURPOSE: This policy incorporates into the Oregon Accounting Manual (OAM) guidelines established by the Department of Justice for the write-off of uncollectible accounts. These guidelines are provided as a matter of convenience for users of the OAM. Included in these guidelines is a form agencies may use to certify for internal purposes that they have taken appropriate efforts before the write-off of uncollectible accounts.


ORS 293.231 ORS 293.240


statements, except for those agencies specifically exempted by OAM 01.05.00.

GUIDELINES FOR WRITING OFF UNCOLLECTIBLE DEBT

UNDER ORS 293.240

A. Introduction ORS 293.240 stipulates the circumstances under which a state agency may write off uncollectible debts that are due the agency. Under ORS 293.240, if an agency has made all reasonable efforts to collect the money owed to it, including money owed on a liquidated and delinquent account that has been relinquished by a private collection agency under 293.231, and has determined that the money and any interest and penalties on the money are uncollectible, the agency may write off the debt on its accounts. Before determining that money is uncollectible, a state agency must adopt criteria for determining when money is uncollectible. The criteria must include the right of offset and must be approved by the Attorney General. This policy explains the procedure to write off a debt and provides criteria for determining when a debt is uncollectible. For purposes of this policy, “debt” means a fixed and certain obligation to pay money, either now or in the future. ORS 293.240 does not apply to debts owed to a state agency for which a procedure for compromise, release, discharge, waiver, cancellation or other form of settlement for reasons other than collectibility is by law made specifically applicable to the agency. In such instances, the state agency must follow the procedure for settlement that is specifically applicable to the agency.


OAM 35.50.10 2 of 4

ORS 293.240 also does not apply to debts that legally have been finally canceled or discharged, as for example, by an order of a bankruptcy court. Such debts are not “uncollectible;” rather, such debts are nonexistent. The procedure for writing off uncollectible debts should not be confused with that provided by ORS 293.250, which authorizes the Department of Revenue to render assistance to state agencies in the collection of delinquent accounts. The Department of Revenue renders such assistance pursuant to the statute and subject to rules promulgated by the Department of Administrative Services (ORS 293.250 (3)). Under ORS 293.250, the referral to Department of Revenue is for collection only. Making such a referral does not authorize a state agency to write off the debt from the agency’s accounts. Similarly, ORS 293.231, which requires state agencies to “offer for assignment” most liquidated and delinquent accounts to private collection firms, does not authorize state agencies to write off those debts. Furthermore, a state agency may not write off an account that is subject to assignment under ORS 293.231. The Department of Administrative Services has promulgated rules governing the procedures and grounds for exempting certain liquidated and delinquent accounts from assignment (OAM 35.40.10). If the private collection firm subsequently returns the account to the state agency because it has been unable to collect the account, then ORS 293.240 applies, and the state agency may evaluate the account to determine if it is collectible. The fact that a private collection firm has relinquished an account back to the state agency does not, standing alone, establish that the debt is “uncollectible” within the meaning of ORS 293.240. The state agency must evaluate collectibility under the criteria set out in Section D or other criteria that has been previously submitted to and approved by the Attorney General. B. State Agency Direct Write Off Authority Each state agency has the authority to write off debts if the agency has written evidence in its files to show that the agency made all reasonable efforts to collect the debt, and that the debt is uncollectible in accordance with criteria for uncollectibility adopted by the agency and approved by the Attorney General. C. Procedures for Write Off

1. Make All Reasonable Efforts to Collect a Debt Each state agency has a statutory duty to make all reasonable efforts to collect the full amount of moneys owing to it, or otherwise charged to it for collection. Whether to consider a state agency’s collection efforts reasonable is determined by the circumstances. “All reasonable efforts to collect” means the employment of all available, legal, and cost-effective means that are appropriate to the circumstances of the collection effort. A means of collection may be considered cost-effective when it is reasonable to expect the costs of collection to be less than the debt. If the anticipated recovery would be only marginally in excess of the cost of collection, it may be reasonable to exert little or no effort to collect the debt.

2. Adopt Criteria to Determine When Money is Uncollectible For the purpose of writing off a debt on its accounts, a state agency must adopt criteria for determining when money is uncollectible.


OAM 35.50.10 3 of 4

The criteria must include the right of offset.

The criteria must be approved by the Attorney General. An agency does not need to submit its write-off criteria to the Department of Justice (DOJ) for approval if it adopts the write-off criteria that DOJ has previously approved (see section D below).

3. Document efforts made, actions taken and write-off The agency should include written evidence in its files to show that they have made all

reasonable efforts to collect the debt, and that the debt is uncollectible in accordance with criteria for uncollectibility adopted by the agency and approved by the Attorney General.

A sample document that agencies may use to certify, for internal purposes, that they have made appropriate efforts to collect the debt is at the end of this policy. The document, if used, should supplement other documentation in the file.

D. Criteria for Uncollectibility Except where the Attorney General has advised a particular agency otherwise, the following criteria for uncollectibility are approved for adoption and use by all state agencies. Any debt, including interest and/or penalties, or any portion of the debt, may be considered uncollectible when the debtor has no money or other thing of value owing or held by any state agency that has not been credited to the debt, and it is reasonable to conclude, after all reasonable efforts to collect the debt have been made, that one or more of the following is true:

1. The debtor does not and will not for the foreseeable future own or have the right to own assets from which the state agency could collect the debt.

2. It is reasonably estimated that the cost of collecting the debt would equal or exceed the amount of the debt.

3. The debtor is deceased, and there are no assets in the debtor’s estate from which the state agency could collect the debt.

4. The debtor is a corporation or a limited liability company that is not and for the foreseeable future will not be engaged in any income-producing activity, and there are no assets from which the agency could collect the debt.

5. The debt has previously been discharged in bankruptcy.

6. The debtor’s estate is subject to a pending bankruptcy proceeding in which it is reasonable to conclude that the debt will be discharged and that the state agency will receive none or an insubstantial share of the assets of the bankruptcy estate.

7. The agency is and will be for the foreseeable future unable to collect from the debtor or from anyone owing the debtor money or holding assets of or from the debtor.

8. The state agency is unable to locate the debtor despite having made reasonable efforts to do so.

9. The debt has been liquidated by reduction to a court judgment, administrative order, or distraint warrant, which has subsequently expired.

OAM 35.50.10 4 of 4

Sample Format to Certify Write Off of Uncollectible Debt under ORS 293.240

DATE: I, ______________________________, hereby certify that:

This agency has made all reasonable efforts to collect the debts listed herewith;*

This agency has determined that such debts are uncollectible in accordance with criteria previously adopted by the agency and approved by the Attorney General or as defined in the “Guidelines for Writing Off Uncollectible Debt Under ORS 293.240;”

There is no procedure provided by law specifically applicable to this agency for compromise, release, discharge, waiver, cancellation, or other form of settlement;

The agency has complied with ORS 293.231; and

The agency has made all appropriate inquiry, to the best of its ability, to ascertain that the debtor has no money or other thing of value owing or held by any other state agency which has not been credited to the debtor’s obligation to the State of Oregon.

BY: ______________________________________________ (signature & title)

*At a minimum, the list must include the debtor’s name, amount of the uncollectible debt, and the reason it was determined to be uncollectible.

OAM 35.60.10 1 of 2

Statewide Policy



DIVISION: Chief Financial Office Effective date: May 1, 2013


Part: Receivables Reporting

Section: Reporting Liquidated and Delinquent Accounts


PURPOSE: This policy provides state agencies with the requirements for reporting liquidated and delinquent accounts to the Legislative Fiscal Office.


ORS 293.229 ORS 293.233 ORS 293.250 ORS 293.590





Reporting Responsibilities 102. Oregon Revised Statutes (ORS) 293.227 through 293.245 provide state agencies guidance on

the collection of liquidated and delinquent accounts. With some exceptions and based on statutory timelines, state agencies are required to assign liquidated and delinquent accounts to the Department of Revenue or to private collection firms. Agencies must report the status of these assigned accounts, along with liquidated and delinquent accounts they are currently pursuing for collection or that the agency has otherwise exempted.

103. Unless exempt by statute, state agencies must report annually by October 1 to the Legislative Fiscal Office the status of their liquidated and delinquent accounts for the previous fiscal year ended June 30 (ORS 293.229). The Legislative Fiscal Office is then required to compile the state agency reports and issue one report to the legislature by December 31.

104. Agency management is responsible to ensure the accuracy and completeness of the information reported annually to the Legislative Fiscal Office. It is important to note that agencies report only the portion of their agency’s accounts receivable that are liquidated and delinquent.


OAM 35.60.10 2 of 2

105. State statutes exclude some state agencies from the reporting process. An agency can consult their authorizing statute to determine if it excludes them from reporting.

a. A governmental entity that does not meet the definition of a “state agency” under ORS 293.227 is not required to report.

b. A state agency whose authorizing statute indicates it is exempt from certain

financial administration laws, and cites ORS 293.229 specifically, is not required to report.

c. If an otherwise excluded state agency chooses to report, it shall follow the

same guidelines provided in the Legislative Fiscal Office reporting manual. Required Reporting Format 106. The Legislative Fiscal Office, in cooperation with the Department of Administrative Services

(DAS) and numerous state agencies, developed a web-based reporting system and a user manual. The user manual from the Legislative Fiscal Office, Reporting Liquidated and Delinquent Accounts, includes instructions on completing and submitting the annual report. The manual also provides some definition of terms and directs users to citations in the Oregon Revised Statutes and the Oregon Accounting Manual to obtain additional information.

107. When reporting liquidated and delinquent accounts each year, agencies are required to use the web-based reporting system using the instructions provided in the user manual. The Legislative Fiscal Office updates the user manual annually and provides state agencies a link to it.

108. Unless statutorily exempt from reporting, even those agencies with no receivables data must use the web-based reporting system and follow the instructions in the user manual for “nothing to report”. Failure to follow these instructions will result in the agency being listed as “did not report” in the Legislative Fiscal Office report to the legislature.



STATEWIDE POLICY

NUMBER

35.60.20

SUPERSEDES

35.60.20 dated 10/24/2017

EFFECTIVE DATE

02/09/2018

PAGE NUMBER



REFERENCE/AUTHORITY

ORS 291.015 ORS 293.252

Policy Owner


Accounts Receivable Management- Receivables Reporting: Accounts Receivable Performance Measures

APPROVED SIGNATURE George Naughton, Chief Financial Officer Signature on file

PURPOSE This policy establishes accounts receivable performance measures (ARPMs) and provides guidance to agencies for monitoring and reporting ARPM data and targets. APPLICABILITY This policy applies to all state agencies included in the state’s annual financial statements, except for those agencies specifically exempted by OAM 01.05.00. FORMS/EXHIBITS/INSTRUCTIONS

• OAM 75.35.12.FO DEFINITIONS Liquidated and delinquent (L&D): see definition in OAM 35.30.30. Receivable, also referred to as account or accounts receivable (A/R): An accounts receivable is established if revenue is not recognized at the point cash is received, refer to OAM 15.35.00 for guidance on revenue recognition. For purposes of this OAM, a receivable does NOT include loans and notes receivable amounts except for the amount of any periodic payment which became delinquent during the reporting period, refer to OAM 35.30.30 for guidance. If a loan or note is determined to be in default and the balance becomes due upon default then the balance should be included as an A/R. Click here for other definitions.


http://www.oregon.gov/das/Financial/Acctng/Documents/75.35.12.FO.xls




http://www.oregon.gov/DAS/CFO/SARS/policies/oam/65.00.00.pdf


POLICY


management of A/R.

102. Agency management shall monitor data related to the ARPMs established in this OAM and shall establish targets for each as required in this OAM. Monitoring of these ARPMs will assist agency management in evaluating the effectiveness of their accounts receivable management, collection processes, and identify potential areas for improvement.

103. Agencies shall report to the Department of Administrative Services (DAS) data in the format and timelines as required in this OAM.

PROCEDURES:

Required ARPMs

104. The ARPMs in paragraphs 105 through 109, and 111 as applicable, are operational measurements designed to monitor the effectiveness of collection processes. Agencies shall track these data elements to assist in the evaluation of collection processes.

Quarterly ARPMs

105. Total receivable collections - Agencies shall measure their total A/R collected during the

quarter and the amount of those collections that are applied to L&D accounts.

106. Receivables over 90 days past due as a percentage of total A/R – At the end of each calendar quarter, agencies shall determine the number and dollar value of accounts outstanding and the number and dollar value of those which are delinquent more than 90 days.

Annual ARPMs for ALL agencies

107. Days to assign – Agencies shall measure the number of days from the Mandatory Collection

Agency Transfer (MCAT) eligibility date, as defined in OAM 35.40.10, to the date of assignment to the Department of Revenue Other Agency Accounts (DOR-OAA) or to a private collection firm (PCF). Agencies shall report the number of accounts that were assigned in less than 30 days, 31-60 days, 61-90 days, 91-180 days, 181-365 days, and over 1 year. The assignment requirements of ORS 293.231, OAM 35.40.10 and Executive Order 17-09 dictate the mandatory timeline for when an account is subject to assignment.

108. Days to collect - Agencies shall measure the total number of days required to collect an A/R in full. Agencies shall report the number and percentage of accounts paid in full in less than 30 days, 31-60 days, 61-90 days, 91-180 days, 181-365 days, 1-3 years and over 3 years. For purposes of this ARPM the calculation is: Date account is paid in full1 less effective date2 of receivable = days to collect

1. Accounts should not be counted until final payment is received. 2. The effective date of the receivable is either:

• The date a state agency can recognize the revenue as described in OAM 15.35.00 under the economic resources measurement focus and accrual basis of accounting (therefore the availability criteria is unrelated to this determination); or

• The due date of a delinquent loan payment.



109. Write-offs as a percentage of available A/R – Agencies shall measure the percentage of available accounts that were written off during a period of time against the total A/R owed during the same period. For purposes of this ARPM the calculation is: Total write-offs during the fiscal year / (total A/R beginning balance + A/R additions during the fiscal year) Note: agencies should only include write-offs where the debt is still legally enforceable. Do not include accounts that were discharged in bankruptcy, compromised or settled with a debtor or that were cancelled under specific agency authority to cancel debts.

Annual ARPM for SPECIFIC agencies

110. The measurement in paragraph 111 is required for agencies that receive a DAS exemption from

the assignment requirements of OAM 35.40.10; however, the measurement is recommended for all agencies.

111. Collections Return on Investment (ROI) – Agencies shall measure the amount of revenue received compared to the costs of their collection efforts to determine the collections ROI.

For purposes of this ARPM the calculation is: Total receivable collections / (department costs1 + collection fees2 + legal fees3)

1. Department costs - should include to the extent possible and available with reasonable

effort:

• Wages for staff performing A/R tasks and management (or a pro-rated percentage of time spent managing A/R staff);

• Other payroll expenses related to the wages identified above; • Training for A/R staff or managers related to A/R job duties; and • Facilities costs (pro-rated based on the number of staff or managers performing A/R

duties compared to the total staff).

2. Collection fees - The costs paid by the agency for collections made by DOR-OAA or a PCF. Refer to the section on collection fees contained in OAM 15.35.00 for details on the proper accounting.

• Include costs paid to DOR-OAA or a PCF by the agency for collection costs, even if those costs are retained from collection prior to the PCF remitting funds to the agency.

• If the agency passes the DOR-OAA or PCF fee to the debtor, then there is no direct cost to the agency; therefore, do not include those fees in this calculation. Refer to OAM 35.40.20 for information on how to pass the fee to the debtor. (Note: not all accounts may pass the fee if there are federal program restrictions or other statutory limitations.)

3. Legal fees - These costs include, but are not limited to, the following:

• Department of Justice costs to litigate, including obtaining a judgment; • Administrative hearing costs, if applicable; and • Recording fees, such as county costs to record documents (e.g., civil penalty,

distraint warrant) into the county lien record to establish a lien on real property or county sheriff fees related to a writ of execution (e.g., asset seizure and sale, till tap).





Recommended ARPMs 112. The ARPMs in paragraphs 113 through 115 are annual measurements that are designed to

identify improvements associated with monitoring the process of collecting accounts receivable. Agencies are encouraged to track these data elements to assist in evaluating their collection processes.

113. Recovery rate - A collection recovery rate measures the amount collected over a period of time divided by the total receivables worked for a period of time. For purposes of this ARPM the calculation is: Total dollars collected / (beginning balance + additions)

114. Account Turnover Rate (ATR) - The ATR is a calculation that indicates how well accounts are

moving through the account assignment pipeline. An ATR of over 100% means that there are fewer accounts at the end of the year than at the beginning. The ATR should be evaluated for all agency accounts as well as accounts placed with DOR-OAA or a PCF.

For purposes of this ARPM the calculation is: Beginning number of accounts / ending number of accounts

115. Agencies not required to measure the ARPM referenced in paragraphs 110 and 111 are

nevertheless encouraged to measure that ARPM.

Agency Targets:

116. Due to the various agency missions and types of receivables owed to state agencies, each

agency should establish targets based on the factors that are unique to itself.

117. Agencies are required to establish quarterly targets for each ARPM established under

paragraphs 105 and 106 of this OAM for reporting periods beginning July 1, 2018.

118. Agencies are required to establish annual targets for each ARPM established under paragraphs

107 through 109, and 111 as applicable, of this OAM for reporting periods beginning July 1,

2018.

119. Agencies are encouraged to establish annual targets for each ARPM established under

paragraphs 113 through 115, as applicable, of this OAM. Reporting Requirements:

120. Quarterly ARPM reports - Agencies shall report to the DAS Chief Financial Office the actual

results for the quarterly ARPMs established under paragraphs 105 and 106 of this OAM as follows: Reporting period Due Date July-September October 31 October-December January 31 January-March April 30 April-June October 1 (with the annual ARPM reports)


121. Annual required ARPM reports - Agencies shall report to the DAS Chief Financial Office the actual results for the required annual ARPMs established under paragraphs 107 through 109, and 111 as applicable, of this OAM by October 1.

122. Annual recommended ARPM reports – Agencies may report to the DAS Chief Financial Office the actual results for the recommended annual ARPMs established under paragraphs 113 through 115, as applicable, of this OAM by October 1.

123. Agency ARPM target reports - Beginning July 1, 2018 the information reported to DAS shall include the agency ARPM targets for the upcoming reporting period.

Agencies are not required to report targets associated with recommended ARPMs if the ARPM will not be measured.

124. Agencies shall report data elements under paragraphs 120 through 123 of this OAM using OAM

form 75.35.12, or an alternative format approved by the DAS Chief Financial Office, and shall submit the report via email to [email protected].

mailto:[email protected]

OAM 35.70.10 1 of 3

Statewide Policy





Part: Interagency Receivables

Section: Billings and Payments


PURPOSE: This policy describes state agency responsibilities when issuing and paying invoices between agencies.


ORS 293.250 ORS 293.285 ORS 293.590





102. The management of receivables between agencies is an important part of an agency’s cash management process. Agencies must actively pursue the collection of all significant receivables owed to them where it is cost beneficial to do so. The goal of each state agency shall be the timely production and distribution of its billings and the timely payment of billings received from other agencies. There shall be a shared responsibility and cooperation by both agencies to assure that the providing agency bills for goods and services requested properly and promptly, and the receiving agency pays for the goods or services timely.

PROCEDURES:

Standards for Interagency Billings and Payments 103. Accounting procedures of the agency must provide for:

a. Billing for goods or services rendered or other receivables as quickly as possible

b. A written, structured collection process for receivables, including periodic assessment of collection effectiveness and the implementation of any needed changes based on those assessments

c. Documentation requirements for collection activities, including effective management of receivable collection and payment processing


OAM 35.70.10 2 of 3

d. Designation of a position or positions, either full-time or part-time, responsible for the collection of receivables

e. For payments processed to another state agency, a written payment process that exhibits good business practices through timely invoice review and payment authorization, followed by prompt payment action

104. All agencies that do not have receivables systems that meet the minimum standards above are

required to develop systems, either manual or automated, that will provide the needed controls. 105. A billing agency shall provide timely invoices on a periodic billing cycle. The billing agency shall

accumulate their charges up to a periodic cut-off point. The billing agency must send invoices within 15 days of a monthly-based billing cycle, and within 30 days for quarterly or annually based billing cycles.

106. A billing agency’s invoices shall be clear and informative. The billing agency’s invoice should conform as closely as practicable to the format suggested by OAM form 75.35.03.FO, Sample Interagency Invoice. The format identifies the following main components that should be integrated into an agency invoice to adequately convey the billing information:

a. A header section that identifies the names of the billing and receiving agencies, along with the key elements that define the transaction, including the invoice number, date, amount, and the customer number

b. A body section that contains any specialized contract or agreement numbers and the billing period that the invoice covers; If the detail is distributed over numerous pages, a summary of the information; Otherwise, the details may be supplied on the single page and followed by any special information about the billing, including terms or conditions.

c. The footer section should contain the SFMA billing information. Note that the billing information contains a recommended transaction code that the paying agency may use. For agencies or entities paying by warrant or check, the footer portion can be a tear-off that the paying agency returns with the payment to assure proper posting.

d. At the bottom of the footer section should be the name and phone number of a contact for the billing. The paying agency should direct any questions to this person.

107. Payers on SFMA must pay the billing with the appropriate transaction code. The billing agency

may supply a recommended transaction code on the invoice. Non-SFMS payers can return the bottom portion of the invoice to assure proper posting of the receivable by the billing agency.

Interagency Payment Timelines

108. A payer agency shall process the billing invoices applying business practices that assure effective and prompt review, authorization, and payment. Where the payer has no questions or concerns with the billing, the payer must make payment within 30 days of the billing date. Where there are billing disputes, the payer must make payment on the undisputed portion of the bill within 30 days of the billing date. Agencies that have trouble meeting the 30-day requirement need to institute a policy of paying the billing first with a post-payment review and correction process.

109. For the purposes of determining a delinquent billing, the “billing date” shall be the latter of: a. The date of the receipt of the invoice,

b. The date of the initial billing statement if no invoice is received, or


OAM 35.70.10 3 of 3

c. The date the claim is made certain by agreement of the parties or by operation of law.

Resolution of Interagency Issues

110. Agencies may use an interagency agreement to arrange for resolution of payment.

111. Agencies must present and resolve billing questions promptly so that the payer agency may make payment within 30 days. Where questions regarding the bill become disagreements, the payer agency must provide the billing agency a written notification (Invoice Inquiry) that explains the reason for the dispute. Agencies must use OAM form 75.35.04.FO, Interagency Invoice Inquiry, to notify other agencies of disputed amounts.

112. The billing agency needs to respond promptly to the written “Invoice Inquiry” in an attempt to clarify or resolve the payer agency’s concerns. Typically, this is less than 30 days.

113. Disputes or disagreements are those limited situations where the parties cannot reach agreement on the facts that created the billing and/or the dollar amount billed. Billings sent to the correct state agency, but mislabeled in some fashion as to the accurate division or program, do not constitute grounds for a dispute.

114. When interagency issues remain unresolved, refer to OAM 35.70.20 for potential progressive actions.



OAM 35.70.20 1 of 2

Statewide Policy





Part: Interagency Receivables

Section: Progressive Actions


PURPOSE: This policy provides guidance on progressive actions they may take to collect interagency receivables that have become delinquent.


ORS 293.250 ORS 293.285 ORS 293.590





102. The State’s policy is that state agencies will bill and pay interagency receivables promptly. For billings requiring payment by the 30th day, a billed account becomes delinquent on the 31st day, or the next business day.

PROCEDURES: 103. The following progressive actions are not mandatory, but if agencies choose to take them, they

should take them in the order suggested. State agencies need to select the progressive actions that best blend with their business practices for the type of receivables they collect. State agencies must then incorporate those selected actions into their own collection policies or procedures and make their written policies or procedures available to the agencies with which they do business.

104. Where a billing agency experiences delays in payments on properly billed receivables for interagency goods or services, the delinquent agency has failed to pay or make arrangement for payment, and in particular where the delinquent agency has a repeated history of delinquent payments, the following progressive actions are authorized. Progressive actions may include, but are not limited to:


OAM 35.70.20 2 of 2

a. Proper notification of the billing agency’s practice for applying payments: The billing agency shall provide either a copy of its policies or procedures for handling interagency payments or instructions on how to obtain them. Alternately, an agency may disclose a summary of the billing agency’s policies or procedures in the “terms” section of the invoice. See OAM 35.70.10 for more information.

b. Dunning letters and/or phone calls to the Chief Financial Officer of the

delinquent agency: The billing agency may initiate a dunning letter or a phone call to the Chief Financial Officer of the delinquent agency. The letter or message should indicate the magnitude of the delinquent amount and provide any additional information regarding the payment pattern or history of delinquent payments.

c. Dunning letters and/or phone calls to the Director of the delinquent agency:

For repeated delinquencies, the billing agency may notify the Director of the debtor agency. The notification should indicate the magnitude of the delinquent amount and provide any additional information regarding the payment pattern or history of delinquent payments. The notification should also describe the collection measures the billing agency has already taken, including the effectiveness or results of those previous measures. The purpose of this notification is to alert the agency Director of the situation.

d. A request for intervention by the Department of Administrative Services Chief

Financial Officer (DAS CFO): After providing the above notification, a billing agency may contact the DAS CFO. The billing agency’s Chief Financial Officer (or designee) shall briefly explain the situation in writing, by mail or e-mail, and request the assistance of the DAS CFO. The billing agency Chief Financial Officer (or designee) should send a copy of the request sent to the DAS CFO to both the Director and the Chief Financial Officer of the debtor agency.

