FOOD STAMP CERTIFICATION MANUAL SECTION: OVERPAYMENTS

15100 - 15300 SUBJECT: SUMMARY/WHEN AND HOW TO

DATE: 2-1-95 PREPARE OVERPAYMENT

15100Summary

County offices must initiate a claim against any household which has received food stamps to which it was not entitled. Such an occurrence is called an "Overissuance" or an "Overpayment". In this section of policy, the term "overpayment" will be used to refer to claims established against households.

This section of policy covers:

1.When and how to prepare an overpayment;

2.Submitting the overpayment to the Overpayment Unit; and

3.The Overpayment Unit's responsibilities, including collection of the amount owed.

In addition, the provisions under which an Overpayment will be collected through a state income tax interception are covered.

The State will initiate or pursue collections only of food stamp benefits paid as a result of improper issuance, or overissuance, and will not initiate or pursue collections of properly issued benefits, or collection of benefits in a manner contrary to federal law or regulation.

15200When to Prepare an Overpayment

The county office will prepare an overpayment claim on any household which received an overissuance of food stamps within the last 36 months. An overpayment must be prepared no matter how small the overissuance. If more than 36 months have elapsed between the month the overissuance occurred and the month of discovery, no overpayment claim will be prepared.

All adult household members will be jointly and severally liable for the value of any overissuance of food stamps to the household. County offices will establish an overpayment claim against:

a.any household that has received more food stamp benefits than it was entitled to receive; or

b.any household which contains an adult member who was an adult member of another household when that household received more food stamp benefits than it was entitled to receive.

See FSC 15531 for additional instructions.

15300Timely Submission of an Overpayment

An overpayment claim must be submitted to the Overpayment Unit within 60 days of the date of discovery.

FOOD STAMP CERTIFICATION MANUAL SECTION: OVERPAYMENTS

15400 - 15400 SUBJECT: PREPARING THE OVERPAYMENT

DATE: 5-1-95

15400Preparing the Overpayment

The following actions will be completed to determine the total amount of the overpayment:

Step 1 - Determine the Initial Month of Overissuance

The initial month of overissuance is the first month in the overpayment period:

If the overissuance resulted from the household giving incorrect or incomplete information at the time of application (initial or recertification), the initial month of overissuance is the first month of the certification period assigned at application approval.

Example - A household submitted an application on September 12. The husband's earnings were reported on the application but the wife's earnings were not reported. The application was approved on October 21 based only on the husband's earnings. Retroactive prorated benefits were authorized for September. At the time of the wage match for the quarter ending September, it was discovered that the wife was employed at the time the application was submitted and had been working for several months. The initial month of overissuance will be September.

For Occasional Reporters, as defined in FSC 11350, if the household fails to timely report one of the changes specified in FSC 11200, the initial month of overissuance will be established by determining the effective date of the change and adding 20 days. For example, if the effective date of change is established as June 6th, the caseworker will begin with June 7th and count 20 days. The 20th day falls before the end of June (June 26th) so the initial month of overissuance is July. (No overpayment will be prepared if the overissuance resulted from a change other than those listed in FSC 11200.) If there is more than one unreported change during the overpayment period, the effective date of each change will be established in the same manner.

FOOD STAMP CERTIFICATION MANUAL SECTION: OVERPAYMENTS

15400 - 15400 SUBJECT: PREPARING THE OVERPAYMENT

DATE: 5-1-95

The effective date of the change is defined as the day upon which an identifiable change actually occurred. Some examples of the effective day of change are given below.

SITUATION EFFECTIVE DATE

. Went to work First day of employment.

. Change in household composition Date member actually entered or

left household.

. Received entitlement check Date first check issued to

household as verified by issuing

agency.

. Received unemployment Date first check issued to

household as verified by WESD

screen.

Example - A household failed to report that the wife went to work in September until the household's recertification interview in December. The caseworker established that the wife's first day of employment was September 11. The 20th day is October 1. The initial month of overissuance will be November.

Quarterly reporting households, as defined in FSC 11340, are only required to report changes on the quarterly report form. The initial month of the overissuance will be the first month following the submission of the quarterly report on which the changed should have been reported.

Step 2 - Exclude Any Months More Than 36 Months Prior to the Month in Which the Overissuance was Discovered

Step 3 - Determine the Household's Correct Allotment for Each Month of the Overpayment Period

The household's correct allotment will be calculated prospectively using the household's income, resources, expenses, household composition, etc. for the same month. See FSC 7000 for instructions on prospective budgeting procedures.

Use the household's actual verified income if possible.

If verification of actual monthly income is not available, the best source of available verification may be used to prepare the overpayment. For example, the quarterly wages appearing on the Wage Match may be used to prepare an overpayment if the individual's employment is verified, but verification of actual monthly wages cannot be obtained.

FOOD STAMP CERTIFICATION MANUAL SECTION: OVERPAYMENTS

15400 - 15400 SUBJECT: PREPARING THE OVERPAYMENT

DATE: 3-15-88

Documentation of all verification obtained must appear in the case record. If actual monthly income cannot be established, documentation of all attempts to obtain verification of the actual monthly income must appear.

Use the standards (e.g. - utility standard, standard deduction, earned income deduction) and issuance charts in effect during the overpayment period. If a change in a standard occurs during the overpayment period, the overpayment budgets must reflect this change. The tapes or forms upon which the overpayment budgets were prepared must be clearly labeled and must remain in the case record as documentation.

Step 4 - If Necessary, Complete a Second Series of Budgets in Which the Earned Income Deduction is Not Allowed

The earned income deduction will not be allowed for any portion of earned income which a household intentionally failed to report. However before this penalty is applied, the household's failure to report must be classified as an intentional program violation (IPV). An overpayment is classified as an IPV only through a court of law or an administrative disqualification hearing. (See FSC 16600.) Therefore, since this determination will not be made until after the overpayment has been submitted, two budgets will be prepared when the household fails to report earned income.

Specifically, two budgets will be prepared when:

a)It is determined that a household has failed to report all or part of its earned income; and

b)The household's failure to report all or part of its earned income has resulted in a overissuance of food stamps to the household; and

c)The overpayment is not classified as an inadverted household error or an administrative error. (See FSC 15410.)

The budgets will be prepared in the same manner as any other budget except that the earned income deduction will not be allowed for that portion of the earned income which the household failed to report. For example, if a household had reported the husband's income but failed to report the wife's income, the earned income deduction will be allowed for the husband's earnings but not for the wife's. The Overpayment Unit will make any necessary adjustments if the overpayment is classified as an IPV.

The earned income disallowance will only be effective for any months in the overpayment period during which the county was not aware of the earnings. For example, a county becomes aware of a household's earned income in July but does not adjust the case to include the earnings until December. The earned income disallowance will cease in July. The earned income deduction will be allowed when the overpayment budgets for the months August through December are prepared.

FOOD STAMP CERTIFICATION MANUAL SECTION: OVERPAYMENTS

15400 - 15402 SUBJECT: PREPARING THE OVERPAYMENT

DATE: 12-1-88

Step 5 - Complete an DCO-216 (Report of Food Coupon Overissuance)

Calculate the total overpayment as instructed on the EMS-216.

NOTE:If the household should become entitled to restored benefits while the overpayment is being prepared, the amount to be restored will offset. See FSC 13320 for instructions.

Step 6 - Enter the Overpayment in the Overpayment Record in the County Office

Any record must contain the following information.

.Name

.Case Number

.Date overpayment was discovered

.Month, day and year overpayment started

.Date referred to the Overpayment Unit

.Suspected claim type

Other information may be added if desired by the county office. Records may be manual or maintained on a personal computer (PC) based system.

15401Preparing Overpayments for Households Participating In Workfare/Work Experience

When an overpayment occurs on a case in which a member participated in workfare during the overpayment period, the worker must determine if the household is entitled to an offset on the overpayment.

15402Households Who Remain Workfare/Work Experience Eligible

If a household has been overissued benefits while participating in Work or in the work experience component and remains eligible for participation in workfare, the caseworker must take the following steps.

1)Establish a claim for the entire amount of overissuance.

2)Give credit to the household for all extra hours of work performed during month of overissuance. Apply these hours to future work obligations.

FOOD STAMP CERTIFICATION MANUAL SECTION: OVERPAYMENTS

15402 - 15403 SUBJECT: PREPARING THE OVERPAYMENT/

DATE: 12-1-88 TYPE OF OVERPAYMENT

3)To determine the number of hours a participant has actually worked, the caseworker should contact the workfare sponsor.

4)Notify the workfare sponsor via DCO-209 of clients entitlement.

5)Complete the DCO-216 and DCO-217 as instructed in FSC 15400.

15403Households Who Do Not Remain Workfare/Work Experience Eligible

If a household has been overissued benefits while a member was participating in Workfare, a different procedure will be used. This procedure is outlined below.

Step 1Determine the household's correct allotment for each month of the overpayment period. Use FSC 15400. Enter the corrected allotment on the DCO-216 in column 2 a.

Step 2Determine the household's correct obligation by dividing the household's correct allotment by $4.25 (minimum wage). For workfare households, see FSC 3820 for the maximum obligation.

FOOD STAMP CERTIFICATION MANUAL SECTION: OVERPAYMENTS

15403 - 15404 SUBJECT: CATEGORICALLY ELIGIBLE

DATE: 5-1-93 HOUSEHOLDS

Step 3Determine the number of hours actually participated. Either the Workfare Sponsor or the WORK Program worker must furnish this information.

Step 4If additional hours were worked due to the overissuance, subtract the household's correct obligation from the number of hours the household actually worked. The result will be the extra hours worked.

Step 5Determine the offset amount by multiplying the extra hours worked by $3.35 (minimum wage). Enter the offset amount in Line 2 b, "Offset."

Example:A household was issued $150 in benefits for the month of September. Hours of obligation were 44. They should have been issued $100.00. Hours of obligation would have been 29. At the time of discovery, the household had completed 35 hours. Six of the completed hours were worked due to the overpayment. The amount of the overpayment is $30.00 ($50 - (6 X 3.35). If the household had completed all 44 hours, no overpayment exist.

The status of the case as "non-fraud" or as "non-fraud-pending fraud determination" will be determined using the EMS-217. When cases are referred in a non-fraud status, the offset will be allowed when the total overpayment amount is entered. When the case is referred in a pending-fraud determination status, the offset must appear on the form but will not be reflected in the overpayment. The offset amount will be used by the Overpayments Unit to adjust the Overpayment if the household is found not to have committed an intentional program violation (fraud) through a court of law or an administrative disqualification hearing.

15404Preparing Overpayments For Categorically Eligible Households

Categorical eligibility cannot be rescinded retroactively.

As long as everyone in the household received AFDC or SSI during a given time, the household would be considered to be properly eligible for food stamps even if its AFDC or SSI eligibility was subsequently determined improper.

No overpayment will be prepared when excess household resources caused the household to be subsequently found ineligible for AFDC or SSI benefits. However, an overpayment will be prepared if the AFDC or SSI eligibility was improper due to unreported income or changes in household size and an overissuance of food stamp benefits occurred.

FOOD STAMP CERTIFICATION MANUAL SECTION: OVERPAYMENTS

15404 - 15404 SUBJECT: CATEGORICALLY ELIGIBLE

DATE: 5-1-93 HOUSEHOLDS

For example, a food stamp household is made up of an AFDC recipient and her children, all of whom are included in the AFDC grant. She goes to work but does not report this income. To determine the food stamp overpayment, the worker will include both the AFDC grant received by the household and the unreported earned income.

In some cases, the additional income will result in a zero allotment. Even though the household would still have been categorically eligible, it would have been entitled to zero benefits. In these instances, the overpayment will be equal to the entire allotment issued to the household. (NOTE: In the case of one and two person households, the minimum benefit rules will apply. See FSC 8630.)

When a household's AFDC or SSI ineligibility is related to the discovery of an unreported household member who was not either an AFDC or SSI recipient, an overpayment may be prepared if an overissuance has occurred as a result. The overissuance amount will be the difference between the allotment the household received and the allotment the household should have received as an NA household had the additional household member been properly reported and included in the food stamp budget.

Overpayments will also occur when an otherwise ineligible household loses its categorical eligibility due to changes in income or household size but continues to participate in the program.

Overpayments prepared for categorically eligible households will be classified as an administrative error, inadvertent household error or IPV according to the guidelines which appear in FSC 15410.

FOOD STAMP CERTIFICATION MANUAL SECTION: OVERPAYMENTS

15410 - 15410 SUBJECT: TYPE OF OVERPAYMENT

DATE: 10-1-86

15410Type of Overpayment

In Section III of the SS-216, the overpayment claim referral type must be entered. The three types of overpayment claim referrals are:

1.Inadvertent household error;

2.Administrative error; or

3.Intentional program violation.

A definition of each type of claim follows:

Inadvertent Household Error - An overpayment caused by a misunder- standing or an error on the part of the household. An inadvertent household error which results in an overpayment includes, but is not limited to, the following:

1.The household unintentionally failed to provide the county office with correct information;

2.The household unintentionally failed to report to the county office changes in household circumstances; or

3.The household unintentionally received an overissuance of food stamps, because it requested a continuation of benefits pending a fair hearing decision.

Administrative Error - An overpayment caused by the agency or by the agency's failure to take action. An administrative error results in an overpayment when:

1.The county office failed to take timely action on a change reported by the household;

2.The agency incorrectly computed the household income or deductions, or otherwise assigned an incorrect allotment;

3.A household received food stamps to which it was not entitled due to a worker or system error;

4.The household continued to receive a food stamp allotment after its certification period had expired without a reapplication determination; or

5.The county office failed to reduce a household's food stamp allotment after its AFDC grant increased.

FOOD STAMP CERTIFICATION MANUAL SECTION: OVERPAYMENTS

15410 - 15410 SUBJECT: TYPE OF OVERPAYMENT/

DATE: 4-1-90 SUBMISSION OF OVERPAYMENT

An overpayment will not be prepared when the county office failed to insure that the household:

a.Signed the application form;

b.Completed a current work registration form; or

c.Was certified in the correct county office. (This does not apply to dual participation.)

In these cases no overpayment will be prepared even though an error has occurred.

Intentional Program Violation (IPV) - An overpayment caused by an individual household member when the member intentionally:

.Made false or misleading statements (for example, the household falsified statements on the application);

.Misrepresented, concealed or withheld facts (for example, the household did not report a change in a timely manner although the household was aware of the reporting requirements); or

.Violated the Food Stamp Act, the Food Stamp Regulations, or State Statutes relating to the Food Stamp Program. (See FSC 16700 for a full explanation of an Intentional Program Violation.)

An IPV must be determined through one of the following procedures:

1.An Administrative Disqualification Hearing;

2.A Court of Law with appropriate jurisdiction;

3.The accused member signing a waiver of the Disqualification Hearing (EMS-257); or

4.The accused member signing a consent agreement with the prosecuting attorney.

Until one of the above actions occurs, suspected IPVs will be handled as inadvertent household errors. A suspected intentional program violation claim will be identified by checking the block, "Non-fraud Pending Fraud Determination" on the EMS-216.

NOTE:If a household is determined to have committed an IPV due to its failure to have reported earned income, no earned income deduction will be allowed when the overpayment amount is calculated. See FSC 15400 for instructions.

FOOD STAMP CERTIFICATION MANUAL SECTION: OVERPAYMENTS

15420 - 15500 SUBJECT: OVERPAYMENT UNIT

DATE: 4-1-90 RESPONSIBILITIES

15420Completion of the EMS-217

The EMS-217, Summary of Circumstances and/or Fraud, will be completed on each overpayment. On the EMS-217, the caseworker must briefly explain why fraud is suspected or why it is not suspected. All pertinent dates and/or supporting information will be included in the explanation.

15430Review and Submission of the Overpayment

The EMS-216 and EMS-217 will be reviewed by the food stamp supervisor, or the Economic and Medical supervisor or designee for accuracy. If the overpayment is valid, the supervisor or designee will sign the EMS-216 and forward both the EMS-216 and EMS-217 to the Overpayment Unit. An EMS-1700 must also be completed and forwarded with the EMS-216 and EMS-217 when the claim is submitted as a "Non-fraud Pending Fraud Determination".

If an intentional program violation is suspected by the county office, but no claim can be established, only the EMS-1700 will be submitted to the Overpayment Unit. If the Fraud Unit does not find sufficient evidence to prosecute but does find that an overpayment exists, the information will be sent to the county for use in completing the EMS-216 and EMS-217.

The county will complete and submit an EMS-201 if the overpayment is used to offset restored benefits owed to the household. Copies of the EMS-216, EMS-217 and (if applicable) the EMS-1700 and/or EMS-201 will be retained and filed in the Overpayment Section of the case record. The Overpayment Section of the EMS-275, Face Sheet, will be completed.

All claim documents must be retained for six years or until the claim is paid in full, whichever occurs earlier.

15500Overpayment Unit Responsibilities

The Overpayment Unit will maintain a record showing the circumstances which resulted in each overpayment, the procedures and methods used to calculate the overpayment, and any circumstances which resulted in suspension or termination of collection action. The Overpayment Unit will also monitor claim payments and identify situations in which an amount not yet restored to a household can be used to offset an overpayment owed by the household. The Overpayment Unit will identify households that have failed to make installment payments on their overpayment.

FOOD STAMP CERTIFICATION MANUAL SECTION: OVERPAYMENTS

15510 - 15520 SUBJECT: COLLECTIONS

DATE: 10-1-86

15510Accounting Section Responsibilities

The Accounting Section is responsible for receiving, processing and recording of all payments and the maintenance of the computer file. At the end of each month the Overpayment Unit will receive a printout of all transactions occurring during that month. The Accounting Section will document and maintain records on the amount of money (and coupons) collected in payment of an overpayment and how much was submitted to FNS.

15520Initial Actions

Upon receipt, the Overpayment Unit will check the SS-216 and SS-217 for accuracy and sign the SS-217 in the designated area.

The Overpayment Unit will then determine if the overpayment should be suspended. Suspension will occur immediately when:

.The total amount of the overpayment is less than $35.00 and recoupment cannot be initiated; or

.The county office has provided documentation showing the household cannot be located.

If the Overpayment Unit determines an overpayment will not be suspended, it will take the following steps:

1.Prepare and forward an SS-11 to the Accounting Section; and

2.Send a Demand Letter and Repayment Agreement to the household (copy to the county office) unless the prosecution is pending on the claim. See FSC 15620 for actions taken on claims where prosecution is pending.

An overpayment can be suspended after one demand letter if:

A.The household cannot be located; or

B.The cost of further collection action is likely to exceed the amount that can be recovered.

A suspended overpayment will be held in a suspended status for three years and used to offset any future restored benefits. The county office will be responsible for offsetting the overpayment and notifying the Overpayment Unit of the action via SS-201. Prior to offsetting an overpayment the county office will refer to the Overpayment Printout or available screens to determine the balance of the overpayment. (The available screens are described in Appendix H, Food Stamp and Related Screens.) The Overpayment Unit will be responsible for notifying the Accounting Section of the offset.

FOOD STAMP CERTIFICATION MANUAL SECTION: OVERPAYMENTS

15530 - 15532 SUBJECT: COLLECTIONS

DATE: 1-1-87

15530Collections

The Overpayment Unit is responsible for the collection of the overpayment. Overpayments may be repaid in one of three manners:

1.Cash payment;

2.Payment with food stamps; or

3.Recoupment (reduction of the household's food stamp allotment prior to issuance).

15531Initiating Collection

The Overpayment Unit will initiate collection against any or all individuals who were adult members of a household at the time an overissuance occurred. Therefore, if a change in membership occurs, the Overpayment Unit may pursue collection action against any household which has a member who was an adult member of the household that received the overissuance. The county office may offset restored benefits by the amount of the overpayment when restored benefits are owed to any household containing a member who was an adult member of the household that received the overissuance. See FSC 13320 for instructions on offsetting claims. Under no circumstances may the Overpayment Unit collect more than the amount of the claim.

The county office must send a copy of the EMS-233T to the Overpayment Unit when the head of household changes on a case with an overpayment.

15532Renegotiation of the Payment Schedule

Once a payment schedule has been negotiated, changes in the household food stamp allotment will not affect the payment schedule. The payment schedule may only be changed through renegotiation. Either the household or the Overpayment Unit may initiate such renegotiation.

The Overpayment Unit may initiate renegotiation if it believes that the household's economic circumstances have changed enough to warrant such action. Households which pay less than the scheduled payment or miss a payment will be allowed to make the overdue payment and continue payments based upon the original schedule if the household does not wish to renegotiate. The Overpayment Unit may refuse renegotiation initiated by the household when it appears that the household's economic circumstances have not changed enough to warrant the requested change in payment. When a settlement cannot be reached in renegotiation procedures, the Overpayment Unit will begin recoupment on active cases involving inadvertent household errors or intentional program violations. In other cases, the old payment schedule will continue to be effective until a new schedule is determined.

FOOD STAMP CERTIFICATION MANUAL SECTION: OVERPAYMENTS

15533 - 15600 SUBJECT: COLLECTIONS/HANDLING IPV

DATE: 10-1-86 OVERPAYMENTS

15533Households Who Fail to Cooperate with the Overpayment Unit

If a household fails to complete and return the Repayment Agreement, or agrees to pay and does not, or pays for a time and then stops, the Overpayment Unit will take the following actions:

1.For inadvertent household error claims, recoupment will be initiated if the case is open. If the case is closed, the Overpayment Unit will determine the appropriate action and pursue it accordingly.

2.For administrative error claims, determine whether: a) more demand letters should be sent; b) the claim should be suspended; or c) the claim should be referred to the Office of General Counsel for civil collection. The Overpayment Unit will document justification for whichever action is chosen.

15534Terminating Collection Action

An overpayment will be determined uncollectible and classified as a terminated claim after it is held in suspense for three years. Terminated claims will be held an additional 3 years before destruction and will be used to offset restored benefits. The procedure will be the same as for suspended claims.

The Overpayment Unit will advise the appropriate county office and the Accounting Section in writing of termination action on an overpayment.

NOTE:There is no essential difference between the way suspended and terminated claims are handled. However, it is important that classifications be correct so that disposal of overpayments will be correctly accomplished.

15600Special Procedures for Handling Suspected Intentional Program

Violation Overpayments

Until an IPV has been determined through one of the procedures specified in FSC 16700, the overpayment will be handled as an inadvertent household error. If an administrative disqualification hearing is declined by the Fair Hearing Section or if the individual is found innocent of the charge through the hearing, the overpayment is handled as an inadvertent household error. This is also true if a court of law finds the individual innocent of an IPV.

FOOD STAMP CERTIFICATION MANUAL SECTION: OVERPAYMENTS

15610 - 15620 SUBJECT: IPV OVERPAYMENTS HANDLING

DATE: 12-1-87

15610Initial Actions - The Overpayment Unit

When the Overpayment Unit receives the EMS-216, EMS-217 and EMS-1700, the case will be logged, batched and forwarded to the Fraud Unit. The Overpayment Unit will track all cases referred to the Fraud Unit and take appropriate action based upon the Fraud Unit's decision to accept or to decline prosecution.

15620Initial Actions - The Fraud Unit

The Fraud Unit will analyze the information received from the Overpayment Unit, make any necessary investigation, and determine whether the case is to be referred for prosecution. Cases which are not referred for prosecution will be returned to the Overpayments Unit. The Overpayment Unit will be provided with a list of the cases referred for prosecution.

The cases referred for prosecution are handled as specified below:

1.Recommended for Prosecution

When the Fraud Unit recommends a case for prosecution, the overpayment will remain with the Fraud Unit. A memorandum will be sent to the Overpayment Unit (Copy to the County) indicating the action being taken on the case. No further action will be taken by the Overpayment Unit until final disposition of the case. Upon completion of prosecution, the overpayment will be returned to the Overpayment Unit with a memorandum (copy to the county) indicating the decision of the court. If the court determines that an intentional program violation (IPV) has occurred, the overpayment will be adjusted to reflect the budget on the EMS-216 where the earned income deduction was disallowed as explained in FSC 15400.

2.Declined Prosecution

If the Fraud Unit recommends a case for prosecution but the Prosecuting Attorney declines prosecution, or if the Fraud Unit determines that the waiting time for a court hearing is prohibitive, the overpayment will be returned to the Overpayment Unit. Upon receipt of a case upon which prosecution was declined, the Overpayment Unit will review the overpayment to determine if there is sufficient evidence to request a Disqualification Hearing. If so, the case will be sent to Fair Hearings for an Administrative Disqualification Hearing within thirty (30) days of the date the case is returned to the Overpayment Unit.

FOOD STAMP CERTIFICATION MANUAL SECTION: OVERPAYMENTS

15630 - 15700 SUBJECT: COLLECTION ACTION ON IPV/

DATE: 12-1-87 RECOUPMENT

15630Collection Action on Intentional Program Violation Cases

The Fraud Unit will be responsible for collection action on court adjudicated cases.

Overpayments to be established as intentional program violations (IPV) by an Administrative Disqualification Hearing or by the signing of a Waiver of the Administrative Disqualification Hearing will be returned to the Overpayment Unit. The Overpayment Unit will prepare an SS-11 notifying the Accounting Section that the claim has been changed to IPV status. When the IPV has been established through an Administrative Disqualification Hearing, the overpayment will be adjusted to reflect the budget on the EMS-216 where the earned income deduction was disallowed as explained in FSC 15400. The household will be advised of the decision and informed of their responsibility to repay the full amount of the debt.

The Overpayment Unit will monitor repayment of the claim until it is paid in full, suspended, or the payments cease. If the household fails to repay the amount due, the Overpayment Unit will identify the claim as a delinquent account and take action to recover the full amount due.

15640Suspension of Intentional Program Violation Claims

The Overpayment Unit will determine if suspension of an intentional program violation claim is appropriate. A claim may be suspended if one of the following conditions are met.

1.The household cannot be located.

2.The Overpayment Unit determined that civil action will not be pursued and has sent demand letters as provided below:

.One demand letter for claims under $100;

.Two demand letters for claims between $100 and $400; and

.Three demand letters for claims of more than $400.

3.The household is not participating in the Program and the cost of further collection is likely to exceed the amount that can be recovered.

15700Recoupment (Allotment Reduction)

The household's food stamp allotment may be reduced prior to issuance to recover an overpayment on an active case. This is called recoupment.

Payments on administrative error overpayments may be collected through recoupment only if the household prefers to use this method of payment. IPV and inadvertent household error overpayments will be recouped unless a payment schedule has been negotiated with the household or the overpayment has been repaid with a lump sum payment. Recoupment may be initiated on inadvertent household errors when a payment schedule has been negotiated if the household fails to make payments or pays less than the scheduled amount.

FOOD STAMP CERTIFICATION MANUAL SECTION: OVERPAYMENTS

15700 - 15810 SUBJECT: RECOUPMENT/FOOD STAMPS IN

DATE: 9-1-92 PAYMENT OF OVERPAYMENTS

On claims established as an inadvertent household error, households will be allowed 10 days by the Overpayment Unit to select an alternative means of paying the claim before recoupment is imposed. On claims established as an intentional program violation, households must select an alternative means of paying the claim on the date of the demand by the Overpayment Unit for repayment of the claim or recoupment will be imposed by the Overpayment Unit.

The Overpayment Unit initiates recoupment by completing and submitting an SS-11 to the Accounting Unit. The amount to be recouped will be computed through one of the following formulas:

.For IPV claims, the recouped amount is twenty percent (20%) of the household's monthly allotment or ten dollars ($10.00) whichever is greater;

.For inadvertent household error claims, the recouped amount is ten percent (10%) or ten dollars, whichever is greater; and

.For administrative error claims, the recouped amount is any amount the household requests and authorizes, but not less than two dollars ($2.00).

One and two person households may not receive the minimum allotment of $10 specified in FSC 8630 after recoupment is initiated.

15800Accepting Payment on an Overpayment

Cash, money orders or cashiers checks may be accepted as partial or full payment of an overpayment. All cash payments must be properly documented and receipted via the EMS-273, "Receipt For Food Coupons and/or Money Received." Counties should take any other actions necessary to account for and safeguard cash received in payment for an overpayment. Division of Finance (DOF) will accept food stamps as partial or full payment of an overpayment if the household wishes to use this method of repayment.

Before accepting food stamps as a payment on an overpayment, the county office must verify that an overpayment exists. The overpayment may be one that has previously been submitted to the Overpayments Unit (an established overpayment) or one that exits but has not been submitted (a new overpayment). Each type of transaction is handled differently.

15810Established Overpayments

When the EMS-216 and EMS-217 have been submitted to the Overpayment Unit, an established overpayment exists. When accepting food stamps as payment on an established overpayment, complete the following actions:

FOOD STAMP CERTIFICATION MANUAL SECTION: OVERPAYMENTS

15810 - 15830 SUBJECT: FOOD STAMPS IN PAYMENT OF

DATE: 4-1-92 OVERPAYMENTS

1.Void all loose food stamps or partial books or signed books accepted as repayment;

2.Prepare an EMS-273 (Receipt for Food Coupons and/or Money);

3.Give a copy of the EMS-273 to the household;

4.Mail the food stamps and the original EMS-273 by certified mail, return receipt requested, to Food Stamp Accounting, P. O. Box 1437, Little Rock, Arkansas 72203; and

5.File a copy of the EMS-273 in the "Overpayments" section of the case record.

NOTE:To void food stamps, each food stamp coupon must be clearly marked or stamped with the word "VOID".

15820New Overpayments

If the EMS-216 and EMS-217 have not been submitted to the Overpayment Unit but an overpayment exists, the overpayment is considered a "new overpayment". When accepting food stamps as payment on a new overpayment, complete the following actions:

1.Void all loose food stamps or partial books or signed books accepted as repayment;

2.Prepare an EMS-273;

3.Give a copy of the EMS-273 to the household;

4.Mail the food stamps, the original EMS-273, the EMS-216, the EMS-217, and the EMS-1700 (if applicable) by certified mail, return receipt requested, to Food Stamp Accounting at the address given above; and

5.File copies of all documents in the "Overpayments" section of the case record.

In no instance will food stamps intended for payment on an overpayment be mailed to the Overpayment Unit or Food Stamp Accounting in advance of the required forms. If the required forms cannot be prepared immediately, void all food stamps (including full books) and hold them in a secure place in the county office until the EMS-216 and EMS-217 are ready for submission. (The EMS-273 must be completed at the time the household returns the food stamps to the county office.)

15830Preventing an Overpayment

If a household receives a food stamp allotment to which it is not entitled, an overpayment can be prevented by returning the full allotment, intact and unaltered to the county office during the month the allotment was issued.

FOOD STAMP CERTIFICATION MANUAL SECTION: OVERPAYMENTS

15830 - 15910 SUBJECT: STATE INCOME TAX REFUND

DATE: 4-1-92 INTERCEPTION

If an allotment has been altered, an EMS-216 and EMS-217 must be completed and submitted to Food Stamp Accounting with the allotment. All loose coupons, altered books or incomplete books in the allotment must be voided.

Altered allotments received by Food Stamp Accounting without an accompanying EMS-216 and EMS-217 will be voided and returned to the county office. The county office will complete the required forms and return the allotment to Food Stamp Accounting.

For procedures used when food stamps are returned to the county office for reasons other than to repay or avoid an overpayment. See FSC 14420. The use of the FNS-135 is explained in this section of policy.

15900State Income Tax Refund Interception

Act 372 of 1983 as amended (Ark. Stats. Ann. S 84-4901 thru 84-4918) and Act 987 of 1985 authorizes the collection of food stamp overpayments through the interception of State Income Tax Refunds.

The Division of Finance will submit a list of households with an overpayment debt to the Data Processing Section. This will be certified by the Overpayments Unit of the Division of Finance. Data Processing will combine the list by social security number with a list prepared by Child Support Enforcement, Central Office, of delinquent obligores of past due child support.

Act 987 requires prenotification of households who owe a debt to the state before this information is furnished to the Revenue Division of the Department of Finance and Administration. A computer generated notice (SS-XA) of DHS' intention to intercept refunds will be mailed prior to December 1 of each year on cases that have overpayment debts listed.

The taxpayer has 30 days from the date the notice was mailed to file a written request for a hearing. If no hearing is requested within 30 days, the refund will be intercepted and mailed to the office of Financial Management to be allocated within the Department of Human Services in order of priority.

15910Cases Eligible for Interception

In order for a case to be submitted for State Tax Refund Intercept, the following conditions must be met.

.The amount owed the State must be approved by the Overpayment Unit.

.The taxpayer must have been notified of the overpayment in at least one demand letter.

FOOD STAMP CERTIFICATION MANUAL SECTION: OVERPAYMENTS

15910 - 15920 SUBJECT: ALLOCATION OF INTERCEPTED

DATE: 10-1-86 TAX REFUNDS

.The overpayment must be at least $20.00.

If the State Tax Refund due a taxpayer is less than $20.00, the Revenue Department will not intercept the refund.

15920Allocation of State Tax Refund

A State Tax Refund intercepted to apply against debts to the State is normally allocated as follows:

.Current Court Ordered Fraud Conviction Overpayment Claims have first priority. Any balance remaining will be applied to any CSEU Arrearage and then to any other Overpayment Claims.

.A CSEU Claim (for AFDC cases only) has first priority against the refund when there is not a current fraud conviction claim with arrearages. Any balance remaining after the CSEU claim has been met will apply to food stamps, AFDC, and/or Medicaid overpayments.

.When only one overpayment claim exists, the refund will be applied against that claim. Should the refund be larger than the claim, the balance will be returned to the taxpayer by the Revenue Department.

.When more than one claim exists with the Food Stamp, AFDC, and Medicaid Program, the refund will be applied against the oldest claim first until the entire amount is used or all claims are paid. Any balance after these claims are satisfied will be allocated to other DHS claims or will be returned to the taxpayer.

FOOD STAMP CERTIFICATION MANUAL SECTION: OVERPAYMENTS

15930 - 15940 SUBJECT: FEDERAL TAX INTERCEPT

DATE: 9-1-92

15930FEDERAL TAX INTERCEPT

The Deficit Reduction Act as amended by the Family Support Act of 1988 authorizes the Internal Revenue Service to operate the Federal Income Tax Intercept Program (including earned income tax credits due). Section 17(b) of the Food Stamp Act authorizes the Secretary of Agriculture to test programs that might increase the efficiency of the Food Stamp Program.

The Arkansas Department of Human Services signed a letter of agreement with USDA-Food and Nutrition Service to participate in a Pilot Project to offset Federal Income Tax Refunds against food stamp overpayment debts held by the Department.

The Overpayment Unit, Division of Finance of the Department of Human Services has the responsibility for certifying claims to Food and Nutrition Service for the purpose of intercepting federal income tax refunds to repay food stamp overpayments.

15940Debts Referred for Offset

Food stamp overpayments submitted for offset must be past due and legally enforceable. A claim is determined to be past due and legally enforceable after establishment of the claim and making reasonable efforts to collect the claim as required in Sections 15100-15800 of the Food Stamp Certification Manual and must additionally meet the following criteria:

(1)limited to inadvertent household error and intentional program violation claims;

(2)the claim must amount to at least $25 (may be a cumulative amount);

(3)the claim must be delinquent for no longer than 10 years and no less than 3 months unless a debt has been reduced to a final judgement entered by a court ordering the debtor to pay the debt--such debts are not subject to the 10 year limit. A debt is considered delinquent when the debtor fails to pay the full monthly amount due in a given month. All payments made to a delinquent account are considered as "payments on a delinquent account". A delinquent account may be brought to a "current" status if the debtor pays the full amount at any given time. The account will remain current as long as the debtor makes the monthly payment amount due each month.

Food stamp debts processed for Federal Income Tax Offset will be delinquent if the arrearages due equals or exceeds an amount equal to three monthly payments. A debtor may bring a delinquent debt to current status any time prior to such debt being certified to the Internal Revenue

FOOD STAMP CERTIFICATION MANUAL SECTION: OVERPAYMENTS

15940 - 15950 SUBJECT: FEDERAL TAX INTERCEPT

DATE: 9-1-92

Service. If the debt remains current, it will not be submitted for Offset. Once a debt has been certified to the Internal Revenue Service as delinquent, the debtor will no longer be able to avoid or reverse such action by bringing the debt to a current status. The certification for offset will be cancelled if the account is paid in full.

(4)each claim must be submitted in the name of only one individual or must be reduced by any amount submitted as a separate claim for other individuals who are jointly and severally liable for the claim;

(5)the claim must not be involved in a bankruptcy stay or discharged in bankruptcy;

(6)individuals must be notified of the intended action prior to intercept and their appeal rights.

1595060 Day Advance Notice

The Overpayment Unit will notify the debtor of its intent to refer a claim for intercept and give the debtor 60 days to appeal the intended intercept by presenting evidence that all or part of the claim is not past due or legally enforceable.

The 60 day notice must contain the following information:

(1)the amount of the claim;

(2)that the debtor has previously been notified of the claim and prior collection efforts have been made;

(3)that the debt is past due and legally enforceable;

(4)the debtor's social security number;

(5)that the claim is to be referred for intercept unless the claim is paid within 60 days of the date of the letter or makes other repayment arrangements acceptable to the Overpayment Unit;

(6)must contain instructions about how to pay the claim, and the name, address, and telephone number of an individual in the Overpayment Unit who can discuss the claim and the intended intercept with the individual.

(7)must contain the specifics of the appeal rights as described in the following section.

FOOD STAMP CERTIFICATION MANUAL SECTION: OVERPAYMENTS

15960 - 15970 SUBJECT: FEDERAL TAX INTERCEPT

DATE: 3-1-94

15960Appeal Rights

As one of the conditions for referring a claim for offset, any evidence presented by a debtor making a timely appeal must be considered and a determination made as to whether the debt is past due and legally enforceable.

In order to appeal the debtor must provide evidence or documentation to the Overpayment Unit who will refer the appeal to the Appeals and Hearings office that the claim is not past due or is not legally enforceable within 60 days of the date of the 60 day notice. An appeal is not considered received until the individual provides such evidence or documentation. The debtor's social security number must be included with the appeal. A claim will not be submitted for intercept if a timely appeal has been filed and is pending.

The debtor must be notified in writing of its decision after the Appeals and Hearings office has reviewed the submitted evidence and documentation as to whether or not the debt is past due and legally enforceable.

If the determination is made that the claims meet the requirements of intercept, the debtor must be notified that the Overpayment Unit intends to refer the claim for intercept. The debtor must be advised that he is entitled to appeal that decision to Food and Nutrition Service within 30 days of receipt of the decision by the Overpayment Unit. The notice must contain the address of Food and Nutrition Service and the debtor is advised to include his social security number on the appeal.

If the determination is made that the claim is not appropriate for intercept, the debtor must be notified in writing and any appropriate corrective action taken under food stamp claim rules.

15970Appeals of State Agency Reviews

When Food and Nutrition Service receives a timely appeal, the FNS Regional Office in Dallas, Texas, will take one of two actions prior to the date the Overpayment Unit is required to certify files to FNS. If time permits, FNS will complete the review and notify the debtor and the Overpayment Unit. If not, FNS will notify the Overpayment Unit that it has not completed its review and the claim must be deleted from its final files certified to FNS for intercept.

When FNS receives an appeal from a state agency decision, it will request documentation from the Overpayment Unit. After review, if a determination is made that the debt is past due and legally enforceable, the debtor will be notified and advised that he has the right to pursue other appeals through the courts. If FNS determined that the claim is not past due or legally enforceable, FNS will request that the Overpayment Unit take any appropriate corrective action. The Overpayment Unit will be notified of FNS's decision in either event.