1911. Compromise Settlement of an Overpayment

1911.1 What is a compromise settlement?

A compromise settlement occurs when we accept an amount less than the full overpayment and forgive repayment of the rest of the debt.

1911.2 What law permits compromise settlements?

The Federal Claims Collection Act of 1966 permits Federal agencies to arrange compromise settlements of overpayment claims.

1911.3 Can compromise settlements be appealed?

No, compromise settlements cannot be appealed because the settlement is at our discretion.

1911.4 When are compromise settlements acceptable?

Generally, we accept a compromise when one of the following conditions exists:

1. The debtor is unable to pay the full amount within a reasonable time;

2. The Government is unable to enforce collection of the full amount within a reasonable time;

3. The Government is unable to obtain full recovery through court action because of the legal issues involved or there is a legitimate dispute as to the facts; or

4. The cost of collecting the claim is likely to exceed the amount to be recovered.

Last Revised: March, 2001