Questions concerning this policy chapter should be directed to:

• Veterans Health Administration
• Veterans Benefits Administration
• National Cemetery Administration
• Debt Management Center
• Financial Services Center
• Construction and Facilities Management
• All others

0601 Overview

This chapter establishes the Department of Veterans Affairs’ (VA) financial policies for the collection of amounts due to the Department. VA utilizes a variety of collection mechanisms to support its mission and maximize collections.

Key points covered in this chapter:

• VA will use electronic funds transfer (EFT) as the primary collection mechanism in accordance with 31 C.F.R. § 206.4;
• VA will adhere to Department of the Treasury (Treasury), Government Accountability Office (GAO), and Office of Management and Budget (OMB) guidance on collections; and
• VA will utilize collection management tools to manage the collection process.

0602 Revisions

See changelog.

0603 Definitions

Agent Cashier – An officer or employee of the Federal Government, who is designated as a cashier by an authorized official and is authorized to disburse cash or carry out other cash-related activities.

Card Acquiring Service (CAS) – A program within Treasury’s Bureau of the Fiscal Service that provides federal agencies with payment card acceptance capabilities.

Collections – A transfer of monies from a source outside the Federal Government to VA for items such as: a payment for goods and/or services provided, debt collections, cash and checks from Veterans, returned benefit checks, intra-governmental collections, refunds, rebates, and other miscellaneous receipts.

Collections Information Repository (CIR) – A web-based tool that gives Federal agencies information on deposits and collections. CIR combines financial transaction information from various collections and settlement systems into one place.

Collection Mechanism – Any tool or system which VA utilizes to receive funds from an outside recipient or from another Federal agency.

Electronic Funds Transfer (EFT) – Electronic transmission of funds to financial institutions.

Fedwire Deposit System (FDS) – Electronic transmission of funds to financial institutions over the Federal Reserve Communications System through a direct line to a Federal Reserve Bank, providing for the immediate availability of funds.

Intra-Governmental Payment and Collection (IPAC) – Payment and collection mechanism for the transfer of funds across Federal Program Agencies (FPAs) for goods and services (i.e., buy/sell transactions), fiduciary transfers (i.e., investment and borrowing transactions), federal employee benefits data and check aftermath activity.

General Lockbox Network (GLN) – The GLN consists of a select number of financial institutions that provide lockbox services to the Department of the Treasury for the collection of non-tax receipts. The work under the GLN is considered standard lockbox servicing that does not require large amounts of specialty or ancillary services.

Offset – The collection of a debt, or a portion of a debt, from monies a debtor is currently receiving or may receive in the future from the Federal Government.

Revenue Source Codes (RSC) – A unique code within VA’s accounting system used to classify revenue sources within VA programs. RSCs allow a user to track financial activity related to a receipt.

0604 Roles and Responsibilities

Under Secretaries, Assistant Secretaries, Other Key Officials and Chief Financial Officers are responsible for ensuring compliance with the policies set forth in this chapter.

Principal Agent Cashiers and Alternate Agent Cashiers are responsible for collecting payments at field stations and carrying out other cash or negotiable instrument operations for Veterans.

0605 Policies

060501 General Policies

1. VA will use EFT as the primary collection mechanism to the greatest extent practicable, as required in 31 C.F.R. § 206.4.
2. VA will ensure proper internal controls are in place to appoint or designate employees to accept collections on behalf of VA.
3. VA will also enforce separation of duties to mitigate the risks of misuse of public funds and fraud.
4. VA will account for collections in accordance with Generally Accepted Accounting Principles (GAAP).
5. VA maintains a revenue source code (RSC) structure to identify and classify the various types of revenue (collections) for financial reporting. For example, VA activities that generate cash collections, such as donations, rental income, enhanced-use leasing, recycling and waste reduction programs, or other services, are classified with associated RSCs.
6. VA will categorize receivables to ensure collection transactions are being reported accurately in VA’s accounting system.
7. When the need for a new RSC is identified, VA’s Administration and Staff Offices will coordinate with Financial Services Center (FSC) and Office of Finance to ensure that an RSC is established in a timely manner. Refer to Volume II, Chapter 1, VA’s Accounting Classification Structure for additional information.
8. VA will maintain supporting documentation for collection activities in accordance with Federal records management requirements contained in National Archives and Records Administration (NARA) regulations and VA Directives applicable for records management.
9. In accordance with 18 U.S.C. § 641, VA will prosecute to the fullest extent of the law any individual who embezzles, steals, knowingly converts to his or her use, or sells Federal property for personal gain.

060502 Treasury’s Collection Mechanisms

1. VA will adhere to Treasury’s requirements regarding collection of funds as contained in Treasury Financial Manual (TFM) in Volume 1, Part 5, Chapter 1500. Treasury oversees several mechanisms that VA may use to process Federal Government collections. For additional information, refer to TFM Volume 1 Part 5, Deposit Regulations.
2. VA will utilize Treasury’s collection mechanisms outlined in Appendix A: Treasury’s Collection Mechanisms.
3. VA will use financial institutions selected by Treasury to implement collection mechanisms such as:
   • General Lockbox Network;
   • Card Acquiring Service (CAS); and
   • Credit Gateway.
4. VA will primarily utilize these financial institutions or collection mechanisms to process cash and checks:
   • Federal Reserve Banks (FRB);
   • Domestic Treasury General Account (DTGA) Depositaries; 
   • International Treasury General Account (ITGA) Depositaries; and
   •  Lockbox.
5. VA will use IPAC or G-invoicing as the mechanism for collecting funds from other Federal agencies and components. Refer to Volume I, Chapter 11-11B, Intragovernmental Transactions for more information on IPAC and G-invoicing.
6. Prior to implementing Pay.gov and establishing accounts, Administrations must coordinate with their respective Finance Offices and FSC.
7. National Cemetery Administration (NCA) Finance Center manages a Pay.gov account that accepts donations and payments for NCA cemeteries and administrative offices.

060503 Collection Management Tools

1. VA may supplement Treasury’s collection mechanisms with other management tools to ensure proper accounting and control of collections.
2. VA will utilize the Collection Information Repository (CIR) to ensure that all deposits and collections have been accurately processed and reported to Treasury. For more information, refer to the Treasury’s CIR website.
3. VA may offset federal payments to collect funds from debtors. Refer to Volume XII, Chapter 1, VA Debt Collection Standards, for additional information on types of offsets.
4. VA’s agent cashiers are authorized to collect and deposit monies regardless of the type of instrument (e.g., cash, checks, bank drafts, traveler’s checks, money orders, credit card, etc.) received.
5. VA will comply with Treasury’s deposit procedures as specified in TFM, Volume I, Part 5, Chapter 2000. For detailed VA financial policies on collection and deposit activities, refer to Volume VIII, Chapter 3, Agent Cashier Accountability Policy.

0606 Authorities and References

• United States Code (U.S.C)
  • 18 U.S.C. § 641, Public Money, Property, or Records
  • 31 U.S.C. § 3332, Required Direct Deposit
  • 31 U.S.C. Chapter 35, Accounting and Collection
  • 31 U.S.C. § 3720, Collection of Payments
• Code of Federal Regulations (C.F.R)
  • 2 C.F.R. § 200.305, Payment
  • 31 C.F.R. Part 205, Rules and Procedures for Efficient Federal-State Funds Transfer
  • 31 C.F.R. Part 206, Management of Federal Agency Receipts, Disbursements and Operation of the Cash Management Improvements Fund
  • 31 C.F.R. Part 208, Management of Federal Agency Disbursements
  • 31 C.F.R. Part 210, Federal Government Participation in the Automated Clearing House
• GAO. Financial Management: Implementation of the Cash Management Improvement Act
• National Archives and Records Administration
• Treasury Financial Manual
  • Volume I, Federal Agencies Part 5, Deposit Regulations, and Part 6, Other Fiscal Matters
  • Volume I, Part 5, Chapter 2000, Depositing Domestic Checks and Cash Received in Over the Counter (OTC) Collections
  • Volume I, Part 5, Chapter 4600, Treasury Lockbox Network
  • Volume I, Part 6, Chapter 4000, Intragovernmental Transaction Applications – Intragovernmental Payment and Collection (IPAC) and Government Invoicing (G-Invoicing)
• Treasury Green Book
• Treasury’s CIR website
• Treasury’s EFT website
• VA Financial Policy
  • Volume I, Chapter 11 – Intragovernmental Transactions
  • Volume II, Chapter 1 – VA’s Accounting Classification Structure
  • Volume VIII, Chapter 3 – Agent Cashier Accountability PolicyVA Financial Policy
  • Volume XII, Chapter 1 – VA Debt Collection Standards

0607 Rescissions

VA Financial Policy Volume VIII, Chapter 6 –Collections, November 2020.

0608 Policy Approval

This policy was approved by the VA Chief Financial Officers’ Council on August 10, 2023.

Appendix A: Treasury’s Collection Mechanisms

1. Automated Clearing House (ACH) is the primary system that agencies use for EFT. This mechanism utilizes the Treasury’s Collections Information Repository (CIR) to manage the collection of U.S. Government funds throughout the world and provide real-time information through Internet access. For additional information on EFT, refer to Treasury’s EFT website. Specific collections under the ACH system, operated by National Automated Clearing House Association (NACHA) – The Electronic Payments Association, include:
   1. The Debit Gateway centralizes processing and settlement of electronic check and ACH debit transactions received from Agency Direct and three Revenue Collections Management (RCM) channels:
      • Electronic Check Processing (ECP);
      • Over the Counter Network (OTCnet); and
      • Pay.gov.
   2. The Debit Gateway reviews check transactions received from ECP, OTCnet, and Agency Direct. Qualified transactions are converted to more efficient and less costly ACH debit entries, or the checks are presented as Image Cash Letters (ICL) to the Check21 system. Check21 is the primary check clearing system for Federal Reserve Banks. More information is located on Treasury’s Debit Gateway website.
      1. The Preauthorized Debit (PAD) allows for the electronic transfer of funds authorized in advance by the remitter. The program uses the ACH system and allows VA to collect payments automatically. VA may electronically withdraw the amount from the remitter’s bank account on a predetermined basis or the remitter may electronically transmit the funds at their discretion. PAD collections may be used for both recurring and single collections. Prior to establishing a PAD application, VA must initiate an agreement with the Treasury and financial institution that will process the ACH entries.
      2. The Lockbox Collection Network is comprised of financial institutions around the country. A selected bank will serve as VA’s entry point into the ACH network and receive the funds on behalf of VA. The bank will receive information from VA, format the transactions, and originate the file into the ACH network for settlement. The banks will report the deposits received through CIR and transfer funds to Treasury’s account for credit to VA, and remittance data to VA, as requested. For additional information, refer to Treasury Lockbox Network on TFM website.
   3. The Credit Gateway program processes Fedwire transactions and ACH credit transactions. A credit transaction removes value from the Transaction Originator’s account and credits the Transaction Receiver’s account. In a credit transaction, the payer (Transaction Originator) “pushes” funds from their account to VA (Transaction Receiver) for collection. For additional guidance, refer to the Treasury’s website.
      1. The Remittance Express Program (REX) allows VA to receive ACH Collections directly from the private sector. The remitter sends an ACH credit transaction to a unique routing transmit number at a Federal Reserve Bank.
      2. The Card Acquiring Service (CAS) allows Federal agencies, such as VA, to accept MasterCard®, Discover®, VISA®, and American Express credit cards. More information can be found in TFM, Volume I, Part 5, Chapter 7000.
      3. The Fedwire Deposit System (FDS) use will be limited by VA due to the high cost of each transaction.
2. Pay.gov is a secure Government-wide collections portal. VA utilizes this collection portal because it allows individuals, States, and businesses to make non-tax related payments to the agency. VA uses Pay.gov for more than 40 programs under VA’s Administrations, including but not limited to:
   • VA Medical Care Copayment;
   • VA Medical Alert Identification;
   • Claim Overpayment/Refund to VA; and
   • Veteran Medical Alert Identification Equipment purchases (a collection tool).
   1. Pay.gov enables VA to receive authorized electronic transaction funds transfer from end-users using a U.S.-held bank account (through ACH Debit), a credit or debit card, or with a digital wallet, such as PayPal or Amazon Pay. Services include:
      • Electronic forms for collections hosted on Pay.gov website;
      • e-Billing for agencies that want to bill customers electronically;
      • Hosted and non-hosted certificate-based collections for agencies with an existing web presence; and
      • Over the phone and desktop collection tools.
   2. Donations to VA that are legal and authorized may also be received through Pay.gov.