Late Payments, DCIA, Red Light
Each USAC Universal Service Fund (USF) contributor invoice that is paid late is considered a unique debt owed to the United States as defined by 31 U.S.C. Section 3701, the Debt Collection Act of 1982, and the Debt Collection Improvement Act (DCIA) of 1996. As such, USAC is required by the DCIA to impose interest and to inform the debtor what may happen if the outstanding debt is not paid.
If the debtor does not pay in full by the due date, the following will be incurred:
- One Day Delinquent: The Filer ID and all associated SPINs (also known as the service provider’s 498 ID) will be put on Red Light status the day after the payment due date. All future Universal Service Fund disbursements will be netted against the outstanding delinquent debt. Interest begins to accrue daily as of the delinquency date at the annual U.S. prime rate plus 3.5 percent, until that debt is paid. This additional interest rate incorporates administrative charges of collection pursuant to 47 C.F.R. § 54.713.
- Marked Red Light status
- Accrue U.S. prime rate
- Accrue 3.5 percent interest
If the full amount of the outstanding debt, and associated administrative fees and penalties, is paid within 30 days of the due date, all interest will be waived.
- 91 Days Delinquent: A DCIA Penalty, an additional daily penalty based on an annual rate of six percent, will be retroactively applied from the date of delinquency to any part of the debt that is more than 90 days past due. The full amount of the outstanding debt is also now eligible for a DCIA transfer to the United States Department of Treasury (“Treasury”) for debt collection. If transferred, the debtor will be required to pay the administrative costs of processing and handling a delinquent claim as set by the Treasury (currently 28 percent of the debt).
- Retain Red Light status
- Continue accruing U.S. prime rate
- Continue accruing 3.5 percent interest
- Accrue 6 percent penalty
- Eligible for transfer to the Treasury
For additional information regarding debt transferred to the Treasury, you can contact Treasury directly at (888) 826-3127.
Monthly Delinquency Notices
Contributors that have fallen behind on universal service payments will receive delinquency notices from USAC reminding them of their obligation. Notices are generated monthly. A company could receive more than one notice in one month if they are more than one month behind in paying. Each notice represents one month of unpaid transactions and identifies how aged the balance has become.
Red Light Rule
Collections and disbursement rules associated with the DCIA, stated in 47 C.F.R. Parts 0 and 1, describe specific provisions which include a rule commonly referred to as the Red Light Rule. See sections 1.1112, 1.1116, 1.1161, 1.1167, and 1.1910 of the FCC’s rules.
With respect to universal service, when an entity’s account becomes delinquent by one day, that entity, as well as any other entity associated with them through a shared taxpayer identification number (TIN), will be subject to the Red Light Rule and considered to be in Red Light status. USAC will withhold all payments to that entity and any associated entities until the delinquency has been satisfied or until payment arrangements that are satisfactory to the FCC are made, such as entering into an approved payment plan.
When possible, USAC will apply any disbursement support to the delinquent universal service obligation until the delinquency is satisfied. This is referred to as a netted payment.
USAC will also take into consideration the Red Light status of each entity at the FCC and will hold disbursements until the Red Light status is resolved at the FCC.
USAC will send the entity or service provider an email notification when a disbursement is held because an entity is in Red Light status. If USAC uses a pending disbursement to offset a universal service delinquency, USAC will also notify the delinquent entity or service provider via email that the disbursement was applied against the delinquent debt.