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Transfer of Ownership Civil Money Penalty (TOCMP)

By Spodek Law Group | August 1, 2017
(Last Updated On: July 28, 2023)

Last Updated on: 28th July 2023, 07:18 pm

Trade Tightrope? Here’s Your Guide to Dealing with Transfer of Ownership Civil Money Penalties

The commercial world could be a minefield, especially when you’re treading the path of legalities around programs like the Supplemental Nutrition Assistance Program (SNAP). A misstep could lead to penalties – one of them being the Transfer of Ownership Civil Money Penalty (TOCMP).

How It Works?

Simply put, when a retailer, disqualified from SNAP, sells or boats off their property, they would bear the TOCMP brunt. For first-time offenders, the disqualification could vary from six months to five years. In case of repeated misconduct, it shoots up to a minimum of a year, extending up to a decade.

Caught on the third strike? It could lead to a permanent shutdown! Furthermore, deceitful actions during the application process could also land you in permanently disqualified territories.

The Big Picture: Civil Money Penalties and SNAP

The heat is on when you transfer or sell your store while disqualified from SNAP. The USDA may slap on a penalty, and it won’t be a gentle tap. According to the deed, those who transfer the property would be liable to a civil money penalty.

The USDA holds the right to disclose a retailer’s information if they fail to pay the penalty, which could also be passed to federal agencies, consumer reporting agencies, and collection companies. Hold that thought! It doesn’t end there. Fellow federal authorities like the Department of Justice, the Department of Treasury, and the Department of Agriculture could also tramp onto the scene.

Paying the Penalty

Hit with a penalty? Be ready to send a written plea to the top boss of the administrative review branch of the Department of Agriculture, and that too, within ten days of receiving the notification letter. You could either offer the full payment or choose an installment method, which needs to be selected within two weeks. Penalty interests start piling up after 30 days of notification. Keep in mind that USDA’s bounds ensure the maximum payment plan doesn’t exceed five years with sixty installments.

Interest & Consequences

The interest space for installment payment bearers is just 1%, albeit it being vulnerable to USDA’s changing whims. Also note, even if you pull off paying the full penalty, the disqualification period remains unaffected.

Retailers falling short on paying the penalties could be ousted from the SNAP program. Penalty fines are based on the Average Monthly SNAP redemption of the firm in the past year, and a 10% spike per month of disqualification could be witnessed. However, the penalty has a ceiling of $100,000. For those avoiding the payment, a civil action instigated by the Attorney General could be on the cards, carried out by a district court applying to the party’s residence or business site.

Interestingly, if the store is bought or transferred to a new entity, they are not liable to pay the penalty. The guilty party is, however, obliged to produce a letter of credit or collateral bond within the initial 15 days.

Disqualification and Conditions for Civil Money Penalty (CMP)

In certain situations, a disqualification could be swapped with a CMP. This could happen if the retail store provides essential food items and its disqualification could lead to a hardship for SNAP participating household, owing to the unavailability of a fair-priced, authorized store in the area.

Additionally, a CMP could be imposed if the retail store has an active compliance policy aiming to prevent laws violation. However, this could be challenging since the retailer needs to back this with adequate evidence.

A retailer with a permanent disqualification status, awaiting a judicial appeal, can opt for the CMP in place of the disqualification. The retailer, however, needs to meet all the penalty requirements along with providing proof of substantial effort in preventing the violation.

Bear in mind that being laid back in paying the CMP could lead to disqualification equivalent to the unpaid CMP period. Moreover, no CMP reduction applies, even when tied with a payment plan, and the levied CMP is deemed as taxable income.

Sounds a bit daunting, doesn’t it? Straddling the legal terrain involving SNAP and retaining your store’s status could be complex, but laying a strong foundation of understanding would help in steering clear of potential traps and landmines.

Understanding the Transfer of Ownership Civil Money Penalty

The Transfer of Ownership Civil Money Penalty (TOCMP) is imposed on retailers who sell or transfer a property that has been disqualified from the Supplemental Nutrition Assistance Program (SNAP). The duration of disqualification varies depending on the number of offenses committed, with an increasing penalty for each subsequent offense. Such penalties will be imposed on the owner if they sell or transfer the store to another party while disqualified from participation in SNAP. This article delves into the intricacies of the TOCMP and its implications.

Determining the Civil Money Penalty

The United States Department of Agriculture (USDA) is responsible for assessing the penalty imposed upon the disqualified retailer, following the guidelines outlined in the Food and Nutrition Act of 2008. According to the act, the disqualified party will face a civil money penalty, which is subject to SNAP regulations.

If a retailer fails to pay the penalty, the USDA reserves the right to disclose their information to other federal agencies and collection companies, potentially impacting their financial reputation. Such retailers can be referred to the Department of Justice, the Treasury Department, and consumer reporting agencies for collection of debts.

Appealing and Paying the Penalty

Upon receiving a notification letter, the retailer can submit a written request to the Chief Administrative Review Branch of the Department of Agriculture within ten days. They can opt to pay the penalty in installments or as a lump sum, but it is crucial to pay the penalty in full. The interest on the penalty begins to accrue 30 days after notification, and a payment plan is subject to USDA regulations.

The USDA has limited discretion in adjusting the penalty amount, although they may reduce it slightly within a payment plan. The levied amount is considered taxable income and the disqualified retailer will have to pay income taxes on the amount.

Calculating the Fine

The fine is determined based on the Average Monthly SNAP Redemption (AMR) of the disqualified retailer during the 12 months preceding the penalty. Calculation of the fine involves multiplying 10% of the AMR by the number of months in the disqualification period. A maximum limit of $100,000 is imposed on the fine. Failing to pay this fine may result in a civil action by the Attorney General, launched by a district court where the party resides or operates their business.

Penalty Payment Plans and Interest Rates

When selecting a payment plan, note that the interest rate on the penalty starts at just 1% but is subject to alteration by the USDA. Given that the penalty serves as a substitute for the disqualification, it is preferable to opt for a shorter payment plan, such as paying the full sum (including interest) within twelve months, if the disqualification period is one year.

Consequences of Non-Payment

Failing to pay any portion of the penalty or complete the installments may result in the retailer’s disqualification from the CMP for a period corresponding to the duration of the unpaid penalty. Similarly, not presenting a bond or letter of credit within the first 15 days may result in disqualification and reinstatement of the civil money penalty.

Substituting Disqualification with Civil Money Penalty

Under specific conditions, a retailer’s disqualification may be replaced with a civil money penalty. This may occur if the retailer provides essential food items, or if disqualification would lead to hardship for households participating in the SNAP program due to a lack of authorized stores providing essential items at fair prices. However, stores with prior sanctions may not be considered for this alternative.

In conclusion, the Transfer of Ownership Civil Money Penalty affects retailers who violate the regulations of the Supplemental Nutrition Assistance Program. Retailers have options for appealing and paying the penalty, with possible consideration given to substituting disqualification with a penalty under specific circumstances. It is crucial for retailers to stay vigilant and compliant to avoid facing these penalties and their potentially far-reaching consequences.

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