---
kind: "section"
citation: "31 C.F.R. § 205.15"
title: "31"
number: "205.15"
heading: "When does State interest liability accrue?"
url: "https://uscodex.org/cfr/31/205.15"
---

# §205.15. When does State interest liability accrue?

- (a) **General rule.** State interest liability may accrue if Federal funds are received by a State prior to the day the State pays out the funds for Federal assistance program purposes. State interest liability accrues from the day Federal funds are credited to a State account to the day the State pays out the Federal funds for Federal assistance program purposes.
- (b) **Refunds.**
  - (1) A State incurs interest liability on refunds of Federal funds from the day the refund is credited to a State account to the day the refund is either paid out for Federal assistance program purposes or credited to the Federal government.
  - (2) We and a State may agree, in a Treasury-State agreement, that a State does not incur an interest liability on refunds in refund transactions under $50,000.
- (c) **Exception to the general rule.** A State does not incur an interest liability to the Federal government if a Federal statute requires the State to retain or use for Federal assistance program purposes the interest earned on Federal funds, notwithstanding any other provision in this section.
- (d) **Mandatory matching of Federal funds.** In programs utilizing mandatory matching of Federal funds with State funds, a State must not arbitrarily assign its earliest costs to the Federal government. A State incurs interest liabilities if it draws Federal funds in advance and/or in excess of the required proportion of agreed upon levels of State contributions in programs utilizing mandatory matching of Federal funds with State funds.

## Notes

### Authority

Authority: 5 U.S.C. 301; 31 U.S.C. 321, 3332, 3335, 6501, 6503.

### Source

Source: 67 FR 31885, May 10, 2002, unless otherwise noted.