31 CFR § 205.15 - When does State interest liability accrue?
---
identifier: "/us/cfr/t31/s205.15"
source: "ecfr"
legal_status: "authoritative_unofficial"
title: "31 CFR § 205.15 - When does State interest liability accrue?"
title_number: 31
title_name: "Money and Finance: Treasury"
section_number: "205.15"
section_name: "When does State interest liability accrue?"
chapter_name: "FISCAL SERVICE, DEPARTMENT OF THE TREASURY"
subchapter_number: "A"
subchapter_name: "BUREAU OF THE FISCAL SERVICE"
part_number: "205"
part_name: "RULES AND PROCEDURES FOR EFFICIENT FEDERAL-STATE FUNDS TRANSFERS"
positive_law: false
currency: "2026-04-05"
last_updated: "2026-04-05"
format_version: "1.1.0"
generator: "[email protected]"
authority: "5 U.S.C. 301; 31 U.S.C. 321, 3332, 3335, 6501, 6503."
regulatory_source: "67 FR 31885, May 10, 2002, unless otherwise noted."
cfr_part: "205"
---
# 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.