Treasury Offset Program NASC PRESENTATION

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Treasury Offset ProgramNASC PRESENTATION
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What is TOP?

• TOP Treasury Offset Program
• A centralized process that intercepts federal
  payments of payees who owe delinquent debts to
  federal and state agencies
• Offset is withholding funds payable by the United
  States to a person to satisfy a debt owed to the
  United States or a State

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What is TOP

• Statutes and Regulations for Administrative
  Offset (offset of federal payments to collect
  state debts)
• 31 U.S.C. 3716 and 31 CFR 285.6
• Statutes and Regulations for State Payment Offset
  (offset of state payments to collect federal
  no-tax debts)
• State law, 31 U.S.C 3716 (h), any state
  regulations and 31 CFR 285.6

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What is TOP?

• TOP is one of the largest and most effective
  tools in collecting delinquent debts for federal
  and state agencies
• Debts owed to the United States (tax non-tax)
• Child support obligations enforced by state
  agencies
• State income tax debts
• State debts (pilot to begin Spring 2007)
• Collections total over 3 billion per year

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What is TOP?

• TOP is a system that compares payments with debts
• Payment and debt comparisons are made on the
  basis of Name and Federal Identification Number
• When a match occurs the payment is offset to
  collect the debt

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TOP

• All debts have a 10 year statute of limitations
• Debt must be at least 25
• This is the minimum TOP will accept, but dollar
  amount could be set higher for certain programs

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Due Process

• Notice
• Intent to offset
• 60 days to dispute the debt
• Any state law requirements

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As of June 30, 2006TOP database contains

• 36.2 billion in federal non-tax debts
• 86.1 billion in child support debts
• 129.4 billion in federal tax debts
• 5.7 billion in state income tax debts
• Total 257 billion

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Priority of Debts in TOP
When more than one debt is submitted for the same
debtor, TOP applies funds collected in accordance
with priorities set by statute and policy and
applies offset funds in the following order

• IRS income tax debts
• Child support debts assigned to states under
  Temporary Assistance to Needy Families program
• Federal non-tax debts
• Other child support debts
• State income tax debts

NOTE If a debtor has two or more debts of the
same priority, TOP applies funds to the oldest
debt first
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TOP Transmission Method

• Batch Processing
• ConnectDirect
• Dataline from creditor agency to FMS
• ConnectMailbox
• Manual process using modem to transmit files to
  FMS

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Agreement to Certify Debts

• This agreement lets FMS know that you will follow
  the Due Process rules for submitting debts
  electronically to TOP
• All debts are true and collectible
• Are delinquent, valid, and legal
• Are not in bankruptcy or foreclosure
• Debts are certified for
• life of debt
• Agreements are done annually in December for all
  new debt to be loaded in the upcoming calendar
  year

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Vendor Offset Notice

• Sent by FMS
• Date and amount of offset, Agency to which money
  is sent, contact point at agency

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Debt Management Operations Center

• Operates the National TOP Call Center
• Callers are referred to states/agencies for
• Account balances
• Specific debt information
• Removal from TOP
• Adjustments or refunds

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Fees

• Fees- A fee will be charged to the state for each
  offset (22).
• The amount of the fee will be added to the debt
  amounts and may be adjusted annually for FMS to
  recover the Federal cost of the program.
• The state may include a fee for each debt
  forwarded to Financial Management Services or the
  fee can be added to the amount of the state debt
  at FMS.

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Test Results

• State Debts Offset by TOP

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Programs for States

• States can participate in the Treasury Offset
  Program two ways
• State Income Tax Program
• Federal tax payments may be offset to collect
  state income tax debts (debtor must reside in
  state)
• Reciprocal Agreement

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System Set-up Requirements

• Review legislation
• Reciprocal Agreement
• Agency submits TOP Agency Profile Form
• Agency submits TOP Security Access Request Form
  for each user
• FMS tests system with agency
• Agency submits certification agreement
• Agency submits certified debts to FMS

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Chapter 577 of 2006 Laws (House Bill 448)

• Added Section 13-930 to Tax-General Article,
  Annotated Code of Maryland.
• Authorizes Comptroller to withhold tax refunds
  and other state payments for
  liabilities held by
  Treasury.

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Chapter 577 of 2006 Laws (House Bill 448)

• Allows Comptroller to certify state tax due to
  Treasury.
• Permits Treasury to withhold vendor payments for
  remittance to Comptroller.

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State Reciprocal Agreement

• Legal references, due process, debt
  certification, operational requirements, fees,
  offset notices, fund transfers, reversals and
  refunds
• Pilot with three states to begin Spring
  2007-Maryland, New Jersey, and Kentucky
• Pilot will be reviewed after one year to
  determine if program is mutually beneficial and
  cost effective

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IRS Tax Refund Intercepts

• Fiscal Year 2006
• 30,530 federal tax refunds intercepted
• 21,800,000

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State Refund Intercept Statistics Fiscal Year
2006
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Collection Statistics
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Current Project Status

• State Debtors notified of potential TOP offset
• Reciprocal agreement signed
• Agreement to certify debts signed
• All TOP security and profile forms completed
• TOP and State ACH forms completed
• Modifications in process for RSTARS and
  Comptroller Tax Systems

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Contact at FMS

• For questions on the state reciprocal agreement
  pilot program, please contact
• Sarah Martin
• 202-874-6884
• sarah.martin_at_fms.treas.gov

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Treasury Offset Program

• Questions ???