Treasury Offset Program (TOP)
State Agencies in TOP as Debtors:
How to Resolve Debts Owed by States to the Federal Government

Overview

Individuals, businesses, and states owe nontax debts to the federal government for various reasons. Examples of debts owed to the federal government can include grant overpayments, loans, overpayments on projects, and debts owed to Medicare. On occasion, an entity's indebtedness to the federal government will become delinquent. As required by federal law, federal agencies submit these delinquent debts to the Treasury Offset Program (TOP) for interception of eligible federal and state payments payable to the delinquent debtor, a process known as "centralized offset."

What is the Treasury Offset Program and How Does it Work?

TOP is a centralized offset program managed and operated by the Department of the Treasury's Bureau of the Fiscal Service (Fiscal Service). Before submitting a nontax debt to TOP, a creditor agency must certify that the debt is valid, delinquent and legally enforceable, and that the agency has complied with all due process pre-requisites prior to offset. This means that, at least 60 days prior to submission of the debt to TOP, the creditor agency has sent a notice to the debtor stating the amount and type of debt and the agency's intention to refer the debt to TOP for offset. The creditor agency provided the debtor with the opportunity to resolve the debt through a repayment agreement and/or to dispute the agency's claim.

After a nontax debt has been submitted for offset, TOP compares a payee's taxpayer identification number (TIN) and name with a debtor's TIN and name. If there is a match, the payee's payment is intercepted in the amount and to the extent authorized by federal law. The intercepted payment is applied to the debtor's debt balance. Any remaining portion of the payment (after paying the debt) is disbursed to the payee.

A TIN identifies the debtor in the same way that it identifies the taxpayer for purposes of the Internal Revenue Code. Pursuant to regulations governing TOP, all subdivisions or organizations sharing a single TIN are responsible for all federal debts associated with that TIN. This means that if two state agencies or corporate divisions are using the same TIN when interacting with the federal government, TOP will offset any eligible payment to one of those entities to pay any eligible debt owed by one of those entities to the federal government. This is true, even in cases when, it is challenging for one state agency or corporate division to be aware of debts owed by another agency or division.

TOP State Programs: Frequently Asked Questions

Locate a State ComptrollerExit the Fiscal Service Web site

"Understanding State Debts in TOP and How They Affect Your Federal Payments"Powerpoint presentation (489 kb)

For general questions regarding the offset of your payment, an entity's representative can call our Treasury Offset Program (TOP) Call Center to obtain agency contact information. The TOP Call Center phone number is toll free (800) 304-3107 or TDD number: (866) 297-0517.


   Last Updated:  March 25, 2014