Debt Management Services

Background

The Financial Management Service serves as the government's central debt collection agency, managing the government's non-tax delinquent debt portfolio. As a part of FMS, DMS' goal is to provide a broad range of services, to be more responsive to the needs of client agencies, and to bring about more equity and uniformity in how the U.S. Government treats its delinquent debtors. We provide these services through a network linking our own debt collection expertise and capabilities with those of the Federal Program Agencies' Debt Collection Centers, private collection agencies, and the U.S. Department of Justice.

Nontax Federal Debts
The Debt Collection Improvement Act of 1996 (DCIA) provides that any non-tax debt or claim owed to the U.S. Government that is 180 days delinquent, with certain exceptions, will be referred to the Department of the Treasury for collection. Debt that is in litigation or foreclosure, with a collection agency or designated federal debt collection center, or that will be disposed of under an asset sales program, is exempt from transfer to the Secretary.

Federal Tax
The Continuous Federal Tax Levy Program levy supports IRS' efforts to collect delinquent federal tax debts by matching them against federal payments. The tax levy program is authorized under the Taxpayer Relief Act of 1997 and allows the IRS to assess a 15 percent levy on certain federal payments until the debt is satisfied.

Child Support and Other State Debt
The Debt Collection Improvement Act of 1996 authorizes the Secretary of the Treasury to collect past due child-support obligations by the administrative offset of federal payments. Executive Order 13019-Supporting Families: Collecting Delinquent Child Support Obligations (September 1996), requires the Secretary of the Treasury to promptly develop and implement procedures necessary for the collection of past-due child support debts. The Office of Child-Support Enforcement (OCSE) within Health and Human Services' Administration for Children and Families assists state governments in operating and managing their programs effectively and in conforming with federal requirements. State Unemployment Insurance Compensation debts are now eligible for referral to TOP.

The Treasury Offset Program (TOP)
One of the key tools used by FMS to collect delinquent debt owed to the federal government agencies and states is the Treasury Offset Program (TOP). Under TOP, FMS matches a database of delinquent debtors against payments disbursed by Treasury, then offsets or withholds federal payments to recipients who also owe delinquent debts.

Cross-Servicing
Another major collection program used by FMS is Cross-Servicing. Federal agencies are required by law to refer debt delinquent more than 180 days old to FMS. FMS attempts to collect the debts using a variety of Cross-Servicing tools. These tools include Treasury demand letters, telephone follow-up, skip tracing, referral of debts for administrative offset and referral of debts to private collection agencies on the governmentwide contract. FMS also provides administrative wage garnishment as a collection tool under Cross-Servicing.

Since FMS was given responsibility for centralized collection of debt, we have sharply increased collections through program changes, adding numerous payment streams and categories of debt. We continue to work with agencies to ensure timely referral of debts more than 180 days past due. For more information on DMS' recent delinquent debt collection activities, please visit Delinquent Debt Collection Accomplishments 2011.

Fact Sheets from the Office of Legislative & Public Affairs

• Debt Check
  
• Debt Collection and The Debt Collection Improvement Act of 1996
  
• Delinquent Debt Collection Accomplishments, 2011