Gold Book: The Check Reclamation Guide

Section 6: Offsets, Including Treasury Check Offsets

The information in this section applies only to reclamations initiated prior to October 19, 2011 listed on the Request for Refund (Check Reclamation).

Introduction:Offset is a collection method in which the U.S. federal government withholds funds payable by the U.S. federal government to the financial institution, and applies the withheld funds to a debt owed to the U.S. federal government. FMS may initiate an offset to collect a reclamation debt by referring the debt to the Treasury Offset Program (TOP). In addition, FMS may direct the Federal Reserve Bank to withhold credits from presenting financial institutions for application to a delinquent reclamation debt, a process known as Treasury Check Offset (TCO).

Funds payable by the U.S. federal government that may be offset include U.S. federal tax refunds, vendor payments or other payments to financial institutions and credits from the Federal Reserve Bank for a U.S. Treasury check included in an incoming cash letter.

Conditions: Unpaid items will be eligible for collection by offset through the Treasury Offset Program if …

• Request for Refund (Check Reclamation) and/or accrued interest, penalties, and administrative fees relating to that reclamation remains unpaid for 120 days after the reclamation date
• The presenting financial institution was sent at least one Summary of Debt Statement informing them that FMS intends to collect the reclamation by offset.
• The reclamation is not under protest.

Unpaid items will be eligible for Treasury Check Offset after FMS has attempted collection through other types of offset for a period of 60 days.

Note: Reclamations which are eligible for an offset are identified by a code “C” in the Reclamation Status column on the Summary of Debt Statement.

The Summary of Debt Statement informs the financial institution of the nature and amount of the reclamation debt and FMS' intention to collect the debt by offset. In addition, the Summary of Debt Statement advises the financial institution that it may inspect and copy FMS' records related to the reclamation debt, and request a review of FMS' decision about the debt.

Example

Reclamation amount: The presenting financial institution owes $400.00 including interest, penalty and administrative fees for a reclamation item that is over 120 days old.

Federal Agency Payment/reimbursement: The presenting financial institution is currently receiving a $2,000.00 Tax Refund from the Internal Revenue Service (IRS.)

Offset action: FMS requests that the Treasury Offset Program (TOP) offset the reclamation amount from the Financial Institution’s tax refund.

Treasury Offset Program (TOP) will divert $400.00 of the tax refund reimbursement to FMS and send $1,600.00 to the presenting financial institution, along with a notice explaining the offset action.

Making a Payment: If a financial institution chooses to pay a reclamation which was referred for offset, then they should call the Financial Management Service as soon as possible to avoid the possibility of a duplicate payment.

Please have the check symbol and check serial number available so that the check can be identified in the FMS system.

Refer to Assistance for the telephone number.

Offsets in error: The table below shows what happens if an offset is executed in error.