The Treasury Offset Program is a centralized offset program, administered by the Bureau of the Fiscal Service's Debt Management Services (DMS), to collect delinquent debts owed to federal agencies and states, in accordance with 26 U.S.C. § 6402(d) (collection of debts owed to federal agencies), 31 U.S.C. § 3720A (reduction of tax refund by amount of the debts), and other applicable laws. The process is known as an offset.
If delinquent debt is owed to a government agency that participates in TOP, the debtor is sent a letter NOTICE OF INTENT TO SUMBIT DEBT FOR FEDERAL OFFSET. The debtor then has 60 days to pay the debt, negotiate an approved payment plan, provide bankruptcy documentation, or request an official review of the debt. If the debt remains delinquent 60 days after the date of the notice, the LWC will submit the debt to TOP for collection. Before federal payments, such as income tax refunds, are release the database is searched to see if delinquent debt has been reported. If delinquent debt is found, the amount owed is taken from the federal payment. Anytime a refund is offset to satisfy delinquent debt, the Internal Revenue Service (IRS) sends a letter to the debtor explaining the garnishment.
The LWC’s utilization of TOP was implemented in phases. The first phase, geared toward unemployment deb created by overpayment or fraud, was implemented October 1, 2011. The second phase, geared toward an employer’s unemployment insurance tax debt, was implemented October 1, 2017.
If an individual owes money to the LWC because of a delinquent debt, the Treasury Department can offset that individual's federal payment or withhold the entire amount to satisfy the debt. The debtor is notified in advance of any offset action to be taken. Individuals may call 225.326.6999 with questions about delinquent unemployment insurance tax debt.
Prior to submitting debts to the TOP, the LWC is required to notify each debtor that it intends to refer the debt for federal offset. You have 60 days from the date of the notice to do one of the following before the debt is sent for offset:
Yes, the Bureau of Fiscal Services (BFS) charges a $17.00 administrative fee for every offset. This fee is taken from your refund, before any debt owed to LWC is satisfied.
State and federal laws authorize TOP. The LWC is not required to secure your permission prior to submitting your unpaid liability to TOP.
Complete IRS Form 8379, which you can obtain by calling the IRS toll-free at 800.829.3676 or by downloading the form from the IRS website at http://www.irs.gov/pub/irs-pdf/f8379.pdf. For assistance with completing the form, call your local IRS office or the IRS toll-free number (800) 829-1040.