Frequently Asked Questions from States as Debtors
The questions on this web page are about overdue debts that states owe to the federal government. To understand how state agencies work with the Treasury Offset Program (TOP) to collect debts that people and businesses owe to them, see State Programs. To understand more about TOP, see How TOP Works.
General questions about debts states owe to the federal government
Examples of debts states might owe the federal government include (but are not limited to) grant overpayments, loans, overpayments on projects, and debts owed to Medicare.
In most cases, agencies can send a valid and legally enforceable state debt to the Treasury Offset Program if the debt is more than 60 days overdue.
The agency must send a letter (a "due process notice") to the last address on record for that debt. The letter must explain the debtor's rights and opportunities to resolve or dispute the debt.
To discuss the debt, contact the agency that sent the due process notice.
You must work with the creditor agency to do anything about your debt.
You may be able to work out an appropriate payment plan with that agency. TOP cannot arrange payment plans for you.
Only the creditor agency may tell us to remove the debt from the TOP database of overdue debts.
The Treasury Offset Program (TOP) cannot do anything about your overdue debt, but we can tell you how to reach the person who can talk to you about it.
If you need information about whom to contact, call the TOP Interactive Voice Response System. (See the Contact Us page.)
When we hold back money from a payment, we send a letter to the payee.
In addition, we can give monthly reports to state comptrollers to help identify delinquent non-tax debts that the state owes to the federal government. These monthly reports include information about whom to contact in the relevant federal agency for each debt. Only those people can help resolve any issue about the debt.
If you are concerned about a debt for your state agency, contact your state comptroller's office for the monthly report. You can also get information on whom to contact about your state agency's debt from the TOP Interactive Voice Response system. (See the Contact Us page.)
We use the taxpayer identification number (TIN) to know who owes the debt. You may have received the reduced payment if your agency's TIN is the same as another agency.
Contact the other state agency to work out this issue.
You must talk with the federal agency that told TOP about the debt. That agency is responsible for returning any part of your payment that should not have been taken from you. To find out whom to contact, look at the notice your received about the debt or get the contact information from the TOP Interactive Voice Response system. (See the Contact Us page.)
The Internal Revenue Code prohibits Fiscal Service from disclosing that a tax-related debt exists.
To find out about tax-related debts, you must contact the IRS: 800-829-1040.
Questions about how reduced payments come to the states
These questions and answers relate to a service called Fedwire.
Some federal payments, especially for large amounts, are sent by a service called Fedwire. Fedwire is often used when the payment must be received right away.
If the state has an overdue debt in the TOP database, TOP blocks the Fedwire payment, and requires that the payment be issued through alternative payment mechanisms. This is to ensure that the payment can be offset to collect any debts in TOP.
The paying agency should pay through the automated clearing house (ACH). TOP offsets ACH payments. The payee receives whatever funds are left over after the overdue debt is satisfied.
Alternatively, the paying agency can request that the debtor contact the creditor agency to pay or otherwise resolve the debt. Once the debt is paid, the creditor agency will remove the debt from TOP, which will then remove the Fedwire block the day after the debt is satisfied.