IMPLEMENTATION REPORT FINDINGS
Note: The following is an html version of the TIN Policy Statement issued in 2000 by the Financial Management Service (FMS).
In October 2012, FMS consolidated with Bureau of the Public Debt to become the Bureau of the Fiscal Service. Since this directive was issued in 2000, the references are all to FMS.
A summary of these reports indicates a number of barriers that prevent agencies from collecting or providing TINs and also identifies strategies, methods, and practices being used to improve the collection of this information.
Barriers to Collecting TINs
The implementation reports indicate that several legal or statutory barriers remain that prevent agencies from collecting TINs. For example, the U.S. Marshals Service reported that there were circumstances when court-ordered payments must be made, regardless of whether it had received a TIN. The implementation reports also revealed circumstances where agencies lack the legal or statutory authority to require certain payment recipients to submit a TIN.
Several agencies noted that certain payment recipients, such as foreign vendors, illegal aliens and other Government agencies, are unable to obtain a TIN. Agencies also reported that collecting TINs for one-time payments, such as payments associated with the taking of the census, was economically prohibitive. Agencies also reported incidents when payment recipients submitted an invalid or improper TIN.
Law enforcement agencies wrote that collecting TINs from payment recipients may have a detrimental effect on federal, state, or local law enforcement operations. There were also circumstances when it was necessary for these agencies to pay an indigent fact witness, without the submission of a TIN, in order to facilitate law enforcement.
Several agencies reported that certain vendors refused to submit their TINs, despite repeated requests. Many vendors were unaware that they had TINs and therefore refused to submit this information.
In addition to these barriers, several agencies felt that it was unnecessary to collect TINs from recipients who were exempt from the Offset Program (TOP). Although some payments are exempt from the TOP, these payments may not be exempt from tax debts. As a result, agencies should collect TINs for all payments.
Barriers to Providing TINs to FMS
Law enforcement agencies identified circumstances when, although there is not necessarily any difficulty collecting TINs, providing TINs to FMS would substantially harm their programs, such as providing them when paying undercover agents or informants.
No Exceptions for Vendor Payments
In general, agencies were more successful in collecting TINs from individual payment recipients than from Government vendors. FMS received several comments from agencies citing a need for an exception in those circumstances when a vendor refused to submit a TIN. A few agencies indicated that there are geographic regions so small and limited that an agency had to do business with the vendor, even if the vendor refused to submit a TIN, to purchase a product or service necessary to carry out an agency program or function.
While exemptions are available in some circumstances for vendor payments, this Policy Directive contains no specific exceptions for the collection of TINs from vendors as a class of payments. It is important that federal Government vendors be subject to TOP since payments made to vendors represent the largest individual payments subject to offset and therefore the potential for a large-dollar collection by fully offsetting these payments is greater.
Strategies for Collecting TINs
The implementation reports identified several strategies, practices, and methods that may be useful in the collection of TINs from vendors and individual recipients.
Agencies reported that the greatest success in collecting TINs from vendors was achieved during contract proceedings. Most agencies have developed internal policies and procedures that require vendors to submit TINs as a condition of awarding the contract. By establishing these policies and procedures, agencies can refuse to do business with vendors who fail to submit a TIN. Such refusal will ensure that agencies comply with 31 U.S.C. 7701(c), which requires agencies to collect TINs from each person doing business with that agency. It will also assist agencies in complying with 31 U.S.C. 3325 (d). The Federal Acquisition Rule; Taxpayer Identification Numbers (FAR TIN) interim rule at 48 CFR Parts 1, 4, 13, 14, 15, and 52 provides agencies with contract clauses that require vendors to submit TINs as part of the application process and impose monetary penalties if such information is not supplied. These clauses are used by a small number of agencies and have been effective in the collection of TINs for these agencies.
Several agencies have developed contract clauses in agency supplemental acquisition rules, which specify that a proper invoice must include a valid TIN and EFT information. These clauses are used in support of the Prompt Payment rule at 5 CFR Part 1315, which requires electronic funds transfer (EFT) information and a TIN as part of a proper invoice. In such cases, an invoice is rejected and returned to a vendor if the vendor fails to submit this information and it was required to do so in the contract.
Agencies are also taking measures to inform vendors and individuals of the federal government's efforts and requirements to collect TINs from payment recipients. Agencies are making this information available by submitting letters to recipients, posting information on the Internet, and establishing points of contact with vendors. There were a number of agencies that planned to meet personally with vendors to convey the Government's TIN and EFT requirements.
Certifying officials may forward TINs to the Internal Revenue Service (IRS) in order to validate the TIN with the IRS taxpayer record information. IRS currently has software available that allows it to identify an invalid TIN by matching a payee TIN with its taxpayer records. The implementation reports revealed that agencies were, in certain circumstances, receiving invalid TINs from payment recipients. In many cases, agencies were unaware that a TIN was invalid until it was submitted to FMS and sent through the TOP.
The Policy Directive explains that FMS will require payment vouchers to have TINs, except in specific limited circumstances described below.
To ensure that agencies submit payment vouchers in a proper form, FMS is requiring that federal payment vouchers submitted to Treasury include a valid TIN. FMS will not require a TIN on payment vouchers under the following circumstances:
- Where an agency does not have the statutory or legal authority to require a federal payee to submit a Taxpayer Identification Number and the agency has no other means of obtaining it;
Several agencies noted that certain court-ordered payments must be made, regardless of whether the paying agency had received a TIN. There may be other circumstances when agencies lack the legal or statutory authority to require a TIN from certain payment recipients.
- Where a federal payment recipient is unable to obtain a Taxpayer Identification Number;
Agencies commented that certain payment recipients are incapable of obtaining TINs. For example, agencies noted that foreign companies, foreign visitors, and U.S. Government agencies are unable to obtain a TIN and would therefore be unable to supply a TIN on a payment request.
- Where the collection or provision of a Taxpayer Identification Number has a detrimental effect on a law enforcement operation, military operation, national security, or emergency relief effort;
Law enforcement agencies indicated the need, in certain circumstances, to protect the identity of certain individuals, such as the case for payments to the witness protection program, for undercover operations, or to informants. Law enforcement agencies may also have the need to pay an indigent fact witness to facilitate law enforcement.
FMS recognizes that payments for military operations, natural disasters, and emergencies must be made as soon as possible and therefore do not require the collection of TINs by an agency when the collection of such information could delay the payment process and endanger life or property.
- Where the agency does not expect to make more than one payment, in an amount of $200 or less, to the same recipient within a one-year period (i.e., the payment is non-recurring) and the cost of obtaining a TIN would be prohibitive; or
Several agencies noted that collecting TINs from individuals for one-time, small-dollar payments, such as refunds for overpayments, is economically prohibitive. FMS recognizes that it is not practical to collect TINs when an agency is making non-recurring, small-dollar payments and has accordingly established a de minimus amount of $200 under which amount an exception would exist.
- Where FMS determines that the collection or provision of a TIN is not in the best interest of the Government.
FMS reserves the right to provide exceptions, in addition to exceptions (a) through (d) of this Policy Directive, in circumstances where it determines that the collection or provision of a TIN cannot be performed due to a legitimate barrier.