Transcript Overview of Debt Setoff and Treasury Offset Program
Virginia Department of Taxation Presentation to Virginia Municipal League and Virginia Association of Counties
Richard C. Dotson Assistant Tax Commissioner October 25, 2011
VML/VACO Seminar to Improve Delinquent Collections
Department of Taxation
Overview of Debt Setoff and Treasury Offset Program (TOP)
VML/VACO Seminar to Improve Delinquent Collections The Virginia Department of Taxation (TAX) administers the Set-Off Debt Collection program. Government units and courts that submit claims are referred to as claimant agencies.
A match against the claim and a Virginia individual tax refund, state lottery prizes, and vendor funds will only occur when authorized by the claimant agency.
VML/VACO Seminar to Improve Delinquent Collections • The program consists of Individual Set-Off and the Comptroller’s Vendor Debt Set-Off (CDS) Program Individual Set-Off Collection Program • Legal remedy for collection of debts owed to Commonwealth’s administrative units and courts • Established in 1981 • The Code of Virginia Set-Off Debt Collection Act, Section 58.1520 through 58.1535 and the State Lottery Law, Section 58.1-4028 • All State Agencies, State Authorities, Courts, Counties, and Towns can participate
VML/VACO Seminar to Improve Delinquent Collections Comptroller’s Vendor Debt Set-Off (CDS) Program • Intercepts vendor payments to offset debts owed by vendors to state agencies • Established as a collaborative effort between the Department of Accounts (DOA) and Department of Taxation (TAX) • Debt Collection Act, Sections 2.1-726 through 2.1-735 of the Code of Virginia • Only State Agencies can participate
VML/VACO Seminar to Improve Delinquent Collections
Program Cycle
November 1 First day agencies are eligible to submit claims January 1 Starts participating year Claims are now eligible to be matched
VML/VACO Seminar to Improve Delinquent Collections
Participation in the Program
• New participants must visit www.tax.virginia.gov to view the Setoff Program Guide.
• New agencies must participate in online training.
• A Set-Off Participation Form along with a letter of authorization signed by the head of the governing body is required (e.g., Mayor, Treasurer, County Supervisor).
VML/VACO Seminar to Improve Delinquent Collections
Current Participants
(in order of priority)
• Department of Taxation • Support Enforcement, Department of Social Services • State Agencies, State Boards, State Authorities and Courts • Counties, Cities, Towns, County Authorities, City Authorities and Local Departments of Social Services • 938 total participants
VML/VACO Seminar to Improve Delinquent Collections The 938 participants consists of the following: State Agencies Local Agencies Courts (Circuit and District) 185 416 337
VML/VACO Seminar to Improve Delinquent Collections
Set-Off Collection Summary
Fiscal Year Paid Claims Dollar Amount
2009 2010 2011 308,051 294,703 309,642 $48,503,841 $47,510,437 $51,988,998
VML/VACO Seminar to Improve Delinquent Collections
Vendor Debt Collection Summary
TRANSACTION_TYPE 2010 2011 Grand Total
DCA (VA Tech) Offset Paid DOA Offset Paid 1,280,262.06 18,106.11 1,700,144.18
18,106.11 2,980,406.24
Lottery Offset Paid 531,557.27 808,010.48
1,339,567.75 Grand Total 49,861,657.88
53,764,768.10
56,291,028.87 101,814,606.65 106,152,686.75
VML/VACO Seminar to Improve Delinquent
Treasury Offset Program (TOP)
• A federal program that allows states to submit delinquent debts to be “offset” against the federal income tax refunds.
• “Offset” means TAX can take a federal income tax refund to pay an eligible tax debt.
• TOP is administered by the Federal Management Service (FMS) which is part of the U.S. Department of the Treasury. • TAX must send a certified letter to the taxpayer 60 days before an account can be assigned to TOP. TAX sends out certified letters quarterly with an annual average of 100,000 per year.
VML/VACO Seminar to Improve Delinquent Collections
Treasury Offset Program (TOP)
• TAX pays FMS a fee of $21 for every successful match. TAX must absorb the fee. We are not permitted, by state regulations, to charge the fee to the taxpayer.
• To be ‘eligible’ for TOP. A bill must have a balance greater than $100, be at least 90 days delinquent and not more than 10 years old, and not under bankruptcy or 1821 appeal.
VML/VACO Seminar to Improve Delinquent Collections
FY Treasury Offset Program (TOP) Collection Summary Number of Offsets Total Cycle Collections Total Fees Paid to FMS Net Cycle Collections
09
25,090 16,016,872 551,980 15,465,737
10
17,416 12,726,067 367,263 12,363,805
11
18,010 12,541,689 397,910 12,346,781
VML/VACO Seminar to Improve Delinquent Collections