The Treasury Offset Program

December 17, 2018

If you do business with or work for the federal government, then you should know about the Treasury Offset Program (TOP).  Under the TOP, if you owe money to a federal agency or a state, or owe child support, the federal government can offset or take in full your federal tax refund, or any other payment owed to you by the federal government.  For example, if you are a contractor doing business with the federal government, they can retain any of the payments that are due to you from the government, irrespective of your other commitments (i.e., to suppliers, employees, etc.).

There are some rules.  Among them is the amount the government is allowed to collect:  

• Federal tax refund - up to 100% to collect federal nontax debts, child support, and state income tax and unemployment insurance debts
• Vendor and federal employee travel-related payments - up to 100% for all debts
• Federal salary – up to 15% of disposable pay for federal tax and nontax debts and up to 50-65% for child support debts
• OPM retirement – up to 25% for federal nontax debts and 15% for federal tax debts
• Social Security and Railroad Retirement benefits – up to 15% for federal tax and nontax debts
• State payments of all kinds – up to 100% for federal nontax debts 

There are some exemptions.  If you are in a situation where the state or federal government might offset a payment to cover a debt, call Post Polak for assistance.