1. Treasury Offset Program: How Federal and State Partnerships Can Cost Effectively Maximize
Debt Recoveries
National Association of State Auditors, Comptrollers, and Treasurers
NASACT/TOP Training Webinar
September 18, 2013 1

2. Opening Remarks Speaker Ronda Kent Speaker Alyssa Riedl
Bureau of the Fiscal Service
U.S. Department of the Treasury
Speaker Alyssa Riedl
Bureau of the Fiscal Service
U.S. Department of the Treasury
Moderator R. Kinney Poynter
Executive Director
NASACT
Speaker James Keifer
Compliance Administration
District of Columbia
Speaker Carol Marshall
Collection Division
State of Minnesota

3. Intentionally Left Blank

4. Bureau of the Fiscal Service
Mission We exist to promote the financial integrity and operational efficiency of the federal government through exceptional accounting, financing, collections, payments, and shared services.
Vision We will transform financial management and the delivery of shared services in the federal government.

5. FY 2012 Key Fiscal Service Statistics

6. Debt Management Services (DMS)
Mission We exist to identify, prevent, collect and resolve debt
owed to government agencies.
Vision We will transform government financial management as the provider of choice for shared services related to improper payments, receivables management, and delinquent debt collection.

7. The Role of DMS
Assist federal and state agencies in the collection of delinquent child support obligations, supplemental nutrition assistance program (SNAP) debts, income tax debts, unemployment insurance compensation debts, and other federal and state debts.
Provides access to the Do Not Pay program for the purpose of preventing, identifying and recovering federally-funded improper payments.

8. Debt Collection Legal Authorities
The Federal Government’s administrative debt collection activities are governed by a number of Federal laws, including:
Federal Claims Collection Act of 1966, Debt Collection Act of 1982, Debt Collection Improvement Act of 1996 and other laws, codified primarily in 5 U.S.C and 31 U.S.C et seq
Internal Revenue Code, Title 26 of the United States Code
Bankruptcy Code, Title 11 of the United States Code
Privacy Act of 1974, 5 U.S.C. 552a
Other statutes that apply to specific agencies, debt types or payment types
Treasury regulations, OMB policies, agency-specific regulations

9. Debt Collection Legal Authorities
Among other things, debt collection laws govern:
Type of due process required for various debt collection remedies
Example: 60 days notice required before a tax refund may be offset; 30 days notice required for most other debt collection actions
The amounts allowed to be collected through each mechanisms:
Example: TOP can offset 100% of a tax refund payment, but no more than 15% of a Federal salary payment; veterans benefit payments are exempt from offset
When debts may not be referred to Treasury for TOP
Example: Debts that are subject to a stay under the Bankruptcy Code are not eligible for referral

10. Debt Collection Programs
DMS collects delinquent debts for federal and state agencies (non-tax and tax) primarily through two programs: the Treasury Offset Program (TOP) and the Cross-Servicing Program.
DMS has collected a total of $6.87 billion as of August 2013 (an increase of % as compared to the same period in FY2012)
Treasury Offset Program - $6.72 billion as of August FY2013
Cross-Servicing Program - $153.5 million as of August FY2013
Cumulative collections over $60 billion since inception (1997)

11. TOP FY2013 Debt Collection Breakdown of $6.87B as of August 31, 2013
Tax Refund/Nontax Federal Debt
$2.7 billion
Administrative Offset/Nontax Federal Debt
$587.6 million
Tax Refund/Child Support
Tax Refund/Unemployment Insurance Compensation
Tax Refund/Other State Debts
$1.9 billion
$324.7 million
$596.3 million
Administrative Offset/State Debts (incl. child support)
$43.3 million
Tax Levy
$555.3 million

12. TOP State Success Stories

13. The State of Mississippi $7
The State of Mississippi $7.4 Million in Unemployment Fraud Recouped in Seven Days – WLBT: Mississippi News Now
WLBT, the Jackson, Mississippi, NBC affiliate aired a report in February 2012 concerning the increased collection of unemployment debts from those individuals collecting unemployment benefits fraudulently.
WLBT reported that the Mississippi Department of Employment Security had collected $7.4 million in its first week participating in TOP. This means that Mississippi was able to recoup 12% of their UIC debts in just the first seven days of using the program.

14. The State of New York Recovers $51M in Fraudulently Collected Unemployment Insurance via TOP
“Once again, New York is at the forefront of efforts to protect taxpayer dollars through preventing and collecting fraudulently-obtained government payments. Every dollar we recover through this program becomes available to eligible unemployed New Yorkers who are most in need of this vital economic safety net. We will continue to do everything we can to collect fraudulently-obtained benefits from people who don’t deserve them, and who are in fact stealing from their fellow New Yorkers.”
Andrew Cuomo, Governor
State of New York

15. The State of Maryland State Income Tax Program
“Maryland is leading the way in collecting back taxes,” said Comptroller Franchot.” Given the fiscal challenges we face, it’s critical we use all available resources to get any money owed to the state.”
State Reciprocal Program
“The offset program we conduct with the federal government is one of the most successful in the nation,” said Comptroller Franchot.“It keeps growing because were able to quickly certify more accounts to intercept.”
Peter Franchot, Comptroller
State of Maryland

16. Fiscal Year 2012 Annual Report to the States
“We are proud of the work we do in collecting delinquent child support, in partnership with the U.S. Department of Health and Human Services, Office of Child Support Enforcement, and participating states. These funds – $2.2 billion in FY 2012 – are repaid to states or provided to meet the needs of America’s families and children.”
David A. Lebryk, Commissioner
Bureau of the Fiscal Service

17. Treasury Offset Program (TOP)
Alyssa Riedl Director, Debt Collection Program Management Directorate

18. Treasury Offset Program (TOP)
TOP is a centralized offset program administered by the U.S. Department of the Treasury, Bureau of the Fiscal Service, to collect delinquent debts owed to federal agencies and states.
TOP requires creditor agencies to provide debtors with due process, including proper notices and dispute opportunities, as well as the chance to repay debts over time.
TOP sends notices to debtors when payments are offset. For recurring payments, TOP sends warning notices.

19. TOP State Programs
State Income Tax Program (SIT) - TOP offsets federal tax refund payments to payees who owe delinquent state income tax obligations.
State Reciprocal Program (SRP) - TOP offsets federal vendor and other non-tax payments to payees who owe delinquent debts to state agencies. In return, states offset payments to payees who owe delinquent debts to federal agencies.
Unemployment Insurance Compensation (UIC) Debts - In partnership with the U.S. Department of Labor, TOP offsets federal tax refund payments to payees who owe delinquent unemployment insurance compensation debts due to fraud or a person’s failure to report earnings.
Child Support Program - States submit delinquent child support obligations to the Office of Child Support Enforcement (OCSE), which in turn submits the debts to TOP for collection through the offset of federal tax refund and other eligible payments.
Supplemental Nutritional Assistance Program - The Department of Agriculture-Food and Nutrition Service (FNS), in collaboration with state offices administering the Food Stamp Program, submit food stamp recipient debts to Treasury for offset of tax refund, federal vendor, salary, federal retirement, Social Security, Railroad Retirement, and state payments.

20. Treasury Offset Program State Programs
TOP Database
KEY
SRP - State Reciprocal Program
UIC - Unemployment Insurance Compensation
Child Support Debt
Unemployment Insurance Compensation Debt
Child Support
Child Support
UIC
SRP
Federal Tax Refund Payments
State Income Tax Debt
Federal Non-Tax Payments
(Vendor, Travel, Misc.)
SRP
State
Income
Other State Debt
SRP
State Programs
Federal Non-Tax Debt
State Payments
(Vendor, State Tax Refunds, Other)
Federal Programs
SRP 18

21. TOP State Delinquent Debt Collections FY 2008 - 2013 (in millions)
PROGRAM
FY 2008
FY 2009
FY 2010
FY 2011
FY 2012
FY 2013*
Income Tax
$375.8
$368.1
$434.5
$475.5
$561.8
$596.6
State Reciprocal
$27.7
$409.3
$22.5
$37.5
$53.8
$35.2
Unemployment Insurance Compensation Debts --
$25.8
$132.9
$324.8
Child Support
$2,825.6
$2,181.1
$2,106.7
$2,312.8
$2,254.8
$1,932.0
SNAP
$115.5
$89.8
$84.6
$102.5
$118.0
$117.7
Grand Totals:
$3,344.6
$3,048.3
$2,648.3
$2,954.1
$3,121.3
$3,006.3
*As of August 31, 2013

22. “Top 10” State Income Tax CY 2012
State Name
Offset
Count
Net Collection
Amount
California
71,672
$73,302,490
New York
93,657
$66,140,756
Maryland
67,859
$59,100,165
Georgia
33,008
$26,280,418
Louisiana
41,739
$25,990,030
Ohio
32,281
$25,667,138
Illinois
53,325
$23,528,935
Alabama
62,347
$19,492,688
Missouri
32,549
$19,383,596
New Jersey
31,808
$19,247,543
Total – 40 States and DC
850,065
$559,799,270

23. UIC CY 2012 Collection Totals
State Name
Offset
Count
Net
Collection
Amount
Total
Of Debt
Referred
Percent
Collected
Alabama
4,972
$3,631,792
$18,100,039
20.07%
Arizona
8,978
$5,372,569
$85,618,651
6.27%
Arkansas
346
$257,840
$65,688,581
0.39%
Connecticut
1,653
$1,058,452
$24,119,445
4.39%
District of Columbia
296
$358,513
$8,360,871
4.29%
Georgia
243
$188,384
$15,508,863
1.21%
Illinois
21,142
$21,142
$210,897,837
16.81%
Louisiana 46
$63,392
$24,033,005
0.26%
Maryland
11,426
$16,468,152
$99,551,103
16.54%
Michigan
2,175
$5,591,231
$104,487,236
5.35%
Minnesota 65
$106,288
$111,926,750
0.09%
Mississippi
23,049
$14,579,094
$47,787,611
30.51%
New Hampshire 25
$21,856
$8,234,002
0.27%
New York
29,230
$29,848,406
$145,135,869
20.57%
Pennsylvania
4,092
$9,534,640
$49,790,488
19.18%
South Carolina 8
$4,903
$38,940,953
0.01%
South Dakota
112
$72,651
$2,742,377
2.65%
Tennessee
145
$128,234
$42,790,488
0.30%
West Virginia
370
$223,761
$4,749,148
4.71%
Wisconsin
8,068
$11,674,318
$87,298,004
13.37%
Total – All States
116,441
$134,631,777
$1,195,674,226
11.26%

24. State Reciprocal Program CY 2012 Collection Totals
State Name
Offset
Count
Net Collection
Amount
Kentucky
2,846
$7,144,856
Maryland
2,587
$9,563,463
Minnesota
589
$1,184,011
New Jersey
2,600
$3,187,655
New York
2,472
$5,432,868
Wisconsin
861
$1,598,761
Total – All States
11,955
$28,111,615

25. Why Join SRP? What are the Benefits?
Ability to collect millions of dollars in unpaid debt annually
Access to federal non-tax payment offsets for the UIC and state tax programs
Recovery of valuable funds for federally sponsored programs
Opportunity to maximize your states’ debt collection potential

26. States Participating in Income Tax, SRP, & UIC in CY2012
Name
Offset
Total
Net Collection
Maryland
81,872
$85,131,780
Minnesota
11,076
$8,016,527
New York
125,359
$101,422,030
Wisconsin
16,742
$21,035,244

27. State Identified Challenges

28. Centralization Legislation Funding Technology Other
While centralizing a state’s debt portfolio and payment streams is ideal, it is not a requirement for participation in the program. TOP works with states to find a way to make the program work for their agency.
Legislation
Fiscal Service is committed to assisting states with the process of obtaining legislation. In doing so, we provide:
Sample legislation and support from the Fiscal Service legal team
a Legislative Forum for State Attorney Generals/staff
Funding Technology
States face challenges in funding new technology to connect with TOP in the current economic climate.
TOP is exploring options for Fiscal Service to support states.
Other

29. TOP Solutions for States

30. The TOP Partial Match Process
Partial match occurs when the social security number (SSN) or employer identification number (EIN) of a TOP debtor matches the SSN or EIN of a payee, but the debtor’s name does not match the payee’s name.
States can obtain a list of these matches by requesting a Debtor Locator Report (DLR) from TOP.
If your state can verify that the individual or entity receiving the payment is the same individual or entity who owed the debt, your state may add the newly identified name variation to TOP as an alias for future payment offset.

31. TOP Legislation/Regulation Checklist for States
Essential Items: While states must abide by all the terms of the reciprocal agreement, the following are most often affected by state legislation:
Authority to offset state tax refunds - If the state issues any tax refunds, they must be subject to offset to collect federal debts.
Authority to offset other state payments - Legislative authority should be broad enough to include all state payments specified in the reciprocal agreement.
Authority for appropriate state official to submit state debts to TOP - TOP generally only accepts one or two points of connection with a state; so the authorized official(s) should be the officials that are capable of submitting the debt.
Authority for Fiscal Service to deduct a fee from offset collections - Federal law requires that Fiscal Service charge a fee to cover its costs of running the TOP program. Fiscal Service withholds a portion of each collection it makes from a federal payment for a state as its fee. States are free to add that fee amount to the debt balance, if state law authorizes it.
No authority to charge Fiscal Service a fee - Federal law does not permit Fiscal Service to pay a fee to the states when the state offsets a payment to collect a federal debt.
Due process - State law cannot require Fiscal Service or federal agencies to provide
different due process from that set forth in the agreement and in 31 CFR

32. What’s New with TOP?

33. TOP’s New Web Client Coming December 2013!
DMS is developing a new system to replace the current year old system that will improve TOP efficiencies and increase TOP collections by enabling:
Increases in payment streams that can be offset
Increases in debt volume that can be collected by offset
Improve matching logic
For TOP users this change will appear seamless, as the new TOP Web Client does not require any system changes of users.

34. Benefits of TOP’s New Web Client
The new web client version will include the following benefits for users:
Newly Enhanced User Screens
Ability to view debt/debtor information in one place to include: Offset Activity, Non Offset Activity, Agency Refund and Reversal Activity
Access to information on the File Receipt, Processing Status and Processing Statistics for Creditor Agencies
Ability to view captured information for bypassed payments fully matched to a debt
Capability to set bypass and override at the payment agency level
Sign up online for TOP’s new Web Client training at

35. Expanding SRP Program
TOP is seeking to identify new debt and payment streams from states currently in the SRP and those planning to join. Specifically, to identify:
potential debt streams that may require statutory or regulatory changes
potential payment streams that may require statutory or regulatory change

36. Working with States to Help Them Understand State Debts in TOP and How They Affect Federal Payments
State Debts in TOP Process:
TOP will offset a payment when the Taxpayer Identification Number (TIN) of a state agency receiving a payment is the same as the TIN of the state agency owing the debt.
TOP sends a letter notifying the payee state agency of the offset, if available. If not, TOP will use the debtor agency address.
TOP Report Designed for States
Treasury Offset Division (TOD) can provide your state with a report to help identify debts owed by state agencies, and assist you with the resolution and payment of these debts.
A written authorization from your state’s Comptroller is required for TOD to release this information at the beginning of each month.

37. Working with States to Help Them Understand State Debts in TOP and How They Affect Federal Payments (2)
New Online information Provided for States:
How to resolve debts owed to the federal government
Frequently Asked Questions
A link to State Comptrollers on NASACT’s website
Visit:
Working together with AGA, States and Federal Agencies to develop new pilots and solutions.

38. Increasing Communication and Soliciting Feedback with States
TOP wants to hear directly from states about their challenges, experiences, best practices, and program recommendations for SRP. These are some of the new ways we are communicating with states:
Annual Report to the States
Offsets Matter – TOP’s bi-monthly news for states
Quarterly Meetings with Participating States
Industry Conferences and Meetings
Individual State Executive Meetings
Enhanced Customer Relationship Engagement
(Pre and Post Implementation)
View Offsets Matter online at

39. The District of Columbia
James Keifer Deputy Director, Compliance Administration

40. The District of Columbia
TOP participant since 1997
Implemented the Reciprocal Offset Process in March 2013 at a cost of $401,695
Certified 43,845 Non-income tax debts, as new offset candidates, valued at $63 million
$15.6 million collected in the first six months of participation

41. Debt Types Added
Previously certified with TOP for Refund Offset were Individual Income Tax, Corporate Income Tax and Un-Incorporated Franchise Tax debts.
Non-Income Tax Debts added for Administrative Offset:
Sales and Use Tax
Withholding Tax
Personal Property Tax
Motor Fuel Tax
The District’s Ballpark Fee
Specialized Events and Specialized Sales

42. Working Towards …
Certifying debts for Administrative Offset for the following City Agencies:
Employment Security Administration
Central Collections Unit
Adding additional offset eligible payment sources for the State Payment Offset

43. Why the District of Columbia was Interested in Participating in TOP
Enhanced the District’s ability to resolve liabilities where 40% of its outstanding tax debt resides beyond its borders. The State Reciprocal Program, unlike TOP, is not limited to collecting from residents living within its legal borders, it allows collecting from debtors regardless of where they reside.
The Federal Government is the District’s largest employer.
We witnessed the pilot program successes of neighboring Maryland.

44. What the District of Columbia was Doing
In the fall of 2009, the District had an automated tax refund offset process to satisfy city government debts,
and …
We participated in TOP
The District did not have an automated intercept program to capture internal D.C. Government payments.

45. What a Closer Look Found
Our internal intercept programs were inadequate. We did not have the necessary legislative support and did not have an adequate IT platform to identify and process intercepts
The Treasury Offset Program (TOP) IT platform would need a complete re-design to accommodate the additional debt types and processing schedules
The City-wide vendor payment accounting system, in its current state, was not capable of processing payment offsets.

46. With So Much to Consider – the District of Columbia Ran a Test
TOP suggested that we provide them a file of debts eligible under the program guidelines
In April, 2010, we submitted a limited file with a debt balance of $21 million
TOP matched our debt file against their January 2010 payment file, and the unexpected result …
1,596 payment offsets valued at $4,001,978.63
A strong argument for DC to participate in the program

47. District of Columbia Addresses the Challenges
Amended the District Tax Code to permit D.C. Treasury Offsets
Developed an automated levy process to capture City contract payments to satisfy tax debts
Realizing additional collections of $2 million annually

48. District of Columbia Addresses the Challenges (2)
Introduced legislation to allow the District to participate in Treasury’s State Reciprocal Program. A Bill was drafted and sent to the City Council in November 2010 to amend chapter 1 of title 47 of the D.C. Official Code to provide authority for collecting debts through the United States Treasury Offset Program; authorizing the Chief Financial Officer to enter into an agreement with the Secretary of the Treasury, specifying reduction and offset of payments for collection of debt; authorizing payment of a fee to the Secretary of the Treasury; authorizing agency participation.
Used Maryland’s legislative code as a model
D.C. Code Section became effective on April 8, 2011.

49. District of Columbia Addresses the Challenges (3)
Program(s) Development
Two accounting systems
Tax based processing system (TAS)
Debt management
Tax refund processing
Citywide System of Accounting and Reporting
(SOAR) R*STARS
Contract Vendor payment distributions

50. District of Columbia Addresses the Challenges (4)
Identify all of the players
Multiple City Agencies
Multiple Administrations within each Agency
Dedicated programming resources within each Agency
Conflicting priorities and vision

51. TAS Development Modified the current TOP file process
Retired the weekly debt recertification
Installed new database tables to track and report changes
Modernized our file transmission service
Expanded TOP site I.D.s for improved payment controls
Included non-income tax debts
Modified the process of issuing tax refunds
Delayed the refund approval by one day to allow for the notification cycle to complete
Attached a review item to each potential refund to allow the refund to be identified but not issued
Installed an auto release for each item to prevent a stalled refund request
Modified the automated carry-over for FMS overpayments

52. Notice Redevelopment
Modified our existing Enforcement Notice (certified mail) to include the Administrative Offset language
Developed Offset Notification letters for payments captured for Federal Agencies
Developed a Due Process notice, sent to every taxpayer with an outstanding District tax liability
103K notices mailed
Unexpected but necessary cost

53. Due Process Notice

54. TAS Development (2) Payment Processing
Dedicated bank accounts established to send and receive offsets
Reports modified to reconcile accounts
Funds distribution protocols developed

55. SOAR Development New liability offset subsystem developed
Process to extract data from eligible payments, create a vendor extract file and transmit the file to Fiscal Service
New rules for determining eligible payments based on vendor profiles, type and source of the payment
Applications designed to process a match file of federal debts received from Fiscal Service
Installed new payment work tables, liability match tables, escrow tables and a process for payment liquidations and transfers to escrow accounts

56. SOAR Development (2) Process to release escrowed payments
Initiating payment release transactions
Creating and transmitting to Fiscal Service the Vendor Update file
Programs to process the FMS acknowledgement file
Updating the liability tables, escrow tables and release tables
Drafting entrees on the Notice of Payment Offset file that is forwarded to TAS for printing

57. SOAR Development (3) Reports
Federal Liability Offset Capture Control report
Auto Release to Vendor Control report
Federal Liability Offset Vendor Release Control report
Vendor Match File Detail Error report
TOP Acknowledgment File Detail Error report
Online references modified
Existing online processing and inquiry applications were updated, new online screens added and training courses developed

58. What Could the District of Columbia Have Done Better
What Could the District of Columbia Have Done Better? Recommendations for States
Identify the players
Define the requirements
Limit the changes to the requirements
Manage the late developing processes

59. The State of Maryland, As a Model

60. Maryland in the State Reciprocal Program (SRP) Offset Pilot
After an August 2005 conference call with TOP, Maryland agreed to participate in the State Reciprocal Program pilot. The State has been a TOP participant since 1996.
Implementation Timeline
Tax based processing: 18 months
Contract Vendor payment, R*STARS: 12 months
Implementation Costs
$1,314,629 contract costs plus other internal costs
Recurring cost; for in-house personnel and maintenance

61. Maryland SRP Offset Pilot (2)
Legislative process
Comptroller worked with FMS to draft the initial legislation
Passed without modifications
Expanded debt file included
Withholding Tax
Corporate Income Tax
Sales and Use Tax
Admissions and Amusement Tax
DLLR, Employment Security
CCU, Central Collections Unit

62. Maryland in the SRP Offset Pilot (3) -- The Successful Results
Reciprocal Offset Collections for the first 6 months, July through December 2007 was $12,508,452.45
In 2008, tax collections increased by about a factor of 8 while vendor offsets decreased by a factor of 3. Second year collections for the program exceeded $11 million.
Vendors became aware of the process, continuing liabilities were being satisfied
Total Reciprocal Offset receipts - $63,834,007

63. Maryland in the SRP Offset Pilot (4) – A Look Back at Important Project Notes
The Comptroller had a well defined project plan with support from top level administrators
As one of only two States in the project pilot, Maryland relied on FMS to guide them through the legal and regulatory issues
The tax based system was modified by in-house developers while R*STARS required contractual assistance
Refund offset processing was implemented first. The State vendor payment offset process experienced issues with batch process timing and was delayed.
In the first full year, Maryland captured 6,345 State Income Tax refunds for Federal debts totaling $2,833,591.

64. Maryland’s Suggestion for Your State’s Success
Ensure the project has a strong Project Manager that implements following established system development life cycle methodologies.

65. Intentionally Left Blank

66. Carol Marshall Revenue Tax Supervisor, Collection Division
The State of Minnesota
Carol Marshall Revenue Tax Supervisor, Collection Division

67. Minnesota Participation in TOP
TOP Collection Totals in 2012
Department of Revenue (DOR)
State Income Tax – 2001
State Reciprocal – May 2012
Department of Employment & Economic Development (DEED)
Unemployment Insurance Compensation – Sept 2012
Department of Health & Human Services (DHS)
Child Support

68. Minnesota Treasury Offset Programs FY2013 (July 2012 thru June 2013)
State Income Tax (SIT) – (source DOR)
$8.0 M
State Reciprocal (SRP) – (source DOR)
$1.8 M federal offsets/pay state debts (goal 3.8M)
$9.6 M state offsets/pay federal debts
$369,000 state offset fees/charged to debtor
January thru July 2013
Unemployment Insurance Compensation (UIC) – (source Fiscal Service)
$15.0 M

69. Minnesota Legislation State Reciprocal Program
2011 Special Legislative Session
July 2011 State of Minnesota shutdown
Enacted into law July 21, 2011
Section 270C.41 Subd. 2.Reciprocal offset agreements
May charge an offset fee of $20 per transaction
Offset cost from debtor
Implement by April 23, 2012
Actual May 31, 2012
Collection Goals:
FY $500,000 and FY $3.8 M = $4.3 M
Option: Contingency Fee Agreement with a non-state vendor

70. Minnesota SRP Key Points
Good Support by Legislature to implement law change
SRP offsets federal payments for businesses too
New Centralized Accounting Systems
Department of Revenue – Gentax (FAST Enterprises)
Replaced more than a dozen legacy systems
Minnesota Management & Budget (MMB) – SWIFT
Upgrade from Connect: Enterprise to Connect: Direct
Manual to Automated
Key Contacts Internally and Externally
DOR
MMB
Fiscal Service

71. Minnesota SRP Challenges Identified
Legislative Goals
Implementation Date – April 23, 2012
Actual May 30, 2013 (goal $500,000)
FY 2012 ended June 30, 2013
Formed a TOP “SRP” Team
Business & Technical Project Managers
Separate sub-teams to develop DOR and MMB process
Intent to Offset Letters (60 day notice)
Mailed prior to actual implementation

72. Minnesota SRP Challenges Identified (2)
TAG Manual – Federal Agency vs. State Agency Information
SRP Agreement, Security Agreement and MOU
Definitions & Terms - Ex: Vendor
Legal
Taxpayer Rights Advocate
New Accounting Systems – Delayed Implementation
Systems – Conversion to Connect: Direct Delayed
Needed key contacts for purchase, implement and test
FMS/BPD Consolidation

73. Minnesota SRP Challenges Identified (3)
Reversal Process for Invalid Offsets and Non-Liable Claims
No prior testing - Process not clearly defined
DOR acts as broker between Fiscal Service and MMB
System limitations
Identify Subject Matter Experts/Resources
Collection – Legal – Technical – Security Agreement

74. Minnesota Recommendations/Solutions for States
Provide more education
Federal and state statutes
Terminology/Definitions
offsets, intercept, revenue recapture
Understand all the processes (all stakeholders)
Ongoing education of staff
Establish clearly defined processes with all parties
Disputes
Hardship claims
Non-liable spouse claims
Reversal of claims

75. Minnesota Recommendations/Solutions for States (2)
Certified Mail Requirement – Income Tax claims
Eliminate this requirement and reduce our cost
Currently $3.56 per letter
60,000 letters = $213,600
Refund of Overpayments
State transmits updates daily – Fiscal Service pays weekly
Recommend Fiscal Service pays more frequently
Full refunds – we also refund Fed Offset fee
- DOR General Budget

76. Minnesota Recommendations/Solutions for States (3)
Partial Match Process Handled by TOP Staff
Must participate in UIC (UIC managed by DEED not DOR)
DOR does not currently have capability for aliases
Have TOP staff handle for DOR
DOR to research enhancing their system/process
Testing
More Testing
Testing is Critical

77. Minnesota DOR Collection Division
Established “Offset Program” Team – they’re the TOPS!
Adjustments, reversals and refunds
Non-liable spouse claims
Disputes and hardship claims
Subject matter experts
Key contacts for staff, legal, TRA and FMS
DOR refund process
Refunds held 2 days pending a match to TOP federal file
Businesses – majority of federal vendors with DOR debts
Good collections results on non-Minnesota businesses
Majority of state offsets for US Dept of Education debts
Highest volume of non-liable spouse claims

78. Minnesota DOR Collection Division (2)
Federal definition of “vendor” not clear
Complaints from debtors, TRA office and legal regarding offsets of federal travel reimbursements
Plain Language Initiative
Declared by State of Minnesota Governor Mark Dayton
All State Agencies
DOR - Each Division has a Team
Focus on Highest Volume Letters
Top Priority – Intent to Offset letters sent by Collections
September 5, 2013 first printing

79. Ronda Kent Deputy Assistant Commissioner, Debt Management Services
DMS/TOP Initiatives
Ronda Kent Deputy Assistant Commissioner, Debt Management Services

80. The Partnership Fund for Program Integrity, Innovation, and Recovery of Federal/State Funds via the TOP Pilot
Various laws authorize Treasury to collect debts on behalf of States.
Limited authority to offset certain types of payments to collect debts owed to States, namely Federal income tax refunds and benefit payments.
In January 2011, state representatives were invited to join the team to develop potential pilot programs including how to utilize the Treasury Offset Program to aid in collection.
In June 2011, OMB’s Partnership Fund provided funding for the pilot to gather data for these programs from participating states.
Purpose: To simulate and test the concept of collecting debts arising out of Federally funded, state managed program debts through the TOP by intercepting Federal tax refunds and other Federal payments to delinquent debtors prior to disbursement.

81. The Partnership Fund for Program Integrity, Innovation, and Recovery of Federal/State Funds via the TOP Pilot
Seven states were selected to participate in the simulation:
Arkansas, Illinois, Kansas, North Carolina, Texas, Washington, and Wisconsin
Programs included:
Temporary Assistance for Needy Families
Child Care
Medicaid
Foster Care
Aid to Families with Dependent Children
One month of payment data (February 2011) from three federal sources:
Federal income tax refunds (IRS)
Retirement payments (OPM; 25%)
Social security payments (SSA; 15%)

82. The Partnership Fund for Program Integrity, Innovation, and Recovery of Federal/State Funds via the TOP Pilot
No actual offsets were processed during the simulation
Contractor evaluated and validated the pilot methodology
Reviewed TOP processes
Extrapolated pilot results to develop nationwide, 10-year estimates for state- submitted debt collection
Contractor Report includes:
Summary of results by state, program and payment type
Estimated costs
Projected offsets
Projected recovery rates
Projected potential savings in ranges with low, medium and high results over 1, 5 and 10 year periods
Interagency report is being developed to accompany the contractor report (expected release date: November 2013)

83. Do Not Pay Program

84. Do Not Pay Objectives Tactical Strategic
Provide agencies with centrally-provided, IPERIA-mandated & agency-driven information that helps them avoid and reduce and recover improper payments
Tactical
Identify potentially improper payments by comparing agency payments to lists of ineligible recipients
Provide agencies with:
analytical insights about payments to potentially ineligible recipients to help them identify systemic sources of improper payment and/or potential fraud
information about patterns of improper payments to help them identify systemic sources of improper payment and/or potential fraud
analytical insights about the sources of future improper payments

85. Do Not Pay Solution
Do Not Pay can be incorporated into all parts of the payments stream. It can be aligned with existing business processes
and an agency’s mission.
Pre-Payment
Re-Verify or Monitor Program Eligibility for Payments
Research Matches
Post-Payment
Trending & Analytics
Reporting
Corrective Action
Pre-Award
Verify Federal Award Eligibility
User submits data for entities receiving payments or being monitored & receives matching results.
User submits data for entities under consideration & receives matching results.
Data Analytics Services staff analyze the data and trends and provide reports to support agency investigation and recovery efforts.

86. Questions? Speaker Ronda Kent Speaker Alyssa Riedl
Bureau of the Fiscal Service
U.S. Department of the Treasury
Speaker Alyssa Riedl
Bureau of the Fiscal Service
U.S. Department of the Treasury
Moderator R. Kinney Poynter
Executive Director
NASACT
Speaker James Keifer
Compliance Administration
District of Columbia
Speaker Carol Marshall
Collection Division
State of Minnesota

87. Intentionally Left Blank

88. District of Columbia
Contact: James Keifer
Phone:
Website:
Phone: 88

89. State of Minnesota TOP State Programs
Contact: Carol Marshall
Phone:
TOP State Programs
Contact: David Burgess
Phone:
Website: