Presentation on theme: "Treasury Offset Program: How Federal and State Partnerships Can Cost Effectively Maximize Debt Recoveries National Association of State Auditors, Comptrollers,"— Presentation transcript:
1Treasury Offset Program: How Federal and State Partnerships Can Cost Effectively Maximize Debt RecoveriesNational Association of State Auditors, Comptrollers, and TreasurersNASACT/TOP Training WebinarSeptember 18, 20131
2Opening Remarks Speaker Ronda Kent Speaker Alyssa Riedl Bureau of the Fiscal ServiceU.S. Department of the TreasurySpeaker Alyssa RiedlBureau of the Fiscal ServiceU.S. Department of the TreasuryModerator R. Kinney PoynterExecutive DirectorNASACTSpeaker James KeiferCompliance AdministrationDistrict of ColumbiaSpeaker Carol MarshallCollection DivisionState of Minnesota
4Bureau 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.
6Debt Management Services (DMS) Mission We exist to identify, prevent, collect and resolve debtowed 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.
7The Role of DMSAssist 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.
8Debt 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 seqInternal Revenue Code, Title 26 of the United States CodeBankruptcy Code, Title 11 of the United States CodePrivacy Act of 1974, 5 U.S.C. 552aOther statutes that apply to specific agencies, debt types or payment typesTreasury regulations, OMB policies, agency-specific regulations
9Debt Collection Legal Authorities Among other things, debt collection laws govern:Type of due process required for various debt collection remediesExample: 60 days notice required before a tax refund may be offset; 30 days notice required for most other debt collection actionsThe 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 offsetWhen debts may not be referred to Treasury for TOPExample: Debts that are subject to a stay under the Bankruptcy Code are not eligible for referral
10Debt 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 FY2013Cross-Servicing Program - $153.5 million as of August FY2013Cumulative collections over $60 billion since inception (1997)
11TOP FY2013 Debt Collection Breakdown of $6.87B as of August 31, 2013 Tax Refund/Nontax Federal Debt$2.7 billionAdministrative Offset/Nontax Federal Debt$587.6 millionTax Refund/Child SupportTax Refund/Unemployment Insurance CompensationTax Refund/Other State Debts$1.9 billion$324.7 million$596.3 millionAdministrative Offset/State Debts (incl. child support)$43.3 millionTax Levy$555.3 million
13The State of Mississippi $7 The State of Mississippi $7.4 Million in Unemployment Fraud Recouped in Seven Days – WLBT: Mississippi News NowWLBT, 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.
14The 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, GovernorState of New York
15The 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, ComptrollerState of Maryland
16Fiscal 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, CommissionerBureau of the Fiscal Service
17Treasury Offset Program (TOP) Alyssa Riedl Director, Debt Collection Program Management Directorate
18Treasury 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.
19TOP State ProgramsState 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.
20Treasury Offset Program State Programs TOP DatabaseKEYSRP - State Reciprocal ProgramUIC - Unemployment Insurance CompensationChild Support DebtUnemployment Insurance Compensation DebtChild SupportChild SupportUICSRPFederal Tax Refund PaymentsState Income Tax DebtFederal Non-Tax Payments(Vendor, Travel, Misc.)SRPStateIncomeOther State DebtSRPState ProgramsFederal Non-Tax DebtState Payments(Vendor, State Tax Refunds, Other)Federal ProgramsSRP18
21TOP State Delinquent Debt Collections FY 2008 - 2013 (in millions) PROGRAMFY 2008FY 2009FY 2010FY 2011FY 2012FY 2013*Income Tax$375.8$368.1$434.5$475.5$561.8$596.6State Reciprocal$27.7$409.3$22.5$37.5$53.8$35.2Unemployment Insurance Compensation Debts--$25.8$132.9$324.8Child Support$2,825.6$2,181.1$2,106.7$2,312.8$2,254.8$1,932.0SNAP$115.5$89.8$84.6$102.5$118.0$117.7Grand 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 NameOffsetCountNet CollectionAmountCalifornia71,672$73,302,490New York93,657$66,140,756Maryland67,859$59,100,165Georgia33,008$26,280,418Louisiana41,739$25,990,030Ohio32,281$25,667,138Illinois53,325$23,528,935Alabama62,347$19,492,688Missouri32,549$19,383,596New Jersey31,808$19,247,543Total – 40 States and DC850,065$559,799,270
23UIC CY 2012 Collection Totals State NameOffsetCountNetCollectionAmountTotalOf DebtReferredPercentCollectedAlabama4,972$3,631,792$18,100,03920.07%Arizona8,978$5,372,569$85,618,6516.27%Arkansas346$257,840$65,688,5810.39%Connecticut1,653$1,058,452$24,119,4454.39%District of Columbia296$358,513$8,360,8714.29%Georgia243$188,384$15,508,8631.21%Illinois21,142$21,142$210,897,83716.81%Louisiana46$63,392$24,033,0050.26%Maryland11,426$16,468,152$99,551,10316.54%Michigan2,175$5,591,231$104,487,2365.35%Minnesota65$106,288$111,926,7500.09%Mississippi23,049$14,579,094$47,787,61130.51%New Hampshire25$21,856$8,234,0020.27%New York29,230$29,848,406$145,135,86920.57%Pennsylvania4,092$9,534,640$49,790,48819.18%South Carolina8$4,903$38,940,9530.01%South Dakota112$72,651$2,742,3772.65%Tennessee145$128,234$42,790,4880.30%West Virginia370$223,761$4,749,1484.71%Wisconsin8,068$11,674,318$87,298,00413.37%Total – All States116,441$134,631,777$1,195,674,22611.26%
24State Reciprocal Program CY 2012 Collection Totals State NameOffsetCountNet CollectionAmountKentucky2,846$7,144,856Maryland2,587$9,563,463Minnesota589$1,184,011New Jersey2,600$3,187,655New York2,472$5,432,868Wisconsin861$1,598,761Total – All States11,955$28,111,615
25Why Join SRP? What are the Benefits? Ability to collect millions of dollars in unpaid debt annuallyAccess to federal non-tax payment offsets for the UIC and state tax programsRecovery of valuable funds for federally sponsored programsOpportunity to maximize your states’ debt collection potential
26States Participating in Income Tax, SRP, & UIC in CY2012 NameOffsetTotalNet CollectionMaryland81,872$85,131,780Minnesota11,076$8,016,527New York125,359$101,422,030Wisconsin16,742$21,035,244
28Centralization 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.LegislationFiscal 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 teama Legislative Forum for State Attorney Generals/staffFunding TechnologyStates 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
30The 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.
31TOP 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 providedifferent due process from that set forth in the agreement and in 31 CFR
33TOP’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 offsetIncreases in debt volume that can be collected by offsetImprove matching logicFor TOP users this change will appear seamless, as the new TOP Web Client does not require any system changes of users.
34Benefits of TOP’s New Web Client The new web client version will include the following benefits for users:Newly Enhanced User ScreensAbility to view debt/debtor information in one place to include: Offset Activity, Non Offset Activity, Agency Refund and Reversal ActivityAccess to information on the File Receipt, Processing Status and Processing Statistics for Creditor AgenciesAbility to view captured information for bypassed payments fully matched to a debtCapability to set bypass and override at the payment agency levelSign up online for TOP’s new Web Client training at
35Expanding SRP ProgramTOP 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 changespotential payment streams that may require statutory or regulatory change
36Working 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 StatesTreasury 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.
37Working 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 governmentFrequently Asked QuestionsA link to State Comptrollers on NASACT’s websiteVisit:Working together with AGA, States and Federal Agencies to develop new pilots and solutions.
38Increasing 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 StatesOffsets Matter – TOP’s bi-monthly news for statesQuarterly Meetings with Participating StatesIndustry Conferences and MeetingsIndividual State Executive MeetingsEnhanced Customer Relationship Engagement(Pre and Post Implementation)View Offsets Matter online at
39The District of Columbia James Keifer Deputy Director, Compliance Administration
40The District of Columbia TOP participant since 1997Implemented the Reciprocal Offset Process in March 2013 at a cost of $401,695Certified 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
41Debt Types AddedPreviously 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 TaxWithholding TaxPersonal Property TaxMotor Fuel TaxThe District’s Ballpark FeeSpecialized Events and Specialized Sales
42Working Towards …Certifying debts for Administrative Offset for the following City Agencies:Employment Security AdministrationCentral Collections UnitAdding additional offset eligible payment sources for the State Payment Offset
43Why 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.
44What 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 TOPThe District did not have an automated intercept program to capture internal D.C. Government payments.
45What 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 interceptsThe Treasury Offset Program (TOP) IT platform would need a complete re-design to accommodate the additional debt types and processing schedulesThe City-wide vendor payment accounting system, in its current state, was not capable of processing payment offsets.
46With 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 guidelinesIn April, 2010, we submitted a limited file with a debt balance of $21 millionTOP matched our debt file against their January 2010 payment file, and the unexpected result …1,596 payment offsets valued at $4,001,978.63A strong argument for DC to participate in the program
47District of Columbia Addresses the Challenges Amended the District Tax Code to permit D.C. Treasury OffsetsDeveloped an automated levy process to capture City contract payments to satisfy tax debtsRealizing additional collections of $2 million annually
48District 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 modelD.C. Code Section became effective on April 8, 2011.
49District of Columbia Addresses the Challenges (3) Program(s) DevelopmentTwo accounting systemsTax based processing system (TAS)Debt managementTax refund processingCitywide System of Accounting and Reporting(SOAR) R*STARSContract Vendor payment distributions
50District of Columbia Addresses the Challenges (4) Identify all of the playersMultiple City AgenciesMultiple Administrations within each AgencyDedicated programming resources within each AgencyConflicting priorities and vision
51TAS Development Modified the current TOP file process Retired the weekly debt recertificationInstalled new database tables to track and report changesModernized our file transmission serviceExpanded TOP site I.D.s for improved payment controlsIncluded non-income tax debtsModified the process of issuing tax refundsDelayed the refund approval by one day to allow for the notification cycle to completeAttached a review item to each potential refund to allow the refund to be identified but not issuedInstalled an auto release for each item to prevent a stalled refund requestModified the automated carry-over for FMS overpayments
52Notice RedevelopmentModified our existing Enforcement Notice (certified mail) to include the Administrative Offset languageDeveloped Offset Notification letters for payments captured for Federal AgenciesDeveloped a Due Process notice, sent to every taxpayer with an outstanding District tax liability103K notices mailedUnexpected but necessary cost
54TAS Development (2) Payment Processing Dedicated bank accounts established to send and receive offsetsReports modified to reconcile accountsFunds distribution protocols developed
55SOAR Development New liability offset subsystem developed Process to extract data from eligible payments, create a vendor extract file and transmit the file to Fiscal ServiceNew rules for determining eligible payments based on vendor profiles, type and source of the paymentApplications designed to process a match file of federal debts received from Fiscal ServiceInstalled new payment work tables, liability match tables, escrow tables and a process for payment liquidations and transfers to escrow accounts
56SOAR Development (2) Process to release escrowed payments Initiating payment release transactionsCreating and transmitting to Fiscal Service the Vendor Update filePrograms to process the FMS acknowledgement fileUpdating the liability tables, escrow tables and release tablesDrafting entrees on the Notice of Payment Offset file that is forwarded to TAS for printing
57SOAR Development (3) Reports Federal Liability Offset Capture Control reportAuto Release to Vendor Control reportFederal Liability Offset Vendor Release Control reportVendor Match File Detail Error reportTOP Acknowledgment File Detail Error reportOnline references modifiedExisting online processing and inquiry applications were updated, new online screens added and training courses developed
58What Could the District of Columbia Have Done Better What Could the District of Columbia Have Done Better? Recommendations for StatesIdentify the playersDefine the requirementsLimit the changes to the requirementsManage the late developing processes
60Maryland 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 TimelineTax based processing: 18 monthsContract Vendor payment, R*STARS: 12 monthsImplementation Costs$1,314,629 contract costs plus other internal costsRecurring cost; for in-house personnel and maintenance
61Maryland SRP Offset Pilot (2) Legislative processComptroller worked with FMS to draft the initial legislationPassed without modificationsExpanded debt file includedWithholding TaxCorporate Income TaxSales and Use TaxAdmissions and Amusement TaxDLLR, Employment SecurityCCU, Central Collections Unit
62Maryland in the SRP Offset Pilot (3) -- The Successful Results Reciprocal Offset Collections for the first 6 months, July through December 2007 was $12,508,452.45In 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 satisfiedTotal Reciprocal Offset receipts - $63,834,007
63Maryland 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 administratorsAs one of only two States in the project pilot, Maryland relied on FMS to guide them through the legal and regulatory issuesThe tax based system was modified by in-house developers while R*STARS required contractual assistanceRefund 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.
64Maryland’s Suggestion for Your State’s Success Ensure the project has a strong Project Manager that implements following established system development life cycle methodologies.
66Carol Marshall Revenue Tax Supervisor, Collection Division The State of MinnesotaCarol Marshall Revenue Tax Supervisor, Collection Division
67Minnesota Participation in TOP TOP Collection Totals in 2012Department of Revenue (DOR)State Income Tax – 2001State Reciprocal – May 2012Department of Employment & Economic Development (DEED)Unemployment Insurance Compensation – Sept 2012Department of Health & Human Services (DHS)Child Support
68Minnesota Treasury Offset Programs FY2013 (July 2012 thru June 2013) State Income Tax (SIT) – (source DOR)$8.0 MState 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 debtorJanuary thru July 2013Unemployment Insurance Compensation (UIC) – (source Fiscal Service)$15.0 M
69Minnesota Legislation State Reciprocal Program 2011 Special Legislative SessionJuly 2011 State of Minnesota shutdownEnacted into law July 21, 2011Section 270C.41 Subd. 2.Reciprocal offset agreements https://www.revisor.mn.gov/statutes/?id=270C.41May charge an offset fee of $20 per transactionOffset cost from debtorImplement by April 23, 2012Actual May 31, 2012Collection Goals:FY $500,000 and FY $3.8 M = $4.3 MOption: Contingency Fee Agreement with a non-state vendor
70Minnesota SRP Key Points Good Support by Legislature to implement law changeSRP offsets federal payments for businesses tooNew Centralized Accounting SystemsDepartment of Revenue – Gentax (FAST Enterprises)Replaced more than a dozen legacy systemsMinnesota Management & Budget (MMB) – SWIFTUpgrade from Connect: Enterprise to Connect: DirectManual to AutomatedKey Contacts Internally and ExternallyDORMMBFiscal Service
71Minnesota SRP Challenges Identified Legislative GoalsImplementation Date – April 23, 2012Actual May 30, 2013 (goal $500,000)FY 2012 ended June 30, 2013Formed a TOP “SRP” TeamBusiness & Technical Project ManagersSeparate sub-teams to develop DOR and MMB processIntent to Offset Letters (60 day notice)Mailed prior to actual implementation
72Minnesota SRP Challenges Identified (2) TAG Manual – Federal Agency vs. State Agency InformationSRP Agreement, Security Agreement and MOUDefinitions & Terms - Ex: VendorLegalTaxpayer Rights AdvocateNew Accounting Systems – Delayed ImplementationSystems – Conversion to Connect: Direct DelayedNeeded key contacts for purchase, implement and testFMS/BPD Consolidation
73Minnesota SRP Challenges Identified (3) Reversal Process for Invalid Offsets and Non-Liable ClaimsNo prior testing - Process not clearly definedDOR acts as broker between Fiscal Service and MMBSystem limitationsIdentify Subject Matter Experts/ResourcesCollection – Legal – Technical – Security Agreement
74Minnesota Recommendations/Solutions for States Provide more educationFederal and state statutesTerminology/Definitionsoffsets, intercept, revenue recaptureUnderstand all the processes (all stakeholders)Ongoing education of staffEstablish clearly defined processes with all partiesDisputesHardship claimsNon-liable spouse claimsReversal of claims
75Minnesota Recommendations/Solutions for States (2) Certified Mail Requirement – Income Tax claimsEliminate this requirement and reduce our costCurrently $3.56 per letter60,000 letters = $213,600Refund of OverpaymentsState transmits updates daily – Fiscal Service pays weeklyRecommend Fiscal Service pays more frequentlyFull refunds – we also refund Fed Offset fee- DOR General Budget
76Minnesota Recommendations/Solutions for States (3) Partial Match Process Handled by TOP StaffMust participate in UIC (UIC managed by DEED not DOR)DOR does not currently have capability for aliasesHave TOP staff handle for DORDOR to research enhancing their system/processTestingMore TestingTesting is Critical
77Minnesota DOR Collection Division Established “Offset Program” Team – they’re the TOPS!Adjustments, reversals and refundsNon-liable spouse claimsDisputes and hardship claimsSubject matter expertsKey contacts for staff, legal, TRA and FMSDOR refund processRefunds held 2 days pending a match to TOP federal fileBusinesses – majority of federal vendors with DOR debtsGood collections results on non-Minnesota businessesMajority of state offsets for US Dept of Education debtsHighest volume of non-liable spouse claims
78Minnesota DOR Collection Division (2) Federal definition of “vendor” not clearComplaints from debtors, TRA office and legal regarding offsets of federal travel reimbursementsPlain Language InitiativeDeclared by State of Minnesota Governor Mark DaytonAll State AgenciesDOR - Each Division has a TeamFocus on Highest Volume LettersTop Priority – Intent to Offset letters sent by CollectionsSeptember 5, 2013 first printing
79Ronda Kent Deputy Assistant Commissioner, Debt Management Services DMS/TOP InitiativesRonda Kent Deputy Assistant Commissioner, Debt Management Services
80The Partnership Fund for Program Integrity, Innovation, and Recovery of Federal/State Funds via the TOP PilotVarious 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.
81The Partnership Fund for Program Integrity, Innovation, and Recovery of Federal/State Funds via the TOP PilotSeven states were selected to participate in the simulation:Arkansas, Illinois, Kansas, North Carolina, Texas, Washington, and WisconsinPrograms included:Temporary Assistance for Needy FamiliesChild CareMedicaidFoster CareAid to Families with Dependent ChildrenOne month of payment data (February 2011) from three federal sources:Federal income tax refunds (IRS)Retirement payments (OPM; 25%)Social security payments (SSA; 15%)
82The Partnership Fund for Program Integrity, Innovation, and Recovery of Federal/State Funds via the TOP PilotNo actual offsets were processed during the simulationContractor evaluated and validated the pilot methodologyReviewed TOP processesExtrapolated pilot results to develop nationwide, 10-year estimates for state- submitted debt collectionContractor Report includes:Summary of results by state, program and payment typeEstimated costsProjected offsetsProjected recovery ratesProjected potential savings in ranges with low, medium and high results over 1, 5 and 10 year periodsInteragency report is being developed to accompany the contractor report (expected release date: November 2013)
84Do Not Pay Objectives Tactical Strategic Provide agencies with centrally-provided, IPERIA-mandated & agency-driven information that helps them avoid and reduce and recover improper paymentsTacticalIdentify potentially improper payments by comparing agency payments to lists of ineligible recipientsProvide agencies with:analytical insights about payments to potentially ineligible recipients to help them identify systemic sources of improper payment and/or potential fraudinformation about patterns of improper payments to help them identify systemic sources of improper payment and/or potential fraudanalytical insights about the sources of future improper payments
85Do Not Pay SolutionDo Not Pay can be incorporated into all parts of the payments stream. It can be aligned with existing business processesand an agency’s mission.Pre-PaymentRe-Verify or Monitor Program Eligibility for PaymentsResearch MatchesPost-PaymentTrending & AnalyticsReportingCorrective ActionPre-AwardVerify Federal Award EligibilityUser 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.
86Questions? Speaker Ronda Kent Speaker Alyssa Riedl Bureau of the Fiscal ServiceU.S. Department of the TreasurySpeaker Alyssa RiedlBureau of the Fiscal ServiceU.S. Department of the TreasuryModerator R. Kinney PoynterExecutive DirectorNASACTSpeaker James KeiferCompliance AdministrationDistrict of ColumbiaSpeaker Carol MarshallCollection DivisionState of Minnesota