1. Treasury Offset Program For Unemployment Insurance Compensation Debts

2. 2 How Does the Treasury Offset Program Work? TOP compares payee names and Taxpayer Identification numbers (TINs) on Federal payment certification vouchers to names and TINs of debtors in TOP’s debtor database When a match occurs on both, TOP intercepts, or “offsets,” all or part of a payee’s eligible Federal or State payment FMS notifies the payee and the payment agency about the offset A TIN is an individual’s Social Security Number or a business’ Federal Employer Identification Number

3. 3 Priority of Debts in TOP Order of Offset IRS Income Tax Debts Child Support Debts Federal Non-Tax Debts State Debts When more than one debt is submitted for the same debtor, TOP applies funds collected in accordance with priorities set by statute and policy If a debtor has two or more debts of the same priority, TOP applies funds to the oldest debt first

4. 4 General Rules For All Debts Submitted to TOP (31 CFR Part 285, Subpart A) Debts must be: –Delinquent & legally enforceable –$25 or more, except for salary which is $100 –State Debts must be less than 10 years old (except UIC Debts).

5. 5 General Rules For All Debts Submitted to TOP Creditor agency must submit certification with debts –Accomplished electronically if agency signs annual agreement to certify debts –Certified for the life of the debt; agency responsible for inactivating debts if they become ineligible for TOP (bankruptcy, debt paid in full) Certification states that debt meets eligibility requirements and that all due process prerequisites, including state law prerequisites, have been met TOP sends notice of any offset to the debtor –Notice includes date and amount of offset, creditor agency to which offset money was sent, and contact point within the creditor agency

6. 6 Unemployment Insurance Compensation Program

7. 7 Highlights Regulations for the offset of tax refund payments to collect unemployment compensation debts owed to States was published Friday, January 28, 2011, in the Federal Register. On February 14, 2011, FMS began accepting the referral of unemployment compensation debt from states. As of March 1, 2012, nine states are participating, with more than $112.3 million in tax refund payment offsets collected since February 2011.

8. 8 SSI Extension for Elderly and Disabled Refugees Act (PL 110-328) Original legislation allowed states to refer delinquent unemployment compensation debts due to fraud to TOP for offset against Federal tax refund payments only. Claims Resolution Act of 2010 (H.R. 4783) Expanded program to allow states to recover: o Non-fraud overpayments; o Uncollected contributions; and o Associated penalties/interest if the Unemployment Compensation (UC) debt is due to failure to report earnings or delinquent contributions. Authority to Offset for Unemployment Insurance Compensation Debts

9. 9 Claims Resolution Act of 2010 (H.R. 4783) There is no longer a statute of limitations on the use of TOP for recovering UC debts older than 10 years The address on the individual’s income tax return does NOT need to be within the state seeking the offset The state does NOT need to send the due process notice to the debtor by certified mail return receipt requested

10. 10 Program Requirements States must have an approved Safeguards Procedure Report (SPR) before they can begin the program in TOP. States must send 60-day notice to debtors. States must complete the following FMS forms: Certification Agreement Agency Profile Input Form Security Access Request Form ACH Vendor/Miscellaneous Payment Enrollment form

11. 11 Safeguards Procedure Report When ready to begin SPR, send meeting request to SafeguardReports@irs.gov SafeguardReports@irs.gov State cannot implement program without written approval of SPR by IRS

12. 12 FMS Testing 2 week advance notice to schedule testing. Send testing request to: Testing averages 30 - 45 days - agency dependent

13. 13 Accounting Each state must provide an accounting contact to FMS Determine if reversals are to be sent as debit or netted from credit amount Authorization Agreement for Preauthorized Payments form (Automatic Bank Debit) to set up a preauthorized debits Contact FMS 30 days prior to implementation to perform preliminary test to ensure no issues with funds transfer Complete ACH Vendor/Miscellaneous Payment Enrollment form for FMS

14. 14 Work project streams concurrently for faster implementation. Determine mode of file transfer early in development stage to begin approval process –Connect:Direct –Connect:Enterprise –Web Client Allow 30 days to receive security FOBs. Consult state legal counsel when preparing 60-day notice letter. Lessons Learned

15. 15 TOP program will reduce the Debt Balance upon offset States do NOT need to adjust balances in TOP to account for offset Allow for proper time for coding at State level For batch testing, use file produced by state system and not manually created file Submit FMS forms 30 days in advance. Agency profile ACH form Security Access Requests and TOP Rules of Behavior File transfer forms (C:D, C:E) Debt Certification (last form to send) Take advantage of ACH testing with FMS. Lessons Learned

16. 16 Contacts

17. 17 Questions?????