Treasury Offset Program (TOP) and State Reciprocal Program (SRP)

TOP allows state governments and the federal government to exchange debtor information in order to offset individual income [tax] refunds for debts owed to the state or federal government. SRP expands the reciprocal matching and offset program to allow offsets of any debts owed to the state or federal government against payments received from the state or federal government.

For Wisconsin purposes, we have expanded the program to allow offsets of all refunds administered by the Department of Revenue (DOR) against federal debts. Eventually we will expand this program further to also offset state vendor payments against federal debts. On the federal side, they have expanded to allow offset of federal vendor payments and non-salary payments against all state tax debts. This does not include social security or disability payments. Federal payments to the debtor may be recurring. DOR will have the ability to enter into an agreement with the debtor to withhold a percentage or set dollar amount of each federal payment.

There is a fee charged for interceptions. For federal income refunds, a $22 fee is charged. Currently the state absorbs that fee, so the debtor is given credit for the entire amount of refund intercepted. For other federal payments, the fee is $17 per intercept and will be passed on to the debtor. DOR charges a fee of $25 for both income and other refund intercepts that are sent to the federal government, and both fees are passed on to the debtor.

Debts may be referred to TOP and SRP 60 days after appeal rights have expired. In mid-December, DOR began mailing notices to businesses to explain that their debt would be referred to the federal government for payment interception. Individual income tax debtors will not receive a separate notice warning them of potential federal payment interception because they have already been sent a TOP warning.

When a state refund is intercepted to pay a federal debt, the debtor will receive a notice advising them of the intercept. The notice contains contact information for the federal agency that submitted the debt for interception. The debtor must contact that agency to obtain information about the debt balance or the basis of the debt. Likewise, if a federal payment is intercepted for a state debt, the federal notice of interception will provide the debtor with contact information for the Department of Revenue. Debtors may contact our Central Collection Section at (608) 266-7879 to obtain information about DOR tax debt and balance owed, or to ask questions about interception of refunds.

Page last updated December 28, 2011