Purpose and Scope
To provide information to all State departments and
agencies on the Federal Management debt collection procedures.
The Debt Collection Improvement Act of 1996 provides that
any non-tax debt or claim owed to an agency of the Federal
government that remains unpaid for a period of 180 days shall
be referred to the U.S. Department of Treasury for appropriate
action. The Department of Treasury is empowered to withhold
of reduce certain federal payments for the purpose of collecting
delinquent non-tax debts owed to the Federal government.
This collection process is known as "administrative offset"
Before referring a debt for collection by administrative
offset, the Federal creditor agency must provide each debtor
with: (a) a written notification of the nature and the amount
of the debt, the intention of the agency to collect the debt
through administrative offset, and an explanation of the
debtor's rights; (b) an opportunity to inspect and copy the
records of the agency; (c) an opportunity for review within
the agency; and (d) an opportunity to enter into a written
All New York State agencies are required to provide the
State's federal employer identification number (FEIN) or
Taxpayer Identification number (TIN) when dealing with the
Federal government. These numbers are used for billing purposes,
grant award applications and drawdown of federal grant funds
from the Department of Treasury.
The Department of Treasury –Financial Management
Service established a centralized “Treasury Offset
Program” (TOP) process that matches Federal payments
to New York State against debts owed to the Federal government.
Since billing records for services provided by Federal agencies
to State agencies contain the same FEIN or TIN that is used
to drawdown federal grant awards, when a TOP match occurs,
the payment is “offset” against the state’s
request for federal grant funds.
Department of Treasury offsets have been taken against federal
grant award drawdowns needed to finance important and critical
agency programs because a debt was owed to the Federal government
by a second (uninvolved) State agency. Since the drawdown
was reduced by the amount of the offset, funds to finance
state payments were insufficient to pay vouchers scheduled
When the offset was taken, a notice was sent to the debtor
State agency, but no notice was provided to OSC or the agency
whose drawdown was reduced. As a result, a labor-intensive
process was undertaken to identify the debtor state agency.
Once the debtor was identified, OSC worked with the agency
and the agency whose drawdown was reduced to reverse the
impact of the drawdown reduction.
Immediately upon receipt of an invoice for goods or services
provided by a Federal government agency, State agencies should
make every effort to make payment to the Federal government
in a timely manner or contest the billing.
If a notice of unpaid debt is received by a State agency
the notice will provide the amount, type of debt owed and
the Federal agency who f=referred the debt to the Department
of Treasury for collection. If you believe the debt collection
notice was issued in error or is erroneous, then you should
immediately contact the Federal agency that referred the
debt for collection. The Department of Treasury or the State
Comptroller’s Office cannot resolve issues regarding
debts owed to federal agencies.
In the event that a Treasury offset is taken, a separate
notice is sent to the debtor state agency notifying them
that a payment was applied to the debt. A copy of this notice
informing the debtor agency that an offset was taken, and
a federal drawdown was reduced, must be immediately sent
or Faxed to:
Office of the State Comptroller
Bureau of State Accounting Operations
110 State St. - 9th Floor
Albany , NY 12236
FAX: (518) 473-6836
Please visit the Department of Treasury-Financial Management
Service website for more information about the Treasury Offset
Program. Included on the website (under DMS guidance: Policies
and Procedures) is a list of awards that are exempt for the
Treasury Offset Program.
Questions about State administered
Federal drawdowns that have been reduced by the Treasury
Offset Program, or questions about this procedure, may be
referred to the Bureau of State Accounting
Operations-Federal Payment Management Team at (518) 486-1241.