The Office of Legislative
and Public Affairs

Fact Sheets

Under the Debt Collection Improvement Act of 1996, FMS is charged with implementing the government's centralized delinquent debt collection program. FMS' Debt Management Services carries out the program using its Treasury Offset Program (TOP) and Cross-Servicing Program.

Treasury Offset Program
TOP is a debt collection program that uses offset, whereby federal payments are reduced or "offset" to satisfy a person's overdue federal debt, child support obligation, or state income tax debt. This is where the largest volume is, in terms of dollars collected. Through TOP, total collections were more than $4.8 billion for fiscal year 2009.

Cross-Servicing
Cross-Servicing is the process whereby agencies refer federal non-tax debts more than 180 days delinquent to FMS for collection. Treasury uses a variety of collection tools once agencies refer their debts. Those tools include Treasury demand letters, telephone calls to debtors, referral of debts to TOP, administrative wage garnishment, reports to credit bureaus, Pay.Gov, referral to one or more of the private collection agencies on Treasury's contract, and referral to the Department of Justice for litigation. In all, more than $309 million was collected through the Cross-Servicing Program in fiscal year 2009.

MAJOR ACCOMPLISHMENTS

Today, the FMS debt collection program is a central tool for sound financial management at the federal level. Since 1996, FMS has collected more than $42.7 billion in delinquent debt. In fiscal year 2009, collections of federal delinquent debt surpassed $5 billion. Of that amount, $44 million was collected through offset of the Stimulus Payments and $235 million was collected through offset of the Economic Recovery Payments.

Through the debt collection program, FMS provides an extremely valuable government-wide service, assisting with the collection of delinquent federal debt, much of which would not be collected otherwise. The debt program has had a tangible impact on agency fiscal operations, the stewardship of taxpayer dollars, the integrity of important federal programs, such as student loan programs, and efforts to collect delinquent child support debt.

Critical to the success of collection efforts is the role of the federal program agencies - that of referring eligible delinquent debts to Treasury for collection. At the end of the third quarter in fiscal year 2009, 100 percent ($47.5 billion) of the eligible federal non-tax debts had been referred to TOP for collection, and 100 percent ($3.2 billion) had been referred to the Cross-Servicing Program.

Providing high-quality customer service throughout the collection process is a high priority. For instance, one of the customer service tools used at the TOP Call Center, the Interactive Voice Response (IVR) system, significantly reduces waiting times for callers by providing an automated response system to address callers' questions. During the 2009 tax season, the TOP Call Center agents and IVR answered over 3.1 million phone inquiries, compared to 2.8 million inquiries for the same period during the 2008 tax season.

Bringing in additional payment streams ensures continued growth of FMS' debt collection program. In June 2009, the U.S. Postal Service (USPS) began participation in the non-Treasury-disbursed Vendor Payment program. The program allows USPS to offset and/or levy supplier payments in order to collect delinquent tax and non-tax debts. A provision of The Medicare Improvements for Patients and Providers Act of 2008 authorized the offset of Medicare provider payments to collect non-tax debts through TOP. In October 2009, FMS, in coordination with the Department of Health and Human Services (HHS)-Centers for Medicare and Medicaid Services (CMS), began to offset some Medicare Part A&B payments to providers who owe delinquent non-tax debts. FMS, in coordination with the IRS and CMS, began the levy of some Medicare payments to providers who owe delinquent taxes in 2008.

Child Support Enforcement
The Office of Child Support Enforcement (OCSE), which is part of HHS, is the federal office that has program responsibility for child support enforcement issues. However, the states run their own programs and make all decisions concerning their child support cases. Child Support cases are either TANF (Temporary Assistance to Needy Families) or non TANF. Payment files are matched against child support debts in TOP. If there is a match, offsets are taken, and the funds are forwarded to HHS' Program Support Center (a clearinghouse for OSCE) for distribution to the states. If it is a TANF debt, the state will keep the funds. If it is a non TANF debt, the state will distribute the funds to the custodial parent or guardian. Since 1999, more than $20.5 billion in delinquent child support debt has been collected through TOP.