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Department of Taxation Overview of Debt Setoff and Treasury Offset Program (TOP)

Virginia Department of Taxation Presentation to Virginia Municipal League and Virginia Association of Counties Richard C. Dotson Assistant Tax Commissioner October 25, 2011. VML/VACO Seminar to Improve Delinquent Collections. Department of Taxation Overview of Debt Setoff and

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Department of Taxation Overview of Debt Setoff and Treasury Offset Program (TOP)

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  1. Virginia Department of Taxation Presentation to Virginia Municipal League and Virginia Association of CountiesRichard C. DotsonAssistant Tax Commissioner October 25, 2011

  2. VML/VACO Seminar to Improve Delinquent Collections Department of TaxationOverview of Debt Setoff and Treasury Offset Program (TOP)

  3. VML/VACO Seminar to Improve Delinquent Collections The Virginia Department of Taxation (TAX) administers the Set-Off Debt Collection program. Government units and courts that submit claims are referred to as claimant agencies. A match against the claim and a Virginia individual tax refund, state lottery prizes, and vendor funds will only occur when authorized by the claimant agency.

  4. VML/VACO Seminar to Improve Delinquent Collections • The program consists of Individual Set-Off and the Comptroller’s Vendor Debt Set-Off (CDS) Program • Individual Set-Off Collection Program • Legal remedy for collection of debts owed to Commonwealth’s administrative units and courts • Established in 1981 • The Code of Virginia Set-Off Debt Collection Act, Section 58.1520 through 58.1535 and the State Lottery Law, Section 58.1-4028 • All State Agencies, State Authorities, Courts, Counties, and Towns can participate

  5. VML/VACO Seminar to Improve Delinquent Collections • Comptroller’s Vendor Debt Set-Off (CDS) Program • Intercepts vendor payments to offset debts owed by vendors to state agencies • Established as a collaborative effort between theDepartment of Accounts (DOA) and Department of Taxation (TAX) • Debt Collection Act, Sections 2.1-726 through 2.1-735 of the Code of Virginia • Only State Agencies can participate

  6. VML/VACO Seminar to Improve Delinquent Collections Program Cycle • November 1 • First day agencies are eligible to submit claims • January 1 • Starts participating year • Claims are now eligible to be matched

  7. VML/VACO Seminar to Improve Delinquent Collections Participation in the Program • New participants must visit www.tax.virginia.gov to view the Setoff Program Guide. • New agencies must participate in online training. • A Set-Off Participation Form along with a letter of authorization signed by the head of the governing body is required (e.g., Mayor, Treasurer, County Supervisor).

  8. VML/VACO Seminar to Improve Delinquent Collections Current Participants (in order of priority) • Department of Taxation • Support Enforcement, Department of Social Services • State Agencies, State Boards, State Authorities and Courts • Counties, Cities, Towns, County Authorities, City Authorities and Local Departments of Social Services • 938 total participants

  9. VML/VACO Seminar to Improve Delinquent Collections The 938 participants consists of the following:

  10. Set-Off Collection Summary VML/VACO Seminar to Improve Delinquent Collections

  11. VML/VACO Seminar to Improve Delinquent Collections Vendor Debt Collection Summary

  12. VML/VACO Seminar to Improve Delinquent Collections VML/VACO Seminar to Improve Delinquent Collections Treasury Offset Program (TOP) • A federal program that allows states to submit delinquent debts to be “offset” against the federal income tax refunds. • “Offset” means TAX can take a federal income tax refund to pay an eligible tax debt. • TOP is administered by the Federal Management Service (FMS) which is part of the U.S. Department of the Treasury.   • TAX must send a certified letter to the taxpayer 60 days before an account can be assigned to TOP. TAX sends out certified letters quarterly with an annual average of 100,000 per year.

  13. VML/VACO Seminar to Improve Delinquent Collections Treasury Offset Program (TOP) • TAX pays FMS a fee of $21 for every successful match.  TAX must absorb the fee.  We are not permitted, by state regulations, to charge the fee to the taxpayer. • To be ‘eligible’ for TOP.  A bill must have a balance greater than $100, be at least 90 days delinquent and not more than 10 years old, and not under bankruptcy or 1821 appeal. 

  14. VML/VACO Seminar to Improve Delinquent Collections Treasury Offset Program (TOP) Collection Summary

  15. VML/VACO Seminar to Improve Delinquent Collections Question and Answer

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