Treasury Offset Program

1. Treasury Offset Program State of Wisconsin Pam James Integrity Conference - March 2012

2. Treasury Offset Program (TOP) for Wisconsin • TOP Overview • Wisconsin’s TOP Project • Approach • Technical Strategy • Timeline • Results • Challenges • Lessons Learned • Questions

3. TOP Overview • States can refer delinquent unemployment compensation debts to TOP for offset against Federal tax refund payments • Initially law limited to debts due to fraud • Expanded in December of 2010 to allow states to recover • Non-fraud overpayments and associated penalties/interest if debt is due to failure to report earnings • Uncollected employer contributions

4. TOP Overview • Three Key Work Streams to Get Started • Send 60–day notice to debtors • intent to certify • Complete IRS Safeguards Procedures Report • SPR/SPR Addendum with IRS to ensure compliance with Publication 1075 – Federal Tax Information (FTI) Security Guidelines • Work with FMS on file transfer processes • certify debts • receive offset payments • maintain records

5. Wisconsin’s TOP Project - Approach • Scope of Wisconsin Implementation • Limited to fraud overpayments • Excluded Non-fraud due to state law limitation • Excluded Employer Delinquencies • Approached with 3 major Work Streams • Notification to the Claimants • Working with IRS on SPR Addendum • Working with FMS on Certification Process • Implemented Processes in Phases • Mailed notices in October 2010 (60 day requirement) • Certification • Weekly Update and Offset – Received 1st offsets in February 2011

6. Wisconsin’s Technical Strategy

7. Wisconsin’s Technical Strategy • New TOP Database to house data identified as FTI • Payment Type • Payment Source • Batch Number • Audit Data • Secured so that contractors and non-authorized FTI users do not have access • UI data base does not contain FTI data • FTI visible on screens to FTI authorized users only • Certain screens – no print allowed • Some export allowed to secure directory for FTI users • For Non-authorized users • Claimant Payment Type Blurred on screens • Payment Type and Source Blurred when printed

8. TOP Timeline

9. Wisconsin TOP Results • Go live 2/15/11 • 2011 TOP Receipts thru 2011 $3,055,893 • 2012 TOP Receipts thru 2/08/2012 $4,589,018 • Internal Cost – 2800 hours (IT only) • Had previous SPR and audit for 1099 data

10. Wisconsin TOP Results *$1.5 million pending

11. Wisconsin Call Volume Experience

12. TOP Challenges for Wisconsin • Securing FTI Data in Accordance with Pub 1075 • System Design to Secure FTI DATA • No contractors can have access to FTI Data • Suppressed ability to print screens containing FTI data • Blurred data on screens for non-FTI approved users

13. Wisconsin - TOP Lessons Learned • Contractors cannot have access to FTI data • Able to keep UI file separate from other state agency’s file using TOP • Can certify at the debtor level or the debt level • Cannot use IRS addresses for any purpose other than TOP This is FTI data • Develop and test in phases • Any data returned on the collection file is considered FTI data • Take advantage of webinars and conference calls on TOP and Pub 1075 • Be prepared for increase in phone calls

14. Next Steps • After initial implementation • Implemented Warehouse for Analysis • Proposed law change to expand for non-fraud • Need to tighten process for pending – currently double collecting from DOR and TOP for some debts • 1st Audit – April 2012

15. Questions?