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FTB participation in U.S. Treasury Offset Program

FTB Archive Disclaimer:  Archived content is not current and may contain broken links. It remains online for historical reference or research. The search function above allows you to search archived and current content separately. If you need archived content in a different format, contact us.

PURPOSE OF BULLETIN

Beginning July 1, 2008, we will participate in the Treasury Offset Program (TOP). The program will offset federal income tax refunds and payments on delinquent Personal Income Tax collection cases. Participation will begin as a pilot to evaluate the feasibility and cost effectiveness of full implementation in the future.

BACKGROUND

The Department of Treasury, Financial Management Service (FMS), serves as the federal government’s central debt collection agency. They administer the TOP debt collection program. TOP is used to collect federal tax debt, federal non-tax debt, child support debt, and state debts, including state income tax.

Legal authorities allowing states to participate include Title 26, United States Code, Section 6402(e); and, Title 31, Code of Federal Regulations, Section 285.8. The regulation governing the Offset of Tax Refund Payments to collect state income tax debt may be found on the following website:

http://www.fms.treas.gov/debt

PRIORITY OF DEBTS

When more than one debt is submitted for the same taxpayer, according to statute, TOP applies money in the following order:

  • IRS
  • Child Support
  • Federal non-tax
  • State income tax
  • Other state debt

CERTIFIED DEBTS

We have signed an agreement with FMS stating all debts referred are:

  • Delinquent, valid, and legally enforceable
  • Not in bankruptcy or foreclosure
  • Not delinquent over 10 years old

INTENT TO OFFSET NOTICE

We will send a Notice of Intent to Offset Federal Payments (FTB 1102 PC) by certified mail, with a return receipt requested, instructing the taxpayer that in order to avoid the offset, they must:

  • Pay the balance in full.
  • Provide evidence that the debt is not past due or not legally enforceable.

The letter will also state, if the taxpayer does not respond within 60 days, we will refer the debt to TOP for offset of federal payments.

POST OFFSET NOTICE

Once an offset occurs, FMS sends a post offset notice to the taxpayer with the date and amount of the offset, along with the contact information for our Offset Desk.

ADDITIONAL INFORMATION

Accounts can be identified in TI with “Fed Offset Pymt” as the payment type.

TAXPAYER INQUIRIES

Refer taxpayers who received either an “Intent to Offset,” or “Post Offset” letter to:

  • Offset Desk 916.845.2867
  • Franchise Tax Board
    PO Box 2966
    Rancho Cordova CA 95741-2966

Direct media contacts to:

  • Public Affairs at 916.845.4800

 

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