Taxpayer Identification Number (TIN) Policy
What is a Taxpayer Identification Number?
A1: A Taxpayer Identification Number (TIN) is a nine-digit number, which is either an Employer Identification Number assigned by the Internal Revenue Service (IRS) or a Social Security number assigned by the Social Security Administration (SSA).
What are the requirements of the TIN Policy Directive?
The TIN Policy Directive requires that all federal payment vouchers submitted to Treasury include a valid Taxpayer Identification Number (TIN), unless otherwise exempt in the Policy Directive.
Why did the former FMS (now Bureau of the Fiscal Service ) issue a Policy Directive on the collection and provision of TINs.
A The Debt Collection Improvement Act of 1996 (DCIA) requires federal agencies to include payee TINs on certified payment vouchers.
The Bureau of the Fiscal Service and other executive branch disbursing agencies are responsible for examining certified payment vouchers to determine whether such vouchers are in proper form.
To ensure that executive branch agencies submit payment vouchers to Treasury in a proper form that includes TINs, the former FMS (now Bureau of the Fiscal Service ) issued a Policy Statement on October 9, 1998, requiring each agency to submit a TIN implementation report to FMS documenting its compliance with the TIN requirement and identifying barriers to providing TINs on payment vouchers.
FMS used these reports and input from agencies at interagency policy workgroup meetings as a basis for developing the TIN Policy Directive and providing exceptions to the TIN requirement if specific legitimate barriers exist.
Why are TINs required on all payment vouchers certified to Treasury for payment?
The DCIA requires agencies to include the TIN of each payee on certified payment vouchers that are submitted to a disbursing official.
Providing TINs on payment vouchers is necessary to offset eligible payments disbursed to a payee in order to satisfy a delinquent non-tax debt owed by the payee to the Government.
The TINs are also necessary for agencies to report vendor income to the IRS and processing of tax levies on eligible payments in order to collect delinquent tax debt.
The Taxpayer Relief Act of 1997, enacted subsequent to the DCIA, included a provision that provides for the continuous levy of federal non-tax payments to collect delinquent tax debts.
Fiscal Service has implemented continuous levy through a process similar to that of offset, and, accordingly, TINs on payment certifications are also necessary to implement this program.
What is the Treasury Offset Program (TOP)?
The Treasury Offset Program (TOP) is a centralized debt collection program that the former FMS (now Bureau of the Fiscal Service ) developed to assist agencies in the collection of delinquent debt owed to the federal government.
Federal statutes require a federal disbursing official to conduct such an offset when the name and TIN of a payee match the name and TIN of a delinquent debtor.
Treasury uses TOP to match delinquent debt files against payment files. When a match occurs, the payment is intercepted and offset up to the amount of the debt. See more information on TOP, including all published rules, notices, and bulletins.
What is a tax levy?
The Taxpayer Relief Act of 1997 authorizes the Internal Revenue Service (IRS) to collect overdue federal tax debts from federal payment recipients by continuously levying up to 15 percent of each eligible payment until the debt is paid.
Under the tax levy process, IRS will supply The Bureau of the Fiscal Service with an electronic file containing tax debt information for inclusion in the TOP database.
TOP will compare the tax debt information with the information about eligible payments. When matches occur, Fiscal Service will comply with the levy by transferring up to 15 percent of the eligible payment to IRS. See more information on tax levies
Are exceptions available to agencies if a legitimate barrier exists that prevents the collection or provision of a TIN?
Yes, exceptions are available to agencies if specific, legitimate barriers exist. Fiscal Service does not require a TIN on a payment voucher under the following circumstances:
- Where an agency does not have the statutory or legal authority to require a federal payee to submit a Taxpayer Identification Number AND the agency has no other reasonable means of obtaining it;
- Where a federal payment recipient is unable to obtain a Taxpayer Identification Number;
- Where the collection or provision of a Taxpayer Identification Number has a detrimental effect on a law enforcement operation, a military operation, national security, or emergency relief efforts;
- Where the agency does not expect to make more than one payment, in an amount of $200 or under, to the same recipient within a one-year period (i.e., the payment is non-recurring) AND the cost of obtaining the Taxpayer Identification Number is prohibitive; or
- Where Fiscal Service determines that the collection or provision of a TIN is not in the best interest of the Government.
Are there specific exceptions available for payments to vendors?
While exceptions are available in some circumstances for vendor payments, this Policy Directive contains no specific exceptions for the collection of TINs from vendors as a class of payments.
It's important that federal government vendors be subject to TOP since payments made to vendors represent the largest individual payments subject to offset making the potential for a large dollar collection by fully offsetting these payments greater.
Additionally, it's important that agencies obtain vendor TINs for reporting vendor income to IRS.
Is an agency required to collect a TIN if the payment is legally exempt from administrative offset?
Yes. Although some payments are exempt from administrative offset, a TIN must be collected for the purposes of vendor income reporting and tax levies.
Is an agency required to collect a TIN for one-time, small-dollar payments?
Exception d) of the TIN Policy Directive states that collection of the TIN is exempt "where an agency does not expect to make more than one payment, in an amount of $200 or less, to the same recipient within a one-year period (i.e., the payment is non-recurring) and the cost of obtaining a TIN would be prohibitive."
Several agencies noted that collecting TINs for one-time, small-dollar payments, such as refunds for overpayments, is economically prohibitive.
Fiscal Service recognizes that it is not practicable to collect TINs when an agency is making non-recurring, small-dollar payments and has established a de minimus amount of $200, under which amount an exception would exist provided that the cost of obtaining a TIN is prohibitive.
Are agencies required to certify their exceptions to the TIN requirement with Treasury?
No. Individual agencies are in the best position to determine whether an exception applies or not.
What happens if an agency fails to collect and/or provide a TIN on a payment voucher? Will Fiscal Service impose a penalty for non-compliance?
No, Fiscal Service will not impose a penalty on another agency for non-compliance with the TIN Policy Directive.
However, Fiscal Service may include such information in reports to Congress, as appropriate, and may review agency compliance with this Policy Directive from time to time if agencies are frequently not able to collect TINs.
What if a federal payment recipient refuses or fails to submit his/her TIN to a payment certifying agency? Are agencies required to withhold payment or impose a similar penalty?
Agencies should consult with agency counsel as to what actions are authorized or required when a payment recipient refuses or fails to submit his or her TIN.
Agencies are required by law to collect TINs from anyone doing business with the Government. (See 31 U.S.C. 7701 for more information.)
Many agencies have implemented internal procedures that require federal payment recipients to submit a TIN as a condition of receiving payment.
Additionally, many agencies use contract clauses that require vendors to submit TINs as a condition of awarding a contract.
How can agencies improve TIN compliance for the collection of TINs?
The agency implementation reports submitted to Fiscal Service identified several strategies, practices, and methods that may be useful in the collection of TINs from vendors and individual recipients.
Agencies reported that the greatest success in collecting TINs from vendors was achieved during contract proceedings. Most agencies have developed internal policies and procedures that require vendors to submit TINs as a condition of awarding the contract.
By establishing these policies and procedures, agencies can refuse to do business with vendors who fail to submit a TIN. Such refusal will ensure that agencies comply with 31 U.S.C. 7701(c), which requires agencies to collect TINs from each person doing business with that agency.
Agency poicies and procedures will also assist agencies in complying with 31 U.S.C. 3325 (d).
The Federal Acquisition Rule; Taxpayer Identification Numbers (FAR TIN) interim rule, codified at 48 CFR Parts 1, 4, 13, 14, 15, and 52, provides agencies with contract clauses that require vendors to submit TINs as part of the application process and impose monetary penalties if such information is not supplied.
These clauses are used by a small number of agencies and have been effective in the collection of TINs for these agencies.
Several agencies have developed contract clauses in agency supplemental acquisition rules, which specify that a proper invoice must include a valid TIN and EFT information.
These clauses are used in support of the Prompt Payment rule at 5 CFR Part 1315, which requires electronic funds transfer (EFT) information and a TIN as part of a proper invoice. In such cases, an invoice is rejected and returned to a vendor if the vendor fails to submit this information and it was required to do so in the contract.
Agencies are also taking measures to inform vendors and individuals of the federal government's efforts and requirements to collect TINs from payment recipients.
Agencies are making this information available by submitting letters to recipients, posting information on the Internet, and establishing points of contact with vendors. There were a number of agencies that planned to meet personally with vendors to convey the Government's TIN and EFT requirements.
Is the collection of my TIN covered by the Privacy Act?
Yes. The collection and use of an individual's TIN is protected under the Privacy Act. The Privacy Act contains specific provisions regarding Social Security numbers, in particular.
When collecting Social Security numbers from individuals, federal agencies must inform them whether the disclosure is mandatory or voluntary, by what statutory or other authority such number is solicited, and what uses will be made of it.
Agencies may disclose an individual's TIN in accordance with the act, which includes, but is not limited to, taking measures to ensure that this information is not disclosed to unauthorized third parties, and publishing routine uses in the Federal Register.