Section 6: Offsets
Introduction
If a reclamation debt remains unpaid for 120 calendar days after the reclamation date, and a protest has not been filed, Treasury will refer the reclamation debt, if eligible, to Treasury's centralized Treasury Offset Program (TOP) or another Federal entity for offset in accordance with 31 U.S.C. 3716.
Offset is a collection method in which the U.S. federal government withholds funds payable by the U.S. federal government to the financial institution, and applies the withheld funds to a debt owed to the U.S. federal government. Fiscal Service may initiate an offset to collect a reclamation debt by referring the debt to the Treasury Offset Program (TOP).
Example
Reclamation amount
The presenting bank owes $400.00 for a reclamation item that is over 120 calendar days old.
Federal Entity Payment/reimbursement
The presenting bank is currently receiving a $2,000.00 Tax Refund from the Internal Revenue Service (IRS.)
Offset action
Fiscal Service requests that the Treasury Offset Program (TOP) offset the reclamation amount from the presenting bank’s tax refund.
Treasury Offset Program (TOP) will divert $400.00 of the tax refund reimbursement to Fiscal Service and send $1,600.00 to the presenting financial institution, along with a notice explaining the offset action.
Table may scroll on smaller screens
| Description | Calculation |
|---|---|
| IRS Tax Refund to the financial institution. | $2000.00 |
| Reclamation amount referred by Fiscal Service to TOP for offset action. | $400.00 |
| Amount presenting bank will receive after offset action. | $1600.00 |
| OFFSET: Amount TOP will divert to Fiscal Service to settle the reclamation item. | $400.00 |
Making a Payment
If a presenting bank chooses to pay a reclamation which was referred for offset, then they should call Fiscal Service as soon as possible to avoid the possibility of a duplicate payment.
Please have the check symbol and check serial number available so that the check can be identified in the Fiscal Service system.
Refer to Contacts for the telephone number.
Offsets in error
Below shows what happens if an offset is executed in error.
- IF a reclamation is collected by an offset AND it is later determined that the financial institution...
-paid the reclamation or,
-filed a timely protest and is not liable for the amount of the reclamation- THEN Fiscal Service will promptly refund the amount of the offset to the presenting bank, if appropriate.