Section 6: Offsets, Including Treasury Check Offsets
The information in this section applies only to reclamations initiated prior to October 19, 2011 listed on the Request for Refund (Check Reclamation).
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).
In addition, Fiscal Service may direct the Federal Reserve Bank to withhold credits from presenting financial institutions for application to a delinquent reclamation debt, a process known as Treasury Check Offset (TCO).
Funds payable by the U.S. federal government that may be offset include U.S. federal tax refunds, vendor payments or other payments to financial institutions and credits from the Federal Reserve Bank for a U.S. Treasury check included in an incoming cash letter.
Conditions: Unpaid items will be eligible for collection by offset through the Treasury Offset Program if …
- Request for Refund (Check Reclamation) and/or accrued interest, penalties, and administrative fees relating to that reclamation remains unpaid for 120 days after the reclamation date
- The presenting financial institution was sent at least one Summary of Debt Statement informing them that Fiscal Service intends to collect the reclamation by offset.
- The reclamation is not under protest.
Unpaid items will be eligible for Treasury Check Offset after Fiscal Service has attempted collection through other types of offset for a period of 60 days.
Note: Reclamations which are eligible for an offset are identified by a code C in the Reclamation Status column on the Summary of Debt Statement.
The Summary of Debt Statement informs the financial institution of the nature and amount of the reclamation debt and Fiscal Service's intention to collect the debt by offset. In addition, the Summary of Debt Statement advises the financial institution that it may inspect and copy Fiscal Service's records related to the reclamation debt, and request a review of Fiscal Service's decision about the debt.
The presenting financial institution owes $400.00 including interest, penalty and administrative fees for a reclamation item that is over 120 days old.
Federal Agency Payment/reimbursement
The presenting financial institution is currently receiving a $2,000.00 Tax Refund from the Internal Revenue Service (IRS.)
Fiscal Service requests that the Treasury Offset Program (TOP) offset the reclamation amount from the Financial Institution’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
|IRS Tax Refund to the financial institution.||$2000.00|
|Reclamation amount referred by Fiscal Service to TOP for offset action.||$400.00|
|Amount financial institution 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 financial institution 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 Assistance 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 financial institution, if appropriate.
Last modified 07/10/18