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1 1 (April 22, 2022)

handle is hein.crs/govehlh0001 and id is 1 raw text is: Congre s&ona R Fesedrch Ser/ce hnorming Ahej ilive debatem osine114 Updated April 22, 2022 Overview of the Treasury Department's Federal Payment Levy and Treasury Offset Programs The U.S. Department of the Treasury, through the Bureau of Fiscal Service (BFS), has two programs for collecting delinquent debt owed by individuals, businesses, and other entities to federal and state government agencies. They differ mainly by the type of debt each program collects. The Federal Payment Levy Program (FPLP) collects delinquentfederal tax debt only. In this case, the BFS collaborates with the Internal Revenue Service (IRS) to collect this debt by placing a continuous levy on eligible federal payments to delinquent taxpayers. The Treasury Offset Program (TOP) collects a variety of state tax and nontax debt and federal nontax debt. In this case, the BFS collaborates with federal and state government agencies to collect delinquent debt (including past-due child support) by offsetting certain federal payments to delinquent individuals. Federal nontax debt consists of direct loans, defaulted guaranteed loans, administrative debt (e.g., salary and benefit overpayments), and unpaid fines and penalties. As Table 1 shows, the TOP collects over nine times the amount of delinquent debt collected by the FPLP. Table I. Amount of Delinquent Federal and State Tax and Nontax Debt Collected Through the Federal Payment Levy Program (FPLP) and the Treasury Offset Program (TOP), FY20 15 to FY20 18 (Millions of Dollars) TOP: State Tax TOP: and Federal Fiscal Nontax Nontax Year FPLP Debt Debt Total FY2015 $724 $3,063 $3,252 $7,039 FY2016 $692 $2,927 $3,525 $7,144 FY2017 $683 $2,850 $3,724 $7,257 FY2018 $679 $2,712 $3,805 $7 196 Source: U.S. Department of the Treasury, U.S. Government Receivables and Debt Collection Activities of Federal Agencies, Fiscal Year 2018 Report to the Congress, August 2019. Both programs rely on the same BFS database of persons and companies with delinquent state and federal tax and nontax debt. Federal and state agencies that are owed delinquent debt (making them creditor agencies) provide and update the information stored in the database. Origin an d Operation of the FPLP The Federal Payment Levy Program was established by the Taxpayer Relief Act of 1997 (TRA97, P.L. 105-34) in Section 6331(h) of the Internal Revenue Code (IRC). Congress intended the FPLP to improve the collection of delinquent federal taxes in two ways. First, the program allows the IRS to share with the BFS the taxpayer information needed to set up a continuous levy for specific taxpayer accounts. Second, IRC Section 6331(h) authorizes the IRS to offset certain federal payments to delinquent taxpayers. Before TRA97 was enacted, the IRS was not permitted to establish an automatic process for offsetting federal payments to delinquent taxpayers. The BFS and IRS have managed the program since it began in July 2000. The cost to the BFS of operating the program is an estimated $220 million from FY2023 to FY3032. Currently, the IRS reimburses the BFS for its services out of appropriated funds. The Biden Administration's FY2023 budget request for the IRS calls for allowing the BFS to cover its costs from levy collections, a change that would reduce administrative and overhead costs for both the IRS and the BFS. The FPLP facilitates the collection of delinquent federal taxes by levying designated federal payments disbursed by BFS to businesses and individuals holding such debt. A levy remains in place until all delinquent taxes are paid in full, including penalties and accrued interest. Current law allows the following payments to be levied under the FPLP up to the specified limits: * up to 15% of federal employee retirement annuities; * up to the full amount of federal payments to federal vendors; * up to the full amount of federal employee travel advances or reimbursements; * up to 15% of Social Security Old Age and Survivor benefits and Railroad Retirement benefits, excluding disability and supplemental security income payments; and * up to 15% of some federal salaries. These limits mean, for example, that for someone who receives a monthly Social Security retirement benefit of $1,000, no more than $150 could be levied through the FPLP to pay a delinquent federal tax debt.

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