Understanding Federal Law on Accepting Payments in Full When an Offset Has Occurred

How TOP Works

The Treasury Offset Program (TOP) is a centralized offset program administered by the U.S. Department of the Treasury, Bureau of the Fiscal Service, to collect delinquent debts owed to federal agencies and states. View information about how TOP works.

Unitary Creditor

All subdivisions or organizations sharing a single Taxpayer Identification Number (TIN) are responsible for all federal and state debts associated with that TIN. This means that if two corporate divisions are using the same TIN when interacting with the federal government, TOP will offset any eligible payment to one of those sub-entities to pay any eligible debt owed by one of those sub-entities to the federal government. This is true, even in cases when it is challenging for one corporate division to be aware of debts owed by another agency or division.

Fiscal Service’s Authority to Offset Federal Payments

The federal government’s administrative debt collection activities are governed by a number of federal laws. Applicable legal authorities for TOP can be viewed in the TOP Legal Authorities Quick Reference.

Federal Law on Accepting Offsets as Payment in Full

When an offset occurs, the debtor has received payment in full for the underlying obligation represented by the payment.

• 31 C.F.R. § 285.5(e)(9) (Payment and disbursing officials have satisfied the obligation underlying the payment) states:When an offset occurs, the debtor has received payment in full for the underlying obligation represented by the payment.Under 31 U.S.C. 3716(c)(2)(A), neither the disbursing official nor the payment agency shall be liable for the amount of the offset on the basis that the underlying obligation was not satisfied. For example, if an agency certifies a payment to a Federal contractor for work completed or services provided, and that payment is offset to collect a delinquent debt that the contractor owes to another Federal agency, the contractor has been paid in full for its services. When the creditor agency credits the offset amount to the contractor's delinquent debt, the contractor has received full value for the services performed under the contract.
• 31 U.S.C. §3716(c)(2) states: Neither the disbursing official nor the payment certifying agency shall be liable for the amount of the administrative offset on the basis that the underlying obligation, represented by the payment before the administrative offset was taken, was not satisfied.
• 26 U.S.C. §6402(g) (Review of reductions) states: No court of the United States shall have jurisdiction to hear any action, whether legal or equitable, brought to restrain or review a reduction authorized by subsection (c), (d), (e), or (f). No such reduction shall be subject to review by the Secretary in an administrative proceeding. No action brought against the United States to recover the amount of any such reduction shall be considered to be a suit for refund of tax. This subsection does not preclude any legal, equitable, or administrative action against the Federal agency or State to which the amount of such reduction was paid or any such action against the Commissioner of Social Security which is otherwise available with respect to recoveries of overpayments of benefits under section 204 of the Social Security Act.