Virginia Department of Taxation
Presentation to Virginia Municipal League
and Virginia Association of Counties
Richard C. Dotson
Assistant Tax Commissioner
October 25, 2011
VML/VACO Seminar to Improve Delinquent Collections
Department of Taxation
Overview of Debt Setoff
and
Treasury Offset Program
(TOP)
VML/VACO Seminar to Improve Delinquent Collections
The Virginia Department of Taxation (TAX) administers the
Set-Off Debt Collection program.
Government units and courts that submit claims are
referred to as claimant agencies.
A match against the claim and a Virginia individual tax
refund, state lottery prizes, and vendor funds will only
occur when authorized by the claimant agency.
VML/VACO Seminar to Improve Delinquent Collections
• The program consists of Individual Set-Off and the
Comptroller’s Vendor Debt Set-Off (CDS) Program
Individual Set-Off Collection Program
• Legal remedy for collection of debts owed to
Commonwealth’s administrative units and courts
• Established in 1981
• The Code of Virginia Set-Off Debt Collection Act, Section
58.1520 through 58.1535 and the State Lottery Law,
Section 58.1-4028
• All State Agencies, State Authorities, Courts, Counties,
and Towns can participate
VML/VACO Seminar to Improve Delinquent Collections
 Comptroller’s Vendor Debt Set-Off (CDS) Program
• Intercepts vendor payments to offset debts owed by vendors
to state agencies
• Established as a collaborative effort between the
Department of Accounts (DOA) and Department of Taxation
(TAX)
• Debt Collection Act, Sections 2.1-726 through 2.1-735 of the
Code of Virginia
• Only State Agencies can participate
VML/VACO Seminar to Improve Delinquent Collections
Program Cycle
November 1
First day agencies are eligible to submit claims
January 1
Starts participating year
Claims are now eligible to be matched
VML/VACO Seminar to Improve Delinquent Collections
Participation in the Program
• New participants must visit www.tax.virginia.gov to view
the Setoff Program Guide.
• New agencies must participate in online training.
• A Set-Off Participation Form along with a letter of
authorization signed by the head of the governing body
is required (e.g., Mayor, Treasurer, County Supervisor).
VML/VACO Seminar to Improve Delinquent Collections
Current Participants
•
•
•
•
•
(in order of priority)
Department of Taxation
Support Enforcement, Department of Social Services
State Agencies, State Boards, State Authorities and
Courts
Counties, Cities, Towns, County Authorities, City
Authorities and Local Departments of Social Services
938 total participants
VML/VACO Seminar to Improve Delinquent Collections
The 938 participants consists of the following:
State Agencies
Local Agencies
Courts
(Circuit and District)
185
416
337
VML/VACO Seminar to Improve Delinquent Collections
Set-Off Collection Summary
Fiscal Year
Paid Claims
Dollar Amount
2009
308,051
$48,503,841
2010
294,703
$47,510,437
2011
309,642
$51,988,998
VML/VACO Seminar to Improve Delinquent Collections
Vendor Debt Collection Summary
TRANSACTION_TYPE
2010
DCA (VA Tech) Offset
Paid
2011
Grand Total
18,106.11
18,106.11
1,280,262.06
1,700,144.18
2,980,406.24
531,557.27
808,010.48
1,339,567.75
External Offset Paid
48,049,838.55
53,764,768.10
101,814,606.65
Grand Total
49,861,657.88
56,291,028.87
106,152,686.75
DOA Offset Paid
Lottery Offset Paid
VML/VACO Seminar to Improve Delinquent
VML/VACO SeminarCollections
to Improve Delinquent Collections
Treasury Offset Program (TOP)
• A federal program that allows states to submit delinquent
debts to be “offset” against the federal income tax
refunds.
• “Offset” means TAX can take a federal income tax
refund to pay an eligible tax debt.
• TOP is administered by the Federal Management
Service (FMS) which is part of the U.S. Department of
the Treasury.
• TAX must send a certified letter to the taxpayer 60 days
before an account can be assigned to TOP. TAX sends
out certified letters quarterly with an annual average of
100,000 per year.
VML/VACO Seminar to Improve Delinquent Collections
Treasury Offset Program (TOP)
• TAX pays FMS a fee of $21 for every successful
match. TAX must absorb the fee. We are not permitted,
by state regulations, to charge the fee to the taxpayer.
• To be ‘eligible’ for TOP. A bill must have a balance
greater than $100, be at least 90 days delinquent and
not more than 10 years old, and not under bankruptcy or
1821 appeal.
VML/VACO Seminar to Improve Delinquent Collections
Treasury Offset Program (TOP)
Collection Summary
FY
09
10
11
Number of
Offsets
Total Cycle
Collections
Total Fees
Paid to FMS
Net Cycle
Collections
25,090
16,016,872
551,980
15,465,737
17,416
12,726,067
367,263
12,363,805
18,010
12,541,689
397,910
12,346,781
VML/VACO Seminar to Improve Delinquent Collections
Question and Answer