The Office of Legislative
and Public Affairs

Fact Sheets

MAJOR ACCOMPLISHMENTS

Under the Debt Collection Improvement Act of 1996, FMS is charged with implementing the Government's centralized delinquent debt collection program. FMS's Debt Management Services carries out the program utilizing its Treasury Offset Program (TOP) and Cross-Servicing Program.

Treasury Offset Program (TOP)
TOP is a debt collection program that uses Offset, whereby federal payments are reduced or "offset" to satisfy a person's overdue federal debt, child support obligation, or state income tax debt. This is where the largest volume is, in terms of dollars collected. Through TOP, total collections were more than $5.8 billion for fiscal year 2008.

Cross-Servicing
Cross-Servicing is the process whereby agencies refer federal non-tax debts more than 180 days delinquent to FMS for collection. Treasury utilizes a variety of collection tools once agencies refer their debts. Those tools include Treasury demand letters, telephone calls to debtors, referral of debts to TOP, reports to credit bureaus, referral to one or more of the private collection agencies on Treasury's contract, and referral to the Department of Justice for litigation.

Administrative Wage Garnishment
FMS also provides administrative wage garnishment (AWG) as a debt collection tool available to federal agencies through Cross-Servicing. AWG is proving to be a valuable tool for increasing collections, and FMS continues to encourage federal agencies to authorize its use through Cross-Servicing. Presently, 22 agencies participate in the AWG program, and FY 2008, AWG collections were $5.97 million. As of January 2009, cumulative collections through AWG totaled $26.6 million.

In all, $180 million was collected through the Cross-Servicing Program in fiscal year 2008.

Today, the FMS debt collection program is a central tool for sound financial management at the federal level. Since 1996, FMS has collected more than $37.4 billion in delinquent debt. In fiscal year 2008, collections of federal delinquent debt surpassed $5.9 billion.

Through the debt collection program, FMS provides an extremely valuable Government-wide service, assisting with the collection of delinquent federal debt, much of which would not be collected otherwise. The debt program has had a tangible impact on agency fiscal operations, the stewardship of taxpayer dollars, the integrity of important federal programs, such as student loan programs, and efforts to collect delinquent child support debt.

Critical to the success of collection efforts is the role of the federal program agencies - that of referring eligible delinquent debts to Treasury for collection. At the close of fiscal year 2008, 100 percent ($49.1 billion) of the eligible federal non-tax debts had been referred to our Treasury Offset Program for collection, and 100 percent ($11.5 billion) had been referred to the Cross-Servicing Program.

Providing high-quality customer service throughout the collection process and implementing new initiatives to aid in preventing delinquencies were Treasury priorities throughout fiscal year 2008. For instance, one of the customer service tools used at the TOP Customer Service center, the Interactive Voice Response (IVR) system, significantly reduces waiting times for callers, by providing an automated response system to address callers' questions. During the 2008 tax season, the TOP Customer Service Center handled more than 2.8 million phone inquiries, compared to 2.7 million inquiries for the same period during the 2007 tax season. TOP Call Representatives handled only eight percent of all calls received.

Bringing in additional debtor streams ensures continued growth of FMS’ debt collection program. A provision of The Medicare Improvements for Patients and Providers Act of 2008 authorized the offset of Medicare provider payments to collect nontax debts through the Treasury Offset Program. In October 2008, FMS, in coordination with the IRS and the Department of Health and Human Services for Medicare and Medicaid Services (CMS), began to levy some Medicare payments to providers who owe delinquent taxes. The program is on track to meet the timetable for full implementation set out in the legislation. Additionally, we anticipate that offsets of Medicare parts A&B payments to providers who owe nontax debts will begin in 2009.

Child Support Enforcement
The Office of Child Support Enforcement (OCSE), which is part of HHS, is the federal office that has program responsibility for child support enforcement issues. However, the states run their own programs and make all decisions concerning their child support cases. Child Support cases are either TANF (Temporary Assistance to Needy Families) or non TANF. Payment files are matched against child support debts in TOP. If there is a match, offsets are taken, and the funds are forwarded to HHS’ Program Support Center (a clearinghouse for OSCE) for distribution to the states. If it is a TANF debt, the state will keep the funds. If it is a non TANF debt, the state will distribute the funds to the custodial parent or guardian. Since 1999, more than $17 billion in delinquent child support debt has been collected through the Treasury Offset Program.