This section provides information to all state departments and agencies on the federal management debt collection procedures.

The Debt Collection Improvement Act of 1996 provides that any non-tax debt or claim owed to an agency of the federal government that remains unpaid for a period of 180 days shall be referred to the U.S. Department of Treasury for appropriate action. The Department of Treasury is empowered to withhold or reduce certain federal payments for the purpose of collecting delinquent non-tax debts owed to the federal government. This collection process is known as "administrative offset" or "offset".

Before referring a debt for collection by administrative offset, the federal creditor agency must provide each debtor with:

• A written notification of the nature and the amount of the debt, the intention of the agency to collect the debt through administrative offset, and an explanation of the debtor's rights;
• An opportunity to inspect and copy the records of the agency;
• An opportunity for review within the agency; and
• An opportunity to enter into a written repayment agreement.

Guide to Financial Operations

REV. 07/31/2015