Do you owe money to the United States of America? Are you receiving benefits from a government agency or expecting a tax refund? After trying to collect the money that you owe, a governmental agency can obtain it from another government agency that was about to mail you a check.
The administrative offset usually occurs with money owed for more than 180 days and is a form of withholding by the Treasury’s Financial Management Service.
Unpaid income taxes, small business, farming and student loans as well as veteran’s health care expenses and other debts may be collected. If your benefits were overpaid in the past, this amount may not be past due as well.
The agency may be attempting to provide you with a written notice and an opportunity for inspection, review and repayment. You may be eligible for a disability and hardship waiver or other exception or legal defense.
If not, the administrative offset will become certified in which case you may receive a letter from the agency that was about to pay you which describes why the offset will occur and by whom.
Past due taxes usually take priority over other debts. Social Security may be taken for past due student loans and other government debts even if owed for more than 10 years. More and more people are having their Social Security, Black Lung, Railroad Retirement and other benefits taken. Up to 15 percent of a Social Security check may be taken but you shouldn’t be left with less than $750.
Even a tax refund check can be taken to pay a past due debt as a “tax interception”. The Wall Street Journal has reported that the Treasury used administrative offset to collect about $4.3 billion in 2008. Almost 81 billion remains to be collected.