- Bureau of the Fiscal Service
- Treasury Offset Program
- Understanding Federal Law on Accepting Payments in Full When an Offset Has Occurred

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

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## 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.

Last modified 09/18/19