Financial Management Service 

Program Summary by Budget Activity 

(Dollars in thousands) 

Appropriation FY 2009 FY 2010 FY 2011 

Enacted Enacted Request $ Change % Change

 Payments $147,717 $150,395 $142,537 ($7,858) (5.2%)

 Collections $21,521 $21,911 $21,690 ($221) (1.0%)

 Government-wide Accounting and Reporting $70,547 $71,826 $71,026 ($800) (1.1%) 

Subtotal, Financial Management Service $239,785 $244,132 $235,253 ($8,879) (3.6%) 

Offsetting Collections - Reimbursables $228,010 $234,690 $216,730 ($17,960) (7.7%) 

Total Program Operating Level $467,795 $478,822 $451,983 ($26,839) (5.6%) 

*The FY 2009 figure does not include $7 million received from the American Recovery and Reinvestment Act. 

Explanation of Request 

The Financial Management Service (FMS) FY 

2011 President’s Budget request focuses on 

continued implementation of modernization 

initiatives in FMS’ payments, collections, debt 

collection, and government-wide accounting 

functions. One such initiative is the Financial 

Information Reporting Standardization 

(FIRST), which will enhance and improve 

operations by improving accuracy and 

integrating budgetary and government-wide 

accounting with proprietary information. 

Another initiative is the Collections and Cash 

Management Modernization (CCMM) 

program, which is streamlining, modernizing 

and improving the process of Treasury’s 

collections and cash management programs. 

The Department is committed to moving to 

paperless processing throughout its bureaus 

and programs, including increasing the number 

of payments and collections made 

electronically. FMS will play a critical role 

through an increasing use of electronic benefit 

payments and collections. This will help 

streamline intergovernmental processes and 

enhance service to the general public. 

FMS strives to consistently look for ways to 

increase the number of payments and 

collections made electronically. The Paperless 

Treasury initiative will move FMS closer to an 

all-electronic organization. Two important 

components of this initiative include: the 

phasing in of government benefit check 

recipients to electronic deposit and requiring 

all businesses with $2,500 or more in quarterly 

tax liability to pay electronically. The use of 

electronics will allow FMS to improve the 

accuracy and efficiency of transactions and 

operations, eliminate paper-based processes, 

and contribute to increasing electronic 

transactions within government and with the 

public. 

Total resources required to support FMS 

activities for FY 2011 are $451,983,000, 

including $235,253,000 from direct 

appropriations, and $216,730,000 from 

offsetting collections and reimbursable 

programs. 

Purpose of Program 

The Financial Management Service (FMS) 

plays a key role in supporting the Department 

of the Treasury’s strategic goal of managing 

the United States Government’s finances 

effectively by operating as the financial 

manager and principal fiscal agent for the 

Federal Government. This role includes 

managing the nation’s finances by collecting 

money due to the United States, disbursing its 

payments, and performing central accounting 

functions. 

Department of the Treasury - Budget in Brief FY 2011 Page 53
(Dollars in thousands) 

Appropriation Amount 

FY 2010 Enacted 244,132 

Changes to Base: 

Maintaining Current Levels (MCLs): $4,560 

FERS % Change 369 

Non-Pay Inflation Adjustment 843 

Pay Annualization 933 

Pay Inflation Adjustment 2,415 

Efficiencies Savings: ($13,439) 

Payment Modernization/Operational (3,020) 

Realignment PM/DMS (3,390) 

Elimination of Paper-Based Process (4,429) 

IT Efficiency Savings (2,600) 

Total FY 2011 Base 235,253 

Total FY 2011 Budget Request 235,253 

Subtotal FY 2011 Changes to Base ($8,879) 

As the Government’s financial manager, FMS 

oversees a daily cash flow in excess of 

$60 billion, disbursing 85 percent of the 

Federal Government’s payments. These 

payments include income tax refunds, Social 

Security benefits, veterans’ benefits and other 

Federal payments to individuals and 

businesses. FMS also administers the world’s 

largest collection system, collecting over $2.8 

trillion in FY 2009. FMS provides cash 

management guidance to Federal Program 

Agencies (FPAs), maintains the Government’s 

accounting books, and compiles and publishes 

government-wide financial information used to 

monitor the Government’s financial status. 

Finally, FMS serves as the Government’s 

central debt collection agency for delinquent 

non-tax debt. 

FMS FY 2011 Budget Highlights

FY 2011 Budget Adjustments 

FY 2010 Enacted 

The FY 2010 enacted direct appropriation for 

FMS is $244,132,000. 

Maintaining Current Levels (MCLs) 

Adjustments Necessary to Maintain Current 

Levels +$4,560,000 / +0 FTE 

Funds are requested for: A FERS percentage 

rate change of $389,000, FY 2011 cost of the 

January 2010 pay increase of $933,000; 

proposed January 2011 pay raise of 

$2,415,000; and non-labor related items such 

as contracts, travel, supplies, equipment and 

GSA rent adjustments of $843,000. 

Efficiencies Savings 

Payment Modernization/Operational 

Efficiency -$3,020,000 / -60 FTE 

The Payment Application Modernization 

(PAM) Project streamlines the FMS payments. 

PAM will replace the current mainframe-based 

software applications used to disburse 

approximately one billion federal payments 

annually, which along with other 

modernization efforts will result in operational 

efficiencies savings. 

Realignment PM/DMS -$3,390,000 / -30 FTE 

Consolidation of Debt Management and 

Payment Management business processes will 

allow FMS to assure operational continuity 

and maximize use of its call centers. 

Elimination of Paper-Based Process -

$4,429,000 / -35 FTE 

The implementation of several IT systems will 

eliminate current paper processes. For 

example, the implementation of the Judgment 

Fund Internet Claims System (JFICS) allows 

federal agencies to submit their claims for 

payment electronically to the Judgment Fund. 

FMS is in the process of rolling out JFICS to 

federal agencies which will eliminate paper 

and result in savings to FMS. Additionally, 

FMS plans to analyze its administrative needs 

and redistribute resources to critical areas. 

IT Efficiency Savings -$2,600,000 / +0 FTE 

FMS will consolidate several software 

contracts and move applications from the 

Bureau of Public Debt server and expects to 

gain efficiency savings from its transition to 

broadband. 

Department of the Treasury - Budget in Brief FY 2011 Page 54
Explanation of Budget Activities 

Salaries and Expenses 

Payments ($142,537,000 from direct 

appropriations and $131,060,000 from 

reimbursable programs) 

FMS issues and distributes payments, develops 

and implements Federal payment policy and 

procedures, promotes the use of electronics in 

the payment process, and assists agencies in 

converting payments from paper checks to 

Electronic Funds Transfer (EFT). This 

activity also includes controlling and 

providing financial integrity to the payments 

process through reconciliation, accounting, 

and claims activities. Included in this activity 

is the claims activity which settles claims 

against the United States. These claims result 

from Federal Government checks that have 

been forged, lost, stolen, or destroyed. FMS 

collects monies from those parties liable for 

fraudulent or otherwise improper negotiation 

of Government checks. It also includes 

processing claims and reclamations for EFT 

payments. 

Collections ($21,690,000 from direct 

appropriations and $1,419,000 from 

reimbursable programs) 

FMS collects revenues needed to operate the 

Federal Government through the management 

of the Federal Government’s collections 

infrastructure. In FY 2009, FMS collected 

$2.86 trillion, of which 83 percent was 

collected electronically, through a network of 

more than 9,000 financial institutions. It also 

manages the collection of Federal revenues 

such as individual and corporate income tax 

deposits, customs duties, loan repayments, and 

fines and proceeds from leases. 

Debt Collection ($80,036,000 from 

reimbursable programs) 

The Debt Collection activity collects 

delinquent Government and child support debt 

by providing centralized debt collection, 

oversight, and operational services to FPAs 

and states as required by the Debt Collection 

Improvement Act (DCIA) of 1996 and related 

legislation. The services include, but are not 

limited to, collecting delinquent debts through 

Cross-Servicing and offsetting Federal 

payments, providing a database for use as a 

tool for barring delinquent debtors, providing 

post-judgment collection, advising and 

educating agencies towards improving debt 

management, and referrals to the Department 

of Justice. 

Government-wide Accounting and Reporting 

($71,026,000 from direct appropriations and 

$4,215,000 from reimbursable programs) 

The Government-wide Accounting and 

Reporting activity maintains the Federal 

Government’s books and accounts for its 

monetary assets and liabilities by operating 

and overseeing the Government’s central 

accounting and reporting system. It also 

works with Federal agencies to adopt uniform 

accounting and reporting standards and 

systems and provides support, guidance, and 

training to assist FPAs in improving their 

government-wide accounting and reporting 

responsibilities. FMS gathers and publishes 

government-wide financial information which 

is used in establishing fiscal and debt 

management policies and is also used by the 

public and private sectors to monitor the 

Government’s financial status. These 

publications include: the Daily Treasury 

Statement, the Monthly Treasury Statement, 

the Treasury Bulletin, the Combined Statement 

of the United States Government, and the 

Financial Report of the United States 

Government (FR). 

Legislative Proposals 

Debt Collection 

Authorize Post-Levy Due Process 

This proposed amendment to 26 U.S.C. § 6330 

would allow the IRS to levy the payment of a 

Department of the Treasury - Budget in Brief FY 2011 Page 55
federal contractor who owes delinquent taxes, 

and provide the taxpayer with notice and an 

opportunity for an administrative collection 

due process (CDP) hearing, and for judicial 

review, within a reasonable time after the levy. 

The IRS currently has this authority for levies 

against state tax refunds and to collect federal 

employment taxes. 

Under the automated Federal Payment Levy 

Program, Treasury matches federal tax 

liabilities against federal payments to 

contractors. When a match occurs, IRS issues 

the CDP notice but cannot levy the payment 

until the CDP requirements are complete. By 

this time the payment has already been made 

and the opportunity for levy is lost. This 

proposal would remedy this situation by 

allowing the IRS to levy the payment at the 

time the payment is identified. 

Allow IRS to Levy 100 Percent of All Vendor 

Payments 

This proposed amendment to 26 U.S.C. § 

6331(h)(3) would allow IRS to continuously 

levy up to 100% of federal payments made to 

all federal vendors who owe delinquent taxes, 

not only vendors of “goods or services.” 

Currently, continuous levies of payments made 

to vendors of “goods or services” allow for 

collection from up to 100% of the levied 

payment, whereas continuous levies of other 

payments attach to no more than 15% of the 

payment. 

The current law excludes from the 100 percent 

continuous levy authority a sizable number of 

federal vendor payments, most notably 

payments related to the purchase or lease of 

real estate by the Federal Government, but also 

payments for other purchases such as 

intellectual property or software. As an 

operational matter, without this legislative 

change, it is not feasible for FMS to automate 

the continuous levy of vendor payments 

because of the significant changes to systems 

and accounting practices required across a 

wide array of agencies to allow for the 

differentiation between payments to vendors 

of “goods or services” versus other vendor 

payments. To identify vendor real estate 

payments, for example, would require more 

than 30 agencies to change the manner in 

which they code payments certified to FMS, as 

well as months of testing and verification of 

agency compliance. In addition, IRS would be 

relying upon the ability of agencies to 

accurately classify vendor payments in order 

to avoid improper seizure. 

Authorize FMS to Deduct Fees from Amounts 

Collected from Levies of Federal Payments 

Rather Than Have Fees Paid Out of IRS's 

Appropriation 

This proposal improves the way FMS collects 

fees from IRS to cover FMS’s costs in 

developing and operating the Federal Payment 

Levy Program (FPLP), which utilizes the 

Treasury Offset Program (TOP) to process 

levies of federal payments to collect 

delinquent tax debts. Rather than IRS paying 

fees from its annual discretionary 

appropriation pursuant to the Economy Act, 

this proposal would allow FMS to retain 

directly a portion of the levied funds. The 

proposal would ensure that sufficient funds are 

available to cover the costs of the program, 

and it is consistent with how other federal 

agencies reimburse FMS for collecting nontax 

debts through TOP. The proposal would 

modify the way that FMS recovers its 

transaction fees for processing IRS levies by 

permitting FMS to add the fee to the liability 

being recovered, thereby shifting the cost of 

collection to the delinquent taxpayer. The 

offset amount would be included within the 

15-percent limit on continuous levies against 

income. 

Allow The Offset of Certain Federal Benefit 

Payments to Collect Delinquent Child Support 

Debts. 

Department of the Treasury - Budget in Brief FY 2011 Page 56
This proposal would authorize the collection 

of delinquent, state-enforced child support 

debts from Social Security, Black Lung, and 

Railroad Retirement benefit payments in the 

same way that such payments are currently 

offset to collect federal nontax debts. Under 

current law, FMS offsets up to 15% of a 

benefit payment to collect nontax debts, and 

the amount of $750 per month is exempt from 

offset. Although States may directly request a 

benefit agency to garnish benefit payments to 

collect delinquent child support debts, this 

proposal provides a cost-efficient way for 

States to collect support from payments that 

States have been unable to identify as a source 

of funding from the delinquent child support 

obligor. 

While many federal benefit payments are 

statutorily protected from collection actions, 

the Debt Collection Improvement Act of 1996, 

as codified at 31 U.S.C. § 3716(c)(3)(A)(i), 

expressly waived any statutory limitation for 

purposes of offset under section 3716 to 

collect federal nontax debts. Section 

3716(h)(3), however, provides that the 

statutory waiver does not apply to collection of 

debts owed to States, which includes child 

support. The proposed language amends 

3716(h)(3) to include child support debts in 

the waiver. 

Allow Offset of Federal Income Tax Refunds to 

Collect Delinquent State Income Taxes for 

Debtors Who Currently Reside in Other States 

Under current law, federal tax refunds may be 

offset to collect delinquent state income tax 

obligations only if the delinquent taxpayer 

resides in the state collecting the tax. This 

proposal will allow FMS to offset federal 

income tax refunds to collect delinquent state 

tax obligations regardless of where the debtor 

resides. 

Department of the Treasury - Budget in Brief FY 2011 Page 57
75 days after the fiscal year-end. However, for 

FY 2009, some agencies that were 

significantly impacted by the substantial 

reporting requirements of the American 

Recovery and Reinvestment Act were granted 

reporting deadline extensions, which 

consequently impact the timing of the FR, now 

scheduled for February 16, 2010. The FR 

presents a picture of government-wide 

finances that complements the traditional 

Federal Government budget information. 

Additionally, FMS issued 100 percent of its 

government-wide accounting reports 

accurately and timely. FMS will continue to 

revamp and implement government-wide 

accounting processes to provide more useful 

and reliable financial information on a regular 

basis. FMS will continue moving forward on 

the Financial Information and Reporting 

Standardization (FIRST) initiative. This 

initiative integrates budget and financial 

reports from FPAs. FIRST will improve the 

consistency of the budgetary and proprietary 

accounting data recorded in agency financial 

statements and reported to FMS through its 

trial balance. 

Department of the Treasury - Budget in Brief FY 2011 Page 59
Department of the Treasury - Budget in Brief FY 2011 Page 60
FMS Performance by Budget Activity 

Budget Activity Performance Measure 

FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 

Actual Actual Target Actual Target 

Met? Target Target 

Payments Percentage of paper check and Electronic 

Funds Transfer (EFT) payments made 

accurately and on time (Oe) 

100 100 100 100 Y 100 100 

Collections Percentage collected electronically of total 

dollar amount of Federal government receipts 

(Oe) 

79 80 80 84 Y 80 82 

Debt Collection Amount of delinquent debt collected through 

all available tools ($ billions) (Ot) 

3.76 4.41 3.90 5.03 Y 4.65 4.84 

Government-wide Percentage of Government-wide accounting 

Accounting and reports issued accurately (Oe) 

Reporting 

100 100 100 100 Y 100 100 

Government-wide Percentage of Government-wide accounting 

Accounting and reports issued timely (E) 

Reporting 

100 100 100 100 Y 100 100 

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, DISC – discontinued, and B – 

baseline 

Description of Performance 

Payments: In FY 2009, FMS issued nearly 1 

billion non-Defense payments worth almost 

$2.7 trillion to a wide variety of recipients, 

such as those who receive Social Security 

benefits, IRS tax refunds, and veterans’ 

benefits. Nearly eighty-one percent of all 

payments disbursed were issued via direct 

deposit. Additionally, in FY 2009, FMS 

disbursed over 54.9 million Economic 

Recovery Act Payments (ERP) totaling $13.7 

billion dollars with 85 percent of the payments 

made by EFT. FMS expects total ERP 

payments disbursed will be over 55 million 

valued at over $13.8 billion. 

In FY 2011, FMS will continue to expand the 

use of electronic media to deliver Federal 

payments. Electronic media provides a safer, 

more secure and reliable method of payment 

for recipients. It also decreases the number of 

paper checks issued, which minimizes costs 

and inefficiencies associated with the delivery 

of non-electronic benefits. 

Collections: In FY 2009, FMS collected $2.86 

trillion, of which 83 percent was collected 

electronically, through a network of more than 

9,000 financial institutions. FMS is in the 

process of developing a comprehensive effort 

to streamline, modernize, and improve the 

processes and systems supporting Treasury’s 

collections and cash management program. 

This effort, Collections and Cash Management 

Modernization, will improve financial 

performance by enabling FMS and 

government agencies to more effectively 

manage financial transaction information and 

improve the efficiency of the collections 

information reporting processes. 

Debt Collection: In FY 2009, FMS collected 

$5.07 billion in delinquent debt, which 

includes $239,162,817 from Economic 

Recovery Payments to satisfy delinquent Child 

Support, Federal Non Tax and State Debt. As 

a result of FMS continued program 

improvements, total debt collections since the 

enactment of the DCIA are over $42.5 billion 

through FY 2009. FMS will continue to 

enhance FedDebt, a comprehensive system 

that integrated FMS existing collection 

programs: Cross-Servicing and the Treasury 

Offset Program. 

Government-wide Accounting and Reporting: 

FMS has consistently released the Financial 

Report of the United States Government (FR) 

Department of the Treasury - Budget in Brief FY 2011 Page 58