Detail of Other Treasury Accounts 

Total Treasury Department Budget 

The Treasury Chapter of the FY 2011 President’s 

Budget covers the following areas: 

Annual Operating Appropriations 

(Most Treasury Bureaus) – $13.9 billion 

These are funds for Treasury operations which 

require annual appropriation action by the 

Congress. Bureau operating budget details are 

provided in the “Analysis of FY 2011 President’s 

Budget” section. 

Interest Payments and other interest – 

$456.0 billion 

These are permanent, indefinite funds for interest 

payments needed: to finance the public debt; by 

the IRS on refunds of taxes to taxpayers; and on 

special accounts handled through the Treasury. 

Mandatory Accounts and other Offsets 

– $91.0 billion 

These are special accounts for which the Congress 

has given the Department of Treasury permanent 

authority to expend funds as appropriations, such 

as: payments made when the earned income credit, 

child credit, and health care credit exceeds the 

taxpayer's tax liability; payments to the Resolution 

Funding Corporation; reimbursements to Federal 

Reserve Banks; special claims and damage 

payments required as a result of judgments against 

the U.S. government; payments to Presidential 

candidates and their parties in accordance with 

Federal Election Commission certification; and 

other accounts. 

Offsetting Collections – $20.0 billion 

Treasury receipts from other government agencies 

and private sources are subtracted from the total 

Treasury budget as an offset. 

Interest Payments 

Interest on the Public Debt 

The Federal Government's outstanding debt 

requirements are financed through borrowing (e.g., 

auctions of Treasury Bills, Notes, and Bonds). 

Funds paid to lenders for the use of their money is 

paid from the Interest on the Public Debt 

appropriation. 

Interest on the Public Debt includes all interest 

paid on Treasury securities sold to the public (e.g., 

foreign and domestic financial institutions, 

individuals, insurance companies, state and local 

governments, etc.) and to Federal Government 

trust funds, revolving funds and deposit funds. 

Refunding Internal Revenue 

Collections 

Under certain circumstances, as provided in 26 

U.S.C. 6611, interest is paid on Internal Revenue 

collections that must be refunded. The Tax Equity 

and Fiscal Responsibility Act of 1982 (Public Law 

97-248) provides for daily compounding of 

interest. Under the Tax Reform Act of 1986 

(Public Law 99-514), interest paid on Internal 

Revenue collections will equal the Federal shortterm rate plus two percentage points, such rate to 

be adjusted quarterly. 

Interest on Uninvested Funds 

This account was established for the purpose of 

paying interest on certain uninvested funds placed 

in trust in the Treasury in accordance with various 

statutes (31 U.S.C. 1321; 2 U.S.C. 158 (P.L. 94-

289); 20 U.S.C. 74a (P.L. 94-418) and 101; 24 

U.S.C. 46 (P.L. 94-290; and 69 Stat. 533). 

Federal Interest Liabilities to the States 

Pursuant to the Cash Management Improvement 

Act (P.L. 101-453, 104 Stat. 1058) as amended 

(P.L. 102-589, 106 Stat. 5133), and Treasury 

implementing regulations codified at 31 CFR Part 

205, under certain circumstances, interest is paid 

to States when Federal funds are not transferred to 

States in a timely manner. 

Payment to Resolution Funding 

Corporation 

The Financial Institutions Reform, Recovery, and 

Enforcement Act of 1989 authorized the Secretary 

of the Treasury such sums as may be necessary to 

Department of the Treasury - Budget in Brief FY 2011 Page 137
cover interest payments on obligations issued by 

the Resolution Funding Corporation (REFCORP). 

REFCORP was established under the Act to raise 

$31.2 billion for the Resolution Trust Corporation 

(RTC) in order to resolve savings institution 

insolvencies. 

Interest Paid to Credit Financing 

Accounts 

This account pays interest on the invested balances 

of guaranteed and direct loan financing accounts. 

For guaranteed loan financing accounts, balances 

result when the accounts receive up-front 

payments and fees to be held in reserve to make 

payments on defaults. Direct loan financing 

accounts normally borrow from Treasury to 

disburse loans and receive interest and principal 

payments and other payments from borrowers. 

Because direct loan financing accounts generally 

repay borrowing from Treasury at the end of the 

year, they can build up balances of payments 

received during the year. Interest on invested 

balances is paid to the financing accounts from the 

general fund of the Treasury, in accordance with 

section 505(c) of the Federal Credit Reform Act of 

1990 

Permanent Authority Appropriations 

Terrorism Risk Insurance Program 

The Terrorism Risk Insurance Extension Act of 

2007 (P.L. 110-160) reauthorized and revised the 

program established by the Terrorism Risk 

Insurance Act (TRIA) of 2002 (P.L. 107-297). The 

2007 Act extended the Terrorism Insurance 

Program for seven years, through December 31, 

2014. This extension of TRIA added a requirement 

for commercial property and casualty insurers to 

make available coverage for losses from domestic 

as well as foreign acts of terrorism and extends 

TRIA coverage for those losses. 

GSE Preferred Stock Purchase 

Agreement Program (PSPA) 

Section 1117 of the Housing and Economic 

Recovery Act of 2008 (P.L. 110-289) provides 

temporary authority for the Secretary of the 

Treasury to purchase obligations and other 

securities issued by three housing related 

Government- sponsored enterprises (GSEs): 

Fannie Mae, Freddie Mac and the Federal Home 

Loan Banks (FHLBs). Under this authority, in 

2008 Treasury entered into agreements with 

Fannie Mae and Freddie Mac to make investments 

of up to $100 billion in senior preferred stock in 

each GSE in order to ensure that each company 

maintains a positive net worth. These Senior 

Preferred Stock Purchase Agreements (PSPAs) 

ensure that Fannie Mae and Freddie Mac will 

remain viable entities critical to the functioning of 

the housing and mortgage markets, thereby 

promoting mortgage affordability by providing 

additional confidence to investors in GSE 

mortgage-backed securities. In May 2009, 

Treasury increased the PSPA funding 

commitments to allow investments of up to $200 

billion in each GSE and on December 24, 2009, 

Treasury announced that the PSPAs would be 

further modified to allow for additional funding in 

the event that cumulative losses at either enterprise 

exceed $200 billion before December 31, 2012. 

As of December 31, 2009, Treasury had made 

payments of $110.6 billion under the PSPAs and 

received $6.8 billion in scheduled dividend 

payments. 

GSE Mortgage-Backed Securities 

Purchase Program 

In September 2008, Treasury initiated a temporary 

program to purchase mortgage-backed securites 

(MBS) issued by Fannie Mae and Freddie Mac, 

which carry the GSEs standard guarantee against 

default. The purpose of the program was to 

promote liquidity in the mortgage market and, 

thereby, affordable homeownership by stabilizing 

the interest rate spreads between mortgage rates 

and Treasury issuances. Treasury purchased $225 

billion in MBS through December 31, 2009. 

In December 2009, Treasury initiated two 

additional purchase programs to support state and 

local Housing Financing Agencies (HFAs). The 

Department of the Treasury - Budget in Brief FY 2011 Page 138
Temporary Credit and Liquidiy Program (TCLP) 

will provide HFAs with credit and liquidity 

facilities supporting up to $8.2 billion in existing 

HFA bonds, temporally replacing private market 

facilities that are expiring or imposing unusually 

high costs to the HFAs due to current market 

conditions. Under the New Issuance Bond 

Program (NIBP) Treasury will purchase up to 

$15.3 billion in securities of Fannie Mae and 

Freddie Mac backed by new HFA housing bonds, 

supporting up to several hundred thousand new 

affordable mortgages and tens of thousands of new 

affordable rental housing units for working 

families. The authority for all of the programs 

displayed in this account was provided in Section 

1117 of the Housing and Economic Recovery Act 

of 2008 (P.L. 110-289) and expired on December 

31, 2009. 

As required by the Federal Credit Reform Act of 

1990, this account records, the subsidy costs 

associated with the GSE MBS and State HFA 

purchase programs, which are treated as direct 

loans for budget execution. The subsidy amounts 

are estimated on a present value basis. 

Office of Financial Stability 

The Emergency Economic Stabilization Act 

(EESA) of 2008 (PL 110-343) authorized the 

establishment of the Troubled Asset Relief 

Program (TARP) and the Office of Financial 

Stability (OFS) to purchase and insure certain 

types of troubled assets for the purpose of 

providing stability to and preventing disruption in 

the economy and financial systems and protecting 

taxpayers. The Act gives the Treasury Secretary 

broad and flexible authority to purchase and insure 

mortgage and other troubled assets, as well as 

inject capital by taking limited equity positions, as 

needed to stabilize the financial markets. This 

account provides for the administrative costs for 

the OFS. 

Troubled Asset Relief Program 

As authorized by the Emergency Economic 

Stabilization Act of 2008 (EESA) (P.L. 110-343) 

and required by the Federal Credit Reform Act of 

1990, as amended, this account records the 

subsidy costs associated with the TARP direct 

loans obligated and loan guarantees committed in 

2008 and beyond (including modifications of 

direct loans or loan guarantees that resulted from 

obligations or commitments in any year). The 

subsidy amounts are estimated on a present value 

basis using a risk-adjusted discount rate, as 

required by the 2008 Act. The direct loan 

programs serviced by this account include the 

Automotive Industry Financing Program (AIFP), 

Term-Asset Backed Securities Loan Facility 

(TALF), Public-Private Investment Program 

(PPIP) and other EESA Section 101 loans. The 

AIFP was developed to prevent a significant 

disruption of the American automotive industry, 

which would pose a systemic risk to financial 

market stability and have a negative effect on the 

economy of the United States. The TALF was 

developed to stimulate investor demand for certain 

types of eligible asset-backed securities, 

specifically those backed by loans to consumers 

and small businesses, and ultimately, bring down 

the cost and increase the availability of new credit 

to consumers and businesses. The PPIP was 

developed to improve the condition of financial 

institutions by facilitating the removal of legacy 

assets from their balance sheets. The guaranteed 

loan commitments that were serviced by this 

account include the Asset Guarantee Program 

(AGP). The AGP provided guarantees for assets 

held by systemically significant financial 

institutions (Bank of America and Citigroup) that 

faced a risk of losing market confidence due in 

large part to a portfolio of distressed or illiquid 

assets. In May 2009, Bank of America announced 

its intention to terminate negotiations with respect 

to the loss-sharing arrangement, and in September 

2009, Treasury, the Federal Reserve, the FDIC, 

and Bank of America entered into a termination 

agreement. On December 23, 2009, the Citigroup 

guarantee was terminated. With this termination, 

the AGP will result in net positive returns to the 

taxpayer. 

Funding shown for other Section 101 loans in 

2010 represent placeholders for potential future 

programs created under the TARP. On December 

9, 2009, and as authorized by EESA, the Secretary 

of the Treasury certified to Congress that an 

extension of TARP purchase authority until 

October 3, 2010, was necessary "to assist 

American families and stabilize financial markets 

because it will, among other things, enable us to 

Department of the Treasury - Budget in Brief FY 2011 Page 139
continue to implement programs that address 

housing markets and the needs of small 

businesses, and to maintain the capacity to respond 

to unforeseen threats." For more details, please see 

the Financial Stabilization and Their Budgetary 

Effects chapter in Analytical Perspectives. 

Troubled Asset Relief Program Equity 

Purchase Program 

As authorized by Emergency Economic 

Stabilization Act of 2008 (P.L. 110-343) and 

required by the Federal Credit Reform Act of 

1990, as amended, this account records the 

subsidy costs associated with the equity purchase 

obligations committed in 2008 and beyond 

(including modifications of equity purchases that 

resulted from obligations in any year). The subsidy 

amounts are estimated on a present value basis. 

The equity purchase programs serviced by this 

account include the Capital Purchase Program 

(CPP), American International Group Investment 

Program. (AIGP), Targeted Investment Program 

(TIP), Automotive Industry Financing Program 

(AIFP), and Public-Private Investment Program 

(PPIP). The purpose of the CPP is to stabilize the 

financial system by building the capital base of 

healthy, viable U.S. financial institutions, which in 

turn will increase the capacity of those institutions 

to lend to businesses and consumers and support 

the economy. The AIGP is intended to provide 

stability and prevent disruptions to financial 

markets from the failure of a systemically 

significant institution. The AIFP was developed to 

prevent a significant disruption of the American 

automotive industry, which would pose a systemic 

risk to financial market stability and have a 

negative effect on the economy of the United 

States. The PPIP was developed to improve the 

condition of financial institutions by facilitating 

the removal of legacy assets from their balance 

sheets. For more details, please see the Financial 

Stabilization and Their Budgetary Effects chapter 

in Analytical Perspectives. 

Troubled Asset Relief Program Home 

Affordable Modification Program 

As authorized by Emergency Economic 

Stabilization Act of 2008 (P.L. 110-343) and 

required by the Federal Credit Reform Act of 

1990, as amended, this account records the 

subsidy costs associated with the equity purchase 

obligations committed in 2008 and beyond 

(including modifications of equity purchases that 

resulted from obligations in any year). The subsidy 

amounts are estimated on a present value basis. 

The equity purchase programs serviced by this 

account include the Capital Purchase Program 

(CPP), American International Group Investment 

Program. (AIGP), Targeted Investment Program 

(TIP), Automotive Industry Financing Program 

(AIFP), and Public-Private Investment Program 

(PPIP). The purpose of the CPP is to stabilize the 

financial system by building the capital base of 

healthy, viable U.S. financial institutions, which in 

turn will increase the capacity of those institutions 

to lend to businesses and consumers and support 

the economy. The AIGP is intended to provide 

stability and prevent disruptions to financial 

markets from the failure of a systemically 

significant institution. The AIFP was developed to 

prevent a significant disruption of the American 

automotive industry, which would pose a systemic 

risk to financial market stability and have a 

negative effect on the economy of the United 

States. The PPIP was developed to improve the 

condition of financial institutions by facilitating 

the removal of legacy assets from their balance 

sheets. For more details, please see the Financial 

Stabilization and Their Budgetary Effects chapter 

in Analytical Perspectives. 

Grants to States for Low-Income 

Housing Projects 

Section 1602 of the American Recovery and 

Reinvestment Act of 2009 (Recovery Act) 

authorizes and directs the Secretary of the 

Treasury to establish payments to states for lowincome housing projects in lieu of low-income 

housing tax credits (LIHTC). This account 

presents the estimated disbursements for this 

program. 

The program will provide payments to State 

Department of the Treasury - Budget in Brief FY 2011 Page 140
housing credit agencies to make sub-awards to 

finance the construction or acquisition and 

rehabilitation of qualified low-income housing in 

the same manner and generally subject to the same 

limitations as LIHTCs allocated under section 42 

of the Internal Revenue Code (IRC). The 

Recovery Act specifies that the exchange of 

credits for cash payments applies only to the 2009 

LIHTC ceiling under IRC 42(h)(3)(C), and that 

States may elect to exchange credits for cash 

payments subject to the requirements and 

limitations provided in Division B, sections 1404 

& 1602 of the Recovery Act. 

The 2011 Budget proposes to extend for one year 

the cash assistance in lieu of LIHTCs option 

available to States found in the Recovery Act. The 

same general requirements and restrictions found 

in the Recovery Act will apply to the extension. 

Grants for Specified Energy Property 

Section 1603 of the American Recovery and 

Reinvestment Act of 2009 authorizes and directs 

the Secretary of the Treasury to establish 

payments in lieu of a tax credits for taxpayers that 

place in service qualifying renewable energy 

facilities. This account presents the estimated 

disbursements for this program. 

This program will provide payments for specified 

energy property (including qualified facilities that 

produce electricity from wind and certain other 

renewable resources; qualified fuel cell property; 

solar property; qualified small wind energy 

property; geothermal property; qualified 

microturbine property; combined heat and power 

system property; and geothermal heat pump 

property). Payments are available for property 

placed in service in 2009 or 2010. In some cases, 

if construction begins in 2009 or 2010, the 

payment can be claimed for property placed in 

service before 2013, 2014 or 2017 (depending on 

the type of property). In general, projects that meet 

eligibility criteria for the energy property 

investment tax credit (ITC) (including qualified 

renewable energy facilities for which an election 

to claim the ITC can be made) are eligible for the 

payments. A person or entity receiving a payment 

for specified energy property may not claim either 

the investment tax credit or the renewable energy 

production tax credit with respect to the same 

property. 

Exchange Stabilization Fund-Money 

Market Mutual Fund 

The Department established a Temporary 

Guarantee Program for Money Market Funds 

(Treasury Guarantee Program) in September 2008 

that was managed under the purview of the 

Treasury's Office of Financial Institutions. Under 

the Treasury Guarantee Program, the Treasury 

guaranteed to individual investors that they would 

receive the stable share price (SSP) for each share 

held in a participating money market fund up to 

the number of shares held as of the close of 

business, September 19, 2008. Use of ESF assets 

to support the Treasury Guarantee Program was 

approved by the President and the Secretary of the 

Treasury on September 19, 2008, and opened for 

participation on September 29, 2008. To 

participate in the Treasury Guarantee Program, 

eligible money market funds must have submitted 

an application and paid a premium of 1 basis point 

if the fund's Net Asset Value (NAV) was greater 

than or equal to 99.75 percent of the SSP, or 1.5 

basis points of the SSP if the fund's NAV was less 

than 99.75 percent of the SSP but greater than or 

equal to 99.50 percent of the SSP. To be eligible, 

funds were required to: (1) be regulated under 

Rule 2a-7 of the Investment Company Act of 

1940; (2) maintain a SSP; (3) have a market-based 

NAV of at least 99.5 percent of the SSP as of 

September 19, 2008; and (4) be publicly offered 

and registered with the Securities and Exchange 

Commission. The Program was initially offered 

for a three month period (through December 19, 

2008), with the option to extend through 

September 18, 2009, at the discretion of the 

Secretary of the Treasury. The Program was 

extended twice during 2009; first from December 

19, 2008 through April 30, 2009 and again through 

September 18, 2009. The program officially 

expired on September 18, 2009. 

On November 19, 2008, Treasury entered into a 

transaction with the Reserve Fund's U.S. 

Government Fund (USGF), under which Treasury: 

(1) executed the Guarantee Agreement, which 

accepted the USGF into the Treasury Guarantee 

Program; and (2) signed a Letter Agreement with 

the USGF. Under the terms of the Letter 

Department of the Treasury - Budget in Brief FY 2011 Page 141
Agreement, Treasury was obligated to purchase in 

early January 2009 the USGF's remaining 

securities issued by four U.S. government 

sponsored enterprises. On January 15, 2009 the 

ESF purchased approximately $3.6 billion of these 

securities; the purchase price representing the 

amortized cost of the remaining securities, plus 

accrued but unpaid interest. Upon consummation 

of the purchase, these GSE securities were 

classified as held to maturity. As of the end of 

fiscal year 2009, $1.1 billion of these securities 

remained outstanding. In November 2009, all 

securities matured and resulted in the closing of 

the Treasury Guarantee Program (and this 

account) in fiscal year 2010. 

Presidential Election Campaign Fund 

Individual Federal income tax returns include an 

optional Federal income tax designation of $3 that 

an individual may elect to be paid to the 

Presidential Election Campaign Fund (PECF). In 

recent years, less than 10% of individuals have 

elected to make this designation, resulting in less 

than $50 million paid into the Fund annually. 

Approximately every four years, the Department 

of the Treasury makes distributions from the 

PECF (referred to as public funds, matching funds, 

or Federal funds) to qualified Presidential 

candidates and national party committees for use 

in the Presidential elections. 

Money for the public funding of Presidential 

elections can only come from the PECF. When 

the PECF runs short of funds, no other general 

Treasury funds may be used. 

Treasury Forfeiture Fund 

The Treasury Forfeiture Fund supports Federal, 

State, and local law enforcement's use of asset 

forfeiture as a powerful tool to punish and deter 

criminal activity. Non-tax forfeitures made by 

participating bureaus of the Department of the 

Treasury and the Department of Homeland 

Security are deposited into the Fund. This revenue 

is available to pay or reimburse certain costs and 

expenses related to seizures and forfeitures that 

occur pursuant to laws enforced by the bureaus 

and other expenses authorized by 31 U.S.C. 9703. 

Upon notification of Congress, revenue can also 

be used to fund law enforcement related activities 

based on requests from member bureaus and 

evaluation by the Secretary of the Treasury. A $62 

million cancellation is proposed for FY 2011. 

Biomass Energy Development 

This account was created to provide loan 

guarantees for the construction of biomass-toethanol facilities, as authorized under Title II of 

the Energy Security Act of 1980. All of the loans 

guaranteed by this account went into default. The 

guarantees have been paid off, and the assets of all 

but one of the projects have been liquidated. The 

one remaining project, the New Energy Company 

of Indiana, entered into a Forbearance agreement 

with DOE in April 2009 due to financial issues. 

Quarterly payments may resume after March 

2011. 

Payment to Terrestrial Wildlife Habitat 

Restoration Trust Fund 

Section 604(b) of the Water Resources 

Development Act of 1999 (P.L. 106-53) requires 

that the Secretary of the Treasury, beginning in 

1999, deposit $5 million annually (74 percent into 

the Cheyenne River Sioux Tribe Terrestrial 

Wildlife Restoration Trust Fund and 26 percent 

into the Lower Brule Sioux Tribe Terrestrial 

Wildlife Restoration Trust Fund) until a total of at 

least $57.4 million has been deposited. At the end 

of 2009, $55 million in payments had been 

deposited in the funds. Full capitalization is 

expected by 2010; therefore the funds will not 

receive any additional payments from the Treasury 

in FY 2011. Tribes are now able to draw down on 

the interest earned from these investments. 

Debt Collection Special Fund 

Under current law, when the Financial 

Management Service (FMS) levies a payment to 

collect a delinquent tax debt referred by the 

Internal Revenue Service (IRS), the IRS pays a fee 

out of its annual appropriation to FMS to process 

the transaction. The Budget proposes to instead 

Department of the Treasury - Budget in Brief FY 2011 Page 142
have the debtor pay the transaction costs in 

addition to their original debt. This would allow 

the IRS to refer all appropriate tax debts for offset, 

maximize revenue, and shift the cost of 

enforcement to delinquent debtors. These 

schedules reflect the elimination of discretionary 

spending and collections as a result of this 

proposal. 

Financial Agent Services 

This permanent, indefinite appropriation allows 

the Financial Management Service to reimburse 

financial institutions for services provided in their 

capacity as depositaries and fiscal agents for the 

United States. The services provided are 

authorized under numerous statutes, including, but 

not limited to, 12 U.S.C. 90 and 265. The services 

include the acceptance and processing of deposits 

of public money, as well as services essential to 

the disbursement of and accounting for public 

monies. 

Federal Reserve Bank Reinvestment 

Fund 

This fund was established by the Treasury and 

General Government Appropriations Act, 1998, 

Title I, (P.L. 105-61, 111 Stat. 1276) as a 

permanent, indefinite appropriation to reimburse 

Federal Reserve Banks for services provided in 

their capacity as depositaries and fiscal agents for 

the United States. 

Claims, Judgments and Relief Acts 

Pending Congressional action and final approval 

by the Court, $3.412 billion will be expended from 

this account in FY 2010 as a result of the 

settlement of Cobell v. Salazar, a case involving 

the management of individual Indian trust 

accounts related to Indian lands. 

Check Forgery Insurance Fund 

This fund was established as a permanent, 

indefinite appropriation in order to maintain 

adequate funding of the Check Forgery Insurance 

Fund. The Fund facilitates timely payments for 

replacement Treasury checks necessitated due to a 

claim of forgery. The Fund recoups disbursements 

through reclamations made against banks 

negotiating forged checks. 

To reduce hardships sustained by payees of 

Government checks that have been stolen and 

forged, settlement is made in advance of the 

receipt of funds from the endorsers of the checks. 

If the U.S. Treasury is unable to recover funds 

through reclamation procedures, the Fund sustains 

the loss. 

Public Law 108-447 expanded the use of the fund 

to include payments made via electronic funds 

transfer. A technical correction to the Fund's 

statutes to ensure and clarify that the Fund can be 

utilized as a funding source for relief of 

administrative disbursing errors was enacted by 

section 119 of Division D of Public Law 110-161. 

Continued Dumping and Subsidy 

Offset 

The Bureau of Customs and Border Protection, 

Department of Homeland Security, collects duties 

assessed pursuant to a countervailing duty order, 

an antidumping duty order, or a finding under the 

Antidumping Act of 1921. Under a provision 

enacted in 2000, the Bureau of Customs and 

Border Protection, through the Treasury, 

distributes these duties to affected domestic 

producers. These distributions provide a 

significant additional subsidy to producers that 

already gain protection from the increased import 

prices provided by the tariffs. The authority to 

distribute assessments collected after October 1, 

2007 has been repealed. Assessments collected 

before October 1, 2007 will be disbursed as if the 

authority had not been repealed. 

Internal Revenue Collections for 

Puerto Rico 

Excise taxes are imposed on rum at the generally 

applicable distilled spirits rate of $13.50 per proof 

gallon. These excise tax collections, less 

estimated refunds, drawbacks, and certain 

administrative expenses are covered-over 

(transferred), to Puerto Rico and the Virgin Islands 

under a permanent legislative provision at the 

lesser of a rate of $10.50 per proof gallon or the 

current rate of tax imposed on a proof gallon. The 

Budget proposes to extend a temporary cover-over 

rate of $13.25 per proof gallon through December 

31, 2011. This proposal does not increase the total 

Department of the Treasury - Budget in Brief FY 2011 Page 143
amount of excise taxes collected, but rather 

increases the portion of excise taxes that are 

covered-over to Puerto Rico and the Virgin 

Islands. 

Government Losses in Shipment 

This account was created as self-insurance to 

cover losses in shipment of Government property 

such as coins, currency, securities, certain losses 

incurred by the Postal Service, and losses in 

connection with the redemption of savings bonds. 

Approximately 1,300 claims are paid annually. 

Payment Where Recovery Rebate 

Exceeds Liability for Tax 

The Economic Stimulus Act of 2008 (Public Law 

110-185) allowed for the issuance of tax rebates 

(economic stimulus payments) to certain eligible 

taxpayers through December 31, 2008. This tax 

rebate was a one-time benefit provided to 

taxpayers to stimulate the economy. Additionally, 

in 2009 the rebate were provided to taxpayers who 

did not receive the full economic stimulus 

payment in 2008 and whose circumstances may 

have changed, making them eligible for some or 

all of the unpaid portion. No outlays are expected 

from this account in 2010, as the one-time 

program is no longer active. 

Payment Where Earned Income Credit 

Exceeds Liability for Tax 

As provided by law, there are instances wherein 

the earned income tax credit (EITC) exceeds the 

amount of tax liability owed through the 

individual income tax system, resulting in an 

additional payment to the tax filer. The EITC was 

originally authorized by the Tax Reduction Act of 

1975 (Public Law 94-12) and made permanent by 

the Revenue Adjustment Act of 1978 (Public Law 

95-600). The Tax Reform Act of 1986 and the 

Omnibus Budget Reconciliation Acts of 1990 and 

1993 increased the credit amount and expanded 

the eligibility for the EITC. 

The American Recovery and Reinvestment Act of 

2009 (Public Law 111-5) temporarily increases the 

EITC for working families with three or more 

children, and increases the threshold for the phaseout range for all married couples filing a joint 

return. The Budget proposes to both permanently 

extend the provision regarding families with three 

or more children and eliminate the Advance 

Earned Income Tax Credit (AEITC). 

Internal Revenue Service – User Fees 

The Secretary of the Treasury may establish new 

fees or raise existing fees for services provided by 

the IRS. The fees can be used to supplement IRS 

appropriations. 

Payment Where Child Credit Exceeds 

Liability for Tax 

As provided by law, there are instances wherein 

the child credit exceeds the amount of tax liability 

owed through the individual income tax system, 

resulting in an additional payment to the tax filer. 

The child credit was originally authorized by the 

Taxpayer Relief Act of 1997 (Public Law 105-34). 

The American Recovery and Reinvestment Act of 

2009 (Public Law 111-5) expanded the pool of 

eligible low-income earners. The credit is 

refundable to the extent of 15 percent of an 

individual’s earned income in excess of $3,000 for 

2009 and 2010. 

Payment Where Health Care Credit 

Exceeds Liability for Tax 

The Trade Act of 2002 established the Health 

Coverage Tax Credit (HCTC), an advanceable, 

refundable tax credit for a portion of the cost of 

qualified insurance. This credit is available to 

certain recipients of Trade Adjustment Assistance 

(TAA) and Pension Benefit Guaranty Corporation 

pension beneficiaries who are aged 55-64. 

The HCTC program was expanded by the 

American Recovery and Reinvestment Act of 

2009 (Public Law 111-5). Increased benefits for 

certain HCTC eligible individuals include 

payment of 80 percent (up from 65 percent) of 

health insurance premiums, up to 24 months of 

coverage for qualified family members, and 

extension of COBRA benefits. This schedule 

reflects the effects of HCTC and other 

Department of the Treasury - Budget in Brief FY 2011 Page 144
Administration health-related tax proposals in 

cases where the credit exceeds the tax liability 

resulting in payment to the tax filer. 

Payment Where Alternative Minimum 

Tax Exceeds Liability for Tax 

The Tax Relief and Health Care Act of 2006 

(Public Law 109-432) allows certain taxpayers to 

claim a refundable credit for a portion of their 

unused long-term alternative minimum tax (AMT) 

credits each year. The Emergency Economic 

Stabilization Act of 2008 (Public Law 110-343) 

increases the AMT refundable credit portion from 

20 percent to 50 percent of the unused long-term 

minimum tax credits for the taxable year in 

question. 

Payment Where Tax Credit to Aid FirstTime Homebuyers Exceeds Liability for 

Tax 

The Housing and Economic Recovery Act of 2008 

(Public Law 110-289) provided a refundable tax 

credit of up to $7,500 for first-time homebuyers. 

The credit allowed for up to 10 percent of the 

purchase price for qualified residences. Taxpayers 

who qualified were allowed a one-time credit 

against their income tax for principal residences 

purchased on or after April 9, 2008, and before 

July 1, 2009. They must repay the credit over a 

15-year period. 

The American Recovery and Reinvestment Act of 

2009 (Public Law 111-5) expanded and extended 

the credit, and also eliminated the repayment 

requirement. Qualifying taxpayers may claim up 

to $8,000 on either their 2008 or 2009 tax returns 

for qualifying 2009 purchases. The credit is 

available for qualifying purchases made between 

January 1, 2009 and November 30, 2009. 

The Worker, Homeownership, and Business 

Assistance Act of 2009 (Public Law 111-92) 

extended the application period for the first-time 

homebuyer credit from November 30, 2009 to 

April 30, 2010. The Act modifies the buyer's 

settlement date to June 30, 2010, if a buyer enters 

into a binding contract by April 30, 2010. The Act 

also provides a "long-time resident" credit of up to 

$6,500 to taxpayers who do not qualify as firsttime homebuyers. 

This account provides resources for the portion, if 

any, of the refundable tax credit amount that 

exceeds the taxpayer's tax liability. 

Payment Where Certain Tax Credits 

Exceeds Liability for Corporate Tax 

The Housing and Economic Recovery Act of 2008 

(Public Law 110-289) allows certain businesses to 

accelerate the recognition of a portion of their 

historic AMT or research and development (R&D) 

credits in lieu of taking bonus depreciation. The 

amount is capped at the lesser of $30 million or 

6 percent of historic AMT and R&D credits. The 

American Recovery and Reinvestment Act of 

2009 (Public Law 111-5) extends this temporary 

benefit through 2009. 

Payment Where American Opportunity 

Credit Exceeds Liability for Tax 

The American Recovery and Reinvestment Act of 

2009 (Public Law 111-5) allows certain taxpayers 

to claim a refundable Hope Scholarship Credit for 

qualifying higher education expenses. Up to 40 

percent of the credit is refundable. The credit 

applies dollar-for-dollar to the first $2,000 of 

qualified tuition, fees and course materials paid by 

the taxpayer, and applies at a rate of 25 percent to 

the next $2,000 in qualified tuition, fees and 

course materials for a total credit of up to $2,500. 

This tax credit is subject to a phase-out for highincome taxpayers. The 2011 Budget proposes to 

extend this credit. 

Making Work Pay Tax Credit 

The American Recovery and Reinvestment Act of 

2009 (Public Law 111-5) allows certain taxpayers 

to claim a refundable Making Work Pay tax credit 

of 6.2 percent of earned income, up to $400 for 

single taxpayers and up to $800 for married 

couples filing joint returns. The refundable credit 

phases out for high-income taxpayers. The 

Department of the Treasury - Budget in Brief FY 2011 Page 145
Making Work Pay credit is claimed by taxpayers 

when they file their 2009 and 2010 returns, and in 

order to accelerate the credit, it is being delivered 

in small increments through reduced payroll 

withholding. The 2011 Budget proposes to extend 

this credit for one year. 

Build American Bond Payments, 

Recovery Act 

The American Recovery and Reinvestment Act of 

2009 (Public Law 111-5) allows State and local 

governments to issue Build America Bonds 

through December 31, 2010. These tax credit 

bonds, which include Recovery Zone Bonds, differ 

from tax-exempt governmental obligation bonds in 

two principal ways: (1) interest paid on tax credit 

bonds is taxable; and (2) a portion of the interest 

paid on tax credit bonds takes the form of a federal 

tax credit. The bond issuer may elect to receive a 

direct payment in the amount of the tax credit. The 

2011 Budget proposes a revenue-neutral extension 

of this program. 

Payment Where COBRA Credit 

Exceeds Liability for Tax 

COBRA gives workers who lose their jobs, and 

thus their health benefits, the right to purchase 

group health coverage provided by the plan under 

certain circumstances. This continuation coverage 

is provided pursuant to part 6 of subtitle B of title I 

of the Employee Retirement Income Security Act 

of 1974 (other than section 609), title XXII of the 

Public Health Service Act, section 4980B of the 

Internal Revenue Code of 1986 (other than under 

subsection (f)(1) of such section insofar as it 

relates to pediatric vaccines), or section 8905(a) of 

5 U.S.C., or under a State program that provides 

comparable continuation coverage. 

The American Recovery and Reinvestment Act of 

2009 (Public Law 111-5) treats assistance eligible 

individuals who pay 35 percent of their COBRA 

premium as having paid the full amount. The 

remaining 65 percent is reimbursed to the 

employer, insurer or health plan as a credit against 

certain employment taxes. This schedule reflects 

the cases where the credit exceeds the tax liability 

resulting in the payment to the tax filer. 

The Department of Defense Appropriation Act of 

2010 (Public Law 111-118) extends the eligibility 

period for the COBRA Premium Assistance 

program from the original ending date of 

December 31, 2009 to February 28, 2010. The 

Act also extends the duration period of the 

taxpayers' premium assistance coverage from 9 

months to 15 months. 

Payment Where Tax Credit for Certain 

Government Retirees Exceeds Liability 

for Tax 

The American Recovery and Reinvestment Act of 

2009 (Public Law 111-5) allows certain federal 

and state retirees to claim a one-time refundable 

credit of up to $250 ($500 in the case of a joint 

return where both spouses are eligible 

individuals). 

Payment Where Saver’s Credit Exceed 

Liability for Tax 

The Budget proposes to modify the Retirement 

Savings Contributions Credit to provide a 50 

percent match on the first $1,000 of retirement 

savings for families that earn less than $65,000. 

The credit will be fully refundable. This proposal 

will be effective for taxable years beginning after 

December 31, 2010. 

Internal Revenue Service – Informant 

Payments 

As provided by law (26 U.S.C. 7623), the 

Secretary of the Treasury may make payments to 

individuals resulting from information given that 

leads to the collection of Internal Revenue taxes. 

The Taxpayer Bill of Rights of 1996 (Public Law 

104-168) provides for payments of such sums to 

individuals from the proceeds of amounts (other 

than interest) collected by reason of the 

information provided, and any amount collected 

shall be available for such payments. This 

Department of the Treasury - Budget in Brief FY 2011 Page 146
information must lead to the detection of public are market-oriented and are derived 

underpayments of taxes, or detection and bringing from activities operated as business-type 

to trial and punishment persons guilty of violating enterprises. 

the Internal Revenue laws (in cases where such 

expenses are not otherwise provided for by law). 

This provision was further amended by the Tax 

Relief and Health Care Act of 2006 (Public Law 

109-432) to encourage use of the program. A 

reward payment typically ranges between 15 and 

30 percent of the collected proceeds for cases 

involving high- income non-compliant taxpayers. 

Lower payments are allowed if information is 

provided that was already available from another 

source. 

Internal Revenue Service – Private 

Collection Agent Program 

The American Jobs Creation Act of 2004 (Public 

Law 108-357) allows the IRS to use private 

collection contractors to supplement its own 

collection staff's efforts to ensure that all taxpayers 

pay what they owe. The IRS used this authority to 

contract with several private debt collection 

agencies starting in 2006. In March 2009, the IRS 

allowed its private debt collection contracts to 

expire, thereby administratively terminating the 

program. 

Offsetting Collections 

In general, amounts collected by the Federal 

Government are classified in two major categories: 

Governmental receipts – Revenues that arise from 

the sovereign and regulatory powers unique to the 

Federal Government. They consist primarily of 

tax receipts, but also include customs duties, court 

fines, certain licenses, etc. All governmental 

receipts are deposited into receipt accounts. These 

receipts are always reported in total (rather than as 

an offset to budget authority and outlays). 

Offsetting receipts - Collections that are offset 

against the budget authority and outlays of the 

collecting agency rather than reflected as 

governmental receipts in computing budget totals. 

Offsetting receipts are comprised of: 

•	 Proprietary Receipts - These receipts from the 

•	 Intragovernmental Receipts - These are 

collections from other governmental accounts 

deposited in receipt accounts. These are 

further classified as follows: 

	 Interfund Receipts - These are 

amounts derived from payments 

between federal and trust funds. 

	 Intrafund Receipts - These are 

amounts derived from payments 

within the same fund group (i.e., 

within the federal fund group or 

within the trust fund group). 

Department of the Treasury - Budget in Brief FY 2011 Page 147