Wisconsin – Treasury Offset Program and State Reciprocal Program Expanded

SALT Report 1309 – The Wisconsin Department of Revenue has expanded the Treasury Offset Program (TOP) and State Reciprocal Program (SRP) to allow all tax refunds administered by the department to offset any federal debts owed.

TOP allows state governments and the federal government to exchange debtor information in order to offset personal income tax refunds for debts owed to the state or federal government. The SRP expands the reciprocal matching and offset program to allow offsets of any debts owed to the state or federal government against payments received from the state or federal government. Eventually, the department will expand this program to allow the offset of state vendor payments against federal debts.

On the federal side, the IRS has expanded the program to allow offsets of federal vendor payments and non-salary payments against all state tax debts. This does not include Social Security or disability payments. The department will be able to enter into an agreement with the debtor to withhold a percentage or set dollar amount of each federal payment. Debts can be referred to the TOP or the SRP 60 days after the appeal rights have expired.

Interception Fees

For federal income tax refunds, a $22 interception fee will be charged but the state will absorb that fee so the debtor is given credit for the entire amount of refund intercepted. For all other federal payments, the fee is $17 per intercept; however this fee will be passed on to the debtor. The department will charge a fee of $25 for income tax or other refund intercepts sent to the federal government; both of those fees will be passed on to the debtor.

Notices

In mid-December 2011, the department began mailing notices to businesses explaining that their debt would be referred to the federal government for possible payment interception. Individual income tax debtors will not receive a separate notice warning them of federal payment interception because they have already been sent a TOP warning.

When a state refund is intercepted to pay a federal debt, the debtor will receive a notice advising them of the intercept. The notice will contain contact information for the federal agency that submitted the debt for interception. The debtor must contact that agency for further information about the debt balance or basis of the debt.  If a federal payment is intercepted for a state debt, the federal notice of interception will provide the debtor with contact information for the department.

Debtors may contact the department’s Central Collection Section at (608) 266-7879 to obtain information about Wisconsin tax debts and balances owed, or to ask questions about interception of refunds.

For Further information:

Wisconsin Department of Revenue – News for Tax Professionals