The Treasury Offset Program Explained

How TOP Works

The Treasury Offset Program operates as a matching system. When a federal agency like the SBA refers a delinquent debt to TOP, the Bureau of the Fiscal Service enters the debtor’s information into a database. That database is checked against all outgoing federal payments. When a match occurs, the payment is intercepted and applied to the outstanding debt. The debtor receives a notice of the offset, though often only after the money has already been taken.

What TOP Can and Cannot Reach

TOP can intercept federal tax refunds, federal salary payments, federal retirement payments, vendor payments from federal agencies, and certain other federal disbursements. Social Security benefits can be offset, but federal law limits the offset to 15% of the monthly benefit amount. Supplemental Security Income (SSI) is exempt from offset. State tax refunds may also be subject to offset through reciprocal agreements between the federal government and participating states.

Procedural Requirements

The referral of a debt to TOP is not automatic and is not without requirements. Under 31 CFR 285.2, the referring agency must certify that the debt is past due, that the debtor was given the required notice and opportunity for review, and that the agency has complied with all applicable laws and regulations. The required notice must be provided at least 60 days before the referral and must include specific information about the debt and the debtor’s rights.

Challenging a TOP Referral

If the SBA failed to meet its procedural obligations, the TOP referral can be challenged. This may involve formal demands to the SBA and the Bureau of the Fiscal Service, administrative review requests, congressional inquiries, and in some cases, litigation under the Administrative Procedure Act. The specific challenge strategy depends on the nature of the procedural defect and the stage of the collection process.