What Does a Notice of Intent to Offset Mean?
Understand the process when a federal payment is used for a debt. This guide clarifies what a Notice of Intent to Offset means and your options for resolution.
A Notice of Intent to Offset is an official letter from the government that serves as a formal warning. It informs you that a federal payment you are scheduled to receive will be reduced or withheld entirely to cover a delinquent debt you owe. The process of using a federal payment to satisfy a past-due obligation is known as an “offset.”
This communication signals that a creditor agency has referred your debt for collection. The notice itself is not the collection action but is instead the final warning before it occurs, providing a window to address the issue.
Understanding the Treasury Offset Program
The U.S. Department of the Treasury’s Bureau of the Fiscal Service (BFS) issues these notices and administers the Treasury Offset Program (TOP). TOP is a centralized system for collecting delinquent debts owed to federal and state agencies, authorized by the Debt Collection Improvement Act of 1996. Federal agencies are required to refer legally enforceable non-tax debts to TOP once they are more than 120 days delinquent.
A wide range of debts can be collected through this program. Common examples include past-due federal taxes, defaulted federal student loans, and delinquent child support payments. State income tax obligations and certain unemployment compensation debts are also eligible for collection.
The program can intercept various federal payments, with the federal tax refund being the most common. Other payments subject to collection include federal employee salaries, federal retirement benefits, and certain Social Security benefits. For non-tax debts, there are limitations; for example, no more than 15% of disposable Social Security benefits can be offset, and benefits are not offset if the monthly amount is under $750.
Information to Gather After Receiving a Notice
The notice itself is the primary source of information. Carefully review it to identify the name of the creditor agency to whom the debt is owed, the exact amount of the debt, and the contact information for that agency. The letter will also detail the original federal payment amount and the proposed offset amount.
Beyond the information in the letter, you should collect personal records related to the debt. This includes any proof of payments you have made, such as canceled checks or bank statements, that may not have been credited to your account. If you believe the debt is not yours due to identity theft, a police report and other related documentation will be necessary.
If the debt was included in a bankruptcy proceeding, locate your bankruptcy filing documents, which show the case number and filing date. For joint tax filers where the debt belongs solely to a spouse, you may need documents to support a claim for Injured Spouse Allocation using IRS Form 8379.
How to Respond to the Notice
The notice provides a window, often 60 days, to act before the offset occurs. You have several ways to respond directly to the creditor agency listed on the notice.
- Pay the debt in full by using the contact information on the notice to arrange for immediate payment, which would stop the offset from proceeding.
- Request a formal review of the debt with the creditor agency, where you can present evidence such as proof of prior payment or documents showing the debt is not valid.
- Establish a repayment agreement by contacting the creditor agency to negotiate a payment plan if you agree you owe the debt but cannot pay it all at once.
- Formally dispute the debt if you believe the amount is incorrect, it has been paid, it was discharged in bankruptcy, or it is the result of identity theft.
Submitting a dispute or a request for review requires providing your supporting documentation to the creditor agency. The agency is then obligated to investigate your claim before the offset can proceed.