Federal Debt and Offset Communications Must Be Reported to the General Accounting Office

This is a reminder about the State of Arizona Accounting Manual (SAAM) policy 7070 Federal Offset Communications that requires notification of federal debt and offset related communications to the General Accounting Office (GAO) as soon as practicable. GAO must be notified if an agency receives communication from the federal government that a debt is owed, there is intent to refer a debt for offset, or there has been an offset. This communication must be provided to the GAO even if the agency does not know what the debt is for, does not agree with the debt, believes the debt communication was incorrectly addressed, or the debt belongs to another agency.

Invoices or demand letters from the federal government sometimes are lost or are addressed incorrectly. Debts that are not paid result in offsets. State agencies expecting an invoice or demand letter from the federal government, but do not receive it, should contact their federal agency partners in a timely manner to ensure the debt is resolved.

The United States Department of the Treasury’s Treasury Offset Program (TOP) collects delinquent debts owed to the federal government. Federal offsets happen when any state agency has an unpaid federal debt. Per federal regulation, federal creditor agencies are required to refer most types of unpaid debts to the TOP once it is more than 120 days delinquent. The federal government identifies debts by taxpayer identification number (TIN). The collection method is generally to reduce the next federal payment or grant draw in line for the TIN, regardless of which state agency owes the debt or which state agency is requesting a federal draw.

The TOP is not authorized to communicate with anyone other than GAO. Send any communications regarding offsets or federal debts to [email protected] immediately.

Federal and Cost Accounting Team