Wisconsin Expands Offset Programs

The Wisconsin Department of Revenue (DOR) has expanded the Treasury Offset Program (TOP) and State Reciprocal Program (SRP) to allow offsets of all refunds administered by the DOR against federal debts. The TOP allows federal and state governments to exchange debtor information to offset individual income refunds for debts owed to the federal or state government. The SRP expands the reciprocal matching and offset program to allow offsets of any debts owed to the federal or state government against payments received from the federal or state government. The DOR plans to eventually expand the program further to also offset state vendor payments against federal debts. The IRS has expanded the program to allow offsets of federal vendor payments and non-salary payments against all state tax debts excluding social security and disability payments. The DOR will be able to enter into agreements with debtors to withhold a percentage or set dollar amount of each federal payment.

Fees are charged by both agencies and may be passed on to the taxpayer for which the refund was intercepted to satisfy the debt. The DOR will not reduce the Wisconsin debt offset by an income tax refund but will for all other types of intercepted refunds. The DOR charges a $25 fee for both income and other refund intercepts that are sent to the federal government, and those fees are passed on to the debtor. Debts may be referred to TOP and SRP 60 days after appeal rights have expired. DOR began mailing notices in December to businesses explaining that their debt would be referred to the federal government for payment interception. Individual income tax debtors will not receive a separate notice to warn them of potential federal payment interception because they have already been sent a TOP warning. In the case of an intercepted refund, the debtor will receive a notice with contact information for the agency that is holding the debt. (News for Tax Professionals, Wisconsin Department of Revenue, December 28, 2011)

Posted on February 17, 2012