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FTB Automates Notices for The U.S.Treasury Offset Program (FTOP)

Purpose of bulletin

To inform staff beginning December 13, 2010, we automated the notice process for the Federal Treasury Offset Program (FTOP). The program offsets federal income tax refunds and overpayments on delinquent Personal Income Tax collection cases.

Corporate income taxpayer's participation in FTOP will be a future enhancement.

Background

The Department of Treasury, Financial Management Service (FMS), serves as the federal government's central debt collection agency. They administer the FTOP debt collection program. FTOP is used to collect federal tax debt, federal non-tax debt, child support debt, and state income taxes.

Legal authorities allowing states to participate include Title 26, United States Code §6402(e); and Title 31, Code of Federal Regulations §285.8. The regulation governing the Offset of Tax Refund Payment to collect state income tax debt may be found on the following website:

http://www.fms.treas.gov/debt

Priority of debt

When more than one debt is submitted for the same taxpayer and according to statute, FMS applies money in the following order:

  • Federal tax
  • Child support
  • Federal non-tax
  • State income tax

Certified debts

We signed an agreement with FMS stating all debts referred are:

  • Delinquent, valid, and legally enforceable.
  • Not in bankruptcy or foreclosure.
  • Not delinquent over 10 years old.

Intent to offset notice

Our collection system will send a letters by certified mail with a return receipt requested. In order for the taxpayer to avoid the offset, they must:

  • Pay the balance in full.
  • Provide proof that the debt is not past due or legally enforceable.

The letter also states, if the taxpayer does not respond within 60 days, we will refer the debt to FMS for offset of federal payments.

Installment agreements and system holds will not stop the FTOP process.

Post offset notice

Once an offset occurs, FMS sends a post-offset notice to the taxpayer with the date and amount, along with the contact information for our FTOP Offset Desk.

Additional information

Our collection system will post a history line two to three weeks before an offset. It advises the offset is pending and the amount to be offset. Accounts can be identified in TI with "TOP PAYMENT" as the payment type.

Taxpayer information

Taxpayers can go to ftb.ca.gov, and search for treasury offset program.

Refer taxpayers who received either an "Intent to Offset," or "Post Offset" letter to:

  • Offset Desk
    • 916.845.2867 (General)
    • 916.845.2865 (Spanish)
  • Interagency Intercept Collections MS-A460
    Franchise Tax Board
    PO Box 2966
    Rancho Cordova, CA 95741-2966

  • Direct media contacts
    • Public Affairs at 916.845.4800