The Treasury Offset Program is a centralized offset program, administered by the Financial Management Service's (FMS) Debt Management Services (DMS), to collect delinquent debts owed to federal agencies and states (including past-due child support), in accordance with 26 U.S.C. § 6402(d) (collection of debts owed to federal agencies), 31 U.S.C. § 3720A (reduction of tax refund by amount of the debts), and other applicable laws. FMS disburses federal payments, such as federal tax refunds, for agencies making federal payments (known as "payment agencies"), such as the Internal Revenue Service. "Creditor agencies," such as the Department of Education, submit delinquent debts to FMS for collection and inclusion in TOP and certify that such debts qualify for collection by offset.The key statutory provisions are 26 USC 6402(d), here, and 31 USC 3720A, here.
One of the key requirements is that the agency seeking the offset (DOE in the case) must have given the federal debtor notice and opportunity to object before implementing the TOP procedure for the debt. That notice, like many tax notices (specifically notices of deficiency and notices of assessments) and, I am sure other governmental notices, must be sent to the addressee's last known address. The agency must prove proper sending, not actual receipt. (Put another way, the statute assigns the risk of nonreceipt to the addressee rather than to the Government agency.) Echoing what is said on this issue in many tax cases, the Kipple court said:
