If you're expecting a federal tax refund this year but you owe the Department of Labor and Training (DLT), you might not be getting the refund you expect. DLT announced today they are participating in the federal Treasury Offset Program (TOP), which will enable the department to collect delinquent Unemployment Insurance (UI) overpayments directly from an individual's federal income tax refund. RI joins 37 other states and the District of Columbia in participating in this program. RI received a federal grant of $417,503 from USDOL in 2012 for several IT projects, one of which was work on the TOP program.
In TOP, the federal Bureau of Fiscal Service, a division of the Department of the Treasury, will compare tax refund payment records with records of debts submitted by states. RI submitted its first file last Friday. A match will occur when the taxpayer identification number and the name of the payment record on the federal level are the same as the taxpayer information number and name submitted on the State's delinquent debt record. When a match occurs, the Bureau of Fiscal Service will reduce the amount of any federal income tax refund payment due to the individual to satisfy the legally enforceable UI debt owed by the individual to the State. The ability to collect delinquent UI overpayments was implemented nationally in TOP in February, 2011. The federal Bipartisan Budget Act of 2013 (PL 113-67) contained a requirement that all states work to implement TOP in the future.
"No one wants to see individuals or employers taking advantage of the unemployment insurance system," stated Director Charles J. Fogarty. "We take fraud seriously in RI and this will be another tool we have to ensure the integrity of the UI Trust Fund." DLT already recovers UI overpayments from state income tax refunds and lottery winnings. In 2013, DLT was able to recover over $1.9 million in overpayments and interest from claimants who collected benefits illegally.
States are required to give claimants 60 days notice before their overpayments are submitted to TOP for federal income tax offset. Beginning last August, DLT began sending letters to individuals who had delinquent overpayments of its intent to submit their debts to TOP. The letters contained the amount of UI overpayments due and gave individuals the opportunity to either dispute the overpayment or to set up a payment plan with DLT to avoid a federal income tax offset.
More information on TOP can be found at: https://www.fms.treas.gov/debt/top_uic.html