TN 23 (02-02)
GN 02201.030 Collection of Title II Overpayments by Tax Refund Offset (TRO)
A. Policy - General
1. Authority for Tax Refund Offset
The Omnibus Budget Reconciliation Act of 1990 permits SSA to recover delinquent title II overpayments from former beneficiaries by offsetting their Federal income tax refunds. The Unemployment Compensation Act of 1992 made TRO a permanent authority for SSA.
2. Criteria for TRO selection
Selection of debts for recovery by TRO is made each week by the system from ROAR, the MBR and Numident records. Following are the main criteria for TRO selection:
The debtor is alive;
The debtor is not entitled to benefits (LAF code is equal to T, U, X, N or P);
The debtor was 18 years or older when the debt was established on SSA's records;
The debtor's BOAN is on the MBR;
The debt is $25 or more;
The debtor is not making regular installment payments, or efforts to recover the debt have terminated (i.e., TC-71 debts);
The debt is past-due, and
The debt is legally enforceable.
NOTE: TRO runs on a weekly selection/certification cycle. Treasury conducts the TRO program through its automated system, the Treasury Offset Program (TOP). See GN 02201.029 for more information about TOP.
3. Preoffset notice
Once a debt is selected for TRO, SSA sends the debtor a notice using the debtor's address of record from the MBR and SSR. If the MBR/SSR does not have an address or if the notice is returned as undeliverable based on the MBR /SSR address, then the TOP system will get any available address from the credit bureau via an automated address request operation run out of central office. If the credit bureau provides a new address, SSA will remail the preoffset notice using that address. If the credit bureau does not provide a new address, then the case will be deleted from TOP.
NOTE: The automated address request operation run out of central office is a separate project from the address requests made by the Debt Management Sections (DMS). The automated operation has no impact on the DMS requests.
The notice informs the debtor of the planned offset action, and:
That he or she owes a delinquent overpayment debt in a particular amount;
That SSA plans to refer the debt to Treasury for TRO/TOP and/or send information about the debt to credit bureaus after 60 days have expired from the date on the notice;
That SSA will not take this action if, before the end of that 60-day period, the debtor pays the debt in full, makes regular installment payments under an agreement with SSA, requests waiver, or furnishes evidence showing that he or she does not owe all or part of the stated amount or SSA does not have the right to collect the debt; and
That the debtor may review and copy SSA's records about the debt.
NOTE: All ECO notices sent November 2015 or later will be stored in ORS. For all ECO notices sent prior to November 2015 you can view the ECO master query. For additional information on the ECO master query, see MSOM DMS 014.007
B. Policy - Past-due debt
1. Definition of past-due debt
For SSA TRO purposes, a past-due debt is one in which:
2. When a debt is delinquent
A debt is delinquent on the later of the following dates:
C. Policy - Legally enforceable debt
A legally enforceable debt for SSA TRO purposes is a debt that is still subject to recovery from the debtor because:
It has not been paid in full; and
Recovery has not been waived; and
A bankruptcy petition is not currently pending in court; and
The debt was not previously discharged in bankruptcy; and
The debtor is alive; and
The debtor is primarily liable for the debt.
D. Procedure - Handling debtor inquiries/protests - Preoffset
In the majority of cases, the debtor has previously been given ample opportunity to dispute the overpayment and/or repay the debt. However, there are situations where the selection for TRO may be erroneous because SSA's records contain outdated or incorrect information.
Additionally, although the time period to request reconsideration of the overpayment determination has passed, under the TRO process, the debtor has the right to object to the collection of a debt on the basis that all or part of the debt is not past-due or not legally enforceable (see GN 02201.030B. and GN 02201.030C.). This section explains how to handle specific inquiries, protests and allegations prior to certification and subsequent offset.
1. Request For explanation of overpayment
For a request for an explanation of the overpayment, proceed as follows:
a. FO/TSC action
If the debtor first contacts the FO/TSC for an explanation, use the MBR/ROAR/PHUS or QROP, accessed via Inquiry Response or Master File Query, to provide an explanation of the overpayment.
Keep explanations generic and if possible, provide explanation immediately. Do not input “TRO Explanation” on the Protest Request screen (DRPF for FO and DRPT for TSC) (MSOM DMS 006.019 and MSOM DMS 006.020). For example: “You were no longer disabled as of 5/01 and continued to receive payments through 12/01;” or “you remarried in 3/01 and continued to receive checks through 7/01.”
If online queries contain insufficient information or unresolvable discrepancies, proceed as follows:
Input “TRO Explanation” on the Protest Request screen (DRPF for FO and DRPT for TSC) (MSOM DMS 006.019 and MSOM DMS 006.020).
Refer to the PC to provide an explanation to the debtor. Annotate DMS Remarks Screen (RMKS) with your action.
Annotate the referral “Necessary Action - TOP/Credit Bureau Case - Do Not Backlog.” If asked, advise the caller that he/she should receive a response within 30 days.
b. PC Action
If the debtor first contacts the PC for an explanation, attempt to answer the question by using the MBR/ROAR/PHUS or QROP. Keep explanations generic to the extent possible.
If online queries contain insufficient information or unresolvable discrepancies, input “TRO Explanation” on the Protest/Stop Recovery Request (PC) screen (DRPR), unless the FO/TSC has already input “TRO Explanation” as in GN 02201.030D.1.a. Provide the explanation. If the debtor is satisfied with the response and requests no additional action, such as waiver, the PC's next action depends upon the status of the debt when the explanation was requested.
If the debt was written off (in terminated collection status) when the debtor requested an explanation, terminate collection by using the Terminate Collection screen (DFTE) (see MSOM DMS 007.003). Terminating collection will set the debt up for TOP selection in the next monthly selection cycle.
If the debt was in RECOOP and was not written off when the debtor requested an explanation, input an installment agreement on the Record Installment Agreement screen (DRIN) (see MSOM DMS 006.014). This will resume billing and allow the debt to be selected for TOP in the next monthly selection.
2. Request for waiver
If a request for waiver is received, obtain an SSA-632-BK in accordance with current instructions in GN 02250.002 and GN 02250.200.
Advise the debtor that TRO remains in effect until SSA receives a completed SSA-632-BK (or its equivalent).
Input the waiver request to the DRPF screen under the TRO category only when the form (or any other written request) is received in accordance with GN 02201.034. Do not delay recording the request once written documentation is received.
3. Request To review record
If the debtor asks to review records in person at the FO, obtain all systems (MBR/ROAR/PHUS) queries and explain what the queries show.
If a request is made by telephone to the FO, set up an appointment for a review of the MBR/ROAR/PHUS queries. Set the appointment well within the 60-day time limit the debtor has to submit evidence.
If a request is made to a TSC or PC, advise the FO to contact the debtor to set up an appointment. Advise the caller that someone from the FO will contact him/her to schedule an appointment.
In all situations, the FO will attempt to satisfy the request for review without the need to obtain the claims folder. Obtain the folder, however, if the debtor indicates he/she wishes to review the folder.
If the folder review has not been conducted by the time of the TRO certification run, input “TRO Explanation” to the Protest/Stop Recovery request (PC) screen (DRPR using code TC-23F).
NOTE: Certification will occur no less than 60 days after the date of the preoffset notice
4. Request for installment payments
If the debtor wants to repay the debt by monthly installments, follow GN 02210.180 to negotiate a reasonable monthly payment amount.
Advise the debtor that the debt will be left on the TRO file until the first payment is received and TRO will be prevented only as long as payments are made according to the agreement.
Tell the debtor to send the installment payment to the address shown on the “Notice of Payment Due” form attached to the preoffset notice. If the debtor does not have the form, provide the remittance address (MATPCS, P.O. Box 3430, Philadelphia, PA 19122-9985). Always make sure that the name and claim number are on the remittance to ensure proper posting for the beneficiary.
Input the manual installment agreement via the Record Installment Agreement (DRIN) screen (MSOM DMS 006.014).
5. Debtor objects to collection of debt
a. Debtor objects to SSA's determination that the debt is past-due and legally enforceable
Under the law that authorizes TRO, a debtor has the right to object to the collection of a debt on the basis that all or part of the debt is not past-due or not legally enforceable (see GN 02201.030B. and GN 02201.030C.) These types of protests require submission of evidence to rebut SSA's findings. However, there will be some situations in which an effective protest to collection will be based on only the debtor's current statement and information in the claims folder.
If an objection to collection is made, any evidence to support the objection must be received within 60 days from the date of the pre-offset notice. Examples of evidence that could rebut SSA's determination that a debt is past due and legally enforceable include:
Copies of checks (front and back), money orders and/or receipts showing payments that reduced or eliminated the debt;
A waiver approval notice,
A waiver or reconsideration request (but no SSA determination regarding that request);
A hearing request (but no SSA determination regarding that request);
A report that the debtor is deceased; or
Bankruptcy documents showing that the debt has been discharged or a bankruptcy petition is pending.
NOTE: The above are not all-inclusive. Any evidence submitted must be evaluated.
If evidence to support objection to collection of the debt is received after 60 days from the date of the preoffset notice, SSA will accept and review the evidence. However, the debt remains in the TRO program unless evaluation of the evidence proves the debt is not past due and legally enforceable.
b. FO action
If an objection to collection is made:
Obtain a statement from the debtor that explains his/her reason(s) for objection to collection of the debt. DO NOT OBTAIN AN SSA-561-U2.
Accept any evidence the debtor submits.
Input the protest to the DRPF screen using selection #19 Non-Enforcement. This releases a TC-23Q (TRO LEG ENF/PAST DUE) code to ROAR. See MSOM DMS 006.019 Protest/Stop Recovery Request (FO) (DRPF).
Forward material to the PC annotated “NECESSARY ACTION - TOP/Credit Bureau Case - Do Not Backlog.”
c. PC action
If an objection to collection is made:
Obtain the claims folder.
Obtain additional information if needed from the debtor prior to making a decision. Contact the debtor by telephone or by direct mail, if possible.
Review the evidence to determine if the debt is still past due and legally enforceable as defined in GN 02201.030B. and GN 02201.030C. If so, and the case can be adjudicated without additional information, send a notice to the debtor explaining why the debt is collectable (in whole or in part).
Notify the debtor of the final decision and input the Terminate Collection (DFTE) screen to re-activate ECO. See MSOM DMS 007.003.
If it is determined that the debt is NOT past due or legally enforceable and the debt is still active in ECO input the Stop Collection Action (TRSC) Screen to inactivate. See MSOM DMS 014.003.
IMPORTANT: Since a review to determine if a debt is past due and legally enforceable is not an initial determination, do not include any appeal language in the decision notice.
d. Debtor protests the fact and/or amount of debt
If a debtor protests the fact and/or amount of a debt, obtain a FACT query.
If there is no indication that a request for review is pending, explain that the time period to appeal the overpayment determination has expired and, therefore, the determination is final. If good cause for extending the time limit is established, process the request as timely filed (see GN 03101.020).
If the debtor indicates that he/she has evidence that refutes SSA's records, explain that the debt will be referred to Treasury unless we receive the evidence within 60 days from the date of the preoffset notice. Follow GN 02201.030D.5.a. and GN 02201.030D.5.b. when the evidence is received.
6. Debtor alleges nonreceipt of overpayment
If a debtor alleges nonreceipt of the overpayment, obtain an ACCT/ROAR query and a PHUS query. If the query shows no record of nonreceipt of the payment(s) in question, proceed as follows:
If the debtor had a representative payee, explain that the payment(s) was sent to the payee and there is no indication that payment(s) was not received.
If there was no representative payee, explain that our records do not show any evidence of a nonreceipt allegation at the time the initial overpayment notice was sent.
If the debtor insists that we provide a photocopy of the check(s) in question, explain that we will investigate but the debt will still be referred to Treasury for offset. Repayment of any erroneous offset will be made if the investigation supports the nonreceipt allegation. Follow GN 02406.000 to handle the nonreceipt allegation (these references apply to titles II and XVI payments, as well as Black Lung payments). DO NOT Make a ROAR Input.
NOTE: If the investigation shows that a copy of the check is not available, presume that the debtor received the check. The overpayment should be determined to stand.
7. Debtor makes a compromise offer
If the debtor makes a compromise offer, process in accordance with existing instructions in GN 02215.100 through GN 02215.125.
8. Debtor alleges nonreceipt of initial overpayment notice
If a debtor alleges never receiving the initial overpayment notice, proceed as follows:
a. TSC action
Advise the debtor to submit a statement regarding nonreceipt of the notice along with his/her current address and telephone number to the FO in person or by mail.
Provide the address and telephone number of the FO that services the debtor.
Explain to the debtor that TRO will continue to apply unless we can confirm his/her allegation.
b. FO action
Get a statement from the debtor regarding nonreceipt of the notice along with his/her current address.
Forward material to the PC annotated “Necessary Action TOP/Credit Bureau Case -- Do Not Backlog.”
Explain to the debtor that TRO will continue to apply unless we can confirm his/her allegation through a folder review.
If, as the result of a folder review request (see GN 02201.030D.4.), the claims folder is in the FO, check for an undeliverable notice. If present:
Advise the debtor that further investigation is necessary.
Return the folder to the PC, clearly marked “TRO - Undeliverable Overpayment Notice in File - Do Not Backlog.”
c. PC action
Review the claims folder to determine if the notice was returned as undeliverable. If so, verify that a subsequent notice was not mailed. If not, the debtor has the right to a full administrative review process. Therefore:
Redate and mail the notice to the debtor's current address.
Delete the old overpayment on ROAR via the Transaction Correction (SMTC) screen (MSOM DMS 002.011).
Query ROAR the following day to verify deletion. When deleted, reestablish the overpayment as a new debt on ROAR via the Establish Debt (SMED) screen (MSOM DMS 002.003). Use the current date as the establishment date.
NOTE: The above actions will delete the debt from the TRO program until the debt becomes delinquent and meets all TRO selection criteria.
If a subsequent notice was mailed, advise the debtor (by telephone, if possible) of the date the new notice was sent.
If there is no evidence to support the debtor's allegations, advise the debtor (by telephone, if possible) accordingly. Explain that since there is no evidence that the notice was returned as undeliverable by the post office, we must proceed on the assumption that the notice was received.
Document the DMS Remarks screen (RMKS) with the information about debtor contact.
9. Report of death
For a report of death, follow this procedure:
a. FO/TSC Action
If the FO/TSC first finds out that a debtor is deceased, obtain proof of death as required by GN 00304.001. Report the death to the PC as quickly as possible.
Provide the debtor's name, claim number and date of death, if known.
b. PC action
If the PC first finds out that a debtor is deceased, obtain proof of death as required by GN 00304.001.
Input the death using the Stop Offset screen (TRSO) which is requested from the Debt Management Menu's (DMMU) function number 12 — Treasury Offset Program Menu (TRMU) screen (see MSOM DMS 014.002). This input will delete the debtor from TOP.
Conduct any estate development in accordance with GN 02215.050 through GN 02215.070.
10. Report of bankruptcy action
If the debtor alleges that a bankruptcy petition is pending or the debt has been discharged in bankruptcy, obtain a copy of the petition or discharge order. The FO inputs “Decision Pending” via the DFBP screen (Record Bankruptcy Petition) and sends the petition to the PSC/OCO for their action. (See GN 02215.185 for information on handling bankruptcy cases.) To process a notification of pending bankruptcy, see GN 02215.190 for FO procedures and GN 02215.195 for PC procedures.
If the debtor alleges that the debt has been discharged in a bankruptcy judgment, ask him/her to submit a copy of the discharge. If the SSA debt is listed on the discharge, input “Decision Pending” via the DFBP screen to prevent any further collection activity. If the SSA debt is not listed on the discharge, make no system input. The PSC/OCO handles the case in accordance with GN 02215.230.
E. Procedure - Handling postoffset/postcertification inquiries
Some inquiries will be received after certification of cases to Treasury or after actual offset has occurred. In the majority of these cases, the debtor simply failed to contact us to resolve the repayment issue as specified in the preoffset notice. There are other situations, however, where certification to Treasury may have been incorrect. This section explains how to handle specific postoffset/postcertification inquiries.
1. Allegation of pending protest, waiver, or hearing request
If a debtor alleges that he/she filed a protest or requested waiver or hearing but never received a decision, obtain a ROAR query and proceed as follows:
If there is a 23W, 23R, or 23H posted before the date of the offset but no decision has been made and released:
Refund any amount offset by Treasury. This is known as an Agency Refund, and Treasury must be notified about the refund. Input the Agency Refund using the Correct Offset Amount screen (TRCA), which is requested from the Debt Management Menu (DMMU) function number 12-Treasury Offset Menu (TRMU) screen (see MSOM DMS 014.005).
Look for an SSA-632-BK, a letter from the debtor or his/her representative or a Form SSA-795 in FO records or in the claims folder.
Process the waiver/protest in accordance with GN 02201.034 or GN 02201.036.
IMPORTANT: The PC will process all TRO refunds. FOs should not use the Critical Payment System to refund TRO offsets.
If ROAR reflects an unfavorable reconsideration, waiver, or hearing decision:
Advise the debtor that since the issue has been resolved, TRO was appropriate.
Do not refund any amounts offset by Treasury.
If there is no ROAR posting but the debtor still indicates a prior protest/waiver/hearing was filed, look for an unprocessed SSA-632-BK, letter or SSA-795 in FO records or in the claims folder. If there is no evidence in the claims folder, check DMS Remarks.
Documentation Found of Waiver/Protest/Hearing Filed Before Certification/Offset
Process as in GN 02201.030E.1.a.
Post the pending request to ROAR via the DRPR or DRPF screen.
No Documentation Found
Advise the debtor that the records review fails to produce any evidence of a precertification protest, waiver or hearing.
Follow GN 02201.030E.2. if the debtor wishes to file a new waiver request.
2. Request for waiver
If a request for waiver is received, proceed as follows:
Obtain an SSA-632-BK in accordance with current instructions in GN 02250.002 and GN 02250.200. Input the request for waiver.
If TRO recouped the entire debt (i.e., the debt balance is zero), proceed as follows:
Consider waiver on the entire overpayment amount, and
Follow GN 02201.034 to process the waiver.
Advise the debtor that refund of the amount offset will be made only if waiver is approved.
Refund any monies due if waiver is approved (partially or fully). Refund any amount offset by Treasury. Process the refund as in GN 02201.030E.1.a.
If TRO partially recouped the debt, proceed as follows:
Consider waiver on the outstanding balance unless the debtor asks for waiver for the full overpayment amount. See GN 02250.310A.3. which states that for recovery to defeat the purpose for amounts already recovered, the person must show that he went into debt to repay the overpayment.
Follow GN 02201.034 to process the waiver.
Refund any monies due if waiver is approved (partially or fully). Process the refund as in GN 02201.030E.1.a.
3. Request for installment payments
When a request for installment payments is received, proceed as follows:
If an installment agreement was negotiated prior to certification and payment was made in accordance with that agreement but offset still occurred, refund the amount offset, unless the debtor wants us to retain the money as payment toward the debt.
If you refund the offset, input an Agency Refund as in GN 02201.030E.1.a.
If the request is made after certification, proceed as follows:
Input the manual installment agreement via the Record Installment Agreement (DRIN) screen (MSOM DMS 006.014).
Advise the debtor that offset may have already occurred or could still occur because SSA has no control over when Treasury conducts the TRO operation. Explain that SSA will not refund any offset monies (unless excess collection, see GN 02201.030E.4.) The installment agreement will apply to the debt balance remaining after offset.
4. Excess collection
Excess collections occur when the total amount of voluntary payments and offsets exceed the debt amount. For example, when a certified debtor enters into an installment agreement and fully refunds the debt after certification, an excess collection would occur if Treasury offsets for the full amount of the debt.
If one debtor is on the record, refund the excess amount under existing instructions.
If more than one debtor is on the record and the system posted the excess collection to that other debtor, an “unverified offset alert” is generated to the PC. If this occurs, proceed as follows:
Refund the excess collection to the TRO debtor. If the offset caused the excess collection, input an Agency Refund as in GN 02201.030E.1.a.
If the voluntary remittance caused the excess collection, repay the excess to debtor but do not input an Agency Refund because we are sending back only the voluntary remittance, not the TRO.
Remove the other debtor from the RECOOP system if the other debt was loaded as a result of the posted excess refund. Correct the other debtor's overpayment balance.
5. Erroneous offset due to incorrect BOAN
If the FO discovers the incorrect BOAN, report the case to the PC so that it can be deleted from TRO. Provide the claim number, debtor's name and both the correct and incorrect BOANs in the report.
If the PC discovers the incorrect BOAN, stop the offset by using the TRSO screen. Select “permanent deletion” as the reason for stopping the offset (see MSOM DMS 014.003).
Correct the MBR per SM 00613.605 once the correct BOAN is determined.
Refund the erroneous offset to the person due the tax refund.
6. Erroneous offset to a joint taxpayer
When couples file joint tax returns and the person who is not an SSA debtor wishes to receive his/her portion of the refund, advise the person to contact his/her local IRS office. (IRS can be reached by calling 1-800-829-1040.) This is known as an “injured spouse claim” which IRS alone can adjudicate. Advise that any refund must be made by IRS, not SSA.
Following are case examples of common postoffset and post-certification situations.
1. Timely protest resolved prior to certification
A debtor contacted us in September and provided documents he felt would show that the debt does not exist. In November, the PSC advised him that his case was reviewed and the overpayment does exist. The debtor has taken no further action until contacting us in early February to say that he has been refused a rapid refund.
Explain that our referral to Treasury for collection was proper. If there is a balance after the offset and he now wishes to pay that balance via full refund or negotiate an installment agreement, we will accept it. And, we will not return the offset monies to him unless the total repaid money exceeds the amount of the overpayment or he requests waiver that is subsequently approved.
2. Alleged nonreceipt of preoffset notice
a. Undeliverable notice posted to TOP
A debtor calls us in March complaining that Treasury has informed him that $500 of his refund has been offset to repay a debt to SSA. He says he never received his pre-offset notice.
SSA's query shows an undeliverable notice posted on March 5. Explain both the TRO process and the existing overpayment to the debtor. Also explain that we received the returned notice from the post office too late to stop the offset, but we will take action to refund the money withheld by Treasury if the debtor wishes it. If the debtor wants the money returned to him, establish how he wishes to repay. Tell the debtor we will refer his debt to Treasury again if he becomes delinquent in repaying.
b. No undeliverable notice entry on TOP
The same situation as above, except the Collection Query does not have an undeliverable notice entry.
Explain that we have a record of all notices returned as undeliverable by the Postal Service and his notice was not returned. When the notice has not been returned, we must assume that it was delivered and proceed under the provisions for debt collection under TRO. Explain to the debtor that we must keep the money collected by Treasury unless he establishes that: 1) the debt does not exist; or 2) he has no liability for repaying the debt; or 3) recovery of the debt is waived; or 4) he provides clear and convincing evidence that the letter was never delivered. He may pursue any of these options, but no money will be refunded unless SSA reaches a decision in the debtor's favor based on the information he provides us.