TN 25 (04-05)

GN 02201.031 Collection of Title II Overpayments by Administrative Offset

A. Policy - general

1. Authority for administrative offset

The Domestic Employment Reform Act of 1994 (DERA) authorizes SSA to collect certain Title II debts by administrative offset. In addition, the Debt Collection Improvement Act of 1996 (DCIA) gives SSA permanent authority to use administrative offset.

IMPORTANT: In this section, the term “administrative offset” refers to the reduction or withholding of Federal payments other than tax refunds. Although Tax Refund Offset (TRO) is a type of administrative offset, separate TRO procedures regarding Title II overpayment debts appear in GN 02201.030.

2. Definition of administrative offset

Administrative offset is the reduction or withholding of Federal or State payments to a person to recover a delinquent debt owed by that person to the Federal government. Various Federal payments, such as travel, expense reimbursements, Office of Personnel Management (OPM) pensions, and Federal contractor payments, as well as eligible State payments, which include State income tax refunds, are subject to administrative offset to recover certain Title II debts. OPM pensions are subject to a reduction of up to 25% of the net payment. Vendor payments such as Federal contractor payments travel and expense reimbursements are subject to a reduction of up to 100% of the net payment.

NOTE: See SI 02220.013 for Title XVI debts collected by administrative offset of Federal payments.

3. Criteria for administrative offset selection

SSA's automated systems select certain Title II debts for recovery by administrative offset. The following criteria apply:

  1. The debt must have been paid to a person after that person attained 18 years of age;

  2. The debt must be considered to be “unrecoverable” under regulations determined by the Commissioner of Social Security;

  3. The debt must be owed by a person who is no longer entitled to receive Social Security benefits;

  4. The debtor must be alive;

  5. The debtor's BOAN must be on the MBR;

  6. The debt must be $25.00 or more; and

  7. The debt must be delinquent (see GN 02201.030B.2. for the definition of “delinquent”).

NOTE: Due to systems limitations, SSA does not select BIC “C” debtors for administrative offset of payments other than tax refunds. SSA does, however, select BIC “C" debtors for TRO administrative offset.

B. Policy - unrecoverable debt

1. Definition of unrecoverable debt

SSA considers a Title II debt to be unrecoverable if it meets all of the following conditions:

  1. The RECOOP billing status is past-due or later, or the debt has been written off as uncollectible;

  2. SSA has not entered into an installment agreement with the debtor, or the debtor has failed to make any payment for two consecutive months; and

  3. No appeal/waiver request is pending; and

  4. The debtor is a former beneficiary.

2. When a debt is unrecoverable

An SSA debt is unrecoverable when it meets the definition in GN 02201.031B.1. For purposes of the administrative offset program, a specific unrecoverable date is not required.

C. Process - pre-offset notice

Once a debt is selected for administrative offset, 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 pre-offset 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 credit bureau address requests made by the Debt Management Sections (DMS). The automated operation has no impact on the DMS requests.

The pre-offset notice tells the debtor about 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, refer the debt to TOP/ECO, 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: SSA uses one notice to inform the debtor about the proposed administrative offset, TOP/ECO, and credit bureau reporting. The same due process rights described above are offered for all collection tools.

D. Procedure - handling debtor inquiries/protests - preoffset

1. Request for explanation of overpayment

Follow the instructions in GN 02201.030D.1.

2. Request for explanation of administrative offset

If a request for an explanation of administrative offset is received, explain that as indicated in the pre-offset notice, Congress passed a law that allows Treasury to withhold unrecoverable SSA overpayments from Federal and State payments due the overpaid person.

3. Request for waiver

Follow the instructions in GN 02201.030D.2.

4. Request to review record

Follow the instructions in GN 02201.030D.3.

5. Request for installment payments

Follow the instructions in GN 02201.030D.4.

6. Debtor objects to collection of debt

a. Protest involves request for review of the debt or the legality of collection

If the debtor alleges that he or she does not owe all or part of the debt or that SSA has no legal right to collect the debt, advise that if he or she wishes us to review the findings before we refer the debt to Treasury, we must receive evidence to support the allegations within 60 days from the date of the pre-offset notice. Follow GN 02201.030D.5.a. through GN 02201.030D.5.c. to review any statements/evidence.

b. Protest involves the fact and/or amount of debt

Follow the instructions in GN 02201.030D.5.d.

7. Debtor alleges nonreceipt of overpayment checks

Follow the instructions in GN 02201.030D.6.

8. Debtor makes a compromise offer

Follow the instructions in GN 02215.100 through GN 02215.125.

9. Debtor alleges nonreceipt of initial overpayment notice

Follow the instructions in GN 02201.030D.8.

10. Report of death

Follow the instructions in GN 02201.030D.9.

11. Report of bankruptcy action

Follow the instructions in GN 02201.030D.10.

E. Handling postoffset/postcertification inquiries

Generally, inquiries will be received 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 pre-offset 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 or waiver request

Follow the instructions in GN 02201.030E.1.

2. Request for waiver

Follow the instructions in GN 02201.030E.2.

3. Request for installment payments

Follow the instructions in GN 02201.030E.3.

4. Excess collection

Follow the instructions in GN 02201.030E.4.

5. Erroneous offset due to incorrect BOAN

Follow the instructions in GN 02201.030E.5.

6. Alleged nonreceipt of pre-offset notice

Follow the instructions in GN 02201.030F.2.

7. Request for different offset amount

a. Background

Various Federal and State payments are subject to a reduction until the delinquent debt is paid. Federal payments include OPM pensions, travel, expense reimbursements and Federal contractor payments. A likely source of Federal payment is the OPM pension, which is subject to a reduction of up to 25%. Vendor payments such as Federal contractor payments, travel and expense reimbursements are subject to a reduction of up to 100% of the net payment. Eligible State payments may include State income tax refunds or unemployment compensation debt, which may be subject to a reduction of 100%.

b. Request for lower offset amount

A debtor may, at any time, request a lower offset amount or percentage alleging financial hardship.

IMPORTANT: SSA will not reduce the amount offset if the debt was caused by intentional false statement or willful concealment of or failure to furnish material information. (Willful concealment means an intentional, knowing and purposeful delay in providing or failure to furnish material information.) Do not take action on a request for a lower offset amount due to hardship when the debt was caused by intentional false statement or willful concealment of or failure to furnish material information.

The procedure for handling a debtor’s request for a lower offset amount depends upon whether SSA can approve the request immediately or SSA requires financial information from the debtor before deciding on the request.

NOTE: A request for hardship does not prevent or stop TOP/ECO or credit bureau reporting.

  • Grant, without financial development, any request that is at least $50 and would permit recovery within 12 months. Document the Debt Management System (DMS) REMARKS screen.

  • If a negotiated/requested amount is at least $50 and would permit full recovery within 36 months, grant the request and annotate the DMS REMARKS screen with the income/expense/asset information obtained from the debtor. DO NOT OBTAIN AN SSA-632-BK OR REQUEST A DETAILED FINANCIAL STATEMENT (i.e., the information requested in Section II on the SSA-632-BK). The debtor’s response to the following questions is sufficient:

    What is the amount of your income (i.e., weekly or monthly)?

    How much are your average monthly expenses (e.g., rent/mortgage, utilities, etc.)?

    Do you have a savings account, CD, or IRA? If so, the approximate value of each.

  • If a negotiated/requested amount would not permit recovery within 36 months, obtain a signed SSA-632-BK and evaluate income, expenses and assets. Continue the current withholding rate until the SSA-632-BK is received and processed. Withhold the amount by which income exceeds expenses but no less than $50. Annotate the DMS REMARKS screen.

  • When the offset amount is finally negotiated, send a FAX on SSA letterhead requesting a reduction due to hardship to the Branch Manager for Operations at Bureau of the Fiscal Service (BFS), formerly known as the Financial Management Service (FMS) (