Treasury Sharpens Tools for Snagging Government Debts
Published Date: 12/23/2025
Proposed Rule
Summary
The Treasury is updating rules for the Treasury Offset Program, which helps collect government debts by taking money from payments owed to people who owe the government. These changes make the rules clearer, bring back some flexible options, and add new powers to improve debt collection. If you’re involved with government payments or debts, watch out—comments on these updates are open until February 23, 2026.
Analyzed Economic Effects
7 provisions identified: 2 benefits, 5 costs, 0 mixed.
Limits on Offsets of Lump‑Sum Benefits
If you receive a one‑time lump‑sum Federal benefit that represents more than one month of benefits, TOP may collect no more than 15% of that payment and must leave a minimum floor. The floor is generally the lesser of $9,000 or $750 multiplied by the number of months represented by the lump sum (Fiscal Service may use $9,000 when it lacks required information). Examples in the rule illustrate calculations for $10,000 and $6,000 lump sums and adjustments when other benefits were received in the prior 12 months.
Tax Refund Offsets for Tribal Child Support
The rule implements the Supporting America's Children and Families Act (Public Law 118-258, Jan. 4, 2025) authority permitting offset of Federal tax refund payments to collect past‑due child support owed to certain Federally recognized Tribal IV‑D agencies (see 26 U.S.C. 6402(c) and 42 U.S.C. 664).
Payments via Non‑Automated Mechanisms Must Allow Offset
Before using payment mechanisms that do not allow automated matching with TOP (for example, government purchase cards or class‑action administrators' disbursements), Federal agencies must determine whether the person entitled to payment owes a debt in TOP and work with Fiscal Service to ensure the payment can be offset. If a debt is owed, the payment agency must make the payment in a manner that permits offset.
How Prior Offsets and Levies Affect Offset Amounts
The proposed rule clarifies treatment when a payment has been partially exempted or previously offset by a payment agency: a disbursing official may either not offset the payment if a prior internal offset is known, calculate an additional offset accounting for the prior offset when sufficient information is available, or disregard the prior offset. The rule also states that prior levies must be disregarded for TOP calculations, and gives an example where a $2,000 payment subject to two 15% collections results in $1,400 disbursed.
Warning Notice Before Monthly Benefit Offset
The proposed rule would generally require a warning notice be sent to a person before Treasury (or the disbursing official) begins offset of monthly benefit payments. This warning‑notice requirement applies only to monthly benefit payments (not other recurring or one‑time payments) and does not apply when sending the notice is administratively infeasible (for example, if no current address is available).
Removal of $25 Minimum Debt Reference
The proposed rule removes the existing reference to a $25 minimum debt threshold for referral to TOP and states Fiscal Service may establish a dollar threshold for referred debts in separate guidance (taking into account collection costs).
Assigned Payments (EAJA) Still Subject to Offset
The proposed rule clarifies that assigned payments (for example, assignment of an Equal Access to Justice Act (EAJA) award to an attorney) are generally subject to offset for debts owed by the original payee (the assignor). The rule cites Astrue v. Ratliff and explains that if the prevailing party owes debts collectible through offset, the EAJA award may be offset even if the payment is assigned to the attorney.
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Key Dates
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