GN 02201.038: Tax Refund Offset (TRO) Problem Cases

changes
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~~Effective Dates: 01/09/2013 - Present~~
Effective Dates: 07/02/2018 - Present
~~TN 17 (06-94)~~
TN 36 (07-18)
~~GN 02201.038 TRO Problem Cases~~
GN 02201.038 Tax Refund Offset (TRO) Problem Cases
~~A. Policy - General~~
A. General overview of problem cases
Internal Revenue Service (IRS) has special requirements for resolving “problem cases” in the TRO program. Problem cases involve unique or unusual circumstances which cannot be resolved without the help of IRS. These special cases should be few in number. Generally, problem cases have the following characteristics:
The Department of the Treasury (Treasury) Internal Revenue Service (IRS) has special requirements for resolving “problem cases” in the Tax Refund Offset (TRO) program. Problem cases are cases which require resolution with the assistance of the Treasury, IRS, or both the Treasury and the IRS. These special cases are few in number. Generally, problem cases have the following characteristics:
* The referring agency cannot resolve the situation with its own records and information.
* IRS must conduct additional investigation and advise the referring agency of its findings.
~~* The debt has been certified to and offset by IRS.~~
* In most instances, the problem cases arise after the debtor or other individual receives notice from IRS that the offset has occurred.
* The Treasury Offset Program (TOP) for TRO certified the debt and offset.
NOTE: Tax matter questions, such as when the balance of a refund will be paid, are not considered to be problem cases. Refer callers with tax matter questions to the IRS toll-free telephone number (1-800-829-1040).
In most instances, the problem cases arise after the debtor or other individual receives notice from Treasury that the offset has occurred.
~~B. Policy - Guidelines~~
NOTE: Tax related questions are not considered TRO problem cases. Refer callers with tax matter questions to the IRS toll-free telephone number (1-800-829-1040).
IRS has strict guidelines for handling problem cases. The most important guideline is that contact between referring agencies and IRS be done through a single contact point. SSA's Office of Financial Policy and Operations (OFPO), located in central office, is the contact point with IRS. OFPO is responsible for:
B. Guidelines for handling problem cases
IRS has strict guidelines for handling problem cases. The most important guideline is that contact between referring agencies and IRS is done through a single contact point. SSA’s Office of Financial Policy and Operations (OFPO), located in central office, is the contact point with IRS. OFPO is responsible for:
* Referring problem cases to IRS.
* Conducting regular followups with IRS on the status of cases.
* Advising SSA components of resolutions and actions.
* Conducting regular case status follow-ups with IRS on the status of cases.
* Advising our agency of resolutions and actions.
IMPORTANT: For problem cases, do not reverse the offset by refunding the amount to the debtor. OFPO will advise the payment center when any refunding or other corrective action is necessary.
~~IMPORTANT: For problem cases, do not reverse the offset by refunding the amount to the debtor. OFPO will advise when any refunding or other corrective action is necessary.~~
C. Procedure for identifying and routing problem cases
C. Procedure
The following describes the procedures for identifying and routing problem cases in the Program Service Center (PC) and Field Office (FO). There are specific examples at the end of the document.
1. Situation Identified as Problem Case
~~If a situation is identified as a problem case, PCs and FOs will generally identify and document. When a situation is identified as a problem case, proceed as follows:~~
* Describe the situation in as much detail as possible on a Form SSA-5002 (Report of Contact). Be sure to include the debtor's name (and name of any other involved individual), debtor's SSN, date and amount of offset, debtor's or other person's daytime telephone number and your name, work number and office.
* Obtain copies of any TRO related correspondence from IRS and SSA to the debtor or other persons, if possible. Also include any letters from the individual.
~~* Provide a copy of the TRO query, MBR and ROAR.~~
* Explain to the person that SSA cannot resolve the case on its own and that we will coordinate with IRS to resolve the issue.
If a situation is a problem case, the PSCs and FOs identify and document it. When you identify a problem case, proceed as follows:
Step
Action
1
Describe the situation in as much detail as possible on a Form SSA-5002 (Report of Contact). Include the following:
* debtor's name (and name of any other involved individual);
* debtor's SSN;
* date;
* amount of offset;
* debtor's or other person's daytime telephone number;
* your name, work number, and office.
2
Obtain copies of any TRO related correspondence sent from SSA and the IRS to the debtor or other persons, if possible. Also, include any letters from the individual.
3
Provide a copy of the External Collection Operation (ECO) query, Master Beneficiary Record (MBR), Supplemental Security Record (SSR), and the Recovery of Overpayments, Accounting and Reporting (ROAR).
4
Explain to the person SSA cannot resolve the case on our own and we will coordinate with IRS to resolve the issue.
5
Add a special message to the record “TRO Problem Case.”
2. Routing Problem Cases
After all required documentation is obtained, send routing problem cases as quickly as possible to the appropriate RO. (Do not send directly to OFPO.) Transmit the material via fax, if possible. Otherwise, proceed as follows:
* PC/FO Action
* Place all material in an envelope marked “TRO PROBLEM CASE.”
* Forward the material to the RO, Program Operations and System, RSI/SSI Program Branch, RSI Operation Section.
After obtaining all required documentation, send problem cases as quickly as possible to the appropriate Regional Office (RO). Do not send directly to OFPO. Transmit the material via fax, if possible. Otherwise, proceed as follows:
* PSC/FO Action
Proceed as follows with the documentation using in-house mail:
* Scan and email materials with subject “TRO PROBLEM CASE” to the RO, Program Operations and System, RSI/SSI Program Branch, RSI Operation Section.
* Note: FO employees should scan material, enter a vHelp request, and upload the material to vHelp for RO analysis. PSC employees do not have access to vHelp.
* RO Action
Proceed as follows with the documentation:
* Review the documentation, clarify any outstanding issues and determine whether or not the situation is a problem case.
* If it is a problem case, send the information to OFPO, Office of Payment and Recovery Policy. Transmit the material to OFPO via email, if possible, using the following email address: ^TOP ECO Questions.
* If material cannot be emailed, transmit the material to OFPO via fax using the following fax number: (410) 965-0384
* If material cannot be emailed or faxed, send it in an envelope (clearly marked “TRO Problem Case—DO NOT OPEN in the Mailroom”) to:OFPO Office of Payment and Recovery Policy 2-A-10 East High Rise 6401 Security Boulevard Woodlawn, Maryland 21235-6401
* If additional PC documentation is needed prior to sending the case to OFPO, send the material to the Operations Analysis Staff in the PC. Ask the PC to obtain the data and send it directly to OFPO, and inform the RO when the case is sent to OFPO.
* Review the documentation, clarify any outstanding issues and determine if the situation is a problem case.
* If it is a problem case, send the information to OFPO. Transmit the material to OFPO via email, if possible, using the following link, filling in the form, and uploading the document: http://sharepoint.ba.ssa.gov/DCBFM/OFPO/OPRP/Inquiry/SitePages/Home.aspx
* If you cannot email the material, transmit the material to OFPO via fax using the following fax number: (410) 965-0384.
* If you cannot email or fax the material, send it in an envelope (clearly marked “TRO Problem Case—DO NOT OPEN in the Mailroom”) to:
OFPO Office of Payment and Recovery Policy6401 Security Boulevard 2-A-10 East High RiseBaltimore, Maryland 21235-6401
* If you need additional PC documentation prior to sending the case to OFPO and send the material to the Operations Analysis Staff in the PC. Ask the PC to obtain the data, send it directly to OFPO and inform the RO.
3. Investigation Complete
~~If IRS notifies OFPO when it completes its investigation, take the following actions:~~
* OFPO will:
* Notify the RO which is controlling the problem case.
If IRS notifies OFPO when it completes its investigation, OFPO and the RO takes the following actions:
* OFPO:
* Notifies the RO, which is controlling the problem case.
* Advise of any necessary action.
* RO will:
* Coordinate notice preparation if SSA must notify the debtor or other individual.
* Tailor the language to address each situation. Do not use predeveloped or “canned” language because it is not conducive to problem cases.
* Ensure that any corrective action, such as refunding the offset amount, is taken by SSA.
* Inform the RO if IRS notifies the person when a problem is resolved. And, if possible, send the RO a copy of the IRS notice.
* Coordinate notice preparation if we must notify the debtor or other individual.
* Tailor the language to address each situation.
NOTE: Do not use pre-developed or “canned” language because it is not conducive to problem cases.
* Ensure that SSA takes any corrective action, such as refunding the offset amount.
NOTE to PC and FO: Inform the RO if IRS notifies the person when a problem is resolved. If possible, send the RO a copy of the IRS notice.
~~D. Examples~~
D. Case Studies
Following are some examples of what is and is not a problem case:
1. Wrong SSN on Tax Return
Jack Spratt erroneously used his daughter's SSN when filing his Federal income tax return. His daughter, Pat, was overpaid as a student because she ceased full time attendance and did not notify SSA. SSA referred Pat's debt to IRS for offset. Because Mr. Spratt used his daughter's SSN on his form 1040, his refund was offset to recover Pat's delinquent debt. In February, Mr. Spratt contacted SSA to ask why his refund was offset. Since SSA cannot resolve the issue without information from IRS regarding Mr. Spratt's tax return, the situation must be handled as a problem case.
Jack Spratt erroneously used his daughter's SSN when filing his Federal income tax return. His daughter, Pat, was overpaid as a student because she ceased full time attendance and did not notify SSA. SSA referred Pat's debt to TOP for offset. Because Mr. Spratt used his daughter's SSN on his form 1040, TOP offset his tax refund to recover Pat's delinquent debt. In February, Mr. Spratt contacted SSA to ask why TOP offset his tax refund. Since SSA cannot resolve the issue without information from Treasury and IRS regarding Mr. Spratt's tax return, the situation is a problem case.
2. Two Agencies Claim Tax refund
Mr. August Hickey, a former disabled wage earner, owes SSA a delinquent debt of $1,294. He also defaulted on a $1,500 student loan made by the Department of Education (DOE). Both agencies referred their debts to IRS for offset. In March, Mr. Hickey's entire refund of $1,525 was offset. Since Mr. Hickey had received SSA's preoffset notice but not DOE's preoffset notice, he was unaware that DOE had referred the defaulted student loan. Confused, he contacted SSA to ask why his entire refund of $1,525 was withheld to recover SSA's debt of $1,294. This is a problem case because SSA must have IRS verification of the offset amount.
Mr. August Hickey, a former disabled wage earner, owes SSA a delinquent debt of $1,294. He also defaulted on a $1,500 student loan made by the Department of Education (DOE). Both agencies referred their debts to TOP for offset. In March, TOP offset Mr. Hickey's entire tax refund of $1,525. Since Mr. Hickey had received a pre-offset notice from Treasury, but not DOE's pre-offset notice, he was unaware that DOE had referred the defaulted student loan. Confused, he contacted SSA to ask why SSA withheld his entire refund of $1,525 to recover SSA's debt of $1,294. This is a problem case because SSA must have Treasury and IRS verification of the offset amount.
3. Amount Withheld Exceeds Amount Certified For Offset
SSA notified Dwight Randle, an overpaid ex-student beneficiary, that his $543 debt had been referred to IRS for offset. When offset occurred, IRS notified Mr. Randle that SSA's debt of $593 had been withheld. Since SSA's records still showed a debt for $543, IRS intervention is required to resolve the issue. The situation must be handled as a problem case.
SSA notified Dwight Randle, an overpaid ex-student beneficiary, that SSA referred his $543 debt to TOP for offset. When the offset occurred, Treasury notified Mr. Randle that they withheld SSA's debt of $593. Since SSA's records showed a debt for $543, intervention is required to resolve the issue and refund the excess amount withheld. The situation is a problem case.
4. Congressional Inquiry Resulting From Offset (Not a Problem Case)
SSA referred Susan Smith's delinquent debt to IRS for offset. The offset occurred in March. The debt met all of SSA's criteria for referral to IRS and was correctly referred. Objecting to the offset on the basis of legal enforceability, Susan and her attorney contacted her Congressperson for support. The Congressperson wrote a letter to the Commissioner asking why the offset was applied and if it was a legal action on SSA's part. Although the Congressional inquiry requires special processing, the situation is not a problem case. SSA has all of the information it needs in its own records and can respond to the inquiry without help from IRS.
SSA referred Susan Smith's delinquent debt to TOP for offset. The offset occurred in March. The debt met all of SSA's criteria for referral to TOP and SSA correctly referred the debt. Susan and her attorney contacted her Congressperson for support questioning the legal enforceability of the offset. The Congressperson wrote a letter to the Commissioner, asking why SSA applied the offset and if it was a legal action on our part. Although the Congressional inquiry requires special processing, the situation is not a problem case. SSA has all of the information it needs in its records and can respond to the inquiry without help from Treasury or IRS.

POMS Reference

GN 02201.038: Tax Refund Offset (TRO) Problem Cases