On December 23, the Treasury issued an NPRM in the Federal Register titled “Debt Collection Authorities Under the Debt Collection Improvement Act of 1996” proposing to revise regulations governing the Treasury Offset Program (TOP). TOP is a centralized system administered by the Bureau of the Fiscal Service that collects delinquent debts owed to the U.S., states, or tribal agencies under Section 455(f) of the Social Security Act by withholding eligible federal and state payments to satisfy those debts. The Treasury stated that the proposal aims to restore statutory flexibility, implement new authorities, eliminate repetitive language, and reorganize rules for clarity and comprehension.

The proposal updated definitions, consolidated general offset rules, clarified procedures for offsetting federal and state payments, and addressed exemptions for certain payment types and minimum thresholds for debt referrals. Additionally, the proposal outlined notification requirements to debtors and creditor agencies, as defined in the proposed rule; fee-charging authority for offset services; and specific provisions for handling lump-sum benefit payments, joint payments, and assigned payments. The Treasury invited public comments on all aspects of the proposed rule until February 23.