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Glenn Hegar  ·  Texas Comptroller of Public Accounts

Reporting of State Debts and Hold Offset Procedures (APS 028)

FPP E.037

Comptroller’s Office Responsibilities

Compliance with warrant hold statutes

The Comptroller’s office is responsible for administering the warrant hold statutes and has established procedures to administer and ensure agency compliance. To administer these statutes, the Comptroller’s office adopted this accounting policy statement as part of the Texas Administrative Code, Title 34, Section 5.160.

Offsets and overages

The Comptroller’s office is authorized to offset state payments against a person’s state debt, and must also issue a payment to the person for any remaining amounts after an offset (referred to as an overage). The Comptroller’s office procedures are described in the Offset Process section of TexPayment Resource.

The Comptroller’s office must provide notice of a held warrant to the person on warrant hold and specify a deadline for paying the state debt before the offset. The Comptroller’s office mails the payee a notice of held warrants 30 days before an offset occurs. This notice also provides an option for the payee to authorize a voluntary offset prior to the 30 days.

If the payee settles the state debt within the 30 days, the held warrant(s) will be released; otherwise, the offset will occur.

If an offset results in an overage warrant and the payee reports the warrant has not been received or is lost, the overage warrant may be canceled and reissued no sooner than two weeks from the date the original overage was issued.

Note: Internal Revenue Service (IRS) tax levies and federal bankruptcy laws present unique issues. Generally, warrants payable to the IRS or a bankruptcy court or trustee do not qualify for state offsets unless authorized by a federal agency. Matters involving IRS tax levies or bankruptcies should be reviewed by the agency’s legal counsel to determine the priority of the levies or liens.

Multiple state debts

When a payee has multiple state debts, the Comptroller’s office has the statutory authority to determine the order of offset. Family Code, Section 231.007, makes the Office of the Attorney General (OAG) the sole assignee of each payment to a person reported as not paying the required child support, and therefore the OAG has the highest offset priority. Comptroller’s office tax delinquencies have the next offset priority. Other state debts are prioritized in the order of their hold dates (older debts have higher priority) as reported to the Texas Identification Number System (TINS).

Direct deposit instructions

Direct deposit instructions for payees on hold will be overridden (suspended, not canceled) for the duration of the hold(s), regardless of the type of debt. A warrant will be printed and held by the Comptroller’s office. After the payee’s hold is released, direct deposit instructions are automatically reinstated.

Direct deposit instructions cannot be set up for persons on hold for delinquent child support payments. After a person’s child support hold is released, direct deposit instructions may be set up for that person.

To prevent erroneous direct deposit payments, paying agencies must maintain current direct deposit instructions while these instructions are suspended due to a hold, and reinstated when the hold is released.

Glenn Hegar
Texas Comptroller of Public Accounts
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