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

Comptroller’s Office Responsibilities

Compliance With Warrant Hold Statutes

The Comptroller’s office is responsible for administering the warrant hold statutes and maintains procedures to administer and ensure agency compliance. To administer these statutes and procedures, the Comptroller’s office adopted this accounting policy statement.

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, referred to as an overage, to the person for any remaining amounts after an offset. The Offset Process describes these procedures.

The Comptroller’s office must provide notice of a held payment 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 payments 30 days before an offset occurs. This notice also provides an option for the payee to authorize a voluntary offset before the 30th day.

Government Code, Section 403.055 (e-1) authorizes the Comptroller’s office to release held warrants that exceed the amount of other held warrants sufficient to cover the debt amount. These warrant releases will be processed on a case-by-case basis upon request from the payee.

If the payee settles the state debt within the 30 days, the held warrant(s) will be released; otherwise, the offset will occur. When an overage payment is required, it is issued via warrant or direct deposit and distributed to the payee by the Comptroller’s office.

If the payee reports the overage warrant has not been received or is lost, the overage warrant may be canceled and reissued after two weeks from the date the original overage warrant was issued.

Note: Internal Revenue Service (IRS) tax levies and federal bankruptcy laws present unique issues. Payments payable to the IRS or a bankruptcy court or trustee may 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 Attorney General’s office the sole assignee of each payment to a person reported as delinquent in child support; therefore, the Attorney General’s office has the highest offset priority. The Comptroller’s 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 are suspended (not canceled) for payees on hold for the duration of the hold(s), regardless of the type of debt. A warrant will be issued and held by the Comptroller’s office. After the payee’s hold is released, the suspension is automatically lifted, and direct deposit payments will resume.

The payee’s custodial agency must monitor and maintain current direct deposit instructions during the time they are suspended due to a hold. This ensures accurate direct deposit payments when the suspension is lifted.

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