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

FPP E.037

Agency Responsibilities

Compliance With Hold Statutes and Comptroller Procedures

To ensure compliance with the warrant hold statutes and procedures described in Warrant Hold, agencies must:

  • Provide the following to its debtors:
  • Submit an Application to Report Indebtedness form (74-188) to identify each type of debt owed to the state.
  • Set up and update hold records via online or batch.
  • Release payments by submitting the Warrant Release or Reinstatement Request form (00-432) as needed and in a timely manner to avoid erroneous offsets.
  • Follow the instructions in Cancellation of Held Warrants.
  • Report the following to the Comptroller’s office (for debts referred to the Attorney General’s office):
    • The principal amount of the debt, plus penalty and interest when applicable, on state debts referred to the Attorney General’s office for collection.
    • The Attorney General’s office must report a hold record on the same debtor for only the amount owed as a result of the collection process, such as attorney’s fees or court costs.
  • Agencies must also report IRS tax levies and bankruptcy information on their debtors.
  • If approved by your agency’s legal staff, follow the instructions for IRS tax levy and bankruptcy payments and other holds as described in the Hold Special Circumstances. Submit a Payee Change Request form (74-157) for the Hold Bypass Indicator as needed.
  • Submit the Debtor Hold File Extract Request form to request a daily extract of all hold records reported to TINS, and then use the file to:
    • Verify a person’s hold status.
    • Restrict payments from local funds to state debtors, including travel advance payments to employees who are on hold.
    • Update and reconcile your agency’s hold records within your internal system.
    • Restrict access to the Debtor Hold Extract File records with third-party vendors or agents.
  • Monitor and research warrants on hold and released via online screens and reports to:
    • Ensure timely release of held warrants to avoid erroneous offsets.
    • Respond to questions from the agency’s debtors and payees.

Accounting for Offsets and Overages

Refer to the hold Offset Process for instructions and the required coding blocks.

The hold source agency must transfer funds from its warrant hold offset account to the correct appropriation and fund within 15 business days from the date the offset deposit is received. Hold source agencies must then update their internal systems to ensure the debtor is immediately credited with the offset funds.

When an offset is found to be erroneous, follow these instructions for corrective actions.

If… The paying agency… The hold source agency…
A held warrant was offset in error or issued with federal funds that exempted it from being held and offset, Must contact the hold source agency to recoup the funds.
  • Must return the funds to the paying agency.
  • Then:
    Reestablishes the TINS hold record if released by the offset,
    – OR –
    Adjusts the liability amount if the offset reduced the debt amount.
An erroneous overage payment was issued to the payee, Must recoup the amount of the overage payment directly from the payee.  
The paying agency fails to recoup the funds from the payee due to an erroneous overage payment, Must report the payee as a state debtor in accordance with Government Code, Section 403.055 (f) and (g).

Is now the paying agency for the erroneous overage payment amount it was unable to recoup from the payee.

Submit an Application to Report Indebtedness form (74-188) for this type of debt if not already on file for your agency.
The liability amount on a hold record is overstated and an offset occurred based on that amount,  

Must refund the overpayment to the payee using that payee’s TIN if the refund is processed through the Comptroller’s office.

If the refund is issued from local funds, ensure the payee is not on hold status.

The warrant hold statutes — Government Code, Sections 403.055(k) and Government Code 2107.008(k) — allow for the Comptroller’s office or a state agency to make a payment to a person on hold if the hold source agency consents to the payment and the release of that payment. Agencies must retain documentation of each hold source agency’s consent to issue and release the payment; documentation must be made available to the Comptroller’s office or the State Auditor’s office upon request.

Maintaining Accurate Hold Information

The Comptroller’s office must rely on the information in TINS when processing offsets and adjusting liabilities; therefore, it is critical that the liability amounts be accurate.

Each agency must keep its hold records current in TINS to prevent unlawful warrant holds and offsets. When a debt has been satisfied, the agency must release the debtor’s hold record in both its internal system and in TINS.