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Glenn Hegar  ·  Texas Comptroller of Public Accounts

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

Issued: Nov. 22, 2005
Updated: Sept. 8, 2017 – View Changes

FPP E.037

Overview

Applicable to

State agencies and institutions of higher education

Policy

State agencies and institutions of higher education (excluding junior and community colleges) are required to:

  • Notify the Texas Comptroller of Public Accounts if a person or other entity owes a debt to the state of Texas.
  • Follow Comptroller’s office procedures to ensure proper reporting and collection of state debts.

The Comptroller’s office procedures for administering the warrant hold statutes, including the offset of state payments against a person’s state debt, are found under Warrant Hold in TexPayment Resource (FPP P.007).

Legal cites

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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.

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Agency Responsibilities

Compliance with Comptroller’s office hold procedures

Agencies must follow the procedures described under Warrant Hold in TexPayment Resource to ensure compliance with the warrant hold statutes, including these requirements:

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Accounting for offsets and overages

Comptroller’s office and agency offset instructions with required coding blocks are included in the Offset Process section of TexPayment Resource.

The hold source agency must transfer funds from the 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 that the debtor is immediately credited with the offset funds.

If the original payment was issued in error or out of federal funds, the paying agency must contact the hold source agency after the offset is made to recoup the payment. After the hold source agency returns the funds to the paying agency, the hold source agency must reestablish the TINS hold record if released or adjust the liability amount if the debt amount had been reduced by the offset.

If an overage payment is issued to an entity as a result of an offset on a warrant that was later found to have been issued in error, the agency that issued the warrant must recoup the amount of the overage payment directly from the entity. If the entity does not return the funds, the entity becomes indebted to the agency that issued the original warrant. That agency must report the entity’s indebtedness to the Comptroller's office in accordance with Government Code, Section 403.055 (g).

If the liability amount on a hold record in TINS is overstated, an overpayment to the hold source agency may result during the offset process. Should such an overpayment occur, the hold source agency must refund the overpayment to the entity using that entity’s TIN if processed through the Comptroller’s office. If the refund is issued from local funds, the agency must verify the entity’s hold status in TINS to ensure that no additional state debts have been reported on that entity.

The warrant hold statutes — Government Code, Sections 403.055(k) and 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 the hold source agencies’ 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.

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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 as accurate as possible.

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

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Changes to this Document
09/08/2017 Updated through Acts of the 85th Legislature, Regular Session
05/12/2017 Updated to reflect launch of TexPayment Resource
09/18/2015 Updated through Acts of the 84th Legislature, Regular Session; added CAPPS information to Hold Procedures
Glenn Hegar
Texas Comptroller of Public Accounts
Questions? Contact statewide.accounting@cpa.texas.gov
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