Offset Law and Legal Definition

Offset generally means a reduction, typically by reducing an amount due to be paid out by an amount owed. For example, the Treasury Offset Program (TOP) is a debt collection program administered by Financial Management Services (FMS), a bureau of the U.S. Department of the Treasury. This program allows state agencies to submit past-due, legally enforceable state income tax obligations to FMS for offset of the debtor’s individual federal income tax refund. In such a case, the federal refund one would have received is used to pay, or offset, all or a portion of a state income tax debt.

The following is an example of a state statute dealing with offset:

NAC 353C.100 Request to offset debt; payment of debtor after notification of interception.

1. If an agency requests that the State Controller place a hold on payments to a person who owes a debt to the agency, the agency may, upon receiving notification from the State Controller that such a payment has been intercepted, submit to the State Controller a request to offset any amount due the agency from the debtor against any amount due the debtor from any agency.

2. The request must be submitted in the format provided by the State Controller.

3. The agency shall verify and certify the accuracy of the name and address of the debtor and the amount of the debt and shall immediately notify the State Controller if the agency discovers that any of the information is incorrect.

4. If an agency has requested that the State Controller place a hold on payments to a debtor and such a payment is intercepted, any agency that receives notification pursuant to NAC 353C.110 that the payment has been intercepted and is being held for potential offset shall not attempt to pay that debtor using a different vendor number or by any other form of payment, unless authorized by the State Controller or the agency that requested the hold on payments to the debtor.