New Law Requires Federal Refund Offset Fee to Be Paid by Debtor

Alabama Department of Revenue

News Release
April 23, 2009

Montgomery—A new state law was passed recently which now requires the administrative fee charged by the U.S. Treasury Department for Alabama’s participation in the Treasury Offset Program (TOP), a debt collection program, to be paid by Alabama taxpayers whose federal refunds are intercepted for payment of past-due Alabama income tax debts. 

Prior to passage of Act 2009-223, effective April 8, 2009, the Alabama Department of Revenue (ADOR) was required to pay the federal fee to the U.S. Treasury for each federal refund intercepted and applied to past-due Alabama income tax debts.  The federal fee is set at $22 per federal refund offset.

Alabama has participated in the Federal Refund Offset program since 2003 and has collected over $37.5 million, representing 153,664 federal refund offsets.

Federal legislation passed by Congress in 1998 (P.L. 105-206) authorizes the federal government to offset federal tax refunds to satisfy state tax delinquencies.  Forty-one states, including the District of Columbia, currently participate in the federal Treasury Offset Program. 

Media contact for more information:

ADOR Media Affairs Office:  Carla A. Snellgrove or Carolyn Blackstock:  (334) 242-1390; FAX:  (334) 242-0550; WEB site address:  www.revenue.alabama.gov