Everyone knows the federal government will get its share of tax money, sooner or later. A program designed by the Virginia Department of Taxation helps localities get their piece of the pie, too.
It’s called the Set-Off Debt Collection Program, and a recent report by King George County Administrator Neiman Young demonstrates how it can help localities get back money that’s owed them.
Participating counties and cities in Virginia submit a file to the state, noting unpaid balances on tax accounts. When a resident is eligible for a tax refund or wins state lottery money, the Department of Taxation checks the list of unpaid balances—and sends what’s owed to the localities.
Camyell Pratt, King George’s deputy treasurer, learned of the program, completed the training and registered the county in 2016.
“The program has proven invaluable,” Young said.
The county has collected $300,811 to date, including tax bills that were delinquent for as long as six years.
The commonwealth is authorized to take all or part of a person’s state tax refund to satisfy a debt as part of the Virginia Debt Collection Act and the U.S. Treasury Offset Program. That includes money owed for state taxes; to the Department of Social Services; other state agencies and courts; cities, towns or counties; the Internal Revenue Service and some non-tax debts to federal agencies.
And it’s not just state tax refunds that can be tapped. Virginia’s Department of Taxation can submit a claim to the federal government, just like localities can file with the state.
When a person is eligible for a federal tax refund, the U.S. Treasury Offset Program checks to see if money is owed to any state, then withholds or reduces the federal income tax refund to pay off the debt. Businesses aren’t exempt; if they have outstanding debt, claims also be applied to those who receive federal vendor payments.