BATON ROUGE, La. — The Louisiana Department of Revenue (LDR) announced Friday a new tool to enhance its efforts to collect overdue debts owed to agencies across state government.
The new Federal-State Offset Program will allow the state to intercept payments owed by the federal government to vendors and contractors for the payment of non-tax debts owed to the State of Louisiana. The program will collect an estimated $11 million per year.
Under this initiative, a participating state agency will submit to the program delinquent debts it has made extensive efforts to collect through communication with the debtor. The program will match those debts to a federal database of taxpayers, vendors and contractors owed refunds or payments by the federal government. If there is a match, the program will claim those refunds or payments and forward them to the state agency for payment of the outstanding debt.
For example, if a contractor for a federal agency owes fines or other payments to the Department of Health and Hospitals, LDR will claim any payments due the contractor from the federal government and forward them to DHH.
This program adds to the tools that LDR uses currently to collect overdue debts to the state. Since 2001, LDR has operated a program called the Federal Tax Refund Offset. Under this program, LDR intercepts federal income tax refunds to satisfy individual state income tax debts. The Federal Tax Refund Offset program has collected an average of $21 million per year for the state since it began in 2001 and a total of $137.2 million since July 2008.
The Federal-State Offset Program announced Friday complements an integrated strategy announced in September by Commissioner of Administration Paul Rainwater to streamline agency collection efforts across state government.
LDR is developing an implementation plan for the program that includes a request for proposals (RFP) for a system to match Louisiana debtors with federal vendors and contractors.