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Set-Off/Offset Programs

The Division of Taxation is the administrator of and a participant in several set-off programs. The purpose of the set-off/offset programs is to prevent an individual or business from receiving a payment from the government (federal, state) while owing money to the government and has been highly successful with millions of dollars in tax debt collected. The following is a brief overview of the current programs: SOIL, FOIL, State Vendor (OMB) Set-Off, Federal Treasury Offset Program (TOP), and State Reciprocal Set-Off.

SOIL (Set-Off of Individual Liability)
The oldest and most well known set-off program, SOIL withholds personal NJ Gross Income Tax Refunds, Saver Rebates and Homestead Rebates from taxpayers who have outstanding tax debts, debts to other state agencies and/or to the Federal Treasury. The Division of Revenue administers SOIL and issues a notice to the taxpayer and, after a 35-45 day waiting period that varies due to the regulations of each participating agency, if the liability still is due, the intercepted monies are turned over to the creditor agency(ies).

FOIL (Set Off of Federal Refunds for Individual Liability)
The FOIL program withholds Federal Income Tax Refunds for NJ Gross Income Tax debt.

Ninety (90) days after the taxpayer has been billed, a Notice of Intended Federal Set-Off is issued to the taxpayer by the Division of Taxation. This notice informs the taxpayer of a 60 day time frame within which to clear up the Income Tax debt. If not resolved within 60 days, the debt information is submitted to the Federal Management System (FMS). FMS in turns sends any intercepted refunds to the Division of Taxation and issues a notice to the taxpayer explaining the set-off. Currently the federal government imposes a $22 processing fee per transaction that is deducted from the refund amount.

State Vendor (OMB) Set-Off
The State Vendor (OMB) Set-Off program withholds contract payments due to state vendors with tax debts and applies those payments to the liability. Vendors and caseworkers are informed after a successful garnishment/set-off. If a change in the status of the case warrants, supervisors can authorize the full or partial refund of the set-off payments to the vendor.

Federal Treasury Offset Program (TOP)
The TOP program is based on a reciprocal agreement between New Jersey and the Federal government (FMS). FMS and New Jersey match debts (both tax and non-tax) against payments due to contract vendors. Ninety (90) days after the taxpayer is billed by Taxation, a Notice of Federal Set-Off is issued to the taxpayer providing an additional 60 days to resolve the debt and prevent an offset. Currently the federal government imposes a $15 processing fee per transaction that is deducted from the payment amount.

State Reciprocal Set-Off
We currently have agreements with Maryland, New York, and Connecticut. The agreements provide that these states will send individual income tax refunds to New Jersey to offset the outstanding New Jersey income tax liability of a taxpayer.  In turn, the Division will send New Jersey individual income tax refunds to Maryland, New York, and Connecticut to offset debts owed to them.


Last Updated: Thursday, 04/10/14



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