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Collection of State Taxes

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I recently received information from a contractor that the government had withheld amounts due to the contractor in order to collect taxes allegedly owed to the DC government.  I am not aware of any authority for such contract withholdings to be made.  Am I missing something?  Can someone point me to where the authority to do this is found?

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I might suggest you start your research with The Debt Collection Act (5 U.S.C. 5514).  I believe there is some implementing policy at FAR 32. There are other laws concerning this as well. I hope this helps.

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The Debt Collection Act deals with debts owed by individuals.  FAR Subpart 32.6 deals with contract debts.  Thanks anyway.

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It may be the Debt Collection Improvement Act (DCIA).  See the answer to the question "Can the U.S. Government collect money to pay debts owed to a State?"

Answer: Yes, only by administrative offset of federal payments and under certain circumstances. Under DCIA, administrative offset (i.e., Treasury Offset Program) may be used to collect debts, including funds or property owed by a person to a State (including any past-due support being enforced by the State), the District of Columbia, American Samoa, Guam, the U.S. Virgin Islands, the Commonwealth of the Northern Mariana Islands, or the Commonwealth of Puerto Rico.

The Secretary of the Treasury has the discretion to collect debts owed to States by offset; it is not mandatory. A reciprocal agreement must be made with the State; the appropriate State official must request the offset; the cost of the collection must not exceed the amount of the debt; the interests of the U.S. must be protected; and the payments withheld to pay State debts may not be exempted from offset (withholding). Social Security, Black Lung Benefit (Part B and Railroad Retirement Benefit (other than tier 2 benefits) payments may not be offset to pay State debts (although they are subject to limited offset to pay federal debts).

https://fiscal.treasury.gov/fsservices/gov/debtColl/faqs/debt_questions_dcia.htm

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31 U.S.C. 3701(b)(2) states the terms "claim" and "debt"  include funds or property owed to a State, DC, etc.

31 U.S.C. 3716(h) states "The Secretary may, in the discretion of the Secretary, apply subsection (a) with respect to any past-due, legally-enforceable debt owed to a State if—..."

Treasury article regarding offsets in support of States: https://fiscal.treasury.gov/fsservices/gov/debtColl/pdf/top/OffsetsMatter0113.pdf

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