Payee Setup and Maintenance

The principal objectives of control of disbursements are to ensure that all disbursements are legal, proper, and correct and that all disbursements are accurately recorded, reported, and reconciled in a timely, efficient manner. Each federal entity’s system of internal management control, and related procedures for, disbursements should be based on the operating needs of that particular federal entity and should conform to the Department of the Treasury’s (Treasury) regulations and the related principles and standards for internal management control prescribed by the Federal Accounting Standards Advisory Board (FASAB). Internal management controls can be found in the Yellow Book on the Government Accountability Office (GAO) website and the Green Book on the Bureau of the Fiscal Service (Fiscal Service) website.

All federal entities, including federal entities that do not use Fiscal Service to disburse payments, must be vigilant of the risks and inefficiencies that exist with regard to providing accurate and reliable payment data in advance of payments being made. Federal entities also need to ensure that they have the ability to control the flow of all payments during budget year transitions and debt ceiling constraints. In the event of a government budget year transition or debt ceiling constraint, Treasury will invoke rules for processing payments that flow through the Federal Reserve Bank (FRB) and debit the Treasury General Account (TGA). For specific instructions on electronic payment file submissions to the FRB in the event of a fiscal crisis, Non-Treasury Disbursing Offices (NTDOs) should refer to TFM Volume I, Part 4A, Chapter 4000, subsection 4020.10, Rules Under Government Fiscal Crisis, for guidance.

Federal entities must submit the Central Accounting Reporting System (CARS) Treasury Account Symbol/Business Event Type Code (TAS/BETC) reporting classification at the initiation of a payment. All federal entities must classify transactions to the proper component-based CARS TAS/BETC when transactions are actually initiated. Refer to the CARS website for the new component-based CARS TAS/BETC format and requirements. Federal entities should use the CARS TAS/BETC and contact either the Chief Disbursing Officer’s office or the Fiscal Service, Federal Disbursement Services (FDS) for information and assistance.

Treasury tracks new banking as well as other regulatory requirements impacting payments and incorporates these requirements into its rules, procedures, and systems. Some of these requirements include Nacha Operating Rules developed by Nacha, "formerly known as NACHA - The Electronic Payment Association", the Federal Reserve Operating Circulars and Regulations, financial sanctions and controls imposed by Treasury’s Office of Foreign Assets Control (OFAC), and the Improper Payments Elimination and Recovery Act of 2010. Federal entities disbursing payments through Treasury must comply with these requirements. Compliance procedures are built into Treasury’s disbursement process and do not require special interfaces and processes that otherwise must be built and maintained by federal entities who do not disburse through Treasury.

5 U.S.C. 301; 12 U.S.C. 90, 265, 266, 1767, 1789a; 31 U.S.C. 321, 331, 3122, 3301-3304, 3321, 3322, 3325, 3327, 3328, 3329, 3331, 3332, 3335, 3336, 3343, 3511, 3512, 3513, 3521, 3528, 3529, 3541, 5112, and 6503

Federal entities that incur obligations after an appropriation or continuing resolution expires violate the Anti-Deficiency Act. Certifying officers (COs) should approve the payment of obligations incurred by federal entities only when Congress has enacted legislation extending obligation authority. The prohibitions contained in this chapter are applicable to all COs. Each administrative department or federal entity is responsible for properly instructing its disbursing officers about these prohibitions.

Executive Order 13224 prohibits transactions with persons who commit, threaten to commit, or support terrorism. OFAC maintains the Specially Designated Nationals (SDN) and Blocked Persons list, which provides a list of individuals and entities covered by Executive Order 13224. The SDN and Blocked Persons list also includes the additional restrictions found in the Foreign Assets Control regulations at 31 CFR Chapter V.

Federal entities must not make or certify payments or draw checks or warrants payable to an individual or organization listed on the SDN and Blocked Persons list. Federal entities should consult the SDN and Blocked Persons list before making payments.

Direct questions concerning Executive Order 13224 or the SDN and Blocked Persons list to OFAC. See the contact information on the Department of the Treasury, Office of Foreign Assets Control website or call 202-622-2490.

DCIA, codified in pertinent part at 31 U.S.C. § 3716, requires federal disbursing officials to withhold all or part of federal payments made to persons or entities that owe delinquent nontax debts in order to satisfy debts. This process is known as “offset.” Fiscal Service has issued regulations governing offset of federal payments to collect delinquent nontax debt at 31 CFR 285.5. Authority for collecting delinquent tax debts through the continuous levy of certain federal payments can be found at 26 U.S.C. § 6331(h). For additional information on federal entity responsibilities under DCIA and the Treasury Offset Program (TOP), see TFM Volume l, Part 3, Chapter 6100.

As noted below, certain provisions in Section 2040 will become effective on March 22, 2024, after amendments to 31 C.F.R. Part 208 become effective.

2040.10—General Guidelines

All federal payments made by a federal entity, other than payments made under the Internal Revenue Code, must be made by EFT, in accordance with 31 CFR Part 208, unless a waiver applies. Accordingly, recipients of federal payments must receive payment by direct deposit to an account at the recipient’s financial institution or by an electronically delivered payment to a Treasury-sponsored account, or obtain a waiver as set forth in this section.

Federal entities that process federal payment requests eligible for deposit to a Treasury-sponsored account must ensure that their forms, online enrollment processes, and any appropriate procedures associated with the application of nontax federal payments reflect the EFT requirement and the availability of payment to a Treasury-sponsored account. In particular, federal entities should inform recipients of the requirement to receive their payment to either an account at the recipient’s financial institution or to a Treasury-sponsored account prior to certifying such payments and should refer the recipients to the EFT requirements prescribed in 31 CFR Part 208. 

2040.20—Waivers Available to Individual Federal Payment Recipients

This subsection sets forth the waivers available to individual federal nontax payment recipients pursuant to 31 CFR § 208.4(a)(1).

2040.20a—Waivers Available to Individual Federal Payment Recipients that Do Not Require Treasury Approval

Waivers from the EFT requirement apply where an individual:

• Was born prior to May 1, 1921, and was receiving payment by check on March 1, 2013, 
• Receives a type of payment for which Treasury does not offer delivery to a Treasury-sponsored account, or
• Is ineligible for a Treasury-sponsored account because of suspension or cancellation of the individual’s Treasury-sponsored account by Treasury’s Financial Agent.

Individual federal payment recipients do not need to obtain Treasury’s approval to utilize the above waivers.

2040.20b—Waivers Available to Individual Federal Payment Recipients that Require Treasury Approval

An individual federal payment recipient may request a waiver from the EFT requirement if payment by EFT would impose a hardship on the individual because of the individual’s inability to manage an account at a financial institution or a Treasury-sponsored account due to a mental impairment or due to the individual living in a remote geographic location lacking the infrastructure to support EFT payments.

Individual payment recipients must contact the U.S. Treasury Electronic Payment Solution Center at 1-877-874-6347 to request to utilize the above waivers based on hardship. As set forth in subsection 2040.40, a federal entity may permit check payments on an interim basis to an individual who requests payment by check because of a mental impairment or because they live in a remote geographic location lacking the infrastructure to support EFT payments. Under these circumstances, the federal entity must inform the individual that they are permitted to receive payment by check for an interim period, but that they must contact the U.S. Treasury Electronic Payment Solution Center at 1-877-874-6347 to request approval to utilize a waiver based on hardship.

2040.30—Waivers Available to Federal Entities

This subsection sets forth the waivers available to federal entities pursuant to 31 CFR §§ 208.4(a)(1)(ii) and 208.4(a)(2)-(8) and the waiver request process that applies to the waivers that require Treasury approval.

2040.30a—Waivers Available to Federal Entities that Do Not Require Treasury Approval

Federal entities may make federal payments by a method other than EFT without obtaining Treasury’s approval in the following circumstances:

• Where the political, financial, or communications infrastructure in a foreign country does not support payment by EFT,
• Where the payment is in a foreign currency and Treasury does not support electronic payment in that currency [this waiver becomes effective March 22, 2024],
• Where the payment is to a recipient within an area designated by the President or an authorized federal entity administrator as a disaster area (this waiver is limited to payments made within 120 days after the disaster is declared),
• Where either a military operation is designated by the Secretary of Defense in which uniformed services undertake military actions against an enemy, or a call or order to, or retention on, active duty of members of the uniformed services is made during a war or national emergency declared by the President or Congress,
• Where a threat may be posed to national security, the life or physical safety of any individual may be endangered, or a law enforcement action may be compromised, [this waiver is effective until March 22, 2024, after which it will be replaced by the immediately following waiver], or
• Where the entity does not expect to make multiple payments to the same individual or small business within a one-year period on a regular, recurring basis [this waiver becomes effective March 22, 2024].

2040.30b—Waivers Available to Federal Entities that Require Treasury Approval [this subsection becomes effective March 22, 2024]

Federal entities may submit requests to Treasury in accordance with the procedures set forth in subsection 2040.30c to be approved to utilize a waiver from the EFT requirement in the following circumstances:

• If Treasury provides a federal entity with an option to begin delivering a type of Federal payment to a Treasury-sponsored account and the federal entity still seeks to make payments of that type other than by EFT, 
• To extend any waiver for payment to a recipient within an area designated by the President or an authorized federal entity administrator as a disaster area past the 120-day period following when the disaster is declared,
• Where a federal entity’s need for goods and services is of such an unusual and compelling urgency that the government would be seriously injured unless payment is made by a method other than EFT, or
• Where there is only one source of goods or services, and the government would be seriously injured unless payment is made by a method other than EFT. 

2040.30c—Federal Entity Waiver Request Process [this subsection becomes effective March 22, 2024]

Agencies that wish to submit a request to Treasury to be approved to utilize the waivers from the EFT requirement set forth in subsection 2040.30b must complete the online waiver request form at https://fiscal.treasury.gov/eft/request-form.html.  The waiver request form will require the federal entity to provide the following information: 

• Federal entity name,
• Agency Location Code,
• Federal entity point of contact (POC) name, email address, and phone number,
• The applicable waiver under subsection 2040.30b that the federal entity is requesting, a written justification indicating why the waiver should be granted, and the requested waiver start date and end date, if applicable, and
• The estimated annual number of payments that the federal entity expects to make utilizing the waiver.

Treasury will provide the federal entity a determination on the waiver request within 60 calendar days of the request and may reach out to the federal entity POC if clarification is needed. Federal agencies are entitled to make relevant payments by check during the pendency of the waiver request process.

For any waiver that is still in effect one year after Treasury’s approval, the federal entity must submit a new waiver request. Renewal requests must be emailed to Treasury at eftmail@fiscal.treasury.gov, at least 30 days before the expiration of the one-year period. 

As noted in subsection 2040.50, pursuant to 31 CFR § 208.4(c), Treasury may nullify a federal entity waiver if its application leads to the federal entity initiating an unusually large number or proportion of check payments.

Any waiver-related questions may be directed to Treasury at the following email address: eftmail@fiscal.treasury.gov. 

2040.40—Interim Check Payments

Federal entities may permit check payments on an interim basis in the following circumstances:

• A federal payment recipient seeks to utilize any of the EFT waivers set forth in subsection 2040.20b and Treasury has not yet made a decision on the recipient’s waiver request,
• A federal entity seeks to utilize any of the EFT waivers set forth in subsection 2040.30b and Treasury has not yet made a decision on the federal entity’s waiver request, or 
• A payee’s designated bank account or Treasury-sponsored account is closed.

The U.S. Treasury Electronic Payment Solution Center may contact individual federal payment recipients who are receiving interim check payments to discuss the requirement to receive their payments electronically by enrolling in direct deposit or the Direct Express card or to obtain a waiver from the EFT requirement. 

2040.50—Federal Entity Compliance

Treasury monitors the percentage of federal entity payments made electronically on a monthly basis to ensure that federal entities are implementing the provisions of 31 CFR Part 208 and this chapter. Treasury meets with federal entities exhibiting low EFT rates to identify the impediments to EFT payments, and to determine strategies to address these impediments. 

Additionally, pursuant to 31 CFR § 208.4(c), Treasury reserves the right to nullify a federal entity waiver if its application leads to the federal entity initiating an unusually large number or proportion of check payments [this provision becomes effective March 22, 2024]. In such circumstances, the federal entity may be required to work with Treasury to identify and implement ways to make the payments by EFT.

2040.60—American Rescue Plan Act Payments

As authorized by the American Rescue Plan Act (ARPA) of 2021, on July 15, 2021, the U.S. Department of the Treasury’s Bureau of the Fiscal Service (Fiscal Service) started disbursing Advance Child Tax Credit (ACTC) payments on behalf of the Internal Revenue Service (IRS). ARPA directed the IRS to issue ACTC payments for the period from July 2021 through December 2021. The payments were issued with the payment date of the 15th of each month, unless the 15th fell on a weekend or holiday. If the payment date fell on a weekend or holiday, the payment date was adjusted to the preceding business day. This program remains active until further notice, due to the possibility of ACH returns.

For more information about the processing of ACTC payments through ACH, reference the Fiscal Service’s Green Book.

The officer or employee who certifies a voucher is responsible for ensuring the payment is proper. Except as provided in this chapter, disbursing officers are not responsible for the propriety of payments authorized by COs. However, a disbursing officer who has knowledge that a payment is improper should not make the payment.

The procedures prescribed in Section 2045 relate to issuing payments (check and electronic) to individuals, commercial entities, nonprofit entities, and non-federal government departments and federal entities; and deductions made from disbursement vouchers.

2050.10—General Requirements

The following requirements apply to all disbursements, whether in cash, checks, or electronic payments, that are issued on the U.S. Treasury or designated depositary banks for authorized and lawful payments and/or refunds of amounts collected:

Note: Federal entities should be particularly alert to the possibility of duplicating payments whenever they:

2050.20—Cash Advances – Establishing Procedures for Cash Advances

It is the responsibility of grantor federal entities to monitor the cash management practices of their recipient organizations to ensure that federal cash is not maintained by them in excess of immediate disbursing needs. Federal entities must establish systems and procedures to assure that balances are maintained and commensurate with immediate disbursing needs, excess balances are promptly returned to the Treasury; and advance funding arrangements with recipient organizations unwilling or unable to comply are terminated.

Procedures established by federal entities should:

2050.30—Preventing Payments Not Covered by an Appropriation or Continuing Resolution

Excluding payrolls in certain circumstances (see subsection 2045.20), the responsibility for preventing payments not covered by an appropriation or a continuing resolution rests with the federal entity certifying the payment. It is the responsibility of the federal entity’s CO to ensure that payments certified to disbursing officers are not improper. It is not the disbursing officer’s responsibility to investigate the date of the underlying obligation of certified scheduled payments.

2050.40—Payrolls – General

Responsibilities for the head of each federal entity include the following:

The Office of Personnel Management (OPM), the Office of Management and Budget (OMB), and the Department of Labor (DOL) issue regulations related to payroll voucher preparation.

2050.50—Payroll Creation

A disbursing officer who knows an obligation was incurred when funds were not available may not disburse a certified payment voucher. This circumstance can arise particularly in the case of payrolls when it is obvious that the time of obligation occurred after the appropriation or continuing resolution lapsed. Therefore, when annual appropriations have not been enacted and there is no continuing resolution under which obligations can be legally liquidated, disbursing officers should not knowingly release payrolls that extend beyond the period provided for in the appropriation or continuing resolution. The inclusive dates of a pay period serve as prima facie notice to disbursing officers of the date on which the obligation was incurred. Disbursing officers should not knowingly release payrolls for any pay period extending beyond or commencing after the expiration date of an appropriation or a continuing resolution, unless the chargeable appropriation is a no-year or unexpired multiple-year appropriation.

2050.50a—Payrolls Processed for the Entire Pay Period

Sometimes the expiration date of an appropriation or a continuing resolution does not coincide with the end of a pay period. Disbursing officers may not release payrolls that include salaries and wages earned beyond the expiration date of the appropriation or continuing resolution.

2050.50b—Payrolls Processed for a Portion of a Pay Period through the Expiration Date

Disbursing officers should make the usual advance release of payroll payments only to cover salaries and wages earned through the expiration date of an appropriation or a continuing resolution.

2050.50c—Payrolls for Pay Periods After the Expiration Date

For any partially covered pay period and all subsequent pay periods, federal entities should process payrolls for salaries and wages earned beyond the expiration date of an appropriation or a continuing resolution as usual. Disbursing officers may prepare payments for such payrolls and may hold them for immediate release upon approval of an appropriation or continuing resolution.

2050.60—Claims for Deceased Employees

In 1996, the procedures and forms to be used to process claims for deceased federal employees were transferred from GAO to OPM. In the “Determination with Respect to Transfer of Functions Pursuant to Public Law 104-53,” dated June 28, 1996, the Acting Director of OMB delegated this and other transferred functions to other federal entities. See 31 U.S.C. 3702 and 5 U.S.C. 5583 for claims involving federal civilian employees’ compensation and leave, and settlement of deceased employees’ accounts.

2050.70—Payee Information

Federal entities should uniformly follow the rules below in connection with the designation of the payee or payees of government payments.

2050.70a—Payments to Individuals

In all cases, use the first name, middle initials, if any, and surname of the payee. Omit punctuation marks except for the use of commas to set off the names of more than two payees.

2050.70b—Payments to Joint Accounts

Federal entities should carefully distinguish between using the term “joint” and “several” accounts in situations such as trust estates, decedents’ estates, trustees, executors, and administrators of the accounts.

Where two or more individuals are jointly entitled to receive the payment, the voucher should include all names as payees. Use the word “and” before the name of the last payee. Where the account is not a joint account but is held by two or more individuals, use “or” before the name of the last payee.

Note: Do not under any circumstances designate the word “estate” as the payee, for example, “Estate of A., deceased.” When the particular estate has only one trustee or one personal representative, designate the individual by name as the payee in that representative capacity, for example:

If the estate has several trustees or personal representatives, designate all trustees, administrators, or executors by name in their representative capacities as joint payees, for example, “A., B., and the X Trust Company, trustees u/w of D., deceased,” etc.

2050.80—Corporate Trustee or Executor in Receivership or in the Hands of the Local Banking Department

The federal entity should make the payment payable to the liquidating officer (Receiver, Secretary of Banking, Commissioner of Banking, etc.) as payee. The names of the corporate trustee or executor and the estate should appear in such designation, for example, “Secretary of Banking, in possession of the business and property of the X Trust Company, trustee u/w of D.” (This form varies according to the designation given the proper liquidating officer under the local law.)

The federal entity CO must be furnished a certified copy of the grant-of-letters testamentary, the will, or trust indenture stating that the intended payee is duly appointed, qualified, and acting trustee or executor. In instances where the administration of the estate is closed and the trustee or personal representative has been discharged, designate the legatees, distributees, or beneficiaries entitled to receive the payment in question as joint payees. The CO must be furnished first with a certified copy of the decree of distribution or other proper evidence from the court having jurisdiction of the particular estate showing the persons entitled to receive payment.

2050.90—Guardians of Minors

Because of differences in local law, there is no all-inclusive rule to determine the guardian to whom payment should be made. Some states require the guardian of the estate of a minor to be someone other than the guardian of his/her person, while others combine both functions in the same individual. The local law must be examined in each case. The CO must be furnished with a certified copy of the appointment that the particular individual is authorized to receive the payment on behalf of the individual’s ward.

The designation of the payee may be in many forms, depending on the circumstances of the particular case. The following are three examples:

These examples are not all-inclusive. In every case, designate the guardian according to title under the local law. Ordinarily, parents or persons standing in place of parents (loco parentis) are not entitled to receive payments on behalf of their minor children. This question also is one of local law. Where the appointment of a guardian is not required and payment may properly be made to the parent, designate the payee in the following form: “F., father of M., a minor.”

2050.100—Incompetents

As in the case of guardians of minors, the designation in this class of cases is governed by the local law according to the title given the representative, for example:

As proof of authority to receive payment, the CO should require a certified copy of the appointment.

2050.110—Corporations

When there has been a change in the corporate name as a result of a merger, consolidation, or other proceeding, and a certificate verifying such a change has been obtained from the proper state official, the federal entity should draw the voucher for payment in the new name.

The federal entity should draw the voucher to the order of the successor company where it is established that:

Where a company has been dissolved and its affairs are being liquidated by liquidating trustees, the designation depends on the local law. In most jurisdictions, the corporation continues for the purposes of liquidation, and it may be proper to designate the corporation rather than the liquidating trustees as the payee. No hard and fast rule can be established to cover all such cases. Federal entities should refer any uncertainties or doubts concerning the payee to be designated to the proper legal officer of the department or establishment for consideration.

2050.120—Unincorporated Associations

Federal entities should make the vouchers payable to the order of the associations, using their official names. They should draw partnership vouchers in the firm’s name. Federal entities should refer any doubts as to form to the proper legal officer of the department or establishment for special consideration.

Federal entities should consider using electronic systems and processes to streamline and improve efficiencies in government invoicing. IPP is a secure web-based electronic invoicing and payment information system provided by Fiscal Service. IPP allows federal entities to transform their existing paper-based order-to-pay processes into a streamlined electronic flow.

IPP provides a centralized location to view all transactions in the purchase-to-pay process. It transforms paper-based processes into an electronic process for both federal entities and their suppliers. IPP’s modular design allows federal entities to implement functionality in phases, according to their business needs. Federal entities use IPP to send electronic purchase orders to vendors, to receive electronic invoices from vendors, and for invoice routing and approval workflow. IPP uploads payment remittance information from Treasury and non-Treasury disbursed federal entities, allowing federal entities and their suppliers to view and download payment information.

For additional information on IPP, see the IPP website.

Reference contracts or agreements on the voucher by placing the contract number and the date in the spaces provided. If the agreement is unnumbered and attached to the voucher, indicate this. However, where payments are made on vouchers in favor of general supply contractors whose contracts are itemized in the Federal Supply Schedule and the item numbers covering the articles purchased are given on the face of the voucher, the contract number and date need not be shown.

Note: The FAR and the Defense Federal Acquisition Regulations (DFAR) require all contractors to be registered in the Central Contractor Registration (CCR) database before award. See the System for Award Management (SAM) website.

The voucher prepared by the federal entity to support payments of this nature should show:

For additional information on activity codes, see the North American Industry Classification System and find the Product and Service Codes Manual at PSC_Manual.

Note: Federal entities may make payments for services of a continuing nature, such as rents, janitorial services, etc., that are performed under federal entity-vendor agreements providing for payments of definite amounts at fixed periodic intervals without submission of invoices or bills by the vendor. They should establish administrative controls for ensuring that recurrent payments are:

Federal entities should increase the number of payment items per voucher-schedule, particularly in those cases where schedules cover only one, two, or three items. They should consolidate multiple invoices or bills payable to one vendor at one office or place of business, for supplies or services rendered to government federal entities, into one payment, when possible, to reduce the number of vouchers prepared and payments issued when the due dates for the multiple bills or invoices are the same. In each case, payment in this manner must be agreeable to the vendor, and only one government establishment may be the debtor.

Note: Federal entities are encouraged to use IPP to send electronic purchase orders to suppliers, to receive electronic invoices from suppliers, and to coordinate invoice routing and approval workflow.

2060.10—Unit Prices of Gasoline or Other Petroleum Products

Where the purchases of gasoline or other petroleum products are made under contracts that provide that the unit prices must be based on tank, wagon, barge, or service station prices on the date and at the point of delivery, show such unit prices at the date and point of delivery on the invoices or vouchers as audit information.

When a cash discount has been offered for prompt payment, federal entities should make every effort to process the invoice within the discount period, if the discount is cost effective to the government. Process the invoice according to the specific terms on which the discount has been offered by the contractor or supplier. Federal entities should take discounts only on those invoices that can be paid within the specified discount period and that are cost effective to the government. For effective cash management, federal entities should submit the voucher covering the payment as near to the last day of the prompt payment period as possible. Prompt Payment Act conditions are met if a check payment is dated and mailed/deposited within the period, not received by the recipient during the period. They are met for ACH and Fedwire payments if the settlement date for the payment is within the prompt pay period. For more information go to the Prompt Payment website.

The administrative processing federal entity assigns each voucher an identification number. This identification number can be system generated or manually entered and is used for all accounting and auditing purposes. The federal entity must place the number in the space identified as “Voucher No.” on standard form vouchers. This rule applies regardless of which operating or administrative unit or division of the federal entity has oversight of the payment. Federal entities are not required to place separate disbursing office voucher numbers, as such, on vouchers except in the case of vouchers covering charges for transportation services. If, for administrative purposes, it is necessary to assign control or accounting numbers to payment documents, these numbers are considered supplementary and subordinate to the official identification number as prescribed above. If the amounts of two or more basic vouchers or invoices due one payee may be properly combined in one payment, clearly indicate the individual basic voucher numbers in the voucher number column on the voucher-schedule but add and list the items as a single payment.

Effective control over disbursements requires the preaudit and approval of vouchers before they are certified for payment. The principal objectives of the preaudit of a voucher are to determine whether:

2075.10—Maximum Payment Amounts

The maximum amount for which a federal entity can issue an individual payment depends on the type of payment instrument. Maximum individual payment amounts for each payment instrument (checks, ACH electronic payments, and Fedwire Same Day Payments) are as follows:

2080.10a—Debt Collection Improvement Act of 1996 (DCIA)

The DCIA requires the federal government to withhold or reduce certain federal payments to satisfy the delinquent nontax debts owed to the United States by the payee. This process is known as “administrative offset.” In addition, the DCIA requires federal entities to identify federal employees who owe delinquent debt to the United States, using a process known as “centralized salary offset.” The Treasury Offset Program (TOP) compares delinquent debt information with federal salary payment information for offsetting the salary payments of those employees who owe debt to the United States. For more information concerning DCIA, see TFM Volume I, Part 3, Chapter 6100 and TFM Volume I, Part 3 generally.

2080.10b—Taxpayer Relief Act of 1997

This Act authorizes the Internal Revenue Service to continuously levy up to 15 percent of certain federal payments, including federal salary payments, to collect delinquent taxes. TOP also is used to match delinquent tax debts with federal salary and other payments for levying the salary payments of those employees who owe delinquent taxes to the United States.

Payroll processing federal entities send extract files to Fiscal Service containing payment information for all employees. Fiscal Service compares the extract file to the National Interactive Delinquent Debt Data Base, identifies matches, and transmits an electronic file containing the identified matches and the debt balances back to the payroll processing federal entities. The payroll processing federal entity offsets or levies up to 15 percent of disposable pay and sends the funds to Fiscal Service. Fiscal Service then sends the funds to the creditor federal entities.

Treasury’s prepaid card final rule at 31 CFR Part 210 permits federal government payments to prepaid accounts including debit card, stored value card, prepaid card or similar payment card program established by the Service if certain conditions are met that provide for consumer protections to the cardholders. To be eligible to receive federal payments, a prepaid account must meet the following requirements:

No person or entity may issue a prepaid card that accepts federal payments in violation of these requirements. Any financial institution that holds an account for a prepaid card issuer, and which receives federal payments in that account, is responsible for ensuring these requirements are met. Federal entities should be aware of these requirements and must promptly notify Fiscal Service if they become aware of any payments being made to a prepaid card that does not comply with these requirements. If Fiscal Service becomes aware that federal payments are being deposited to prepaid cards that do not meet these requirements, it reviews the situation and takes appropriate action. Fiscal Service may, for example, refer any violations of the EFT rule requirements to the appropriate regulatory bodies.

Direct inquiries concerning this chapter to:

Department of the Treasury 
Bureau of the Fiscal Service 
Disbursing and Debt Management

202-874-9880