Set-off or offset programs divert a taxpayer’s refunds and government payments to pay federal or state debts such as unpaid taxes, traffic fines, or child support. The Division of Taxation oversees and participates in several set-off programs that collect funds for the State of New Jersey as well as other government entities.
These programs include:
Set-Off of Individual Liability (SOIL)
SOIL withholds New Jersey Income Tax refunds and Homestead Benefit payments from taxpayers who owe debts to other agencies such as the:
Depending on the regulations of each participating agency, the New Jersey Division of Revenue and Enterprise Services sends a notice after a 35- to 45-day waiting period. The notice shows which government agency is seeking the funds and how to contact that agency.
Set-Off of Federal Refunds for Individual Liability (FOIL)
This program withholds federal income tax refunds and diverts them to reduce unpaid New Jersey Income Tax debts.
If you do not respond to a FOIL bill within 90 days, we send a Notice of Intended Federal Set-Off.
This notice informs you that you have 60 days to clear up your debt.
If you do not resolve your tax issues within the allotted time frame, the Division contacts the federal Bureau of the Fiscal Service (BFS). BFS sends your federal tax refund(s) to the New Jersey Division of Taxation.
The federal government charges a $22 processing fee per transaction that is deducted from the refund.
State Vendor (OMB) Set-Off
The New Jersey Office of Management and Budget withholds payments to vendors that owe taxes to the State. The payments are sent to the Division of Taxation to reduce the vendor’s State tax debt.
If you or your business do work with New Jersey, your payments can be diverted to resolve your tax debt. We will notify you and your caseworker after we receive the funds. The Division processes full or partial refunds directly to the vendor if diverted payments exceed the vendor’s tax debt.
Federal Treasury Offset Program (TOP)
The Treasury Offset Program (TOP) is based on an agreement between New Jersey and the federal Bureau of the Fiscal Service (BFS). BFS and New Jersey match debts (both tax and non-tax) against payments due to vendors.
If you do not respond to a bill sent under this program within 90 days, we send you a Notice of Intended Federal Set-Off.
This notice informs you that you have 60 days to clear up your debt or your payment(s) will be diverted to reduce the debt.
The federal government imposes a $13.12 processing fee per transaction. The federal government deducts the fee from the payment amount.
State Reciprocal Set-Off
Maryland, New York, and Connecticut participate in an agreement to send individual income tax refunds to New Jersey to resolve tax debts. In turn, we send New Jersey Income Tax refunds to offset taxes owed in other states.