FAQ: What is Set-Off Debt Collection?
The Virginia Department of Taxation originally established the Set-Off Debt Collection Program in 1983. At that time, the program collected outstanding tax debts to individuals and businesses. By 1990, the state program expanded to add the Comptroller’s Vendor Debt Set Off (CDS) Program. Under the CDS, vendor payments are targeted to offset debts owed by the particular vendor to other state agencies, the federal government, child support enforcement and some localities.
As required under the CDS, state agencies, like VCU, process full payments to our vendors, which include individuals, small businesses, independent contractors, and large corporations. Those payments are recorded and reported to the Department of Taxation to check for outstanding debt matches. If a payment is intercepted, the Department of Accounts as well as our office of Procurement Services notifies the vendor and determines whether the payment or portion of the payment can be held. .
Vendors are often confused as to why their VCU payments are reduced. Some act as though VCU has not fully paid their respective bill; however, that is not the reality. VCU is required under law to report the payments and is not the actual agency taking funds or reducing payments.
In CDS cases, VCU has made a full payment and should not be subject to late fees, termination of services, or collection threats. Whenever a vendor claims that VCU has an outstanding bill based on funds seized by the Department of Taxation, VCU departments should never attempt to replace the seized funds, collections fees, or even late fees and interest. If departments experience vendor challenges regarding payments or partial payments under the CDS Program, please feel free to contact the Office of Procurement Services for guidance and support.
This post was written by Ramona Taylor, Assistant Director of Contracts and Compliance
Categories Procurement Services