Frequently Asked Questions

debtors

1. Do we need Social Security Numbers to submit debtors to the Clearinghouse?

Yes, Social Security Numbers (SSNs) are required. A debt setoff cannot occur at the Department of Revenue without an SSN to match against tax refunds. The Department of Revenue matches the SSN against the first four characters of the last name.

2. Can you submit debts for business owners?

We recommend that you only submit debts for individuals. However, if you do attempt to collect against a business you should ensure the business owner is the sole owner, Still, you must provide the Social Security Number, Last Name and at least the first letter of the First Name for the business owner.  A Federal Tax ID number will not suffice, an actual Social Security number is required.

3. What kind of information is required for a debtor?

There are several required items for each debtor:

  • Social Security Number
  • First Name (at least first character)
  • Last Name
  • Compliance Date (date to begin attempting to collect)
  • Expiration Date (date to terminate attempting to collect)
  • Debt Amount (must be $50.00 or more)

    • 3. When debtors pay you directly do you send the amount paid or the new balance?

    You always send the new debt balance to the Clearinghouse. The Clearinghouse does not do any calculations, we simply replace the debt amount we have with the debt amount you send to the Clearinghouse. This is especially important if the debtor pays in full or it reduces the debt to less than $50. Once a debt is below $50 it is no longer included in the weekly file to the Department of Revenue.

    5.  How are debtors notified that their tax refund has been setoff?

    The debtor receives an official letter from the North Carolina Department of Revenue listing the amount that was setoff for indebtedness to a local government and the toll free number to call for information.

    6.  If a debtor pays their debt(s) in full but still had their tax refund setoff, how much should be refunded?

    If the debtor paid a debt but was still setoff at the Department of Revenue, they are due a refund of the amount surplus amount. Quite often there is a reason that it occurred. There is a timing issue in many instances. If someone pays your local government directly, it may take up to eight days before the debt is removed at the Department of Revenue. In other instances, the debtor received the letter from the Department of Revenue that they were setoff. The debtor may attempt to pay the debt hoping that they will also get the $15 Clearinghouse fee and the Department of Revenue or Education Lottery fee. We discourage refunding the Clearinghouse, Department of Revenue or Education Lottery fees. Remember, the debtor was notified that they had 30 days in order to pay the debt in full to keep from being submitted to the Department of Revenue. However, if a debtor paid your local government and you failed to send the updated balances to the Clearinghouse for a week or longer, you should consider returning the surplus and fees.