Got a letter saying your tax refund is being seized? Social Security getting garnished? Congratulations, you've been introduced to the Treasury Offset Program, or TOP. It's the federal government's favorite collection tool, and the SBA has weaponized it against millions of Americans who dared to take out COVID relief loans.
This isn't just debt collection. This is the federal government using its unique powers to take money directly from your pocket—no lawsuit required, no court appearance needed, just a letter telling you your money is gone.
- Federal tax refunds (100%)
- State tax refunds (varies by state)
- Social Security benefits (up to 15%)
- Federal salary/retirement payments
- Vendor/contractor payments
- Any federal payment you're owed
What Is the Treasury Offset Program?
TOP is a centralized program run by the Bureau of the Fiscal Service. Federal agencies refer delinquent debts to TOP, which then intercepts federal payments headed your way and redirects them to pay off your debt.
Here's what makes it terrifying: they don't have to sue you. They don't need a court judgment. They just send a letter, wait 60 days, and start taking your money. Try doing that as a private creditor—you'd be arrested for extortion.
The SBA started referring EIDL loans to TOP en masse in 2023. After years of saying they wouldn't aggressively pursue smaller loans, they reversed course and opened the floodgates. Now millions of business owners are discovering their tax refunds vanished without warning.
How the Process Works
Step 1: Delinquency. Your EIDL loan becomes delinquent (usually 120+ days past due without payment arrangement).
Step 2: Referral Letter. The SBA sends you a "Notice of Intent to Refer" to TOP. This is your 60-day warning.
Step 3: TOP Registration. After 60 days, your debt is entered into the TOP database.
Step 4: Interception. The next time you're owed a federal payment, TOP grabs it. You might get a letter after the fact explaining what happened.
Step 5: Repeat. This continues until the debt is paid or you die. There is no statute of limitations on federal debt.
Critical Warning
Federal debt never goes away. Unlike private debt with 7-year credit reporting limits and varying statutes of limitations, the SBA can pursue you indefinitely. They can garnish your Social Security when you're 80 years old for a loan you took in 2020.
Your Rights (Such As They Are)
You do have some rights in this process. The problem is the SBA doesn't always respect them, and exercising them requires navigating the same broken bureaucracy that created this mess.
- 60-Day Notice: You must receive written notice before referral to TOP
- Right to Review: You can request review of the debt's validity
- Right to Records: You can request your loan records
- Hardship Exception: You may qualify for reduced garnishment if Social Security is your only income
- Payment Plan: You can theoretically set up a payment plan to stop offset
The reality? Good luck getting anyone at the SBA to answer the phone to exercise these rights. People have spent months trying to set up payment plans only to have their refunds taken anyway because the paperwork wasn't processed in time.
What TOP Can and Cannot Take
They CAN take:
- 100% of your federal tax refund
- 100% of your state tax refund (in participating states)
- Up to 15% of Social Security benefits
- Federal employee wages (up to 15%)
- Federal retirement/pension payments
- Federal contractor payments
They CANNOT take:
- SSI (Supplemental Security Income)
- Veterans disability benefits
- Federal employee injury compensation
- Railroad retirement Tier 2 benefits
- Black Lung benefits
Notice that regular Social Security is NOT protected. If you're a retiree who took an EIDL loan and now can't pay, they will take 15% of your Social Security check every month for the rest of your life or until the debt is paid.
The Social Security Nightmare
This is where it gets really ugly. Thousands of older Americans took EIDL loans to try to save businesses they'd spent decades building. When those businesses couldn't survive anyway, they were left with debt they couldn't pay—and Social Security as their only income.
The SBA's response? Take 15% of their Social Security. Every month. Automatically. Indefinitely.
We've heard from retirees in their 70s who are losing $200-300 per month from Social Security checks that are already below the poverty line. They can't appeal because the SBA won't answer their calls. They can't set up payment plans because the SBA won't process their paperwork. They just lose money every month while watching their grocery budget shrink.
If Social Security is your only income and garnishment would cause "financial hardship," you may qualify for reduced offset. You need to contact the SBA directly to request this—if you can ever reach anyone. The form is SBA Form 1150.
How to Stop or Reduce Offset
Option 1: Pay the Debt
Obviously. If you can pay it off or set up a payment plan before TOP referral, you can avoid offset. Contact the SBA at 1-833-572-0502 (if they ever answer).
Option 2: Request Review
If you believe the debt amount is wrong or you don't actually owe it, you can request administrative review. You have 60 days from the notice date.
Option 3: Hardship Request
If garnishment would cause financial hardship, you can request reduced offset. This is especially relevant for Social Security recipients.
Option 4: Offer in Compromise
In some cases, you may be able to settle for less than the full amount owed. The SBA has a process for this, though success rates are low.
Option 5: Bankruptcy
EIDL debt is generally dischargeable in bankruptcy, unlike student loans. Consult a bankruptcy attorney if your debt is overwhelming.
The Timeline Nobody Tells You
Here's what the SBA doesn't advertise: once your debt is in TOP, it can take 6-12 months to get removed even if you pay in full.
We've heard from people who paid off their entire EIDL balance, got confirmation from the SBA, and still had their tax refund taken months later. The SBA's systems don't talk to TOP's systems in real time. So you might pay $50,000 to clear your debt and then watch another $5,000 disappear from your tax refund because nobody updated the database.
Getting that money back? Good luck. You're looking at months of phone calls, paperwork, and frustration—assuming the SBA admits the mistake at all.
Real Stories from TOP Victims
Maria, 68, Florida: "I took $25,000 to try to save my catering business. COVID killed it anyway. Now they're taking $180 from my Social Security every month. That's my prescription money."
James, 54, Ohio: "I was expecting a $7,000 tax refund to catch up on bills. Gone. No warning—the letter came after my refund was already taken. My kids were counting on that money."
Sandra, 41, Texas: "I set up a payment plan and made every payment for 8 months. They still took my refund because someone didn't update the system. It's been 6 months trying to get it back."
Dealing with TOP Right Now?
Document everything. Save every letter. Record every phone call (where legal). Your records are your only protection.
Share Your ExperienceThe Bigger Picture
TOP isn't new—it's been around since 1996. What IS new is the SBA using it as a mass collection weapon against COVID relief borrowers.
The agency that gave hundreds of billions to fraudsters is now using the most aggressive collection tool available against legitimate business owners who couldn't repay. The criminals bought Lamborghinis. The honest business owners lose their tax refunds.
This is what "accountability" looks like at the SBA: punish the victims, ignore the perpetrators, and collect every dime you can from people who followed the rules.