The Financial Management Service (FMS) disburses more than $1.7 trillion in federal payments annually, including Social Security, veterans' benefits and income tax refunds, to more than 100 million people. FMS also collects more than $2 trillion each year in federal revenues, oversees a daily cash flow of more than $50 billion, provides centralized debt collection services to most federal agencies and provides governmentwide accounting and reporting.
FMS has about 2,100 employees, one-third of who are located in four Regional Financial Centers (RFCs)—Austin, TX; Kansas City, MO; Philadelphia, PA; and San Francisco, CA; and one Debt Collection Center in Alabama. The RFCs issue payments by electronic funds transfer (EFT) and paper check, and the Debt Collection Center collects debts older than 180 days on behalf of federal agencies. All FMS employees, including the Commissioner, are career civil servants.
In fiscal year 2003, FMS issued more than 950 million non-Defense payments (including advance child tax credit payments) with a dollar value of more than $1.72 trillion, to more than 100 million people. For fiscal year 2003, 74 percent of these transactions were issued by Electronic Funds Transfer (EFT). The remainder of FMS' payments are disbursed by check.
On May 28, 2003, President George W. Bush signed into law the Jobs and Growth Tax Relief Reconciliation Act of 2003 providing a tax advance payment to about 24 million United States taxpayers totaling $14.2 billion. As the federal agency that disburses 85 percent of federal government payments, FMS began making these payments on July 25, 2003. Two years ago, FMS and the Department of Defense Finance and Accounting Service issued more than 87 million advanced refund credit payments totaling more than $36 billion.
In 1996, Congress passed a law requiring most federal payments to be paid by EFT. For those individuals without a bank account, Treasury designed the Electronic Transfer Account (ETA), a low-cost account to be offered by federally insured financial institutions with the same consumer protections available to other account holders. Currently, more than 500 financial institutions with nearly 18,000 branch locations nationwide are certified to offer the ETA. More than 50,000 individual ETA accounts have been opened by these financial institutions.
Through its Electronic Money (E-Money) Program, FMS tests new payment and collection technologies using the Internet and card technology, as well as related technologies such as digital signatures and biometrics. FMS has initiated E-Money pilot programs to help federal agencies modernize their payment and collection activities.
In October 2000, FMS began collections through a federal Internet portal, called Pay.gov. Citizens may use this portal to transact business with participating federal agencies—to pay fines, fees, and submit forms and applications. Since the launch of Pay.gov, 13 federal agencies are using the portal to process forms and applications and to collect payments for fees and excise taxes. For example, the Bureau of Alcohol, Tobacco and Firearms uses Pay.gov to accept and process excise tax forms; and the Department of the Interior uses Pay.gov to collect abandoned land mine fees. Additionally, FMS has established 20 cashflows with additional applications scheduled to be added. More than $7 billion has been collected through Pay.gov.
FMS administers the world's largest collections system, gathering more than $2.2 trillion annually through a network of more than 10,000 financial institutions. FMS collects nearly $1.8 trillion of that total - more than 80 percent - through electronic transactions. It also manages the collection of federal revenues such as individual and corporate income tax deposits, customs duties, loan repayments, fines and proceeds from leases.
The Electronic Federal Tax Payment System (EFTPS) was originally introduced in 1996, but in September 2001, FMS and IRS launched a new Internet application, EFTPS-On-Line at www.eftps.gov, which allows individuals and businesses to pay federal taxes using Internet technology. Earlier electronic methods, still available today, allowed taxpayers to make federal tax deposits using PC software or the telephone. EFTPS-On-Line continues to provide the many conveniences of the earlier options, such as 24-per-day service, as well as some added features. These features include: instant, printable acknowledgement for documenting each transaction; the ability to schedule advance payments; and access to payment history.
Currently, more than 4.4 million taxpayers are enrolled in EFTPS, with more than 156,000 enrolled in the On-line version. Each year, nearly $1.5 trillion is collected through EFTPS, with EFTPS-On-Line accounting for more than $90 billion of that total. EFTPS-On-Line offers convenience, security and safety to those taxpayers owing quarterly estimated tax payments, and individual taxpayers as well. Funds are electronically withdrawn from the taxpayer's account as instructed and approved On-line. The taxpayer receives a payment confirmation documenting each transaction, which helps in record keeping.
FMS gathers and publishes governmentwide financial information that is used in establishing fiscal and debt management policies and also used by the public and private sectors to monitor the Government's financial status. These publications include:
The Financial Report is the federal government's set of audited financial statements, a requirement of the Government Management and Reform Act of 1994. Treasury Secretary John Snow expressed his intention to continue to produce financial reports that better fulfill our responsibilities to the Congress and the public.
To achieve this goal, FMS, in consultation with the Office of Management and Budget and the General Accounting Office, is developing a new process for preparing the Financial Report to enhance the integrity and meet the new accelerated timeframe of issuing the fiscal year 2004 Financial Report by December 15. This accelerated timing will finally allow adequate time to have the financial statements considered in the budget process. Now, decision-makers will be able to use the financial information in this report to improve the management and programs of the federal government.
FMS serves as the government's central debt collection agency, managing the government's delinquent debt portfolio. Since enactment of the Debt Collection Improvement Act of 1996 (DCIA), FMS has collected about $18.2 billion in delinquent debt. Since FMS was given responsibility for centralized collection of debt, we have sharply increased collections through program changes, adding numerous payment streams and categories of debt. We have also worked with agencies to ensure timely referral of debts more than 180 days past due. In fiscal year 2003 FMS collected more than $3 billion in delinquent debt owed to the federal government.
Critical to the success of collection efforts is the role of the federal program agencies - that of referring eligible delinquent debts to Treasury for collection. At the close of fiscal year 2003, 95 percent ($31.6 billion) of the eligible federal non-tax debts had been referred to TOP for collection. For the same time period, 82 percent ($7.9 billion) of the eligible debts had been referred to the Cross-Servicing Program for collection, up from 43 percent at the end of fiscal year 1999. Through the Treasury Offset Program (TOP), total collections were over $2.99 billion for fiscal year 2003. Additionally, more than $134 million was collected through the Cross-Servicing Program - almost double the amount collected in fiscal year 2002.
