Understanding the Set-Off Debt Process for Tax Bill Payments By: Orange County Treasurer’s Office As tax season approaches, some residents have questions about the Set-Off Debt Collections program. In the context of Orange County tax bill payments, set-off debt is the withholding of funds from any state refund or lottery winnings in order to apply it against open tax balances. By authority of the Code of Virginia, Section 58.1- 520 through 58.1-534, Orange County is authorized to apply individual income tax refunds, or portions thereof, to any outstanding debt owed to the County. In addition, Section 58.1-4000 through 58.1-4028 permit certain prizes from the State Lottery program to be similarly subjected to the delinquent debts of the Set-Off Debt Collections program. The Orange County Treasurer uploads Delinquent files to the Virginia Department of Taxation during the first week of January, and a daily file is uploaded to the state with updated information about any bills adjusted by the Commissioner of the Revenue’s office or paid by taxpayer. Once refund filings start, the state will cross reference with the County to find any matches (taxpayers with incoming state tax refunds AND outstanding Orange County tax balances). Taxpayers with balances are notified by the Treasurer’s office that they have 30 days to remit payment without paying fees to the state. Taxpayers have the option to waive those 30 days, allowing the Treasurer’s office to finalize the claim early and take payment from state tax refund. If the match is not paid within 30 days, the Treasurer’s office finalizes the claim with state. The state will then deduct 4% from the claim and send the remainder to the Treasurer’s office on next month’s payment file. Once payment is received, the Treasurer will send a letter to those who still owe a balance on their taxes.
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OCI March 2025
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