Pre-payment verification and Do Not Pay reform

Summary#

This bill requires federal agencies to do more checks before making payments. It expands and formalizes the Treasury Department’s Do Not Pay system and gives Treasury access to certain government data (for fraud and improper-payment prevention). It also requires a one-time post-award report from entities that receive a federal award for the first time in a given program.

• Main change: Agencies must complete specified pre-certification checks (payee identity, bank account validity, funds availability, deceased-payee checks, etc.) before certifying vouchers for payment.
• Do Not Pay: The Treasury’s Do Not Pay system is made permanent, must include specified data sets (including the National Directory of New Hires and certain IRS and Social Security information), and may add more data after public notice.
• Data access: Treasury may receive and share certain tax, employment, and Social Security information with authorized users for identifying and stopping improper payments.
• Reporting: First-time recipients of covered awards ($50,000 or more) must submit a one-time report within 180 days on how they used the funds; payments can be stopped for noncompliance.
• Privacy and enforcement: The bill requires privacy guidance, limits use of Do Not Pay data to certain purposes, and creates criminal/financial penalties for unlawful disclosure of Do Not Pay information.

What it means for you#

• Federal agencies and certifying officials

  • Must perform new pre-payment verification steps before certifying vouchers.
  • Must screen recipients against Do Not Pay data assets and record any approved exemptions.
  • Will need procedures to detect fraud-risk indicators and include those in risk assessments.

• Disbursing officials

  • May return payment vouchers that do not meet the pre-certification checks.
  • Must follow Treasury guidance on pausing payments when required.

• Recipients of federal awards (grants, contracts, pass-through entities)

  • First-time recipients in a program receiving $50,000 or more must file a one-time report within 180 days about use of funds.
  • If a required report is not submitted, agencies must stop payments until the recipient complies.

• State and local governments and contractors

  • Must screen recipients and applicants against Do Not Pay data assets when administering federally funded programs.
  • Will need to follow privacy guidance when accessing Do Not Pay.

• Treasury, IRS, and Social Security Administration

  • Treasury gains access to new data sources for the Do Not Pay system.
  • Treasury may receive limited IRS return information and Social Security confirmations; Treasury must pay SSA for confirmation services.

• Individuals (taxpayers, payees)

  • Certain tax, employment, and Social Security data may be used by the Do Not Pay system to check payment eligibility.
  • Unauthorized disclosure of Do Not Pay information is penalized by fine and possible imprisonment.

Expenses#

No publicly available cost estimate is provided with the bill text.

• The bill requires the Secretary of the Treasury to pay the Social Security Administration the full costs of providing name/SSN confirmation services.
• Agencies, states, and contractors likely will face additional administrative and technology costs to implement pre-certification checks, to connect to Do Not Pay data assets, and to collect/store the single post-award reports.
• There is no overall fiscal note in the text showing total expected federal or state costs or savings.

Proponents' View#

The bill appears intended to reduce improper payments and fraud and to make pre-payment checks consistent across the government.

• It could prevent payments to ineligible or fraudulent payees by requiring identity, bank-account, and funds-availability checks before payments are made.
• Expanding Do Not Pay data access (National Directory of New Hires, selected IRS data, Social Security confirmations) could improve detection and recovery of improper payments.
• A single post-award report from first-time recipients could help agencies verify that award funds were used as intended and identify early fraud-risk indicators.
• Standardizing pre-payment requirements and fraud-risk indicators could improve governmentwide accountability and reduce future losses.

Opponents' View#

The bill raises several practical and privacy concerns based on its provisions and some details left out.

• One concern is potential payment delays: added pre-certification steps could slow down legitimate payments to individuals, businesses, and grantees.
• The bill expands access to sensitive IRS, employment, and Social Security data; it is unclear whether the privacy safeguards and oversight described are sufficient to prevent misuse or data breaches.
• The text says certain Treasury data matches “shall not be considered a matching program” for one statute, which could affect how privacy laws and matching-notice requirements apply; the bill later says it does not modify other Privacy Act protections, creating possible legal ambiguity.
• Agencies, states, and recipients will likely incur new administrative and technical costs, but the bill provides no governmentwide cost estimate.
• The reporting requirement for first-time recipients could increase burden on small organizations or new grantees and might deter some applicants; the bill allows limited exceptions but details on implementation and burdens are thin.
• It is unclear how quickly agencies and the Do Not Pay system must integrate additional data assets, and how errors or incorrect data in integrated sources will be fixed and communicated to affected payees.