Set-Off of Grantee's Tax Indebtedness

An opinion was requested as to whether the Internal Revenue Service has a right to setoff certain grant proceeds held by the Community Services Administration against the grantee's tax indebtedness. All grant payments up to the amount of the grantee's delinquency must be suspended until the delinquency is cured, but a setoff of grant payments withheld against the tax delinquency is not appropriate since grant payments are not reimbursements for expenses already incurred by the grantee. The tax delinquency may be paid by the agency on behalf of the grantee for delinquencies arising from current or prior grants, but delinquencies not attributed to current or prior grants may not be paid from withheld grant funds.