Food Stamp Program: Storeowners Seldom Pay Financial Penalties Owed for Program Violations

RCED-99-91 Published: May 11, 1999. Publicly Released: May 26, 1999.
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Highlights

Pursuant to a congressional request, GAO provided information on the Food and Nutrition Service's (FNS) efforts to maintain the integrity of the Food Stamp Program, focusing on the: (1) dollar amount of the financial penalties, collections, and debt reductions (waivers, adjustments, or write-offs) affecting storeowners violating program regulations during fiscal year (FY) 1993 through FY 1998; (2) effectiveness of the FNS' procedures and practices for assessing financial penalties against storeowners for program violations; and (3) effectiveness of FNS' procedures and practices for collecting financial penalties levied against storeowners.

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Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Agriculture To improve the integrity of the Food Stamp Program, the Secretary of Agriculture should direct the Administrator, FNS, to develop guidance that specifies its field staff's responsibilities, duties, and guidelines in reviewing data on electronic benefits transfers to identify and assess penalties against storeowners who violate the Food Stamp Program's regulations.
Closed – Implemented
FNS issued in February 2000, a policy memo that provided both direction and model language for its field offices to use in charging stores that were found to be trafficking food stamp benefits. FNS also implemented in August 2002, "The Watch List" and a web-based program for listing, tracking, and reporting on stores that meet certain levels of redemption activities and have been flagged by FNS's ALERT system as having suspicious patterns of transactions. This and the Retailer Compliance Website provides the data for taking action against suspicious stores. FNS believes it has fully implemented this recommendation, but recognizes that tools and instructions regarding EBT trafficking need constant updating and improvements.
Department of Agriculture To improve the integrity of the Food Stamp Program, the Secretary of Agriculture should direct the Administrator, FNS, to develop the corrective actions necessary, as required by the Federal Claims Collection Standards, to help prevent delinquencies and defaults, and determine the priority and resources it needs to assign to make debt collection more effective.
Closed – Implemented
FNS has developed and implemented a strategy to refer all appropriate, delinquent, retailer debt to the Department of the Treasury for collection through Treasury's debt cross-servicing program. FNS has referred over six million dollars in delinquent debt under this strategy. The debt collection services performed by Treasury to manage these accounts will be expanded to include Treasury's administrative offset program once FNS completes the administrative processing requirements necessary to permit the referral of the debt to Treasury. FNS also examined all existing retailer accounts to ensure that all were properly categorized and managed under standards appropriate to the Debt Collection Improvement Act of 1996, and the relevant Federal Claims Collection Standards.
Department of Agriculture To improve the integrity of the Food Stamp Program, the Secretary of Agriculture should direct the Administrator, FNS, to complete the actions needed to refer delinquent debts with storeowner taxpayer identification numbers to Treasury electronically in a timely manner.
Closed – Implemented
FNS has published the Privacy Act Systems of Record notice and has revised the existing Departmental Rule on Debt Collection to allow Treasury to use its Treasury Offset Program to collect delinquent retailer debt. FNS also revised its retailer application to ensure that all newly-authorized retailers have been provided with the relevant notice on the use of their Taxpayer Identifying Number under the standards prescribed by the Debt Collection Improvement Act of 1996. FNS has implemented a system for the "electronic" transmission of the retailer debt to Treasury.

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