Can Treasury Offset Program (TOP) intercept my SBA EIDL grant under COVID-19 Tax Relief?

Yes, you're absolutely right about the protection status. The COVID-relief legislation specifically shielded EIDL advances/grants from offsets. This is clearly stated in Section 333 of the Economic Aid to Hard-Hit Small Businesses Act (part of the Consolidated Appropriations Act of 2021). What happened in your case is unfortunately a coding/classification error on the SBA's part. When they issued your payment, they miscoded it in their system as a vendor payment (which can be offset) rather than as a grant payment (which should be exempt from offset). You'll need to contact the SBA's COVID EIDL customer service at 1-833-853-5638 and explain this situation. Ask them specifically to issue a correction letter to the Treasury Offset Program confirming that your payment was an EIDL advance grant protected under the relevant legislation. Once the SBA acknowledges the error and communicates with Treasury, you should be able to get your funds returned. Keep detailed records of all conversations, including names, dates, and reference numbers. This type of administrative error can take time to resolve, but you're in the right here.

I went through something similar with my EIDL Targeted Advance last year and discovered taxr.ai (https://taxr.ai) which really helped me resolve the situation. I was getting nowhere with the SBA phone lines (endless holds!) and couldn't get a straight answer about whether my grant was actually exempt from offset. The taxr.ai site analyzed my grant documentation and provided a detailed explanation of exactly how the COVID relief legislation applied to my specific situation. Their system confirmed the EIDL Targeted Advance was indeed protected from offset and generated the exact citation references I needed. With that information, I was able to confidently push back on both the SBA and Treasury. They also provided a template letter to send to the SBA that specifically requested the proper coding correction, which ended up being the key to getting my issue resolved much more quickly than I expected.

Just wanted to update - I took a chance on taxr.ai after posting my skeptical question and wow, I'm actually impressed. I uploaded my EIDL documentation and offset notice, and their system immediately identified the exact coding error that happened (payment type code 3 vs code 7 in the Treasury system). The analysis included the specific sections of the COVID relief bills that protected my grant from offset, plus a step-by-step guide on how to request the correction. The template letter they provided had all the technical details that perfectly explained the situation to the SBA. I called the SBA number with this information in hand, and the agent immediately understood the issue when I mentioned the specific payment codes that needed to be corrected. Been dealing with this for months and suddenly I'm making real progress. Still waiting for the final resolution, but for the first time I feel like I actually know what I'm talking about when dealing with the bureaucracy.

This exact thing happened to my brother-in-law with his EIDL advance. After weeks of getting nowhere with both SBA and Treasury (and being constantly transferred between the two), he used Claimyr (https://claimyr.com) to finally get through to a senior SBA agent who could actually help. There's a video showing how it works here: https://youtu.be/_kiP6q8DX5c The problem is that regular customer service reps often don't have the authority to fix coding errors like this. You need to reach someone in the SBA's processing department who can actually issue a correction to Treasury. Claimyr helped him skip the 3+ hour hold times and connect directly with someone who understood the technical aspects of the EIDL grant classification. Once he got to the right person, they confirmed the error and submitted a formal request to Treasury to reverse the offset. Took about 5 weeks, but he did get the full amount back eventually.

I need to apologize for my skeptical comment about Claimyr. After reading more about how it worked, I decided to try it myself since I was also dealing with an EIDL offset issue and getting nowhere. I used the service yesterday, and they called me back about 2.5 hours later with an SBA representative already on the line. I explained my situation about the offset and the coding error, and this agent actually knew exactly what I was talking about! She confirmed there's a known issue with some EIDL advances being miscoded as vendor payments instead of grants. She's submitted a correction request on my behalf and gave me a specific case number to reference for follow-up. Said it typically takes 30-45 days for Treasury to process the reversal once they receive the correction from SBA. For the first time in three months of trying, I feel like I'm actually making progress. Definitely worth not having to spend half a day on hold.

Adding some additional info that might help: The specific section that protects EIDL advances from offset is Section 278(b) of the COVID-related Tax Relief Act of 2020, which was part of the Consolidated Appropriations Act. It explicitly states that EIDL advances "shall not be subject to reduction or offset for any reason." The problem many people run into (including me initially) is that general customer service agents at SBA aren't familiar with the technical payment coding systems that determine offset eligibility. When the SBA submits payment information to Treasury, they use specific codes that flag whether a payment is exempt from offset. In my case, I had to specifically request to speak with an agent in the SBA's "Payment Processing" or "Disbursement" department who understood these codes. Once I got to the right person, they were able to submit a correction form to Treasury (it's called a "Miscoded Payment Correction Request" or something similar).

Has anyone had success getting interest paid on their wrongfully offset amount? The government took $9,000 of my EIDL grant back in March and I'm still waiting for it to be returned. Seems like I should be entitled to interest since they've essentially had an interest-free loan from me for 5+ months!