On March 25, 2025, the U.S. Department of the Treasury (Treasury) released the Notice to Recipients of Coronavirus State and Local Fiscal Recovery Funds (SLFRF). This notice stated that Treasury “intends to vigorously monitor recipients’ methods of obligating funds by the December 31, 2024, deadline.” The notice further states that they are “committed to recouping funds that recipients obligated or expended impermissibly, as well as recapturing funds that they did not obligate by the deadline.”
With this notice, Treasury has emphasized its commitment to monitor how funds were obligated, and whether such obligations were made on time, made accurately, and for eligible uses. As a reminder, the deadline to report on obligations by the December 31, 2024 deadline was January 31, 2025 for quarterly reporters and is April 30, 2025 for annual reporters.
Treasury is planning to take the following actions to recapture funds not obligated by the deadline or obligated impermissibly:
- Enhance compliance checks on the data submitted by recipients as it pertains to obligations.
- Send out Information Document Requests to an unreported number of recipients, wherein recipients will have the responsibility to promptly complete the requests.
- Send out “Financial Instructions to Return Unobligated Funds” to recipients who did not report their funds being fully obligated by the deadline or impermissibly obligated.
Treasury has made clear that it expects recipients to comply with these requests for information and repay the unobligated, or impermissibly obligated, funds by a date not yet confirmed. Recipients who do not repay the amount of funds that Treasury ascertains they owe by this date will face debt collection, with interest and penalties accruing once the debt has been established.
What Recipients Can Do to Prepare
There are several actions that recipients can take to prepare for this notice:
- Check that SLFRF funds were obligated by the December 31, 2024 deadline and were reported accurately and on time.
- Continue to maintain thorough documentation of SLFRF obligations and expenditures to show compliance and allowability and to avoid potential recoupment.
- Be prepared to participate in these enhanced compliance checks and have a mechanism in place to respond promptly to any information requested by Treasury.
- If recoupment is expected, become familiar with the repayment process and understand the consequences of failing to repay by the deadline.
How Forvis Mazars Can Help
Our team continues to monitor updates related to the SLFRF funds and remains committed to assisting entities in navigating these changes. If you have questions or need assistance, please reach out to a professional at Forvis Mazars.