The U.S. Department of the Treasury on March 25, 2025, published a notice titled "Compliance Reviews and Related Recoupment Efforts," informing all Coronavirus State and Local Fiscal Recovery Funds (SLFRF) recipients that the Treasury Department intends to vigorously monitor recipients' methods of obligating funds by the Dec. 31, 2024, deadline, as well as recapture any funds obligated in violation of SLFRF rules and guidance and unobligated funds.
The notice states that the Treasury Department intends to take several actions in alignment with its commitment to recoup funds used impermissibly and recapture funds not obligated by the Dec. 31, 2024, deadline. These actions include enhancing compliance checks on recipients' obligation data, issuing Information Document Requests and sending "Financial Instructions to Return Unobligated Funds" to recipients that did not fully obligate SLFRF by the deadline.
Key Treasury Deadlines
The Treasury Department has identified the following key deadlines for state, local and Tribal government SLFRF recipients:
- Dec. 31, 2024 – Deadline to obligate all SLFRF funds
- Jan. 31, 2025 – Deadline for quarterly reporters to submit their latest report, covering obligations through the Dec. 31, 2024, deadline
- April 30, 2025 – Deadline for quarterly reporters to submit their quarterly report for the period of Jan. 1 – March 31, 2025
- April 30, 2025 – Deadline for annual reporters to submit their next report, covering obligations through the Dec. 31, 2024, deadline
The Treasury Department's Compliance and Reporting Guidance resource provides further guidance on recipient compliance and reporting responsibilities.
Holland & Knight Insights
Given the Treasury Department's focus on SLFRF compliance, it is advisable for state, local and Tribal governments to timely file all of their required reports. It is also important to respond promptly to all Information Document Requests. These requests will be sent to the SLFRF recipient's point of contact, but the recipient's legal team should be consulted on any response. The stakes are high, as failure to comply with the Treasury Department's requirements could result in a lengthy – and costly – Office of Inspector General desk review or audit of a recipient's use of SLFRF. Further, any recouped SLFRF could take away funding for critical programs and services established by states, cities and Tribes with SLFRF funding.
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