MISSISSIPPI LEGISLATURE

1998 Regular Session

To: Finance

By: Senator(s) Hamilton

AN ACT TO ESTABLISH A PROCEDURE FOR SETTING OFF AGAINST STATE INCOME TAX REFUNDS CERTAIN DEBTS OWED BY TAXPAYERS TO MUNICIPALITIES AND COUNTIES AS A RESULT OF UNPAID FINES OR FEES; TO AMEND SECTION 27-7-83, MISSISSIPPI CODE OF 1972, IN CONFORMITY THERETO; AND FOR RELATED PURPOSES. 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:

SECTION 1. The purpose of this act is to establish a policy and provide a system whereby claimant entities of the State of Mississippi in conjunction with the State Tax Commission shall cooperate in identifying certain debtors who qualify for refunds from the State Tax Commission. It is the intent of the Legislature that this act be liberally construed so as to effectuate its purpose.

SECTION 2. As used in this act, unless the context requires otherwise:

(a) "Claimant entity" means any municipality or county of this state.

(b) "Commission" means the State Tax Commission of the State of Mississippi.

(c) "Debtor" means a person who owes a debt to a municipality or county.

(d) "Debt" means an unpaid fine or fee.

(e) "Refund" means the Mississippi income tax refund which the commission determines to be due any individual taxpayer.

SECTION 3. The collection remedy authorized by this act is in addition to and not in substitution for any other remedy available by law.

SECTION 4. (1) The claimant entity may submit any debts in excess of Twenty-five Dollars ($25.00) to the commission for collection through setoff under the procedure established by this act, except in cases where the validity of the debt is legitimately in dispute.

(2) Upon request of the claimant entity, the commission shall set off any refund against the sum certified by the claimant entity as provided in this act.

SECTION 5. (1) Within the time frame specified by the commission, a claimant entity seeking to collect a debt through setoff shall supply the information necessary to identify each debtor whose refund is sought to be set off and certify the amount of the debt or debts owed by each such debtor.

(2) If a debtor identified by a claimant entity is determined by the commission to be entitled to a refund of at least Twenty-five Dollars ($25.00), the commission shall transfer an amount equal to the refund owed, not to exceed the amount of the claimed debt certified, to the claimant entity. When the refund owed exceeds the claimed debt, the commission shall send the excess amount to the debtor within a reasonable time after such excess is determined.

(3) At the time of the transfer of funds to a claimant entity pursuant to subsection (2), the commission shall notify the taxpayer or taxpayers whose refund is sought to be set off that the transfer has been made. Such notice shall clearly set forth the name of the debtor, the manner in which the debt arose, the amount of the claimed debt, the transfer of funds to the claimant entity pursuant to subsection (2), the intention to set off the refund against the debt, the amount of the refund in excess of the claimed debt, the taxpayer's opportunity to give written notice to contest the setoff within thirty (30) days of the date of mailing of the notice, the name and mailing address of the claimant entity to which the application for a hearing must be sent, and the fact that failure to apply in writing for such a hearing within the thirty-day period will be deemed a waiver of the opportunity to contest the setoff. In the case of a joint return, the notice shall also state the name of the taxpayer named in the return, if any, against whom no debt is claimed, the fact that a debt is not claimed against such taxpayer, the fact that such taxpayer is entitled to receive a refund if it is due him regardless of the debt asserted against his spouse, and that in order to obtain a refund due him, such taxpayer must apply in writing for a hearing with the claimant entity named in the notice within thirty (30) days of the date of the mailing of the notice. If a taxpayer fails to apply in writing for such a hearing within thirty (30) days of the mailing date of such notice, he will have waived his opportunity to contest the setoff.

(4) Upon receipt of funds transferred from the commission pursuant to subsection (2), the claimant entity shall deposit and hold such funds in an escrow account until a final determination of the validity of the debt.

(5) The claimant entity shall pay the commission a fee, not to exceed Seventeen Dollars ($17.00) in each case in which a tax refund is identified as being available for offset. Such fees shall be deposited by the tax commission into a special fund hereby created in the State Treasury, out of which the Legislature shall appropriate monies to defray expenses of the commission in employing personnel to administer the provisions of this act.

SECTION 6. If the claimant entity receives a written application contesting the setoff or the claim upon which the setoff is based, it shall grant a hearing to the taxpayer to determine whether the setoff is proper or the claim is valid. If the sum asserted as due and owing is not correct, an adjustment to the claimed sum may be made. No issues shall be reconsidered at the hearing which have been previously litigated.

SECTION 7. (1) Upon determination of the amount of the debt due and owing by means of the hearing provided for by Section 6 or by the taxpayer's default through failure to comply with Section 5(3) which mandates a timely request for review, the claimant entity shall remove the amount of the debt due and owing from the escrow account established pursuant to Section 5(4) and shall credit such amount to the debtor's obligation.

(2) Upon transfer of the debt due and owing from the escrow account to the credit of the debtor's obligation, the claimant entity shall notify the debtor in writing of the finalization of the setoff. Such notice shall include a final accounting of the refund which was set off, including the amount of the refund to which the debtor was entitled prior to setoff, the amount of the debt due and owing, the amount of the refund in excess of the debt which has been returned to the debtor by the commission pursuant to Section 5(2), and the amount of the funds transferred to the claimant entity pursuant to Section 5(2) in excess of the debt determined to be due and owing at a hearing held pursuant to Section 6, if such a hearing was held. At such time, the claimant entity shall refund to the debtor the amount of the claimed debt originally certified and transferred to it by the commission in excess of the amount of the debt finally found to be due and owing.

SECTION 8. (1) The commission is authorized to prescribe forms and adopt rules and regulations which it deems necessary to effectuate the intent and provisions of this act. All such rules and regulations shall be adopted in accordance with the Mississippi Administrative Procedures Law (Section 25-43-1 et seq., Mississippi Code of 1972).

(2) The commission may enter into reciprocal agreements with the departments of revenue of other states that have enacted legislation that is substantially equivalent to the setoff procedure in this act. The agreement shall authorize the commission to provide by rule for the setoff of state income tax refunds or rebates of debtors from states with which Mississippi has a reciprocal agreement and to provide for sending lists of names of Mississippi debtors to the states with which Mississippi has a reciprocal agreement for setoff of that state's income tax refunds.

SECTION 9. (1) Pursuant to the provisions of Section 27-7-83, Mississippi Code of 1972, the commission may provide to a claimant entity all information necessary to accomplish and effectuate the intent of this act.

(2) The information obtained by a claimant entity from the commission in accordance with the provisions of this act shall retain its confidentiality and shall only be used by a claimant entity in the pursuit of its debt collection duties and practices; and any employee or former employee of any claimant entity who unlawfully discloses any such information for any other purpose, except as otherwise specifically authorized by law, shall be subject to the same penalties specified by law for unauthorized disclosure of confidential information by an agency or employee of the commission.

SECTION 10. When the setoff authorized by this act is exercised, the refund which is set off shall be deemed granted. Personnel of a claimant entity shall be released from liability for improper receipt of monies under setoff procedures upon return of any monies so received.

SECTION 11. Section 27-7-83, Mississippi Code of 1972, is amended as follows:

27-7-83. (1) Returns and return information filed or furnished under * * * this chapter shall be confidential, and except in accordance with proper judicial order, or as otherwise authorized by this section, it is unlawful for members of the State Tax Commission or members of the Mississippi Department of Information Technology Services, any deputy, agent, clerk or other officer or employee thereof, or any former employee thereof, to divulge or make known in any manner the amount of income or any particulars set forth or disclosed in any report or return required. * * * This section shall apply fully to any federal return, a copy of any portion of a federal return, or any information reflected on a federal return which is attached to or made a part of the state tax return. * * * This section shall also apply to any federal return or portion thereof, or to any federal return information data which is acquired from the Internal Revenue Service for state tax administration purposes pursuant to the Federal-State Exchange Program cited at Section 6103, Federal Internal Revenue Code. The term "proper judicial order" as used in this section shall not include subpoenas or subpoenas duces tecum, but shall include only those orders entered by a court of record in this state after furnishing notice and a hearing to the taxpayer and the State Tax Commission. The court shall not authorize the furnishing of such information unless it is satisfied that the information is needed to pursue pending litigation wherein the return itself is in issue, or the judge is satisfied that the need for furnishing the information outweighs the rights of the taxpayer to have such information secreted.

(2) Returns and return information with respect to taxes imposed by this chapter shall be open to inspection by or disclosure to the Commissioner of the Internal Revenue Service of the United States, or the proper officer of any state imposing an income tax similar to that imposed by this chapter, or the authorized representatives of such agencies. Such inspection shall be permitted, or such disclosure made, only upon written request by the head of such agencies, or the district director in the case of the Internal Revenue Service, and only to the representatives of such agencies designated in a written statement to the commissioner as the individuals who are to inspect or to receive the return or return information on behalf of such agency. The commissioner is authorized to enter into agreements with the Internal Revenue Service and with other states for the exchange of returns and return information data, or the disclosure of returns or return information data to such agencies, only to the extent that the statutes of the United States or of such other state, as the case may be, grant substantially similar privileges to the proper officer of this state charged with the administration of the tax laws of this state.

(3) (a) The return of a person shall, upon written request, be open to inspection by or disclosure to:

(i) In the case of the return of an individual, that individual;

(ii) In the case of an income tax return filed jointly, either of the individuals with respect to whom the return is filed;

(iii) In the case of the return of a partnership, any person who was a member of such partnership during any part of the period covered by the return;

(iv) In the case of the return of a corporation or a subsidiary thereof, any person designated by resolution of its board of directors or other similar governing body, or any officer or employee of such corporation upon written request signed by any principal officer and attested to by the secretary or other officer;

(v) In the case of the return of an estate, the administrator, executor or trustee of such estate, and any heir at law, next of kin or beneficiary under the will, of the decedent, but only to the extent that such latter persons have a material interest which will be affected by information contained therein;

(vi) In the case of the return of a trust, the trustee or trustees, jointly or separately, and any beneficiary of such trust, but only to the extent that such beneficiary has a material interest which will be affected by information contained therein;

(vii) In the case of the return of an individual or a return filed jointly, any claimant agency or claimant entity seeking to collect a debt through the set-off procedure established in Sections 27-7-701 through 27-7-713, Sections 27-7-501 through 27-7-519 and Sections 1 through 10 of Senate Bill No. 2512, 1998 Regular Session, from an individual with respect to whom the return is filed.

(b) If an individual described in paragraph (a) is legally incompetent, the applicable return shall, upon written request, be open to inspection by or disclosure to the committee, trustee or guardian of his estate.

(c) If substantially all of the property of the person with respect to whom the return is filed is in the hands of a trustee in bankruptcy or receiver, such return or returns for prior years of such person shall, upon written request, be open to inspection by or disclosure to such trustee or receiver, but only if the commissioner finds that such receiver or trustee, in his fiduciary capacity, has a material interest which will be affected by information contained therein.

(d) Any return to which this section applies shall, upon written request, also be open to inspection by or disclosure to the attorney in fact duly authorized in writing by any of the persons described in paragraph (a) of this subsection to inspect the return or receive the information on his behalf, subject to the conditions provided in paragraph (a).

(e) Return information with respect to any taxpayer may be open to inspection by or disclosure to any person authorized by this subsection to inspect any return of such taxpayer if the commissioner determines that such disclosure would not seriously impair state tax administration.

(4) The State Auditor and the employees of his office shall have the right to examine only such tax returns as are necessary for auditing the State Tax Commission, and the same prohibitions against disclosure which apply to the State Tax Commission shall apply to the State Auditor and his employees or former employees.

(5) Nothing herein shall be construed to prohibit the publication of statistics, so classified as to prevent the identification of particular reports or returns and the items thereof, or the inspection by the Attorney General, or any other attorney representing the state, of the report or return of any taxpayer who shall bring action to set aside the tax thereon, or against whom any action or proceeding has been instituted to recover any tax or penalty imposed.

(6) Nothing in this section shall prohibit the chairman of the commission from making available information necessary to recover taxes owing the state pursuant to the authority granted in Section 27-75-16, Mississippi Code of 1972.

(7) Reports and returns required under the provisions of this chapter shall be preserved in accordance with approved records control schedules. No records, however, may be destroyed without the approval of the Director of the Department of Archives and History.

(8) The commission is authorized to disclose to the Child Support Unit of the Department of Human Services the name, address, Social Security number, amount of income, source of income and assets for individuals who are delinquent in the payment of any child support as defined in Section 93-11-101, Mississippi Code of 1972.

SECTION 12. This act shall take effect and be in force from and after July 1, 1998.