2005 Regular Session
To: Ways and Means
By: Representative Chism
AN ACT TO CREATE THE "SETOFF DEBT COLLECTION ACT FOR STATE AGENCIES AND LOCAL GOVERNING AUTHORITIES"; TO PROVIDE THAT THE STATE TAX COMMISSION SHALL GIVE NOTICE TO A TAXPAYER WHOSE TAX REFUND IS TO BE SETOFF; TO REQUIRE THE CLAIMANT AGENCY TO PROVIDE A HEARING IF A TAXPAYER CONTESTS THE SETOFF; TO PROVIDE THE PROCEDURE TO SETOFF A TAXPAYER'S DEBT WHEN THE AMOUNT OF THE DEBT IS DETERMINED; TO AUTHORIZE THE STATE TAX COMMISSION TO ADOPT RULES AND REGULATIONS TO CARRY OUT THIS ACT; TO AUTHORIZE THE STATE TAX COMMISSION TO ENTER INTO RECIPROCAL AGREEMENTS WITH OTHER STATES THAT HAVE SUBSTANTIALLY THE SAME LAWS FOR SETOFF OF A TAXPAYER'S REFUND; TO REQUIRE THAT ALL INFORMATION OBTAINED FROM A CLAIMANT AGENCY SHALL BE CONFIDENTIAL AND ONLY USED BY THE CLAIMANT AGENCY; TO PROVIDE THAT CLAIMANT AGENCIES THAT UNLAWFULLY DISCLOSE INFORMATION SHALL BE SUBJECT TO PENALTIES SPECIFIED BY LAW; TO PROVIDE THE PRIORITY IN WHICH MULTIPLE CLAIMS MAY BE PAID; AND FOR RELATED PURPOSES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:
SECTION 1. This act may be cited as the "Setoff Debt Collection Act for State Agencies and Local Governing Authorities."
SECTION 2. As used in this act, unless the context requires otherwise:
(a) "Claimant agency" means a state agency, board, committee, commission, political subdivision, or any other governmental or quasi governmental entity. A political subdivision that submits a claim through an association is a claimant agency for the purpose of the notice and appeal provisions of this act.
(b) "Commission" means the State Tax Commission of the State of Mississippi.
(c) "Debtor" means any individual owing overdue support for a child as defined by federal regulations.
(d) "Debt" means any sum due and owing any claimant agency, including collection costs, court costs, fines, penalties, and interest which have accrued through contract, subrogation, tort, operation of law, or any other legal theory regardless of whether there is an outstanding judgment for that sum which is legally collectible and for which a collection effort has been or is being made. It also includes any fine, penalty, cost, fee, assessment, surcharge, service charge, restitution, or other amount imposed by a court or as a direct consequence of a final court order which is received by or payable to the clerk of the appropriate court or treasurer of the entity in which the court is located.
(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 agency 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 and alternate means of collection would result in a loss of federal funds or federal assistance.
(2) Upon request of the claimant agency, the commission shall set off any refund against the sum certified by the claimant agency as provided in this act.
(3) If the claimant agency determines that the administrative cost of utilizing this act is prohibitive, it may choose not to participate in the setoff program, or it may choose to participate only in cases of debt above an amount it determines is appropriate.
SECTION 5. (1) Within the time frame specified by the commission, a claimant agency 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 agency 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 agency. 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 agency pursuant to subsection (2) of this section, 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 agency pursuant to subsection (2) of this section, 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 the mailing of the notice, the name and mailing address of the claimant agency 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 agency 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) of this section, the claimant agency shall deposit and hold such funds in an escrow account until a final determination of the validity of the debt.
(5) The claimant agency 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 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 article.
SECTION 6. If the claimant agency 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 in Section 6 of this act or by the taxpayer's default through failure to comply with Section 5(3) of this act which mandates a timely request for review, the claimant agency shall remove the amount of the debt due and owing from the escrow account established pursuant to Section 5(4) of this act 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 agency 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) of this act and the amount of the funds transferred to the claimant agency pursuant to Section 5(2) of this act in excess of the debt determined to be due and owing at a hearing held pursuant to Section 6 of this act, if such a hearing was held. At such time, the claimant agency 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.).
(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 defaulters from states with which Mississippi has a reciprocal agreement and to provide for sending lists of names of Mississippi defaulters 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 agency all information necessary to accomplish and effectuate the intent of this act.
(2) The information obtained by a claimant agency from the commission in accordance with the provisions of this act shall retain its confidentiality and shall only be used by a claimant agency in the pursuit of its debt collection duties and practices; and any employee or former employee of any claimant agency 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. Claims to refunds allowed to be set off under this act must be made by a claimant agency filing a written notice with the commission of its intention to effect collection through setoff under this act. The following is the order of priority for multiple claims filed:
(a) The State Tax Commission;
(b) Claims of the Mississippi Department of Human Services;
(c) Claims of agencies not given a specific priority.
SECTION 11. This act shall take effect and be in force from and after July 1, 2005.