SB 2055 — Income tax; authorize counties and municipalities to collect certain debts by setoff against the debtor's income tax refund.

SB2055 (As(COMMITTEE Introduced)SUBSTITUTE) - 2018 Regular Session MISSISSIPPI LEGISLATURE Regular Session To:

Senator(s) Fillingane, Michel Senate Bill 2055 (COMMITTEE SUBSTITUTE) AN ACT TO ENACTAUTHORIZE THEA "LOCALPROCEDURE GOVERNMENTTO DEBTALLOW COLLECTIONCOUNTIES AND MUNICIPALITIES TO COLLECT CERTAIN DEBTS THROUGH A SETOFF ACT";AGAINST INCOME TAX REFUNDS OWED THE DEBTOR;

TO AUTHORIZEPROVIDE COUNTIES AND MUNICIPALITIES TO SUBMIT CERTAIN DEBTS OWED TO THEM TO THE DEPARTMENT OF REVENUE FOR COLLECTIONHEARING THROUGHAND AAPPEALS SETOFFIN AGAINSTCONTESTED THECASES; DEBTORS' MISSISSIPPI INCOME TAX REFUND;

TO PROVIDE THAT THESUCH COUNTIESHEARING AND MUNICIPALITIESAPPEALS SHALL UTILIZEONLY THECONSIDER MISSISSIPPIMISTAKES ASSOCIATION OF SUPERVISORSFACT; OR THE MISSISSIPPI MUNICIPAL LEAGUE, AS APPROPRIATE, AS THEIR AGENTS IN UTILIZING THIS PROCEDURE;

TO PROVIDEAUTHORIZE THE AMOUNTDEPARTMENT OF THEREVENUE DEBTTO ANDTRANSFER THE INCOME TAX REFUNDS OF A DEBTOR TO WHICHA THISCLAIMANT ACTFOR APPLIES;THE PURPOSE OF SATISFYING SUCH DEBTS;

TO PROVIDE FOR NOTICE TO THE DEBTOR AND AN OPPORTUNITY FOR THE DEBTOR TO CONTEST AND APPEAL THE SETOFF;

TO PROVIDE FOR THE DUTIES OF THE DEPARTMENT OF REVENUE UNDER THIS ACT;

TO IMPOSE A COLLECTION ASSISTANCE FEE ON EACH DEBT COLLECTED UNDER THIS ACT;

TO AUTHORIZE THE EXCHANGE OF INFORMATION BETWEEN THE DEPARTMENT OF REVENUE, LOCAL GOVERNMENT AND THEIR MEMBER ORGANIZATIONS THAT IS NECESSARY TO ACCOMPLISH AND EFFECTUATE THE INTENT OF THIS ACT;

TO PROVIDE THAT INFORMATION OBTAINED FROM THE DEPARTMENT OF REVENUE SHALL RETAIN ITS CONFIDENTIALITY AND TO PROVIDE PENALTIES FOR THE UNLAWFUL DISCLOSURE OF SUCH INFORMATION;

     SECTION 1.  ThisAs actused shall be known as the "Local Government Debt Collection Setoff Act."      SECTION 2.  The purpose of this act is to establish as public policy that all claimant local governments and the Department of Revenue shall cooperate in identifyingSections debtors1 whothrough owe7 money to local governments and who qualify for refunds from the Department of Revenue.  It is also the intent of this actact: that procedures be established for setting off against any refund the sum of any debt owed to a local government.  Furthermore, it is the legislative intent that this act be liberally construed so as to effectuate these purposes as far as legally and practically possible.

              SECTION(a)  3. "Claimant Aslocal usedgovernment" inmeans thiscounties act:and municipalities.

                (a) (b)  "Claimant"Debtor" local government" means countiesany andindividual municipalitiesowing actinga throughdebt their nonprofit member organizations with respect to the collection of any debtclaimant owedlocal andgovernment. finalized by law, ordinance, order or resolution.

                (b) (c)  "Debtor""Debt" means any personliquidated owingsum adue debtand owing to any claimant local government.government which has accrued through contract, subrogation, tort, justice or municipal court conviction or any other debt regardless of whether there is an outstanding judgment for the sum.

                (c) (d)  "Debt""Department" means anythe liquidatedDepartment sumof dueRevenue andof owingthe toState any claimant local government which has accrued through contract, subrogation, tort, justice or municipal court conviction or any other debt regardless of whetherMississippi. there is an outstanding judgment for the sum.

                (d) (e)  "Department""Refund" means the Mississippi Departmentincome oftax Revenue.refund which the department determines to be due any individual taxpayer.

           (e) SECTION "Local2.  government"The meanscollection aremedy countyauthorized orby municipality.Sections 1 through 7 of this act is in addition to and not in substitution for any other remedy available by law.

           (f) SECTION "Member3.  organization"(1)  meansA theclaimant Mississippilocal Associationgovernment may submit debts of SupervisorsFifty forDollars counties,($50.00) theor Mississippimore Municipalowed Leagueto it for municipalities,collection orthrough entitiessetoff, under the procedure established by Sections 1 through or7 contractedof bythis theseact, memberexcept organizationsin forcases where the purposevalidity of facilitatingthe debt is legitimately in dispute, an alternate means of collection underis thispending act.and believed to be adequate, or such collection would result in a loss of federal funds or federal assistance.

           (g) (2)  "NetUpon proceedsthe collected"request meansof grossa proceedsclaimant, collectedthe throughdepartment shall setoff any refund against athe debtor'ssum refundcertified lessby the collectionclaimant assistanceas feesprovided authorized in Sections 1 through 7 of this act.act;

      however, (h) claims "Person"for meansoverdue anysupport individual,for firm,a partnership,child association,shall trustee,take receiver,priority assignee,over corporation,claims entity,made limitedunder liabilitySections company,1 utilitythrough or7 jointof venture.this act.

           (i) SECTION "Refund"4.  means(1)  Within the Mississippitime incomeframe taxspecified refundby whichthe department, a claimant local government seeking to collect a debt through setoff shall supply the departmentinformation determinesnecessary to identify each debtor whose refund is sought to be dueset aoff and certify the amount of debt or debts owed by each debtor.

           (j) (2)  "Setoff"If meansa thedebtor department'sidentified legalby righta toclaimant reducelocal government is determined by the debtor'sdepartment claimto be entitled to a Mississippirefund incomeof taxat refundleast fromFifty Dollars ($50.00), the department byshall atransfer an amount equal to the refund owed, not to exceed the amount of the claimed debt certified, to the claimant local government properlyminus establishesthe underamount thisclaimed actby whichthe isdepartment as a collection fee.  The department shall retain ten percent (10%) of the claimed debt as a collection fee.  When the income tax refund owed byexceeds the debtor.claimed debt, the department shall send the excess amount to the debtor within a reasonable time after the excess is determined.

     SECTION(3)  4. At (1) the Thetime collectionof remedythe intransfer of funds to a claimant local government pursuant to subsection (2) of this actsection, the department shall notify the taxpayer or taxpayers whose refund is sought to be setoff that the transfer has been made.  The notice shall clearly set forth the name of the debtor, the manner in additionwhich the debt arose, the amount of the debt, the transfer of funds to the claimant local government pursuant to subsection (2) of this section and notthe intention to setoff the refund against the debt, the amount of the refund in substitutionexcess 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 to which the application for anysuch othera remedyhearing availablemust bybe law.sent, and the fact that the failure to apply for such a hearing, in writing, within the thirty-day period will be deemed a waiver of the opportunity to contest the setoff.  The setoff may be contested only on grounds of a mistake of fact.       (4)  Upon receipt of funds transferred from the department pursuant to subsection (2) of this section, the claimant local government shall deposit and hold the funds in an escrow account until the hearing is waived or a decision pursuant to a hearing is finalized.

     (2) SECTION A5.  (1)  When the claimant local government mayreceives submita protest or application in writing from a debttaxpayer owedwithin tothirty it(30) fordays collectionof underthe thisnotice act. issued Aby the department, the claimant local government thatshall decidesset a date to submithear athe debtprotest owedand give notice to itthe fortaxpayer collectionby underregistered thisor actcertified shallmail establishof the debtdate byso followingset.  The time and place of the procedureshearing setshall forthbe designated in Sectionthe 6notice ofand thisthe actdate andset shall submitnot be less than fifteen (15) days from the debtdate throughof the notice.  If, at the hearing, a membermistake organization.of fact is found to have been made, an adjustment to the claim may be made.  The claimant local government shall give notice to the debtor of its final determination as provided in subsection (3) of this section.

     SECTION(2)  5. No Thisissues actshall onlybe appliesreconsidered to a debt that is at leastthe Fiftyhearing Dollars ($50.00) and refunds to which thehave debtorbeen ispreviously entitledlitigated. of at least Fifty Dollars ($50.00).  Different types of debts under Fifty Dollars ($50.00) may be combined to satisfy the debt threshold if they are owed by the same debtor.

     SECTION(3)  6. If (1) any Adebtor is dissatisfied with the final determination made at the hearing by the claimant local governmentgovernment, he may notappeal submitthe afinal debtdetermination forto collectionthe undercircuit thiscourt actby untilfiling itnotice hasof givenappeal with the noticemunicipal requiredclerk byor thisthe sectionclerk of the board of supervisors, as appropriate, and with the claimclerk hasof beenthe finallycircuit determinedcourt asof providedthe incounty thisto section.which the appeal shall be taken within thirty (30) days from the date notice of final determination was given by the claimant local government.

     (2) SECTION A6.  local(1)  government,Upon orfinal itsdetermination memberby organizationmeans onof its behalf, shall send written notice to a debtorhearing that theno localmistake governmentof intendsfact tohas submitbeen themade debtor owed by the debtortaxpayer's fordefault collectionthrough byfailure setoff. to Thecomply noticewith shalltimely explainrequest the basis for thereview, local government's claim to the debt,claimant that the local government intendsshall toremove apply the debtor'samount refund against the debt, and that a total collection assistance fee of twenty-five percent (25%) shall be added to the debt ifdue itand isowing submittedfrom for setoff.  The notice shall also inform the debtorescrow thataccount the debtor has the right to contest the matter by filing a request for a hearing with the local government, shall state the time limits and procedurescredit for requesting a hearing and shall state that theamount failure to request a hearing within the requireddebtor's timeobligation. will result in setoff of the debt.

     (3) (2)  AUpon debtortransfer whoof decidesthe todebt contestdue aand proposedowing setofffrom shallthe fileescrow aaccount writtento requestthe forcredit aof hearingthe withdebtor's account, the claimant local government withinshall thirtynotify (30)the daysdebtor afterin writing of the datefinalization of the localsetoff.  governmentThe mailsnotice shall include a noticefinal accounting of the proposedrefund actionwhich towas setoff, including the debtor. amount Aof requestthe forrefund ato hearingwhich isthe considereddebtor towas beentitled filedprior whento itthe issetoff, deliveredthe foramount mailingof withthe postagedebt prepaiddue and properlyowing, addressedthe asamount requiredof the department's collection fee, the amount of the refund in excess of the noticedebt providedwhich bywas returned to the localdebtor government. by Thethe governingdepartment, bodyand the amount of the funds transferred to the claimant local government orin aexcess personof designatedthe bydebt thedue governingand bodyowing.  shallAt holdthat time, the hearing. claimant Inlocal agovernment hearingshall underrefund thisto section,the debtor any civilamount orthat criminalwas issuetransferred thatto hasit beenby litigatedthe department in aexcess courtof proceedingthe cannotamount beof reconsidered.debt, if any.

     (3) SECTION A7.  decision(1)  madeNotwithstanding afterthe aprovisions hearingthat underprohibit thisdisclosure sectionby shallthe determinedepartment whetherof athe debtcontents isof owedtaxpayer torecords or information and notwithstanding any other confidentiality statute, the department may provide to a claimant local government all information necessary to accomplish and effectuate the amountintent of theSections debt.1 through 7 of this act.

     (4) (2)  AppealsThe frominformation hearingsobtained heldby undera thisclaimant actlocal shallgovernment befrom made to the circuitdepartment court of the county in whichaccordance thewith debtor resides and shall be reviewed on the administrativeprovisions recordof madeSections at1 thethrough hearing7 beforeof thethis localact government. shall Theretain standardits ofconfidentiality reviewand of such decisions shall only be thatused established by Mississippia lawclaimant pertaininglocal togovernment in the reviewpursuit of allits otherdebt administrativecollection decisionsduties madeand bypractices; political subdivisions.

    and SECTIONany 7. official (1) or Aemployee claimantor localprior government,official or itsemployee memberof organizationany onclaimant itslocal behalf,government seekingwho tounlawfully collectdiscloses aany debtsuch throughinformation setofffor shallany notifyother thepurpose, departmentexcept inas writingspecifically andauthorized supplyby informationlaw, necessaryshall tobe identifysubject the debtor whose refund is sought to be setoff.  The local government, or its member organization, shall notify the departmentsame inpenalties writingspecified withinby sixtylaw (60)for daysunauthorized ofdisclosure when a debt of whichconfidential theinformation departmentby hasan previouslyagent been noticed has been paid or isemployee noof longerthe oweddepartment. to it.

     (2) SECTION The8.  department,Section upon27-7-83, receiptMississippi Code of notification,1972, shall determine each year whether the debtor to the claimant local government is entitledamended toas afollows: refund of at least Fifty Dollars ($50.00) from the department.  Upon determination by the department that a debtor specified by a claimant local government qualifies for such a refund, the department shall set off the debt against the refund to which the debtor would otherwise be entitled and shall refund any remaining balance to the debtor.  The department shall mail the debtor written notice that the setoff has occurred and shall credit the net proceeds collected to the claimant local government, after deducting the total collection assistance fee owed to the department and the member organization.

     SECTION 8.  Claims made under Sections 27-7-501 through 27-7-519 for overdue child support shall take priority over claims made under this act.  When there are multiple claims by two (2) or more member organizations submitting debts on behalf of local governments, the claims have priority based on the date each member organization filed the claim with the department.  When there are multiple claims among local governments whose debts are submitted by the same member organization, the claims have priority based on the date each local government requested the member organization to submit the debts on its behalf.

     SECTION 9.  To recover the costs incurred by the department and the member organization in collecting debts under this act, a total collection assistance fee of twenty-five percent (25%) shall be imposed on each debt collected through setoff.  The department shall collect this fee as part of the debt and retain five percent (5%) for its administrative costs.  The additional twenty percent (20%) shall be remitted to the member organization as payment for collection services rendered on behalf of its claimant local governments.

     SECTION 10.  (1)  Along with the transmittal of the net proceeds collected on behalf of the claimant local government, the department shall provide the local government with an accounting of the setoffs for which payment is being made.  The accounting shall, whenever possible, include the full names of the debtors, the debtor's social security numbers or federal tax identification numbers, the gross proceeds collected per setoff, the net proceeds collected per setoff and the collection assistance fees added to the debt collected per setoff.

     (2)  Upon receipt by a claimant local government of net proceeds collected on the claimant agency's behalf by the department, the claimant local government shall credit the debtor's obligation with the net proceeds collected.

     SECTION 11.  (1)  The department, the local government or its member organization on its behalf, may exchange information necessary to accomplish and effectuate the intent of this act.

     (2)  The information obtained by a local government or its member organization in accordance with the provisions of this article shall retain its confidentiality and shall only be used by the local government or member organization in the pursuit of its debt collection duties and practices.  Any employee or former employee of any local government or its member organization 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 department.

     SECTION 12.  The department shall promulgate rules and regulations pursuant to the Mississippi Administrative Procedures Act which are necessary to implement and carry out its duties and functions under this act.  Local governments may also promulgate rules and regulations necessary for the local administration of their authority granted under this act.

     SECTION 13.  Section 27-7-83, Mississippi Code of 1972, is amended as follows: