GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1989

S	1 

SENATE BILL 1587

Short Title:  Setoff Debt Collection Changes.	(Public)
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Sponsors: Senator Barker.
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Referred to:  Finance.
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June 6, 1990

A BILL TO BE ENTITLED
AN ACT TO IMPROVE THE PROCEDURE FOR COLLECTING DEBTS OWED THE STATE BY SETTING OFF THE DEBTS AGAINST TAX REFUNDS.
The General Assembly of North Carolina enacts:
Section 1.  G.S. 105A-3 reads as rewritten:
"§ 105A-3. Remedy additional; mandatory usage; obtaining identifying information.
(a)	The collection remedy under this Article is in addition to and not in substitution for any other remedy available by law.
(b)	All claimant agencies shall submit, for collection under the procedure established by this Article, all debts which they are owed, except debts that they are advised by the Attorney General not to submit because the validity of the debt is legitimately in dispute, because an alternative means of collection is pending and believed to be adequate, or because such a collection attempt would result in a loss of federal funds.
(c)	All claimant agencies shall whenever possible obtain the full name, social security number, address, and any other identifying information required by rules promulgated by the Department pursuant to G.S. 105A-16 from any person for whom the agencies provide any service or transact any business and who the claimant agencies can foresee may become a debtor under this Article."
Sec. 2. G.S. 105A-6 reads as rewritten:
"§ 105A-6. Procedure for setoff.
(a)	A claimant agency seeking to attempt collection of a debt through setoff shall notify the Department in writing and supply (i) information necessary to identify the debtor whose refund is sought to be set off and (ii) the date, if any, that the debt is expected to expire.  Notification to the Department and the furnishing of identifying information must occur on or before a date specified by the Department in the first year preceding the calendar year during which the refund would be paid.  The notice is effective to initiate setoff against refunds that would be made in calendar years following the year in which the notice was first made until the date specified in the notice that the debt is expected to expire.  The agency shall notify the Department in writing when a debt has been paid or is no longer owed the agency.   
(b)	The Department, upon receipt of notification, shall determine each year whether the debtor to the claimant agency is entitled to a refund of at least fifty dollars ($50.00) from the Department.  Upon determination by the Department that a debtor specified by a claimant agency qualifies for such a refund, the Department shall notify in writing the claimant agency that a refund is pending, specify its sum, and indicate the debtor's address as listed on the tax return.
(c)	Unless stayed by court order, the Department shall, upon certification as provided in this Article, set off the certified debt against the refund to which the debtor would otherwise be entitled."
Sec. 3.  G.S. 105A-13 reads as rewritten:
"§ 105A-13. Disposition of proceeds collected; collection assistance fees.
(a)	Upon effecting final setoffs, the Department shall periodically write checks to the respective claimant agencies for the net proceeds collected on their behalf.
(b)	
		Each year the Department shall calculate its actual cost of collection as a percentage of the immediately preceding year's collections under the Setoff Debt Collection Act and shall retain that percentage from the gross proceeds collected by the Department through setoff for the current fiscal year."
Sec. 4.  The Administrative Office of the Courts shall submit to the Department of Revenue on or before October 1, 1991, a list of all outstanding debts owed the State for services rendered for representation of indigent persons, as identified in judgments entered pursuant to G.S. 7A-455(b) that have not been satisfied.  The list shall specify the name, address, and social security number of the debtor, the amount of the debt, and the date the judgment will expire.  This list will constitute notice under G.S. 105A-6 of these debts.
Sec. 5.  In order to pay for the computer programming, data entry, and related expenses needed to implement the provisions of this act, the Department of Revenue shall draw from individual income tax net collections received under Division II of Article 4 of Chapter 105 of the General Statutes an amount not to exceed eighty-one thousand six hundred dollars ($81,600) for the 1990-91 fiscal year.
Sec. 6.  Sections 1 through 3 of this act are effective for taxable years beginning on or after January 1, 1991, and apply to debts submitted pursuant to G.S. 105A-6 on or after January 1, 1991.  The remainder of this act shall become effective July 1, 1990.