House Study Bill 140 - Introduced HOUSE FILE _____ BY (PROPOSED COMMITTEE ON STATE GOVERNMENT BILL BY CHAIRPERSON COWNIE) A BILL FOR An Act relating to the assignment of debts placed with the 1 centralized collection unit of the department of revenue to 2 a private debt collection designee. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 2688YC (2) 84 jm/rj

H.F. _____ Section 1. Section 421.17, Code 2011, is amended by adding 1 the following new subsection: 2 NEW SUBSECTION . 27A. To implement the private debt 3 collection program established in section 421.17C. 4 Sec. 2. NEW SECTION . 421.17C Private debt collection 5 program. 6 1. When used in this section, unless the context otherwise 7 requires: 8 a. “Debt” means any indebtedness owed to the state by a 9 person, corporation, or other entity, or any indebtedness 10 owed to a local government entity if such indebtedness has 11 been transferred to the centralized collection unit of the 12 department of revenue pursuant to procedures established under 13 section 421.17, subsection 27. “Debt” does not include “court 14 debt” as defined in section 602.8107. 15 b. “Department” means the department of revenue. 16 c. “Director” means the director of revenue. 17 d. “State” means any board, commission, or department of the 18 state, and any other entity reported in the Iowa comprehensive 19 annual financial report. 20 2. The director shall establish a program to assign debt to 21 a private collection designee upon the placement of the debt 22 with the centralized collection unit of the department. 23 a. The program shall apply to all debt on the books of the 24 centralized collection unit on or after the effective date of 25 this Act. 26 b. The department shall enter into a contract with a 27 private debt collection designee by September 1, 2011, and the 28 department shall commence assignment of the debt to a private 29 debt collection designee no later than November 1, 2011. 30 c. Prior to entering into a contract with a private debt 31 collection designee, the department shall solicit requests for 32 proposals. 33 d. The department shall provide for the assessment of a 34 collection fee of up to twenty-five percent of the amount of 35 -1- LSB 2688YC (2) 84 jm/rj 1/ 3

H.F. _____ the debt being collected under the program that is attributable 1 to a debtor. The collection fee as calculated shall be added 2 to the amount of the debt owed by the debtor and shall be owed 3 by and collected from the debtor. The collection fee shall be 4 used to compensate the private debt collection designee. 5 e. The confidentiality provisions of sections 422.20 and 6 422.72 do not apply to tax information assigned to a private 7 collection designee under the program. 8 f. The centralized computer data bank established in section 9 421.17, subsection 27, shall be made available to the private 10 debt collection designee. 11 g. The department’s existing right regarding setoff from 12 income tax refunds or other accounts payable by the state shall 13 not be impaired by this program. 14 EXPLANATION 15 This bill relates to the assignment of debts placed with the 16 centralized collection unit of the department of revenue to a 17 private debt collection designee. 18 The bill requires the director of revenue to establish a 19 program to assign debt placed with the centralized collection 20 unit to a private collection designee for further collection 21 efforts, upon the placement of such debt with the unit. 22 The bill defines “debt” to mean any indebtedness owed 23 to the state by a person, corporation, or other entity, 24 any indebtedness owed to a local government entity, if such 25 indebtedness has been transferred to the centralized collection 26 unit pursuant to procedures established under Code section 27 421.17, subsection 27. The term “debt” under the bill does not 28 include “court debt” as defined in Code section 602.8107. 29 The bill provides that the program applies to all eligible 30 debt on the books of the centralized collection unit on or 31 after the effective date of the bill. 32 The bill requires the department of revenue to solicit 33 requests for proposals from private debt collection designees. 34 The bill requires that the department of revenue enter into 35 -2- LSB 2688YC (2) 84 jm/rj 2/ 3

H.F. _____ a contract with a private debt collection designee by September 1 1, 2011, and commence with assigning the debt to the private 2 debt collection designee no later than November 1, 2011. 3 The bill requires the department to provide for a collection 4 fee no greater than 25 percent of the amount of the debt 5 being collected under the program that is attributable to a 6 debtor. The collection fee as calculated shall be added to the 7 amount of the debt owed by the debtor and shall be owed by and 8 collected from the debtor. The collection fee shall be used to 9 compensate the private debt collection designee. 10 Under the bill, the confidentiality provisions of Code 11 sections 422.20 and 422.72 do not apply to tax information 12 assigned to a private collection designee. 13 The bill also requires the centralized computer data bank 14 established in Code section 421.17, subsection 27, to be made 15 available to the private debt collection designee. 16 The bill does not impair the ability of the department 17 of revenue regarding setoff from income tax refunds or other 18 accounts payable by the state. 19 -3- LSB 2688YC (2) 84 jm/rj 3/ 3