HSB 41 (LSB 1254XD (6) 85)

SENATE/HOUSE FILE _____

BY  (PROPOSED DEPARTMENT OF ADMINISTRATIVE SERVICES BILL)

A BILL FOR

An Act concerning setoff procedures for collection of debts owed a state agency or political subdivision.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 8A.504, subsection 1, paragraph a, Code 2013, is amended to read as follows:
   a.  “Collection entity” means the department of administrative services and any other state agency that maintains a separate accounting system and elects to establish a debt collection setoff procedure for collection of debts owed to the state or its agencies
 
an agency.
    Sec. 2.  Section 8A.504, subsection 1, Code 2013, is amended by adding the following new paragraph:
   NEW PARAGRAPH.  0b.  “Debtor” means a person who is liable on a claim to an agency.
    Sec. 3.  Section 8A.504, subsection 1, paragraph b, Code 2013, is amended to read as follows:
   b.  “Person” does not include a state
 
an agency.
    Sec. 4.  Section 8A.504, subsection 1, paragraph d, Code 2013, is amended to read as follows:
   d.  “State agency”
 
“Agency” means a board, commission, department, including the department of administrative services, or other administrative office or unit of the state of Iowa or any other state entity reported in the Iowa comprehensive annual financial report, or a political subdivision of the state, or an office or unit of a political subdivision. “State agency”
 
“Agency” does include the clerk of the district court as it relates to the collection of a qualifying debt. “State agency”
 
“Agency” does not include the general assembly or the governor.
    Sec. 5.  Section 8A.504, subsections 2, 3, and 5, Code 2013, are amended to read as follows:
   2.  Setoff procedure.  The collection entity shall establish and maintain a procedure to set off against any claim owed to a person
 
debtor by a state
 
an agency any liability of that person
 
debtor owed to a state
 
an agency, a support debt being enforced by the child support recovery unit pursuant to chapter 252B, or such other qualifying debt. The procedure shall only apply when at the discretion of the director it is feasible. The procedure shall meet the following conditions:
   a.  Before setoff, a person’s
 
debtor’s liability to a state
 
an agency and the person’s
 
debtor’s claim on a state
 
an agency shall be in the form of a liquidated sum due, owing, and payable.
   b.  Before setoff, the state agency shall obtain and forward to the collection entity the full name and social security number of the person
 
debtor liable to it
 
the agency or to whom a claim is owing who is a natural person. If the person
 
debtor is not a natural person, before setoff, the state agency shall forward to the collection entity the information concerning the person
 
debtor as the collection entity shall, by rule, require. The collection entity shall cooperate with other state agencies in the exchange of information relevant to the identification of persons
 
debtors liable to or claimants of state agencies. However, the collection entity shall provide only relevant information required by a state
 
an agency. The information shall be held in confidence and used for the purpose of setoff only. Section 422.72, subsection 1, does not apply to this paragraph.
   c.  Before setoff, a state
 
an agency shall, at least annually, submit to the collection entity the information required by paragraph “b” along with the amount of each person’s
 
debtor’s liability to and the amount of each claim on the state agency. The collection entity may, by rule, require more frequent submissions.
   d.  Before setoff, the amount of a person’s
 
debtor’s claim on a state
 
an agency and the amount of a person’s
 
debtor’s liability to a state
 
an agency shall constitute a minimum amount set by rule of the collection entity.
   e.  Upon submission of an allegation of liability by a state
 
an agency, the collection entity shall notify the state agency whether the person
 
debtor allegedly liable is entitled to payment from a state
 
an agency, and, if so entitled, shall notify the state agency of the amount of the person’s
 
debtor’s entitlement and of the person’s
 
debtor’s last address known to the collection entity. Section 422.72, subsection 1, does not apply to this paragraph.
   f.
  (1)  Upon notice of entitlement to a payment, the state agency shall send written notification to that person
 
debtor of the state agency’s assertion of its rights to all or a portion of the payment and of the state agency’s entitlement to recover the liability through the setoff procedure, the basis of the assertion, the opportunity to request that a jointly or commonly owned right to payment be divided among owners, and the person’s
 
debtor’s opportunity to give written notice of intent to contest the amount of the allegation. The state agency shall send a copy of the notice to the collection entity. A state
 
An agency subject to chapter 17A shall give notice, conduct hearings, and allow appeals in conformity with chapter 17A.
   (2)  However, upon submission of an allegation of the liability of a person
 
debtor which is owing and payable to the clerk of the district court and upon the determination by the collection entity that the person
 
debtor allegedly liable is entitled to payment from a state
 
an agency, the collection entity shall send written notification to the person
 
debtor which states the assertion by the clerk of the district court of rights to all or a portion of the payment, the clerk’s entitlement to recover the liability through the setoff procedure, the basis of the assertions, the person’s
 
debtor’s opportunity to request within fifteen days of the mailing of the notice that the collection entity divide a jointly or commonly owned right to payment between owners, the opportunity to contest the liability to the clerk by written application to the clerk within fifteen days of the mailing of the notice, and the person’s
 
debtor’s opportunity to contest the collection entity’s setoff procedure.
   g.  Upon the timely request of a person
 
debtor liable to a state
 
an agency or of the spouse of that person
 
debtor and upon receipt of the full name and social security number of the person’s
 
debtor’s spouse, a state
 
an agency shall notify the collection entity of the request to divide a jointly or commonly owned right to payment. Any jointly or commonly owned right to payment is rebuttably presumed to be owned in equal portions by its joint or common owners.
   h.  The collection entity shall, after the state agency has sent notice to the person
 
debtor liable or, if the liability is owing and payable to the clerk of the district court,
 
after the collection entity has sent notice to the person
 
debtor liable,
 
shall set off the amount owed to the agency against any amount which a state
 
an agency owes that person
 
debtor. The collection entity shall refund any balance of the amount to the person
 
debtor. The collection entity shall periodically transfer amounts set off to the state agencies entitled to them. If a person
 
debtor liable to a state
 
an agency gives written notice of intent to contest an allegation, a state
 
an agency shall hold a refund or rebate until final disposition of the allegation. Upon completion of the setoff, a state
 
an agency shall notify in writing the person
 
debtor who was liable or, if the liability is owing and payable to the clerk of the district court, shall comply with the procedures as provided in paragraph “j”.
   i.  The department of revenue’s existing right to credit against tax due or to become due under section 422.73 is not to be impaired by a right granted to or a duty imposed upon the collection entity or other state agency by this section. This section is not intended to impose upon the collection entity or the department of revenue any additional requirement of notice, hearing, or appeal concerning the right to credit against tax due under section 422.73.
   j.  If the alleged liability is owing and payable to the clerk of the district court and setoff as provided in this section is sought, all of the following shall apply:
   (1)  The judicial branch shall prescribe procedures to permit a person
 
debtor to contest the amount of the person’s
 
debtor’s liability to the clerk of the district court.
   (2)  The collection entity shall, except for the procedures described in subparagraph (1), prescribe any other applicable procedures concerning setoff as provided in this subsection.
   (3)  Upon completion of the setoff, the collection entity shall file, at least monthly, with the clerk of the district court a notice of satisfaction of each obligation to the full extent of all moneys collected in satisfaction of the obligation. The clerk shall record the notice and enter a satisfaction for the amounts collected and a separate written notice is not required.
   k.  If the alleged liability is owing and payable to a community college
 
political subdivision and setoff pursuant to this section is sought, both of the following shall apply:
   (1)  In addition to satisfying other applicable setoff procedures established under this subsection, the community college
 
political subdivision shall prescribe
 
establish and implement procedures to permit a person
 
debtor to contest the
 
validity or the amount of the person’s
 
debtor’s liability to the community college
 
political subdivision. Such procedures shall be consistent with and ensure the protection of the person’s
 
debtor’s right of due process under Iowa law.
   (2)  The collection entity shall, except for the procedures prescribed pursuant to subparagraph (1), prescribe any other applicable procedures concerning setoff as provided in this subsection.
   3.  In the case of multiple claims to payments filed under this section, priority shall be given to claims filed by the child support recovery unit or the foster care recovery unit, next priority shall be given to claims filed by the clerk of the district court, next priority shall be given to claims filed by the college student aid commission, next priority shall be given to claims filed by the investigations division of the department of inspections and appeals, and last priority shall be given to claims filed by other state agencies. In the case of multiple claims in which the priority is not otherwise provided by this subsection, priority shall be determined in accordance with rules to be established by the director.
   5.  Under substantive rules established by the director, the department shall seek reimbursement from other state agencies to recover its costs for setting off liabilities.
    Sec. 6.  Section 99D.2, subsection 3, Code 2013, is amended to read as follows:
   3.  “Claimant agency” means a state
 
an agency as defined in section 8A.504, subsection 1, or the state court administrator as defined in section 602.1101.
    Sec. 7.  Section 99F.1, subsection 4, Code 2013, is amended to read as follows:
   4.  “Claimant agency” means a state
 
an agency as defined in section 8A.504, subsection 1, or the state court administrator as defined in section 602.1101.
    Sec. 8.  Section 234.8, Code 2013, is amended to read as follows:
   234.8  Fees for child welfare services.
   The department of human services may charge a fee for child welfare services to a person liable for the cost of the services. The fee shall not exceed the reasonable cost of the services. The fee shall be based upon the person’s ability to pay and consideration of the fee’s impact upon the liable person’s family and the goals identified in the case permanency plan. The department may assess the liable person for the fee and the means of recovery shall include a setoff against an amount owed by a state
 
an agency to the person assessed pursuant to section 8A.504. In addition the department may establish an administrative process to recover the assessment through automatic income withholding. The department shall adopt rules pursuant to chapter 17A to implement the provisions of this section. This section does not apply to court-ordered services provided to juveniles which are a charge upon the state pursuant to section 232.141 and services for which the department has established a support obligation pursuant to section 234.39.
EXPLANATION
   This bill concerns setoff procedures established in Code section 8A.504 and used to collect debts owed the state or a political subdivision of the state.
   The bill redesignates the term “agency” rather than as the defined term “state agency” while keeping the definition the same. The bill also defines “debtor” as a person who is liable on a claim to an agency. Corresponding changes to terms in Code section 8A.504 are made to reflect these changes.
   Code section 8A.504(2)(k), relating to additional setoff requirements for debts owing and payable to a community college, is amended. The bill provides that the additional requirements apply to political subdivisions, that political subdivisions shall establish and implement these enhanced procedures, and that the procedures shall permit a debtor to contest the validity or the amount of the debtor’s claimed liability.