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House Study Bill 656 - IntroducedA Bill ForAn Act 1relating to the setoff procedures used by public
2agencies.
3BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1 Section 1. Section 8A.323, subsection 5, Code 2020, is
2amended to read as follows:
35. Any fine that remains unpaid upon becoming delinquent
4may be collected by the department of revenue pursuant to the
5setoff procedures provided for in section 8A.504 421.65. For
6purposes of this subsection, a fine becomes delinquent if
7it has not been paid within thirty days of the date of the
8issuance of the parking citation, unless a written request for
9a hearing is filed as provided pursuant to the rules of the
10department of revenue. If an appeal is filed and the citation
11is upheld, the fine becomes delinquent ten days after the
12issuance of the final decision on the appeal or thirty-one
13days after the date of the issuance of the parking citation,
14whichever is later.
15 Sec. 2. Section 8A.502, subsection 2, Code 2020, is amended
16by striking the subsection.
17 Sec. 3. Section 96.11, subsection 16, Code 2020, is amended
18to read as follows:
1916. Reimbursement of setoff costs. The department shall
20include in the amount set off in accordance with section 8A.504
21 421.65, for the collection of an overpayment created pursuant
22to section 96.3, subsection 7, or section 96.16, subsection
234, an additional amount for the reimbursement of setoff costs
24incurred by the department of administrative services revenue.
25 Sec. 4. Section 99D.2, subsection 3, Code 2020, is amended
26to read as follows:
273. “Claimant agency” means a public agency as defined
28in section 8A.504 421.65, subsection 1, or the state court
29administrator as defined in section 602.1101.
30 Sec. 5. Section 99D.28, subsection 2, Code 2020, is amended
31to read as follows:
322. The licensee is authorized and directed to withhold
33any winnings of a debtor which are paid out directly by the
34licensee subject to the lien created by this section and
35provide notice of such withholding to the winner when the
-1-1winner appears and claims winnings in person. The licensee
2shall pay the funds over to the collection entity which
3administers the setoff program pursuant to section 8A.504
4 421.65.
5 Sec. 6. Section 99F.1, subsection 5, Code 2020, is amended
6to read as follows:
75. “Claimant agency” means a public agency as defined
8in section 8A.504 421.65, subsection 1, or the state court
9administrator as defined in section 602.1101.
10 Sec. 7. Section 99F.19, subsection 2, Code 2020, is amended
11to read as follows:
122. The licensee is authorized and directed to withhold
13any winnings of a debtor which are paid out directly by the
14licensee subject to the lien created by this section and
15provide notice of such withholding to the winner when the
16winner appears and claims winnings in person. The licensee
17shall pay the funds over to the collection entity which
18administers the setoff program pursuant to section 8A.504
19 421.65.
20 Sec. 8. Section 99G.38, subsection 3, Code 2020, is amended
21to read as follows:
223. The state of Iowa offset program, as provided in
23section 8A.504 421.65, shall be available to the authority to
24facilitate receipt of funds owed to the authority.
25 Sec. 9. Section 217.34, Code 2020, is amended to read as
26follows:
27217.34 Debt setoff.
28The investigations division of the department of inspections
29and appeals and the department of human services shall provide
30assistance to set off against a person’s or provider’s income
31tax refund or rebate any debt which has accrued through written
32contract, nonpayment of premiums pursuant to section 249A.3,
33subsection 2, paragraph “a”, subparagraph (1), subrogation,
34departmental recoupment procedures, or court judgment and which
35is in the form of a liquidated sum due and owing the department
-2-1of human services. The department of inspections and appeals,
2with approval of the department of human services, shall adopt
3rules under chapter 17A necessary to assist the department of
4administrative services revenue in the implementation of the
5setoff under section 8A.504 421.65 in regard to money owed to
6the state for public assistance overpayments or nonpayment
7of premiums as specified in this section. The department of
8human services shall adopt rules under chapter 17A necessary to
9assist the department of administrative services revenue in the
10implementation of the setoff under section 8A.504 421.65, in
11regard to collections by the child support recovery unit and
12the foster care recovery unit.
13 Sec. 10. Section 234.8, Code 2020, is amended to read as
14follows:
15234.8 Fees for child welfare services.
16The department of human services may charge a fee for
17child welfare services to a person liable for the cost of the
18services. The fee shall not exceed the reasonable cost of the
19services. The fee shall be based upon the person’s ability
20to pay and consideration of the fee’s impact upon the liable
21person’s family and the goals identified in the case permanency
22plan. The department may assess the liable person for the fee
23and the means of recovery shall include a setoff against an
24amount owed by a state agency to the person assessed pursuant
25to section 8A.504 421.65. In addition the department may
26establish an administrative process to recover the assessment
27through automatic income withholding. The department shall
28adopt rules pursuant to chapter 17A to implement the provisions
29of this section. This section does not apply to court-ordered
30services provided to juveniles which are a charge upon the
31state pursuant to section 232.141 and services for which the
32department has established a support obligation pursuant to
33section 234.39.
34 Sec. 11. Section 252B.5, subsection 4, Code 2020, is amended
35to read as follows:
-3- 14. Assistance to set off against a debtor’s income tax
2refund or rebate any support debt, which is assigned to
3the department of human services or which the child support
4recovery unit is attempting to collect on behalf of any
5individual not eligible as a public assistance recipient, which
6has accrued through written contract, subrogation, or court
7judgment, and which is in the form of a liquidated sum due
8and owing for the care, support, or maintenance of a child.
9Unless the periodic payment plan provisions for a retroactive
10modification pursuant to section 598.21C apply, the entire
11amount of a judgment for accrued support, notwithstanding
12compliance with a periodic payment plan or regardless of the
13date of entry of the judgment, is due and owing as of the date
14of entry of the judgment and is delinquent for the purposes of
15setoff, including for setoff against a debtor’s federal income
16tax refund or other federal nontax payment. The department
17of human services shall adopt rules pursuant to chapter 17A
18necessary to assist the department of administrative services
19 revenue in the implementation of the child support setoff as
20established under section 8A.504 421.65.
21 Sec. 12. Section 261.37, subsection 7, Code 2020, is amended
22to read as follows:
237. To establish an effective system for the collection of
24delinquent loans, including the adoption of an agreement with
25the department of administrative services revenue to set off
26against a defaulter’s income tax refund or rebate the amount
27that is due because of a default on a loan made under this
28subchapter. The commission shall adopt rules under chapter
2917A necessary to assist the department of administrative
30services revenue in the implementation of the student loan
31setoff program as established under section 8A.504 421.65.
32The commission shall apply administrative wage garnishment
33procedures authorized under the federal Higher Education Act of
341965, as amended and codified in 20 U.S.C. §1071 et seq., for
35all delinquent loans, including loans authorized under section
-4-1261.38, when a defaulter who is financially capable of paying
2fails to voluntarily enter into a reasonable payment agreement.
3In no case shall the commission garnish more than the amount
4authorized by federal law for all loans being collected by the
5commission, including those authorized under section 261.38.
6 Sec. 13. Section 321.11A, subsection 1, Code 2020, is
7amended to read as follows:
81. Notwithstanding section 321.11, the department, upon
9request, shall provide personal information that identifies
10a person by the social security number of the person to the
11following:
12a. The department of revenue for the purpose purposes of
13collecting debt and administering the setoff program pursuant
14to section 421.65.
15b. The judicial branch for the purpose of collecting court
16debt pursuant to section 602.8107.
17c. The department of administrative services for the purpose
18of administering the setoff program pursuant to section 8A.504.
19 Sec. 14. Section 321.31, subsection 1, paragraph c, Code
202020, is amended to read as follows:
21c. The director shall maintain a records system of
22delinquent accounts owed to the state using information
23provided through the computerized data bank established in
24section 421.17. The department and county treasurers shall use
25the information maintained in the records system to determine
26if applicants for renewal of registration have delinquent
27accounts, charges, fees, loans, taxes, or other indebtedness
28owed to or being collected by the state as provided pursuant
29to section 8A.504 421.65. The director, the director of the
30department of administrative services, and the director of
31revenue shall establish procedures for updating the delinquent
32accounts records to add and remove accounts, as applicable.
33 Sec. 15. Section 321.40, subsection 6, paragraph a, Code
342020, is amended to read as follows:
35a. The department or the county treasurer shall refuse
-5-1to renew the registration of a vehicle registered to the
2applicant if the department or the county treasurer knows that
3the applicant has a delinquent account, charge, fee, loan,
4taxes, or other indebtedness owed to or being collected by the
5state, from information provided pursuant to sections 8A.504
6 and 421.17 and 421.65. An applicant may contest this action
7by initiating a contested case proceeding with the agency
8that referred the debt for collection pursuant to section
98A.504 421.65. The department of revenue and the department
10of transportation shall notify the county treasurers through
11the distributed teleprocessing network of persons who owe
12such a delinquent account, charge, fee, loan, taxes, or other
13indebtedness.
14 Sec. 16. NEW SECTION. 421.65 Setoff procedures.
151. Definitions. As used in this section, unless the context
16otherwise requires:
17a. “Collection entity” means the department of revenue and
18any other public agency that maintains a separate accounting
19system and elects to establish a debt collection setoff
20procedure for collection of debts owed to the public agency.
21b. “Person” does not include a public agency.
22c. “Public agency” means a board, commission, department,
23including the department of revenue, or other administrative
24office or unit of the state of Iowa or any other state entity
25reported in the Iowa comprehensive annual financial report,
26or a political subdivision of the state, or an office or unit
27of a political subdivision. “Public agency” does include the
28clerk of the district court as it relates to the collection of
29a qualifying debt. “Public agency” does not include the general
30assembly or the governor.
31d. “Qualifying debt” includes but is not limited to the
32following:
33(1) Any debt, which is assigned to the department of
34human services, or which is owed to the department of human
35services for unpaid premiums under section 249A.3, subsection
-6-12, paragraph “a”, subparagraph (1), or which the child support
2recovery unit is otherwise attempting to collect, or which the
3foster care recovery unit of the department of human services
4is attempting to collect on behalf of a child receiving foster
5care provided by the department of human services.
6(2) An amount that is due because of a default on a loan
7under chapter 261.
8(3) Any debt which is in the form of a liquidated sum due,
9owing, and payable to the clerk of the district court.
102. Setoff procedure. The collection entity shall establish
11and maintain a procedure to set off against any claim owed to
12a person by a public agency any liability of that person owed
13to a public agency, a support debt being enforced by the child
14support recovery unit pursuant to chapter 252B, or such other
15qualifying debt. The procedure shall only apply when at the
16discretion of the director it is feasible. The procedure shall
17meet the following conditions:
18a. Before setoff, a person’s liability to a public agency
19and the person’s claim on a public agency shall be in the form
20of a liquidated sum due, owing, and payable.
21b. Before setoff, the public agency shall obtain and forward
22to the collection entity the full name and social security
23number of the person liable to the public agency or to whom
24a claim is owing who is a natural person. If the person is
25not a natural person, before setoff, the public agency shall
26forward to the collection entity the information concerning the
27person as the collection entity shall, by rule, require. The
28collection entity shall cooperate with other public agencies in
29the exchange of information relevant to the identification of
30persons liable to or claimants of public agencies. However,
31the collection entity shall provide only relevant information
32required by a public agency. The information shall be held in
33confidence and used for the purpose of setoff only. Section
34422.72, subsection 1, does not apply to this paragraph.
35c. Before setoff, a public agency shall, at least annually,
-7-1submit to the collection entity the information required
2by paragraph “b” along with the amount of each person’s
3liability to and the amount of each claim on the public agency.
4The collection entity may, by rule, require more frequent
5submissions.
6d. Before setoff, the amount of a person’s claim on a public
7agency and the amount of a person’s liability to a public
8agency shall constitute a minimum amount set by rule of the
9collection entity.
10e. Upon submission of an allegation of liability by a public
11agency, the collection entity shall notify the public agency
12whether the person allegedly liable is entitled to payment from
13a public agency, and, if so entitled, shall notify the public
14agency of the amount of the person’s entitlement and of the
15person’s last address known to the collection entity. Section
16422.72, subsection 1, does not apply to this paragraph.
17f. (1) Upon notice of entitlement to a payment, the public
18agency shall send written notification to that person of the
19public agency’s assertion of its rights to all or a portion
20of the payment and of the public agency’s entitlement to
21recover the liability through the setoff procedure, the basis
22of the assertion, the opportunity to request that a jointly
23or commonly owned right to payment be divided among owners,
24and the person’s opportunity to give written notice of intent
25to contest the amount of the allegation. A public agency
26shall provide the person with an opportunity to contest the
27liability. A public agency subject to chapter 17A shall give
28notice, conduct hearings, and allow appeals in conformity with
29chapter 17A.
30(2) However, upon submission of an allegation of the
31liability of a person which is owing and payable to the
32clerk of the district court and upon the determination by the
33collection entity that the person allegedly liable is entitled
34to payment from a public agency, the collection entity shall
35send written notification to the person which states the
-8-1assertion by the clerk of the district court of rights to all
2or a portion of the payment, the clerk’s entitlement to recover
3the liability through the setoff procedure, the basis of the
4assertions, the person’s opportunity to request within fifteen
5days of the mailing of the notice that the collection entity
6divide a jointly or commonly owned right to payment between
7owners, the opportunity to contest the liability to the clerk
8by written application to the clerk within fifteen days of the
9mailing of the notice, and the person’s opportunity to contest
10the collection entity’s setoff procedure.
11g. Upon the timely request of a person liable to a public
12agency or of the spouse of that person and upon receipt of the
13full name and social security number of the person’s spouse,
14a public agency shall notify the collection entity of the
15request to divide a jointly or commonly owned right to payment.
16Any jointly or commonly owned right to payment is rebuttably
17presumed to be owned in equal portions by its joint or common
18owners.
19h. The collection entity shall, after the public agency
20has sent notice to the person liable or, if the liability is
21owing and payable to the clerk of the district court, the
22collection entity has sent notice to the person liable, set
23off the amount owed to the agency against any amount which a
24public agency owes that person. The collection entity shall
25refund any balance of the amount to the person. The collection
26entity shall periodically transfer amounts set off to the
27public agencies entitled to them. If a person liable to a
28public agency gives written notice of intent to contest an
29allegation, a public agency shall hold a refund or rebate until
30final disposition of the allegation. Upon completion of the
31setoff, a public agency shall notify in writing the person who
32was liable or, if the liability is owing and payable to the
33clerk of the district court, shall comply with the procedures
34as provided in paragraph “j”.
35i. The department of revenue’s existing right to credit
-9-1against tax due or to become due under section 422.73 is not
2to be impaired by a right granted to or a duty imposed upon
3the collection entity or other public agency by this section.
4This section is not intended to impose upon the collection
5entity any additional requirement of notice, hearing, or appeal
6concerning the right to credit against tax due under section
7422.73.
8j. If the alleged liability is owing and payable to the
9clerk of the district court and setoff as provided in this
10section is sought, all of the following shall apply:
11(1) The judicial branch shall prescribe procedures to
12permit a person to contest the amount of the person’s liability
13to the clerk of the district court.
14(2) The collection entity shall, except for the procedures
15described in subparagraph (1), prescribe any other applicable
16procedures concerning setoff as provided in this subsection.
17(3) Upon completion of the setoff, the collection entity
18shall file, at least monthly, with the clerk of the district
19court a notice of satisfaction of each obligation to the
20full extent of all moneys collected in satisfaction of the
21obligation. The clerk shall record the notice and enter a
22satisfaction for the amounts collected and a separate written
23notice is not required.
24k. If the alleged liability is owing and payable to a
25community college and setoff pursuant to this section is
26sought, both of the following shall apply:
27(1) In addition to satisfying other applicable setoff
28procedures established under this subsection, the community
29college shall prescribe procedures to permit a person to
30contest the amount of the person’s liability to the community
31college. Such procedures shall be consistent with and ensure
32the protection of the person’s right of due process under Iowa
33law.
34(2) The collection entity shall, except for the procedures
35prescribed pursuant to subparagraph (1), prescribe any other
-10-1applicable procedures concerning setoff as provided in this
2subsection.
3l. If the alleged liability is owing and payable to a school
4district for school meals and the school district has made
5reasonable efforts to collect the debt, setoff pursuant to
6this section may be sought by the school district. However,
7this paragraph shall not be interpreted to limit any other
8options for school meal debt collection available to the school
9district by law.
103. In the case of multiple claims to payments filed under
11this section, priority shall be given to claims filed by
12the child support recovery unit or the foster care recovery
13unit, next priority shall be given to claims filed by the
14clerk of the district court, next priority shall be given
15to claims filed by the college student aid commission, next
16priority shall be given to claims filed by the investigations
17division of the department of inspections and appeals, and
18last priority shall be given to claims filed by other public
19agencies. In the case of multiple claims in which the priority
20is not otherwise provided by this subsection, priority shall be
21determined in accordance with rules to be established by the
22director.
234. The director shall have the authority to enter into
24reciprocal agreements with the departments of revenue of other
25states that have enacted legislation that is substantially
26equivalent to the setoff procedure provided in this section
27for the recovery of an amount due because of a default on a
28loan under chapter 261. A reciprocal agreement shall also be
29approved by the college student aid commission. The agreement
30shall authorize the department to provide by rule for the
31setoff of state income tax refunds or rebates of defaulters
32from states with which Iowa has a reciprocal agreement and to
33provide for sending lists of names of Iowa defaulters to the
34states with which Iowa has a reciprocal agreement for setoff of
35that state’s income tax refunds.
-11- 15. Under substantive rules established by the director, the
2department shall seek reimbursement from other public agencies
3to recover its costs for setting off liabilities.
4 Sec. 17. Section 422.12G, subsection 2, Code 2020, is
5amended to read as follows:
62. The director of revenue shall draft the income tax form
7to allow the designation of contributions to the veterans trust
8fund and to the volunteer fire fighter preparedness fund as
9one checkoff on the tax return. The department of revenue,
10on or before January 31, shall transfer one-half of the total
11amount designated on the tax return forms due in the preceding
12calendar year to the veterans trust fund and the remaining
13one-half to the volunteer fire fighter preparedness fund.
14However, before a checkoff pursuant to this section shall be
15permitted, all liabilities on the books of the department of
16administrative services and accounts identified as owing under
17section 8A.504 421.65 shall be satisfied.
18 Sec. 18. Section 422.12I, subsection 2, Code 2020, is
19amended to read as follows:
202. The director of revenue shall draft the income tax form
21to allow the designation of contributions to the foundation
22fund on the tax return. The department, on or before January
2331, shall transfer the total amount designated on the tax
24form due in the preceding year to the foundation fund.
25However, before a checkoff pursuant to this section shall be
26permitted, all liabilities on the books of the department of
27administrative services and accounts identified as owing under
28section 8A.504 421.65 shall be satisfied.
29 Sec. 19. Section 422.12K, subsection 2, Code 2020, is
30amended to read as follows:
312. The director of revenue shall draft the income tax form
32to allow the designation of contributions to the child abuse
33prevention program fund on the tax return. The department of
34revenue, on or before January 31, shall transfer the total
35amount designated on the tax return forms due in the preceding
-12-1calendar year to the child abuse prevention program fund.
2However, before a checkoff pursuant to this section shall be
3permitted, all liabilities on the books of the department of
4administrative services and accounts identified as owing under
5section 8A.504 421.65 shall be satisfied.
6 Sec. 20. Section 422.20, subsection 3, paragraph a, Code
72020, is amended to read as follows:
8a. Unless otherwise expressly permitted by section 8A.504,
9 section 8G.4, section 11.41, section 96.11, subsection 6,
10section 421.17, subsections 22, 23, and 26, section 421.17,
11subsection 27, paragraph “k”, section 421.17, subsection 31,
12section 252B.9, section 321.40, subsection 6, sections 321.120,
13421.19, 421.28, 421.65, 422.72, and 452A.63, this section, or
14another provision of law, a tax return, return information, or
15investigative or audit information shall not be divulged to any
16person or entity, other than the taxpayer, the department, or
17internal revenue service for use in a matter unrelated to tax
18administration.
19 Sec. 21. Section 422.72, subsection 3, paragraph a, Code
202020, is amended to read as follows:
21a. Unless otherwise expressly permitted by section 8A.504,
22 section 8G.4, section 11.41, section 96.11, subsection 6,
23section 421.17, subsections 22, 23, and 26, section 421.17,
24subsection 27, paragraph “k”, section 421.17, subsection 31,
25section 252B.9, section 321.40, subsection 6, sections 321.120,
26421.19, 421.28, 421.65, 422.20, and 452A.63, this section, or
27another provision of law, a tax return, return information, or
28investigative or audit information shall not be divulged to any
29person or entity, other than the taxpayer, the department, or
30internal revenue service for use in a matter unrelated to tax
31administration.
32 Sec. 22. Section 456A.16, subsection 7, Code 2020, is
33amended to read as follows:
347. The department shall adopt rules pursuant to chapter 17A
35to implement this section. However, before a checkoff pursuant
-13-1to this section shall be permitted, all liabilities on the
2books of the department of administrative services revenue and
3accounts identified as owing under section 8A.504 421.65 shall
4be satisfied.
5 Sec. 23. Section 602.8102, subsection 58A, Code 2020, is
6amended to read as follows:
758A. Assist the department of administrative services
8 revenue in setting off against debtors’ income tax refunds
9or rebates under section 8A.504 421.65, debts which are due,
10owing, and payable to the clerk of the district court as
11criminal fines, civil penalties, surcharges, or court costs.
12 Sec. 24. Section 602.8107, subsection 4, paragraph a, Code
132020, is amended to read as follows:
14a. This subsection does not apply to amounts collected for
15victim restitution, the victim compensation fund, the criminal
16penalty surcharge, sex offender civil penalty, drug abuse
17resistance education surcharge, the law enforcement initiative
18surcharge, county enforcement surcharge, amounts collected as
19a result of procedures initiated under subsection 5 or under
20section 8A.504 421.65, or fees charged pursuant to section
21356.7.
22 Sec. 25. Section 642.2, subsection 4, Code 2020, is amended
23to read as follows:
244. Notwithstanding subsections 2, 3, 6, and 7, any
25moneys owed to the child support obligor by the state, with
26the exception of unclaimed property held by the treasurer
27of state pursuant to chapter 556, and payments owed to the
28child support obligor through the Iowa public employees’
29retirement system are subject to garnishment, attachment,
30execution, or assignment by the child support recovery unit
31if the child support recovery unit is providing enforcement
32services pursuant to chapter 252B. Any moneys that are
33determined payable by the treasurer pursuant to section 556.20,
34subsection 2, to the child support obligor shall be subject to
35setoff pursuant to section 8A.504 421.65, notwithstanding any
-14-1administrative rule pertaining to the child support recovery
2unit limiting the amount of the offset.
3 Sec. 26. REPEAL. Section 8A.504, Code 2020, is repealed.
4 Sec. 27. TRANSITION PROVISIONS. Any rule, regulation,
5form, order, or directive promulgated by the department of
6administrative services as required to administer and enforce
7the provisions of section 8A.504 prior to the effective date of
8this Act shall continue in full force and effect until amended,
9repealed, or supplemented by the department of revenue.
10EXPLANATION
11The inclusion of this explanation does not constitute agreement with
12the explanation’s substance by the members of the general assembly.
13This bill relates to the setoff procedures used by public
14agencies.
15The bill repeals the setoff procedures administered by the
16department of administrative services and contained in Code
17section 8A.504 and reestablishes the setoff procedures under
18the purview of the department of revenue. The bill updates
19references to the setoff procedures accordingly throughout the
20Code.
21Pursuant to new Code section 421.65, the department of
22revenue, along with any other public agency that maintains a
23separate accounting system and elects to establish a setoff
24procedure, is required to establish and maintain a procedure to
25set off against any claim owed to a person by a public agency
26any liability of that person owed to a public agency, a support
27debt being enforced by the child support recovery unit, or any
28other qualifying debt.
29The bill provides that any rule, regulation, form, order,
30or directive the department of administrative services adopted
31prior to the effective date of the bill to administer Code
32section 8A.504 is to continue in full force or effect until
33the department of revenue amends, repeals, or supplements such
34rule, regulation, form, order, or directive.
-15-ja/jh
2agencies.
3BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1 Section 1. Section 8A.323, subsection 5, Code 2020, is
2amended to read as follows:
35. Any fine that remains unpaid upon becoming delinquent
4may be collected by the department of revenue pursuant to the
5setoff procedures provided for in section 8A.504 421.65. For
6purposes of this subsection, a fine becomes delinquent if
7it has not been paid within thirty days of the date of the
8issuance of the parking citation, unless a written request for
9a hearing is filed as provided pursuant to the rules of the
10department of revenue. If an appeal is filed and the citation
11is upheld, the fine becomes delinquent ten days after the
12issuance of the final decision on the appeal or thirty-one
13days after the date of the issuance of the parking citation,
14whichever is later.
15 Sec. 2. Section 8A.502, subsection 2, Code 2020, is amended
16by striking the subsection.
17 Sec. 3. Section 96.11, subsection 16, Code 2020, is amended
18to read as follows:
1916. Reimbursement of setoff costs. The department shall
20include in the amount set off in accordance with section 8A.504
21 421.65, for the collection of an overpayment created pursuant
22to section 96.3, subsection 7, or section 96.16, subsection
234, an additional amount for the reimbursement of setoff costs
24incurred by the department of administrative services revenue.
25 Sec. 4. Section 99D.2, subsection 3, Code 2020, is amended
26to read as follows:
273. “Claimant agency” means a public agency as defined
28in section 8A.504 421.65, subsection 1, or the state court
29administrator as defined in section 602.1101.
30 Sec. 5. Section 99D.28, subsection 2, Code 2020, is amended
31to read as follows:
322. The licensee is authorized and directed to withhold
33any winnings of a debtor which are paid out directly by the
34licensee subject to the lien created by this section and
35provide notice of such withholding to the winner when the
-1-1winner appears and claims winnings in person. The licensee
2shall pay the funds over to the collection entity which
3administers the setoff program pursuant to section 8A.504
4 421.65.
5 Sec. 6. Section 99F.1, subsection 5, Code 2020, is amended
6to read as follows:
75. “Claimant agency” means a public agency as defined
8in section 8A.504 421.65, subsection 1, or the state court
9administrator as defined in section 602.1101.
10 Sec. 7. Section 99F.19, subsection 2, Code 2020, is amended
11to read as follows:
122. The licensee is authorized and directed to withhold
13any winnings of a debtor which are paid out directly by the
14licensee subject to the lien created by this section and
15provide notice of such withholding to the winner when the
16winner appears and claims winnings in person. The licensee
17shall pay the funds over to the collection entity which
18administers the setoff program pursuant to section 8A.504
19 421.65.
20 Sec. 8. Section 99G.38, subsection 3, Code 2020, is amended
21to read as follows:
223. The state of Iowa offset program, as provided in
23section 8A.504 421.65, shall be available to the authority to
24facilitate receipt of funds owed to the authority.
25 Sec. 9. Section 217.34, Code 2020, is amended to read as
26follows:
27217.34 Debt setoff.
28The investigations division of the department of inspections
29and appeals and the department of human services shall provide
30assistance to set off against a person’s or provider’s income
31tax refund or rebate any debt which has accrued through written
32contract, nonpayment of premiums pursuant to section 249A.3,
33subsection 2, paragraph “a”, subparagraph (1), subrogation,
34departmental recoupment procedures, or court judgment and which
35is in the form of a liquidated sum due and owing the department
-2-1of human services. The department of inspections and appeals,
2with approval of the department of human services, shall adopt
3rules under chapter 17A necessary to assist the department of
4administrative services revenue in the implementation of the
5setoff under section 8A.504 421.65 in regard to money owed to
6the state for public assistance overpayments or nonpayment
7of premiums as specified in this section. The department of
8human services shall adopt rules under chapter 17A necessary to
9assist the department of administrative services revenue in the
10implementation of the setoff under section 8A.504 421.65, in
11regard to collections by the child support recovery unit and
12the foster care recovery unit.
13 Sec. 10. Section 234.8, Code 2020, is amended to read as
14follows:
15234.8 Fees for child welfare services.
16The department of human services may charge a fee for
17child welfare services to a person liable for the cost of the
18services. The fee shall not exceed the reasonable cost of the
19services. The fee shall be based upon the person’s ability
20to pay and consideration of the fee’s impact upon the liable
21person’s family and the goals identified in the case permanency
22plan. The department may assess the liable person for the fee
23and the means of recovery shall include a setoff against an
24amount owed by a state agency to the person assessed pursuant
25to section 8A.504 421.65. In addition the department may
26establish an administrative process to recover the assessment
27through automatic income withholding. The department shall
28adopt rules pursuant to chapter 17A to implement the provisions
29of this section. This section does not apply to court-ordered
30services provided to juveniles which are a charge upon the
31state pursuant to section 232.141 and services for which the
32department has established a support obligation pursuant to
33section 234.39.
34 Sec. 11. Section 252B.5, subsection 4, Code 2020, is amended
35to read as follows:
-3- 14. Assistance to set off against a debtor’s income tax
2refund or rebate any support debt, which is assigned to
3the department of human services or which the child support
4recovery unit is attempting to collect on behalf of any
5individual not eligible as a public assistance recipient, which
6has accrued through written contract, subrogation, or court
7judgment, and which is in the form of a liquidated sum due
8and owing for the care, support, or maintenance of a child.
9Unless the periodic payment plan provisions for a retroactive
10modification pursuant to section 598.21C apply, the entire
11amount of a judgment for accrued support, notwithstanding
12compliance with a periodic payment plan or regardless of the
13date of entry of the judgment, is due and owing as of the date
14of entry of the judgment and is delinquent for the purposes of
15setoff, including for setoff against a debtor’s federal income
16tax refund or other federal nontax payment. The department
17of human services shall adopt rules pursuant to chapter 17A
18necessary to assist the department of administrative services
19 revenue in the implementation of the child support setoff as
20established under section 8A.504 421.65.
21 Sec. 12. Section 261.37, subsection 7, Code 2020, is amended
22to read as follows:
237. To establish an effective system for the collection of
24delinquent loans, including the adoption of an agreement with
25the department of administrative services revenue to set off
26against a defaulter’s income tax refund or rebate the amount
27that is due because of a default on a loan made under this
28subchapter. The commission shall adopt rules under chapter
2917A necessary to assist the department of administrative
30services revenue in the implementation of the student loan
31setoff program as established under section 8A.504 421.65.
32The commission shall apply administrative wage garnishment
33procedures authorized under the federal Higher Education Act of
341965, as amended and codified in 20 U.S.C. §1071 et seq., for
35all delinquent loans, including loans authorized under section
-4-1261.38, when a defaulter who is financially capable of paying
2fails to voluntarily enter into a reasonable payment agreement.
3In no case shall the commission garnish more than the amount
4authorized by federal law for all loans being collected by the
5commission, including those authorized under section 261.38.
6 Sec. 13. Section 321.11A, subsection 1, Code 2020, is
7amended to read as follows:
81. Notwithstanding section 321.11, the department, upon
9request, shall provide personal information that identifies
10a person by the social security number of the person to the
11following:
12a. The department of revenue for the purpose purposes of
13collecting debt and administering the setoff program pursuant
14to section 421.65.
15b. The judicial branch for the purpose of collecting court
16debt pursuant to section 602.8107.
17c. The department of administrative services for the purpose
18of administering the setoff program pursuant to section 8A.504.
19 Sec. 14. Section 321.31, subsection 1, paragraph c, Code
202020, is amended to read as follows:
21c. The director shall maintain a records system of
22delinquent accounts owed to the state using information
23provided through the computerized data bank established in
24section 421.17. The department and county treasurers shall use
25the information maintained in the records system to determine
26if applicants for renewal of registration have delinquent
27accounts, charges, fees, loans, taxes, or other indebtedness
28owed to or being collected by the state as provided pursuant
29to section 8A.504 421.65. The director, the director of the
30department of administrative services, and the director of
31revenue shall establish procedures for updating the delinquent
32accounts records to add and remove accounts, as applicable.
33 Sec. 15. Section 321.40, subsection 6, paragraph a, Code
342020, is amended to read as follows:
35a. The department or the county treasurer shall refuse
-5-1to renew the registration of a vehicle registered to the
2applicant if the department or the county treasurer knows that
3the applicant has a delinquent account, charge, fee, loan,
4taxes, or other indebtedness owed to or being collected by the
5state, from information provided pursuant to sections 8A.504
6 and 421.17 and 421.65. An applicant may contest this action
7by initiating a contested case proceeding with the agency
8that referred the debt for collection pursuant to section
98A.504 421.65. The department of revenue and the department
10of transportation shall notify the county treasurers through
11the distributed teleprocessing network of persons who owe
12such a delinquent account, charge, fee, loan, taxes, or other
13indebtedness.
14 Sec. 16. NEW SECTION. 421.65 Setoff procedures.
151. Definitions. As used in this section, unless the context
16otherwise requires:
17a. “Collection entity” means the department of revenue and
18any other public agency that maintains a separate accounting
19system and elects to establish a debt collection setoff
20procedure for collection of debts owed to the public agency.
21b. “Person” does not include a public agency.
22c. “Public agency” means a board, commission, department,
23including the department of revenue, or other administrative
24office or unit of the state of Iowa or any other state entity
25reported in the Iowa comprehensive annual financial report,
26or a political subdivision of the state, or an office or unit
27of a political subdivision. “Public agency” does include the
28clerk of the district court as it relates to the collection of
29a qualifying debt. “Public agency” does not include the general
30assembly or the governor.
31d. “Qualifying debt” includes but is not limited to the
32following:
33(1) Any debt, which is assigned to the department of
34human services, or which is owed to the department of human
35services for unpaid premiums under section 249A.3, subsection
-6-12, paragraph “a”, subparagraph (1), or which the child support
2recovery unit is otherwise attempting to collect, or which the
3foster care recovery unit of the department of human services
4is attempting to collect on behalf of a child receiving foster
5care provided by the department of human services.
6(2) An amount that is due because of a default on a loan
7under chapter 261.
8(3) Any debt which is in the form of a liquidated sum due,
9owing, and payable to the clerk of the district court.
102. Setoff procedure. The collection entity shall establish
11and maintain a procedure to set off against any claim owed to
12a person by a public agency any liability of that person owed
13to a public agency, a support debt being enforced by the child
14support recovery unit pursuant to chapter 252B, or such other
15qualifying debt. The procedure shall only apply when at the
16discretion of the director it is feasible. The procedure shall
17meet the following conditions:
18a. Before setoff, a person’s liability to a public agency
19and the person’s claim on a public agency shall be in the form
20of a liquidated sum due, owing, and payable.
21b. Before setoff, the public agency shall obtain and forward
22to the collection entity the full name and social security
23number of the person liable to the public agency or to whom
24a claim is owing who is a natural person. If the person is
25not a natural person, before setoff, the public agency shall
26forward to the collection entity the information concerning the
27person as the collection entity shall, by rule, require. The
28collection entity shall cooperate with other public agencies in
29the exchange of information relevant to the identification of
30persons liable to or claimants of public agencies. However,
31the collection entity shall provide only relevant information
32required by a public agency. The information shall be held in
33confidence and used for the purpose of setoff only. Section
34422.72, subsection 1, does not apply to this paragraph.
35c. Before setoff, a public agency shall, at least annually,
-7-1submit to the collection entity the information required
2by paragraph “b” along with the amount of each person’s
3liability to and the amount of each claim on the public agency.
4The collection entity may, by rule, require more frequent
5submissions.
6d. Before setoff, the amount of a person’s claim on a public
7agency and the amount of a person’s liability to a public
8agency shall constitute a minimum amount set by rule of the
9collection entity.
10e. Upon submission of an allegation of liability by a public
11agency, the collection entity shall notify the public agency
12whether the person allegedly liable is entitled to payment from
13a public agency, and, if so entitled, shall notify the public
14agency of the amount of the person’s entitlement and of the
15person’s last address known to the collection entity. Section
16422.72, subsection 1, does not apply to this paragraph.
17f. (1) Upon notice of entitlement to a payment, the public
18agency shall send written notification to that person of the
19public agency’s assertion of its rights to all or a portion
20of the payment and of the public agency’s entitlement to
21recover the liability through the setoff procedure, the basis
22of the assertion, the opportunity to request that a jointly
23or commonly owned right to payment be divided among owners,
24and the person’s opportunity to give written notice of intent
25to contest the amount of the allegation. A public agency
26shall provide the person with an opportunity to contest the
27liability. A public agency subject to chapter 17A shall give
28notice, conduct hearings, and allow appeals in conformity with
29chapter 17A.
30(2) However, upon submission of an allegation of the
31liability of a person which is owing and payable to the
32clerk of the district court and upon the determination by the
33collection entity that the person allegedly liable is entitled
34to payment from a public agency, the collection entity shall
35send written notification to the person which states the
-8-1assertion by the clerk of the district court of rights to all
2or a portion of the payment, the clerk’s entitlement to recover
3the liability through the setoff procedure, the basis of the
4assertions, the person’s opportunity to request within fifteen
5days of the mailing of the notice that the collection entity
6divide a jointly or commonly owned right to payment between
7owners, the opportunity to contest the liability to the clerk
8by written application to the clerk within fifteen days of the
9mailing of the notice, and the person’s opportunity to contest
10the collection entity’s setoff procedure.
11g. Upon the timely request of a person liable to a public
12agency or of the spouse of that person and upon receipt of the
13full name and social security number of the person’s spouse,
14a public agency shall notify the collection entity of the
15request to divide a jointly or commonly owned right to payment.
16Any jointly or commonly owned right to payment is rebuttably
17presumed to be owned in equal portions by its joint or common
18owners.
19h. The collection entity shall, after the public agency
20has sent notice to the person liable or, if the liability is
21owing and payable to the clerk of the district court, the
22collection entity has sent notice to the person liable, set
23off the amount owed to the agency against any amount which a
24public agency owes that person. The collection entity shall
25refund any balance of the amount to the person. The collection
26entity shall periodically transfer amounts set off to the
27public agencies entitled to them. If a person liable to a
28public agency gives written notice of intent to contest an
29allegation, a public agency shall hold a refund or rebate until
30final disposition of the allegation. Upon completion of the
31setoff, a public agency shall notify in writing the person who
32was liable or, if the liability is owing and payable to the
33clerk of the district court, shall comply with the procedures
34as provided in paragraph “j”.
35i. The department of revenue’s existing right to credit
-9-1against tax due or to become due under section 422.73 is not
2to be impaired by a right granted to or a duty imposed upon
3the collection entity or other public agency by this section.
4This section is not intended to impose upon the collection
5entity any additional requirement of notice, hearing, or appeal
6concerning the right to credit against tax due under section
7422.73.
8j. If the alleged liability is owing and payable to the
9clerk of the district court and setoff as provided in this
10section is sought, all of the following shall apply:
11(1) The judicial branch shall prescribe procedures to
12permit a person to contest the amount of the person’s liability
13to the clerk of the district court.
14(2) The collection entity shall, except for the procedures
15described in subparagraph (1), prescribe any other applicable
16procedures concerning setoff as provided in this subsection.
17(3) Upon completion of the setoff, the collection entity
18shall file, at least monthly, with the clerk of the district
19court a notice of satisfaction of each obligation to the
20full extent of all moneys collected in satisfaction of the
21obligation. The clerk shall record the notice and enter a
22satisfaction for the amounts collected and a separate written
23notice is not required.
24k. If the alleged liability is owing and payable to a
25community college and setoff pursuant to this section is
26sought, both of the following shall apply:
27(1) In addition to satisfying other applicable setoff
28procedures established under this subsection, the community
29college shall prescribe procedures to permit a person to
30contest the amount of the person’s liability to the community
31college. Such procedures shall be consistent with and ensure
32the protection of the person’s right of due process under Iowa
33law.
34(2) The collection entity shall, except for the procedures
35prescribed pursuant to subparagraph (1), prescribe any other
-10-1applicable procedures concerning setoff as provided in this
2subsection.
3l. If the alleged liability is owing and payable to a school
4district for school meals and the school district has made
5reasonable efforts to collect the debt, setoff pursuant to
6this section may be sought by the school district. However,
7this paragraph shall not be interpreted to limit any other
8options for school meal debt collection available to the school
9district by law.
103. In the case of multiple claims to payments filed under
11this section, priority shall be given to claims filed by
12the child support recovery unit or the foster care recovery
13unit, next priority shall be given to claims filed by the
14clerk of the district court, next priority shall be given
15to claims filed by the college student aid commission, next
16priority shall be given to claims filed by the investigations
17division of the department of inspections and appeals, and
18last priority shall be given to claims filed by other public
19agencies. In the case of multiple claims in which the priority
20is not otherwise provided by this subsection, priority shall be
21determined in accordance with rules to be established by the
22director.
234. The director shall have the authority to enter into
24reciprocal agreements with the departments of revenue of other
25states that have enacted legislation that is substantially
26equivalent to the setoff procedure provided in this section
27for the recovery of an amount due because of a default on a
28loan under chapter 261. A reciprocal agreement shall also be
29approved by the college student aid commission. The agreement
30shall authorize the department to provide by rule for the
31setoff of state income tax refunds or rebates of defaulters
32from states with which Iowa has a reciprocal agreement and to
33provide for sending lists of names of Iowa defaulters to the
34states with which Iowa has a reciprocal agreement for setoff of
35that state’s income tax refunds.
-11- 15. Under substantive rules established by the director, the
2department shall seek reimbursement from other public agencies
3to recover its costs for setting off liabilities.
4 Sec. 17. Section 422.12G, subsection 2, Code 2020, is
5amended to read as follows:
62. The director of revenue shall draft the income tax form
7to allow the designation of contributions to the veterans trust
8fund and to the volunteer fire fighter preparedness fund as
9one checkoff on the tax return. The department of revenue,
10on or before January 31, shall transfer one-half of the total
11amount designated on the tax return forms due in the preceding
12calendar year to the veterans trust fund and the remaining
13one-half to the volunteer fire fighter preparedness fund.
14However, before a checkoff pursuant to this section shall be
15permitted, all liabilities on the books of the department of
16administrative services and accounts identified as owing under
17section 8A.504 421.65 shall be satisfied.
18 Sec. 18. Section 422.12I, subsection 2, Code 2020, is
19amended to read as follows:
202. The director of revenue shall draft the income tax form
21to allow the designation of contributions to the foundation
22fund on the tax return. The department, on or before January
2331, shall transfer the total amount designated on the tax
24form due in the preceding year to the foundation fund.
25However, before a checkoff pursuant to this section shall be
26permitted, all liabilities on the books of the department of
27administrative services and accounts identified as owing under
28section 8A.504 421.65 shall be satisfied.
29 Sec. 19. Section 422.12K, subsection 2, Code 2020, is
30amended to read as follows:
312. The director of revenue shall draft the income tax form
32to allow the designation of contributions to the child abuse
33prevention program fund on the tax return. The department of
34revenue, on or before January 31, shall transfer the total
35amount designated on the tax return forms due in the preceding
-12-1calendar year to the child abuse prevention program fund.
2However, before a checkoff pursuant to this section shall be
3permitted, all liabilities on the books of the department of
4administrative services and accounts identified as owing under
5section 8A.504 421.65 shall be satisfied.
6 Sec. 20. Section 422.20, subsection 3, paragraph a, Code
72020, is amended to read as follows:
8a. Unless otherwise expressly permitted by section 8A.504,
9 section 8G.4, section 11.41, section 96.11, subsection 6,
10section 421.17, subsections 22, 23, and 26, section 421.17,
11subsection 27, paragraph “k”, section 421.17, subsection 31,
12section 252B.9, section 321.40, subsection 6, sections 321.120,
13421.19, 421.28, 421.65, 422.72, and 452A.63, this section, or
14another provision of law, a tax return, return information, or
15investigative or audit information shall not be divulged to any
16person or entity, other than the taxpayer, the department, or
17internal revenue service for use in a matter unrelated to tax
18administration.
19 Sec. 21. Section 422.72, subsection 3, paragraph a, Code
202020, is amended to read as follows:
21a. Unless otherwise expressly permitted by section 8A.504,
22 section 8G.4, section 11.41, section 96.11, subsection 6,
23section 421.17, subsections 22, 23, and 26, section 421.17,
24subsection 27, paragraph “k”, section 421.17, subsection 31,
25section 252B.9, section 321.40, subsection 6, sections 321.120,
26421.19, 421.28, 421.65, 422.20, and 452A.63, this section, or
27another provision of law, a tax return, return information, or
28investigative or audit information shall not be divulged to any
29person or entity, other than the taxpayer, the department, or
30internal revenue service for use in a matter unrelated to tax
31administration.
32 Sec. 22. Section 456A.16, subsection 7, Code 2020, is
33amended to read as follows:
347. The department shall adopt rules pursuant to chapter 17A
35to implement this section. However, before a checkoff pursuant
-13-1to this section shall be permitted, all liabilities on the
2books of the department of administrative services revenue and
3accounts identified as owing under section 8A.504 421.65 shall
4be satisfied.
5 Sec. 23. Section 602.8102, subsection 58A, Code 2020, is
6amended to read as follows:
758A. Assist the department of administrative services
8 revenue in setting off against debtors’ income tax refunds
9or rebates under section 8A.504 421.65, debts which are due,
10owing, and payable to the clerk of the district court as
11criminal fines, civil penalties, surcharges, or court costs.
12 Sec. 24. Section 602.8107, subsection 4, paragraph a, Code
132020, is amended to read as follows:
14a. This subsection does not apply to amounts collected for
15victim restitution, the victim compensation fund, the criminal
16penalty surcharge, sex offender civil penalty, drug abuse
17resistance education surcharge, the law enforcement initiative
18surcharge, county enforcement surcharge, amounts collected as
19a result of procedures initiated under subsection 5 or under
20section 8A.504 421.65, or fees charged pursuant to section
21356.7.
22 Sec. 25. Section 642.2, subsection 4, Code 2020, is amended
23to read as follows:
244. Notwithstanding subsections 2, 3, 6, and 7, any
25moneys owed to the child support obligor by the state, with
26the exception of unclaimed property held by the treasurer
27of state pursuant to chapter 556, and payments owed to the
28child support obligor through the Iowa public employees’
29retirement system are subject to garnishment, attachment,
30execution, or assignment by the child support recovery unit
31if the child support recovery unit is providing enforcement
32services pursuant to chapter 252B. Any moneys that are
33determined payable by the treasurer pursuant to section 556.20,
34subsection 2, to the child support obligor shall be subject to
35setoff pursuant to section 8A.504 421.65, notwithstanding any
-14-1administrative rule pertaining to the child support recovery
2unit limiting the amount of the offset.
3 Sec. 26. REPEAL. Section 8A.504, Code 2020, is repealed.
4 Sec. 27. TRANSITION PROVISIONS. Any rule, regulation,
5form, order, or directive promulgated by the department of
6administrative services as required to administer and enforce
7the provisions of section 8A.504 prior to the effective date of
8this Act shall continue in full force and effect until amended,
9repealed, or supplemented by the department of revenue.
10EXPLANATION
11The inclusion of this explanation does not constitute agreement with
12the explanation’s substance by the members of the general assembly.
13This bill relates to the setoff procedures used by public
14agencies.
15The bill repeals the setoff procedures administered by the
16department of administrative services and contained in Code
17section 8A.504 and reestablishes the setoff procedures under
18the purview of the department of revenue. The bill updates
19references to the setoff procedures accordingly throughout the
20Code.
21Pursuant to new Code section 421.65, the department of
22revenue, along with any other public agency that maintains a
23separate accounting system and elects to establish a setoff
24procedure, is required to establish and maintain a procedure to
25set off against any claim owed to a person by a public agency
26any liability of that person owed to a public agency, a support
27debt being enforced by the child support recovery unit, or any
28other qualifying debt.
29The bill provides that any rule, regulation, form, order,
30or directive the department of administrative services adopted
31prior to the effective date of the bill to administer Code
32section 8A.504 is to continue in full force or effect until
33the department of revenue amends, repeals, or supplements such
34rule, regulation, form, order, or directive.
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