House File 2565 - EnrolledAn Actrelating to the setoff procedures used by public
agencies and including effective date provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
   Section 1.  Section 8A.323, subsection 5, Code 2020, is
amended to read as follows:
   5.  Any fine that remains unpaid upon becoming delinquent
may be collected by the department of revenue pursuant to the
setoff procedures provided for in section 8A.504 421.65. For
purposes of this subsection, a fine becomes delinquent if
it has not been paid within thirty days of the date of the
issuance of the parking citation, unless a written request for
a hearing is filed as provided pursuant to the rules of the
department of revenue. If an appeal is filed and the citation
is upheld, the fine becomes delinquent ten days after the
issuance of the final decision on the appeal or thirty-one
days after the date of the issuance of the parking citation,
whichever is later.
   Sec. 2.  Section 8A.502, subsection 2, Code 2020, is amended
by striking the subsection.
   Sec. 3.  Section 96.11, subsection 16, Code 2020, is amended
to read as follows:
   16.  Reimbursement of setoff costs.  The department shall
include in the amount set off in accordance with section 8A.504
 421.65, for the collection of an overpayment created pursuant
to section 96.3, subsection 7, or section 96.16, subsection
4, an additional amount for the reimbursement of setoff costs
incurred by the department of administrative services revenue.
   Sec. 4.  Section 99D.2, subsection 3, Code 2020, is amended
to read as follows:
   3.  “Claimant agency” means a public agency as defined
in section 8A.504 421.65, subsection 1, or the state court
administrator as defined in section 602.1101.
   Sec. 5.  Section 99D.28, subsection 2, Code 2020, is amended
to read as follows:
   2.  The licensee is authorized and directed to withhold
any winnings of a debtor which are paid out directly by the
licensee subject to the lien created by this section and
provide notice of such withholding to the winner when the
-1-winner appears and claims winnings in person. The licensee
shall pay the funds over to the collection entity which
administers the setoff program pursuant to section 8A.504
 421.65.
   Sec. 6.  Section 99F.1, subsection 5, Code 2020, is amended
to read as follows:
   5.  “Claimant agency” means a public agency as defined
in section 8A.504 421.65, subsection 1, or the state court
administrator as defined in section 602.1101.
   Sec. 7.  Section 99F.19, subsection 2, Code 2020, is amended
to read as follows:
   2.  The licensee is authorized and directed to withhold
any winnings of a debtor which are paid out directly by the
licensee subject to the lien created by this section and
provide notice of such withholding to the winner when the
winner appears and claims winnings in person. The licensee
shall pay the funds over to the collection entity which
administers the setoff program pursuant to section 8A.504
 421.65.
   Sec. 8.  Section 99G.38, subsection 3, Code 2020, is amended
to read as follows:
   3.  The state of Iowa offset program, as provided in
section 8A.504 421.65, shall be available to the authority to
facilitate receipt of funds owed to the authority.
   Sec. 9.  Section 217.34, Code 2020, is amended to read as
follows:
   217.34  Debt setoff.
   The investigations division of the department of inspections
and appeals and the department of human services shall provide
assistance to set off against a person’s or provider’s income
tax refund or rebate any debt which has accrued through written
contract, nonpayment of premiums pursuant to section 249A.3,
subsection 2, paragraph “a”, subparagraph (1), subrogation,
departmental recoupment procedures, or court judgment and which
is in the form of a liquidated sum due and owing the department
-2-of human services. The department of inspections and appeals,
with approval of the department of human services, shall adopt
rules under chapter 17A necessary to assist the department of
administrative services revenue in the implementation of the
setoff under section 8A.504 421.65 in regard to money owed to
the state for public assistance overpayments or nonpayment
of premiums as specified in this section. The department of
human services shall adopt rules under chapter 17A necessary to
assist the department of administrative services revenue in the
implementation of the setoff under section 8A.504 421.65, in
regard to collections by the child support recovery unit and
the foster care recovery unit.
   Sec. 10.  Section 234.8, Code 2020, 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 agency to the person assessed pursuant
to section 8A.504 421.65. 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.
   Sec. 11.  Section 252B.5, subsection 4, Code 2020, is amended
to read as follows:
-3-   4.  Assistance to set off against a debtor’s income tax
refund or rebate any support debt, which is assigned to
the department of human services or which the child support
recovery unit is attempting to collect on behalf of any
individual not eligible as a public assistance recipient, which
has accrued through written contract, subrogation, or court
judgment, and which is in the form of a liquidated sum due
and owing for the care, support, or maintenance of a child.
Unless the periodic payment plan provisions for a retroactive
modification pursuant to section 598.21C apply, the entire
amount of a judgment for accrued support, notwithstanding
compliance with a periodic payment plan or regardless of the
date of entry of the judgment, is due and owing as of the date
of entry of the judgment and is delinquent for the purposes of
setoff, including for setoff against a debtor’s federal income
tax refund or other federal nontax payment. The department
of human services shall adopt rules pursuant to chapter 17A
necessary to assist the department of administrative services
 revenue in the implementation of the child support setoff as
established under section 8A.504 421.65.
   Sec. 12.  Section 261.37, subsection 7, Code 2020, is amended
to read as follows:
   7.  To establish an effective system for the collection of
delinquent loans, including the adoption of an agreement with
the department of administrative services revenue to set off
against a defaulter’s income tax refund or rebate the amount
that is due because of a default on a loan made under this
subchapter. The commission shall adopt rules under chapter
17A necessary to assist the department of administrative
services
 revenue in the implementation of the student loan
setoff program as established under section 8A.504 421.65.
The commission shall apply administrative wage garnishment
procedures authorized under the federal Higher Education Act of
1965, as amended and codified in 20 U.S.C. §1071 et seq., for
all delinquent loans, including loans authorized under section
-4-261.38, when a defaulter who is financially capable of paying
fails to voluntarily enter into a reasonable payment agreement.
In no case shall the commission garnish more than the amount
authorized by federal law for all loans being collected by the
commission, including those authorized under section 261.38.
   Sec. 13.  Section 321.11A, subsection 1, Code 2020, is
amended to read as follows:
   1.  Notwithstanding section 321.11, the department, upon
request, shall provide personal information that identifies
a person by the social security number of the person to the
following:
   a.  The department of revenue for the purpose purposes of
collecting debt and administering the setoff program pursuant
to section 421.65
.
   b.  The judicial branch for the purpose of collecting court
debt pursuant to section 602.8107.
   c.  The department of administrative services for the purpose
of administering the setoff program pursuant to section 8A.504.
   Sec. 14.  Section 321.31, subsection 1, paragraph c, Code
2020, is amended to read as follows:
   c.  The director shall maintain a records system of
delinquent accounts owed to the state using information
provided through the computerized data bank established in
section 421.17. The department and county treasurers shall use
the information maintained in the records system to determine
if applicants for renewal of registration have delinquent
accounts, charges, fees, loans, taxes, or other indebtedness
owed to or being collected by the state as provided pursuant
to section 8A.504 421.65. The director, the director of the
department of administrative services,
and the director of
revenue shall establish procedures for updating the delinquent
accounts records to add and remove accounts, as applicable.
   Sec. 15.  Section 321.40, subsection 6, paragraph a, Code
2020, is amended to read as follows:
   a.  The department or the county treasurer shall refuse
-5-to renew the registration of a vehicle registered to the
applicant if the department or the county treasurer knows that
the applicant has a delinquent account, charge, fee, loan,
taxes, or other indebtedness owed to or being collected by the
state, from information provided pursuant to sections 8A.504
and 421.17 and 421.65. An applicant may contest this action
by initiating a contested case proceeding with the agency
that referred the debt for collection pursuant to section
8A.504 421.65. The department of revenue and the department
of transportation shall notify the county treasurers through
the distributed teleprocessing network of persons who owe
such a delinquent account, charge, fee, loan, taxes, or other
indebtedness.
   Sec. 16.  NEW SECTION.  421.65  Setoff procedures.
   1.  Definitions. As used in this section, unless the context
otherwise requires:
   a.  “Obligor” means a person, not including a public agency,
who has been determined to owe a qualifying debt.
   b.  “Public agency” means a board, commission, department,
including the department of revenue, 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. “Public agency” does include the
clerk of the district court as it relates to the collection of
a qualifying debt. “Public agency” does not include the general
assembly or office of the governor.
   c.  “Public payment” means any claim a public agency owes to
an obligor.
   d.  “Qualifying debt” means any of the following:
   (1)  Any debt, which is assigned to the department of
human services, or which is owed to the department of human
services for unpaid premiums under section 249A.3, subsection
2, paragraph “a”, subparagraph (1), or which the child support
recovery unit is otherwise attempting to collect, or which the
-6-foster care recovery unit of the department of human services
is attempting to collect on behalf of a child receiving foster
care provided by the department of human services.
   (2)  Any debt which is in the form of a liquidated sum due,
owing, and payable to the clerk of the district court.
   (3)  Any liquidated sum certain, owing, and payable to a
public agency, with respect to which the public agency has
provided the obligor an opportunity to protest or challenge
the sum in a manner in compliance with applicable law and due
process, and which has been determined as owing through the
challenge or protest, or for which the time period provided by
the public agency to challenge or protest has expired.
   2.  Setoff procedure. The department shall establish and
maintain a procedure to set off against each public payment
any qualifying debt the obligor owes to a public agency. The
procedure shall only apply when the department determines, in
its discretion, it is feasible and complies with applicable
law. The procedure shall meet the following conditions:
   a.  Each participating public agency shall obtain and forward
to the department the full name and social security number
of each obligor, or similar identifying information for an
obligor who is not a natural person, and any other information
concerning the person the department shall require. The
department shall cooperate with public agencies in the exchange
of information relevant to identifying public payments and
qualifying debt that may be subject to setoff. However, the
department shall provide only relevant information required by
a public 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.
   b.  Each participating public agency shall, at least
annually, certify to the department the information required
by paragraph “a”, the amount of each obligor’s liability to
and the amount of each claim on the public agency, and that
all liabilities submitted constitute qualifying debt. The
-7-department may, by rule, require more frequent certifications
or certifications of additional information about the
qualifying debt or the obligor. The department may, in its
discretion, review the accuracy of any certification made
pursuant to this paragraph.
   c.  The department may, by rule, establish a minimum amount
of liabilities and claims that may be setoff.
   d.  Upon submission of an allegation of liability by a
public agency, the department shall notify the public agency
whether the obligor is entitled to a public payment, and, if so
entitled, shall notify the public agency of the amount of the
obligor’s entitlement and last address known to the department.
Section 422.72, subsection 1, does not apply to this paragraph.
   e.  Upon notice of entitlement to a public payment, the
department shall send written notification to the obligor and
any known co-payee of the public payment. The notification
shall contain the public agency’s assertion of its rights to
all or a portion of the payment and of the public 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 obligor’s opportunity to give
written notice of intent to contest the setoff procedure or
that the debt is a qualifying debt.
   f.  Upon the request of an obligor or a co-payee of the
public payment received by the department within the time
period provided in the written notification, and upon receipt
of the full name and social security number of the co-payee,
or similar identifying information of a co-payee who is not a
natural person, the department shall notify the public agency
that the public agency shall divide a jointly or commonly owned
right to payment in the manner determined by the department.
Any jointly or commonly owned right to payment is rebuttably
presumed to be owned in equal portions by its joint or common
owners.
-8-
   g.  The department shall, after the department has sent
the notice to the obligor provided in paragraph “e”, set
off the amount last certified by the public agency as owed
to the agency against the public payment. The department
shall refund any balance of the payment to the obligor. The
department shall periodically transfer amounts set off to the
public agencies entitled to them, reduced by any fees charged
for setoff. If an obligor gives written notice of intent
to contest a setoff, the public agency shall hold a refund
or rebate until final disposition of the challenge. Upon
completion of the setoff, the department shall provide written
notice of the completed setoff to the obligor and any co-payees
of the payment subject to setoff.
   h.  The department’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 department by
this section. This section is not intended to impose upon the
department any additional requirement of notice, hearing, or
appeal concerning the right to credit against tax due under
section 422.73.
   i.  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 an obligor to contest the amount of the obligor’s
liability to the clerk of the district court.
   (2)  The department shall, except for the procedures
described in subparagraph (1), provide for any other applicable
procedures concerning setoff as provided in this subsection.
   (3)  Upon completion of the setoff, the department 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. A separate written notice is not required.
-9-
   3.  Challenges to a setoff.
   a.  Challenges under this section may be initiated only by an
obligor. The department’s review of a challenge to a setoff
is not subject to chapter 17A.
   b.  The obligor challenging the setoff shall submit a written
challenge in the manner provided in the notice described in
subsection 2, paragraph “e”, within fifteen days of the date of
the notice.
   c.  The department, upon receipt of a written challenge,
shall provide written notice of the challenge to the public
agency. The department shall review the information submitted
by the public agency prior to the setoff and shall obtain
additional information from the public agency if necessary to
establish that the liability is a qualified debt, or to verify
the identity of the obligor or the amount owed. The department
shall set a time to occur within ten days of receipt of the
challenge to review the relevant facts of the challenge with
the obligor. An alternative time may be set at the request
of the obligor. If the obligor does not participate in the
review at the scheduled time and an alternative time is not
requested and approved, the review shall take place without the
obligor being present. Information in favor of the obligor
and the public agency shall be considered in the review. Only
a determination that the debt is not a qualified debt or a
mistake of fact, including a mistake in the identity of the
obligor, or a mistake in the amount owed, shall be considered
as a reason to deny or modify the setoff.
   d.  If the department determines that a mistake of fact has
occurred or that the liability submitted does not constitute
a qualified debt, the public agency shall promptly return the
setoff funds to the original payee or payees unless there is
another qualifying debt available for setoff.
   e.  If the department finds no mistake of fact and that the
liability is a qualified debt, the department shall provide a
notice of that effect to the obligor and the public agency, and
-10-the public agency shall retain the funds subject to setoff.
   f.  The obligor shall have the right to file an action for
wrongful setoff in district court within thirty days of the
date of the notice to the obligor provided in paragraph “e”,
either in the county where the obligor is located or the county
where the main office of the public agency is located. The
defendant in such action shall be the public agency, with an
additional copy of such petition to be served upon the office
of the attorney general. Actions under this section are in
equity and not actions at law and are an obligor’s exclusive
remedy to challenge any action arising from or related to this
section.
   g.  Recovery under this subsection is limited to restitution
from the public agency of the amount that has been wrongfully
setoff or obtained by the public agency.
   h.  A challenge under this subsection shall not be used to
extend, toll, or reopen the statute of limitations to challenge
or contest a qualified debt. Only mistakes of fact, failure
of the public agency to comply with the provisions of this
section, or a liability that is not a qualified debt, shall
constitute grounds for challenge under this subsection.
   4.  Priority. 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 investigations division of the
department of inspections and appeals, next priority shall be
given to claims that will be deposited into the state general
fund, and last priority shall be given to claims filed by other
public 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 department.
   5.  Reciprocal agreements. The director shall have the
-11-authority to enter into reciprocal agreements with departments
or agencies of other states that have established a setoff
procedure.
   6.  Fees. The department shall establish fees for use of the
setoff system to be paid by participating public agencies to
the department.
   Sec. 17.  Section 422.12G, subsection 2, Code 2020, is
amended to read as follows:
   2.  The director of revenue shall draft the income tax form
to allow the designation of contributions to the veterans trust
fund and to the volunteer fire fighter preparedness fund as
one checkoff on the tax return. The department of revenue,
on or before January 31, shall transfer one-half of the total
amount designated on the tax return forms due in the preceding
calendar year to the veterans trust fund and the remaining
one-half to the volunteer fire fighter preparedness fund.
However, before a checkoff pursuant to this section shall be
permitted, all liabilities on the books of the department of
administrative services
and accounts identified as owing under
section 8A.504 421.65 shall be satisfied.
   Sec. 18.  Section 422.12I, subsection 2, Code 2020, is
amended to read as follows:
   2.  The director of revenue shall draft the income tax form
to allow the designation of contributions to the foundation
fund on the tax return. The department, on or before January
31, shall transfer the total amount designated on the tax
form due in the preceding year to the foundation fund.
However, before a checkoff pursuant to this section shall be
permitted, all liabilities on the books of the department of
administrative services
and accounts identified as owing under
section 8A.504 421.65 shall be satisfied.
   Sec. 19.  Section 422.12K, subsection 2, Code 2020, is
amended to read as follows:
   2.  The director of revenue shall draft the income tax form
to allow the designation of contributions to the child abuse
-12-prevention program fund on the tax return. The department of
revenue, on or before January 31, shall transfer the total
amount designated on the tax return forms due in the preceding
calendar year to the child abuse prevention program fund.
However, before a checkoff pursuant to this section shall be
permitted, all liabilities on the books of the department of
administrative services
and accounts identified as owing under
section 8A.504 421.65 shall be satisfied.
   Sec. 20.  Section 422.20, subsection 3, paragraph a, Code
2020, is amended to read as follows:
   a.  Unless otherwise expressly permitted by section 8A.504,
section 8G.4, section 11.41, section 96.11, subsection 6,
section 421.17, subsections 22, 23, and 26, section 421.17,
subsection 27, paragraph “k”, section 421.17, subsection 31,
section 252B.9, section 321.40, subsection 6, sections 321.120,
421.19, 421.28, 421.65, 422.72, and 452A.63, this section, or
another provision of law, a tax return, return information, or
investigative or audit information shall not be divulged to any
person or entity, other than the taxpayer, the department, or
internal revenue service for use in a matter unrelated to tax
administration.
   Sec. 21.  Section 422.72, subsection 3, paragraph a, Code
2020, is amended to read as follows:
   a.  Unless otherwise expressly permitted by section 8A.504,
section 8G.4, section 11.41, section 96.11, subsection 6,
section 421.17, subsections 22, 23, and 26, section 421.17,
subsection 27, paragraph “k”, section 421.17, subsection 31,
section 252B.9, section 321.40, subsection 6, sections 321.120,
421.19, 421.28, 421.65, 422.20, and 452A.63, this section, or
another provision of law, a tax return, return information, or
investigative or audit information shall not be divulged to any
person or entity, other than the taxpayer, the department, or
internal revenue service for use in a matter unrelated to tax
administration.
   Sec. 22.  Section 456A.16, subsection 7, Code 2020, is
-13-amended to read as follows:
   7.  The department shall adopt rules pursuant to chapter 17A
to implement this section. However, before a checkoff pursuant
to this section shall be permitted, all liabilities on the
books of the department of administrative services revenue and
accounts identified as owing under section 8A.504 421.65 shall
be satisfied.
   Sec. 23.  Section 602.8102, subsection 58A, Code 2020, is
amended to read as follows:
   58A.  Assist the department of administrative services
 revenue in setting off against debtors’ income tax refunds
or rebates under section 8A.504 421.65, debts which are due,
owing, and payable to the clerk of the district court as
criminal fines, civil penalties, surcharges, or court costs.
   Sec. 24.  Section 602.8107, subsection 4, paragraph a, Code
2020, is amended to read as follows:
   a.  This subsection does not apply to amounts collected for
victim restitution, the victim compensation fund, the criminal
penalty surcharge, sex offender civil penalty, drug abuse
resistance education surcharge, the law enforcement initiative
surcharge, county enforcement surcharge, amounts collected as
a result of procedures initiated under subsection 5 or under
section 8A.504 421.65, or fees charged pursuant to section
356.7.
   Sec. 25.  Section 642.2, subsection 4, Code 2020, is amended
to read as follows:
   4.  Notwithstanding subsections 2, 3, 6, and 7, any
moneys owed to the child support obligor by the state, with
the exception of unclaimed property held by the treasurer
of state pursuant to chapter 556, and payments owed to the
child support obligor through the Iowa public employees’
retirement system are subject to garnishment, attachment,
execution, or assignment by the child support recovery unit
if the child support recovery unit is providing enforcement
services pursuant to chapter 252B. Any moneys that are
-14-determined payable by the treasurer pursuant to section 556.20,
subsection 2, to the child support obligor shall be subject to
setoff pursuant to section 8A.504 421.65, notwithstanding any
administrative rule pertaining to the child support recovery
unit limiting the amount of the offset.
   Sec. 26.  REPEAL.  Section 8A.504, Code 2020, is repealed.
   Sec. 27.  TRANSITION PROVISIONS.  Any rule, regulation,
form, order, or directive promulgated by the department of
administrative services as required to administer and enforce
the provisions of section 8A.504 prior to the effective date of
this Act shall continue in full force and effect until amended,
repealed, or supplemented by the department of revenue.
   Sec. 28.  EFFECTIVE DATE.  This Act takes effect January 1,
2021.
______________________________
PAT GRASSLEYSpeaker of the House
______________________________
CHARLES SCHNEIDERPresident of the Senate
   I hereby certify that this bill originated in the House and is known as House File 2565, Eighty-eighth General Assembly.______________________________
MEGHAN NELSONChief Clerk of the House
Approved _______________, 2020______________________________
KIM REYNOLDSGovernor
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