093_HB0089eng HB0089 Engrossed LRB093 02361 JAM 02707 b 1 AN ACT concerning State collection of debts. 2 Be it enacted by the People of the State of Illinois, 3 represented in the General Assembly: 4 Section 5. The State Finance Act is amended by adding 5 Section 5.595 as follows: 6 (30 ILCS 105/5.595 new) 7 Sec. 5.595. The Debt Collection Fund. 8 Section 10. The Illinois State Collection Act of 1986 is 9 amended by changing Sections 4, 5, 6, 7, and 8 and adding 10 Section 10 as follows: 11 (30 ILCS 210/4) (from Ch. 15, par. 154) 12 Sec. 4. (a) The Comptroller shall provide by rule 13 appropriate procedures for State agencies to follow in 14 establishing and recording within the State accounting system 15 records of amounts owed to the State of Illinois. The rules 16 of the Comptroller shall include, but are not limited to: 17 (1) the manner by which State agencies shall recognize 18 debts; 19 (2) systems to age accounts receivable of State 20 agencies; 21 (3) standards by which State agencies' claims may be 22 entered and removed from the Comptroller's Offset System 23 authorized by Section 10.05 of the State Comptroller Act; 24 (4) accounting procedures for estimating the amount of 25 uncollectible receivables of State agencies; and 26 (5) accounting procedures for writing off bad debts and 27 uncollectible claims prior to referring them to the 28 Department of Revenue Collections Bureau for collection. 29 (b) State agencies shall report to the Comptroller HB0089 Engrossed -2- LRB093 02361 JAM 02707 b 1 information concerning their accounts receivable and 2 uncollectible claims in accordance with the rules of the 3 Comptroller, which may provide for summary reporting. The 4 Department of Revenue is exempt from the provisions of this 5 subsection with regard to debts the confidentiality of which 6 the Department of Revenue is required by law to maintain. 7 (c) The rules of the Comptroller authorized by this 8 Section may specify varying procedures and forms of reporting 9 dependent upon the nature and amount of the account 10 receivable or uncollectible claim, the age of the debt, the 11 probability of collection and such other factors that will 12 increase the net benefit to the State of the collection 13 effort. 14 (d) The Comptroller shall report annually by March 14, 15 to the Governor and the General Assembly, the amount of all 16 delinquent debt owed to each State agency as of December 31 17 of the previous calendar year. 18 (Source: P.A. 86-515.) 19 (30 ILCS 210/5) (from Ch. 15, par. 155) 20 Sec. 5. Rules; payment plans; offsets. 21 (a) Until July 1, 2004 for the Department of Public Aid 22 and July 1, 2005 for Universities and all other State 23 agencies, State agencies shall adopt rules establishing 24 formal due dates for amounts owing to the State and for the 25 referral of seriously past due accounts to private collection 26 agencies, unless otherwise expressly provided by law or rule, 27 except that on and after July 1, 2005, the Department of 28 Employment Security may continue to refer to private 29 collection agencies past due amounts that are exempt from 30 subsection (g). Such procedures shall be established in 31 accord with sound business practices. 32 (b) Until July 1, 2004 for the Department of Public Aid 33 and July 1, 2005 for Universities and all other State HB0089 Engrossed -3- LRB093 02361 JAM 02707 b 1 agencies, agencies may enter deferred payment plans for 2 debtors of the agency and documentation of this fact retained 3 by the agency, where the deferred payment plan is likely to 4 increase the net amount collected by the State, except that, 5 on and after July 1, 2005, the Department of Employment 6 Security may continue to enter deferred payment plans for 7 debts that are exempt from subsection (g). 8 (c) Until July 1, 2004 for the Department of Public Aid 9 and July 1, 2005 for Universities and all other State 10 agencies, State agencies may use the Comptroller's Offset 11 System provided in Section 10.05 of the State Comptroller Act 12 for the collection of debts owed to the agency, except that, 13 on and after July 1, 2005, the Department of Employment 14 Security may continue to use the Comptroller's offset system 15 to collect amounts that are exempt from subsection (g). All 16 debts that exceed $1,000 and are more than 90 days past due 17 shall be placed in the Comptroller's Offset System, unless 18 the State agency shall have entered into a deferred payment 19 plan or demonstrates to the Comptroller's satisfaction that 20 referral for offset is not cost effective. 21 (d) State agencies shall develop internal procedures 22 whereby agency initiated payments to its debtors may be 23 offset without referral to the Comptroller's Offset System. 24 (e) State agencies or the Comptroller may remove claims 25 from the Comptroller's Offset System, where such claims have 26 been inactive for more than one year. 27 (f) State agencies may use the Comptroller's Offset 28 System to determine if any State agency is attempting to 29 collect debt from a contractor, bidder, or other proposed 30 contracting party. 31 (g) Beginning July 1, 2004 for the Departments of Public 32 Aid and Employment Security and July 1, 2005 for Universities 33 and other State agencies, State agencies shall refer to the 34 Department of Revenue Debt Collection Bureau (the Bureau) all HB0089 Engrossed -4- LRB093 02361 JAM 02707 b 1 debt to the State, provided that the debt satisfies the 2 requirements for referral of delinquent debt as established 3 by rule by the Department of Revenue. 4 (h) The Department of Public Aid shall be exempt from 5 the requirements of this Section with regard to child support 6 debts, the collection of which is governed by the 7 requirements of Title IV, Part D of the federal Social 8 Security Act. The Department of Public Aid may refer child 9 support debts to the Bureau, provided that the debt satisfies 10 the requirements for referral of delinquent debt as 11 established by rule by the Department of Revenue. The Bureau 12 shall use all legal means available to collect child support 13 debt, including those authorizing the Department of Revenue 14 to collect debt and those authorizing the Department of 15 Public Aid to collect debt. All such referred debt shall 16 remain an obligation under the Department of Public Aid's 17 Child Support Enforcement Program subject to the requirements 18 of Title IV, Part D of the federal Social Security Act, 19 including the continued use of federally mandated enforcement 20 remedies and techniques by the Department of Public Aid. 21 (h-1) The Department of Employment Security is exempt 22 from subsection (g) with regard to debts to any federal 23 account, including but not limited to the Unemployment Trust 24 Fund, and penalties and interest assessed under the 25 Unemployment Insurance Act. The Department of Employment 26 Security may refer those debts to the Bureau, provided the 27 debt satisfies the requirements for referral of delinquent 28 debt as established by rule by the Department of Revenue. The 29 Bureau shall use all legal means available to collect the 30 debts, including those authorizing the Department of Revenue 31 to collect debt and those authorizing the Department of 32 Employment Security to collect debt. All referred debt shall 33 remain an obligation to the account to which it is owed. 34 (i) All debt referred to the Bureau for collection shall HB0089 Engrossed -5- LRB093 02361 JAM 02707 b 1 remain the property of the referring agency. The Bureau shall 2 collect debt on behalf of the referring agency using all 3 legal means available, including those authorizing the 4 Department of Revenue to collect debt and those authorizing 5 the referring agency to collect debt. 6 (j) No debt secured by an interest in real property 7 granted by the debtor in exchange for the creation of the 8 debt shall be referred to the Bureau. The Bureau shall have 9 no obligation to collect debts secured by an interest in real 10 property. 11 (k) Beginning July 1, 2003, each agency shall collect 12 and provide the Bureau information regarding the nature and 13 details of its debt in such form and manner as the Department 14 of Revenue shall require. 15 (l) For all debt accruing after July 1, 2003, each 16 agency shall collect and transmit such debtor identification 17 information as the Department of Revenue shall require. 18 (Source: P.A. 92-404, eff. 7-1-02.) 19 (30 ILCS 210/6) (from Ch. 15, par. 156) 20 Sec. 6. The Comptroller with the approval of the 21 Governor may provide by rule and regulation for the creation 22 of a special fund or funds for the deposit of designated 23 receipts by designated agencies to be known as the Accounts 24 Receivable Fund or Funds. Deposits shall be segregated by 25 the creditor agency. No deposit shall be made unless the 26 collection is of an account receivable more than 120 days 27 past due. 28 Seventy-five percent of the amounts deposited each 29 quarter into such a special fund shall be transferred to the 30 General Revenue Fund or such other fund that would have 31 originally received the receipts. The remaining amounts may 32 be used by the creditor agency for collecting overdue 33 accounts pursuant to appropriation by the General Assembly. HB0089 Engrossed -6- LRB093 02361 JAM 02707 b 1 An agency, with the approval of the Comptroller, may 2 deposit all receipts into the General Revenue Fund or other 3 such fund that would have originally received the receipts. 4 Twenty-five percent of such deposits made each quarter for 5 accounts receivable more than 120 days past due shall be 6 transferred to the Accounts Receivable Fund or Funds. The 7 transferred amounts may be used by the creditor agency for 8 collecting overdue accounts pursuant to appropriation by the 9 General Assembly. 10 In determining the types of receipts to be deposited 11 pursuant to this Section the Comptroller and the Governor 12 shall consider the following factors: 13 (1) The percentage of such receipts estimated to be 14 uncollectible by the creditor agency; 15 (2) The percentage of such receipts certified as 16 uncollectible by the Attorney General; 17 (3) The potential increase in future receipts, as 18 estimated by the creditor agency, if 25% of amounts collected 19 are retained for collection efforts; 20 (4) The impact of the retention of 25% of receipts on 21 the relevant fund balances; and 22 (5) Such other factors as the Comptroller and the 23 Governor deem relevant. 24 This Section shall not apply to the Department of Revenue 25 nor the Department of Employment Security. 26 This Section is repealed July 1, 2004. On that date any 27 moneys in the Accounts Receivable Funds created under this 28 Section shall be transferred to the General Revenue Fund. 29 (Source: P.A. 86-194.) 30 (30 ILCS 210/7) (from Ch. 15, par. 157) 31 Sec. 7. Upon agreement of the Attorney General, the 32 Bureauagenciesmay contract for legal assistance in 33 collecting past due accounts. Any contract entered into under HB0089 Engrossed -7- LRB093 02361 JAM 02707 b 1 this Section before the effective date of this amendatory Act 2 of the 93rd General Assembly shall remain valid but may not 3 be renewed.In addition, agencies may contract for collection4assistance where such assistance is determined by the agency5to be in the best economic interest of the State. Agencies6may utilize monies in the Accounts Receivable Fund to pay for7such legal and collection assistance; provided, however, that8no more than 20% of collections on an account may be paid9from the Accounts Receivable Fund as compensation for legal10and collection assistance on that account. If the amount11available for expenditure from the Accounts Receivable Fund12is insufficient to pay the cost of such services, the13difference, up to 40% of the total collections per account,14may be paid from other monies which may be available to the15Agency.16 (Source: P.A. 85-814.) 17 (30 ILCS 210/8) (from Ch. 15, par. 158) 18 Sec. 8. Debt Collection Board. There is created a Debt 19 Collection Board consisting of the Director of Central 20 Management Services as chairman, the State Comptroller, and 21 the Attorney General, or their respective designees. The 22 Board shall establish a centralized collections service to 23 undertake further collection efforts on delinquent accounts 24 or claims of the State which have not been collected through 25 the reasonable efforts of the respective State agencies. 26 The Board shall promulgate rules and regulations pursuant to 27 the Illinois Administrative Procedure Act with regard to the 28 establishment of timetables and the assumption of 29 responsibility for agency accounts receivable that have not 30 been collected by the agency, are not subject to a current 31 repayment plan, or have not been certified as uncollectible 32 as of the date specified by the Board. The Board shall make 33 a final evaluation of those accounts and either (i) direct or HB0089 Engrossed -8- LRB093 02361 JAM 02707 b 1 conduct further collection activities when further collection 2 efforts are in the best economic interest of the State or 3 (ii) in accordance with Section 2 of the Uncollected State 4 Claims Act, certify the receivable as uncollectible or submit 5 the account to the Attorney General for that certification. 6 The Board is empowered to adopt rules and regulations 7 subject to the provisions of the Illinois Administrative 8 Procedure Act. 9 The Board is empowered to enter into one or more 10 contracts with outside vendors with demonstrated capabilities 11 in the area of account collection. The contracts shall be 12 let on the basis of competitive proposals secured from 13 responsible proposers. The Board may require that vendors be 14 prequalified. All contracts shall provide for a contingent 15 fee based on the age, nature, amount and type of delinquent 16 account. The Board may adopt a reasonable classification 17 schedule for the various receivables. The contractor shall 18 remit the amount collected, net of the contingent fee, to the 19 respective State agency which shall deposit the net amount 20 received into the fund that would have received the receipt 21 had it been collected by the State agency. No portion of the 22 collections shall be deposited into an Accounts Receivable 23 Fund established under Section 6 of this Act. The Board 24 shall act only upon the unanimous vote of its members. 25 The authority granted the Debt Collection Board under 26 this Section shall be limited to the administration of debt 27 not otherwise required by the provisions of this amendatory 28 Act of the 93rd General Assembly to be referred to the 29 Department of Revenue's Debt Collection Bureau. Upon referral 30 to and acceptance of any debt by the Bureau, the provisions 31 of this Section shall be rendered null and void as to that 32 debt and the Board shall promptly deliver its entire file and 33 all records relating to such debt to the Bureau, together 34 with a status report describing all action taken by the Board HB0089 Engrossed -9- LRB093 02361 JAM 02707 b 1 or any entity on its behalf to collect the debt, and 2 including an accounting of all payments received. 3 (Source: P.A. 89-511, eff. 1-1-97.) 4 (30 ILCS 210/10 new) 5 Sec. 10. Department of Revenue Debt Collection Bureau to 6 assume collection duties. 7 (a) The Department of Revenue's Debt Collection Bureau 8 shall serve as the primary debt collecting entity for the 9 State and in that role shall collect debts on behalf of 10 agencies of the State. All debts owed the State of Illinois 11 shall be referred to the Bureau, subject to such limitations 12 as the Department of Revenue shall by rule establish. The 13 Bureau shall utilize the Comptroller's offset system and 14 private collection agencies, as well as its own collections 15 personnel. The Bureau shall collect debt using all legal 16 authority available to the Department of Revenue to collect 17 debt and all legal authority available to the referring 18 agency. 19 (b) The Bureau shall have the sole authority to let 20 contracts with persons specializing in debt collection for 21 the collection of debt referred to and accepted by the 22 Bureau. Any contract with the debt collector shall specify 23 that the collector's fee shall be on a contingency basis and 24 that the debt collector shall not be entitled to collect a 25 contingency fee for any debt collected through the efforts of 26 any State offset system. 27 (c) The Department of Revenue shall adopt rules for the 28 certification of debt from referring agencies and shall adopt 29 rules for the certification of collection specialists to be 30 employed by the Bureau. 31 (d) The Department of Revenue shall adopt rules for 32 determining when a debt referred by an agency shall be deemed 33 by the Bureau to be uncollectible. HB0089 Engrossed -10- LRB093 02361 JAM 02707 b 1 (e) Once an agency's debt is deemed by the Bureau to be 2 uncollectible, the Bureau shall return the debt to the 3 referring agency which shall then write the debt off as 4 uncollectible or return the debt to the Bureau for additional 5 collection efforts. The Bureau shall refuse to accept debt 6 that has been deemed uncollectible absent factual assertions 7 from the referring agency that due to circumstances not known 8 at the time the debt was deemed uncollectible that the debt 9 is worthy of additional collection efforts. 10 (f) For each debt referred, the State agency shall 11 retain all documents and records relating to or supporting 12 the debt. In the event a debtor shall raise a reasonable 13 doubt as to the validity of the debt, the Bureau may in its 14 discretion refer the debt back to the referring agency for 15 further review and recommendation. 16 (g) The Department of Public Aid shall be exempt from 17 the requirements of this Section with regard to child support 18 debts, the collection of which is governed by the 19 requirements of Title IV, Part D of the federal Social 20 Security Act. The Department of Public Aid may refer child 21 support debts to the Bureau, provided that the debt satisfies 22 the requirements for referral of delinquent debt as 23 established by rule by the Department of Revenue. The Bureau 24 shall use all legal means available to collect child support 25 debt, including those authorizing the Department of Revenue 26 to collect debt and those authorizing the Department of 27 Public Aid to collect debt. All such referred debt shall 28 remain an obligation under the Department of Public Aid's 29 Child Support Enforcement Program subject to the requirements 30 of Title IV, Part D of the federal Social Security Act, 31 including the continued use of federally mandated enforcement 32 remedies and techniques by the Department of Public Aid. 33 (g-1) The Department of Employment Security is exempt 34 from subsection (a) with regard to debts to any federal HB0089 Engrossed -11- LRB093 02361 JAM 02707 b 1 account, including but not limited to the Unemployment Trust 2 Fund, and penalties and interest assessed under the 3 Unemployment Insurance Act. The Department of Employment 4 Security may refer those debts to the Bureau, provided the 5 debt satisfies the requirements for referral of delinquent 6 debt as established by rule by the Department of Revenue. The 7 Bureau shall use all legal means available to collect the 8 debts, including those authorizing the Department of Revenue 9 to collect debt and those authorizing the Department of 10 Employment Security to collect debt. All referred debt shall 11 remain an obligation to the account to which it is owed. 12 (h) The Debt Collection Fund is created as a special 13 fund in the State treasury. Debt collection contractors under 14 this Act shall receive a contingency fee as provided by the 15 terms of their contracts with the Department of Revenue. 16 Thereafter, 20% of all amounts collected by the Bureau, 17 excluding amounts collected on behalf of the Departments of 18 Public Aid and Revenue, shall be deposited into the Debt 19 Collection Fund. All remaining amounts collected shall be 20 deposited into the General Revenue Fund unless the funds are 21 owed to any State fund or funds other than the General 22 Revenue Fund. Moneys in the Debt Collection Fund shall be 23 appropriated only for the administrative costs of the Bureau. 24 On the last day of each fiscal year, unappropriated moneys 25 and moneys otherwise deemed unneeded for the next fiscal year 26 remaining in the Debt Collection Fund may be transferred into 27 the General Revenue Fund at the Governor's reasonable 28 discretion. The provisions of this subsection do not apply to 29 debt that is exempt from subsection (a) pursuant to 30 subsection (g-1) or child support debt referred to the Bureau 31 by the Department of Public Aid pursuant to this amendatory 32 Act of the 93rd General Assembly. Collections arising from 33 referrals from the Department of Public Aid shall be 34 deposited into such fund or funds as the Department of Public HB0089 Engrossed -12- LRB093 02361 JAM 02707 b 1 Aid shall direct, in accordance with the requirements of 2 Title IV, Part D of the federal Social Security Act, 3 applicable provisions of State law, and the rules of the 4 Department of Public Aid. Collections arising from referrals 5 from the Department of Employment Security shall be deposited 6 into the fund or funds that the Department of Employment 7 Security shall direct, in accordance with the requirements of 8 Section 3304(a)(3) of the federal Unemployment Tax Act, 9 Section 303(a)(4) of the federal Social Security Act, and the 10 Unemployment Insurance Act. 11 (i) The Attorney General and the State Comptroller shall 12 assist in the debt collection efforts of the Bureau, as 13 requested by the Department of Revenue. 14 (j) The Director of Revenue shall report annually to the 15 General Assembly and State Comptroller upon the debt 16 collection efforts of the Bureau. Each report shall include 17 an analysis of the overdue debts owed to the State. 18 (k) The Department of Revenue shall adopt rules and 19 procedures for the administration of this amendatory Act of 20 the 93rd General Assembly. The rules shall be adopted under 21 the Department of Revenue's emergency rulemaking authority 22 within 90 days following the effective date of this 23 amendatory Act of the 93rd General Assembly due to the budget 24 crisis threatening the public interest. 25 (l) The Department of Revenue's Debt Collection Bureau's 26 obligations under this Section 10 shall be subject to 27 appropriation by the General Assembly. 28 Section 99. Effective date. This Act shall take effect 29 upon becoming law.