97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
HB1527

 

Introduced 2/15/2011, by Rep. Lou Lang

 

SYNOPSIS AS INTRODUCED:
 
15 ILCS 405/10.05  from Ch. 15, par. 210.05
15 ILCS 405/10.05c new
30 ILCS 210/10
35 ILCS 5/911.3

    Amends the State Comptroller Act, the Illinois State Collection Act of 1986, and the Illinois Income Tax Act. Provides that the Department of Revenue may enter into a reciprocal offset agreement with the Office of the State Comptroller and the Secretary of the Treasury of the United States, or his or her delegate, which provides for (i) the use of the Comptroller's offset system to offset State payments to collect federal nontax debts and for the Comptroller to charge a fee up to $25 per transaction for such offsets and (ii) offsetting federal payments, as authorized by federal law, to collect State debts, State tax, and nontax obligations. Sets forth the requirements for the agreement. Makes other changes.


LRB097 08667 RLJ 48796 b

FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB1527LRB097 08667 RLJ 48796 b

1    AN ACT concerning State government.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The State Comptroller Act is amended by changing
5Section 10.05 and by adding Section 10.05c as follows:
 
6    (15 ILCS 405/10.05)  (from Ch. 15, par. 210.05)
7    Sec. 10.05. Deductions from warrants; statement of reason
8for deduction. Whenever any person shall be entitled to a
9warrant or other payment from the treasury or other funds held
10by the State Treasurer, on any account, against whom there
11shall be any account or claim in favor of the State or to the
12United States upon certification by the Secretary of the
13Treasury of the United States, or his or her delegate, pursuant
14to a reciprocal offset agreement under subsection (i-1) of
15Section 10 of the Illinois State Collection Act of 1986, then
16due and payable, the Comptroller, upon notification thereof,
17shall ascertain the amount due and payable to the State, or to
18the United States, as aforesaid, and draw a warrant on the
19treasury or on other funds held by the State Treasurer, stating
20the amount for which the party was entitled to a warrant or
21other payment, the amount deducted therefrom, and on what
22account, and directing the payment of the balance; which
23warrant or payment as so drawn shall be entered on the books of

 

 

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1the Treasurer, and such balance only shall be paid. The
2Comptroller may deduct the entire amount due and payable to the
3State or may deduct a portion of the amount due and payable to
4the State in accordance with the request of the notifying
5agency, and may deduct the entire amount due and payable to the
6United States, or may deduct a portion of the amount due and
7payable to the United States, in accordance with a reciprocal
8offset agreement under subsection (i-1) of Section 10 of the
9Illinois State Collection Act of 1986. No request from a
10notifying agency or from the Secretary of the Treasury of the
11United States for an amount to be deducted under this Section
12from a wage or salary payment, or from a contractual payment to
13an individual for personal services, shall exceed 25% of the
14net amount of such payment. "Net amount" means that part of the
15earnings of an individual remaining after deduction of any
16amounts required by law to be withheld. For purposes of this
17provision, wage, salary or other payments for personal services
18shall not include final compensation payments for the value of
19accrued vacation, overtime or sick leave. Whenever the
20Comptroller draws a warrant or makes a payment involving a
21deduction ordered under this Section, the Comptroller shall
22notify the payee and the State agency that submitted the
23voucher of the reason for the deduction and he or she shall
24retain a record of such statement in his or her records. As
25used in this Section, an "account or claim in favor of the
26State" includes all amounts owing to "State agencies" as

 

 

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1defined in Section 7 of this Act. However, the Comptroller
2shall not be required to accept accounts or claims owing to
3funds not held by the State Treasurer, where such accounts or
4claims do not exceed $50, nor shall the Comptroller deduct from
5funds held by the State Treasurer under the Senior Citizens and
6Disabled Persons Property Tax Relief and Pharmaceutical
7Assistance Act or for payments to institutions from the
8Illinois Prepaid Tuition Trust Fund (unless the Trust Fund
9moneys are used for child support). The Comptroller and the
10Department of Revenue the Lottery shall enter into an
11interagency agreement to establish responsibility, duties, and
12procedures relating to deductions from lottery prizes awarded
13under Section 20.1 of the Illinois Lottery Law. The Comptroller
14may enter into an intergovernmental agreement with the
15Department of Revenue and the Secretary of the Treasury of the
16United States, or his or her delegate, to establish
17responsibilities, duties, and procedures relating to
18reciprocal offset of delinquent State and federal obligations
19pursuant to subsection (i-1) of Section 10 of the Illinois
20State Collection Act of 1986.
21(Source: P.A. 93-56, eff. 7-1-03.)
 
22    (15 ILCS 405/10.05c new)
23    Sec. 10.05c. Deduction from warrants and payments for
24satisfaction of delinquent federal obligations. Pursuant to
25the procedures established under a reciprocal offset agreement

 

 

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1entered into under Section 10.05 and subsection (i-1) of
2Section 10 of the Illinois State Collection Act of 1986, the
3Comptroller shall deduct from a warrant or other payment
4described in Section 10.05, in accordance with the procedures
5provided therein, and pay over to the Secretary of the Treasury
6of the United States, or his or her delegate, that amount
7certified as necessary to satisfy, in whole or in part a
8delinquent federal obligation. The Comptroller shall provide
9the Secretary of the Treasury of the United States, or his or
10her delegate, with the address to which the warrant or other
11payment was to be mailed and the social security number of each
12person from whom a deduction is made pursuant to this Section.
 
13    Section 10. The Illinois State Collection Act of 1986 is
14amended by changing Section 10 as follows:
 
15    (30 ILCS 210/10)
16    Sec. 10. Department of Revenue Debt Collection Bureau to
17assume collection duties.
18    (a) The Department of Revenue's Debt Collection Bureau
19shall serve as the primary debt collecting entity for the State
20and in that role shall collect debts on behalf of agencies of
21the State. All debts owed the State of Illinois shall be
22referred to the Bureau, subject to such limitations as the
23Department of Revenue shall by rule establish. The Bureau shall
24utilize the Comptroller's offset system and private collection

 

 

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1agencies, as well as its own collections personnel, and may use
2the offset system of the Department of the Treasury of the
3United States for the collection of State debt pursuant to
4Sections 10.05 and 10.05c of the State Comptroller Act and
5subsection (i-1) of Section 10 of the Illinois State Collection
6Act of 1986. The Bureau shall collect debt using all legal
7authority available to the Department of Revenue to collect
8debt and all legal authority available to the referring agency.
9    (b) The Bureau shall have the sole authority to let
10contracts with persons specializing in debt collection for the
11collection of debt referred to and accepted by the Bureau. Any
12contract with the debt collector shall specify that the
13collector's fee shall be on a contingency basis and that the
14debt collector shall not be entitled to collect a contingency
15fee for any debt collected through the efforts of any State
16offset system.
17    (c) The Department of Revenue shall adopt rules for the
18certification of debt from referring agencies and shall adopt
19rules for the certification of collection specialists to be
20employed by the Bureau.
21    (d) The Department of Revenue shall adopt rules for
22determining when a debt referred by an agency shall be deemed
23by the Bureau to be uncollectible.
24    (e) Once an agency's debt is deemed by the Bureau to be
25uncollectible, the Bureau shall return the debt to the
26referring agency which shall then write the debt off as

 

 

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1uncollectible in accordance with the requirements of the
2Uncollected State Claims Act or return the debt to the Bureau
3for additional collection efforts. The Bureau shall refuse to
4accept debt that has been deemed uncollectible absent factual
5assertions from the referring agency that due to circumstances
6not known at the time the debt was deemed uncollectible that
7the debt is worthy of additional collection efforts.
8    (f) For each debt referred, the State agency shall retain
9all documents and records relating to or supporting the debt.
10In the event a debtor shall raise a reasonable doubt as to the
11validity of the debt, the Bureau may in its discretion refer
12the debt back to the referring agency for further review and
13recommendation.
14    (g) The Department of Healthcare and Family Services shall
15be exempt from the requirements of this Section with regard to
16child support debts, the collection of which is governed by the
17requirements of Title IV, Part D of the federal Social Security
18Act. The Department of Healthcare and Family Services may refer
19child support debts to the Bureau, provided that the debt
20satisfies the requirements for referral of delinquent debt as
21established by rule by the Department of Revenue. The Bureau
22shall use all legal means available to collect child support
23debt, including those authorizing the Department of Revenue to
24collect debt and those authorizing the Department of Healthcare
25and Family Services to collect debt. All such referred debt
26shall remain an obligation under the Department of Healthcare

 

 

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1and Family Services' Child Support Enforcement Program subject
2to the requirements of Title IV, Part D of the federal Social
3Security Act, including the continued use of federally mandated
4enforcement remedies and techniques by the Department of
5Healthcare and Family Services.
6    (g-1) The Department of Employment Security is exempt from
7subsection (a) with regard to debts to any federal account,
8including but not limited to the Unemployment Trust Fund, and
9penalties and interest assessed under the Unemployment
10Insurance Act. The Department of Employment Security may refer
11those debts to the Bureau, provided the debt satisfies the
12requirements for referral of delinquent debt as established by
13rule by the Department of Revenue. The Bureau shall use all
14legal means available to collect the debts, including those
15authorizing the Department of Revenue to collect debt and those
16authorizing the Department of Employment Security to collect
17debt. All referred debt shall remain an obligation to the
18account to which it is owed.
19    (h) The Bureau may collect its costs of collecting debts on
20behalf of other State agencies from those agencies in a manner
21to be determined by the Director of Revenue, except that the
22Bureau shall not recover any such cost on any accounts referred
23by the General Assembly, the Supreme Court and other courts of
24this State, and the State executive branch constitutional
25officers. The provisions of this subsection do not apply to
26debt that is exempt from subsection (a) pursuant to subsection

 

 

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1(g-1) or child support debt referred to the Bureau by the
2Department of Healthcare and Family Services (formerly
3Department of Public Aid) pursuant to this amendatory Act of
4the 93rd General Assembly. Collections arising from referrals
5from the Department of Healthcare and Family Services (formerly
6Department of Public Aid) shall be deposited into such fund or
7funds as the Department of Healthcare and Family Services shall
8direct, in accordance with the requirements of Title IV, Part D
9of the federal Social Security Act, applicable provisions of
10State law, and the rules of the Department of Healthcare and
11Family Services. Collections arising from referrals from the
12Department of Employment Security shall be deposited into the
13fund or funds that the Department of Employment Security shall
14direct, in accordance with the requirements of Section
153304(a)(3) of the federal Unemployment Tax Act, Section
16303(a)(4) of the federal Social Security Act, and the
17Unemployment Insurance Act.
18    (i) The Attorney General and the State Comptroller may
19assist in the debt collection efforts of the Bureau, as
20requested by the Department of Revenue.
21    (i-1) The Department may enter into a reciprocal offset
22agreement with the Office of the State Comptroller and the
23Secretary of the Treasury of the United States, or his or her
24delegate, which provides for (i) the use of the Comptroller's
25offset system to offset State payments to collect federal
26nontax debts and for the Comptroller to charge a fee up to $25

 

 

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1per transaction for such offsets; and (ii) offsetting federal
2payments, as authorized by federal law, to collect State debts,
3State tax, and nontax obligations, and for the Comptroller to
4collect the offset cost from the Department of the Treasury of
5the United States to cover the full cost of offsets taken, to
6the extent allowed by federal law, or, if not allowed by
7federal law, from the debtor by offset of the overpayment. The
8agreement shall provide that the Department of Treasury of the
9United States may deduct a fee from each administrative offset
10and State payment offset. Any offset fees collected by the
11Comptroller under this subsection for administrative offset or
12State payment offset shall be deposited into the Comptroller's
13Administrative Fund.
14    For purposes of this subsection, "administrative offset"
15is any offset of federal payments to collect State debts.
16    For purposes of this subsection, "State payment offset" is
17any offset of State payments to collect federal nontax debts.
18    (j) The Director of Revenue shall report annually to the
19General Assembly and State Comptroller upon the debt collection
20efforts of the Bureau. Each report shall include an analysis of
21the overdue debts owed to the State.
22    (k) The Department of Revenue shall adopt rules and
23procedures for the administration of this amendatory Act of the
2493rd General Assembly. The rules shall be adopted under the
25Department of Revenue's emergency rulemaking authority within
2690 days following the effective date of this amendatory Act of

 

 

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1the 93rd General Assembly due to the budget crisis threatening
2the public interest.
3    (l) The Department of Revenue's Debt Collection Bureau's
4obligations under this Section 10 shall be subject to
5appropriation by the General Assembly.
6(Source: P.A. 95-331, eff. 8-21-07; 96-493, eff. 1-1-10;
796-1383, eff. 1-1-11.)
 
8    Section 15. The Illinois Income Tax Act is amended by
9changing Section 911.3 as follows:
 
10    (35 ILCS 5/911.3)
11    Sec. 911.3. Refunds withheld; order of honoring requests.
12The Department shall honor refund withholding requests in the
13following order:
14        (1) a refund withholding request to collect an unpaid
15    State tax;
16        (2) a refund withholding request to collect certified
17    past due child support amounts under Section 2505-650 of
18    the Department of Revenue Law of the Civil Administrative
19    Code of Illinois;
20        (3) a refund withholding request to collect any debt
21    owed to the State;
22        (4) a refund withholding request made by the Secretary
23    of the Treasury of the United States, or his or her
24    delegate, to collect any tax liability arising from Title

 

 

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1    26 of the United States Code;
2        (4.5) a refund withholding request made by the
3    Secretary of the Treasury of the United States, or his or
4    her delegate, to collect any nontax debt owed to the United
5    States as authorized under subsection (i-1) of Section 10
6    of the Illinois State Collection Act of 1986;
7        (5) a refund withholding request pursuant to Section
8    911.2 of this Act; and
9        (6) a refund withholding request to collect certified
10    past due fees owed to the Clerk of the Circuit Court as
11    authorized under Section 2505-655 of the Department of
12    Revenue Law of the Civil Administrative Code of Illinois.
13(Source: P.A. 92-826, eff. 8-21-02; 93-836, eff. 1-1-05.)