Bill Summary – FastDemocracy

House Study Bill 656 - Introduced
                                  HOUSE FILE _____
                                  BY (PROPOSED COMMITTEE ON
                                      STATE GOVERNMENT BILL BY
                                      CHAIRPERSON KAUFMANN)
                            A BILL FOR
An Act relating to the setoff procedures used by public
  agencies.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
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    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
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 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
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 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:
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    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
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 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
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 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. “Collection entity” means the department of revenue and
 any other public agency that maintains a separate accounting
 system and elects to establish a debt collection setoff
 procedure for collection of debts owed to the public agency.
    b. “Person” does not include a public agency.
    c. “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 the governor.
    d. “Qualifying debt” includes but is not limited to 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
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 2, paragraph “a”, subparagraph (1), or which the child support
 recovery unit is otherwise attempting to collect, or which the
 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) An amount that is due because of a default on a loan
 under chapter 261.
    (3) Any debt which is in the form of a liquidated sum due,
 owing, and payable to the clerk of the district court.
    2. Setoff procedure. The collection entity shall establish
 and maintain a procedure to set off against any claim owed to
 a person by a public agency any liability of that person owed
 to a public agency, a support debt being enforced by the child
 support recovery unit pursuant to chapter 252B, or such other
 qualifying debt. The procedure shall only apply when at the
 discretion of the director it is feasible. The procedure shall
 meet the following conditions:
    a. Before setoff, a person’s liability to a public agency
 and the person’s claim on a public agency shall be in the form
 of a liquidated sum due, owing, and payable.
    b. Before setoff, the public agency shall obtain and forward
 to the collection entity the full name and social security
 number of the person liable to the public agency or to whom
 a claim is owing who is a natural person. If the person is
 not a natural person, before setoff, the public agency shall
 forward to the collection entity the information concerning the
 person as the collection entity shall, by rule, require. The
 collection entity shall cooperate with other public agencies in
 the exchange of information relevant to the identification of
 persons liable to or claimants of public agencies. However,
 the collection entity 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.
    c. Before setoff, a public agency shall, at least annually,
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 submit to the collection entity the information required
 by paragraph “b” along with the amount of each person’s
 liability to and the amount of each claim on the public agency.
 The collection entity may, by rule, require more frequent
 submissions.
    d. Before setoff, the amount of a person’s claim on a public
 agency and the amount of a person’s liability to a public
 agency shall constitute a minimum amount set by rule of the
 collection entity.
    e. Upon submission of an allegation of liability by a public
 agency, the collection entity shall notify the public agency
 whether the person allegedly liable is entitled to payment from
 a public agency, and, if so entitled, shall notify the public
 agency of the amount of the person’s entitlement and of the
 person’s last address known to the collection entity. Section
 422.72, subsection 1, does not apply to this paragraph.
    f. (1) Upon notice of entitlement to a payment, the public
 agency shall send written notification to that person of 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 person’s opportunity to give written notice of intent
 to contest the amount of the allegation. A public agency
 shall provide the person with an