SB0397eng 97TH GENERAL ASSEMBLY

SB0397 Engrossed LRB097 04209 HLH 44248 b

AN ACT concerning revenue.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Department of Revenue Law of the Civil Administrative Code of Illinois is amended by adding Section 2505-660 as follows:

(20 ILCS 2505/2505-660 new)

Sec. 2505-660. Collection of delinquent debts; housing authority. Upon certification by a housing authority of the amounts of delinquent debts, the Department of Revenue may collect the delinquent debts by intercepting the tax refund of any person owing the delinquent debts. The Department of Revenue shall enter into an agreement with the housing authority as provided in Section 8.1d of the Housing Authorities Act prior to undertaking any collections under this Section. Any agreement between the Department of Revenue and the housing authority for the intercept of tax refunds shall contain provisions for certification of debt, notification to the taxpayer of the intercept, and treatment of joint returns that are consistent with the requirements for a refund withholding request under Section 8.1d of the Housing Authorities Act.

Section 10. The Illinois Income Tax Act is amended by changing Section 911.3 as follows:

(35 ILCS 5/911.3)

Sec. 911.3. Refunds withheld; order of honoring requests. The Department shall honor refund withholding requests in the following order:

(1) a refund withholding request to collect an unpaid State tax;

(2) a refund withholding request to collect certified past due child support amounts under Section 2505-650 of the Department of Revenue Law of the Civil Administrative Code of Illinois;

(3) a refund withholding request to collect any debt owed to the State;

(4) a refund withholding request made by the Secretary of the Treasury of the United States, or his or her delegate, to collect any tax liability arising from Title 26 of the United States Code;

(5) a refund withholding request pursuant to Section 911.2 of this Act; and

(6) a refund withholding request to collect certified past due fees owed to the Clerk of the Circuit Court as authorized under Section 2505-655 of the Department of Revenue Law of the Civil Administrative Code of Illinois; and .

(7) a refund withholding request to collect a delinquent debt owed to a housing authority as authorized under Section 2505-660 of the Department of Revenue Law of the Civil Administrative Code of Illinois.

(Source: P.A. 92-826, eff. 8-21-02; 93-836, eff. 1-1-05.)

Section 15. The Housing Authorities Act is amended by adding Section 8.1d as follows:

(310 ILCS 10/8.1d new)

Sec. 8.1d. Collection of debt; setoff program.

(a) Definitions. As used in this Section:

"Debtor" means a person having a delinquent debt with a housing authority which has not been adjusted, satisfied, or set aside by court order, or discharged in bankruptcy.

"Delinquent debt" means a sum which has been reduced to judgment in a final court order and is due and owing a housing authority, including collection costs, court costs, fines, penalties, and interest which have accrued through contract, subrogation, tort, operation of law, or other legal theory. "Delinquent debt" does not include sums owed to a housing authority when the housing authority and the debtor have entered into a written payment agreement and the debtor is current in meeting the obligations of the agreement. "Delinquent debt" also includes any fine, penalty, cost, fee, assessment, surcharge, service charge, restitution, or other amount imposed by a court or as a direct consequence of a final court order which is received by or payable to the clerk of the appropriate court or treasurer of the entity where the court is located.

"Refund" means any individual Illinois income tax refund payable. "Refund" also includes a refund belonging to a debtor resulting from the filing of a joint income tax return.

(b) Collection of debt; information to be given by housing authority; information to be given by Department of Revenue to housing authority.

(1) The collection remedy under this Section is in addition to any other remedy available by law.

(2) Housing authorities may submit for collection under the procedure established by this Section all delinquent debts which they are owed.

(3) All housing authorities, whenever possible, shall obtain the full name, social security number, address, and any other identifying information, required by rules promulgated by the Department of Revenue for implementation of this Section, from any person for whom the housing authorities provide any service or transact any business and who the housing authorities can foresee may become a debtor under the terms of this Section.

(4) Upon request from a housing authority, the Department of Revenue shall furnish to the housing authority any information the Department of Revenue deems necessary to properly notify the debtor.

(c) Choice of housing authority as to use of or participation in setoff program. If the housing authority determines that the administrative cost of utilizing this Section is prohibitive, it may choose not to participate in the setoff program, or it may choose to participate only in cases of delinquent debts above an amount it determines appropriate.

(d) Department of Revenue to assist in collection of delinquent debt by setoff of any refunds due to debtor. Subject to the limitations contained in this Section, the Department of Revenue, upon request, shall render assistance in the collection of any delinquent debt owing to any housing authority by setting off any refunds due the debtor from the Department of Revenue by the sum certified by the housing authority as delinquent debt.

(e) Notification by housing authority; refund determinations; Department of Revenue liability.

(1) A housing authority seeking to attempt collection of a delinquent debt through setoff shall notify the Department of Revenue in writing and supply information the Department of Revenue determines necessary to identify the debtor whose refund is sought to be set off. A request for setoff may be made only after the housing authority has notified the debtor of its intention to cause the debtor's refund to be set off. The housing authority shall promptly notify the debtor when the liability out of which the setoff arises is satisfied. The housing authority shall promptly notify the Department of Revenue of a reduction in the delinquent debt.

(2) Upon receiving the certification of the housing authority of the amount of the delinquent debt, the Department of Revenue shall determine if the debtor is due a refund. If the debtor is due a refund of more than a tolerance amount as determined by the Department of Revenue, the Department of Revenue shall set off the delinquent debt against the amount of the refund. The Department of Revenue may retain an amount not to exceed $25 of each refund set off to defray its administrative expenses, and that amount may be added to the debt. Apportionment is not required in the case of a refund resulting from filing a joint return. A person has no property right or property interest in a refund until all amounts due the State and housing authorities are paid. The Department of Revenue shall consider a delinquent debt and debtor list provided by a housing authority as correct and the Department of Revenue is not liable for a wrongful or improper setoff.

(f) Notice of intention to set off debt; form, delivery and presumption. The notice of intention to set off must be given by mailing the notice, with postage prepaid, addressed to the debtor at the address provided to the housing authority when the debt was incurred or at the debtor's last known address. If the notice is returned to the housing authority as undeliverable or the housing authority has any reason to believe the debtor did not receive the notice, the housing authority shall obtain the last known address of the debtor from the Department of Revenue and resend the notice. The giving of the notice by mail is complete upon mailing the notice or resending the notice if the notice is returned to the housing authority as undeliverable or the housing authority has any reason to believe the debtor did not receive the notice. A certification by the housing authority that the notice has been sent is presumptive proof that the requirements as to notice are met, even if the notice actually has not been received by the debtor. The notice must include a statement substantially as follows:

"According to our records, you owe the (housing authority) a debt in the amount of (amount of the debt), plus interest, if applicable, for (type of debt). You are hereby notified of the (housing authority's) intention to submit this debt to the Illinois Department of Revenue to be set off against your individual income tax refunds until the debt is paid in full. Pursuant to Section 8.1d of the Housing Authorities Act, Section 2505-660 of the Department of Revenue Law of the Civil Administrative Code of Illinois, and Section 911.3 of the Illinois Income Tax Act, this amount, plus $25 in administrative costs, will be deducted from your Illinois individual income tax refunds unless you fully satisfy this debt with the (housing authority). If you file a joint return with your spouse, this amount will be deducted from the total joint refunds without regard to which spouse incurred the debt or actually withheld the taxes."

(g) Agreements; credit to debtor's obligation by housing authority; notification of housing authority to debtor of setoff.

(1) A housing authority may enter into an agreement with the Department of Revenue to establish a program for the purpose of collecting certain delinquent debts. The purpose shall be to intercept, in whole or in part, State income tax refunds due the persons who owe delinquent debts to the housing authority in order to satisfy delinquent debts. The agreement shall include, but may not be limited to, a certification by the housing authority that the debt claims forwarded to the Department of Revenue are valid, that reasonable efforts have been made to notify persons of the delinquency of the debts, and that the delinquent debts have been reduced to judgment in a final court order. The agreement shall include provisions for payment of the intercept by the Department of Revenue to the housing authority. The agreement may also include provisions to allow the Department of Revenue to recover its cost for administering the program. Intercepts made pursuant to this Section shall not interfere with the collection of debts related to child support. During the collection of debts under this Section, when there are 2 or more debt claims certified to the Department of Revenue at the same time, priority of collection shall be as provided in Section 911.3 of the Illinois Income Tax Act.

(2) Upon receipt by a housing authority of proceeds collected on its behalf by the Department of Revenue, the housing authority shall credit the debtor's obligation and shall notify the debtor in writing of the amount of the setoff.

(3) The Department of Revenue may add an administrative fee of no more than $25 to the delinquent debt. This fee shall be used by the Department of Revenue to cover any administrative costs pursuant to this Section.

(h) Information from Department of Revenue to be used only by housing authority for collection purposes; penalties for disclosure.

(1) The exchange of information among the Department of Revenue, housing authority, and the debtor pursuant to this Section is lawful.

(2) The information obtained by a housing authority from the Department of Revenue in accordance with the exemption allowed by paragraph (1) may be used by the housing authority only in the pursuit of its debt collection duties and practices. A person employed by or formerly employed by the housing authority who knowingly discloses the information for another purpose commits a Class A misdemeanor.

(i) Indemnification of Department of Revenue by housing authority. Housing authorities shall indemnify the Department of Revenue against any injuries, actions, liabilities, or proceedings arising from performance under the provisions of this Section.

(j) Department of Revenue rules, forms, and procedures permitted. The Department of Revenue may promulgate rules and prescribe forms and procedures necessary to implement this Section.