[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 7335 Introduced in House (IH)]
110th CONGRESS
2d Session
H. R. 7335
To amend title 31, United States Code, to allow certain local tax debt
to be collected through the reduction of Federal tax refunds.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
December 10, 2008
Mr. Moran of Virginia introduced the following bill; which was referred
to the Committee on Oversight and Government Reform, and in addition to
the Committee on Ways and Means, for a period to be subsequently
determined by the Speaker, in each case for consideration of such
provisions as fall within the jurisdiction of the committee concerned
_______________________________________________________________________
A BILL
To amend title 31, United States Code, to allow certain local tax debt
to be collected through the reduction of Federal tax refunds.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. EXPANSION OF TAX REFUND REDUCTION PROVISION TO INCLUDE
CERTAIN LOCAL TAX DEBT.
(a) Expansion of Program.--Section 3720A of title 31, United States
Code (relating to reduction of tax refund by amount of debt) is amended
by adding at the end the following:
``(j) Collection of Past-Due Legally Enforceable Local Government
Tax Obligations.--
``(1) In general.--Upon receiving notice from any eligible
State on behalf of a local government, or from any eligible
local government, that a named person owes a past-due, legally
enforceable tax obligation to the local government, the
Secretary of the Treasury shall, under such conditions as may
be prescribed by the Secretary, determine whether any amounts,
as refunds of Federal taxes paid, are payable to such person.
If the Secretary of the Treasury finds that any such amount is
payable, he shall--
``(A) reduce such refunds by an amount equal to the
amount of such debt;
``(B) pay the amount of such reduction--
``(i) to the State for purposes of payment
by the State to the local government on behalf
of which the State submitted the notice; or
``(ii) to the eligible local government
that submitted the notice;
``(C) notify the State or eligible local government
of the person's name, taxpayer identification number,
address, and the amount collected; and
``(D) notify the person due the refund that the
refund has been reduced by an amount necessary to
satisfy a past-due, legally enforceable tax obligation.
``(2) Priorities for offset.--
``(A) Any overpayment (as defined in section 6401
of the Internal Revenue Code of 1986) by a person shall
be reduced pursuant to this subsection--
``(i) after such overpayment is reduced (I)
with respect to any liability for any internal
revenue tax on the part of the person who made
the overpayment; (II) with respect to past-due
support (as defined in section 464(c) of the
Social Security Act); (III) with respect to any
past-due, legally enforceable debt owed to a
Federal agency; and (IV) with respect to any
past-due, legally enforceable State income tax
obligation (as defined in section 6402(e) of
the Internal Revenue Code of 1986); and
``(ii) before such overpayment is credited
to the future liability for any Federal
internal revenue tax of such person.
``(B) If the Secretary receives notice from one or
more States or eligible local governments of more than
one tax obligation subject to paragraph (1) that is
owed by such person to any local government, any
overpayment by such person shall be applied against
such debts in the order in which such notices were
filed.
``(3) Notice; consideration of evidence.--
``(A) No State may take action under this
subsection (on behalf of a local government) until the
local government certifies to the State that the local
government--
``(i) has notified the person owing the
past-due, legally enforceable tax obligation by
certified mail with return receipt that the
State (on behalf of the local government)
proposes to take action pursuant to this
section;
``(ii) has given such person at least 60
days to present evidence that all or part of
such liability is not past-due or not legally
enforceable;
``(iii) has considered any evidence
presented by such person and has determined
that an amount of such debt is past-due and
legally enforceable; and
``(iv) has satisfied such other conditions
as the Secretary may prescribe to ensure that
the determination made under clause (iii) is
valid and that the local government has made
reasonable efforts to obtain payment of such
tax obligation.
``(B) No eligible local government may take action
under this subsection until the local government--
``(i) has notified the person owing the
past-due, legally enforceable tax obligation by
certified mail with return receipt that the
local government proposes to take action
pursuant to this section;
``(ii) has given such person at least 60
days to present evidence that all or part of
such liability is not past-due or not legally
enforceable;
``(iii) has considered any evidence
presented by such person and has determined
that an amount of such debt is past-due and
legally enforceable; and
``(iv) has satisfied such other conditions
as the Secretary may prescribe to ensure that
the determination made under clause (iii) is
valid and that the local government has made
reasonable efforts to obtain payment of such
tax obligation.
``(4) Definition of past-due, legally enforceable tax
obligation.--In this subsection, the term `past-due, legally
enforceable tax obligation' means a tax debt--
``(A)(i) which resulted from--
``(I) a judgment rendered by a court of
competent jurisdiction which has determined an
amount of tax to be due; or
``(II) a determination after an
administrative hearing which has determined an
amount of tax to be due; and
``(ii) which is no longer subject to judicial
review; or
``(B) which resulted from a tax which has been
assessed but not collected, the time for
redetermination of which has expired, and which has not
been delinquent for more than 10 years.
``(5) Eligible state.--In this subsection, the term
`eligible State' means a State that participates in the
procedure applicable under section 6402(e) of the Internal
Revenue Code of 1986 (relating to collection of past-due,
legally enforceable State income tax obligations).
``(6) Eligible local government.--In this subsection, the
term `eligible local government' means a municipality described
in clause (ii) of section 6103(b)(5)(A) of the Internal Revenue
Code of 1986.
``(7) Regulations.--The Secretary shall issue regulations
prescribing the time and manner in which eligible States (on
behalf of local governments) and eligible local governments
must submit notices of past-due, legally enforceable tax
obligations and the necessary information that must be
contained in or accompany such notices. The regulations shall
specify the types of taxes and the minimum amount of debt to
which the reduction procedure established by paragraph (1) may
be applied. The regulations may require eligible States (on
behalf of local governments) and eligible local governments to
pay a fee to reimburse the Secretary for the cost of applying
such procedure, and such fee may be reimbursed by local
governments to States in accordance with applicable State law.
Any fee paid to the Secretary pursuant to the preceding
sentence shall be used to reimburse appropriations which bore
all or part of the cost of applying such procedure.
``(8) Erroneous payment to state or local government.--Any
eligible State or eligible local government receiving notice
from the Secretary that an erroneous payment has been made to
such State or eligible local government with respect to a
notice by the State (on behalf of a local government) or notice
by the eligible local government under paragraph (1) shall pay
promptly to the Secretary, in accordance with such regulations
as the Secretary may prescribe, an amount equal to the amount
of such erroneous payment (without regard to whether any other
amounts payable to such State or eligible local government
under such paragraph have been paid to such State or eligible
local government).
``(k) Treatment of Payments Made to States or Local Governments.--
The Secretary may provide that, for the purposes of determining
interest, the payment of any amount withheld under subsection (j) to an
eligible State (on behalf of a local government) or an eligible local
government shall be treated as a payment to the person or persons
making the overpayment.''.
(b) Disclosure of Certain Information to Agencies of States
Requesting Refund Offsets for Past-Due, Legally Enforceable Tax
Obligations.--Paragraph (10) of section 6103(l) of the Internal Revenue
Code of 1986 is amended--
(1) in the paragraph heading, by inserting after ``6402''
the following: ``or under subsection (j) of section 3720a of
title 31, united states code'';
(2) in subparagraph (A), by inserting after ``6402'' the
following: ``or subsection (j) of section 3720A of title 31,
United States Code,''; and
(3) in subparagraph (B)--
(A) by striking ``section 6402 is'' and inserting
``section 6402 or under subsection (j) of section 3720A
of title 31, United States Code, is''; and
(B) by striking ``section 6402.'' and inserting
``section 6402 or under subsection (j) of section 3720A
of title 31, United States Code.''.
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