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S.B. 205







Sponsor: Mike Dmitrich

             8      LONG TITLE
             9      General Description:
             10          This bill amends the Individual Income Tax Act and the Office of State Debt Collection
             11      part relating to rulemaking authority.
             12      Highlighted Provisions:
             13          This bill:
             14          .    requires the Office of State Debt Collection to make rules relating to an
             15      overpayment of individual income taxes that is applied against a judgment; and
             16          .    makes technical changes.
             17      Monies Appropriated in this Bill:
             18          None
             19      Other Special Clauses:
             20          None
             21      Utah Code Sections Affected:
             22      AMENDS:
             23          59-10-529, as last amended by Chapter 35, Laws of Utah 2002
             24          63A-8-204, as enacted by Chapter 354, Laws of Utah 1995
             26      Be it enacted by the Legislature of the state of Utah:
             27          Section 1. Section 59-10-529 is amended to read:

             28           59-10-529. Overpayment of tax -- Credits -- Refunds.
             29          (1) In cases where there has been an overpayment of any tax imposed by this chapter,
             30      the amount of overpayment is credited as follows:
             31          (a) against any income tax then due from the taxpayer;
             32          (b) against:
             33          (i) the amount of any judgment against the taxpayer, including one ordering the
             34      payment of a fine or of restitution to a victim under Title 77, Chapter 38a, Crime Victims
             35      Restitution Act, obtained through due process of law by any entity of state government; or
             36          (ii) any child support obligation which is due or past due, as determined by the Office
             37      of Recovery Services in the Department of Human Services and after notice and an opportunity
             38      for an adjudicative proceeding, as provided in Subsection (2); or
             39          (c) as bail, to ensure the appearance of the taxpayer before the appropriate authority to
             40      resolve an outstanding warrant against the taxpayer for which bail is due, if a court of
             41      competent jurisdiction has not approved an alternative form of payment. This bail may be
             42      applied to any fine or forfeiture which is due and related to a warrant which is outstanding on
             43      or after February 16, 1984, and in accordance with Subsections [(3) and] (4) and (5).
             44          (2) (a) Subsection (1)(b)(ii) may be exercised only if the Office of Recovery Services
             45      has sent written notice to the taxpayer's last-known address or the address on file under Section
             46      62A-11-304.4 , stating:
             47          (i) the amount of child support that is due or past due as of the date of the notice or
             48      other specified date;
             49          (ii) that any overpayment shall be applied to reduce the amount of due or past-due child
             50      support specified in the notice; and
             51          (iii) that the taxpayer may contest the amount of past-due child support specified in the
             52      notice by filing a written request for an adjudicative proceeding with the office within 15 days
             53      of the notice being sent.
             54          (b) The Office of Recovery Services shall establish rules to implement this Subsection
             55      (2), including procedures, in accordance with the other provisions of this section, to ensure
             56      prompt reimbursement to the taxpayer of any amount of an overpayment of taxes which was
             57      credited against a child support obligation in error, and to ensure prompt distribution of
             58      properly credited funds to the obligee parent.

             59          (3) The Office of State Debt Collection shall, in accordance with Title 63, Chapter 46a,
             60      Utah Administrative Rulemaking Act, make rules establishing procedures and requirements:
             61          (a) that are consistent with the other provisions of this section; and
             62          (b) for:
             63          (i) applying an overpayment against a judgment in accordance with Subsection
             64      (1)(b)(i); and
             65          (ii) ensuring prompt reimbursement to a taxpayer of any amount of an overpayment of
             66      taxes that was credited against a judgment described in Subsection (1)(b)(i) in error.
             67          [(3)] (4) Subsection (1)(c) may be exercised only if:
             68          (a) a court has issued a warrant for the arrest of the taxpayer for failure to post bail,
             69      appear, or otherwise satisfy the terms of a citation, summons, or court order; and
             70          (b) a notice of intent to apply the overpayment as bail on the issued warrant has been
             71      sent to the person's current address on file with the commission.
             72          [(4)] (5) (a) The commission shall deliver the overpayment applied as bail to the court
             73      that issued the warrant of arrest. The clerk of the court is authorized to endorse the check or
             74      commission warrant of payment on behalf of the payees and deposit the monies in the court
             75      treasury.
             76          (b) The court receiving the overpayment applied as bail shall order withdrawal of the
             77      warrant for arrest of the taxpayer if the case is one for which a personal appearance of the
             78      taxpayer is not required and if the dollar amount of the overpayment represents the full dollar
             79      amount of bail. In all other cases, the court receiving the overpayment applied as bail is not
             80      required to order the withdrawal of the warrant of arrest of the taxpayer during the 40-day
             81      period, and the taxpayer may be arrested on the warrant. However, the bail amount shall be
             82      reduced by the amount of tax overpayment received by the court.
             83          (c) If the taxpayer fails to respond to the notice described in Subsection [(3)] (4), or to
             84      resolve the warrant within 40 days after the notice was sent under that subsection, the
             85      overpayment applied as bail is forfeited and notice of the forfeiture shall be mailed to the
             86      taxpayer at the current address on file with the commission. The court may then issue another
             87      warrant or allow the original warrant to remain in force if:
             88          (i) the taxpayer has not complied with an order of the court;
             89          (ii) the taxpayer has failed to appear and respond to a criminal charge for which a

             90      personal appearance is required; or
             91          (iii) the taxpayer has paid partial but not full bail in a case for which a personal
             92      appearance is not required.
             93          [(5)] (6) If the alleged violations named in the warrant are later resolved in favor of the
             94      taxpayer, the bail amount shall be remitted to the taxpayer.
             95          [(6)] (7) Any balance shall be refunded immediately to the taxpayer.
             96          [(7)] (8) (a) If a refund or credit is due because the amount of tax deducted and
             97      withheld from wages exceeds the actual tax due, a refund or credit may not be made or allowed
             98      unless the taxpayer or [his] the taxpayer's legal representative files with the commission a tax
             99      return claiming the refund or credit:
             100          (i) within three years from the due date of the return, plus the period of any extension
             101      of time for filing the return provided for in Subsection [(7)] (8)(c); or
             102          (ii) within two years from the date the tax was paid, whichever period is later.
             103          (b) Except as provided in Subsection [(7)] (8)(d), in other instances where a refund or
             104      credit of tax which has not been deducted and withheld from income is due, a credit or refund
             105      may not be allowed or made after three years from the time the tax was paid, unless, before the
             106      expiration of the period, a claim is filed by the taxpayer or [his] the taxpayer's legal
             107      representative.
             108          (c) Beginning on July 1, 1998, the commission shall extend the period for a taxpayer to
             109      file a claim under Subsection [(7)] (8)(a)(i) if:
             110          (i) the time period for filing a claim under Subsection [(7)] (8)(a) has not expired; and
             111          (ii) the commission and the taxpayer sign a written agreement:
             112          (A) authorizing the extension; and
             113          (B) providing for the length of the extension.
             114          (d) Notwithstanding Subsection [(7)] (8)(b), beginning on July 1, 1998, the
             115      commission shall extend the period for a taxpayer to file a claim under Subsection [(7)] (8)(b)
             116      if:
             117          (i) the three-year period under Subsection [(7)] (8)(b) has not expired; and
             118          (ii) the commission and the taxpayer sign a written agreement:
             119          (A) authorizing the extension; and
             120          (B) providing for the length of the extension.

             121          [(8)] (9) The fine and bail forfeiture provisions of this section apply to all warrants and
             122      fines issued in cases charging the taxpayer with a felony, a misdemeanor, or an infraction
             123      described in this section which are outstanding on or after February 16, 1984.
             124          [(9)] (10) If the amount allowable as a credit for tax withheld from the taxpayer
             125      exceeds the tax to which the credit relates, the excess is considered an overpayment.
             126          [(10)] (11) A claim for credit or refund of an overpayment which is attributable to the
             127      application to the taxpayer of a net operating loss carryback shall be filed within three years
             128      from the time the return was due for the taxable year of the loss.
             129          [(11)] (12) If there has been an overpayment of the tax which is required to be
             130      deducted and withheld under Section 59-10-402 , a refund shall be made to the employer only
             131      to the extent that the amount of overpayment was not deducted and withheld by the employer.
             132          [(12)] (13) If there is no tax liability for a period in which an amount is paid as income
             133      tax, the amount is an overpayment.
             134          [(13)] (14) If an income tax is assessed or collected after the expiration of the
             135      applicable period of limitation, that amount is an overpayment.
             136          [(14)] (15) (a) If a taxpayer is required to report a change or correction in federal
             137      taxable income reported on [his] the taxpayer's federal income tax return, or to report a change
             138      or correction which is treated in the same manner as if it were an overpayment for federal
             139      income tax purposes, or to file an amended return with the commission, a claim for credit or
             140      refund of any resulting overpayment of tax shall be filed by the taxpayer within two years from
             141      the date the notice of the change, correction, or amended return was required to be filed with
             142      the commission.
             143          (b) If the report or amended return is not filed within 90 days, interest on any resulting
             144      refund or credit ceases to accrue after the 90-day period.
             145          (c) The amount of the credit or refund may not exceed the amount of the reduction in
             146      tax attributable to the federal change, correction, or items amended on the taxpayer's amended
             147      federal income tax return.
             148          (d) Except as specifically provided, this section does not affect the amount or the time
             149      within which a claim for credit or refund may be filed.
             150          [(15)] (16) No credit or refund may be allowed or made if the overpayment is less than
             151      $1.

             152          [(16)] (17) The amount of the credit or refund may not exceed the tax paid during the
             153      three years immediately preceding the filing of the claim, or if no claim is filed, then during the
             154      three years immediately preceding the allowance of the credit or refund.
             155          [(17)] (18) In the case of an overpayment of tax by the employer under the withholding
             156      provisions of this chapter, a refund or credit shall be made to the employer only to the extent
             157      that the amount of the overpayment was not deducted and withheld from wages under the
             158      provisions of this chapter.
             159          [(18)] (19) If a taxpayer who is entitled to a refund under this chapter dies, the
             160      commission may make payment to the duly appointed executor or administrator of the
             161      taxpayer's estate. If there is no executor or administrator, payment may be made to those
             162      persons who establish entitlement to inherit the property of the decedent in the proportions set
             163      out in Title 75, Utah Uniform Probate Code.
             164          [(19)] (20) Where an overpayment relates to adjustments to net income referred to in
             165      Subsection 59-10-536 (3)(c), credit may be allowed or a refund paid any time before the
             166      expiration of the period within which a deficiency may be assessed.
             167          [(20)] (21) An overpayment of a tax imposed by this chapter shall accrue interest at the
             168      rate and in the manner prescribed in Section 59-1-402 .
             169          Section 2. Section 63A-8-204 is amended to read:
             170           63A-8-204. Rulemaking authority -- Collection techniques.
             171          The office shall establish rules:
             172          (1) to govern collection techniques, which may include the use of:
             173          [(1)] (a) credit reporting bureaus;
             174          [(2)] (b) collection agencies;
             175          [(3)] (c) garnishments;
             176          [(4)] (d) liens;
             177          [(5)] (e) judgments; and
             178          [(6)] (f) administrative offsets[.]; and
             179          (2) as required by Section 59-10-529 .

Legislative Review Note
    as of 2-15-05 8:50 AM

Based on a limited legal review, this legislation has not been determined to have a high
probability of being held unconstitutional.

Office of Legislative Research and General Counsel

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