8A.504 - SETOFF PROCEDURES.
8A.504 SETOFF PROCEDURES.
1. Definitions. As used in this section, unless the context
otherwise requires:
a. "Collection entity" means the department of administrative
services and any other state agency that maintains a separate
accounting system and elects to establish a debt collection setoff
procedure for collection of debts owed to the state or its agencies.
b. "Person" does not include a state agency.
c. "Qualifying debt" includes, but is not limited to, the
following:
(1) Any debt, which is assigned to the department of human
services, 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 guaranteed
student or parental 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.
d. "State agency" means a board, commission, department,
including the department of administrative services, 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. "State agency" does include the clerk of
the district court as it relates to the collection of a qualifying
debt. "State agency" does not include the general assembly or
the governor.
2. Setoff procedure. The collection entity shall establish
and maintain a procedure to set off against any claim owed to a
person by a state agency any liability of that person owed to a state
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 state agency and
the person's claim on a state agency shall be in the form of a
liquidated sum due, owing, and payable.
b. Before setoff, the state agency shall obtain and forward
to the collection entity the full name and social security number of
the person liable to it or to whom a claim is owing who is a natural
person. If the person is not a natural person, before setoff, the
state 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 state
agencies in the exchange of information relevant to the
identification of persons liable to or claimants of state agencies.
However, the collection entity shall provide only relevant
information required by a state 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 state agency shall, at least annually,
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 state agency. The collection entity may,
by rule, require more frequent submissions.
d. Before setoff, the amount of a person's claim on a state
agency and the amount of a person's liability to a state agency shall
constitute a minimum amount set by rule of the collection entity.
e. Upon submission of an allegation of liability by a state
agency, the collection entity shall notify the state agency whether
the person allegedly liable is entitled to payment from a state
agency, and, if so entitled, shall notify the state 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 state
agency shall send written notification to that person of the state
agency's assertion of its rights to all or a portion of the payment
and of the state 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.
The state agency shall send a copy of the notice to the collection
entity. A state agency subject to chapter 17A shall give notice,
conduct hearings, and allow appeals in conformity with chapter 17A.
(2) However, upon submission of an allegation of the liability of
a person which is owing and payable to the clerk of the district
court and upon the determination by the collection entity that the
person allegedly liable is entitled to payment from a state agency,
the collection entity shall send written notification to the person
which states the assertion by the clerk of the district court of
rights to all or a portion of the payment, the clerk's entitlement to
recover the liability through the setoff procedure, the basis of the
assertions, the person's opportunity to request within fifteen days
of the mailing of the notice that the collection entity divide a
jointly or commonly owned right to payment between owners, the
opportunity to contest the liability to the clerk by written
application to the clerk within fifteen days of the mailing of the
notice, and the person's opportunity to contest the collection
entity's setoff procedure.
g. Upon the timely request of a person liable to a state
agency or of the spouse of that person and upon receipt of the full
name and social security number of the person's spouse, a state
agency shall notify the collection entity of the request to divide a
jointly or commonly owned right to payment. Any jointly or commonly
owned right to payment is rebuttably presumed to be owned in equal
portions by its joint or common owners.
h. The collection entity shall, after the state agency has
sent notice to the person liable or, if the liability is owing and
payable to the clerk of the district court, the collection entity has
sent notice to the person liable, set off the amount owed to the
agency against any amount which a state agency owes that person. The
collection entity shall refund any balance of the amount to the
person. The collection entity shall periodically transfer amounts
set off to the state agencies entitled to them. If a person liable
to a state agency gives written notice of intent to contest an
allegation, a state agency shall hold a refund or rebate until final
disposition of the allegation. Upon completion of the setoff, a
state agency shall notify in writing the person who was liable or, if
the liability is owing and payable to the clerk of the district
court, shall comply with the procedures as provided in paragraph
"j".
i. The department of revenue's existing right to credit
against tax due or to become due under section 422.73 is not to be
impaired by a right granted to or a duty imposed upon the collection
entity or other state agency by this section. This section is not
intended to impose upon the collection entity or the department of
revenue any additional requirement of notice, hearing, or appeal
concerning the right to credit against tax due under section 422.73.
j. If the alleged liability is owing and payable to the clerk
of the district court and setoff as provided in this section is
sought, all of the following shall apply:
(1) The judicial branch shall prescribe procedures to permit a
person to contest the amount of the person's liability to the clerk
of the district court.
(2) The collection entity shall, except for the procedures
described in subparagraph (1), prescribe any other applicable
procedures concerning setoff as provided in this subsection.
(3) Upon completion of the setoff, the collection entity shall
file, at least monthly, with the clerk of the district court a notice
of satisfaction of each obligation to the full extent of all moneys
collected in satisfaction of the obligation. The clerk shall record
the notice and enter a satisfaction for the amounts collected and a
separate written notice is not required.
3. In the case of multiple claims to payments filed under this
section, priority shall be given to claims filed by the child support
recovery unit or the foster care recovery unit, next priority shall
be given to claims filed by the college student aid commission, next
priority shall be given to claims filed by the investigations
division of the department of inspections and appeals, next priority
shall be given to claims filed by a clerk of the district court, and
last priority shall be given to claims filed by other state agencies.
In the case of multiple claims in which the priority is not otherwise
provided by this subsection, priority shall be determined in
accordance with rules to be established by the director.
4. The director shall have the authority to enter into reciprocal
agreements with the departments of revenue of other states that have
enacted legislation that is substantially equivalent to the setoff
procedure provided in this section for the recovery of an amount due
because of a default on a guaranteed student or parental loan under
chapter 261. A reciprocal agreement shall also be approved by the
college student aid commission. The agreement shall authorize the
department to provide by rule for the setoff of state income tax
refunds or rebates of defaulters from states with which Iowa has a
reciprocal agreement and to provide for sending lists of names of
Iowa defaulters to the states with which Iowa has a reciprocal
agreement for setoff of that state's income tax refunds.
5. Under substantive rules established by the director, the
department shall seek reimbursement from other state agencies to
recover its costs for setting off liabilities. Section History: Recent Form
2003 Acts, ch 145, §86, 286; 2006 Acts, ch 1072, §4; 2008 Acts, ch
1032, §201
Referred to in § 8A.323, 8A.502, 96.11, 99D.2, 99D.28, 99F.1,
99F.19, 99G.38, 217.34, 234.8, 252B.5, 261.37, 321.11A, 321.31,
321.40, 422.12D, 422.12K, 422.12L, 422.20, 422.72, 456A.16,
602.8102(58A), 602.8107, 642.2