[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 3512 Introduced in Senate (IS)]








109th CONGRESS
  2d Session
                                S. 3512

 To amend the Internal Revenue Code of 1986 to allow an offset against 
 income tax refunds to pay for State judicial debts that are past-due.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             June 14, 2006

Mr. Smith (for himself and Mr. Schumer) introduced the following bill; 
     which was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
 To amend the Internal Revenue Code of 1986 to allow an offset against 
 income tax refunds to pay for State judicial debts that are past-due.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. OFFSET OF STATE JUDICIAL DEBTS AGAINST INCOME TAX REFUND.

    (a) In General.--Section 6402 of the Internal Revenue Code of 1986 
(relating to authority to make credits or refunds) is amended by 
redesignating subsections (f) through (k) as subsections (g) through 
(l), respectively, and by inserting after subsection (e) the following:
    ``(f) Collection of Past-Due, Legally Enforceable State Judicial 
Debts.--
            ``(1) In general.--Upon receiving notice from any State 
        judicial branch or State agency designated by the chief justice 
        of the State's highest court that a named person owes a past-
        due, legally enforceable State judicial debt to or in such 
        State, the Secretary shall, under such conditions as may be 
        prescribed by the Secretary--
                    ``(A) reduce the amount of any overpayment payable 
                to such person by the amount of such State judicial 
                debt;
                    ``(B) pay the amount by which such overpayment is 
                reduced under subparagraph (A) to such State judicial 
                branch or State agency and notify such State judicial 
                branch or State agency of such person's name, taxpayer 
                identification number, address, and the amount 
                collected; and
                    ``(C) notify the person making such overpayment 
                that the overpayment has been reduced by an amount 
                necessary to satisfy a past-due, legally enforceable 
                State judicial debt.
        If an offset is made pursuant to a joint return, the notice 
        under subparagraph (B) shall include the names, taxpayer 
        identification numbers, and addresses of each person filing 
        such return.
            ``(2) Offset permitted only against residents of state 
        seeking offset.--Paragraph (1) shall apply to an overpayment by 
        any person for a taxable year only if the address shown on the 
        Federal return for such taxable year is an address within the 
        State of the State judicial branch or State agency seeking the 
        offset.
            ``(3) Priorities for offset.--Any overpayment by a person 
        shall be reduced pursuant to this subsection--
                    ``(A) after such overpayment is reduced pursuant 
                to--
                            ``(i) subsection (a) with respect to any 
                        liability for any internal revenue tax on the 
                        part of the person who made the overpayment;
                            ``(ii) subsection (c) with respect to past-
                        due support;
                            ``(iii) subsection (d) with respect to any 
                        past-due, legally enforceable debt owed to a 
                        Federal agency; and
                            ``(iv) subsection (e) with respect to any 
                        past-due, legally enforceable State income tax 
                        obligations; and
                    ``(B) before such overpayment is credited to the 
                future liability for any Federal internal revenue tax 
                of such person pursuant to subsection (b).
        If the Secretary receives notice from 1 or more State agencies, 
        or from 1 or more State agencies and the State judicial branch, 
        of more than 1 debt subject to paragraph (1) that is owed by 
        such person to such State agency or State judicial branch, any 
        overpayment by such person shall be applied against such debts 
        in the order in which such debts accrued.
            ``(4) Notice; consideration of evidence.--Rules similar to 
        the rules of subsection (e)(4) shall apply with respect to 
        debts under this subsection.
            ``(5) Past-due, legally enforceable state judicial debt.--
                    ``(A) In general.--For purposes of this subsection, 
                the term `past-due, legally enforceable State judicial 
                debt' means a debt--
                            ``(i) which resulted from a judgment or 
                        sentence rendered by any court or tribunal of 
                        competent jurisdiction which--
                                    ``(I) handles criminal or traffic 
                                cases in the State; and
                                    ``(II) has determined an amount of 
                                State judicial debt to be due; and
                            ``(ii) which resulted from a State judicial 
                        debt which has been assessed and is past-due 
                        but not collected.
                    ``(B) State judicial debt.--For purposes of this 
                paragraph, the term `State judicial debt' includes 
                court costs, fees, fines, assessments, restitution to 
                victims of crime, and other monies resulting from a 
                judgment or sentence rendered by any court or tribunal 
                of competent jurisdiction handling criminal or traffic 
                cases in the State.
            ``(6) Regulations.--The Secretary shall issue regulations 
        prescribing the time and manner in which State judicial 
        branches and State agencies must submit notices of past-due, 
        legally enforceable State judicial debts and the necessary 
        information that must be contained in or accompany such 
        notices. The regulations shall specify the types of State 
        judicial monies and the minimum amount of debt to which the 
        reduction procedure established by paragraph (1) may be 
        applied. The regulations may require State judicial branches 
        and State agencies to pay a fee to reimburse the Secretary for 
        the cost of applying such procedure. 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.
            ``(7) Erroneous payment to state.--Any State judicial 
        branch or State agency receiving notice from the Secretary that 
        an erroneous payment has been made to such State judicial 
        branch or State agency 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 judicial branch or State agency under 
        such paragraph have been paid to such State judicial branch or 
        State agency).''.
    (b) Disclosure of Return Information.--Section 6103(l)(10) of the 
Internal Revenue Code of 1986 (relating to disclosure of certain 
information to agencies requesting a reduction under subsection (c), 
(d), or (e) of section 6402) is amended by striking ``or (e)'' each 
place it appears in the text and heading and inserting ``(e), or (f)''.
    (c) Conforming Amendments.--
            (1) Section 6402(a) of the Internal Revenue Code of 1986 is 
        amended by striking ``and (e)'' and inserting ``(e), and (f)''.
            (2) Paragraph (2) of section 6402(d) of such Code is 
        amended by striking ``subsection (e)'' and inserting 
        ``subsections (e) and (f)''.
            (3) Paragraph (3)(B) of section 6402(e) of such Code is 
        amended to read as follows:
                    ``(B) before such overpayment is--
                            ``(i) reduced pursuant to subsection (f) 
                        with respect to past-due, legally enforceable 
                        State judicial debts, and
                            ``(ii) credited to the future liability for 
                        any Federal internal revenue tax of such person 
                        pursuant to subsection (b).''.
            (4) Section 6402(g) of such Code, as so redesignated, is 
        amended by striking ``or (e)'' and inserting ``(e), or (f)''.
            (5) Section 6402(i) of such Code, as so redesignated, is 
        amended by striking ``or (e)'' and inserting ``, (e), or (f)''.
    (d) Effective Date.--The amendments made by this Act shall apply to 
refunds payable for taxable years beginning after December 31, 2006.
                                 <all>