1.Offset of State judicial
debts against income tax refund
(a)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)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
offsetParagraph (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)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 evidenceRules 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)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)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)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 StateAny 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 informationSection 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)
(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)The amendments made by this Act shall apply to refunds
payable for taxable years beginning after December 31, 2006.